Bis Industries Limited v Toll Holdings Limited

Bis Industries Limited initiated legal proceedings against Toll Holdings Limited, seeking to enforce a non-solicitation restraint clause contained within a due diligence agreement. The agreement was established during negotiations for a potential equity investment or acquisition by Toll Holdings in Bis Industries. The dispute arose from the enforceability of the restraint and the appropriateness of granting an injunction following the termination of the due diligence process.

The court was tasked with determining whether the restraint was reasonable and enforceable, particularly given that the due diligence process was discontinued after approximately three weeks, during which some confidential information was shared. Additionally, the court had to consider whether an injunction should be granted to prevent Toll Holdings from soliciting Bis Industries' employees.

The court found that the restraint was reasonable and enforceable, taking into account the nature of the negotiations and the sharing of confidential information. The court also held that the restraint applied to employees who were approached prior to the agreement's entry into force but secured employment post the agreement. Consequently, the court granted an injunction to prevent Toll Holdings from contravening the restraint. The judgment emphasised the importance of maintaining commercial confidentiality and protecting the legitimate interests of both parties in high-stakes negotiations.

Toll Holdings Limited was ordered to comply with the non-solicitation restraint clause and refrain from soliciting employees of Bis Industries Limited for the specified period. The injunction was to remain in effect until the terms of the restraint were fully complied with, ensuring the protection of Bis Industries' business interests.