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Transonic v Tilakee

Transonic v Tilakee

Case [2021] VSC 413 9 July 2021

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

S ECI 2021 02302

TRANSONIC TRAVEL PTY LTD (ACN 103 179 326)	Plaintiff
v
TILAKEE NOMINEES PTY LTD (ACN 125 723 748) AS TRUSTEE FOR THE MSA TRUST	First Defendant
MASON STUART ADAMS	Second Defendant
SHAKESPEARE FINANCIAL SERVICES PTY LTD (ACN 009 351 615)	Third Defendant

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JUDGE:	Nichols J
WHERE HELD:	Melbourne
DATE OF HEARING:	8 July 2021
DATE OF RULING:	9 July 2021
CASE MAY BE CITED AS:	Transonic v Tilakee
MEDIUM NEUTRAL CITATION:	[2021] VSC 413

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INJUNCTIONS – Interlocutory – Restraint of Trade Covenant – Form of order – Where proposed form of injunction too ambiguous or too wide – Serious question to be tried – Quia timet – Optus Networks Pty Ltd v City of Boroondara [1997] 2 VR 318, followed – Daniel (A Pseudonym) v Secretary to the Department of Justice (2015) 45 VR 266, followed.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr JT Rush RFD QC Mr M Tehan	Minter Ellison
For the First and Second Defendants	Mr D Gration	James Partners Lawyers
For the Third Defendant	No appearance

HER HONOUR:

Introduction and background

By an agreement made in May 2018 the plaintiff (Transonic) purchased 60% of the shares held by the first defendant (Tilakee) in a company called Keygate Holdings Pty Ltd, which operates a travel agency business and trades as “Asia Escape Holidays” (Keygate). Transonic is part of the Helloworld Travel Limited group of companies which is a global travel organisation headquartered in Australia, with retail, corporate and wholesale elements.

The share sale agreement (SSA) was in writing and was between Tilakee as vendor, Mason Adams (the second defendant, who was then the sole director of Tilakee and operated its travel business) (Adams) as the guarantor of the vendor’s obligations under the agreement, Transonic as purchaser and Helloworld Travel Limited, which is related to Transonic. The SSA was completed on 31 May 2018 when Transonic paid $2,000,000 to Tilakee and transferred to it 171,000 shares in Helloworld, the value of which was said, on this application, to have been $880,000 at the time of the transaction.

The SSA contained vendors restraints, intended to protect the goodwill of the business against competition from Tilakee and Adams. In this proceeding Transonic seeks injunctive relief (both final and interlocutory) to enforce certain of those restraints.[1]
[1]Transonic also alleges various breaches of the SSA and related misleading conduct, which are not relevant to the present application.

By Summons dated 1 July 2021, Transonic seeks orders restraining Tilakee and Adams (together, the defendants) from engaging in conduct in breach or threatened breach of certain of the restraints. After this application was issued and before it came on for hearing the defendants consented to orders that, until the hearing and determination of the proceeding or further order, they not take any steps to:

(a) establish a new business that is the…

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.

Continue reading Transonic v Tilakee

Details

AGLC: Transonic v Tilakee [2021] VSC 413
Case: [2021] VSC 413
Decision Date: 9 July 2021

CaseChat Overview and Summary

In the matter of Transonic v Tilakee, the plaintiff, Transonic, sought an interlocutory injunction to enforce a restraint of trade covenant against the defendant, Tilakee, as part of an ongoing employment dispute. The case was heard in the Supreme Court of Victoria. The primary issue before the Court was whether the proposed form of the injunction was sufficiently clear and narrowly tailored to enforce the restraint of trade covenant or whether it was too ambiguous or overly broad.

The Court examined the legal principles established in Optus Networks Pty Ltd v City of Boroondara and Daniel (A Pseudonym) v Secretary to the Department of Justice. The Court held that for an interlocutory injunction to be granted, the form of the order must not be ambiguous or overly wide. The Court also noted that if there was a serious question to be tried, an injunction might not be appropriate. Applying these principles, the Court found that the proposed form of the injunction was too ambiguous and too wide, making it unsuitable for enforcement at this stage of the proceedings.

Consequently, the Court refused to grant the injunction in the form proposed by Transonic. The Court determined that the injunction, as proposed, was not narrowly tailored enough to address the specific concerns related to the restraint of trade covenant. The Court emphasised that any injunction must be precise enough to avoid potential harm to the defendant's rights and interests while still protecting the plaintiff's legitimate business interests. The Court's decision was based on the need for clarity and precision in the form of the injunction to ensure it would not unfairly prejudice the defendant.

Orders