PRD Realty Pty Ltd & Anor v Expectation Pty Ltd - [2005] HCATrans 164

[2005] HCATrans 164

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Brisbane No B47 of 2004

B e t w e e n -
PRD REALTY PTY LTD
First Applicant
GORDON DOUGLAS
Second Applicant
and
EXPECTATION PTY LTD
Respondent
Application for special leave to appeal

KIRBY J
HAYNE J

TRANSCRIPT OF PROCEEDINGS

AT BRISBANE ON MONDAY, 21 MARCH 2005, AT 10.59 AM

MR P.D.T. APPLEGARTH, SC: May it please the Court, I appear with my learned friend, MR A.M. POMERENKE, for the applicants. (instructed by Thynne & Macartney)

MR W. SOFRONOFF, QC: May it please the Court, I appear with my learned friend, MR M.J. BURNS, for the respondent. (instructed by Clewett, Corser & Drummond)

KIRBY J: Yes, thank you.

MR APPLEGARTH: Your Honours, the principle at stake in this case is that damages are assessed for a loss actually suffered, and that this requires account to be taken of the financial benefits gained from the acquisition of property that is acquired as a contravention of the Act.

HAYNE J: The principle at stake here is, what is the factual base on which these principles are to be applied, is it not, Mr Applegarth?

MR APPLEGARTH: It is, your Honour. If I can turn then immediately to that point ‑ ‑ ‑

HAYNE J: How do we know what that factual base is when the Full Court said there has to be a retrial?

MR APPLEGARTH: Well, the Full Court said that, but, with respect to the Full Court, the Full Court did not, in our submission, pay regard to the fact that the respondent at trial, when faced with arguments based upon Flemington Properties and Manwelland, chanced its forensic arm by not contesting the submissions and seeking findings of fact. So we say to the argument advanced by the respondent that this matter is ripe for determination, that there were ‑ ‑ ‑

KIRBY J: Yes, but, as Justice Hayne has said, until you get the fact‑finding accurately and properly made, the application of the legal principles is impossible. That was what the Full Court said. By reason of the gross delay in the giving of the reasons and the unsatisfactory character of the reasons one is given, that just had not been properly done.

MR APPLEGARTH: Your Honour, we are not here to defend those aspects, but what we are here to defend is the argument that there were no findings of fact, when a party did not seek findings of fact. So we submit that, far from the resolution of these important questions of law being diverted by an inquiry by the court into the facts, the essential facts are these. The trial judge found, based upon exhibits and submissions and calculations that the respondents point to in their submissions, that there was a net income, after payment of borrowing costs and expenses, of $4 million.

KIRBY J: But he found that after…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2005] HCATrans 164
Decision Date

CaseChat Overview and Summary

PRD Realty Pty Ltd and another party (the plaintiffs) brought proceedings against Expectation Pty Ltd (the defendant) in the Supreme Court of New South Wales. The dispute concerned the interpretation and enforceability of a restraint of trade clause within a franchise agreement. The plaintiffs sought declarations that the restraint was void and unenforceable, and an injunction to prevent the defendant from enforcing it.

The central legal issue before the court was whether the restraint of trade clause, which purported to prevent the plaintiffs from engaging in a similar business for a period of two years after the termination of the franchise agreement within a specified geographical area, was reasonable and therefore legally enforceable. This required the court to consider the scope of the restraint, the legitimate business interests the defendant sought to protect, and whether the restraint went beyond what was necessary to protect those interests.

The court applied the established legal principles governing restraints of trade, which are presumed to be void as contrary to public policy unless the party seeking to enforce the restraint can demonstrate its reasonableness. Reasonableness is assessed by balancing the interests of the party imposing the restraint in protecting their legitimate business concerns against the interests of the restrained party in pursuing their trade or profession, and the public interest in free competition. The court found that the restraint was wider than necessary to protect the defendant's legitimate business interests, particularly in relation to the geographical scope and the breadth of activities prohibited.

Consequently, the Supreme Court of New South Wales declared the restraint of trade clause to be void and unenforceable and granted the injunction sought by the plaintiffs.

Orders