Creak v Ford Motor Company of Australia Ltd

1. [1]

   GLEESON JA and KIRK JA: We agree with the orders proposed by White JA and, subject to what follows, with his Honour’s reasons. The following observations are directed to the issue of restraint of trade, as raised by grounds 4-7 of the amended notice of appeal.

2. [2]

   The common law restraint of trade doctrine applies if there is a “restraint” in the relevant sense, if it is a restraint of “trade” in the relevant sense, and if the restraint of trade in question is not of a species which falls outside the operation of the common law doctrine: note Peters (WA) Ltd v Petersville Ltd (2001) 205 CLR 126; [2001] HCA 45 at [14]-[19]. If the doctrine does apply then it is necessary to ask both whether the restraint is reasonable as between the parties, in that it is no wider than is reasonably necessary to protect some legitimate interest of the covenantee, and whether the restraint is against the public interest: see eg Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co [1894] AC 535 at 565; Buckley v Tutty [1971] HCA 71; (1971) 125 CLR 353 at 376. At common law the onus of proof for the former issue lies on the covenantee, and for the latter lies on the covenantor: see authority gathered in JD Heydon, The Restraint of Trade Doctrine (4th ed, 2018, LexisNexis Butterworths), 34-35. The burden of persuasion no doubt is allocated the same way (as to the difference between burdens of proof and persuasion, see below at [25]-[27]). Issues of severance may then arise along with, under New South Wales law, the possibility of reading down pursuant to the Restraints of Trade Act 1976 (NSW).

3. [3]

   Here, based on prior English and Australian first instance authority, the primary judge held that the restraint imposed by cl 2.2(a) of the Deed fell within an exceptional category to which the doctrine did not apply. As White JA indicates at [106] below, it was appropriate that her Honour follow earlier Australian first instance authority out of comity. However, like White JA, we respectfully disagree with aspects of the approach taken in that authority.

4. [4]

   The relevant proposition can be traced back to the judgment in Panayiotou v Sony Music Entertainment (UK) Ltd [1994] EMLR 229 (the George Michael case). Parker J held there that a contractual restraint entered in settlement of a dispute about another contractual restraint “does not attract the doctrine of restraint of trade” (at 347). Based on authority relating to compromises of other types of dispute, his Lordship said that there “is a clear public interest in upholding genuine and proper compromises” (at 345). He referred to “powerful public policy reasons” against a litigant being able to take advantage of the restraint of trade doctrine to rid themselves of the substituted restraint that they had agreed to in order to resolve the earlier dispute (at 346). He said (ibid):

5. [5]

   There are two overlapping public interest arguments raised here: the desirability of upholding settlements of disputes per se, and the desirability of facilitating settlements of disputes. The former relates to all types of disputes. The latter – to the extent it goes beyond the former – relevantly relates in particular to disputes about restraints of trade, where otherwise it may be difficult to resolve disputes about restraints of trade if any subsequent restraints agreed were themselves fully open to challenge as a restraint.

6. [6]

   As four members of the High Court noted in Peters (WA) Ltd v Petersville Ltd at [19], the George Michael decision suggests that a “genuine and proper compromise” of a dispute respecting an alleged restraint of trade may fall outside the scope of the restraint of trade doctrine, such that the subsequent restraint does not require justification under that doctrine. It was unnecessary to resolve the point in that case.

7. [7]

   In 2002 the English Court of Appeal considered a dispute between two entities over use of the acronym “WWF”: World Wide Fund for Nature v World Wrestling Federation Entertainment Inc (2002) 54 IPR 145; [2002] EWCA Civ 196. The parties had been involved in a series of disputes around the world, mainly in the context of applications by the Federation to register trade marks. There had been litigation in Switzerland. In 1994 an agreement was reached which involved restrictions on the Federation’s use of the acronym and the Fund agreeing to withdraw all pending legal actions. The Fund later brought proceedings successfully seeking to enforce restraints in that agreement. The Court rejected the Federation’s argument that the restraints were unenforceable as a restraint of trade.

8. [8]

   The disputes resolved by the settlement agreement were not about pre-existing covenants in restraints of trade; the parties did not have a pre-existing contractual relationship. Perhaps for that reason the Court did not refer to the George Michael case. White JA quotes the key passages of the Court of Appeal’s judgment below at [112]. The Court said at [48] that as regards restraints arising from “a settlement of a genuine dispute” there is a presumption that the restraints are reasonable as between the parties. It is for the covenantor, seeking to avoid the agreement, to show that there is something justifying application of the restraint doctrine, such as that the original dispute was contrived, or there was no reasonable basis for the rights claimed, or it was “otherwise contrary to the public interest”. This approach thus holds that the restraint of trade doctrine can still apply to settlement agreements, but effectively says that there is a presumption that the restraint is reasonable in the parties’ interests, thus reversing the usual burden. The judgment is not necessarily inconsistent with the George Michael proposition that the restraint doctrine does not apply at all to settlements of disputes about restraints, because the case was not addressing that more specific issue.

9. [9]

   In Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Noack (2004) 71 NSWLR 212; [2004] NSWSC 347 a personal and political dispute had arisen between two trade union officials, which led to litigation, and in turn to a finding of contempt being made against one of those officials, Mr Noack. An internal union disciplinary process was then commenced which was resolved by an agreement recorded in a deed. Part of the agreement was that Mr Noack agreed with the union that he would not thereafter seek any elected office in the union. He later did so in breach of his promise. The union sought to enforce the promise, in response to which Mr Noack submitted that it was unenforceable as a restraint of trade. Nicholas J rejected that contention, holding first that it was not a restraint of trade (at [44]-[47]). Secondly, in reliance on the George Michael case, he held that the promise was of a type to which the restraint doctrine did not apply (at [48]-[57]).

10. [10]

    In fact, the Noack decision went further than George Michael, as there is nothing to suggest that the first dispute – which had been settled by the deed – involved issues of restraint of trade. It is not apparent that his Honour realised that that was so. It may be relevant in that regard that Mr Noack was not legally represented. Noack also went further than World Wide Fund – which was not cited – in that Nicholas J held that the restraint doctrine did not apply at all to settlement agreements.

11. [11]

    The Court of Appeal of Singapore considered the issue in 2007 in Man Financial (S) Pte Ltd v Wong Bark Chuan David [2007] SGCA 53; [2008] 1 SLR(R) 663. The discussion was in obiter as the Court held that the agreement containing the impugned restraint was not contained in a settlement agreement in the relevant sense (at [40]-[41]). Nevertheless, the Court concluded that there were “compelling reasons in favour of the approach” adopted in George Michael (at [61]). It held that the public policy in favour of upholding genuine settlement or compromise agreements trumped the public policy manifest in the doctrine of restraint of trade, so long as two conditions were met: (a) the settlement was of a prior dispute over a restraint of trade in an existing contract (as opposed to settlement of disputes generally); and (b) the settlement was not “tainted by one or more vitiating factors” (at [65]). The latter condition seemed to overlap with identification of what constituted a genuine settlement, for that was said to be “a settlement or compromise agreement that is not rendered either void or voidable by vitiating factors” (at [43]).

12. [12]

    An argument based on George Michael was raised in the Supreme Court of this State in Metcash Limited v Jardim (No 3) (2010) 273 ALR 407; [2010] NSWSC 1096. Ball J held that the principle from that case did not apply, as the first dispute (which had been settled) concerned termination of a contract and not the enforceability of a restraint in the contract. As there had been no compromise reached in relation to the restraint there was no reason why the restraint of trade doctrine should not apply. This decision appears inconsistent with Noack insofar as it limited the relevant proposition to cases where the settled dispute involved controversy relating to restraint of trade.

13. [13]

    The issue was then raised before Ball J again in a subsequent case, Properties Northside Pty Ltd t/as Raine & Horne Manly/Freshwater v Pickering [2015] NSWSC 310. In that case a real estate agent was subject to post-employment restraints. The agent left the agency, which sought to enforce the restraints, in response to which he argued the restraints were unenforceable. The litigation was settled by a deed which contained somewhat different restraints. The agency subsequently alleged that the agent had breached the settlement deed, including the restraints. The agent argued the restraints in the deed were unenforceable.

14. [14]

    Ball J held that the deed was a genuine compromise of a dispute about the original restraints and, as such, outside the scope of the restraint of trade doctrine. His Honour referred to George Michael and Noack, and said at [46] that it was appropriate to follow the decision of Noack (in fact, as referred to above, Noack goes beyond George Michael). In any event, Ball J appeared to agree with the George Michael approach, at least insofar as it related to assessment of what was reasonable between the parties, saying as follows:

15. [15]

    His Honour’s approach is somewhat similar to that adopted in World Wide Fund, at least insofar as it suggests that a settlement might still be impugned based on being contrary to the public interest. His Honour may adopt a more rigid position as regards reasonableness between the parties, as he appears to view that as conclusively determined by the compromise, whereas the English Court of Appeal spoke in terms of a presumption.

16. [16]

    In this case White JA adopts an approach similar to that in World Wide Fund insofar as his Honour suggests that in a case where there has been a settlement, by parties legally represented, there is an “evidentiary onus” on the challenger to establish that the restraint is not reasonable as between the parties, although the legal onus remains on the party defending the restraint (at [124]).

17. [17]

    The approaches taken in these cases to restraints imposed in agreements entered as “genuine and proper compromises” of disputes are thus as follows:

    1. (1)

       the restraint of trade doctrine does not apply at all (Noack);

    2. (2)

       the doctrine does not apply at all at least if the previous dispute involved controversy about restraints of trade (George Michael, Man Financial, note also Metcash);

    3. (3)

       the covenantor is unable to argue that the restraint is unreasonable as between the parties, but may still argue that it is contrary to the public interest (Properties Northside);

    4. (4)

       there is some degree of reversal of the onus of proof on the issue of whether the restraint is unreasonable as between the parties, such that it is borne by the covenantor (World Wide Fund; White JA in this case).

18. [18]

    For our part, we disagree with approaches (1), (2) and (3). In our view they give insufficient weight to the public interest in limiting restraints of trade. The doctrine gives effect to public policy, doing so in a way which overrides contractual freedom: see eg Peters American Delicacy Co Ltd v Patricia’s Chocolates & Candies Pty Ltd (1947) 77 CLR 574 at 590-591; [1947] HCA 62. The fact that the parties have reached an agreement a second time is not of itself a promising basis for suggesting that the doctrine is excluded, subject to consideration of the strength of the public interest relating to settlements.

19. [19]

    The public policy against restraints of trade is not only vindicated by asking the secondary question of whether the restraint is contrary to the public interest. The prior question of whether the restraint is reasonable as between the parties, which is most obviously directed towards the preservation of party autonomy, also manifests a concern about the public interest. So much is reflected in the seminal discussion by Lord Macnaghten in Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co [1894] AC 535 at 565 (emphasis added):

20. [20]

    The point was clearly explained by Walsh J in Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288; [1973] HCA 40 (at 307, emphasis added, citation omitted):

21. [21]

    The italicised sentence was quoted and approved by four members of the High Court in Peters (WA) v Petersville Ltd at [27]. In that case the High Court rejected an argument that contracts which absorb the capacity of a covenantor, rather than sterilise it, were outside the restraint doctrine: at [34]-[37], [52]. The joint judgment regarded that argument as turning on whether there was some countervailing public policy so significant that it meant that the general rule of striking down restraints of trade unless they can be justified should be overridden.

22. [22]

    It is “no doubt true that there is a public interest in the resolution of disputes”: Attwells v Jackson Lalic Lawyers Pty Ltd (2016) 259 CLR 1; [2016] HCA 16 at [52]. That public interest encompasses both strands identified above at [5], namely favouring the upholding the settlement of disputes and facilitating the resolution of disputes about restraints of trade. But that public interest is not so strong as necessarily and always to override the public policy requiring restraints of trade to be justified. Parties cannot override that public policy by agreement; that is the very point of the doctrine. If they cannot do it in their first agreement, there is no reason they should necessarily be able to do so in a second agreement resolving some dispute about the first. Thus an exclusion of the doctrine altogether – whether for all settlement agreements (the first approach) or even just those involving disputes about restraints (the second approach) – is not justified.

23. [23]

    Further, to take the third approach – adopted in Properties Northside – of conclusively presuming that the agreement is reasonable as between the parties still insufficiently recognises the public purpose underlying the general rule. Although it would still be open to argue that the restraint was contrary to the public interest, there is force in the view expressed in an eminent text some years ago that often little more than lip service is paid to this requirement once it is established that a restraint is reasonable as between the parties: DW Grieg and JLR Davis, The Law of Contract (Law Book, 1987), 1108. And, as explained, the requirement of being reasonable between the parties itself manifests public policy reaching beyond the concerns of the parties themselves. An unreasonable restraint disadvantages not only the restrained party but also the community insofar as it is denied the competitive benefit of the person being able to carry out their trade.

24. [24]

    The fourth approach, involving some degree of reversal of the burden of proof or persuasion, is closer to an acceptable balance of the competing considerations, at least in cases where the original dispute was about a restraint of trade. If it was not, then the public interest in resolving disputes simpliciter is no more of a trump than it is for any other relevant interest.

25. [25]

    In order to address the merits of this approach it is necessary to clarify a distinction between burdens of proof and persuasion. Insofar as the issue is just the onus of proof, whether legal or evidential, it relates to proof of facts: see eg R v S (Stephen Paul) [2006] 2 Cr App R 23; [2006] EWCA Crim 756 at [20] (CA); JD Heydon, Cross on Evidence (LexisNexis, 13th edition), [7001]; see also, by way of illustration, MZAPC v Minister for Immigration and Border Protection (2021) 273 CLR 506; [2021] HCA 17 at [35], [39], [60]. Thus “onus as a determining factor of the whole case can only arise if the tribunal finds the evidence pro and con so evenly balanced that it can come to no such conclusion”: Robins v National Trust Co Ltd [1927] AC 515 at 520 (PC).

26. [26]

    The difference between the legal onus of proof and an evidentiary onus (as opposed to a “tactical” one) is that the latter involves an obligation to show that there is sufficient evidence to raise an issue such as to require determination; once that has been done, it falls to the party bearing the legal onus to make out the relevant facts: note eg discussion C R Williams, “Burdens and Standards in Civil Litigation” (2003) 25 Syd Law Review 165 at 166-169; Cross on Evidence at [7005] and [7210]; Commissioner of Police v Zisopoulos (2020) 299 IR 314; [2020] NSWCA 236 at [61]-[62], [74]-[75], [96]-[99].

27. [27]

    Issues of legal characterisation or evaluation arise for consideration after the facts have been found. For such issues, one side or the other may bear the burden of persuasion in the sense that if the court is not persuaded that some particular conclusion should be reached then the side bearing the burden of persuasion loses on the point: note eg Maloney v The Queen (2013) 252 CLR 168; [2013] HCA 28 at [355]. To speak of an evidentiary onus is suggestive of a focus just on facts. To speak of a presumption one way of the other – as was done in World Wide Fund – is no doubt to cast the burden of both proof and persuasion on the party who must rebut the presumption.

28. [28]

    In the context at hand, to address only onus of proof does relatively little to move the dial one way or the other, as it merely relates to fact-finding. On the other hand, to shift the persuasive burden to a covenantor as regards what is reasonable between the parties – in other words, to presume that a restraint is reasonable in that sense unless the Court is persuaded to the contrary – may be seen to move the dial too much, undervaluing the important public policy against restraints of trade.

29. [29]

    A preferable way of approaching the issue is to treat the settlement of a dispute about a restraint of trade as of itself a legitimate interest to which a restraint may be directed. That interest may be additional to any other legitimate interest of the covenantee, the subject of the first restraint of trade. A restraint imposed in such a situation is still subject to the general rule requiring justification, and with the usual principle as to the onus of proof and persuasion applying. However, part of the analysis will then be whether the restraint was reasonable as between the parties, and not contrary to the public interest, taking account of the legitimate interest of the covenantee in being able to resolve disputes with some degree of certainty. Some restraints which might otherwise have been unenforceable might survive scrutiny because it was a reasonable means of resolving the prior dispute. Others may be so excessive, in all the circumstances, that even given that consideration it cannot be justified.

30. [30]

    We would only apply this approach to settlements of disputes involving controversy about a restraint of trade. If the first agreement did not involve restraints then there is little reason to say that a subsequent agreement which for the first time imposes some restraint should not be subject to conventional legal scrutiny.

31. [31]

    In this case, at noted by White JA at [110], the prior dispute did not relate to the validity of restraints of trade. That being so, in our view there is no occasion to apply some distinctive approach and the restraints here fall to be justified in the ordinary way. Even so, for the reasons referred to by White JA at [123]-[128], the restraints were reasonable as between the parties and not contrary to the public interest taking account of all the circumstances.

32. [32]

    WHITE JA: This is an appeal from orders of the Common Law Division (Schmidt AJ) in proceedings brought by the respondent, Ford Motor Company of Australia Ltd (“Ford”) against a company, Tallevine Pty Ltd (“Tallevine”) and its sole director and shareholder, Mr Ian Creak (Ford Motor Company of Australia Ltd v Tallevine Pty Ltd (as trustee for Thornleigh Trading Trust) (in liq) [2022] NSWSC 83).

33. [33]

    From late 2010 until 19 February 2014, Tallevine was an authorised Ford dealer for the marketing, sale and service of Ford vehicles, and parts and accessories, marketed in Australia under the trademarks or business names registered or owned by Ford or any of its related bodies corporate. It was so appointed under a Dealer Agreement, which is undated but commenced in 2010.

34. [34]

    Tallevine operated its business from premises located on Pennant Hills Road, Thornleigh.

35. [35]

    On 20 May 2014, Ford commenced proceedings in the County Court of Victoria against Tallevine. Ford alleged that the Dealer Agreement had been terminated on 19 February 2014 pursuant to a confidential settlement agreement between the parties entered into on 21 October 2013. Ford alleged that the termination of the Dealer Agreement constituted a revocation of Tallevine’s approval by Ford to use any “Trade Mark” (as defined in the Dealer Agreement). It sought an order for specific performance of Tallevine’s obligations under certain clauses of the Dealer Agreement. It alleged that, within 14 days after termination of the Dealer Agreement, Tallevine had been required to remove from its premises all signs indicating that it was an authorised Ford dealer for any Ford Marketed Product (as defined) and including the name Ford, and bearing or including any of the Trade Marks (as defined). It also sought to enforce other provisions of the Dealer Agreement applicable from termination of the Dealer Agreement, including a term requiring Tallevine to discontinue advertising itself as an authorised Ford dealer and discontinuing the use of any Trade Marks. Ford sought an injunction restraining Tallevine from displaying signage and using Trade Marks, one of which was the name Ford in a device as depicted below:

36. [36]

    The other was the following Trade Mark:

37. [37]

    By its Defence, Tallevine admitted to having entered into a settlement agreement on 21 October 2013 but denied that it was binding. This was on the grounds that Ford had breached that agreement in unreasonably failing to extend the sale period provided in that agreement and had engaged in unconscionable conduct. It also alleged that the settlement agreement had been entered into under economic duress. It brought a counter-claim which fleshed out the allegations of economic duress. Its counter-claim asserted that, by letter dated 9 September 2013, Ford purported to give notice of its intention to terminate the Dealer Agreement, alleging certain breaches by Tallevine and Mr Creak unless those breaches were remedied. It alleged that Ford required Tallevine to have certain convictions that had been recorded against Mr Creak and Tallevine in the Local Court of New South Wales on 28 August 2013 overturned or quashed on appeal, or finally dismissed, within 30 days (that is by 9 October 2013).

38. [38]

    Mr Creak pleaded that neither Tallevine nor he was in breach of the Dealer Agreement and that the findings of the Local Court were demonstrably erroneous and appellable. He pleaded that Ford agreed to extend the period for having the findings overturned until 21 October 2013 which deadline was practicably impossible to meet. He pleaded that the convictions were overturned in the District Court in or about November 2014.

39. [39]

    Prior to a mediation of those claims, Mr Creak served a draft Statement of Claim proposed to be filed in the Federal Court that asserted breaches by Ford of the Trade Practice (Industry Codes) Franchising Regulations 1998 (Cth) in withholding its consent to the transfer of Tallevine’s business to Maximotion Pty Ltd (which later changed its name to Fleet Serv Pty Ltd (“Fleet Serv”) (J [10(4)])).

40. [40]

    The claims and counter-claims in the Victorian County Court proceedings were settled by a deed of settlement made on 16 September 2015. The construction of that agreement and the validity of its restraint provisions are the central issues in this appeal. It is convenient to set out the relevant terms at the outset.

41. [41]

    The parties to the deed were Tallevine, Mr Creak, and Ford.

42. [42]

    Clause 2.1(a) provided:

43. [43]

    Clause 2.1(b) and (c) provided that Tallevine would file an appearance and the parties would submit final orders to be made by consent by the Supreme Court in the form of attached Minutes and would cooperate with each other in requesting the Supreme Court to make the consent orders.

44. [44]

    Clause 2.2(a) provided:

45. [45]

    Ford undertook to consider any application made to it by a person to be appointed as an authorised Ford dealer at the Pennant Hills premises. It undertook to pay Tallevine $100,000 if it had not appointed a person to be an authorised Ford dealer at the premises by 31 January 2016 (cl 2.3).

46. [46]

    The deed provided for mutual releases. Clauses 3.1, 4.1 and 5.1 provided:

47. [47]

    The “Dispute” was defined as the dispute between Ford and Tallevine the subject of the County Court proceeding including Tallevine’s counter-claim in that proceeding.

48. [48]

    Clause 9 provided:

49. [49]

    The deed was governed by the laws of Victoria (cl 15).

50. [50]

    The Minute of Consent Orders attached to the deed are set out as an appendix to these reasons. Appendix A (6289441, pdf) The reference in those orders to the defendant is to Tallevine. The reference to the plaintiff is to Ford.

51. [51]

    The orders required Tallevine to take positive steps as specified in orders 1, 2 and 3 and restrained Tallevine from engaging in the conduct specified in orders 4, 5, 6, 7, 8, 9, 11 and 12. Mr Creak relies on order 10. It is convenient to quote orders 4, 6, 7, 8, and 10 at this point.

52. [52]

    The proceeding contemplated by the deed was commenced in the Supreme Court of New South Wales. Orders in accordance with the Minutes attached to the deed were made on 28 October 2015.

53. [53]

    On 10 March 2017, Ford filed a Summons in fresh proceedings charging Tallevine with being in contempt of the orders of 28 October 2015. On 7 August 2017, Tallevine filed a cross-claim in those proceedings by which it alleged that Ford had repudiated the deed of settlement of 16 September 2015, or that it had validly rescinded that deed for misrepresentation by Ford or for mistake. It contended that, by reason of the termination or avoidance of the deed, the consent orders entered pursuant to the deed should be set aside. It also reagitated allegations in connection with the first settlement agreement of 21 October 2013 and claimed that Ford had repudiated and unlawfully withheld from it the benefit of the Dealer Agreement.

54. [54]

    Tallevine was ordered to provide $150,000 as security for costs of its cross-claim. It provided the security on 12 January 2018. On 29 September 2020, Ford’s application for Mr Creak to be joined to those proceedings was refused (Ford Motor Company of Australia Ltd v Tallevine Pty Ltd (as Trustee for the Thornleigh Trading Trust) [2019] NSWSC 1914 at [125]). On 12 April 2021, Tallevine went into members’ voluntary liquidation. On 31 May 2021, its cross-claim was dismissed. On 20 September 2021, Fagan J assessed the costs of the cross-claim at $295,000. His Honour ordered payment of the $150,000 Tallevine had given as security for costs to Ford (Ford Motor Company of Australia Ltd v Tallevine Pty Ltd (in liq) [2021] NSWSC 1192 at [7], [9]). Ford did not pursue its contempt proceeding against Tallevine after it was wound up.

55. [55]

    Prior to this, on 24 May 2019, Ford had commenced new proceedings against Tallevine and Mr Creak. After Tallevine was wound up, the proceeding continued against Mr Creak alone. It is the judgment in those proceedings that is the subject of this appeal. In those proceedings, it was alleged and admitted that, on or about 30 June 2017, Tallevine sold its business to Fleet Serv. It was alleged and admitted that, from the sale date, Fleet Serv had been under the exclusive control and direction of Mr Creak and had carried on, and was continuing to carry on, Tallevine’s business from the Pennant Hills premises. It was alleged that Fleet Serv was using domain names and websites including “www.raptor4wd.com” and “www.phauto.com.au”. After pleading the terms of the deed of 17 September 2015, Ford alleged that any conduct engaged in by Tallevine in breach of the consent orders attached to the deed and made by the Court on 28 October 2015 was also a breach of the deed by Mr Creak, and any conduct engaged in by Fleet Serv after 10 October 2016, which the orders restrained Tallevine from doing, was a breach of the deed by Mr Creak.

56. [56]

    The defendants denied that that was the effect of the deed, but said in the alternative:

57. [57]

    The issues in the appeal primarily concern the proper construction and validity of the deed of 16 September 2015. There are also issues concerning the asserted liability of Mr Creak for costs ordered against Tallevine in respect of its cross-claim in the 2017 proceedings which was not pursued after Tallevine was wound up.

58. [58]

    On about 31 January 2016, Ford paid the sum of $100,000 to Tallevine pursuant to cl 2.3(b) of the deed.

59. [59]

    As recorded by the primary judge (at J [20]), Mr Creak admitted the following facts:

60. [60]

    Paragraphs 24, 37, 43, 52, 58, 60 and 62 of the Statement of Claim (referred to at [35], [37], [43] and [44]-[46] quoted at [59] above) alleged:

61. [61]

    The primary judge found the following facts:

62. [62]

    The appellant submitted that the primary judge erred in finding [at 10(1)] that there was any dispute concerning “raptorisation” of vehicles prior to entry into the settlement deed. (“Raptorisation” refers to the fitting of accessories including grilles, wheels and decals to present a lower performance standard vehicle as a higher performance vehicle sold under Ford’s ‘Raptor’ line.) Tallevine commenced manufacturing and selling its range of “Raptor” branded accessories and parts for Ford vehicles when it was still an authorised Ford dealer. It says there was no complaint from Ford about that at the time. Ford Motor Company (USA) (“Ford USA”) manufactured its own range of Ford Raptor F Series trucks but these were not imported or distributed in Australia by Ford. At the time, Raptor models of Ford Ranger trucks were not in production. On 29 May 2013, a Mr Geoff Atkinson, Dealer Sales and Development Manager for the “Eastern Region” of Ford, advised Mr Creak regarding “…the Raptor name plate which you are using for your dressed up Ranger”. Mr Atkinson said that:

63. [63]

    The appellant submitted that the primary judge erred in finding that the Victorian County Court proceedings resulted from any ongoing dispute about Tallevine’s continuing to raptorise Ford vehicles, with counterfeit accessories and parts, or that those proceedings were brought to prevent the use of the Raptor mark in the fitting of accessories and grilles which were not manufactured by agreement under the Ford Group’s protocol. They submitted that those proceedings had “…everything to do with the branding of Tallevine’s business and nothing to do with Tallevine raptorising any vehicles or the branding of vehicles for sale”. But this is of limited significance as cl 9 of the deed of settlement precludes regard being had in the construction of the deed to any conduct of the parties prior to entry into the deed that is not set out in the deed. Conduct set out in the deed includes Ford’s allegation that Tallevine had engaged in passing off and misleading and deceptive conduct by using the words FORD, RANGER, and RAPTOR, and the logos referred to above “in connection with the sale of motor vehicles”.

64. [64]

    The principal issues concerning the construction of the deed were the proper construction of order 10(b) and its relationship with the restraints in orders 4, 7, and 8. The primary judge accepted Ford’s submission that in cl 10(b) the words “in good faith” provided an excuse for good faith use consistent with ss 120 and 122 of the Trade Marks Act 1995 (Cth). The primary judge did not accept the appellant’s submission that all of the other restraints agreed to had to be read down in the light of the chapeau to order 10. The primary judge reasoned:

65. [65]

    Ground 1 of the Notice of Appeal challenges this reasoning. It contends:

66. [66]

    Ground 4A challenges the primary judge’s finding that the deed was intended to resolve an existing dispute concerning the raptorisation of vehicles by Tallevine. Ground 4A is:

67. [67]

    The second question of construction concerns cl 2.2(a).

68. [68]

    The primary judge recorded (J [175]) that Ford accepted that cl 2.2(a) did not bind Mr Creak in relation to the positive obligations imposed by orders 1 to 3 but submitted that Tallevine’s breach of those provisions nonetheless resulted in Mr Creak being in breach of the deed given other provisions of the orders by which he was bound by cl 2.2(a). Mr Creak submitted that cl 2.2(a) was a bare warranty or representation as to a future fact, rather than a contractual promise or obligation whereby he promised that he would cause his related entities to do or not do anything (J [201]).

69. [69]

    The primary judge concluded:

70. [70]

    This reasoning is the subject of ground 3 of the Notice of Appeal. Ground 3 contends:

71. [71]

    Ground 12 of the Notice of the Appeal, referring to cl 2.2(a) of the deed, is:

72. [72]

    As noted at [56] the appellant pleaded that if cl 2.2(a) of the deed had the effect for which Ford contended, then it was a restraint of trade within the meaning of the Restraints of Trade Act 1976 (NSW).

73. [73]

    Ford did not file a Reply to 17(c) of Mr Creak’s defence. Mr Creak submitted that the onus of establishing the restraint was reasonable in the interests of the parties lay on Ford and because it had not filed a Reply asserting that the restraint was reasonable as between the parties, it was not open to it to assert that the restraint was reasonable as between the parties and hence the restraint was void. The primary judge rejected this submission on the ground that, pursuant to r 14.27 of the Uniform Civil Procedure Rules 2005 (NSW), there was a joinder of issue on all that Mr Creak pleaded (J [109]) and there was a real issue between the parties about the reasonableness of the restraints agreed by the deed (J [114]-[122]). Grounds 5 and 6 of the Notice of Appeal challenge this reasoning.

74. [74]

    The primary judge found that the doctrine of restraint of trade did not apply to the deed of settlement (J [80]-[103]). Ground 4 of the Notice of Appeal challenges this finding.

75. [75]

    Paragraph 17(c)(i) pleaded only that the settlement deed, if it bound Mr Creak, was a restraint of trade within the meaning of s 4(1) of the Restraints of Trade Act. The allegation in par 17(c)(ii) was abandoned at trial, apparently for tactical reasons associated with Mr Creak’s submission that Ford had not pleaded that the restraint was reasonable as between the parties. On appeal, Mr Creak accepted that because the settlement deed was governed by the laws of Victoria, the Restraints of Trade Act did not apply, see below at [117]. Mr Creak did not plead that cl 2.2(a) was invalid.

76. [76]

    Ford pleaded that Tallevine’s filing a cross-claim in the 2017 proceedings commenced by Ford seeking relief against Tallevine for contempt was a breach of cl 4.1 of the deed of settlement and resulted in Ford incurring costs in defending that cross-claim. Ford claimed that the costs it incurred in the contempt proceedings, including the costs of defending the cross-claim, were caused by breaches by Tallevine and Mr Creak of cl 4.1 of the deed of settlement. It sought to recover those costs as damages. It also sought an order that Mr Creak indemnify Ford for its loss and liability arising from Tallevine’s cross-claim in the 2017 proceedings.

77. [77]

    The primary judge held that Ford had not established the quantum of the costs it incurred in the contempt proceedings other than its costs of defending the cross-claim. This was because Ford took the forensic decision not to read affidavits which were said to have analysed the work undertaken (J [331], [334]). The primary judge held that she could rely upon findings made by Fagan J, who made a lump sum assessment in the sum of $295,000, of which Ford had recovered $150,000 leaving a balance of $145,000 unrecovered in respect of the costs (J [332]-[333], [339]).

78. [78]

    Her Honour concluded that Tallevine’s cross-claim was brought contrary to cl 4.1 of the deed (J [361]) and she made an order that Mr Creak indemnify Ford for its losses and liabilities arising from Tallevine’s cross-claim against Ford in the 2017 proceedings. That order was made in addition to the entry of judgment against Mr Creak in the amount of $145,000.

79. [79]

    Grounds 8, 8A, 9 and 10 of the Notice of Appeal challenge these findings.

80. [80]

    There was no cross-appeal.

First Issue: Offering of raptorised Ford vehicles bearing a Ford sign: orders 4-10 (Grounds 1 and 4A)

1. [81]

   The form of the consent orders was contained in the Minutes, which were an attachment to the deed, and formed part of the agreement between the parties. By cl 9 of the deed, it was agreed that the only conduct relied on by the parties was as set out in the deed and the deed superseded all earlier conduct by or between the parties in connection with the subject matter of the deed. Except in so far as any issue about Tallevine’s “raptorisation” of motor vehicles is reflected in the recitals to the deed, or the language of its operative provisions including the agreed orders, or perhaps, from the claim and counter-claim made in the proceedings in the County Court of Victoria, the deed cannot be construed on the assumption that it was intended to resolve a dispute about such conduct. Ground 4A (quoted at [66] above) is correct, in so far as the claim and counter-claim in the County Court proceedings did not include a dispute about raptorisation of Ford vehicles. The question is whether the conduct about which Ford complains is within the terms of the orders attached as a minute to the deed.

2. [82]

   The “raptorisation” of vehicles by Tallevine about which Ford complains in these proceedings was characterised by Ford as involving the modification of Ford vehicles including by fitting them with counterfeit grilles with the word FORD on them, but without the Blue Oval Device. Tallevine also offered decals using the word “Raptor”, carbon wrapping, custom paint, bigger wheels and suspension, and custom interiors including seats and door trim with the “Raptor” word and device. Mr Creak described “Raptor enhancements” as:

3. [83]

   An example of a “2017 Ford Ranger Raptor XLS” advertised for sale by Tallevine or Fleet Serv (it is not clear whether the advertisement was placed before or after 30 June 2017) is as follows:

4. [84]

   Order 4 restrained Tallevine from advertising, distributing, supplying, offering for sale, and selling motor vehicles under or by reference to, amongst other things, any sign that included the word FORD, but subject to order 10. Order 7 restrained Tallevine from advertising, distributing, supplying or selling motor vehicle parts or accessories bearing any of the Ford signs that were not manufactured by or with the authority of Ford or its related bodies corporate, or which were fitted with any such parts or accessories.

5. [85]

   The grille depicted above, bearing the name FORD, was not manufactured by any of Ford’s related bodies corporate but has been fitted to the vehicle. The advertising, distributing, supplying, offering for sale or selling of such vehicles is a contravention of order 7. It is not protected by cl 10(b). The word FORD is not used merely to describe a vehicle offered for sale, but is included as one of the parts fitted to the vehicle that is the subject matter of the proposed sale. The process of “raptorising” Ford vehicles, which involves the fitting of parts or the provision of accessories that bear any of the Ford Signs or Raptor Signs (which include the words FORD and RAPTOR, whether or not using the devices depicted in cll 4(b) and 8(b)) contravenes order 7 and is not protected by cl 10(b), because the use of those words goes beyond the mere description of vehicles offered for sale. It is only the latter that is protected by cl 10(b).

6. [86]

   This conclusion does not depend upon the construction of the words “in good faith” in order 10(b).

7. [87]

   So far as ground 1 is concerned (quoted at [65] above), I see no reason to read those words as merely preserving the good faith use of trade marks permitted by ss 120 and 122 of the Trade Marks Act. Ford was not the owner of any of the trade marks in question. Clause 14 of the Dealer Agreement acknowledged Ford’s right to the exclusive use of any trademark owned by Ford or any related body corporate (which includes Ford USA) and the right of Ford to give its approval to the use by the dealer during the pendency of the Dealer Agreement to the use of any such trade mark. But neither Ford nor any of its related companies was the owner in Australia of the Raptor trade mark depicted above. Clause 10(b) has no different operation in relation to the use of the word RAPTOR than it does in relation to the use of the words FORD or RANGER. As Ford or its related bodies corporate had no right to the use in Australia of the trade mark RAPTOR SVT™, there is no reason to construe the words “in good faith” as limited to permitted uses under ss 120 and 122 of the Trade Marks Act.

8. [88]

   However, that does not expand the operation of order 10(b) to go beyond preserving Tallevine’s right to describe the vehicles offered for sale by the use of the words FORD, RANGER and RAPTOR so as to extend to conduct that is restrained by order 7.

9. [89]

   The primary judge was right in holding (at J [233]-[242]) that cl 10(b) permitted Tallevine to sell vehicles manufactured by Ford USA and to describe those vehicles as Ford vehicles, Ford Rangers or Ford Raptors, if the vehicles had been manufactured by Ford USA or by someone else with the authority of Ford or its related bodies corporate, and to describe the vehicles offered for sale under those names, provided that the vehicles were not fitted with parts or accessories bearing any of the Ford Signs or Ford Raptor Signs (as defined in orders 4 and 8) that had not been manufactured with the authority of Ford or any of its related bodies corporate. The raptorisation of the vehicles, if they involved enhancements bearing any of the Ford Signs or Ford Raptor Signs (such as decals or accessories bearing the name RAPTOR, or grilles not manufactured by Ford USA but bearing the name FORD) was a breach of order 7 that was not protected by order 10(b).

10. [90]

    Orders 4 and 8 distinguish between the words FORD and RAPTOR and the words and devices set out in cll 4(b) and 8(b). Clause 10(b) does not authorise the use of the marks depicted in cll 4(b) and 8(b).

11. [91]

    On the other hand, there would be nothing to prevent Tallevine, Fleet Serv or Mr Creak from offering for sale particular vehicles by reference to the name FORD or RANGER or RAPTOR if the vehicles could fairly be so described, even if the vehicles have been modified by enhancements, whether accessories or fitted parts, such as wheels, or grilles, provided the enhancements do not bear Ford Signs or Ford Raptor Signs (as defined) and provided that the vehicles so enhanced could honestly still be described as Ford vehicles or Rangers, or Raptors.

Clause 2.2(a) of the Settlement Deed not a “bare warranty”: Ground 3

1. [92]

   Mr Creak submitted that cl 2.2(a) should not be read as a contractual promise by Mr Creak that he and his Related Entities would not engage in any of the conduct the subject of the attached Minutes, but as a bare warranty that the facts in future would be as there described.

2. [93]

   As I understood the submission, it was that because cl 2.2(a) was a bare warranty, while a breach thereof might sound in damages, assuming loss could be proved, it did not provide a basis for injunctive relief.

3. [94]

   This submission was misconceived and rightly rejected by the primary judge. By cl 2.2(a) Mr Creak gave an undertaking that neither he nor any Related Entity would engage in conduct the subject of the agreed orders. The promise was clearly worded as an undertaking. Whether the promise was a warranty, condition, or innominate term would be relevant if Ford sought to rescind the deed of settlement for breach of the promise. It is not relevant to whether the promise is enforceable by injunction.

4. [95]

   Mr Creak was the controlling mind and directing will of Tallevine and Fleet Serv. If they were to engage in conduct that was the subject of the restraints, it would be because of what he decided or did. In relation to them, his undertaking that they would not engage in any of the conduct the subject of the attached Minutes was negative in substance and enforceable by injunction (Dalgety Wine Estates Pty Ltd v Rizzon (1979) 141 CLR 552 at 573; [1979] HCA 41; Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272; [2009] HCA 8 at [12] fn 11; Price v Spoor (2021) 270 CLR 450; [2021] HCA 20 at [51]). Mr Creak submitted that, because the definition of “Related Entity” was wide and included, inter alios, any body corporate of which Mr Creak or any relative of his was a member, the promise should not be enforceable by injunction. As I apprehended the submission, it was that, in those circumstances, Mr Creak would not be in a position to fulfil the undertaking. But the fact that an injunction would not be granted to compel Mr Creak to perform an obligation which he was incapable of performing is not a reason for denying Ford injunctive relief where Mr Creak failed to comply with his undertaking that he could perform.

Validity of Clause 2.2(a) of the Settlement Deed: Grounds 4, 5, 6 and 7

1. [96]

   The Defence pleaded that, if the deed had the effect alleged by Ford it contained a cartel provision and was, to that extent, unenforceable pursuant to ss 4L and 45AJ of the Competition and Consumer Act 2010 (Cth). That defence was abandoned at trial. It is surprising that neither party, nor the Court in any pretrial hearing, had taken any steps for the transfer of the proceeding to the Federal Court pursuant to the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) as raising a special federal matter (s 6(1)). As those grounds of defence were abandoned at trial, that issue does not arise.

2. [97]

   As quoted at [56] above, par 17(c) of the defence pleaded that if the settlement deed had the effect alleged by Ford, it was in restraint of trade within the meaning of s 4(1) of the Restraints of Trade Act.

3. [98]

   The primary judge found that the restraint of trade doctrine did not apply to the settlement deed (J [90]-[103]). In reaching this conclusion, the primary judge applied observations of Parker J in Panayiotou v Sony Music Entertainment (UK) Ltd [1994] EMLR 229, followed by Nicholas J in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Noack (2004) 71 NSWLR 212; [2004] NSWSC 347). In Panayiotou, the plaintiff was seeking to have a recording agreement declared invalid as being in restraint of trade. That agreement had been entered into as part of a compromise of earlier litigation in which an anterior agreement had itself been alleged to be in restraint of trade. Parker J said (at 346):

4. [99]

   In Peters (WA) Ltd v Petersville Ltd (2001) 205 CLR 126; [2001] HCA 45, Gleeson CJ, Gummow, Kirby and Hayne JJ referred to Parker J’s decision in Panayiotou at [19] but expressed no conclusion upon the correctness of his conclusion quoted above.

5. [100]

   In Noack the defendant, Mr Noack, had been the State Secretary of the South Australian branch of a Union and engaged in litigation that was pending against another officer of the Union in relation to allegations of harassment and breach of the Union’s rules. The proceedings were compromised by a deed whereby Mr Noack agreed to resign his office upon receiving certain payments and agreed thereafter not to stand for any elected office in the Union or interfere in the operation of the Union in any way. After Mr Noack stood for office again, the Union brought proceedings for an injunction to restrain his doing so. Mr Noack submitted that his covenant not to stand for office in the Union was invalid as an unlawful restraint of trade.

6. [101]

   Nicholas J held that the doctrine did not apply. His Honour gave two reasons for this conclusion. The first was that the covenant did not have a connection with trade. The restraint on his seeking nomination for election to an office in the Union did not infringe his ability to work or undertake paid employment and, his Honour found, lacked the characteristics of one in restraint of trade at [46]. The conduct restrained was of an entirely political kind. In an interlocutory judgment in the proceedings which gave rise to the settlement, Mansfield J had found that the Union was divided between two factions with Mr Noack in one faction and the other officer in the other (Adlam v Noack [1999] FCA 1606 at [9]).

7. [102]

   The second reason was that, applying and extending Panayiotou:

8. [103]

   Nicholas J went on to hold that, if the doctrine of restraint of trade could apply, nonetheless the restraint was not invalid because it was reasonable in the interests of the parties and in the public interest (at [58]-[59]).

9. [104]

   The litigation that was compromised by the settlement deed in that case did not itself involve a dispute about the validity of a purported restraint of trade.

10. [105]

    Contrary to the submission of the appellant, the reasoning of Nicholas J for the second ground on which his Honour decided that the doctrine of restraint of trade did not apply, was not obiter. As Lord Macnaghten said in Commissioner of Taxation for New South Wales v Palmer [1907] AC 179 at 184:

11. [106]

    It was appropriate for the primary judge to have followed Nicholas J’s decision as a matter of comity.

12. [107]

    In Peters (WA) Ltd v Petersville Ltd, the majority said at [19] that the decision in Panayiotou:

13. [108]

    The majority did not express any conclusion about that matter, but there is nothing in the reasons in Peters (WA) Ltd v Petersville Ltd that would support a wider scope for an exception than that articulated in Panayiotou.

14. [109]

    Justice Ball followed Panayiotou in Properties Northside Pty Ltd t/as Raine & Horne Manly/Freshwater v Pickering [2015] NSWSC 310 at [43]-[49] where a contract said to be an unlawful restraint of trade was a compromise of proceedings brought by the plaintiff seeking to reinforce restraints. In Metcash Ltd v Jardim (No 3) [2010] NSWSC 1096; (2010) 273 ALR 407, Ball J held at [42] that where a dispute concerned the termination of a contract but did not concern a restraint of trade clause, there was no reason why the restraint of trade doctrine should not apply to a compromise that resolved the dispute (see to the same effect, Man Financial (S) Pte Ltd v Wong Bark Chuan David [2007] SGCA 53; [2008] 4 LRC 419).

15. [110]

    In the present case, there was no dispute in the County Court proceedings or the foreshadowed Federal Court proceedings about the validity of the terms of the dealer agreement which Ford sought to enforce. The rationale stated by Parker J in Panayiotou for holding that the doctrine of restraint of trade was inapplicable to the compromise in that case is not applicable. In J D Heydon, The Restraint of Trade Doctrine (4th ed, 2018, LexisNexis Butterworths), the learned author observes that it is not easy to see how private parties can, by agreement, exclude the application of a doctrine of public policy.

16. [111]

    In a case such as the present, the true position, it seems to me, is that the doctrine applies. But, in assessing whether the restraint is reasonable in the interests of the parties, it is highly relevant that the restraints, in so far as they bound Tallevine, are not alleged to have been unlawful, and that cl 2.2(a) requires Mr Creak to ensure that Tallevine’s successor, a company he controls, does not do what Tallevine was prohibited from doing. The restraints were negotiated as a genuine and proper compromise (and included a payment by Ford of $100,000 to Tallevine pursuant to cl 2.3(b)) and both parties were legally advised. Those are powerful reasons for concluding that the restraint in cl 2.2(a) was reasonable in the interests of the parties. The fact that the compromise advanced the public interest in the avoidance of litigation is a powerful reason for concluding that the compromise is reasonable in the public interest.

17. [112]

    This case is analogous to World Wide Fund for Nature v World Wrestling Federation Entertainment Inc [2002] EWCA Civ 196; [2002] FSR 33. There, the World Wide Fund For Nature (formerly World Wildlife Fund) and World Wrestling Federation Entertainment Inc compromised litigation in relation to the Federation’s applications for trade mark registration of its logo using the initials “WWF” outside the United States. The World Wildlife Fund had registered its “WWF” trade mark. There was litigation between the parties around the world. The disputes were compromised by an agreement by which the Federation undertook to cease using the initials except for limited defined purposes. After the Federation breached the agreement, the Fund sought and obtained injunctive relief. The Federation contended that any restriction on its use of the mark WWF was a restriction in restraint of trade and therefore void unless the Fund could justify it (at [40]). Giving the judgment of the Court of Appeal of England and Wales, Carnwath LJ said:

18. [113]

    I accept that the primary judge erred in finding that the restraint of trade doctrine did not apply to the deed (ground 4).

19. [114]

    Appropriately, the primary judge went on to consider whether cl 2.2(a) was void as being in restraint of trade on the assumption that the doctrine did apply. Her Honour rejected Mr Creak’s submission that it was not open to Ford to argue or to adduce evidence that the provisions of the deed were reasonable in the interests of the parties because it had not filed a Reply to that effect. Grounds 5 and 6 challenge this conclusion.

20. [115]

    The primary judge considered this submission to be raised as an ambush. Her Honour said:

21. [116]

    There was no error in this reasoning.

22. [117]

    In any event, the submission did not even have technical merit. On appeal, Mr Creak conceded that the Restraints of Trade Act did not apply because the proper law of the deed of settlement was the law of Victoria (see KA & C Smith Pty Ltd v Ward (1998) 45 NSWLR 702 at 720). It is unnecessary to decide whether the concession was rightly made, noting that in converse circumstances to that case a different view has been tentatively expressed by Parker J in Label Manufacturers Australia Pty Ltd v Chatzopoulos [2022] NSWSC 1059 at [150]-[153] (and see also Allied Express Transport Pty Ltd v Braim [2022] NSWSC 1298 at [273] (Williams J)). The Defence did not plead that cl 2.2(a) was void because it was in restraint of trade. It pleaded that if the clause had the effect for which Ford contended then it was a restraint of trade within the meaning of s 4(1) of the Restraints of Trade Act. Section 4(1) provides:

23. [118]

    There are first instance authorities referred to in Isaac v Dargan Financial Services Pty Ltd (2018) 98 NSWLR 343; [2018] NSWCA 163 which have held that s 4(1) does not change the position at common law that the onus of establishing that a covenant in restraint of trade is reasonable as between the parties lies on the party seeking to enforce the contract. Gleeson JA, with whom the other members of the Court agreed, said at [78] that without deciding the question, that view is attractive.

24. [119]

    The Restraints of Trade Act modifies, but does not displace, the common law principles. If Mr Creak were to have been held strictly to his pleading, his defence could have been rejected for failing to plead that if cl 2.2(a) had the effect contended for by Ford, it was void. This is especially so as para 17(c)(ii) was withdrawn, leaving only an allegation that the clause was valid to the extent to which it was not against public policy, and no allegation that it was void, without which the common law rules about onus were not invoked.

25. [120]

    Accordingly, the primary judge did not err (as contended in Ground 6 of the Notice of Appeal) in admitting evidence relevant to the existence of interests of the respondent in supporting the reasonableness of the restraints.

26. [121]

    Nor did the primary judge err in finding that Ford had an interest in the brand reputation in the Raptor name and Ford Raptor vehicles including F Series trucks. Mr Creak contended (Ground 7) that any interest of that kind was held only by other entities within the Ford group of companies.

27. [122]

    In the County Court proceedings, Ford had alleged that the word FORD and the blue Ford Rondelle were registered in the name of Ford Canada and that the Australian registered mark for the word RANGER and the United States registered mark for the word RAPTOR were registered in the name of Ford USA.

28. [123]

    It may be accepted that Ford did not have a proprietary interest in the marks. That does not mean that it did not have a legitimate interest to protect. By cl 14.1 of the Dealer Agreement, Tallevine acknowledged that Ford had the right to give and to revoke approval to Tallevine for the use of any Trade Mark, including any Trade Mark owned either by Ford or by any of its related bodies corporate. Ford had a legitimate interest in enforcing these terms of the Dealer Agreement.

29. [124]

    Although the legal onus of establishing that the restraint is reasonable as between the parties lies on the party seeking to enforce the covenant, where, as here, the restraint is reached as the result of the settlement of a genuine dispute in which both parties were legally represented and there was no overreach of one of the parties, the evidentiary onus shifts. As the primary judge said:

30. [125]

    On this issue, the primary judge concluded:

31. [126]

    I agree.

32. [127]

    The primary judge also held that the restraints in cl 2.2(a) were not contrary to the public interest (J [283]-[290]). Her Honour said:

33. [128]

    I agree. The onus of establishing that the restraints were contrary to the public interest lay on Mr Creak. The restraints he accepted were part of the quid pro quo he offered to settle the County Court proceedings and his foreshadowed Federal Court proceedings. There was a public interest in finalising the first and pre-empting the second. The primary judge observed at [99] that as no complaint was made of the consent orders that bound Tallevine there is no reason that the obligations that bound Mr Creak should be in any different position. The primary judge was correct in upholding the validity of cl 2.2(a).

Width of the injunctive relief ordered

1. [129]

   The only challenge to the width of the injunctive relief ordered were in grounds 11 and 12 in the Notice of Appeal that were as follows:

2. [130]

   Orders 3 and 4 were:

3. [131]

   Order 3 reflected order 3(d) attached to the deed of settlement that bound Tallevine.

4. [132]

   Order 4(a) and (b) reflected order 1(e)(i) and (ii) attached to the deed of settlement that bound Tallevine.

5. [133]

   Order 4(c) reflected order 1(e)(iii) attached to the deed of settlement that required Tallevine to amend its website “to remove all statements to the effect of paragraph 12 below”. “Paragraph 12 below” provided that:

6. [134]

   Order 11 attached to the deed of settlement provided:

7. [135]

   Order 4 made by the primary judge is a mandatory injunction addressed to Mr Creak that is justified to remedy his breach of his negative covenant ([95] above) undertaking that Tallevine and Fleet Serv would not breach the restraints in orders 11 and 12.

8. [136]

   Order 3 is justified on the same basis. Tallevine was bound to transfer to Ford the domain names there referred to. Mr Creak did not undertake that he would ensure that Tallevine or any Related Entity that succeeded to its business would perform Tallevine’s positive obligations. Tallevine had already registered the domain name raptor4x4.com.au. It was an agreed fact that, on or about 28 June 2017, Mr Creak procured the registration of domain name raptor4wd.com in the name of Gavin Cox. The domain name raptor4wd.com was used by Fleet Serv from on or about 30 June 2017. This was a breach by Mr Creak of cl 2.2(a) of the deed of settlement when applied with reference to order 6 of the attached Minutes. Order 3 made by the primary judge was justified to remedy that breach.

9. [137]

   The primary judge did not err in qualifying some of the injunctive relief ordered by reference to the language of order 10(b) in the Minutes attached to the deed. As the primary judge held, any asserted ambiguity in the orders could be resolved by reference to the judge’s reasons, and from the date of publication of the reasons of this Court, by reference to this Court’s reasons. In any event, the asserted ambiguity arises from the terms of the parties’ agreement. As Giles JA (with the concurrence of Spigelman CJ and Allsop P) said in Orleans Investments Pty Ltd v Mindshare Communications Ltd (2009) 254 ALR 81; [2009] NSWCA 40 at [105]-[106], injunctions are practical tools in the administration of justice, but there are limits to the precision and clarity which can be attained. It is not possible to predict all possible future cases. That does not mean that Mr Creak should not be bound by injunction to what he promised.

Damages and Indemnity

1. [138]

   Orders 1 and 2 made by the primary judge were as follows:

2. [139]

   Ford pleaded that it suffered damage by reason of Tallevine’s breach of the orders made on 28 October 2015, being costs which it incurred in proceedings 2017/75192 in which it sought relief against Tallevine for contempt. It also alleged that Tallevine’s filing of its cross-claim in those proceedings against Ford was a breach by Tallevine and Mr Creak of cl 4.1 of the deed of settlement. It also claimed an entitlement under cl 5.1 of the deed of settlement to have Mr Creak indemnify it against the costs it incurred in bringing the contempt proceedings against Tallevine and defending Tallevine’s cross-claim pursuant to cl 5.1 of the deed.

3. [140]

   By cl 4.1 of the deed, Tallevine and Mr Creak covenanted not to bring or pursue a Claim (as defined) against Ford in respect of any matter which was the subject of a release under cl 3.1. By cl 3.1, Tallevine released Ford from any Claim arising from or connected with the Dispute (as defined) or any part of it, the allegations giving rise to or referred to in the Dispute or any part of it, and any other Claim which was known, or could have reasonably been known, to Tallevine as at the date of the deed.

4. [141]

   “Claim” was defined to include costs (whether or not the subject of a court order). The “Dispute” meant the dispute the subject of the County Court proceedings including Tallevine’s counter-claim in those proceedings.

5. [142]

   Ford sought both damages and an order that Mr Creak indemnify it for its loss and liability arising from Tallevine’s cross-claim against it in proceeding 2017/75192.

6. [143]

   The primary judge found that Ford was entitled to damages to recover the costs it incurred in bringing the contempt proceedings against Tallevine but had failed to prove the quantum of those costs (J [318], [324], [325], [329], [334]-[335], [341]-[343]).

7. [144]

   There is no cross-appeal against this finding.

8. [145]

   The primary judge had earlier explained that Ford had served an affidavit which referred to a confidential exhibit of memoranda of fees and disbursements in the contempt proceedings which were not served. Mr Creak sought an unredacted copy of the memoranda, some of which were only provided in the week before the hearing commenced. When advised that there were objections to the affidavit of Ford’s solicitor, who was required for cross-examination, Ford advised that the solicitor would not be called. It nonetheless sought to rely on the memoranda of fees. The tender was rejected. Ford does not challenge that ruling. A late application by Ford for leave to call the solicitor was refused and, again, that ruling is not the subject of challenge (J [62]-[79]).

9. [146]

   Notwithstanding these rulings, the primary judge gave judgment for Ford against Mr Creak in the sum of $145,000 for costs incurred by Ford in defending the cross-claim Tallevine brought in the 2017 proceedings. Given her Honour’s rulings on evidence, there was no evidence from Ford as to the costs that it had incurred in defending the cross-claim. The primary judge held that the judgment of Fagan J assessing Ford’s costs of defending the cross-claim in the sum of $295,000 provided a foundation for assessing the costs in that sum. As Ford had recovered $150,000 by recourse to the security Tallevine had provided for its costs of the cross-claim, her Honour entered judgment for the balance of $145,000 in respect of those costs. In so reasoning, her Honour held that “Fagan J’s judgment was not inadmissible under s 91 of the Evidence Act, to prove those costs, they not finally having been in issue in those proceedings: s 91(1)” (at J [331]).

10. [147]

    Additionally, the primary judge ordered that Mr Creak indemnify Ford for its losses and liabilities arising from Tallevine’s cross-claim against Ford in proceeding 2017/75192.

11. [148]

    The first issue is whether Tallevine’s filing of its cross-claim was a breach of its covenant not to sue in cl 4.1 of the deed of settlement. By cl 4.1, Tallevine covenanted not to bring a Claim against Ford in respect of any matter which was the subject of a release under cl 3.1. The release under cl 3.1 is quoted at [46] above.

12. [149]

    By its cross-claim, Tallevine asserted that, under the Dealer Agreement, as amended by the “First settlement agreement” of 21 October 2013, and the Franchising Code and s 51ACB of the Competition and Consumer Act, Ford was obliged as of 18 February 2014 to consent to the sale of Tallevine’s franchise business to Fleet Serv, to consent to the extension of the sale period, and to recognise Fleet Serv as an authorised Ford dealer at the location of Tallevine’s franchise business. Tallevine alleged that Ford was not entitled to terminate the Dealer Agreement. It alleged that Ford’s conduct in terminating the Dealer Agreement was unconscionable. It alleged that the first settlement agreement, to the extent it provided for termination of the Dealer Agreement in default of completion of a sale of the business by 18 February 2013 was void or voidable. It alleged that Tallevine was entitled to relief against forfeiture of the Dealer Agreement.

13. [150]

    All these claims fell squarely within the Dispute which was the subject of Tallevine’s release in cl 3.1. Tallevine also alleged that the settlement deed had been repudiated by Ford, which had accepted that repudiation or, alternatively, that Tallevine had rescinded the settlement deed for misrepresentation or mistake. It sought the setting aside of the consent orders made on 6 October 2015 and related relief.

14. [151]

    Tallevine’s challenge to the validity of the deed of settlement did not fall within any of the subparagraphs of cl 3.1, but it fell within the chapeau to that clause as being connected with the Dispute. If the challenge had succeeded, then the release would have been discharged. But, as it did not succeed, all of the cross-claim was brought in breach of Tallevine’s covenant in cl 4.1.

15. [152]

    Mr Creak was in breach of his covenant in cl 4.1 in that he caused Tallevine to bring a Claim against Ford in respect of matters which were the subject of the release under cl 3.1. Although it was Tallevine that brought the claim, it was Mr Creak who caused it to do so.

16. [153]

    Mr Creak submitted that, on the Friday evening prior to the commencement of the trial on the Monday, Ford had served written submissions in reply in which it accepted that the costs incurred in defending the most substantial claim in the cross-claim could not be the subject of the indemnity. In those submissions, counsel appearing at trial for Ford accepted that, to the extent the costs of the cross-claim related to the attempt to set aside the deed by reason of alleged representations made during the mediation, that could not be the subject of the indemnity. Mr Creak submitted that the case was conducted on the basis of that concession.

17. [154]

    The concession was withdrawn on the third day of the hearing. Although counsel for Mr Creak submitted that he had run the trial on the basis of what had been contained in Ford’s written submissions in reply, he did not submit that he had suffered any prejudice or would have acted differently had the concession not been made in the written submission served very shortly before the hearing. No complaint was made at trial about the withdrawal of the concession. No attempt was made to demonstrate how the trial might have proceeded differently had the concession not been made. The issue is one of construction of cl 3.1 of the settlement deed. Until the submission had been served on the Friday before the commencement of the trial on the following Monday, Ford’s position had been that it was entitled to be indemnified by Mr Creak in respect of all of its costs of defending Tallevine’s cross-claim in the 2017 proceedings. Any evidence that might have been relevant to the question, and it is hard to think what evidence might have been relevant, having regard in particular to cl 9 of the deed of settlement, could and should have been adduced. Mr Creak did not point to any evidence that might have been adduced to address the question.

18. [155]

    Mr Creak submitted that, had the trial judge asked, but for Mr Creak’s breach of cl 2.2(a), would Tallevine have brought its cross-claim, the answer would necessarily have been that it may well have.

19. [156]

    I do not understand the relevant breach to have been a breach by Mr Creak of cl 2.2(a) because the bringing of the cross-claim was not the subject of the attached minutes of consent orders. In any event, there is no factual basis for the submission. Mr Creak controlled Tallevine.

20. [157]

    The primary judge rightly held that the incurring of costs in defending proceedings brought by Tallevine in breach of its and Mr Creak’s covenant in cl 4.1 would have been within the reasonable contemplation of the parties when the deed was entered into as the probable result of the breach. The costs also naturally arose from the breach. The damages claimed were not too remote.

21. [158]

    The real issue was whether the quantum of damages could be proved from the reasons and orders of Fagan J of 20 September 2021. Section 91(1) of the Evidence Act 1995 (NSW) provides:

22. [159]

    Ford submitted that the order of Fagan J was admissible as to the fact that the order was made and that s 91 did not apply to court orders (as distinct from reasons).

23. [160]

    But s 91(1) excludes evidence of both the decision and a finding of fact to prove the existence of a fact that was in issue in the proceeding.

24. [161]

    Section 91 does not affect the operation of a judgment in rem or the law relating to res judicata or issue estoppel (s 93), but the costs order made against Tallevine was not a judgment in rem and Ford did not contend that the judgment bound Mr Creak as a privy to Tallevine.

25. [162]

    Mr Creak had notice of Ford’s application and appeared through his solicitor at the hearing before Fagan J to advise that he had no submissions to make on the application. He did not thereby become bound by the order.

26. [163]

    Tallevine’s liquidator did not oppose the order sought by Ford, apparently on the basis that the costs ordered would not be provable in the liquidation of Tallevine (J [330]).

27. [164]

    The primary judge held that the costs the subject of Fagan J’s judgment had not “…finally been in issue in those proceedings” (J [331]). I take it that this was because the liquidator of Tallevine had not ultimately contested the quantum of the costs claimed.

28. [165]

    That fact did not mean that the costs were not “in issue” in the proceeding before Fagan J. Rather, the quantum of costs was the very issue to be decided. The fact that Tallevine, through its liquidator, did not ultimately contest the issue did not mean that the quantum of costs was not in issue. Orders were not made by consent. The quantum of costs sought by Ford was not awarded. Neither the findings of fact made by Fagan J, nor his Honour’s orders, were admissible to prove the quantum of costs of the cross-claim which Mr Creak was liable to pay under his indemnity. The judgment for $145,000 entered for Ford against Mr Creak, should be set aside. Ford is entitled to nominal damages for Mr Creak’s breach of the deed.

29. [166]

    Ford sought to quantify its claim for indemnity under cl 5.1 of the deed in the amount for which it sought judgment. Its cause of action to enforce the indemnity in cl 5.1 merged in the judgment, just as it would have been, had judgment been given for Mr Creak, and just as it will be on the entry of judgment for nominal damages.

30. [167]

    Even if there were no merger of the cause of action to enforce the indemnity in cl 5.1 in the judgment, it would be an abuse of process if Ford, having failed to prove the quantum of its claim before the primary judge, instituted new proceedings to enforce the indemnity and there sought to adduce the evidence of the quantum of its costs that it failed to adduce before the primary judge. Such a course would lead to conflicting judgments (Rippon v Chilcotin Pty Ltd (2001) 53 NSWLR 198; [2001] NSWCA 142 at [15], [19]-[23], [36]). The same objection could be taken if Ford’s solicitors sought to have the costs assessed pursuant to s 198 of the Legal Profession Uniform Law (NSW) against Mr Creak as a non-associated third party payer.

31. [168]

    Accordingly, each of order 1 and order 2 made by the primary judge should also be set aside.

32. [169]

    Because Mr Creak has had some success in his appeal, the parties should provide written submissions on the question of costs of the proceedings below and of the appeal, including any submissions on interest on costs. Orders 14, 15 and 16 made below (dealing with interest on the sum awarded, costs of the proceedings below, and interest on costs) should be set aside.

33. [170]

    For these reasons, I propose the following orders:

    1. (1)

       Appeal allowed in part.

    2. (2)

       Set aside orders 1, 2, 14, 15 and 16 made in the court below on 10 March 2022.

    3. (3)

       In lieu of order 1 below, direct entry of judgment for the respondent against the appellant in the sum of $100.

    4. (4)

       Otherwise dismiss the appeal.

    5. (5)

       Order that within 21 days, the parties file and serve written submissions of no more than 8 pages on the appropriate orders to be made as to costs of the proceedings below, interest on costs, and costs of the appeal.

    6. (6)

       Any submissions in reply to be filed and served within 7 days thereafter.