DXC Eclipse Pty Ltd v Wildsmith (No 2)

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.