Hunter v Koulouris [2011] NSWSC 887

Hunter v Koulouris [2011] NSWSC 887

The five year restraint agreed in the Deed of 21 July 2008 was no more than reasonably necessary to protect the Plaintiffs. The business had substantial goodwill, an exclusive distributorship, valuable customer connections and a limited market; Mr Koulouris knew of the US supplier's insistence on a five year non-compete, received substantial benefits and releases, had legal advice, and continued to have customer contact after commencing The Sign Division. The appropriate focus was the time required to sever his relationship with Johnsons' customers, and he breached the restraint for himself and through the Second and Third Defendants.

Jurisdiction
Australia
Judgment Date
30 August 2011
Procedural Posture
Proceedings for Injunctive Relief Enforcing a Restraint of Trade Covenant / Final Hearing After Interlocutory Injunction Proceedings Were Settled
Outcome
The restraint was held reasonable and breached; the Defendants should be restrained until 20 July 2013, with parties to bring in Short Minutes.
Legal Topics
['buy Out of One Partner in Business' 'non Competition Covenant' 'reasonableness of Restraint Period' 'protection of Goodwill and Customer Connection' 'restraints of Trade Act 1976']
['trade and Commerce' 'restraint of Trade' 'equity'] ['buy Out of One Partner in Business' 'non Competition Covenant' 'reasonableness of Restraint Period' 'protection of Goodwill and Customer Connection' 'restraints of Trade Act 1976']

Case Brief

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Procedural Posture

Proceedings for Injunctive Relief Enforcing a Restraint of Trade Covenant / Final Hearing After Interlocutory Injunction Proceedings Were Settled

Legal Issues

  1. 1 ['Whether the First Defendant breached the non-competition covenant in the Deed dated 21 July 2008, including through the Second and Third Defendants.' 'Whether the five year restraint period was reasonable and not against public policy.' "Whether the appropriate focus was the time required to sever the First Defendant's relationship with customers of the business."]

Ratio Decidendi

The five year restraint agreed in the Deed of 21 July 2008 was no more than reasonably necessary to protect the Plaintiffs. The business had substantial goodwill, an exclusive distributorship, valuable customer connections and a limited market; Mr Koulouris knew of the US supplier's insistence on a five year non-compete, received substantial benefits and releases, had legal advice, and continued to have customer contact after commencing The Sign Division. The appropriate focus was the time required to sever his relationship with Johnsons' customers, and he breached the restraint for himself and through the Second and Third Defendants.

Court Disposition

The restraint was held reasonable and breached; the Defendants should be restrained until 20 July 2013, with parties to bring in Short Minutes.

Orders

  • ['The parties should bring in Short Minutes to reflect these reasons.']