Daley Investments Pty Limited v Melacare Industries of Australia Pty Limited

Daley Investments Pty Limited (the appellant) appealed to the New South Wales Court of Appeal against a decision of the Supreme Court of New South Wales. The dispute concerned the interpretation and enforceability of a deed of covenant entered into between the parties, which contained a restraint of trade clause. The appellant sought to restrain the respondent from carrying on a business in competition with the appellant.

The primary legal issue before the Court of Appeal was whether the restraint of trade clause in the deed was void as being contrary to public policy, and therefore unenforceable. This required the court to consider the reasonableness of the restraint in terms of its duration, geographical scope, and the nature of the business activity it sought to restrict, in order to determine if it went beyond what was necessary to protect the legitimate interests of the appellant.

The Court of Appeal, applying established principles of contract law concerning restraints of trade, found that the restraint was unreasonably broad. The court reasoned that the duration and geographical extent of the restriction were not justified by the legitimate business interests of the appellant, and that it unduly restricted the respondent's ability to earn a livelihood. Consequently, the court held that the restraint of trade clause was void and unenforceable. The appeal was dismissed.