Canny Gabriel Castle Jackson Advertising Pty Ltd v Volume Sales (Finance) Pty Ltd

The High Court of Australia considered an appeal concerning a dispute between Canny Gabriel Castle Jackson Advertising Pty Ltd (the appellant) and Volume Sales (Finance) Pty Ltd (the respondent). The core of the disagreement related to the interpretation and enforceability of a written agreement for the sale of a business, specifically concerning the vendor's restrictive covenant.

The central legal issue before the High Court was whether the restrictive covenant contained within the sale agreement was void for uncertainty. The covenant sought to prevent the vendor from engaging in a similar business within a defined geographical area and for a specified period. The court had to determine if the terms of this restraint were sufficiently precise to be legally enforceable or if they were too vague, rendering them void as an unreasonable restraint of trade.

The High Court, in allowing the appeal, reasoned that the restrictive covenant was indeed void for uncertainty. The court applied the principle that for a restraint of trade clause to be valid, its scope must be clearly and precisely defined. In this instance, the wording of the covenant was found to be ambiguous regarding the precise nature of the business activities that were prohibited and the exact geographical boundaries of the restraint. Consequently, the court held that the uncertainty rendered the covenant unenforceable, as it was not possible to ascertain with sufficient clarity what was being restrained.