Molodysky v Lanstel Pty Limited

In *Molodysky v Lanstel Pty Limited* [1989] NSWCA 147, the New South Wales Court of Appeal considered a dispute between the appellant, Mr. Molodysky, and the respondent, Lanstel Pty Limited. The core of the disagreement concerned the interpretation and enforceability of a restrictive covenant contained within a deed of settlement. Mr. Molodysky sought to enforce this covenant against Lanstel, which had allegedly breached its terms.

The primary legal issue before the Court of Appeal was whether the restrictive covenant, which purported to prevent Lanstel from engaging in certain business activities, was valid and enforceable. This involved determining whether the covenant went beyond what was reasonably necessary to protect the legitimate interests of Mr. Molodysky and whether it constituted an unreasonable restraint of trade. The court also had to consider the principles governing the construction of such covenants within settlement deeds.

The Court of Appeal ultimately found that the restrictive covenant was void for being an unreasonable restraint of trade. Applying established legal principles, the court reasoned that the scope of the restriction was too broad and not confined to protecting a specific, legitimate interest of the covenantee. The covenant sought to prevent Lanstel from engaging in a wide range of activities that were not directly related to the subject matter of the original dispute settled by the deed, thereby imposing an undue burden on Lanstel's ability to conduct its business. The court held that for a restraint of trade to be valid, it must be no wider than is necessary to protect the proprietary interests of the party seeking to enforce it.

Consequently, the Court of Appeal dismissed Mr. Molodysky's appeal, upholding the primary judge's decision that the restrictive covenant was unenforceable.