| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
EMPLOYMENT AND INDUSTRIAL LIST
S CI 2016 02982
| CROWE HORWATH (AUST) PTY LTD (ACN 006 466 351) | Plaintiff and Defendant by Counterclaim |
| v | |
| ANTHONY LOONE | Defendant and Plaintiff by Counterclaim |
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JUDGE: | McDonald J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 13 to 16 February and 21 February 2017 |
DATE OF JUDGMENT: | 4 April 2017 |
CASE MAY BE CITED AS: | Crowe Horwath (Aust) Pty Ltd v Loone |
MEDIUM NEUTRAL CITATION: | [2017] VSC 163 |
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CONTRACT – Contract of employment – Enforceability of covenant in restraint of trade – Legitimate interest of employer in protecting its goodwill in its clients – Severance – Whether geographic restraint severable – Covenant severed – Balance of covenant enforceable – Whether contract of employment terminated by reason of defendant’s acceptance of plaintiff’s repudiatory conduct – Whether restraint of trade covenants survived termination effected by defendant’s acceptance of plaintiff’s repudiation of contract – Interlocutory injunction restraining defendant from providing accounting services to clients of plaintiff discharged.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr A Moses SC and Mr N Harrington | Mills Oakley |
| For the Defendant | Mr J Bourke QC and Mr A P Rodbard-Bean | Marsh & Maher |
HIS HONOUR:
Introduction
In November 2000, the Launceston accounting firm Garrotts was acquired by Investor Group Ltd. At the time, Anthony Loone was a partner of the firm. In the ensuing years there were a number of changes in the trading name and ownership of the Investor Group Ltd. In August 2012, the business traded under the name Crowe Horwath Australia (‘CHA’). On 1 November 2012, Mr Loone entered into a contract of employment with CHA as Managing Principal of CHA’s Launceston office (‘the Contract’). The registered office of CHA is in Melbourne. Thus, although the focus of the current proceedings has been concerned with Mr Loone’s employment in Launceston, neither party contended that the plaintiff’s claim was not properly commenced in the Supreme Court of Victoria.
In January 2015 CHA was acquired by Findex Group Ltd. Much of the evidence in the current proceedings concerned the impact of that acquisition upon the contract entered into by Mr Loone on 1 November 2012. Mr Loone contends:
(i) that during the period from late 2015 until July 2016, CHA engaged in conduct which constituted a repudiation of the Contract;
(ii) that the conduct, viewed in isolation or cumulatively, entitled him to terminate the Contract on 12 July 2016;
(iii) that the restrictive covenants (which he contends are unenforceable as unreasonable restraints of trade) are of no legal effect post the termination of the Contract on 12 July 2016.
I have concluded that the restrictive covenants in cl 3.1 of sch 2 of the Contract are enforceable, save for the geographic restraint in cl 3.1(c). However, cl 3.1(c) is severable. Notwithstanding that the clause is enforceable, Mr Loone terminated his contract of employment on 12 July 2016 by accepting the repudiatory conduct of CHA. As a consequence, the…
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- Case
- [2017] VSC 163
- Decision Date
CaseChat Overview and Summary
The court first assessed whether the covenant in restraint of trade was enforceable under Australian law, considering the legitimate business interests of Crowe Horwath in protecting its goodwill and client relationships. The court found that while the geographic restraint was not severable, the balance of the covenant was enforceable. The court also determined that the employment contract was effectively terminated when Loone accepted the plaintiff’s repudiatory conduct. Despite this, the court concluded that the restraint of trade covenants did not automatically lapse upon termination. However, given the specific circumstances of the case, the court deemed it just to discharge the interlocutory injunction that had restrained Loone from providing accounting services to Crowe Horwath’s clients.
In light of the findings, the court discharged the interlocutory injunction that had been placed on Loone, allowing him to provide accounting services to Crowe Horwath’s clients, while affirming that the balance of the restraint of trade covenant remained enforceable.
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