Cream v Bushcolt Pty Ltd - [2002] WASC 100

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION: CREAM -v- BUSHCOLT PTY LTD [2002] WASC 100

CORAM: SCOTT J

HEARD: 4-8 FEBRUARY 2002

DELIVERED : 1 MAY 2002

FILE NO/S: CIV 1636 of 2001

BETWEEN: CLAYTON GEORGE TIMOTHY CREAM
Plaintiff
AND
BUSHCOLT PTY LTD
Defendant
(BY ORIGINAL ACTION)
BUSHCOLT PTY LTD
Plaintiff
AND
DOLSA PTY LTD
First Defendant
CLAYTON GEORGE TIMOTHY CREAM
Second Defendant
(BY COUNTERCLAIM)

Catchwords:

Contract - Sale of business - Covenant in restraint of trade - Reasonableness - Plaintiff seeking to reenter business in same area - Same trade in competition with business sold - Equity - Estoppel - False and misleading statements - Trade Practices Act

Legislation:

Trade Practices Act (Cth) 1974

Fair Trading Act 1987

Result:

Restraint of trade clause upheld
Plaintiff's claim dismissed

Category: B

Representation:

Original Action

Counsel:

Plaintiff: Mr A R Beech
Defendant: Mr M L Bennett

Solicitors:

Plaintiff: Deacons
Defendant: Bennett & Co

Counterclaim

Counsel:

Plaintiff:     Mr M L Bennett
First Defendant             :     Mr A R Beech
Second Defendant         :     Mr A R Beech

Solicitors:

Plaintiff:     Bennett & Co
First Defendant             :     Deacons
Second Defendant         :     Deacons

Case(s) referred to in judgment(s):

Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288; (1973) 1 ALR 385
Bateman v Slatyer (1987) 71 ALR 553
Britten v Bishop, unreported; SCt of WA (Malcolm CJ); Library No 960560S; 25 September 1996
Butt v Long (1953) 88 CLR 476
Commonwealth v Verwayen (1990) 170 CLR 394
Connors Bros Ltd v Connors (1940) 4 All ER 179
Hoylevans Pty Ltd v Weir [2001] WASCA 23
IRAF Pty Ltd v Graham [1982] 1 NSWLR 419
Jacques v Cut Price Deli Pty Ltd (1993) ASC 56 - 221; (1993) ATPR (Digest) 46 - 102, FedCt, 12 March 1993
Lindner v Murdock's Garage (1950) 83 CLR 628
Lyndel Nominees v Mobil Oil Australia Ltd (1997) 37 IPR 599
Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co [1894] AC 535
Peters (WA) v Petersville Ltd [2001] 181 ALR 337
Walton Stores (Interstate) Ltd v Maher & Anor (1987) 164 CLR 387

Case(s) also cited:

Austotel Pty Ltd v Franklins SelfServe Pty Ltd (1989) 16 NSWLR 582
Barlow v Neville Jeffress Advertising Pty Ltd (1995) ATPR 41 - 376
Brendon Pty Ltd v Russell (1994) 11 WAR 280
Bridge v Deacons [1984] AC 705
Brown v Brown [1980] 1 NZLR 484
Commonwealth of Australia v Clark [1994] 2 VR 333
Cummings v Lewis (1993) ATPR 46 - 103
Davis v Wood (1979) ATPR 40 - 117
Fleming Bros (Monaro Agencies) Pty Ltd v Smith (1983) ATPR 40 389
Futuretronics International Pty Ltd v Gadzhis (1992) 2 VR 217
Gates v City Mutual Life Assurance Ltd (1986) 160 CLR 1
Geraghty v Minter (1979) 142 CLR 177
Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82
Grundt v Great Boulder Proprietary Gold Mines Ltd (1937) 59 CLR 641
Hawkesbury Bakery v Moses [1965] NSWR 1242
James v ANZ Banking Group Ltd (1986) 64 ALR 347
Leighton v Wales (1838) ER 150
Lloyds Ships Holding Pty Ltd v Davros (1987) 17 FCR 505
Marks v GIO Australia (1998) 196 CLR 494
Mason v Provident Clothing & Supply Co Ltd [1913] All ER 400
McCalusland v Hill (1985) 23 OAR 738
Peters (WA) Ltd v Petersville Ltd (1999) ATPR 41 - 714
Silovi Pty Ltd v Barbaro (1988) 13 NSWLR 466
Sykes v Reserve Bank (1998) 88 FCR 511
Walton Stores (Interstate) Ltd v Maher (1988) 164 CLR 387
Wardley Australia v State of Western Australia (1992) 175 CLR 514

SCOTT J: The plaintiff Clayton George Timothy Cream ("Mr Cream") commenced a livestock transport business with his father in 1978. The business had financial backing from a family friend. The business carried on under the name of Cream Transport and was involved exclusively in the livestock transport industry ("the business").
Mr Cream was also the managing director of the first defendant by counterclaim, Dolsa Pty Ltd ("Dolsa"). That company acted as the trustee of the Cream Unit Trust which operated Cream Transport and which owned land at Geraldton, being the depot for Cream Transport. It is not necessary to set out the title particulars of that land. Suffice it to say that the real estate owned by Dolsa as trustee, was part of the real estate owned by the business and comprised the land from which the business was conducted.
There were some changes in the beneficial ownership of the business following the death of the plaintiff's father which are not relevant for the purposes of this case. However, in 1986 or 1987 Andrew Snell ("Mr Snell") joined the business as a manager and a director of Dolsa. Mr Snell was given a 10 per cent interest in the business. The balance of the shareholding remained with the plaintiff and traded under the name of Cream Transport.
The business was that of a livestock carrier. The business primarily carried cattle and sheep in the mid‑west, Gascoyne, Pilbara and Murchison regions of Western Australia. However, the evidence establishes that from time to time livestock was carried outside those areas to other parts of the State and on infrequent occasions interstate.
By 1997 to 1998 the business of Cream Transport had expanded to the stage where eight to 10 drivers were employed full‑time, together with one full‑time subcontractor and other casual subcontractors.
The business initially commenced in Midland Junction but moved to Geraldton in 1980 or 1981 and was based in Geraldton thereafter. For a short period of time (two or three months) one truck and one driver were based in Carnarvon.
In addition, in the period 1992 and 1993 the plaintiff sought to extend the operations of the business into the Kimberley region. The business operated extensively in the Kimberley region during that period, but livestock transport in that area was very competitive and not financially viable. The plaintiff was unable to operate the business successfully in the Kimberleys without establishing a depot in that area which was uneconomic. Accordingly, the plaintiff did not seek to continue operations in that region and from mid‑1994 the plaintiff discontinued the business expansion into the Kimberley region.
The business continued to expand and grow and by the end of June 1998 had a turnover in excess of $3,000,000.
Mr Cream was the holder of a private pilot's licence which he utilised to make flying visits to customers from time to time (for the most part annually). The stations visited by him and a customer reference map were produced in evidence as exhibit 1. The blue semicircle on the map was drawn by the plaintiff to show an area with a radius of 200 kilometres of Geraldton which was the principal area in which Cream Transport operated.
Mr Cream accepted that in 1998 the business made deliveries or pick‑ups of livestock in every region of the State shown in exhibit 1 if the Goldfields interior and Eucla areas are aggregated. Mr Cream's evidence, however, was that the focus of the business was in the 200‑kilometre area around Geraldton and that the business's contact with other regions was far less significant and intermittent.
Mr Cream's analysis of the geographical area into which the business extended is best shown on the spreadsheet analysis annexed to his witness statement (exhibit E) and shown as exhibits D(1) to (6). Whilst it can properly be said that the operations of Cream Transport were insignificant in some regions of the State, in terms of the percentage of the overall area covered by the business, it is important to note that the business did operate throughout all of those regions of the State.
A summary of the spreadsheets prepared by Mr Cream can be found in his proof of evidence following par 39.
In considering these spreadsheets and the summary of the spreadsheet evidence, it is important to note that in some cases points of origin would be only for the purpose of back‑loading in order to offset the cost of the return trip to base. In those cases Mr Cream's evidence was that the back‑loading would be a one‑off trip which would not truly represent a client contact.
It is important also to note that Mr Cream, having spent his working life in the livestock transport industry, was closely associated with that industry and its representative association. For 10 years he was on the committee of the Livestock Transporters Association of WA (Inc) and from time to time was a member of the executive committee. He said in his evidence that he had constant exposure to many of the participants in the livestock transport industry throughout Western Australia. No doubt that would have been a fact known to the first defendant, Bushcolt Pty Ltd ("Bushcolt"), and generally to the Hampton Transport group ("Hamptons") of which Bushcolt, upon incorporation, became part.
Hamptons operated in the livestock transport industry throughout most regions of Western Australia.
From Hamptons' point of view the mid‑west region of Western Australia in which Cream Transport operated was an area in which it did not have a significant presence and into which it wished to expand.
The central matter giving rise to this action involves the sale in 1988 by Mr Cream of the business of Cream Transport to Bushcolt (a company set up by the Hampton Group to purchase the business). In particular, as part of the sale terms, which will be discussed later in these reasons, the Hampton Group asked Mr Cream to sign a restraint of trade deed, the terms of which are central to the action.
That deed, exhibit A(22), includes, inter alia, the following provisions:
"1.1Definitions
'Restraint area' means the State of Western Australia;
'Restrainted business' means the transportation and carriage of livestock; and
'Restraint period' means ten (10) years from the date of this deed;
2.RESTRAINT
2.1Restrain Obligation
The Covenantor must not, during the Restraint Period in the Restraint Area;
(a)promote, participate in, operate or engage in whether on his own account or in partnership or by joint‑venture; or
(b)be concerned or interested in (directly or indirectly, or through any interposed body corporate, trust, principal, agent, shareholder, beneficiary, or as an independent contractor, consultant or in any other capacity),
a Restrained Business.
2.2Independence of Restraints
Each of the restraint obligations imposed on the Covenantor by Clause 2.1 (which results from the combinations of the Restrained Business, Restraint Period and Restraint Area) is a separate and independent obligation from the other restraint obligations imposed (although they are cumulative in effect).
2.3Reasonableness of Restraint
The Covenantor agrees that each of the restraint obligations imposed by Clause 2.1 is reasonable in its extent (as to duration, geographical area and restrained conduct) having regard to the interests of each party. If any restraint obligation imposed by Clause 2.1, would be void as drawn but would be valid if the Restraint Period or the Restraint Area was re‑drawn then the obligation in question shall apply with such modification as necessary to make it valid and effective."
That deed dated 30 November 1998, was executed by Mr Cream and Bushcolt.
Before the pleadings are considered in this action it is necessary to deal with the circumstances surrounding, and the terms of the sale of, Cream Transport to Bushcolt.
Mr Cream took an overseas holiday in 1996 where he met his future wife. They married in September 1997. Following that holiday and his marriage, Mr Cream decided to reduce the intensity of his working life. He consulted a number of the senior employees of Cream Transport and indicated he would like to involve them more in the day‑to‑day running of the business. Mr Cream made those changes, but despite those rearrangements he was still working extremely hard.
In 1997 and 1998 Mr Cream tried to talk Mr Snell into buying the business. Mr Snell, however, did not wish to purchase Mr Cream's interest.
In July 1998 Mr Cream decided to terminate his involvement in the livestock transportation industry. He and his wife decided to leave Geraldton and relocate to Perth. At that stage Mr Cream had no plans for an alternative career.
As the first step in winding down the business, Mr Cream sold some of the business equipment. Some 20 to 25 per cent of the equipment of Cream Transport was sold privately over a number of months.
Mr Cream was, however, anxious to sell the remainder of the business and eventually contacted the manager of Hamptons, a Mr Mark Fleming. Hamptons were at that stage the largest livestock transport operators in Western Australia with depots in Kalgoorlie, Perth, Broome, Katanning and Esperance.
Negotiations then commenced between Mr Cream and representatives of Hamptons and a number of meetings occurred between Hamptons' personnel and Mr Cream. There is some dispute as to how many meetings actually occurred and where those meetings occurred, but in the end a resolution of that conflict is not necessary for a determination of this case. For reasons I will later come to, I am of the view that Mr Cream's evidence for the most part is preferable to the evidence called by the defendants, although in one particular area Mr Cream's recollection of events was clearly wrong. That specific matter related to the manner of payment of the purchase price which Hamptons ultimately paid for the purchase of the business.
The meetings between Mr Cream and the representatives of Hamptons concerned the price and conditions for the sale of the business. In that respect it is to be noted that when Mr Cream decided to sell the business, he prepared exhibit A1, a memorandum headed "General Information", to assist the sale. That document included a list of the prime movers, trucks and other equipment that were to be included in the sale.
In the general information section of the memorandum after setting out the financial position of Cream Transport the document provides:
"The trading name of 'Cream Transport' (goodwill) would be available to the purchaser of the entire trailing fleet at no extra cost. This would also include client lists, introductions and existing company telephone numbers, etcetera."
In my view, what is clear from exhibit A(1) is that Mr Cream intended to sell the business in its entirety. The discussions between Mr Cream, on the one hand, and the representatives of Hamptons, on the other, indicate that Mr Cream was selling the business "lock, stock and barrel".
There were a number of negotiations between Mr Cream and representatives of Hamptons, some in Geraldton and some in Perth. It was common ground that following a meeting at the Windsor Hotel in South Perth agreement was reached as to the sale price of the business. The agreement was reached in the carpark of the hotel and followed extensive negotiations. The price was agreed at $1,573,000. That was broken up as follows:
(a)The plant and equipment of the business would be sold on a walk‑in, walk‑out basis for $1,423,000; and
(b)The land upon which the Cream Transport depot was situated would be sold for $150,000.
It was agreed that settlement would take place on 30 November 1998 so that Hamptons would take over from 1 December 1998.
Bushcolt was incorporated by Hamptons as the corporate vehicle which would take over the running of Cream Transport.
As the settlement date approached, it became apparent that the transfer of the land upon which the depot was situated could not be settled by the due date. Finance had to be arranged and it became apparent that settlement of that aspect of the transaction could not be finalised until early in 1999.
It is common ground that prior to settlement some negotiations occurred adjusting the individual prices of a number of specific vehicles so that Bushcolt could arrange finance. This was done by allocating different values to plant and equipment so that the ultimate purchase price remained the same.
As I have earlier indicated in these reasons, in the course of negotiations the representatives of Hamptons made it clear to Mr Cream that they required him to enter into a restraint of trade deed as part of the purchase. That was a matter of no concern to Mr Cream because, as I have already said, his intention was to leave the livestock transport industry permanently.
There is some dispute in the evidence as to what exactly was said when the question of the restraint of trade was discussed. Mr Cream's recollection is that he said to Mr Paul Mullins from Hamptons, "I don't mind signing something that says I won't work in livestock transportation - I've had a gutful and I don't intend to come back."
Mr Cream also recalls that when he saw the draft restraint deed which provided for a 10‑year restraint, as mentioned earlier in these reasons, his response was again:
"10 years. You could make it 100 years. Add a zero. I have no intention of coming back."
There is some dispute as to exactly what Mr Cream said on that occasion. Mr Mullins' recollection was that Mr Cream said that the restraint could last for "a lifetime". In my view, that issue is unimportant because, on any version, Mr Cream made it plain that he was never intending to enter the livestock transport industry again. I accept Mr Cream's evidence that at the time he genuinely intended that to be the case. He had spent some time thinking about the matter and, as I have said, following his marriage he had finally decided, after discussions with his wife, to leave the livestock transport industry forever. The terms of the restraint deed were of no significance to him. On the other hand, from Hamptons' side of the transaction it was essential that a restraint deed be entered into because without such a deed the purchase by Hamptons of the Cream business would be commercially vulnerable. The terms of the restraint deed, so far as they are relevant to the matters in issue in these proceedings, are set out earlier in these reasons.
On the date of settlement Mr Cream's recollection was that he received a substantial cheque in payment of the purchase price. Evidence put to him in cross‑examination reveals, however, that no such cheque was received and that the bulk of the consideration was paid by way of bank transfer. A balance was credited to Mr Cream's account after payment out of encumbrances that had to be discharged on settlement. Only a small cheque was actually handed over to Mr Cream at settlement. In that respect I accept that Mr Cream's recollection of the events surrounding the settlement was faulty.
The evidence establishes that Mr Cream voluntarily entered into the restraint of trade deed; he was happy with its terms, and he voluntarily agreed to be bound by it, because he had no intention of ever returning to the livestock transport industry. The terms of the deed were not imposed upon him by Hamptons and were not designed to restrict Mr Cream in any undue manner. In his evidence in cross‑examination Mr Cream accepted that at the time of signing the restraint deed its terms were of no significance to him because he had no desire whatever to return to the livestock transport industry in any form again. It did not matter to him at that time whether the restraint was for 10 or 100 years and it did not matter to him what geographical area it covered. The only matter of concern that he raised with the representatives of Hamptons was whether he would be able to accept employment as a truck driver in the livestock transport industry. On raising that query, he was told by Mr Paul Mullins from Hamptons that the restraint would prevent him from acting as a truck driver. He was prepared to accept that restriction.
Mr Cream did not seek any legal advice as to the terms of the restraint deed because, as I have said, it was of no concern to him. At that stage he thought the restraint was reasonable and legally enforceable and he accepted that he could not return to the livestock transport industry in Western Australia for 10 years.

Following the settlement of the business, Mr Cream and his wife moved from Geraldton to Perth and Mr Cream took a year off work. The only time he returned to work was when he worked for one week for Hamptons to relieve Mr Snell (who had accepted employment with Hamptons) so that Mr Snell could have a holiday.
In September 1999 Mr Cream and his wife took a three‑week holiday in Canada. Just before leaving, Mr Cream was called by Mr David Jones, a manager at Hamptons, who offered him employment as general manager of that company. The offer was for employment for a 12‑month period, with Mr Cream having the right to terminate the employment earlier if he chose to do so. From Hamptons' point of view, however, they would have liked Mr Cream to stay on for a longer period.
Mr Cream wanted a written employment contract before accepting the position, but when he returned from Canada, no written contract was provided to him. As a consequence, he decided not to take the job.
Just prior to Christmas 1999 Mr David Jones and Mr Bart Jones of Hamptons again offered Mr Cream the same position. This time he accepted. Mr Cream worked for Hamptons for three months but, following a dispute, summarily left the position on 1 April 2000. It is not necessary to refer to the terms of the dispute in these reasons except to say that Mr Cream ultimately decided to walk out of the job, and did so. He left behind property that belonged to Hamptons and left the job suddenly and without notice.
Following the termination of that employment, Mr Cream and his wife decided to purchase a licensed post office. In October 2000 he and his wife purchased, and started to operate, a licensed post office business at Westminster, Balga. By January 2001 it became apparent to Mr Cream and his wife that they were unhappy working in the post office business and, in addition, they had not settled down to life in Perth. Mr Cream had spent the whole of his life in Geraldton and his family ties were there. His wife's friends were also located in Geraldton. They decided that they had enjoyed their time together in Geraldton better than they enjoyed their time in Perth. They decided to sell the post office business and move back to Geraldton.
Mr Cream realised that finding new employment in Geraldton would be difficult, but accepted that he was bound by the terms of the deed of restraint so that he could not return to the livestock transport industry in Western Australia until the term of the restraint expired.
Eventually, however, Mr Cream sought some legal advice in relation to the restraint deed and commenced these proceedings.
In his evidence Mr Cream said that he wished to resume operations in the livestock transport industry and operate in the same area as before.
In the statement of claim the plaintiff, Mr Cream, seeks to establish that the restraint contained in cl 2.1 of the restraint deed is unreasonable. In cl 12 of the amended statement of claim the plaintiff pleads:
"12.The restraint contained in clause 2.1 of the restraint deed is unreasonable as between the plaintiff and the defendant in that:
(1)the duration of the restraint, ie. 10 years after 30 November 1998, is:
(a)excessive; further or alternatively
(b)beyond that required to afford the defendant adequate protection; further or alternatively
(2)the geographical scope of the restraint, ie. the State of Western Australia, is:
(a)excessive; further or alternatively
(b)beyond that required to afford the defendant adequate protection;
in circumstances where the business only transported livestock predominantly in the mid‑west, Gascoyne, Pilbara and Murchison regions of Western Australia. The particulars to paragraph 4 are repeated; further or alternatively
(3)the operative scope of the restraint, ie. restraining the plaintiff from being concerned or interested in any way in a livestock carriage or transportation business in Western Australia for 10 years, is:
(a)excessive; further or alternatively
(b)beyond that required to afford the defendant adequate protection;
and restricts the plaintiff's ability to earn an income; further or alternatively
(4)see below
(5)no valuable consideration was provided by the defendant to the plaintiff for the restraint."
Subparagraph (4) (of paragraph 12 of the statement of claim) was not pursued by the plaintiff at trial. That subparagraph had provided:
(4)The restraint was not ancillary to the purchase of any goodwill by the defendant.
The relief sought by the plaintiff in the statement of claim is a declaration that cl 2.1 of the restraint deed is unenforceable as an unreasonable restraint of trade.
The defendants have lodged a defence and counterclaim. It is not necessary to refer to the defence and counterclaim in detail apart from saying that the counterclaim is based upon alleged misrepresentations by Mr Cream in saying to Hamptons that he would never again be involved in any capacity with a livestock transportation business.
It is then necessary to consider the legal principles which deal with restraints of trade clauses such as the one presently under consideration. The first matter for consideration is whether the clause set out earlier in these reasons properly constitutes a restraint of trade within the meaning of that term, Peters (WA) v Petersville Ltd [2001] 181 ALR 337 per Gleeson CJ, Gummow, Kirby and Hayne JJ at 341 [14]. In this case it can be readily seen that the clause in question is directed towards restraining the plaintiff from engaging in the livestock transport industry. In my view, the clause is clearly a restraint within the meaning of the doctrine.
The more central question in this case is whether the restraint imposed is more than that which is required (in the judgment of the Court) to protect the interests of the parties. That is a matter which is relevant to the considerations of public policy which underlie the whole doctrine, since to that extent the deprivation of a person of his liberty of action is regarded as detrimental to the public interest: Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co [1894] AC 535 at 565; Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288; (1973) 1 ALR 385.
In this case it should be noted that not only was the commercial restraint a voluntary consensual restraint, but significantly, the plaintiff was prepared to agree to an even wider restraint. In that respect I accept Mr Cream's evidence that when he decided to sell Cream Transport, he honestly believed on reasonable grounds that he would never re‑enter the livestock transport industry again. As I have said, he had spent all of his working life in the industry and had reached the stage where he had decided to leave the industry forever. His attitude in that respect was made known to the representatives of Hampton and clearly understood by all the parties to this transaction. The significance of that finding of fact will become apparent later in these reasons.
The three aspects of the restraint clause which fall for consideration in this case are:
(1)The duration of the restraint - 10 years from 30 November 1998;
(2)The geographical scope of the restraint - the whole of the State of Western Australia;
(3)The operative scope of the restraint - restraining the plaintiff from being concerned or interested in any way in a livestock carriage or transportation business in Western Australia.
Each of those aspects of the clause will need to be considered in turn.
In relation to the duration of the restraint, it is important to note that Mr Cream had been engaged in the livestock transport industry since he left school. It constituted the whole of his working life. Not only had he established a solid client base in the areas in which the company operated, but it is apparent from his evidence that he made many personal friends in the industry and, as I have said, took an active role in the industry association. He was well known, as was his company. His trucks had a distinctive colour, livery and identity. Indeed the defendants continued with that livery after the purchase to take advantage of the goodwill that had been acquired.
In my view, in those circumstances there was nothing unreasonable about a 10‑year restraint to give the Hampton Group ample time to establish firm ties with the plaintiff's former clients. As Menzies J said in Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (supra) at 294:
"It was the basis of the decision of the trial Judge that when parties negotiate a commercial arrangement from positions where one does not have the other at an unfair advantage and do, after hard bargaining, reach an agreement which each finds in its interest to accept, the court will not readily find that their bargain is unreasonable as between themselves, notwithstanding the well‑established policy of the law against restraints of trade. This course of his Honour's reasoning was the same as that stated persuasively by Ungoed‑Thomas J in Texaco Ltd v Mulberry Filling Station Ltd [1972] 1WLR 814 where another petrol tie was under consideration."
Menzies J went on to say later on page 294:
"I agree entirely with his Honour's approach to this problem of reasonableness as between the two parties, and consider that, despite the severe restrictions which Rocca accepted - restrictions which the Full Court regarded as unnecessary and harsh - there was not, applying Edwards v Noble (1971) 125 CLR 296, sufficient to warrant interference with the conclusion that the learned trial Judge reached. For my own part, I regard it as a circumstance of considerable weight that five years after making the original arrangement and with the experience of its working during that time, Rocca should, in 1969, in consideration of Amoco paying for further work at the service station and increasing the rebate, have agreed to extend the terms of the lease and under lease for a period of five years."
See also IRAF Pty Ltd v Graham [1982] 1 NSWLR 419 per Roth J at 429.
In this case the evidence establishes that Mr Cream was anxious to sell the remainder of his livestock trucking business. To sell in one bulk sale was to his advantage. The price which he received from Hamptons constituted a satisfactory sale on his part. As I have said, he willingly entered into the restraint clause for the period of 10 years and, at that time at least, accepted that the period of the restraint was reasonable.
I have therefore concluded that the 10‑year restraint in all of the circumstances of this case was reasonable.
The second aspect of the restraint relates to the geographical limit, ie, the whole of the State of Western Australia. Much of the evidence in this case focused upon the area of operation of Cream Transport. The analysis to which I have referred earlier in these reasons attached to Mr Cream's witness statement indicates the areas in which, and the extent to which, Cream Transport operated in various parts of the State. From that analysis, it is evident that the focus of the Cream Transport business was the mid‑west, Gascoyne, Murchison and Pilbara area of Western Australia. The attempted extension of the business into the Kimberleys was brief and unsuccessful, and the evidence establishes that Cream Transport had only an insignificant presence in an area to the south of the metropolitan area.
In considering the geographical restraint in this case, one of the factors to be considered is that a restraint may be imposed more readily and more widely upon the vendor of a business in the interests of the purchaser, than upon a former employee in the interests of a master: Lindner v Murdock's Garage (1950) 83 CLR 628; Butt v Long (1953) 88 CLR 476; Britten v Bishop, unreported; SCt of WA (Malcolm CJ); Library No 960560S; 25 September 1996 at 3.
In considering this aspect of the clause, it is necessary to take into account the fact that Bushcolt was concerned to protect the goodwill of the business it had purchased. This was therefore one of those cases that came within the category of the sale of goodwill as distinct from restraint of trade clauses in the context of a master‑servant relationship: Connors Bros Ltd v Connors (1940) 4 All ER 179 per Viscount Maugham at 190. His Lordship went on to say also at page 190:
"Their Lordships are not here concerned to deal with cases in the second category [that is, cases involving master and servant]. With regard to those in the first, it is plain that considerations which apply in such cases will often be applicable with necessary modifications to a case in which the goodwill sold is the property of a limited company. A covenant by such a company not to compete with the purchaser would in general be useless as a protection, for the company would in due course be wound up, and the most serious competition might be expected to come from those who had been actively engaged in managing and carrying on its affairs."
It is important in this case to focus upon the facts and circumstances concerning the sale of the business by Mr Cream to Bushcolt. The evidence establishes that the livestock transport industry had a limited number of operators in the State of Western Australia. There were a few carriers who operated in the business apart from owner‑operators. Cream Transport had a significant presence, particularly in the mid‑west Gascoyne, Murchison and Pilbara regions of the State, but, in addition, was known in the Kimberleys and in the south‑west. From Bushcolt's viewpoint it was of vital importance that it should be properly protected from competition from Mr Cream. The reasons for that are already apparent in this judgment. The evidence establishes that Hamptons operated throughout the State and that without adequate protection from competition by Mr Cream the goodwill which was acquired would be severely diminished.
Whilst the law is clear the restraints of trade are contrary to public policy and prima facie void, that presumption is capable of rebuttal in a case where the restraint is held to be reasonable: Lindner v Murdock's Garage (supra) per Kitto J at 655.
In this case the geographical restraint related to the entire State of Western Australia, including areas in which Cream Transport did not have a significant presence. On the other hand, however, the fact that Cream Transport did have a presence throughout the State is of significance. As Malcolm CJ said in Britten v Bishop (supra) at 4:
"In this case, however, it was known to both parties that the appellant and his family had very long‑standing connections in the hotel and tavern trade generally, both in the metropolitan area and in the country. The respondent gave uncontradicted evidence that the relevant business was of a very close knit kind and also very competitive. It is not necessary for the covenantee to prove that the business, for the protection of which the restraint was imposed, has in fact been carried on in every part of the area specified in the contract."
This case is in many respects similar to that considered by Malcolm CJ in Britten's case. The evidence establishes that the livestock transport industry in this State is very competitive and, in my view, Bushcolt has established that the geographical area of the restraint was necessary to properly protect the goodwill of the business that it was purchasing.
The third aspect relates to the scope of the clause and specifically focuses upon cl 2.1(b), namely, the restraint on Mr Cream that he must not during the restraint period in the restraint area "be concerned or interested in (directly or indirectly, or through any interposed body corporate, trust, principal, agent shareholder, beneficiary, or as an independent contractor, consultant or in any other capacity) a Restrainted business".
It is common ground that the scope of that clause was such as to prevent Mr Cream from driving a truck as an independent contractor to a livestock transport carrier.
In my opinion, the construction of the clause was designed to prevent Mr Cream from re‑establishing a presence in the livestock transport industry. Even as an owner driver or as a contractor driver, if Mr Cream re‑entered the livestock industry, particularly in the area where his business focused, it is likely that the business of Bushcolt would be damaged. In that respect, in my view, the covenant cannot be said to be unreasonable.
I have therefore come to the conclusion that the clause under consideration is not an unreasonable restraint of trade and, as a consequence, the clause is not invalid.
In case I am held to be incorrect in reaching that conclusion, it is then necessary to consider as an alternative the defendant's causes of action in the counterclaim under the Trade Practices Act (Cth) 1974, s 51A ("the Trade Practices Act") and under s 10 the Fair Trading Act1987 ("the Fair Trading Act") (Western Australia).
In relation to the defendant's counterclaim under the Trade Practices Act, in my view it is sufficient to dispose of that claim by concluding, as I have, that there was nothing either misleading or deceptive about Mr Cream's statement that he was selling up, leaving Geraldton and leaving the livestock transport industry permanently, however that intention was expressed. In my view, Mr Cream made it plain to the representatives of Hamptons that he would not return to the industry. As I have already found, that belief was honestly held by Mr Cream and based upon reasonable grounds. Indeed, his subsequent history in purchasing a licensed post office was consistent with such a representation: Lyndel Nominees v Mobil Oil Australia Ltd (1997) 37 IPR 599 per Wilcox J at 625.
It follows, in my view, that there was nothing misleading or deceptive about Mr Cream's statements: cf Jacques v Cut Price Deli Pty Ltd (1993) ASC 56 - 221; (1993) ATPR (Digest) 46 - 102, FedCt, 12 March 1993, 431 per Spender J; Bateman v Slatyer (1987) 71 ALR 553.
That conclusion is sufficient to dispose of the defendant's counterclaim for misleading and deceptive conduct under the Trade Practices Act and Fair Trading Act, the latter of which in ss 9, 10 and 11 reflects the corresponding provisions of the Trade Practices Act.
I then turn to the defendant's counterclaim based upon equitable principles. The defendant in this action pleads that in the course of discussions leading to the formation of the asset sale agreement (a) the plaintiff represented to the defendant that he did not want to, and would never in the future, conduct or work in a livestock transportation business in any capacity in competition with the business within the area or Western Australia as a whole and (b) the defendant offered a price for the sale of assets that included a premium to represent the goodwill of the business.
The defendant further pleads that, by reason of the representation pleaded, the defendant assumed and expected that the plaintiff did not want to be, and would not in the future be, involved in any capacity with a livestock transportation business in competition with the business.
The defendant pleads that it relied upon that assumption and expectation and paid a premium for the purchase of the sale assets. In addition, the defendant pleads that it accepted the restraint contained in the deed of restraint and did not seek to negotiate a restraint that was for a shorter period and that covered a smaller geographic area than that contained in the deed of restraint.
The defendant pleads that the actions of the plaintiff in bringing these proceedings so that he can re‑enter the livestock transportation industry are contrary to the assumption and expectation pleaded and that, if the plaintiff is permitted to maintain the action and ultimately to re‑enter the livestock transportation industry, the defendant will suffer loss and detriment, particulars of which are given.

In examining this aspect of the claim the defendant relies upon the principles of promissory equitable estoppel in Walton Stores (Interstate) Ltd v Maher & Anor (1987) 164 CLR 387. In that case Mason CJ and Wilson J said at 404:
"One may therefore discern in the cases a common thread which links them together, namely, the principle that equity will come to the relief of a plaintiff who has acted to his detriment on the basis of a basic assumption in relation to which the other party to the transaction has 'played such a part in the adoption of the assumption that it would be unfair or unjust if he were left free to ignore it': per Dixon J in Grundt (1937) 59 CLR at 675; see also Thompson (1933) 49 CLR at 547. Equity comes to the relief of such a plaintiff on the footing that it would be unconscionable conduct on the part of the other party to ignore the assumption."
In the same case Brennan J said at 423:
"The unconscionable conduct which it is the object of equity to prevent is the failure of a party, who has induced the adoption of the assumption or expectation and who knew or intended that it would be relied on, to fulfil the assumption or expectation or otherwise to avoid the detriment which that failure would occasion. The object of the equity is not to compel the party bound to fulfil the assumption or expectation; it is to avoid the detriment which, if the assumption or expectation goes unfulfilled, will be suffered by the party who has been induced to act or abstain from acting thereon."
Brennan J went on to consider the matters that a party needs to establish in order to sustain an equitable estoppel and said at 428-9:
"In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise. For the purposes of the second element, a defendant who has not actively induced the plaintiff to adopt an assumption or expectation will nevertheless be held to have done so if the assumption or expectation can be fulfilled only by a transfer of the defendant's property, a diminution of his rights or an increase in his obligations and he, knowing that the plaintiff's reliance on the assumption or expectation may cause a detriment to the plaintiff if it is not fulfilled, fails to deny to the plaintiff the correctness of the assumption or expectation of which the plaintiff is conducting his affairs."
The defendant maintains that the plaintiff, by making the representations as to his future non‑involvement in the transport livestock industry, induced the defendant to purchase the assets of the business and to pay a price which it would not otherwise have paid.
In the course of the trial a great deal of evidence was called concerning the true value of the assets which were sold. In that respect it is my conclusion that the majority of the assets were sold at a value greatly in excess of the taxation written‑down value. The advantage to the defendant in purchasing the assets at such a price was that it was able to depreciate the assets from a higher base figure than would otherwise be the case. From the plaintiff's point of view, he was able to secure a better price for the plant and equipment than he would otherwise have been able to achieve.
Whilst no purchase price was allocated to goodwill, counsel for the plaintiff concedes that the goodwill of the business was sold to the defendant pursuant to the sale agreement. Earlier in these reasons I have already set out the terms of the document prepared by the plaintiff for the information of potential purchasers which indicates clearly that the goodwill of the business was to be sold at no extra cost.
I accept the evidence called on behalf of the defendant that the purchase price for the business would not have been agreed at the figure it was, had the goodwill of the business not been included in the sale.
In Hoylevans Pty Ltd v Weir [2001] WASCA 23 144 Hasluck J had occasion to consider a restraint of trade clause in a contract for the sale of a tavern. That case involved an application for an injunction to restrain the breach of a restraint clause and in that respect is somewhat different to this. However, his Honour said at [77]:
"The effect of Mr Weir's conduct in negotiating an agreement of that kind and by then signing and purporting to abide by the original offer was to represent that he was bound personally to observe the requirements of the clause. In other words, the effect of the representation contained in his call was to substitute his personal undertaking by these verbal arrangements for the personal obligation that would otherwise have been imposed upon him by the formal deed. This created an assumption of the kind described by Mason CJ and Wilson J in Walton's case."
In my view, similarly in this case, the defendant's case for equitable promissory estoppel is made out to the extent that the plaintiff should be restrained from entering into the livestock transport business in direct competition with the defendant in the State of Western Australia.
Counsel for the plaintiff submitted that the defendant's claim for equitable estoppel should fail because the defendant did not rely upon the plaintiff's oral representations, but relied upon the terms of the deed which included the restraint of trade clause. In my opinion, that proposition is not sustained on the evidence. Whilst the defendant had its solicitors prepare the restraint deed, in my view, the evidence called on behalf of the defendant was such that it was aware of the possibility that the restraint clause could be struck out. Hamptons had previously purchased a business in the Kimberleys with a five‑year restraint clause. The evidence of David John Cecil Jones ("Mr Jones") was that Hamptons had purchased a livestock transport business in Broome in 1990 or 1991 which was a much smaller business than Cream Transport. In that case Mr Jones said that it took at least five years to build up the business. Because of that, he said in his evidence, "I believe that it could take 10 years to build up relationships with the clients of the business." Mr Jones was aware of the vulnerability of restraint of trade clauses.
Mr Jones said in his evidence that Mr Cream was prepared to sign a restraint which prevented him from re‑entering the livestock transport business during his lifetime and Australia‑wide. Mr Jones, however, told Mr Cream that life was unreasonable but that 10 years, he thought, was appropriate. He said in response Mr Cream said:
"I don’t care how long you make it, I never intend to return to the business and it could be Australia‑wide."
Accordingly, arrangements were made for the restraint deed to be prepared in a form more limited than Mr Cream was prepared to accept.
It follows, in my view, that from Hamptons' point of view it relied upon the oral representations of Mr Cream so that if the deed of restraint was held to be unenforceable because it was too wide, a more limited form of restraint could be imposed upon him to reflect the oral representations, albeit, if necessary, in a restricted form: Commonwealth v Verwayen (1990) 170 CLR 394 per Mason CJ at 410 - 413 and Deane J at 436 - 7.
In the circumstances, therefore, if I am wrong in upholding the validity of the restraint clause, I would uphold the defendants' equitable claim to the extent that the plaintiff should be precluded from entering the livestock transport industry in the State of Western Australia for a period of 10 years from the date of the contract. It would be unconscionable for the plaintiff to act, as he proposes to do, before that period expires.
I will leave the parties to formulate an order which reflects these reasons. The orders should not be in injunctive form because Mr Cream's approach to these proceedings has been to ask the Court to determine his legal obligations so that he can comply with them. As I understand his evidence, it is not his intention to violate any order of the Court or to do other than comply with his lawful obligations. Accordingly, a judgment in declaratory form would be sufficient for present purposes. If at some future date it is alleged that the plaintiff has breached the order, injunctive proceedings can be instituted.