Gates and Anor (trading as Elias Gates and Associates) v Strange

The New South Wales Court of Appeal considered a dispute between Elias Gates and Associates, represented by Gates and another party, and Mr. Strange. The core of the disagreement concerned the alleged breach of a restraint of trade clause contained within an employment agreement.

The Court was required to determine whether the restraint of trade clause was valid and enforceable, and if not, whether it should be severed from the remainder of the agreement. Specifically, the Court had to assess if the geographical scope and duration of the restraint were reasonable in protecting the legitimate business interests of Elias Gates and Associates, or if they went too far and unduly restricted Mr. Strange's ability to earn a living.

In its reasoning, the Court applied established principles of contract law concerning restraints of trade. It considered the nature of the business, the position held by Mr. Strange, and the potential harm that his competition could cause to his former employer. The Court ultimately found that the restraint of trade clause, as drafted, was wider than necessary to protect the legitimate interests of Elias Gates and Associates and was therefore void. The Court declined to sever the offending parts of the clause, holding that the entire restraint was unenforceable.