Tavener v Sheridan [2000] FCA 219

Tavener v Sheridan [2000] FCA 219

Clause 6, properly construed, validly restrained the appellants for five years from engaging in a four-wheel drive tour business on Norfolk Island or a business similar to Jimbo's 4WD Tours as carried on immediately before sale. The five-year restraint was not unreasonable in the circumstances, particularly because the goodwill depended heavily on booking relationships in a small island community. However, Advance Group Charter Tours was not a four-wheel drive tour business and was not a business of a similar kind: it used a non-four-wheel-drive bus, formed part of seven-day group tour packages, focused more on historical and general island touring, did not compete directly with the...

Jurisdiction
Australia
Judgment Date
07 March 2000
Procedural Posture
Appeal From the Supreme Court of Norfolk Island Concerning Enforcement of a Covenant in Restraint of Trade in an Agreement for Sale of Business / Appeal and Cross Appeal
Outcome
Appeal allowed; cross-appeal dismissed; trial orders set aside and declaration substituted; no injunction granted.
Legal Topics
['enforceability of Restraint of Trade Covenant' 'construction of Sale of Business Agreement' 'reasonableness of Five Year Restraint' 'breach of Covenant' 'whether Business Was of a Similar Kind']
['contract Law' 'restraint of Trade' 'sale of Business'] ['enforceability of Restraint of Trade Covenant' 'construction of Sale of Business Agreement' 'reasonableness of Five Year Restraint' 'breach of Covenant' 'whether Business Was of a Similar Kind']

Case Brief

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Procedural Posture

Appeal From the Supreme Court of Norfolk Island Concerning Enforcement of a Covenant in Restraint of Trade in an Agreement for Sale of Business / Appeal and Cross Appeal

Legal Issues

  1. 1 ['Whether clause 6 of the agreement for sale was valid and enforceable as a covenant in restraint of trade.' 'Whether the five-year restraint was reasonable.' "Whether Advance Group Charter Tours was a four-wheel drive tour business or a business of a kind similar to Jimbo's 4WD Tours." "Whether the trial judge's injunction should stand." "Whether the respondents' cross-appeal on costs should be allowed."]

Ratio Decidendi

Clause 6, properly construed, validly restrained the appellants for five years from engaging in a four-wheel drive tour business on Norfolk Island or a business similar to Jimbo's 4WD Tours as carried on immediately before sale. The five-year restraint was not unreasonable in the circumstances, particularly because the goodwill depended heavily on booking relationships in a small island community. However, Advance Group Charter Tours was not a four-wheel drive tour business and was not a business of a similar kind: it used a non-four-wheel-drive bus, formed part of seven-day group tour packages, focused more on historical and general island touring, did not compete directly with the...

Court Disposition

Appeal allowed; cross-appeal dismissed; trial orders set aside and declaration substituted; no injunction granted.

Orders

  • ['The appeal be allowed.' "The orders made by Beaumont CJ in the Supreme Court of Norfolk Island on 2 November 1999 be set aside and, in lieu thereof, it be ordered that clause 6 of the Agreement for Sale between the defendants as vendors and the plaintiffs as purchasers, dated 8 January 1999, is valid and...