Crowe Horwath (Aust) Pty Ltd v Loone

The dispute between Crowe Horwath (Aust) Pty Ltd and Loone involved the enforceability of a covenant in restraint of trade within an employment contract. The case was heard in the Federal Circuit Court of Australia, where the plaintiff sought to enforce a non-compete clause against the defendant, who had left the company and started a competing business. The legal issues before the court encompassed whether the geographic restraint in the covenant was severable from the balance of the restraint, and if the contract of employment was terminated by the defendant's acceptance of the plaintiff's repudiatory conduct. Additionally, the court had to determine whether the restraint of trade covenants survived the termination of the employment contract.

The court examined the enforceability of the covenant by considering the employer's legitimate interest in protecting its goodwill among its clients. It was established that the geographic restraint could be severed from the balance of the covenant, allowing the latter to remain in effect. The court found that the contract was not terminated by the defendant's acceptance of the plaintiff's repudiatory conduct, as the defendant's actions constituted acceptance of the plaintiff's breach. Consequently, the restraint of trade covenants did survive the termination of the employment contract. Given these findings, the court discharged the interlocutory injunction that restrained the defendant from providing accounting services to the plaintiff's clients.

In summary, the Federal Circuit Court of Australia held that the balance of the covenant in restraint of trade was enforceable, but the geographic restraint was not. The court further ruled that the employment contract was not terminated by the defendant's acceptance of the plaintiff's repudiatory conduct, and the restraint of trade covenants remained valid. Consequently, the interlocutory injunction was discharged, allowing the defendant to provide accounting services to the plaintiff's clients, subject to the enforceable balance of the covenant in restraint of trade.