Mildwing v Corpcode No (7) Pty Ltd

Mildwing and another (the appellants) appealed to the New South Wales Court of Appeal against a decision of the Supreme Court of New South Wales. The dispute concerned the interpretation and enforceability of a deed of covenant entered into between the parties.

The primary legal issue before the Court of Appeal was whether the deed of covenant, which purported to restrict the appellants from carrying on a competing business, was valid and enforceable. This involved considering whether the restraint of trade clause within the deed was reasonable in its scope, duration, and geographical area, and whether it went beyond what was necessary to protect the legitimate business interests of Corpcode No (7) Pty Ltd (the respondent).

The Court of Appeal analysed the principles governing restraints of trade, noting that such covenants are prima facie void unless they can be shown to be reasonable and for the protection of some proprietary interest of the covenantee. Applying these principles, the Court found that the restraint imposed by the deed was wider than necessary to protect the respondent's business interests and was therefore void as an unreasonable restraint of trade. The Court considered the specific nature of the business and the activities sought to be restrained, concluding that the restrictions were overly broad.

Consequently, the Court of Appeal allowed the appeal, setting aside the Supreme Court's earlier orders and finding the deed of covenant to be unenforceable.