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Sidameneo (No 456) Pty Ltd v Alexander

Sidameneo (No 456) Pty Ltd v Alexander

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Case Copied 21 December 2011 44 min read

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Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation: Sidameneo (No 456) Pty Ltd v Alexander [2011] NSWCA 418
Hearing dates: 8/11/2011; 9/11/2011; 10/11/2011
Decision date: 21 December 2011
Before: Beazley JA at [1]; Basten JA at [2]; Young JA at [3]
Decision:
1. Appeal dismissed save that the question of costs below is reserved.
2. Appellant to pay the respondents' costs of the appeal.
3. Appellant to file and serve submissions with respect to its appeal on costs issues by 20 January 2012 with respondents to file any response by 3 February 2012.
4. Decision on costs below to be dealt with on the papers.
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords:
RESTRAINT OF TRADE - restrictive covenants - meaning of "proprietary" interest - whether there was a legitimate proprietary or commercial interest - whether goodwill held by each party has to be in the same industry to be protected

RESTRAINT OF TRADE - restrictive covenants - whether a covenant is reasonable reasonableness judged at date of creation but may include contemplated expansion - reasonableness depends on facts in each case - covenant in this case imposed usual minimum restriction of one year, three kilometres - legitimate interest found therefore, prima facie, it can be protected - minimum restriction allowed

DAMAGES - breach of restrictive covenant - whether operator of medical centre damaged by breach - no loss demonstrated - no damages awarded
TORTIOUS INTERFERENCE - party not liable for interfering with another's contract if it believes that that contract has come to an end - whether must hold belief reasonably - when question is one of termination, rescission or the contents of a contract, belief must be held reasonably - when party does not know of existence of contract and therefore no question of termination, etc arises, there is no need to consider reasonableness
Legislation Cited: Restraints of Trade Act 1976
Trade Practices Act 1974 (Cth)
Cases Cited: Adelaide Brighton Ltd v Ostabridge Pty Ltd [2005] NSWSC 737
Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (1995) 58 FCR 26
Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd [1973] HCA 40; 133 CLR 288
Ashcoast Pty Ltd v Whillans [2000] 2 Qd R 1
Ballachulish Slate Quarries Co Ltd v Grant (1903) 5 F (Ct of Sess) 1105
BB Australia Pty Ltd v Karioi Pty Ltd [2010] NSWCA 347; 278 ALR 105
Blakely and Anderson v de Lambert [1959] NZLR 356
Bromley v Smith [1909] 2 KB 235
Buckley v Tutty [1971] HCA 71; 125 CLR 353
Cactus Imaging Pty Ltd v Peters…

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: [2011] NSWCA 418
Decision Date: 21 December 2011

CaseChat Overview and Summary

The appeal concerned a dispute between Sidameneo (No 456) Pty Ltd and Alexander, heard by the New South Wales Court of Appeal. The core of the disagreement revolved around the enforceability of restrictive covenants contained within a contract, and whether Alexander had tortiously interfered with a contract.

The Court of Appeal was required to determine whether Sidameneo possessed a legitimate proprietary or commercial interest that warranted protection through the restrictive covenants. This involved considering whether the goodwill held by each party needed to be in the same industry for protection and whether the covenants themselves were reasonable. Furthermore, the Court had to assess whether Alexander was liable for tortious interference with a contract, specifically in circumstances where a party believes a contract has ended.

The Court found that Sidameneo did have a legitimate proprietary interest to protect, and that the restrictive covenants, imposing a usual minimum restriction of one year and three kilometres, were prima facie reasonable. Regarding the claim for damages due to breach of the restrictive covenant, the Court determined that no loss had been demonstrated by the operator of the medical centre, and therefore no damages were awarded. On the issue of tortious interference, the Court held that a party is not liable if they reasonably believe a contract has come to an end, or if they are unaware of the contract's existence.

The appeal was dismissed, with the exception of the question of costs below, which was reserved. Sidameneo was ordered to pay the respondents' costs of the appeal, and further submissions were to be filed regarding the costs issues. The decision on costs below was to be dealt with on the papers.

Orders

Orders of the court

1. Appeal dismissed save that the question of costs below is reserved.

2. Appellant to pay the respondents' costs of the appeal.

3. Appellant to file and serve submissions with respect to its appeal on costs issues by 20 January 2012 with respondents to file any response by 3 February 2012.

4. Decision on costs below to be dealt with on the papers.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

Medium Neutral Citation:	Sidameneo (No 456) Pty Ltd v Alexander [2011] NSWCA 418
Hearing dates:	8/11/2011; 9/11/2011; 10/11/2011
Decision date:	21 December 2011
Before:	Beazley JA at [1]; Basten JA at [2]; Young JA at [3]
Decision:	1. Appeal dismissed save that the question of costs below is reserved. 2. Appellant to pay the respondents' costs of the appeal. 3. Appellant to file and serve submissions with respect to its appeal on costs issues by 20 January 2012 with respondents to file any response by 3 February 2012. 4. Decision on costs below to be dealt with on the papers. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Catchwords:	RESTRAINT OF TRADE - restrictive covenants - meaning of "proprietary" interest - whether there was a legitimate proprietary or commercial interest - whether goodwill held by each party has to be in the same industry to be protected RESTRAINT OF TRADE - restrictive covenants - whether a covenant is reasonable reasonableness judged at date of creation but may include contemplated expansion - reasonableness depends on facts in each case - covenant in this case imposed usual minimum restriction of one year, three kilometres - legitimate interest found therefore, prima facie, it can be protected - minimum restriction allowed DAMAGES - breach of restrictive covenant - whether operator of medical centre damaged by breach - no loss demonstrated - no damages awarded TORTIOUS INTERFERENCE - party not liable for interfering with another's contract if it believes that that contract has come to an end - whether must hold belief reasonably - when question is one of termination, rescission or the contents of a contract, belief must be held reasonably - when party does not know of existence of contract and therefore no question of termination, etc arises, there is no need to consider reasonableness
Legislation Cited:	Restraints of Trade Act 1976 Trade Practices Act 1974 (Cth)
Cases Cited:	Adelaide Brighton Ltd v Ostabridge Pty Ltd [2005] NSWSC 737 Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (1995) 58 FCR 26 Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd [1973] HCA 40; 133 CLR 288 Ashcoast Pty Ltd v Whillans [2000] 2 Qd R 1 Ballachulish Slate Quarries Co Ltd v Grant (1903) 5 F (Ct of Sess) 1105 BB Australia Pty Ltd v Karioi Pty Ltd [2010] NSWCA 347; 278 ALR 105 Blakely and Anderson v de Lambert [1959] NZLR 356 Bromley v Smith [1909] 2 KB 235 Buckley v Tutty [1971] HCA 71; 125 CLR 353 Cactus Imaging Pty Ltd v Peters…