Eastland Technology Australia & Ors v Whisson & Ors

In the matter of *Eastland Technology Australia & Ors v Whisson & Ors*, the High Court of Australia considered a dispute concerning the enforceability of certain restrictive covenants contained within a deed of settlement. The applicants, Eastland Technology Australia and its related entities, sought to restrain the respondents, former employees and directors, from engaging in conduct that allegedly breached these covenants.

The central legal issues before the High Court were whether the restrictive covenants were void for uncertainty and, alternatively, whether they were void as an unreasonable restraint of trade. The applicants contended that the covenants, which restricted the respondents from soliciting clients and engaging in competing business activities, were sufficiently clear and reasonable to be enforceable. The respondents argued that the language used in the covenants was too vague to ascertain the precise scope of the restrictions, and that even if certain aspects were clear, the restrictions imposed were broader than necessary to protect the applicants' legitimate business interests.

The High Court analysed the wording of the restrictive covenants, applying established principles of contractual interpretation and the law relating to restraints of trade. Their Honours considered the context in which the covenants were made, namely a deed of settlement resolving prior litigation. The Court found that certain aspects of the covenants were indeed uncertain, rendering them unenforceable. Furthermore, the Court determined that even those covenants which might have been considered sufficiently certain were, in their breadth, unreasonable restraints of trade, as they extended beyond what was necessary to protect the applicants' proprietary interests. The principles applied included the requirement for covenants to be no wider than necessary to protect a legitimate business interest and the strict scrutiny applied to restraints of trade, particularly those imposed in a settlement context.

Consequently, the High Court dismissed the applicants' application for an injunction, finding that the restrictive covenants in question were unenforceable.