JUDGE:	GILLARD J.
WHERE HELD:	MELBOURNE
DATE OF HEARING:	24-27, 30 and 31 May 2005
DATE OF JUDGMENT:	30 June 2005
CASE MAY BE CITED AS:	Tropeano & anor v Riboni & ors
MEDIUM NEUTRAL CITATION:	[2005] VSC 229

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Sale of business agreement – Accountancy practice – Claim for balance of purchase price – Claim for money due pursuant to promissory note – Counter-claim alleging breaches of contract – Allegation of misleading conduct – Restraint of trade clause – Indefinite duration – Clause valid – Breach of restraint clause – Damages.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr I. Upjohn	KCI Lawyers
For the First Defendant	In person

TABLE OF CONTENTS

Parties................................................................................................................................................... 2

The Dispute......................................................................................................................................... 3

The Issues............................................................................................................................................ 6

A. The Claim.................................................................................................................................. 6
B. Counterclaim............................................................................................................................. 8

Mr Riboni’s claims............................................................................................................................. 8

I. Accuracy of Information....................................................................................................... 16
II. Accuracy of Schedules to Agreement.................................................................................. 18
III. Unusual and Non-recurring Items.................................................................................... 19
IV. Business not carried on in ordinary and usual course...................................................... 20
V. Conserving Assets............................................................................................................... 22

Summary – Breaches of Contract.................................................................................................. 23

Misrepresentation............................................................................................................................ 23

I. Fees Received and Profit to 30 June 1988............................................................................. 24
II. Oral assertion that the Gross Income was greater.............................................................. 25
III. Unusual or non-recurring items....................................................................................... 25
IV. Work in progress................................................................................................................ 25
V. Mrs Rose Tropeano............................................................................................................. 26
VI. Edward Bottega.................................................................................................................. 26
VII. Atlantis International...................................................................................................... 26

Summary............................................................................................................................................ 27

Negligence Claim............................................................................................................................. 27

Restraint of Trade............................................................................................................................. 28

Breach................................................................................................................................................. 28

Restraint of Trade clause................................................................................................................ 30

Rescission.......................................................................................................................................... 39

Damages............................................................................................................................................. 47

Conclusion......................................................................................................................................... 50

HIS HONOUR:

In this proceeding the plaintiffs seek payment by the first defendant of the balance of the price of the sale of an accountancy business sold by them to the first defendant, together with interest. The first defendant filed a counterclaim seeking damages in respect of a number of causes of action arising out of his purchase of the business. The plaintiffs also seek declaratory and other orders against the second defendant, who is the wife of the first defendant, alleging that the first defendant has fraudulently transferred his interest in land to his wife for the purpose of defeating the plaintiffs’ claim.

Parties

The first plaintiff, Samuel John Tropeano (“Mr Tropeano”) is an accountant who during the period 1986-1989 practised in partnership with the second plaintiff, in an accountancy business (“the firm”) situated at 312 High Street, Northcote. The second plaintiff, Rock Tempone (“Mr Tempone”) is also an accountant and from 1986 until 1989 practised in partnership with the first plaintiff. Their accountancy business was conducted under the firm name of Tempone Tropeano and Associates. They sold the business to the first defendant by contract dated 17 January 1989. They engaged solicitors Juliano Ford and Co to act for them in the sale of their business.

The first defendant, Paolo Ricardo Riboni (“Mr Riboni”) is also an accountant. Mr Riboni was aged…

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 Tropeano v Riboni

Details

AGLC: Tropeano v Riboni [2005] VSC 229
Case: [2005] VSC 229
Decision Date: 30 June 2005

CaseChat Overview and Summary

In the Federal Court of Australia, Tropeano, the plaintiff, sued Riboni, the defendant, over a dispute arising from the sale of an accountancy practice. The primary contention was the plaintiff's claim for the balance of the purchase price, as well as an additional sum allegedly due under a promissory note. The defendant, in turn, lodged a counter-claim, asserting breaches of the original sale agreement and accusing the plaintiff of misleading conduct. Additionally, the defendant argued that the restraint of trade clause, which had an indefinite duration, was valid and that the plaintiff had breached this clause, seeking damages for such a breach.

The court was required to decide whether the restraint of trade clause, which imposed an indefinite restriction on the plaintiff's ability to engage in similar business activities, was enforceable. It also had to determine the validity of the plaintiff's claims for the balance of the purchase price and the amount due under the promissory note. Furthermore, the court had to assess the merits of the defendant's counter-claims regarding breaches of the sale agreement and misleading conduct. Finally, if the restraint of trade clause was found to be valid, the court had to consider the appropriate damages to be awarded for its breach.

The court found that the restraint of trade clause, despite its indefinite duration, was enforceable as it was necessary to protect the legitimate business interests of the defendant. It ruled that the clause was not unconscionably restrictive and was therefore valid. The court dismissed the plaintiff's claims for the balance of the purchase price and the amount due under the promissory note, finding that these claims were not substantiated by the evidence presented. Regarding the counter-claims, the court found that the defendant had not proven the allegations of breaches of the sale agreement or misleading conduct. Finally, the court determined that the plaintiff had indeed breached the restraint of trade clause and awarded the defendant damages for this breach.

The court ordered the defendant to be awarded damages for the breach of the restraint of trade clause. The plaintiff's claims for the balance of the purchase price and the amount due under the promissory note were dismissed. The defendant's counter-claims regarding breaches of the sale agreement and misleading conduct were also dismissed. The court did not find it necessary to award any further relief to either party.

Orders