Sheridan v Tavener [1999] NFSC 5

Sheridan v Tavener [1999] NFSC 5

Upon its proper construction, the restraint in clause 6 validly and reasonably prohibits the defendants, for five years from the date of sale, from engaging in not only a four-wheel drive tour business but also any business of a similar kind, being one substantially overlapping with and in competition with the business sold. The defendants' operation of Advance Tours involves sufficient overlap in sites, method, and customer attraction to be a business of a similar kind, thus constituting a breach of the covenant, warranting injunctive relief.

Jurisdiction
Australia
Judgment Date
02 November 1999
Procedural Posture
Claim for Injunction and Ancillary Relief Following Sale of Business / Final Hearing of Application for Final Injunction; Further Issues Reserved
Outcome
Claim for injunctive relief granted; restraint of trade covenant declared valid and enforceable; defendants restrained for five years from engaging in similar tour business; costs reserved; further relief stood over for directions.
Legal Topics
['sale of Business' 'reasonableness of Restraint' 'interpretation of Restrictive Covenants' 'breach of Restraint of Trade' 'competition Law']
['contract Law' 'restraint of Trade'] ['sale of Business' 'reasonableness of Restraint' 'interpretation of Restrictive Covenants' 'breach of Restraint of Trade' 'competition Law']

Case Brief

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Procedural Posture

Claim for Injunction and Ancillary Relief Following Sale of Business / Final Hearing of Application for Final Injunction; Further Issues Reserved

Legal Issues

  1. 1 ['Proper construction of a contractual covenant in restraint of trade upon sale of a business' 'Whether the covenant restraining engaging in a four-wheel drive tour business, or a business of similar kind, is reasonable and enforceable' 'Whether the defendants breached the covenant by operating a new tour business']

Ratio Decidendi

Upon its proper construction, the restraint in clause 6 validly and reasonably prohibits the defendants, for five years from the date of sale, from engaging in not only a four-wheel drive tour business but also any business of a similar kind, being one substantially overlapping with and in competition with the business sold. The defendants' operation of Advance Tours involves sufficient overlap in sites, method, and customer attraction to be a business of a similar kind, thus constituting a breach of the covenant, warranting injunctive relief.

Court Disposition

Claim for injunctive relief granted; restraint of trade covenant declared valid and enforceable; defendants restrained for five years from engaging in similar tour business; costs reserved; further relief stood over for directions.

Orders

  • ['Declare that clause 6 of the agreement for sale between defendants as vendors and plaintiffs as purchasers dated 8 January 1999 is valid and enforceable in accordance with its terms.' "Order that the defendants be restrained for a period of five years from 8 January 1999 from owning, participating or being...