Mode Motor Pty Ltd v Col Crawford Pty Ltd

Mode Motor Pty Ltd (the appellant) 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 of a clause within a written agreement for the sale of a motor vehicle dealership. The appellant sought to enforce certain terms of the agreement, which the respondent resisted.

The primary legal issue before the Court of Appeal was whether the respondent had breached a restraint of trade clause contained within the sale agreement. Specifically, the court had to determine the geographical scope and duration of the restraint, and whether the respondent's conduct fell within its proscribed activities. The court also considered whether the restraint was reasonable and therefore enforceable in equity.

The Court of Appeal, comprising Kirby P, Glass JA, and Priestley JA, analysed the wording of the restraint clause in light of the surrounding circumstances and the established legal principles governing restraints of trade. The court found that the clause, as drafted, was overly broad in its geographical reach and duration, rendering it unreasonable and therefore unenforceable. The court applied the principles that restraints of trade are prima facie void unless they are shown to be reasonable and for the protection of legitimate business interests.

The appeal was dismissed, and the orders of the Supreme Court were affirmed.