Martin Lewis Shipwrights Pty Ltd v Hutton

The New South Wales Court of Appeal considered a dispute between Martin Lewis Shipwrights Pty Ltd and Hutton. The case concerned the interpretation and enforceability of a restrictive covenant contained within a deed of settlement.

The primary legal issue before the Court of Appeal was whether the restrictive covenant, which purported to prevent the respondent from engaging in shipbuilding or ship repair within a specified radius of the appellant's business premises, was void for uncertainty and/or as an unreasonable restraint of trade.

The Court analysed the principles governing restrictive covenants, particularly in the context of a settlement deed. It considered the extent to which such covenants could be enforced, focusing on whether the restrictions imposed were wider than necessary to protect the legitimate business interests of the covenantee. The Court examined the geographical scope and the nature of the prohibited activities to determine if they were reasonably defined and proportionate.

The Court of Appeal found that the restrictive covenant was void for uncertainty and was an unreasonable restraint of trade. Consequently, the appeal was dismissed.