Geraghty v Minter

[1979] HCA 42

HIGH COURT OF AUSTRALIA

Barwick C.J., Gibbs, Stephen, Mason and Aickin JJ.

GERAGHTY v. MINTER

(1979) 142 CLR 177

20 September 1979

Restraint of Trade

Restraint of Trade—Restraint by agreement—Partnership—Deed of partnership—Admission of partners to established business—Covenant in restraint of trade binding new partners on dissolution of partnership—Validity—Reasonableness—Agreement on dissolution of partnership by &hich assets assigned to some former partners but goodwill reserved to all former partners.

Decisions

Sept. 20.
The following written judgments were delivered:-
BARWICK C.J. My brother Mason, in the reasons for judgment which he has prepared in this appeal, sets out the terms of cl. 21 of the partnership arrangements between the parties, which clause has been held to be valid by the Supreme Court of Queensland, both at first instance and on appeal. My brother also recites all the circumstances of the case relevant to the resolution of this appeal. I have no need to set out the terms of the restrictive clause or to supplement what my brother has written as to those facts and circumstances. (at p179)

2. Whether or not the clause is no more than a reasonable restraint of trade raises a familiar question. The principles by the employment of which the validity or otherwise of the clause is to be determined are well known. So far as the present case is concerned, the question is: did the clause provide at the time it was given no more than reasonable protection of the interest of those in whose favour it was entered into, bearing in mind its possible operation according to its terms properly construed? (at p179)

3. Treating each husband and wife as together one party, the parties were unequal partners sharing assets and profits in the ratio of sixty to forty. The partnership was terminable by either party at short notice and, in any case, instanter on a notice given in due time pursuant to cl. 3 which my brother Mason has set out in full in his reasons. The partnership arrangements provided that, on the termination of the partnership, the assets of the partnership should be realized and appropriate distribution made of the proceeds. But the partnership arrangements provided that, on termination of the partnership for any reason, the firm name should remain the sole property of the major partner. Thus, on the termination of the partnership, the assets of the partnership, including the goodwill (which could not include the use of the name of the business) would be realized and the net proceeds distributed ratably to the partners, according to their respective interests. (at p179)

4. The benefit of the restrictive clause in this case clearly enough was not personal to the majority partner. The benefit of the clause was therefore assignable along with the goodwill: Jacoby v. Whitmore (1883) 49 LT 335, at p 337 , per Brett M.R. Indeed, it formed part of the goodwill and might be expected to increase its worth. Though given to the major partner, it enured for the benefit of…