Commercial Minerals Pty Ltd v Hollins; Auqal Pty Ltd (Originally Quality Earths Pty Ltd) v Hollins

Commercial Minerals Pty Ltd and Auqal Pty Ltd (formerly Quality Earths Pty Ltd) appealed to the New South Wales Court of Appeal against a decision of the Supreme Court of New South Wales. The dispute concerned the interpretation and enforceability of a restrictive covenant contained within a deed of settlement, which purported to prevent the respondent, Mr Hollins, from carrying on a business in competition with the appellants.

The primary legal issues before the Court of Appeal were whether the restrictive covenant was void for uncertainty and, alternatively, whether it was void as an unreasonable restraint of trade. The court was required to consider the scope and duration of the restriction imposed by the covenant and whether it went beyond what was reasonably necessary to protect the legitimate business interests of the appellants.

The Court of Appeal found that the restrictive covenant was void for uncertainty. It held that the phrase "carrying on a business in competition with the business of the vendor" was too vague and ambiguous to be given a definite meaning. The court reasoned that for a restraint of trade clause to be enforceable, its terms must be clear and precise, allowing a party to understand the precise nature and extent of the restriction imposed upon them. As the covenant lacked this clarity, it could not be enforced. Consequently, the appeal was allowed, and the orders of the Supreme Court were set aside.