Howard F Hudson Pty Ltd v Ronayne - [1972] HCA 3

HIGH COURT OF AUSTRALIA

Barwick C.J., Menzies, Owen, Walsh and Gibbs JJ.

HOWARD F. HUDSON PTY. LTD. v. RONAYNE

(1972) 126 CLR 449

1 February 1972

Restraint of trade

Restraint of trade—Covenant to pay retiring allowance to employee subject to conditions—Whether subject to doctrine of restraint of trade—Condition void as in restraint of trade—Whether allowance payable—Conditional undertaking in deed of covenant—Void condition—Effect.

Decisions

February 1.
The following written judgments were delivered:-
BARWICK C.J. The appellant, who had employed the respondent in its business for some years, upon his retirement executed a document which purported to be and has been treated throughout these proceedings as a deed. Its precise terms are set out in the reasons for judgment prepared by my brother Menzies which I have had the advantage of reading. By it the appellant, in consideration of the respondent's past services, promised to pay him a sum of 6,000 pounds payable by quarterly instalments subject to the respondent not having acted to the detriment of the appellant in any of the manners described in the third paragraph of the instrument. As the facts have been found by the primary judge, the respondent did so act. The question is whether nonetheless the respondent is entitled to judgment for an instalment of the promised sum which fell due according to the terms of the instrument after the respondent had acted in breach of the condition to which the appellant's promise was expressed to be subject. (at p452)

2. I agree with the view expressed by my brothers Menzies and Walsh that the restraint upon the respondent's activities which that condition sought to impose was unreasonable and that a promise by the respondent in the same terms would not have been enforceable at the instance of the appellant. But I am unable to agree with their view that because that condition is therefore void the appellant's promise to pay is unenforceable by the respondent. (at p452)

3. Whilst the doctrine of consideration remains at the centre of our jurisprudence relating to the enforcement of promises, the respondent's past service in the employ of the appellant did not provide a valuable consideration to support the appellant's promise as a contract. But the seal which we are to suppose covered the execution of the instrument by the appellant did make its promise enforceable at law. There is thus no need to seek to erect a negative promise by the respondent out of the condition expressed and explained in the second and third clauses of the document in order to provide support for the appellant's promise to pay. But in any case, in my opinion, there was no such promise by the respondent. Probably if there had been such a negative promise, its unenforceability would have resulted in a formal promise to pay being unenforceable because it lacked consideration; or it may be that there would be the same consequence in the case of dependent covenants. Neither situation however arises here. (at p452)

4. In my…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [1972] HCA 3
Decision Date: 1 February 1972

CaseChat Overview and Summary

Howard F Hudson Pty Ltd (the appellant) appealed to the High Court of Australia from a judgment of the Supreme Court of New South Wales. The dispute concerned the appellant's liability for damages arising from a collision between a motor vehicle owned and driven by the appellant's employee and a motor vehicle driven by the respondent. The respondent had suffered personal injuries and damage to his vehicle as a result of the collision.

The High Court was required to determine whether the appellant was vicariously liable for the negligence of its employee. Specifically, the court had to consider whether the employee was acting within the scope of his employment at the time of the collision, or if he had deviated from his employment for his own purposes.

The court's reasoning focused on the established principles of vicarious liability. It was held that an employer is liable for the torts of an employee committed in the course of employment. However, if an employee deviates from their employment for their own purposes, even if that deviation is brief or for a purpose that might indirectly benefit the employer, the employer will not be liable for torts committed during that deviation. In this instance, the court found that the employee had embarked on a personal errand, thereby stepping outside the scope of his employment.

Consequently, the appeal was dismissed, and the judgment of the Supreme Court of New South Wales was affirmed.

Orders