Lloyds Ships Holdings Pty Ltd v. Davros Pty Ltd & Ors [1987] FCA 102

Lloyds Ships Holdings Pty Ltd v. Davros Pty Ltd & Ors [1987] FCA 102

Clause 39 restraint of trade is an unreasonable restraint not reasonably necessary to protect the covenantee's interest due to its breadth—prohibiting 'shipbuilding of any description'—thus invalid. However, applicants are entitled to limited equitable protection against solicitation of former customers. Respondents' representations and conduct in use of business names constituted misleading and deceptive conduct under s.52 and actionable defamation in the USA, for which liability is established; issues of damages adjourned.

Parties
First Applicant: Lloyd's Ships Holdings Pty. Ltd.; Second Applicant: Queensland Merchant Holdings Limited; First Respondent: Davros Pty. Ltd.; Second Respondent: Lloyd Corporation (a firm); Third Respondent: Keith Bernie Lloyd; Fourth Respondent: Lloyd's Exclusive Charters Pty. Ltd.
Jurisdiction
Australia
Judgment Date
06 March 1987
Procedural Posture
Contract/commercial and Trade Practices Federal Court Proceeding / Judgment After Trial on Liability; Trial of Damages and Account of Profits Adjourned Sine Die
Outcome
Restraint of trade clause declared invalid as unreasonable and not enforceable; limited equitable relief granted; respondents found liable for misleading or deceptive conduct and passing off; findings of liability for defamation and s.52 conduct arising from US statements; damages not determined and to be addressed...
Legal Topics
Restraint of Trade Clause Validity, Rescission of Settlement Deed, Misleading or Deceptive Conduct, Passing Off, Goodwill Protection, Breach of Contract, Injunctive Relief, Laches and Acquiescence
Contract Restraint of Trade Defamation Trade Practices Restraint of Trade Clause Validity Rescission of Settlement Deed Misleading or Deceptive Conduct Passing Off +4 more

Case Brief

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Parties

Lloyd's Ships Holdings Pty. Ltd.

First Applicant

Queensland Merchant Holdings Limited

Second Applicant

Davros Pty. Ltd.

First Respondent

Lloyd Corporation (a firm)

Second Respondent

Keith Bernie Lloyd

Third Respondent

Lloyd's Exclusive Charters Pty. Ltd.

Fourth Respondent

Procedural Posture

Contract/commercial and Trade Practices Federal Court Proceeding / Judgment After Trial on Liability; Trial of Damages and Account of Profits Adjourned Sine Die

Legal Issues

  1. 1 Is the restraint of trade clause void for uncertainty, public policy, or as an unreasonable restraint of trade?
  2. 2 If valid, did the restraint of trade clause end upon rescission?
  3. 3 Are the applicants prevented from relief due to delay, laches, or acquiescence?

Ratio Decidendi

Clause 39 restraint of trade is an unreasonable restraint not reasonably necessary to protect the covenantee's interest due to its breadth—prohibiting 'shipbuilding of any description'—thus invalid. However, applicants are entitled to limited equitable protection against solicitation of former customers. Respondents' representations and conduct in use of business names constituted misleading and deceptive conduct under s.52 and actionable defamation in the USA, for which liability is established; issues of damages adjourned.

Court Disposition

Restraint of trade clause declared invalid as unreasonable and not enforceable; limited equitable relief granted; respondents found liable for misleading or deceptive conduct and passing off; findings of liability for defamation and s.52 conduct arising from US statements; damages not determined and to be addressed...

Orders

  • Restraint clause struck down as void and unenforceable.
  • Injunction or limited relief to restrain solicitation of former customers granted.