Neville Jeffress Advertising Pty Ltd v Barlow

Neville Jeffress Advertising Pty Ltd, the purchaser of the goodwill of an advertising business, sought an interim prohibitory injunction against Patrick Barlow, the former managing director of the business, for breaching a covenant in restraint of trade. The Supreme Court of Tasmania was tasked with deciding whether the covenant was valid, and if so, whether an interim injunction should be granted to prevent further breaches. Clause 12 of the agreement between the parties stipulated that Barlow would not engage in any advertising business with the plaintiff's clients or potential clients for three years after his employment ended. Barlow argued that the clause was void as against public policy, that damages would be an adequate remedy, and that the balance of convenience favoured him. Neville Jeffress Advertising Pty Ltd countered that the covenant was valid and necessary to protect its investment in the business's goodwill.

The Court considered the nature of the restrictive covenant and whether it provided reasonable protection to Neville Jeffress Advertising Pty Ltd without being injurious to the public. It noted that while any contract in restraint of trade is void prima facie, such restraints may be justified in specific circumstances. The Court found that the covenant was not a general prohibition on Barlow's ability to work in the advertising industry but was limited to the clients of Neville Jeffress Advertising Pty Ltd. Given the evidence presented, the Court was satisfied that there was a probability that Neville Jeffress Advertising Pty Ltd would succeed in the principal proceedings if the covenant was deemed valid. The balance of convenience also favoured granting the interim injunction, as the plaintiff risked significant loss of goodwill if the covenant was breached further. The Court granted the interim prohibitory injunction, pending further hearings to determine its terms.