Cosoff Cudmore Knox v David Peter Rydon [2007] NSWSC 198

New South Wales Supreme Court

CITATION : Cosoff Cudmore Knox v David Peter Rydon [2007] NSWSC 198

HEARING DATE(S) : 02/03/07

JUDGMENT DATE : 2 March 2007

JURISDICTION : Equity Division

JUDGMENT OF : White J

EX TEMPORE JUDGMENT DATE : 2 March 2007

DECISION : See paragraphs 54 and 55 of judgment.

CATCHWORDS : RESTRAINT OF TRADE – Solicitor – Clause in partnership agreement – Application for interlocutory injunction restraining former partner from providing legal advice to clients of partnership, or enticing any person employed by the partnership from continuing employment – Whether clause valid – Balance of convenience – Injunction in the terms sought would not serve the purposes of the clause – Limited injunction ordered.

LEGISLATION CITED : Corporations Act 2001 (Cth)

Lindner v Murdock's Garage (1950) 83 CLR 628 Bridge v Deacons [1984] AC 705 CASES CITED : Rouen & Ors v Ryan [2001] NSWCA 230 Oswald Hickson Collier & Co v Carter-Ruck [1984] AC 720 Edwards v Warboys [1984] AC 724 Sharah v Healey [1982] 2 NSWLR 223

Cosoff Cudmore Knox PARTIES : v David Peter Rydon

FILE NUMBER(S) : SC 1562/07

COUNSEL : Plaintiff: D A Smallbone Defendant: N J Kidd

SOLICITORS : Plaintiff: Tresscox Lawyers Defendant: Sachs Gerace Lawyers

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

WHITE J

Friday, 2 March 2007

1562/07 Cosoff Cudmore Knox v David Peter Rydon JUDGMENT 1 HIS HONOUR: This is an application by the partners of a firm of solicitors, Cosoff Cudmore Knox, for an interlocutory injunction to restrain the defendant, Mr Rydon, a former partner in that firm, from providing legal advice to any person who was a client of the firm within the twelve months immediately prior to Mr Rydon's ceasing to be a partner. An interlocutory injunction is also sought to restrain Mr Rydon from enticing, or attempting to entice, any person who was an employee of that firm in that period. 2 The defendant entered into a partnership agreement with the other partners of the firm in June 2005. The business of the partnership was that of a legal practice. It was common ground that Mr Rydon did not make a capital contribution to the firm on being admitted as a partner. Nor was he entitled to an interest in the assets of the partnership, including its goodwill. He was entitled to such share in the net profits of the partnership as might be agreed upon from time to time. He was not required to contribute to any losses, whether of capital or otherwise, and was entitled to an indemnity from persons described as "Capital Partners" in respect of any losses. 3 The partnership was determinable, inter alia, by Mr Rydon's giving not less than two months' notice in writing of termination to the managing partner. Clause 22 of the partnership agreement contained a covenant against competition. Clause 22.3 provided: "In consideration of the Capital Partners and the other partners in the Partnership entering into this Agreement, and in order to protect the goodwill of the Partnership, the New Partner will not (either directly or indirectly) commit or be interested in the commission of each Prescribed Act for each Prescribed Period, subject to the provisions of clause 22.8 ."