Legal Research
Cases
DXC Eclipse Pty Ltd v Wildsmith (No 2)

DXC Eclipse Pty Ltd v Wildsmith (No 2)

Case [2022] NSWSC 1330 30 September 2022

Restraint of Trade

Contract Formation

Parol Evidence Rule

Admissibility of Evidence

Contract Law

No judgment structure available for this case.

Type to search within this case.

Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: DXC Eclipse Pty Ltd v Wildsmith (No 2) [2022] NSWSC 1330
Hearing dates: 1, 2, 3, 4, 16 August 2022; further written submissions ending 30 August 2022
Date of orders: 30 September 2022
Decision date: 30 September 2022
Jurisdiction: Equity - Expedition List
Before: Parker J
Decision:
See [190]-[192]

Catchwords:
RESTRAINT OF TRADE – vendor of shares in company carrying on software reselling business – competition restraint – supplier solicitation restraint – employee solicitation restraint – whether vendor’s new software reselling business competitive with former business – admissibility of opinion from consultant economist – reasonableness of restraints
CONTRACT – construction – defined term – “means and includes” – Fitzgerald v Masters – parol evidence rule – exceptions – exchanges of drafts

Legislation Cited:
Competition and Consumer Act 2010 (Cth)
Evidence Act 1995, s 80
Restraints of Trade Act 1976, s 4

Cases Cited:
Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288
BHP Billiton Iron Ore Pty Ltd v National Competition Council (2008) 236 CLR 145
Codelfa Constructions Pty Ltd v State Rail Authority (1982) 149 CLR 337
Commissioner of Taxation (Cth) v Murry (1998) 193 CLR 605
DXC Eclipse Pty Ltd v Wildsmith [2022] NSWSC 512
Employsure Ltd v McMurchy [2021] NSWSC 1179
Fitzgerald v Masters (1956) 95 CLR 420
John Fairfax Publications Pty Limited v Birt [2006] NSWSC 995
Pearson v HRX Holdings Pty Ltd (2012) 205 FCR 187
Sidameneo (No 456) v Alexander [2011] NSWCA 418
Stacks Taree Pty Ltd v Marshall (No 2) [2010] NSWSC 77
Stenhouse Australia Ltd v Phillips [1974] AC 391
Veda Advantage (Australia) Pty Ltd v de Beer [2016] NSWSC 37
Walker Group Constructions Pty Ltd v Tzaneros Investments Pty Ltd (2017) 94 NSWLR 108

Category: Principal judgment
Parties: DXC Eclipse Pty Limited (Plaintiff)
Martin Wildsmith (First Defendant)
On-Key Consulting Pty Limited (Second Defendant)
Representation:
Counsel:
I Neil SC/ A Spies (Plaintiff)
D Mahendra (Defendants)
Solicitors:
Bird & Bird (Plaintiff)
Maurice Blackburn Lawyers (Defendants)

File Number(s): 2022/91079
Publication restriction: Nil

Judgment

Revised and annotated to correct errors and omissions identified by counsel for the plaintiff in the original judgment; issued 10 October 2022

This is a restraint of trade case. In 2018, the plaintiff acquired ownership of a business through the purchase of the shares of the company which conducted the business. The plaintiff now seeks to enforce restraint covenants in the purchase contracts against the defendants, who are two of the vendors.
DXC Eclipse Pty Limited (“DXC Eclipse”), the plaintiff, is part of a multi-national group of companies (“DXC Group”). The ultimate holding company for the Group is DXC Technology Company, an American company. The Group’s Australian and New Zealand operations are conducted through a group of Australian companies, the holding company for which is DXC Technologies Australia Holdings Pty Limited. DXC Eclipse is an indirectly wholly-owned subsidiary of that company.
Part of the business of the DXC Group is the supply…

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.

Continue reading DXC Eclipse Pty Ltd v Wildsmith (No 2)

Details

AGLC: DXC Eclipse Pty Ltd v Wildsmith (No 2) [2022] NSWSC 1330
Case: [2022] NSWSC 1330
Decision Date: 30 September 2022

CaseChat Overview and Summary

The case of DXC Eclipse Pty Ltd v Wildsmith (No 2) involved a dispute between the plaintiff, a company that sells software, and the defendant, its former shareholder and employee. The primary issue was the enforceability of certain restraints of trade contained in a share sale agreement. The restraints included a non-competition clause, a supplier solicitation clause, and an employee solicitation clause. The central question was whether these restraints were reasonable and necessary to protect the plaintiff's business interests, particularly in light of the defendant's entry into a competitive software reselling business. The court also considered the admissibility of expert evidence from a consultant economist and the proper construction of defined terms in the share sale agreement.

The court examined the nature and scope of the restraints, assessing whether they were necessary to protect the plaintiff's legitimate business interests, such as its goodwill and confidential information. In doing so, the court considered whether the defendant's new business was competitive with the plaintiff's existing business. The court also addressed the admissibility of the economist's opinion, determining whether it was relevant and reliable in assessing the reasonableness of the restraints. Additionally, the court considered the parol evidence rule and exceptions, particularly in relation to the exchanges of drafts between the parties, to properly interpret the defined terms in the agreement.

After considering the evidence and arguments presented, the court concluded that the non-competition and employee solicitation restraints were reasonable and necessary to protect the plaintiff's legitimate business interests. However, the court found that the supplier solicitation restraint was not necessary and therefore unenforceable. The court also accepted the economist's opinion as relevant and reliable, aiding in its assessment of the reasonableness of the restraints. As a result, the court upheld the enforceability of the non-competition and employee solicitation restraints, while striking down the supplier solicitation restraint.

The court's final orders included declarations that the non-competition and employee solicitation restraints were reasonable and enforceable, while the supplier solicitation restraint was unreasonable and unenforceable. The court did not make any other orders concerning the share sale agreement or the parties' business activities.

Orders