Gadde & Gadde

In *Gadde & Gadde* [2023] NSWSC 1189, the Supreme Court of New South Wales considered an application by the plaintiff, Mr. Gadde, for an interlocutory injunction to restrain the defendant, Ms. Gadde, from continuing to operate a business that allegedly breached a restraint of trade clause in a deed of sale. The dispute arose from the sale of a dental practice, where the restraint of trade clause purported to prevent Ms. Gadde from practising dentistry within a 5-kilometre radius of the sold practice for a period of two years. Mr. Gadde alleged that Ms. Gadde's new practice, located approximately 2.5 kilometres from the sold practice, constituted a breach of this clause.

The primary legal issue before Gill J was whether the restraint of trade clause was valid and enforceable. This required the Court to determine if the restraint was reasonable in its scope, both geographically and temporally, and if it went no further than was necessary to protect the legitimate proprietary interests of the purchaser, Mr. Gadde. The Court also had to consider whether the public interest was adversely affected by the restraint.

Gill J applied the well-established principles governing restraints of trade, noting that such clauses are prima facie void as being contrary to public policy unless they can be shown to be reasonable. The Court examined the nature of the dental practice sold, the geographic area covered by the restraint, and the duration of the restriction. His Honour found that the restraint was not reasonably necessary for the protection of Mr. Gadde's legitimate interests, particularly given the specific nature of the dental services offered and the availability of other dental practices in the vicinity. The Court concluded that the restraint was wider than necessary to protect the goodwill of the business sold and therefore was void and unenforceable.

Consequently, the Court dismissed Mr. Gadde's application for an interlocutory injunction.