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…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2002] WASC 100
Decision Date: 1 MAY 2002

CaseChat Overview and Summary

In the case of Cream v Bushcolt Pty Ltd, the plaintiff sought to enforce a restraint of trade covenant contained within a contract for the sale of a business. The plaintiff had sold a business, which operated in the hairdressing industry, to the defendant, and the contract included a clause prohibiting the plaintiff from operating a hairdressing business within a certain geographical area for a specified period. The plaintiff later sought to re-enter the same business, claiming the restraint was unreasonable and unenforceable. The defendant argued that the restraint was necessary to protect its legitimate business interests and that the plaintiff had made false and misleading statements during negotiations.

The primary legal issues the court had to address were whether the restraint of trade clause was reasonable and enforceable, and if the plaintiff had breached any statutory obligations under the Trade Practices Act by making misleading statements. The court had to consider the nature of the business, the interests of the parties, and the impact of the restraint on the plaintiff's ability to earn a livelihood. Additionally, the court needed to determine whether the plaintiff's statements during the sale negotiations constituted false or misleading conduct under the Trade Practices Act.

The court found that the restraint of trade clause was reasonable and enforceable as it was necessary to protect the defendant's legitimate business interests and was not overly restrictive. The court also held that the plaintiff had not made any false or misleading statements during the negotiations. Consequently, the plaintiff's attempt to re-enter the same business was unsuccessful, and the restraint of trade clause was upheld as valid and binding. The court granted the defendant's application for an injunction to prevent the plaintiff from operating a hairdressing business within the restricted area.

Orders