Urban Shoemakers Pty Ltd v All Podiatry Pty Ltd

Urban Shoemakers Pty Ltd (Urban) sought an interlocutory injunction against All Podiatry Pty Ltd (All Podiatry) to restrain alleged breaches of a restraint of trade clause contained within a commercial lease agreement. The dispute concerned All Podiatry's operation of a retail footwear business from premises leased from Urban, which Urban alleged was in contravention of a clause preventing the tenant from conducting a business that competed with the landlord's existing or future businesses on adjoining premises. The matter came before Nicholas Smith J in the Supreme Court of New South Wales.

The primary legal issue before the Court was whether the restraint of trade clause in the lease was valid and enforceable. This required the Court to consider whether the clause went beyond what was reasonably necessary to protect Urban's legitimate business interests, and whether it imposed an unreasonable restriction on All Podiatry's ability to trade. The Court also had to determine if the conduct of All Podiatry constituted a breach of the clause as it was construed.

Nicholas Smith J reasoned that for a restraint of trade clause to be enforceable, it must be no wider than is reasonably necessary to protect the legitimate interests of the party seeking to enforce it. His Honour found that the clause, as drafted, was overly broad and sought to prevent competition in a manner that was not confined to the specific nature of Urban's existing or contemplated businesses. The Court considered the scope of the clause in relation to the geographical area and the types of businesses restricted, concluding that it imposed an unreasonable burden on All Podiatry. Consequently, the Court held that the restraint of trade clause was void as an unreasonable restraint of trade.

As a result of finding the restraint of trade clause to be unenforceable, Nicholas Smith J dismissed Urban Shoemakers Pty Ltd's application for an interlocutory injunction.