Premier Pizza Distributors Pty Limited v Baingold Pty Limited & Ors [2004] NSWSC 1218

New South Wales Supreme Court

CITATION : Premier Pizza Distributors Pty Limited v Baingold Pty Limited & Ors [2004] NSWSC 1218 HEARING DATE(S) : 27, 18 October and 1 November 2004 JUDGMENT DATE : 14 December 2004 JURISDICTION: Equity Division JUDGMENT OF : Windeyer J at 1 DECISION : Plaintiff entitled to injunction restraining further breach of deed of restraint. Claims against first, third, fourth and fifth defendants dismissed

CATCHWORDS : TRADE AND COMMERCE - restraint of trade - sale of business - defendants sold business to plaintiffs subject to clause that they (excepting the third defendant) would not engage in similar business within 10 kilometres within three years - where third defendant set up rival business - whether lease guarantee/financial gifts constituted breach of contract - meaning of "involvement" in business LEGISLATION CITED : Trade Practices Act 1974 (Cth) Premier Pizza Distributors Pty Limited (Plaintiff) Baingold Pty Limited (First Defendant) PARTIES : Gioacchino Faraone also known as Jack Faraone (Second Defendant) John Faraone also known as Giovanni Faraone (Third Defendant) Maria Faraone (Fourth Defendant) GGM Specialised Distributors Pty Limited (Fifth Defendant) FILE NUMBER(S) : SC 1937 of 2004 COUNSEL : Ms P M Sibtain (Plaintiff) Mr D L Warren (Defendants) SOLICITORS : Diamond Peisah & Co (Plaintiff) G Cerin (Defendants)

- 8 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

WINDEYER J

TUESDAY 14 DECEMBER 2004.

1937/04 PREMIER PIZZA DISTRIBUTORS PTY LTD V BAINGOLD PTY LTD & ORS JUDGMENT Facts 1 Premier Pizza Distributors Pty Ltd (Premier Pizza), then Gumleaf Property Pty Ltd, by contract dated 4 June 2003, purchased from Baingold Pty Ltd (Baingold) its business as a supplier of packaging and ingredients for the pizza industry. The purchase price was $410,000 comprising $337,100 for goodwill and $72,890 for plant and equipment. 2 The directors of Baingold were the second defendant Gioacchino Faraone (Jack) and his wife Maria Faraone (Maria). The third defendant Giovanni Faraone (John) is the son of Jack and Maria. The fifth defendant GGM Specialised Distributor Pty Ltd (GGM) is a company owned and controlled by John. The sole director and sole shareholder of Premier Pizza is Mrs Beck. She is the wife of Mr Beck, who was and is the manager of the company. 3 The agreement was completed on 3 July 2004. It included a term that Baingold would not engage in conduct derogating from the purchaser's right to obtain the full benefit of the goodwill of the business purchased. The agreement for sale included a term which required covenants to be given by Jack and Maria, they being the directors of Baingold by deed. That deed was duly executed and contained the following terms: In consideration of the Purchaser having entered into the Contract with the Vendor the Covenantors as the Key Persons in the Contract covenant and agree with the Purchaser that they will not, without the prior written consent of the Purchaser, be involved in a business which is the same or a similar type of business to the Business during the Restraint Time within the Restraint Distance The Covenantors must not during the Restraint Time engaged [sic] in any conduct derogating from the Purchaser's right to obtain the full benefit of the goodwill of the Business pursuant to the Contract