Cream v Bushcolt Pty Ltd

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CREAM -v- BUSHCOLT PTY LTD [2004] WASCA 82



SUPREME COURT OF WESTERN AUSTRALIACitation No:[2004] WASCA 82
THE FULL COURT (WA)
Case No:FUL:84/200219 FEBRUARY & 13 NOVEMBER 2003
Coram:MALCOLM CJ
MILLER J
MCKECHNIE J
22/04/04
51Judgment Part:1 of 1
Result: Appeal allowed, Relevant provisions in contract in restraint of trade held void and , unenforceable, Cross-appeal dismissed
B
PDF Version
Parties:CLAYTON GEORGE TIMOTHY CREAM
BUSHCOLT PTY LTD

Catchwords:

Contracts
Illegal and void contracts
Contract in restraint of trade
Whether covenant in restraint of trade for 10 years unreasonable
Whether statewide covenant restraint of trade on sale of livestock transport business reasonable
Business based in Geraldton and operated mainly in the Mid-West, Gascoyne and Murchison areas with some business in the Lower West of the State
Statewide covenant unreasonable
Restraint clauses not to be concerned in any way directly or indirectly in the livestock transport industry unreasonable
Cumulative effect of restraints unreasonable so that covenant contract in restraint of trade void
Appellant not precluded from involvement in livestock transport industry by the doctrine of promissory estoppel
Statement by appellant in negotiations that he intended to leave the livestock transport industry permanently was honest and based on reasonable grounds

Legislation:

Fair Trading Act 1987 (WA), ss 9, 77
Trade Practices Act 1974 (Cth), s 51A

Case References:

Adelaide Petroleum NL v Poseidon Ltd (1988) ATPR 40-901
Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288
Brendon Pty Ltd v Russell (1994) 11 WAR 280
British Reinforced Concrete Engineering Co Ltd v Schelff [1921] 2 Ch 563
Britten v Bishop, unreported; SCt of WA; Library No 960560S; 25 September 1996
Brown v Brown [1980] 1 NZLR 484
Buckley v Tutty (1971) 125 CLR 353
Butt v Long (1953) 88 CLR 476
Cummings v Lewis (1993) ATPR (Digest) 46-103
Esso Petroleum Co Ltd v Harper's Garage (Stourport) Ltd [1968] AC 269
Fleming Brothers (Monaro Agencies ) Pty Ltd v Smith (1983) ATPR 40-389
Hawkesbury Bakery Pty Ltd v Moses [1965] NSWR 1242
Herbert Morris Ltd v Saxelby [1916] 1 AC 688
IRAF Pty Ltd v Graham [1982] 1 NSWLR 419
Jaques v Cut Price Deli Pty Ltd (1993) ATPR (Digest) 46-120
Lindner v Murdock's Garage (1950) 83 CLR 628
Lloyds Ships Holdings Pty Ltd v Davros Pty Ltd (1987) 17 FCR 505
Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181
Miba Ltd v Nescor Industries Group Ltd (1996) 141 ALR 525
Peters (WA) Ltd v Petersville Ltd (1999) ATPR 41–714
Peters (WA) Ltd v Petersville Ltd [2001] HCA 45; (2001) 205 CLR 126
Pioneer Concrete Services Ltd v Galli [1985] VR 675
Stenhouse Australia Ltd v Phillips [1974] AC 391
Thomson v Thomson (1802) 2 VSC 470
Ting v Blanche (1993) 118 ALR 543
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387
Whitmore v Farley [1881] 29 WR 825
Windhill Local Board…
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Details
Case
[2004] WASCA 82
Decision Date

CaseChat Overview and Summary

The case of Cream v Bushcolt Pty Ltd involved a dispute between the plaintiff, Cream, and the defendant, Bushcolt Pty Ltd, regarding the enforceability of certain restrictive covenants in a contract. The case was heard in the Supreme Court of Western Australia. The primary issue before the court was whether the restrictive covenants in the contract, which sought to restrain the plaintiff from engaging in the livestock transport industry for a period of ten years and from operating anywhere in the state, were reasonable and enforceable.

The court examined the nature of the business, which was based in Geraldton and primarily operated in the Mid-West, Gascoyne, and Murchison areas, with some business extending to the Lower West of the State. The court held that the statewide restraint was unreasonable, as it exceeded the geographical scope necessary to protect the legitimate business interests of the defendant. Furthermore, the court found that the restraint clauses prohibiting the plaintiff from being involved in any way, directly or indirectly, in the livestock transport industry were also unreasonable. The cumulative effect of these restraints rendered the covenant in restraint of trade void.

In reaching its decision, the court considered the appellant's statement during negotiations that he intended to leave the livestock transport industry permanently. The court found this statement to be honest and based on reasonable grounds, and thus the appellant was not precluded from involvement in the livestock transport industry by the doctrine of promissory estoppel. Consequently, the appeal was allowed, the relevant provisions in the contract in restraint of trade were held void and unenforceable, and the cross-appeal was dismissed.

Orders

Orders of the court

Appeal allowed, Relevant provisions in contract in restraint of trade held void and , unenforceable, Cross-appeal dismissed

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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