Creamoata Ltd v Rice Equalization Association Ltd [1953] HCA 40

H. C. or A. 1953. SX

SypNrEy,

April 15-17; July 23.

ams A.C.J., Fullagar and Kitto JJ.

HIGH COURT (1953.

[HIGH COURT OF AUSTRALIA.]

CREAMOATA LIMITED é i g 4 APPELLANT ;

DEFENDANT, AND

THE RICE EQUALIZATION ASSOCIATION

LIMITED : i} RESPONDENT. PLAINTIFF,

ON APPEAL FROM THE SUPREME COURT OF NEW SOUTH WALES.

Deed—Release in equity—Deed executed by association of rice millers and member —Effect of resolution passed at meeting of board of directors of association that

member should resign from association—No formal deed of release executed.

Contract—Restraint of trade—Validity—Reasonableness—Implied term—Incorpor- ation of rice equalization association—Agreement by all millers with association as to percentages of harvest to be sought from Rice Marketing Board—Covenant by millers not to obtain or attempt to obtain during currency of agreement any alteration of allocation from board without consent of association—Definition of allocation to mean proportionate part of annual harvest of paddy rice to which

millers from time to time entitled.

Upon harvesting, the whole of the crop of rice grown in New South Wales, except for some small portions exempted for various purposes, becomes vested in a board constituted under the Marketing of Primary Products Act 1927-1940 (N.S.W.) and is disposed of by that board. In 1946 all the eight millers who purchased the harvest from the board incorporated R., a company limited by guarantee, and each became a member thereof and entered into similar deeds. The purpose of the deed was to institute a scheme to equalize the proceeds of milled rice, and to agree upon the proportions of the harvest that each would seek from the board. Under it the whole of the rice available for sale was sold to the eight millers in the proportions so agreed upon. This agreement was embodied in negative covenants contained in the deed each had respectively entered into with R. In 1949 C., a company, was, upon application to the board, given an allocation of 1,500 tons, or approximately three per cent of the 1949 harvest available for sale, a condition imposed being that C. would build a mill at Yenda. The mill was completed in November 1949, and C. then applied to the board for a further allocation from the 1950 harvest. After some negotiations, during which it was agreed that C.'s allocation as a member of R. should be five and one-half per cent