3 The fifth defendant (Roselink) was acquired by some of the defendants in January 2010. The Ice Nemesis Unit Trust was created in February 2010 with Roselink as trustee. In May 2010 Roselink, as trustee of the Ice Nemesis Unit Trust, executed a lease of premises in Mirrabooka (the Mirrabooka premises or Mirrabooka site) for use as an ice rink. Since at least November 2010, when Xtreme Ice Arena opened to the public, Roselink has carried on an ice rink business as trustee of the Ice Nemesis Unit Trust under the name of Xtreme Ice Arena from the premises in Mirrabooka.

4 The sixth defendant (Mr Williams), the seventh defendant (Mr Lowick), the ninth defendant (Mr MacLellan) and the tenth defendant (Andrew) are and have since February 2010 been directors of Roselink. Andrew is the son of Mr and Mrs Bruske. The eighth defendant (Casey) is the son of Mr and Mrs Minson. Casey became a director of Roselink in February 2010 when he was an undischarged bankrupt. It appears he resigned in November 2010 when it was realised, that as an undischarged bankrupt, he was not entitled to be a director. Mr Williams and Mr Lowick were associates of Mr and Mrs Anuriw, Mr and Mrs Minson and Mr and Mrs Bruske and assisted in setting up the Perth Ice Arena. An equal number of units in the Ice Nemesis Unit Trust are held by each of Mr Williams as trustee of the Dwight Williams Family Trust, Mr Lowick and his mother, Karen Lowick, as trustees for the Lowick Unit Trust, Mr MacLellan and his wife as trustees of the MacLellan Family Trust, Andrew Bruske as trustee for the Bruske Family Trust and Casey Minson as trustee of the Minson Family Trust.

5 In this action Jaddcal and Mr and Mrs Anuriw allege that Mr and Mrs Minson and Mr and Mrs Bruske are or were engaged, concerned or interested in Roselink's ice rink business in breach of the Restraint Clause and the fifth to tenth defendants induced them to breach their contract by breaching the Restraint Clause.

6 The plaintiffs adduced evidence from Mr and Mrs Anuriw, Mr Grasso, who was employed as a DJ at Perth Ice Arena for a time, Mr Daws, an accountant and insolvency consultant, Mr Klopper, a real estate representative, Mr O'Hehir, a business broker, Ms Osborne, a book keeper employed by Jaddcal, Mr Salmond, President of the Western Australian Ice Hockey Association, Mr Sandon, a real estate agent and Ms Caffarelli, an accountant who assisted the defendants in establishing the business structure for the ice rink business to be operated by Roselink and in negotiating the lease for the Mirrabooka premises. A large volume of documents were received in evidence.

7 The defendants submitted there was no case to answer and elected to call no evidence. Mr Minson, Mr Bruske, Mr Lowick, Mr MacLellan, Mr Williams, Casey and Andrew each swore an affidavit in opposition to an application by the plaintiffs for an interlocutory injunction. Those affidavits were adduced in evidence at the trial by the plaintiffs.

8 Some of the evidence in those affidavits is selfserving and some is inconsistent with oral evidence given by Mr Anuriw and Mr Grasso. Some of the evidence in the affidavits is qualified by, if not strictly inconsistent with, documentary evidence. In general I accept the evidence in the defendants' affidavits insofar as it is not contradicted by evidence of other witnesses or documentary material and is not argumentative or conclusionary in nature. For example, I do not accept the statement in [6] of Mr Minson's affidavit that 'John Bruske and I have never planned on establishing a new ice rink whether in Joondalup or anywhere else' or his statement in [9.13] that 'at no time have the Bruskes, my wife and I had an interest in the fifth defendant nor have we been involved in the establishment of the ice rink business nor is it our intention to be in any way involved in the day to day operations once the ice rink is opened'.

9 Counsel for the plaintiffs submitted, in accordance with the rule in Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 that adverse inferences may be drawn against the defendants because they failed to give evidence. The scope and operation of the principle in Jones v Dunkel was recently explained by Heydon, Crennan and Bell JJ in Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; (2011) 85 ALJR 533 in the following terms:

The rule in Jones v Dunkel is that the unexplained failure by a party to call a witness may in appropriate circumstances support an inference that the uncalled evidence would not have assisted the party's case. That is particularly so where it is the party which is the uncalled witness. The failure to call a witness may also permit the court to draw, with greater confidence, any inference unfavourable to the party that failed to call the witness, if that uncalled witness appears to be in a position to cast light on whether the inference should be drawn.

The rule in Jones v Dunkel permits an inference, not that evidence not called by a party would have been adverse to the party, but that it would not have assisted the party [63] [64].

10 Where a party fails to call a witness it may be appropriate to conclude that evidence already adduced by an opponent which might have been contradicted by the evidence not called may be more readily accepted: Jones v Dunkel (308) (Kitto J), (312) (Menzies J). Further, where an inference is open from facts proved by direct evidence and the question is whether it should be drawn, the circumstance that the party disputing it might have proved the contrary is properly to be taken into account as a circumstance in favour of drawing the inference: Jones v Dunkel (312) (Menzies J).

11 In this case the defendants made a no case submission and elected to call no evidence. The appropriate inferences can be drawn from the decision of the defendants to call no evidence in deciding whether the case has been proved.

12 I will first outline the events giving rise to this action before outlining the issues.

13 As I have said, the Deed, by which Mr and Mrs Minson and Mr and Mrs Bruske sold their shares in Jaddcal, ceased to be directors of Jaddcal and agreed to the restraints in the Restraint Clause, was executed on 28 August 2009.

14 Casey played ice hockey at semiprofessional level for the Newcastle Northstars. In August 2009 his father (Mr Minson), Mr Williams, Mr Lowick and Mr MacLellan visited him in Newcastle where he was playing in the grand final of the ice hockey season. In the course of that visit Mr Williams, Mr Lowick, Mr MacLellan and Casey discussed the idea of opening a new ice rink in Western Australia.

15 Some of the defendants and their family attended a barbecue in late August 2009 on the Swan River. Mr Lowick, Mr Williams, Mr MacLellan and Andrew were at the barbecue. Andrew said he was also interested in coming into the venture to set up an ice rink.

16 Mr Williams says in his affidavit that after the barbecue each of Mr Lowick, Mr MacLellan, Andrew and he agreed that they should start looking around for a suitable venue to build an ice rink. There is no evidence that any of the defendants, other than Mr Minson, did anything to look for a suitable venue until Mr Minson identified the Mirrabooka premises in October.

17 The Mirrabooka site was owned by Gallway Investments Pty Ltd and Tilley Properties (Qld) Pty Ltd, companies based in Queensland. First State Group, on behalf of those companies, instructed Vend Property Pty Ltd to lease the Mirrabooka site. Jeff Klopper, the managing director of Vend Property, attended to those instructions. In October 2009 Mr Klopper received a phone call from Mr Minson expressing an interest in the Mirrabooka site. Mr Klopper met Mr Minson at the Mirrabooka site to inspect it. Mr Minson said he was making enquiries on behalf of directors who were looking to use the site for an ice rink business. Mr Minson told Mr Klopper that the company, or the directors as a whole, had experience in ice rinks in Western Australia and across the world. Mr Minson told Mr Klopper that he had experience with the Australian ice hockey team. On 27 November 2009 Mr Minson sent an email to Mr Klopper in which he asked Mr Klopper to accept the email as a genuine expression of interest in the Mirrabooka site and added:

We are having a director's meeting on Sunday to discuss the building and its potential for our project. We would be looking at least a 10 year + 5 + 5 lease with the first right to purchase within the first five years for this property. This will be discussed at our meeting but that is the general consensus at the moment. I will send thru our discussions to you on Monday for you to approach the owners.

18 There was a meeting at the home of Mr and Mrs Minson on 13 December 2009. The people present included Mr Lowick, Mr MacLellan, Mr and Mrs Minson, Mr and Mrs Bruske, Mr Williams, Andrew and Ms Caffarelli. Ms Caffarelli was asked to attend the meeting to provide some advice on the options for structures for people setting up a business. Ms Caffarelli said that the best way to structure the business would be to incorporate a company which would act as the trustee of a unit trust and that each of the directors could have their own family trusts hold the units in the unit trust. Ms Caffarelli said that it would take her sometime to put all of that in place and it was better to put it in place sooner rather than trying to find suitable premises and then negotiate without an established business structure.

19 On 17 December Ms Caffarelli sent an email to Karen Lowick setting out the information that was required to set up the trustee company, the unit trust and the discretionary (family) trusts. On the same day, 17 December, Ms Lowick forwarded Ms Caffarelli's email to Mr and Mrs Minson, Mr and Mrs Bruske, Mr Lowick, Mr MacLellan, and others. Mr Bruske provided information to Ms Caffarelli in an email sent from Mrs Bruske's email address on 21 January 2010 in which he said:

As you may recall from Dave Minson, both Cheryl & I are under the same terms of restraint from being involved in another ice rink business in the Perth metro area for the next three years. Therefore, as we intended to build the business for our children anyway, we would like to formally loan our children the investment money for them to be part owners in the new ice rink. As per our discussions, we feel that the creation of a unit trust (family trust) would be the most suitable way of structuring our side of the business.

After stating that the unit holders were to be Andrew and his sister, Kristy, Mr Bruske continued:

Could you please take the necessary steps to create this family trust, and also advise if we need to draw up any paperwork to show I have loaned the money to my children for this venture to prove that both Cheryl & I are not linked to this venture.

20 On 29 January Ms Caffarelli sent an email to Mr and Mrs Minson, Mr and Mrs Bruske, Mr Lowick, Mr MacLellan, Karen Lowick and others in which she said that she had reserved a shelf company with the name of Roselink Enterprises Pty Ltd and that she was in the process of setting up a trading unit trust to be called the Ice Nemesis Unit Trust, the units in which would be held by each of 'your' trusts. Ms Caffarelli noted that 'you have all requested unit trusts' and she recalled from their meeting that the units should be held by discretionary trusts. Ms Caffarelli asked the recipients to confirm that their individual trusts should be discretionary trusts. Mr Bruske sent an email to, amongst others, Mr and Mrs Minson reminding the recipients to respond to Ms Caffarelli with respect to their trust accounts. Mr and Mrs Minson replied to Mr Bruske 'Yes please as discussed'. Mr Bruske then emailed to Ms Caffarelli stating:

As requested by Dave Minson, can you please set up his trust as a family trust.

In a separate email to Ms Caffarelli Mr Bruske requested that Ms Caffarelli make the Bruske Trust Account a discretionary trust (family trust).

21 Mr Williams, Mr Lowick, Casey, Mr MacLellan and Andrew became directors of Roselink on 15 February 2010. Also, on 15 February 2010 the Ice Nemesis Unit Trust was established by a deed executed on that day. The trustee is Roselink. Units were allotted to Mr Lowick and Karen Lowick as trustees for the Lowick Unit Trust, Andrew as trustee for the Bruske Family Trust, Mr MacLellan and his wife as trustees for the MacLellan Family Trust, Mr Williams as trustee for the Dwight Williams Family Trust and Casey as trustee for the Minson Family Trust.

22 The Bruske Family Trust was established by a deed executed on 15 February 2010. The trustees are Andrew and Kristy, who are also the specified beneficiaries. The general beneficiaries are persons related to Andrew and Kristy, including Mr and Mrs Bruske. Mr Minson witnessed the signature of each of Andrew and Kristy to the deed which established the Bruske Family Trust. There is no evidence of any email, or other communication between Andrew and Ms Caffarelli concerning the establishment of the Bruske Family Trust, the establishment of the Ice Nemesis Unit Trust, the allotment of units to the Bruske Family Trust or the acquisition of Roselink and appointment of Andrew as a director. The inference is open that all of the instructions to Ms Caffarelli concerning those matters, insofar as they affected Andrew or the Bruske Family Trust, were attended to by Mr Bruske. That inference is more readily drawn because Mr Bruske and Andrew did not give evidence. I draw the inference.

23 The Minson Family Trust was established by a deed executed on 15 February 2010. The trustee is Casey. The specified beneficiaries are Casey and his brothers, Liam and Blair. The general beneficiaries are persons related to the specified beneficiaries, including Mr and Mrs Minson. The guardian is Mr Minson. The trustee may not exercise the 'restricted powers' except with the consent of the guardian. The restricted powers include the power to distribute income or capital to a beneficiary or to lend any sum to any beneficiary. There is no evidence of any email or other communication between Casey and Ms Caffarelli concerning the Minson Family Trust, the Ice Nemesis Unit Trust or Roselink. The inference is open that, insofar as the Casey and the Minson Family Trust are concerned, all instructions were given to Ms Caffarelli by Mr and Mrs Minson, or Mr Bruske acting on the instruction of Mr and Mrs Minson. That inference is more readily drawn because Casey, Mr Minson, Mrs Minson, and Mr Bruske did not give evidence. I draw the inference.

24 Mr Klopper sent a blank offer to lease proposal to Mr Minson prior to Christmas 2009 but there was no subsequent communication between any of the defendants and Mr Klopper or anyone else concerning the Mirrabooka site until 18 January 2010 when Mr Klopper emailed Mr Minson asking whether he was still interested in the property. The following day, 19 January, Mr Bruske replied:

Sorry for the delay in getting back to you. Dave is overseas at the moment, and asked me to let you know we are still interested in the property, and will seriously sit down with you and go over the lease options very shortly. We are still getting our details finalised for the property. Will advise you very shortly.

Mr Minson was travelling overseas from 26 December 2009 to 13 January 2010 and again from 15 January to 1 March 2010.

25 Between late January and 8 April 2010 when Mr Williams signed an offer to lease on behalf of Roselink, Mr Minson and Ms Caffarelli negotiated with Mr Klopper for the lease of the Mirrabooka site. Notwithstanding Mr Klopper's evidence that he negotiated the terms of the deal with Ms Caffarelli, the emails passing between Mr Minson and Mr Klopper show that Mr Minson, as well as Ms Caffarelli, negotiated the terms of the lease with Mr Klopper. Furthermore, emails between Mr Minson and Ms Caffarelli show that Mr Minson gave instructions to Ms Caffarelli concerning the terms of the lease to be negotiated with Mr Klopper.

26 At some time Mr Minson attended an inspection of the property with Mr Klopper and others. At the meeting Mr Klopper was told that the prospective tenant had years of experience on local and overseas rinks. He was told that the operator had over 20 years of experience in the industry and had rolled out 15 ice rinks around the world. That description could only apply to Mr Minson.

27 On 30 March Mr Minson sent an email to Ms Caffarelli, Mr Lowick, Mr and Mrs Bruske, Mr MacLellan, Karen Lowick and others to which Mr Minson attached marked up amendments to the offer to lease. Mr Minson advised the others that they should feel free to add amendments and that it was going to be a compromise by both parties. Mr Minson said that it would go back and forth for at least another two weeks and asked the others to 'please be patient'.

28 The offer to lease was signed on behalf of Roselink by Mr Williams on 8 April 2010. Emails passing between Mr Minson and Ms Caffarelli on 8 April show that Mr Minson was the person giving instructions to Ms Caffarelli about the terms of the offer to lease that Roselink was willing to execute. It also appears that Mr Minson collected the 'paperwork' from Ms Caffarelli. Mr Minson asked Ms Caffarelli to ask Mr Klopper if 'we' could access the building over the weekend with 'our' engineer and architect.

29 The offer to lease provided that Roselink pay a deposit of $51,887. That amount was paid by Mr and Mrs Bruske. In drawing up the accounts for Roselink Ms Caffarelli subsequently treated the payment of the deposit as a director contribution by Andrew.

30 The owners of the Mirrabooka site required a bank guarantee as part of the lease. On 15 April 2010 Sandra Williams, Mr Williams' wife, referred to the bank guarantee in an email to Ms Caffarelli and said 'I believe Dave Minson is attending to that'. It is open to infer that Mr Minson attended to the arrangements necessary for the bank guarantee. That inference is more readily drawn because Mrs Williams, Mr Minson and the other defendants did not give evidence. I draw the inference.

31 On 27 April Mr Minson emailed Ms Caffarelli requesting that she set up a directors' contract/policy for Roselink. Ms Caffarelli replied asking whether Mr Minson was referring to an internal management agreement for the operation of the trust. Mr Minson replied:

Yes, the one with any possible internal disputes and get out clauses not that we are having any but need to cover all bases for everyone. No problems in a meeting maybe next week.

That evidence demonstrates that Mr Minson gave instructions to Ms Caffarelli to draw up an agreement regulating the arrangements between the people involved in the ice rink venture.

32 The offer to lease included conditions that Roselink would provide a detailed scope of lessee's works for the refit of the interior of the building, that Roselink have access to the premises prior to the commencement of the lease to survey and properly measure for intended fitout and Roselink obtain approval from statutory authorities for use of the premises as an ice rink. It may be inferred from subsequent emails that Mr Minson and the Roselink directors met with the council in relation to necessary approvals. Mr Minson communicated with Mr Klopper and with Mr Smeulders, of First State Group, in relation to the scope of works.

33 On 20 April 2010 Roselink had applied to the City of Stirling for approval to commence development for a change of use of the Mirrabooka site to an indoor sports centre and public amusement (ice rink). The application is not in evidence. However, the approval was given on 6 May 2010. The address of Roselink on the approval is Mr Minson's post office box. The inference is open that Mr Minson drafted and lodged, on behalf of Roselink, the application for development approval. That inference is strengthened because none of the defendants gave evidence. I draw the inference.

34 On 11 May 2010 Ms Caffarelli emailed to Mr Minson referring to the offer to lease documents and asking Mr Minson to confirm that conditions that were to be met before the lease could proceed had been met. The conditions were conditions with respect to council approval for an ice rink, correct power loadings, structural integrity and approval of 'your works' by the lessor. Mr Minson continued to communicate with Ms Caffarelli, Mr Klopper and Mr Smeulders about the terms of and completion of the lease. Mr Minson forwarded to Mr Smeulders and Mr Klopper drawings for the movement of poles for the building and a description of works to be done by Roselink. On 11 May Mr Klopper emailed to Mr Minson referring to 'your scope of works schedule' received this morning and pointing out that the 'power provided is what will be provided by the lessor and that any upgrade will be at the cost of the lessee'. Mr Minson emailed in reply stating 'understood and agreed'. The inference is open that Mr Minson oversaw the drafting and settling of the scope of works on behalf of Roselink. That inference is more readily drawn because none of the defendants gave evidence. I draw the inference.

35 The formal lease was subsequently entered into by which Roselink as trustee for the Ice Nemesis Unit Trust leased the Mirrabooka premises. On 25 May 2010 Mr Lowick picked up the keys for the new building from the leasing agent.

36 Meanwhile, Mr Minson and Casey had been involved in obtaining equipment for the ice rink. In November 2009, Mr Minson had acquired from Becker Arena Products, a company in the United States, equipment needed to establish an ice rink. An invoice from Becker Arena Products to Mr Minson shows that on 30 November 2009 Mr Minson paid $152,028.31 for the equipment. The equipment eventually arrived in Australia in February 2010. It was stored at the property of Mr and Mrs Williams until it was installed at the Mirrabooka premises.

37 The defendants say that Mr Minson gave the ice rink machinery, plant and equipment to Casey and Casey supplied the equipment to Roselink. Mr Lowick prepared some documents recording expenditures by Roselink and contributions by directors. The information was provided to Ms Caffarelli in order for her to prepare BAS statements for Roselink. Those records state that on 30 December 2009 $150,036.07 was paid by a director for the purchase of various equipment. The records also state that amounts were paid for sea containers and customs and import duties. The records state that Casey's contribution was $194,000 made up, amongst other things, of $150,036.07 for various equipment and other amounts for containers, customs and other items. The same record states that Andrew's contribution was $194,000 including $51,922 paid for 'deposit for holding property' on 9 April 2010. The contributions by Mr Lowick, Mr MacLellan and Mr Williams are all stated to be simply 'deposit'.

38 In the last week of April 2010 Mr Anuriw drove to the home of Mr and Mrs Williams at Ballajura. He saw four shipping containers. The doors of two containers were open and he saw that they contained goods he recognised as ice rink barriers, boards and a black coloured Zamboni ice resurfacing machine. Two people were moving the goods from one container to another. I find that the equipment that Mr Anuriw saw was equipment that Mr Minson had purchased from Becker Arena Products and imported from the United States.

39 On 25 August 2010 Mr Anuriw drove into the car park adjoining the Mirrabooka site. He saw Mr Bruske standing by the half open rear roller door of the building. On a truck parked nearby Mr Anuriw saw a 30 foot shipping container similar to the type he had seen at the Williams' property. Mr Bruske recognised Mr Anuriw and immediately turned and reentered the building. Mr Anuriw walked to the roller door carrying a camera. He saw Karen Lowick standing outside. He also saw Mr Lowick and Mr Williams. There was an altercation between Mr Anuriw, Mr Lowick and Mr Williams and Mr Anuriw was forced to leave the Mirrabooka premises. It is open to infer that Mr Bruske was participating in installing plant, machinery and equipment at the Mirrabooka premises. That inference is more readily drawn because Mr Bruske and the other defendants did not give evidence. I draw the inference.

Mr Bruske seeks quote for light and sound equipment

40 Mr Grasso was for some time employed by Jaddcal as a DJ at Perth Ice Arena. He gave evidence that he was approached by Mr Bruske to obtain some light and sound equipment for an ice rink. In the course of his crossexamination Mr Grasso at times appeared to contradict himself and be confused about dates and even the sequence of events. However, in general I accept his evidence. I more readily accept his evidence because Mr Bruske did not give evidence to contradict it. I find that in May or June 2010 Mr Bruske approached Mr Grasso soliciting a quote for light and sound equipment for an ice rink. Mr Bruske said words to the effect, 'Dave wants a quote for a sound and lighting fitout for an ice rink that he's planning to set up in Melbourne'. Subsequently, Mr Grasso asked Mr Bruske, 'do you know anything about a new rink at 15 Chesterfield Road Mirrabooka?' and 'do you have anything to do with a company called Roselink?' In response Mr Bruske said, 'my suggestion to you is to keep your mouth shut. If you tell anyone anything about that there will be a number of people coming round to cut your balls off'. Mr Bruske did not accept the quote. There is no evidence that Mr Bruske was involved with Mr Minson in any ice rink enterprise other than the ice rink being established by Roselink at the Mirrabooka premises. The timing and circumstances of the request for the quote together with Mr Bruske's response to Mr Grasso when Mr Grasso asked him if he knew anything about a new rink at Mirrabooka and whether he had anything to do with a company called Roselink make it open to draw the inference that Mr Bruske was soliciting a quote for equipment for the Roselink ice rink at Mirrabooka. The inference is more readily drawn because Mr Bruske did not give evidence. I draw the inference.

41 Xtreme Ice Arena opened to the public for business in November 2010. Since then Roselink has carried on an ice rink business as trustee of the Ice Nemesis Unit Trust under the name of Xtreme Ice Arena from the premises in Mirrabooka.

42 The plaintiffs allege that Mr and Mrs Minson and Mr and Mrs Bruske are and have been involved in the Xtreme Ice Arena and the ice rink business of Roselink in breach of the Restraint Clause. The plaintiffs allege that Roselink, Mr Williams, Mr Lowick, Casey and Andrew induced them to breach their contract with Mr and Mrs Anuriw contained in the Deed.

43 The defendants say that the Restraint Clause is an unreasonable restraint of trade and is void. Alternatively, the first to fourth defendants (Mr and Mrs Minson and Mr and Mrs Bruske) say that a restraint period of no more than one year was reasonably required and any period longer than that was unreasonable. The defendants further say that upon a proper construction of the Restraint Clause, the first to fourth defendants did not breach the Restraint Clause. The fifth to tenth defendants (Roselink, Mr Williams, Mr Lowick, Mr MacLellan, Casey and Andrew) deny that they wrongfully interfered with the contractual relations between Mr and Mrs Anuriw and Mr and Mrs Minson and Mr and Mrs Bruske.

44 The defendants say that Jaddcal is not entitled to enforce the Restraint Clause because it is not a party to the Deed. Jaddcal says that the Deed expressly purported to confer the benefit of the Restraint Clause upon and for the benefit of Jaddcal and by reason of the Property Law Act 1969 (WA) s 11(2) the Restraint Clause is enforceable by Jaddcal.

45 Jaddcal claims against the first to fourth defendants damages for breach of contract for breach of the Restraint Clause. Jaddcal claims against the fifth to tenth defendants damages for tortious interference in the contractual relations between the plaintiffs and Mr and Mrs Minson and Mr and Mrs Bruske. Mr and Mrs Anuriw claim against the first to fourth defendants restitution of the amount they allege was paid in consideration of the restraints contained in the Restraint Clause. Alternatively, the plaintiffs each claim an injunction restraining the first to fourth defendants from further breaching the Restraint Clause.

46 The defendants deny that the plaintiffs have suffered any loss or damage as a result of any breach of the Restraint Clause by the first to fourth defendants or as a result of any wrongful interference by the fifth to tenth defendants in the contractual relations between the plaintiffs and Mr and Mrs Minson and Mr and Mrs Bruske. The first to fourth defendants deny that Mr and Mrs Anuriw paid any consideration for the Restraint Clause, or any separate and distinct consideration, and deny that they are liable to make restitution to Mr and Mrs Anuriw of any consideration paid for the Restraint Clause.

Jaddcal is entitled to enforce the Restraint Clause

47 The plaintiffs submit that although Jaddcal is not a named party to the Deed it is referred to within the Deed and upon a proper interpretation of the Deed it is the entity that is intended to take advantage of the Restraint Clause. The plaintiffs rely on s 11(2) of the Property Law Act 1969 (WA) which states:

(2) Except in the case of a conveyance or other instrument to which subsection (1) applies, where a contract expressly in its terms purports to confer a benefit directly on a person who is not named as a party to the contract, the contract is, subject to subsection (3), enforceable by that person in his own name but -

(a) all defences that would have been available to the defendant in an action or proceeding in a court of competent jurisdiction to enforce the contract had the plaintiff in the action or proceeding been named as a party to the contract, shall be so available;

(b) each person named as a party to the contract shall be joined as a party to the action or proceeding; and

(c) such defendant in the action or proceeding shall be entitled to enforce as against such plaintiff, all the obligations that in the terms of the contract are imposed on the plaintiff for the benefit of the defendant.

48 The Explanatory Memorandum to the Property Law Bill 1969 which, upon enactment, became the Property Law Act said in relation to cl 11 which, upon enactment, became s 11:

Clause 11 provides that a person may take an interest in land or other property or the benefit of any covenant although he is not named as a party in the instrument concerned. Subclause (1) is in substance a re-enactment of section 5 of the Real Property Act 1845 (8 and 9 Vict C 106) which is to be repealed by this Bill. That section has been held to have a very limited effect and is in practice confined to what are known as 'covenants running with the land'. There has been a great deal of judicial argument on the question as to whether persons who are not parties to a contract should have the right to enforce the contract when it has been made for their benefit. See Coulls v Bagots Executor and Trustee Co Ltd [1967] HCA 3; 40 ALJR 471 and Beswick v Beswick [1967] UKHL 2; (1967) 3 WLR 932. The result of the cases is that the Courts have refused to recognise third party rights except in limited categories of cases and not always on logical grounds. For example, in general, in the absence of any trust it can be said that a policy of insurance taken out by A and expressed to be payable to B is not enforceable by B. Similarly where two partners agree that on the death of one, the survivor will pay an annuity or other sum to the widow, such an agreement cannot be enforced by the widow. The manifest injustice caused by the rigid application of the third party rule has led to suggestions for reform. As long ago as 1937 the Law Revision Committee in England in its Sixth Interim Report stated:

'The common law of England stands alone among modern systems of law in its rigid adherence to the view that a contract should not confer any rights on a stranger to the contract, even though the sole object may be to benefit him.'

The Committee recommended (at para 48) legislation to provide that:

'Where a contract by its express terms purports to confer a benefit directly on a third party, it shall be enforceable by the third party in his own name subject to any defences that would have been valid between the contracting parties. Unless the contract otherwise provides it may be cancelled by the mutual consent of the contracting parties at any time before the third party has adopted it either expressly or by conduct.'

This proposal is advocated in 'Law Reform Now' published in 1964 and edited by the present Lord Chancellor and is among the subjects in Item 111 of the first programme of the English Law Commission of July 1965. It is also advocated in a leading text book, Cheshire and Fifoot's Law of Contract 6th Ed p 391-2. It is therefore felt that there is ample authority to justify the inclusion of a measure of law reform in the Bill by substantially adopting the wording of the Law Revision Committee's recommendation in subclauses (2) and (3) (Explanatory Memorandum, Property Law Bill 1969 (WA) 3 - 4).

49 The UK Law Revision Committee, Sixth Interim Report (1937) emphasised that proposed statutory recognition of third party rights should be carefully limited. It said:

The first and most important provision ought to be that no third party right can be acquired unless given by the express terms of the contract. A third party right ought not to be acquired by implication, e.g. merely because the performance of the contract will benefit the third party [47].

50 This recommended limitation on the statutory recognition of third party rights was embodied in Property Law Act s 11(2). The rights conferred on third parties by that provision apply only where a contract 'expressly in its terms purports to confer a benefit directly' on a person who is not named as a party to the contract.

51 In Bell Group Ltd (in liq) v Westpac (2008) 39 WAR 1 [3369] Owen J held that Property Law Act s 11(2) applies where the conferral of the benefit arises under an implied term. His Honour pointed out that s 11(2) substantially adopted the wording of the recommendation of the English Law Revision Committee in its Sixth Interim Report (cmd 5449, 1937, paras 41 - 49): see Westralian Farmers v Southern Meat Packers; the Explanatory Memorandum to the Property Law Act s 4. Owen J said that:

[T]he inclusion of the words 'expressly in its terms' in the English Law Revision Committee's recommendation was directed towards the problem of 'incidental beneficiaries', that is, towards ensuring that there was an intention to confer a benefit directly on third parties and that third parties did not gain enforceable rights merely because the contractual provisions would be of benefit to them [3369].

At [3371] Owen J said that a third party may enforce rights under a written contract, even though the particular rights might not appear expressly but arise by implication. His Honour said that:

The intention to confer a benefit directly on the third party would still have to appear expressly in the agreement [3371].

52 Property Law Act s 11(2) distinguishes between intended and incidental third party beneficiaries. Only intended beneficiaries acquire actionable legal rights in a contract. An intended beneficiary is a third party for whose benefit a contract is formed or a contractual provision included. An incidental beneficiary is a third party that benefits from the performance of a contract, but whose benefit was not the reason the contract was formed or the contractual provision included.

53 The court approaches the task of ascertaining the meaning of contractual provisions objectively. In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 the High Court said:

The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of text, but also of the surrounding circumstances known to the parties, and the purposes and object of the transaction [40].

In determining whether a third party is an intended or incidental beneficiary, the court should use an objective, reasonable person test. Would a reasonable person have intended to confer on the third party:

(1) the right to bring an action to enforce the contract, and, thereby;

54 A reasonable person in the position of the parties to the Deed would have intended to confer the benefit of the Restraint Clause on Jaddcal. The Restraint Clause is cl 8.2 of the Deed. Clause 8.10 provides that the purchasers and the vendors acknowledged that all the prohibitions and restrictions contained in cl 8 are necessary to protect the goodwill of the Company, that is Jaddcal. Recital V recites that the company (Jaddcal) conducts the ice rink business conducted by Jaddcal at the Perth Ice Arena. I find that Jaddcal is entitled to enforce the Restraint Clause in the Deed.

55 The Restraint Clause provides that the Vendors (the first to fourth defendants) shall not 'be directly or indirectly engaged, concerned or interested in the capacity specified in cl 8.3 in the trade or business specified in cl 8.4 within the area specified in cl 8.5 within the period specified in cl 8.6'.

56 The Restraint Clause is in a form which is variously known as a 'step', 'ladder' or 'cascade' clause. It provides that the Vendors separately enter with the Purchasers into each of the covenants resulting from the combination of each of the capacities in cl 8.3 with each trade or business specified in cl 8.4, each separate geographical area in cl 8.5 and each separate period in cl 8.6. Each of those covenants constitutes a separate restraint of trade imposed on the Vendors under the Deed. Clause 8.9 provides that if any of those covenants is or becomes unenforceable that does not affect the validity or enforceability of the other covenants that remain binding on the Vendors. The Restraint Clause contemplates all of the combinations applying with severance of those found to be an unreasonable restraint of trade. The defendants did not argue that the clause is uncertain. In any event, I find that it is not uncertain.

57 The reference to 'the capacity specified in cl 8.3' extends rather than limits the restraints imposed by the Restraint Clause. The clause lists 10 specific 'capacities' and a further capacity 'otherwise'. Including the capacity of 'otherwise' means that a vendor will breach the Restraint Clause if he or she is directly or indirectly engaged, concerned or interested in the specified business in any capacity. The intention of the clause appears to be to ensure that it covers conduct that might not otherwise be covered. For example, (c) of the clause is 'debenture holder or holder of any other security'. A person who was connected (to use a neutral word) with a business of the sort specified may fall within the Restraint Clause by reason of holding a debenture or other security over the business when he or she may not have come within the terms of the Restraint Clause if cl 8.3 had not been included.

58 Clauses 8.4, 8.5 and 8.6 are limiting provisions. Clause 8.4 limits the trade or business which the Vendors are restrained from being directly or indirectly engaged, concerned or interested in. Clause 8.4 extends at least to a corporation that is engaged in or carries on an ice rink business. The inclusion of '(b) firm' and '(c) business' extends the businesses which the Vendors are restrained from being involved in to unincorporated businesses.

59 Clauses 8.5 and 8.6 are limiting provisions. They limit the area within which and the period for which the Vendors are not to be engaged, concerned or interested in an ice rink business.

60 The gist of the Restraint Clause is that the first to fourth defendants shall not be directly or indirectly engaged, concerned or interested in an ice rink business within the specified area within the specified period.

61 In general, at common law, a term of a contract that is an unreasonable restraint of trade is contrary to public policy and void. Whether a restraint is reasonable is a question of law. Reasonable means reasonable both in relation to the parties and in relation to the public interest. The onus is on the restraining party to prove that the restraint is reasonable as between the parties, but the other party has the onus of proving that the restraint injures the public interest. The defendants have not pleaded that the restraint injures the public interest. Accordingly, that is not an issue in this action.

62 A restraint of trade will be reasonable only if:

1. the party in whose favour the restraint is given has a genuine interest requiring protection;
2. the activities restrained are no wider than necessary for protection of that interest;
3. the restriction is for a period no longer than necessary for the protection of that interest; and
4. the restriction relates to a geographical area no larger than necessary for the protection of that interest.

Restraining party must have a legitimate interest to protect

63 For a restraint to be reasonable the restraining party must establish an identifiable interest calling for protection. A bare covenant restrictive of competition even if it is limited in point of time and place cannot be sustained: Butt v Long [1953] HCA 76; (1953) 88 CLR 476, 486; Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628, 633. The interest must be that of the party seeking to enforce the restraint: Berry v Wong [2000] NSWSC 1002.

64 In this case both Jaddcal and Mr and Mrs Anuriw seek to enforce the Restraint Clause. Jaddcal seeks to enforce it by an award of damages for breach of the clause and, alternatively, by an injunction to restrain Mr and Mrs Minson and Mr and Mrs Bruske from engaging in conduct in breach of the clause. The primary relief claimed by Mr and Mrs Anuriw is not to enforce the Restraint Clause but for restitution of an amount paid for the Restraint Clause, but alternatively they claim an injunction to restrain Mr and Mrs Minson and Mr and Mrs Bruske from engaging in conduct in breach of the clause.

65 The interest of the buyer of a business in protecting its goodwill from competition by the seller is a recognised legitimate interest meriting protection. However, the categories of contracts that may contain an enforceable covenant in restraint of trade are not closed. A commercial agreement that is not strictly one for the sale of a business may contain an enforceable covenant in restraint of trade. An investor in a business that has just started up, or that has not yet commenced, may have a legitimate interest to protect from fellow investors or from persons from whom they acquired the business directly or indirectly.

66 In Dawnay Day & Co Ltd v D'Alphen [1997] EWCA Civ 1753; [1998] ICR 1068 the plaintiff company, Dawnay Day, was a merchant bank. The defendants (the managers) were experienced managers in the business of broking European bonds and were formerly employed by Euro Suisse Securities Ltd. They left Euro Suisse in order to establish a new joint venture business with Dawnay Day in the same field. The venture involved the creation of a jointly owned company, Dawnay Day Securities Ltd, by whom they were employed and of which they became directors. Dawnay Day invested large sums in the joint venture vehicle, Dawnay Securities. Subsequently the managers moved on from Dawnay Securities to another company dealing in European bonds. Dawnay Day issued proceedings claiming to enforce contractual undertakings by the managers not to compete with the business of Dawnay Securities. The undertakings were in a shareholders agreement between Dawnay Day and the managers. The managers argued that Dawnay Day's only interest was as an investor, that is the holder of shares in Dawnay Securities, and that an investment in a company does not give a shareholder a legitimate interest in need of protection by the imposition of covenants in restraint of trade. Robert Walker J observed that Dawnay Securities was not a party to the shareholders agreement but if it had been a covenantee under the shareholders agreement he would have had no difficulty in concluding that Dawnay Securities had a legitimate interest in protecting its goodwill. Counsel for the managers emphasised that the restrictive covenants were entered into, not in favour of Dawnay Securities, but Dawnay Day and that the covenants were not entered into on the occasion of a sale of shares in Dawnay Securities. Robert Walker J held that Dawnay Day had a sufficient legitimate interest of a proprietary nature to entitle it to seek protection in the form of restrictive covenants by the managers. The managers' appeal to the England and Wales Court of Appeal was dismissed. Evans LJ, with whom the other members of the court agreed, said at 1107:

In my judgment, far from confining the circumstances in which covenants in restraint of trade may be enforced to certain categories of case, and defining those categories strictly, the courts have moved in the opposite direction. The established categories are not rigid and they are not exclusive. Rather, the covenant may be enforced when the covenantee has a legitimate interest, of whatever kind, to protect, and when the covenant is no wider than is necessary to protect that interest. The fact therefore that Dawnay Day was neither the purchaser of a business from the managers, nor their employer, does not mean that the covenants cannot be enforced.

Dawnay Day's undertaking to make the capital contribution, and certainly the contribution after it was made, gave Dawnay Day a clear commercial interest in safeguarding itself against competition from the managers, individually or collectively, for the agreed period set out in clause 9. The fact that the interest was 'commercial' does not mean that it was not lawful. In my judgment the judge was correct to describe it as an interest 'of a proprietary nature' which falls within the established principle that 'a proprietary or quasiproprietary interest' is entitled to protection, where and to the extent that protection is reasonably necessary: see Chitty on Contracts, 27th ed (1994), vol 1, para 16075, p 820. I would also be prepared to say more generally that Dawnay Day had a clear commercial interest in the success of the joint venture, by reason of its contribution to it, and that, whether or not the interest can be classified as proprietary or quasiproprietary, Dawnay Day is entitled to claim protection for that interest in the form of the covenants which it now seeks to enforce.

67 In Seven Network (Operations) Ltd v Warburton (No 2) [2011] NSWSC 386 at [66] Pembroke J held that there is no principle excluding a legitimate interest from existing outside of an employment contract or sale of business contract. The defendant, Mr Warburton, had entered into an employment contract with the plaintiff, Seven Network. Mr Warburton was a senior executive. The disputed restraint clause was not in the employment contract but in a management equity participation deed (MEP deed). The purpose of the MEP deed was to protect the interests of private equity investors (KKR) in the Seven Media Group (SMG). This was done by ensuring that senior executives had an economic stake in the business through options, as well as preventing them from competing with SMG after their employment had ended. Pembroke J said that from the perspective of KKR and Seven Network, the restraints on competition served to protect their investment. The object of the restraints on competition was, amongst other things, to reduce the risk of devaluation of the business by the departure of any executives to work for competitors and to reduce the risk of dissipation or reduction in the customer connection of the business. Pembroke J held that Seven Network and KKR had a legitimate interest to protect by the restrictive covenants.

Defendants say plaintiffs have no legitimate interest to protect

68 The plaintiffs say that the restraints imposed by the Restraint Clause are reasonably necessary to protect the goodwill of the business purchased by Mr and Mrs Anuriw from Mr and Mrs Minson and Mr and Mrs Bruske. The first to fourth defendants argue that the Restraint Clause does not protect any legitimate interest of the plaintiffs on two grounds. First, the first to fourth defendants submitted that in the case of covenants between vendors and purchasers of businesses the main justification for a restraint is the protection of the goodwill of the business acquired by the purchaser. Those defendants submitted that on a proper analysis of the Deed the consideration paid by Mr and Mrs Anuriw to the first to fourth defendants was for the shares held by the first to fourth defendants in Jaddcal and nothing was paid by Mr and Mrs Anuriw for goodwill. Secondly, the defendants argue that the business of Jaddcal did not have any goodwill at the time of the share purchase. Those defendants submitted that it is clear from the report of Graham O'Hehir that at the date of the Deed Jaddcal did not have any goodwill. The first to fourth defendants submitted that if the restraint is not ancillary to the sale of the goodwill of a business it should be struck down because if there is no protectable interest the covenant will be regarded as unreasonable.

Mr and Mrs Anuriw purchased interest in Perth Ice Arena business

69 It is not uncommon for a purchaser to acquire a business, or an interest in a business, by purchasing shares in the company which owns the business rather than purchasing the business directly. As a matter of substance, the purchaser of the shares has the same legitimate financial interest to support restraints on competition agreed as part of the transaction as it would if it had purchased the business directly.

70 In substance Mr and Mrs Anuriw purchased from Mr and Mrs Minson and Mr and Mrs Bruske their interests in the Perth Ice Arena business, including the goodwill of the business. Mr and Mrs Anuriw, Mr and Mrs Minson and Mr and Mrs Bruske acquired Jaddcal for the purpose of establishing and operating the Perth Ice Arena business. All of Jaddcal's assets were employed in that business. Jaddcal had no function other than owning and operating the Perth Ice Arena business. Mr and Mrs Anuriw purchased from Mr and Mrs Minson and Mr and Mrs Bruske two thirds of the shares in Jaddcal. The restraint on competition served to protect the investment of Mr and Mrs Anuriw in the business. The object of the restraints on competition was to reduce the risk of failure or devaluation of the business by the departing shareholders establishing, or assisting to establish, a rival business that undermined the Perth Ice Arena business by attracting customers who would otherwise have patronised Perth Ice Arena.

Jaddcal owned goodwill in Perth Ice Arena business

71 At the date of the Deed Jaddcal owned the goodwill of the Perth Ice Arena business. The evidence of Mr O'Hehir does not establish that at the date of the Deed Jaddcal did not have any goodwill in the relevant sense. Mr O'Hehir is a business valuer. He concluded that in August 2009 the Perth Ice Arena business had no goodwill because it had not been operating long enough to establish a sustainable turnover or earnings. Mr O'Hehir applied the accounting concept of goodwill meaning the value of an entity over and above the value of its assets. The accounting concept of goodwill differs from the legal concept.

72 In Federal Commissioner of Taxation v Murry (1998) 193 CLR 605 the High Court considered the legal concept of goodwill. The respondent had sold a taxi licence which she had been leasing to a third party. The question before the High Court was whether the amount received on disposal of the licence, or some part of it, constituted a payment of goodwill for the purpose of pt IIIA of the Income Tax Assessment Act 1936 (Cth). The High Court held that goodwill is an asset of a business because it is the valuable right or privilege to use the other assets of the business to attract custom and produce income. The sale of an asset of a business does not involve any sale of goodwill unless the sale of the asset is accompanied by or carries with it the right to conduct the business. Since goodwill is an indivisible item of property which is distinct from and does not inhere in the assets of a business the taxpayer did not dispose of goodwill. She had sold no business, she merely sold an asset of the business.

73 In the course of their joint judgment the plurality made a number of points relevant to the issue presently under consideration. First, goodwill is an accounting and business term as well as a legal term. The understanding of accountants and business persons as to the meaning of the term differs from that of lawyers: [13]. Secondly, a business may have goodwill even though it is not profitable. The plurality said:

In a business trading at a loss or with less than industry average profitability, there may be a marked difference between the value of goodwill for legal purposes and its value for accounting or commercial purposes. That is because goodwill for legal purposes includes everything that adds value to the business 'every positive advantage' as Wood VC pointed out in Churton v Douglas. As a result, a business may have valuable goodwill in the eyes of the law although an accountant would conclude that the business either has no goodwill or that, if it has, it is of nominal value only. The value of such goodwill may be difficult to assess. Having regard to the likely future of the business, often it may have only nominal value. But in some cases, the value of the goodwill may be more than nominal. It may be the difference between the revenues generated by the relevant advantages and the operating expenses (other than a share of the fixed costs) incurred in earning those revenues [50].

If a business trading at a loss may have valuable goodwill, even more so a business which has not been trading long enough for a valuer to attribute any goodwill to it may have valuable goodwill in the eyes of the law. Thirdly, a person who has purchased the goodwill of a business may have a legitimate interest to be protected by the law even if it had no goodwill in an accounting sense, that is the value of the firm was no greater than the value of its identifiable assets. The plurality said:

A business may have goodwill for legal purposes even though its trading losses are such that its sale value would be no greater than its 'breakup' value. Once the courts rejected patronage as the touchstone of goodwill in favour of the 'added value' concept, it might seem impossible for a business to have goodwill for legal purposes when its value as a going concern does not exceed the value of the identifiable assets of the business. But the attraction of custom still remains central to the legal concept of goodwill. Courts will protect this source or element of goodwill irrespective of the profitability or value of the business. Thus, a person who has sold the goodwill of a business will be restrained by injunction from soliciting business from a customer of the old firm even though the value of that firm is no greater than the value of its identifiable assets [20].

Fourthly, the attributes of a business which form part of its goodwill include its location and having no nearby competitor. The plurality said:

In some businesses, price and service may have little effect in attracting custom. The goodwill of such businesses may derive almost wholly from their location. This will often be the case where there is no nearby competitor and custom is drawn from nearby residents or those who must pass by the site of the business. The lack of competition resulting from an enforceable restrictive covenant may also enhance the goodwill of a business [26].

74 Furthermore, at the date of the Deed the parties agreed that the restrictions contained in the Restraint Clause are 'necessary to protect the goodwill of the Company'. That is, the first to fourth defendants recognised that the business carried on by Jaddcal had goodwill.

75 In any event I reject the first to fourth defendants' contention that the plaintiffs had no legitimate interest to protect because, as I have tried to explain, the question is not whether the Restraint Clause was in part consideration for the sale of the goodwill of the business acquired by the purchaser or part of a transaction for the sale and purchase of a business. The question is whether the party in whose favour the covenant is given has a genuine interest requiring protection. There is no principle excluding a legitimate interest from existing outside of the purchase of goodwill in a business acquisition. The investors in a start up business which has not yet earned income, or established a sustainable income, may have a legitimate interest requiring protection. Dawnay Day & Co Ltd v D'Alphen and Seven Network (Operations) Ltd v Warburton (No 2) provide examples of such legitimate interests.

76 I find that Jaddcal had a genuine interest in the Perth Ice Arena business requiring protection from competition by the first to fourth defendants. It owned and operated the ice rink business. When the Deed was executed Jaddcal had been operating Perth Ice Arena and had attracted customers. There were connections between the customers and the ice rink that Jaddcal had a legitimate interest in protecting from competition from the first to fourth defendants. There may be different ways in which there is a connection between a business and its customers which is of value to the proprietor. The Perth Ice Arena business had been operating for four months. The West Coast Ice Hockey Club had been operating from there and its members resorted there to go skating or play ice hockey. Other people living north of the river resorted to the Perth Ice Arena to skate. Those connections were of some value and likely to continue if a rival did not open up at a location which is likely to attract customers who would otherwise skate or play ice hockey at the Perth Ice Arena.

77 I find that Mr and Mrs Anuriw had a legitimate interest to protect. The Perth Ice Arena was in substance a joint venture between them, Mr and Mrs Minson and Mr and Mrs Bruske conducted through the joint venture vehicle, Jaddcal. When the Anuriws purchased the shares of the Bruskes and Minsons in Jaddcal they were in substance purchasing the interest of the Bruskes and the Minsons in the joint venture business conducted through Jaddcal. They had a legitimate interest to reduce the risk of failure or devaluation of the business by the departing shareholders establishing, or assisting to establish, a rival business that undermined the Perth Ice Arena business by attracting customers who would otherwise have resorted to the Perth Ice Arena.

78 In determining whether the Restraint Clause is reasonable there are three questions which must be addressed. First, is the operative scope, that is the activities restrained, unduly wide? Second, is the area of the restraint unduly wide? Third, is the duration of the restraint unduly long? As well as addressing these three questions separately, it is also necessary to consider the cumulative effect of the three categories of restraint: Cream v Bushcolt Pty Ltd [2004] WASCA 82 [87] (Malcolm CJ).

79 Before considering the reasonableness of each of these aspects of the Restraint Clause it is convenient to consider two matters that were raised during the course of the trial. The first is the expertise of Mr Minson and Mr Bruske and their connection with customers of Perth Ice Arena. The second is whether the payments made by Mr and Mrs Anuriw to Mr and Mrs Minson and Mr and Mrs Bruske under the Deed included payment for the share of Mr and Mrs Minson and Mr and Mrs Bruske in the goodwill of Jaddcal.

Expertise and customer connections of Mr Minson and Mr Bruske

80 Counsel for the plaintiffs stressed the expertise of Mr Minson in establishing or constructing an ice rink. I find that Mr Minson had both expertise and experience in constructing and fitting out an ice rink. Mr Minson's expertise and experience would be of great assistance in constructing and establishing an ice rink. That appears to have been of particular concern to the plaintiffs.

81 The plaintiffs also referred to the experience of Mr Minson, and to a lesser extent Mr Bruske, in State and national hockey associations. Mr Minson was for many years President of the WA Ice Hockey Association. In December 2009 and January 2010 Mr Minson was the team leader, and Mr Bruske the team manager, representing Ice Hockey Australia in the World Ice Hockey Championships in Canada and Turkey.

82 The skills and expertise of Mr Minson and Mr Bruske is relevant to anyone wishing to establish a new ice rink in Perth. However, the evidence does not establish that Mr Minson and Mr Bruske are the only persons in Perth with the necessary skills, expertise and experience to fit out an ice rink. Furthermore, it is not the purpose of the Restraint Clause to protect any business secrets or confidential information. The Restraint Clause does not seek to prevent Mr Minson and Mr Bruske using their expertise or experience to establish an ice rink except if the location of the ice rink is likely to cause injury to Jaddcal by drawing customers from Perth Ice Arena.

83 The evidence does not establish that any of the defendants had any personal association or connection with the customers of Perth Ice Arena. There is no evidence that Mr Minson or Mr Bruske solicited or served customers of Perth Ice Arena so as to develop some personal loyalty of the customers to Mr Minson or Mr Bruske. The evidence, so far as it goes, is that Mr Minson did much of the work in setting up Perth Ice Arena, including the fit out. Mr Minson is an electrical contractor and completed the electrical fit out of Perth Ice Arena. Mr Bruske had bookkeeping skills. There is no evidence that Mrs Minson or Mrs Bruske did anything that would have developed any customer loyalty.

84 There is a controversy between the parties whether or not Mr and Mrs Anuriw paid anything for the Restraint Clause. In substance, Mr and Mrs Anuriw paid $640,000 for the interest of Mr and Mrs Minson and Mr and Mrs Bruske in the Perth Ice Arena business they held through Jaddcal. In addition to paying the first to fourth defendants for their shares, Mr and Mrs Anuriw agreed to procure the repayment of the first to fourth defendants' loan accounts with the company. Jaddcal's balance sheet as at 28 August 2009 shows net assets of $179,199. Jaddcal had no business or assets outside of the Perth Ice Arena business. In substance, Mr and Mrs Anuriw paid $640,000 to acquire part of a business with net assets of $179,199. Part of the transaction included Mr and Mrs Bruske and Mr and Mrs Minson entering into the Restraint Clause. I find that the Restraint Clause was part of a transaction in which Mr and Mrs Anuriw paid a substantial sum to acquire the interest of Mr and Mrs Bruske and Mr and Mrs Minson in the Perth Ice Arena business carried on through the vehicle of Jaddcal. That is, the Restraint Clause was part of the consideration provided by Mr and Mrs Minson and Mr and Mrs Bruske in return for the sum of $640,000 paid by Mr and Mrs Anuriw.

85 The defendants did not challenge the reasonableness of the activities restrained by the Restraint Clause. In any event, I find that the operative scope of the Restraint Clause is not unduly wide. The Restraint Clause provides, in effect, that the restrained parties shall not be directly or indirectly engaged, concerned or interested in any corporation, firm or business that is engaged in or carries on, or has an interest in, an ice rink business within the specified areas within the specified periods.

86 The type of business which the restrained parties are restrained from engaging in is the type of business that Jaddcal was engaged in at the time the Deed was made, that is, an ice rink business. It is not too wide. It is no more than is adequate to protect the business of Jaddcal. So far as Mr and Mrs Anuriw are concerned the operative scope of the Restraint Clause was no wider than necessary for the protection of their interest, that is the business of the company in which they purchased the shares from the first to fourth defendants.

87 The primary challenge to the reasonableness of the restraint was directed at the geographical width of the restraint, that is the area within which the Restraint Clause restrains the first to fourth defendants from engaging in the business of an ice rink. The Restraint Clause is a cascade or step up clause which provides for progressively narrower restraint areas ranging from an area with a radius of 50 km from the Perth GPO to an area with a radius of 10 km from the Perth GPO. The plaintiffs contend that an area within a 10 km radius from the Perth GPO is reasonable. I will refer to that area as the 10 km circle.

88 The geographical extent of the restraint must bear some reasonable relationship to the geographical area in which the business was conducted. In considering the reasonableness of the restraint the court should have regard to the nature of the business in question, including the location of the ice rink and its customers.

89 It is a curious feature of the Restraint Clause that the geographical areas referred to are areas determined by their radius from the Perth GPO rather than from their distance from the Perth Ice Arena. The Perth Ice Arena falls outside the 10 km circle. If a covenant in relation to an area with a radius of no more than 10 km from the Perth GPO is enforceable, then the first to fourth defendants would be entitled to establish and operate an ice rink business next door to the Perth Ice Arena. That might have the consequence that the prescribed area is less than is adequate to reasonably protect the Perth Ice Arena business but it is not, for that reason alone, an area greater than is reasonably necessary to protect the business of the Perth Ice Arena.

90 A covenant against competition entered into by a vendor with the purchaser of a business will usually be upheld as necessary to protect the subject matter of the sale, provided that it is confined to the area within which competition on the part of the vendor would be likely to injure the purchaser in the enjoyment of the goodwill he has bought: Herbert Morris Ltd v Saxelby [1916] 1 AC 688, 708 709 (Lord Parker); Kores Manufacturing Co Ltd v Kolok Manufacturing Ltd [1959] Ch 108, 118 (Jenkins LJ); Office Angels Ltd v RainerThomas (1991) WL 837950, 5 (Slade LJ, ButlerSloss & Mann LLJ agreeing).

91 The transaction of which the Restraint Clause formed a part is, or is analogous to, the sale of a business. The interest of Jaddcal and Mr and Mrs Anuriw which requires protection is or is analogous to, the interest of a purchaser of the goodwill of a business. The Restraint Clause should be upheld as necessary to protect the interests of Jaddcal and Mr and Mrs Anuriw provided that it is confined to the area within which competition by the first to fourth defendants would be likely to injure the Perth Ice Arena business.

92 Prior to the opening of Xtreme Ice there was no northern suburbs facility to compete with Perth Ice Arena for the patronage of people living north of the river. Mr Anuriw said that from his experience running the Perth Ice Arena, generally speaking people from the southern suburbs who go ice skating or play ice hockey go to the Cockburn Ice Arena and people from the northern suburbs came to Perth Ice Arena. Mr Anuriw gave evidence that the West Coast Ice Hockey Club train and play half of their fixtures at Perth Ice Arena. Their membership is about 350 people. From his knowledge of the club Mr Anuriw said that virtually all of those people live north of the river.

93 Randal Salmond is the president of the Western Australian Ice Hockey Association. He gave evidence that at the time of the trial there were three ice hockey clubs in Western Australia the Hawks, West Coast and the Vikings. The Hawks are based at Cockburn Ice Arena in Bibra Lake. West Coast are based at Perth Ice Arena. The Vikings, a recently founded club, are based at Xtreme Ice. All clubs including West Coast pay for their teams ice time for training. The Association pays for its members clubs ice time for games. Prior to Xtreme Ice Arena opening, the Association divided the State hockey teams' ice time for games and training between Perth Ice Arena and Cockburn Ice Arena.

94 Before Xtreme Ice Arena opened, ice rink customers living south of the river tended to frequent Cockburn Ice Arena and those living north of the river tended to frequent Perth Ice Arena. There were two ice hockey clubs - one based at Perth Ice Arena and one based at Cockburn Ice Arena. An ice rink opening in close proximity to Perth Ice Arena was likely to draw customers from Perth Ice Arena. As at August 2009, if a new ice rink was opened it was likely that some people who live closer to the new ice rink than Perth Ice Arena may patronise the new ice rink rather than Perth Ice Arena.

95 A reasonable area within which the restraints are to operate is an area within which a competing business would be reasonably accessible by the customers who went to the Perth Ice Arena: see C & S Constructions Pty Ltd v Dawson (1991) ATPR 41148, 53, 1067 (Waddell CJ). An area with a radius of 10 km from the Perth Ice Arena is an area within which a competing business would be reasonably accessible by the customers who went to the Perth Ice Arena as at August 2009 and customers who were foreseeably likely to go to Perth Ice Arena in the following months. The 10 km circle captures a substantial part of the catchment area from which in August 2009 the Perth Ice Arena drew its customers. That is principally the area north of the river and those locations to which the Perth Ice Arena is more accessible than the Cockburn Ice Arena.

96 Counsel for the plaintiffs said, and it appears from the maps in evidence, that the Perth Ice Arena is about 2 km outside the 10 km circle. Therefore, a location approximately 22 km from the Perth Ice Arena would be inside the 10 km circle. That is the extreme distance between the Perth Ice Arena and locations within the 10 km circle. Most points within the circle would be substantially closer to the Perth Ice Arena.

97 Some points within the 10 km circle are closer as the crow flies to the Cockburn Ice Arena than the Perth Ice Arena. In this case the Perth Ice Arena had only been operating for four months and it was reasonably foreseeable that it would draw customers from locations north of the river and to a lesser extent locations south of the river from which Perth Ice Arena was reasonably accessible and were not so close to Cockburn Ice Arena that they would be unlikely to go to any ice rink other than Cockburn Ice Arena. I find that the locations within the 10 km circle are generally locations from which the Perth Ice Arena is reasonably accessible in comparison with Cockburn Ice Arena notwithstanding that some of those locations would be closer in a straight line to Cockburn Ice Arena than Perth Ice Arena. There was a reasonable likelihood that people living in those locations who wished to go ice skating would patronise Perth Ice Arena.

98 The plaintiffs further sought to demonstrate the reasonableness of the 10 km circle restraint by evidence concerning the location and population basis of ice rinks in the metropolitan cities of Australia. Christopher Daws, who describes himself as an insolvency consultant, was briefed by the plaintiffs' solicitors to provide an analysis as to what population customer base would generally be required to sustain an ice rink business. Mr Daws considered the fixed overhead costs of an ice rink and considered the fixed costs and variable costs of Perth Ice Arena. He stated, unsurprisingly, that in order for an ice rink business to break even, that is cover its costs and expenses, it requires a substantial amount in sales revenue without allowing for any profit margin. Mr Daws said that any business will normally have a catchment area, that is, an area in which its customers are located. Some businesses require a larger catchment area in order to ensure a sufficient client base and therefore revenue. Mr Daws concluded that due to the nature of the costs that an ice rink business incurs a large catchment area is needed to ensure the viability of the business.

99 The plaintiffs submitted that ice rinks in other Australian cities require substantial population catchment areas and distances between each other so as to generate sufficient income to cover fixed costs and generate a profit to the owners. Mr Daws examined the location of ice rinks in each of the metropolitan areas of the States and Territories of Australia and their proximity to one another. Mr Daws obtained from the Australian Bureau of Statistics the population for each capital city. Mr Daws then determined the population base for each ice rink by assuming an evenly spread population and distribution of ice rinks across each metropolitan area. Mr Daws summarised his conclusions in the following table:

100 Mr Daws' analysis was based upon the population of the metropolitan areas as at July 2010. Mr Daws stated that prior to November 2010 the only ice rinks in Western Australia were the Perth Ice Arena and Cockburn Ice Arena in Bibra Lake, south of the river and 29.9 km from Perth Ice Arena in a straight line.

101 Mr Daws' analysis must be approached with caution. Mr Daws does not consider the geographical distribution of the ice rinks within each metropolitan city nor attempt to identify a natural catchment area or population base for each ice rink. Nevertheless, Mr Daws' analysis provides an indication as to the distances between ice rinks and the relationship between ice rinks and population bases in the metropolitan cities of Australia. Mr Daws' analysis shows that the notional population base for each of the ice rinks in Perth was less than the notional population base for each ice rink in Melbourne, Sydney and Brisbane before Xtreme Ice commenced operations. Furthermore, ice rinks in other metropolitan cities are located a minimum of between 15 and 26 km from each other.

102 In Esso Petroleum Co Ltd v Harper's Garage (Stourport) Ltd [1967] UKHL 1; [1968] AC 269 Lord Pearce said that in a doubtful case where the court does not see clearly whether or not the restraint is reasonable:

... there may be a danger in preferring the guidance of a general rule, founded on grounds of public policy many generations ago, to the guidance given by free and competent parties contracting at arm's length in the management of their own affairs. Therefore, when free and competent parties agree and the background provides some commercial justification on both sides for their bargain, and there is no injury to the community, I think that the onus should be easily discharged (323 - 324).

103 The evidence provides some commercial justification on both sides for the bargain which Mr and Mrs Anuriw and Mr and Mrs Minson and Mr and Mrs Bruske struck in including the Restraint Clause in the deed of settlement. They freely bargained and agreed upon that clause. Clause 8.10 of the Deed provides that the purchasers (Mr and Mrs Anuriw) and the vendors (Mr and Mrs Minson and Mr and Mrs Bruske) acknowledged that the prohibitions and restrictions contained in the Restraint Clause 'are reasonable in the circumstances and necessary to protect the goodwill of the Company' [Jaddcal]. The 10 km circle is the minimum area of restraint that the parties to the Deed agreed was reasonable and necessary to protect the goodwill of Jaddcal. I find that the restraint in the deed of settlement is reasonable insofar as it relates to an area with a radius of 10 km from the Perth GPO.

104 The Restraint Clause restrains Mr and Mrs Minson and Mr and Mrs Bruske from being directly or indirectly engaged, concerned or interested in an ice rink business for a period of three years, two years, 18 months, one year, or six months after the settlement date.

105 The first to fourth defendants conceded that, if the restraint is otherwise not unduly wide, a period of 12 months is not unreasonable. The plaintiffs submitted that:

For the purposes of these proceedings the plaintiffs contend that a period of 18 months was reasonable, so we don't contend for anything higher than that.

106 The principles relevant to the reasonableness of the duration of a restraint of trade clause were considered by Angel J in Extraman (NT) Pty Ltd v Blenkinship (2008) 220 FLR 375 which was cited with apparent approval in Seven Network (Operations) Ltd v Warburton (No 2) [72] and Hanna v Oamps Insurance Brokers Ltd [2010] NSWCA 267. Pursuant to a sale of shares agreement between the second plaintiff, Skilled Group Ltd and the first defendant and others, Skilled Group Ltd acquired all the issued share capital of Extra Group Pty Ltd and its subsidiary companies and other related companies for $21,982,766 of which $19,650,000 was allocated to goodwill in the books of the second plaintiff. The first defendant's share of the sale price was $2,955,835 and on a pro rata basis $2,643,066 of that sum represented payment to the first defendant for his share of the goodwill of the Extraman business. The sale of shares agreement provided, amongst other things, that the first defendant would not compete with or carry on the same or substantially similar business as that of Extra Group Pty Ltd and its subsidiaries in specified areas including the Northern Territory for up to five years from 4 July 2005. In considering the reasonableness of the area of the restraint Angel J said:

There are a number of cases to the effect that the reasonableness of duration depends upon how long it will take for the covenantor's customer connection to fade away or for the covenantee to secure a firm connection with customers: ... A purchaser, however, is entitled to protect not only the connection with existing customers of the business but also to profit from its established reputation: ...

It seems to me, with respect, that in cases involving the sale of goodwill of a business, the duration of a restraint is not to be measured according to the time required for severing the relationship between the vendor and the clients of the business [69] - [70].

107 After rejecting a submission that reasonableness in goodwill cases is to be measured according to the purchasers 'recoupment of their investment' and an argument related to the first defendant's customer connections being confined to the Northern Territory, Angel J continued:

Second, a purchaser of goodwill is entitled to protection from competition from the vendor because the purchaser has paid for goodwill (an item of property), not because the vendor personally poses as a threat to that goodwill. It is therefore irrelevant to enquire whether the first defendant has any advantage over anybody else in being able to attract customers away from the purchaser.

When goodwill is sold the whole of the connection of the business can be protected by a covenant against competition, in the words of Lord Parker which I repeat, 'confined to the area within which it would in all probability enure to the injury of the purchaser'. It is especially significant, I think, that Lord Parker refers to 'area', not the duration of the restraint. So, too, Lord Watson in Nordenfelt (at 552), in the passage I have quoted from Connors Bros Ltd & Ors v Connors above, refers to a limitation 'in respect of space', not in respect of the duration of the restraint. This goes some way to explain why in both Connors Bros Ltd & Ors v Connors and Bridge v Deacons the Privy Council treated the scope of a restraint as opposed to its duration as determinative of its validity. It also goes some way to explain and justify Heydon's comment in The Restraint of Trade Doctrine, 2nd ed, p 165, that there is relatively little discussion in the cases of 'problems' of time, and little coherence in the decisions. Lord Parker's speech in Herbert Morris Ltd v Saxelby was approved and followed by the High Court in Butt v Long and it is, of course, binding on me.

...

The defendants' submissions do not sufficiently take account of the clear demarcation the law draws between restraints in respect of the sale of a business and restraints in employment contracts. The former concern the protection of a legitimate interest defined by reference to the business in which the goodwill is being transferred and the whole of the reputation and connection of that business. Employment cases concern protection limited to trade connection and trade secrets: Herbert Morris v Saxelby [1916] 1 AC 688, at 7012, per Lord Atkinson, 7089, per Lord Parker of Waddington.

As Lord Parker said:

'... The goodwill of a business is immune from the danger of the owner exercising his personal knowledge and skill to its detriment, and if the purchaser is to take over such goodwill with all its advantages it must, in his hands, remain similarly immune. The covenant against competition is, therefore, reasonable if confined to the one within which it would in all probability enure to the injury of this purchaser.

It is quite different in the case of an employer taking such a covenant from his employee or apprentice. The goodwill of his business is, under the conditions in which we live, necessarily subject to the competition of all persons (including the servant or apprentice) who choose to engage in a similar trade. The employer in such a case is not endeavouring to protect what he has, but to gain a special advantage which he would not otherwise secure ...

If a covenant restraining competition by an employee were in itself reasonable, it is difficult to see why the Court has considered in almost every case whether such covenant could be justified as no more than sufficient to protect trade connection and trade secrets.'

It seems to me, with respect, that sale of goodwill cases which treat customer connection as determinative of the reasonableness of the duration of a restraint, do not take sufficient account of a number of matters: that reasonableness is to be judged as at the date the covenant was entered into; that goodwill is not confined to customer connection: Federal Commissioner of Taxation v Murry; that goodwill is property; that subject to the contrary intention of the parties, a covenant protecting goodwill is for the benefit of the business rather than the purchaser personally which can be resold, the new purchaser gaining the benefit of the restraint: Pearson v Arcadia Stores, Guyra Ltd (No 1) [1935] HCA 41; (1935) 53 CLR 571; that the transfer of businesses from one hand to another would be discouraged if a narrow view of duration was taken. As Professor Trebilcock (p 232) has observed, there is a public interest in promoting the sale of businesses and restraint clauses on the sale of businesses, while commonplace, are much less frequently litigated than post-employment contracts and much less frequently overturned [73] [78].

Angel J found that the restraint in the sale of shares agreement insofar as it restrained the first defendant for a period of five years within the Northern Territory from being involved in a business the same or similar to that sold was reasonable in the interests of the parties.

108 It takes substantial capital and time to set up and establish an ice rink business. Jaddcal was incorporated in February 2008 for the purpose of establishing and operating Perth Ice Arena. The fit out of Perth Ice Arena was undertaken between about January 2009 and 15 April 2009. It cost about $700,000. At the time the Deed was executed Perth Ice Arena had been open to the public for about four months. Counsel for the plaintiffs fairly described it as a start up business. It was reasonable that Jaddcal be able to develop its business, including developing customer loyalty and its reputation, for a reasonable period without being undermined by a rival business being opened within the area from which Perth Ice Arena drew its customers.

109 The ice rink business is seasonal in nature. Sales, that is patronage, are greater in winter than in summer. The deed was executed on 28 August 2009. At that time there was only a month or two of the winter left. It is reasonable that Jaddcal should have the whole of the 2010 winter to establish its reputation and customer connections without competition from the first to fourth defendants. That would require a restraint continuing beyond 28 August 2010. A restraint period of 18 months from 28 August 2009 would ensure that Jaddcal could operate for the whole of the 2010 winter without competition from the first to fourth defendants.

110 By cl 8.10 of the Deed the first to fourth defendants acknowledged that all the prohibitions and restrictions contained in cl 8 are reasonable in the circumstances and necessary to protect the goodwill of Jaddcal. A period of six months was the median period agreed to be reasonable and necessary to protect the goodwill of Jaddcal.

111 As Angel J observed in Extraman (NT) Pty Ltd v Blenkinship at [81] citing Walsh J in Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd [1973] HCA 40; (1973) 133 CLR 288, 308, a decision upon the question of reasonableness depends upon a judgment the reasons for which do not admit of great elaboration. In my opinion the plaintiffs have shown that the restraint which they seek to impose for a period of 18 months from the date of the Deed does not go beyond what is adequate or necessary for the protection of their interests.

112 As I have said, in her closing submissions, counsel for the plaintiff submitted that the plaintiffs did not contend that a restraint period of more than 18 months was reasonable. Counsel for the plaintiffs then made their closing submissions. Counsel for the first to fourth defendants submitted that a restraint period of no more than 12 months was reasonable. I then permitted counsel for the plaintiffs to make submissions in reply. In her reply submissions counsel for the plaintiffs again contended for a restraint period of 18 months. At the conclusion of her submissions I asked counsel for the plaintiffs to specify the relief sought by each plaintiff against each set of defendants rather than specifying the relief that was sought by 'the plaintiffs'. At that time counsel, contrary to her earlier submissions, submitted that Jaddcal and Mr and Mrs Anuriw each claimed an injunction against the first to fourth defendants restraining them from breaching the Restraint Clause in the event that no other remedy were available. As that was a different position than the plaintiffs had previously put I permitted counsel for the defendants to make further submissions in relation to that matter. Counsel for the first to fourth defendants submitted that there was no room for the grant of an injunction because the plaintiffs' case was that a restraint period of 18 months was reasonable and approximately 22 months had expired by the time of the trial. I then gave counsel for the plaintiffs an opportunity to respond to that submission. Counsel for the plaintiffs then said:

What we say is this, that that 18 months is what we were contending for in the context of the preliminary efforts having been undertaken within that 18 month period so that's the context within which that should be read. It's entirely a matter for you, your Honour, at the end of the day to determine which of those timeframes is reasonable but ... we say that the three years that's in the deed is reasonable (ts 831 - 832).

113 The plaintiffs did not elaborate upon the submission that a period of three years was reasonable and advanced no argument in support of that submission. I am unable to uphold that submission. I find that a restraint period of 18 months is reasonable but not a restraint period of three years.

114 As I have said, as well as addressing the operative scope, duration and geographical area of the Restraint Clause it is also necessary to consider the cumulative effect of the four categories of restraint. I conclude, having regard to the nature of the Perth Ice Arena business, the situation and circumstances of the business in August 2009 and the terms of the Deed, a restraint that the first to fourth defendants shall not be directly or indirectly engaged, concerned or interested, in any corporation, firm or business that is engaged in or carries on, or has an interest in, an ice rink business within a 10 km radius of the Perth GPO for a period of 18 months is reasonable and enforceable.

115 I am confirmed in that view by a consideration of the consideration paid by Mr and Mrs Anuriw for the purchase of the shares of Mr and Mrs Minson and Mr and Mrs Bruske in Jaddcal. In BDO Group Investments (NSWVIC) Pty Ltd v NGO [2010] VSC 206 Croft J said that:

in the context of the sale of a business, the approach of the courts is, essentially, based on commercial fairness and the need to hold parties to the bargain which they made. Consequently, the court will be reluctant to hold a restraint unreasonable if that would enable the vendor to obtain the purchase price without providing the whole of the consideration bargained for by the purchaser [40].

That applies as much to the sale and purchase of the shares in a company that owns a business as it does to the sale and purchase of a business directly.

116 Whether the first to fourth defendants breached the Restraint Clause depends upon three questions. The first is whether their acts or conduct amounted to being directly or indirectly engaged, concerned or interested in the business engaged in or carried on by Roselink. In relation to this question, I will consider the plaintiffs' case against each of the first to fourth defendants. The second question is whether Roselink is engaged in or carries on an ice rink business within 10 km of the Perth GPO. It is common ground that it does. The third question is whether the first to fourth defendants were directly or indirectly engaged, concerned or interested in the business engaged in or carried on by Roselink within 18 months of the date of the deed. There is no doubt that Roselink engaged in or carried on an ice rink business within 18 months of the date of the deed. There is an issue whether the acts of the defendants can be a breach of the Restraint Clause when those acts were carried out before Roselink opened the Xtreme Ice Arena to the public. I will address that issue when considering whether Mr Minson breached the Restraint Clause.

117 I find that Mr Minson was directly or indirectly concerned in the ice rink business engaged in or carried on by Roselink as trustee for the Ice Nemesis Unit Trust.

118 In their defence the first to fourth defendants and the fifth to tenth defendants admit that during or about November 2009 Mr Minson acquired ice rink machinery, plant and equipment from the United States and gave the equipment to Casey who contributed the equipment to Roselink. The evidence shows that the directors of Roselink treated the supply of the equipment to Roselink as a capital contribution by Casey. The equipment was installed and formed a necessary part of the infrastructure of Roselink's business. The plaintiffs say that by supplying, or contributing, the equipment to Roselink, Mr Minson participated in setting up Roselink's business and thereby was, and is, concerned in Roselink's business.

119 The plaintiffs say that the conduct of Mr Minson that breached the Restraint Clause includes not only contributing capital to Roselink in the form of plant and equipment but also negotiating the lease for Roselink and the other things Mr Minson did to set up, or help set up, Roselink's business. The defendants deny that contributing the equipment is a breach of the Restraint Clause. The defendants deny that negotiating the lease or engaging in the other conduct alleged by the plaintiffs amounts to being directly or indirectly engaged, concerned or interested in the ice rink business carried on by Roselink.

120 A restraint clause is to be interpreted like any commercial agreement giving the words and their operation a reasonable and commonsense interpretation: Griffiths & Beerens Pty Ltd v Duggan [2008] VSC 201; (2008) 66 ACSR 472 [65] (Pagone J). The words 'concerned in' have a very wide meaning. In George Hill & Co v Hill (1886) 55 LT 769 the plaintiffs sued on a covenant that the defendant will not, so long as the plaintiffs carry on their business, 'engage in, or be in any way concerned or interested in any similar business within 10 miles of the Royal Exchange'. The defendant argued that he was only a servant at weekly wages and therefore not 'engaged in or in any way concerned or interested in' the business of his employers. Kekewich J at page 771 said that it was not necessary to say whether the defendant was 'engaged or interested in' the business, 'interested' meaning, in commercial language, 'entitled to profits'; but the words 'concerned in' were intended to cover this exact case and he regarded them as meaning 'having something to do with' a similar business.

121 There must, of course, be some limit placed on the words 'concerned in'. In William Cory & Son Ltd v Harrison [1906] AC 274, 275 276 Earl Halsbury LC said that it would be impossible to lay down with precision what is or is not comprehended in such words as 'interested or concerned in'. The Lord Chancellor said that you must look at the facts of the particular case and look at the business meaning of the words. The Lord Chancellor said:

... [W]hen you are dealing with the carrying on of a business and endeavouring to prevent the carrying on of that business directly or indirectly, or the having any part or concern in that business, I think every businessman would quite comprehend that the mere fact of being a creditor of the firm is not being 'concerned or interested in' it (276).

122 In Batts Combe Quarry Ltd v Ford [1943] Ch 51 the vendors of the Batts Combe Quarry covenanted with the purchasers that they would not within 10 years directly or indirectly carry on or assist in carrying on or be engaged, concerned, interested or employed in the business of a quarry within 75 miles as the crow flies of Batts Combe Quarry. One of the vendors within 10 years provided a sum of money to enable his three sons to purchase the Chelms Combe Quarry in the immediate neighbourhood of the Batts Combe Quarry and for working capital. He also took part on his sons' behalf in preliminary negotiations for the purchase of machinery and equipment for the Chelms Combe Quarry. He was not a partner in the sons' business, nor in any way financially interested in it, and he took no part in its management. The trial judge gave judgment for the defendants (the father and the three sons) and the plaintiffs (the purchasers of the Batts Combe Quarry) appealed. The Court of Appeal agreed with the trial judge that the sons were not in partnership with their father, and that the mere acceptance by them of his bounty did not amount to a procuring by them of the breach, if any, of his covenant. The Court of Appeal held that the father had broken his covenant in three respects. First, by providing the capital of the sons' business the father assisted in carrying it on. Secondly, both by the provision of the capital and by taking part in the negotiations he was concerned in the business. Thirdly, in taking part in the negotiations, he was employed in the business. The defendant father had argued that the words 'assist in carrying on or be engaged, concerned, interest or employed in the business of a quarry' cannot refer to preliminary acts necessary to enable the business to be carried on. He argued that no such business as is referred to in the covenant existed during the stages of the purchase of the quarry and installation of the machinery, and that, for the purposes of this covenant the business of quarry owners carried on by the sons must be treated as having begun not earlier than when they first began to extract stone from the quarry. Lord Greene, with whom the other members of the court agreed, held that, having regard to the scope and intention of such a covenant, the defendants' contention placed far too narrow a construction on the words. His Lordship held that the words 'assist in carrying on' were wide enough to cover a person who provides the necessary capital to enable a business to be carried on. His Lordship said:

It is not merely the equipment of a business which is brought about by the provision of capital, but its whole life. In other words, the provision of the capital which is necessary to set up a business gives the business life, and its effects continue after the installation is complete for the simple reason that the business as carried on owes its origin entirely to the provision of the capital. I can think of no more effective way of assisting a person in carrying on his business than to provide him free of charge the necessary equipment to enable him to begin the business (53).

Lord Greene went on to hold that in doing what he did the father was 'concerned in' the sons' business. His Lordship said:

The word 'concerned' is of quite general import. Clearly it cannot be limited to 'concerned' in the sense of financial interest or of being an employee of the business. Again, I can see no more effective way of being concerned in a business than by providing the capital necessary to establish it, and the word 'concerned' seems also to cover the assistance given by the father in the course of the negotiations (53).

Finally, Lord Greene held that the part the father took in the negotiations was that of an agent or employee. The acquisition of machinery and its installation was part of the business activities of the sons, and, as their representative, he negotiated in that matter and gave advice.

123 In Griffiths & Beerens Pty Ltd v Duggan the first defendant, Mr Duggan, was the managing director of the GB companies. He sold his shares in the GB companies to the plaintiffs and as part of the sale covenanted that he would not be involved in any business that is the same as or substantially similar to the businesses carried on by the GB companies. Pagone J found that Mr Duggan had breached the restraint clause by actively assisting the other defendants, his children and former employees of the GB companies, to establish a rival business, Jak Max Pty Ltd, in competition with the GB companies. Pagone J found that Mr Duggan had breached the restraint clause by providing financial assistance to his children so that they could obtain bank loans, gave financial inducements to key employees to leave the GB companies and to join Jak Max by giving them each $100,000 and facilitated contacts between his children and the suppliers and customers of the GB companies. The defendants argued that the payment of $100,000 to the employees was an unconditional gift by reason of Mr Duggan's gratitude for many years of service. Similarly, money or properties given to his children which may have been used by way of security for the business established by Jak Max, were independent events which did not amount to an involvement in the prohibited sense notwithstanding that the effect might have been the same. In relation to those arguments Pagone J said:

So much might be accepted if each event was truly to be regarded as independent and if there were not so many of them. However, the evidence taken as a whole, in the context in which they all occurred, and in light of the views that I reached about a number of the witnesses, lead me to conclude that Paul Duggan was involved in the prohibited sense [83].

124 A similar observation may be made about Mr Minson's contribution to setting up the Xtreme Ice business. In early March 2010 Mr Minson gave to Casey the ice rink equipment he had acquired from Becker Arena Products as Casey's contribution to the ice rink venture. By that time Mr Minson had hosted a meeting to discuss the business structure for the venture, had given instructions to establish the Minson Family Trust which was to be the vehicle by which Casey was to hold his interest in the venture, had identified the premises on which the ice rink would be established and was playing a prominent, if not the principal, role in negotiating a lease of the Mirrabooka site to Roselink. He knew and intended that the equipment he gave to Casey would be used to establish Roselink's ice rink.

125 Mr Minson played an important part in obtaining the premises on which Roselink established its ice rink. Mr Minson first identified the premises and made the initial contact with the owners' representative, carried out the initial inspection and carried out the initial discussions with Mr Klopper about a lease. After Ms Caffarelli became involved in negotiating the lease, Mr Minson continued to be involved in reviewing terms of the lease and communicating to Mr Klopper matters which Roselink wanted in or out of the lease and was involved in obtaining the bank guarantee required under the lease. Mr Minson played a prominent, if not the principal, part in settling the scope of works, obtaining development approval from the City of Stirling and instructed Ms Caffarelli to provide an internal management agreement for the operation of the trust director's policy.

126 I find that by contributing the ice rink equipment to Casey as his contribution to the capital of Roselink and by engaging in the other activities which were necessary to set up the business Mr Minson was concerned in the business of Roselink. The act of giving the ice rink equipment to Casey was not independent of the setting up of Roselink's business. Mr Minson knew and intended that it would form an important part of Roselink's plant, machinery and equipment for its ice rink business. Contributing the equipment was part of a course of conduct of Mr Minson to set up, or help set up, Roselink's ice rink business. There were broadly four things that had to be, and were, done to establish Roselink's ice rink business. The first was to establish a business structure. Mr Minson hosted and was present at the meeting where the business structure was agreed upon. He then gave instructions to Ms Caffarelli to establish the Minson Family Trust which was to hold Casey's interest in the venture. Mr Minson also gave instructions to obtain an internal management agreement for the operation of the trust which was to own the business. The second thing is to obtain premises from which the business was to operate. Mr Minson located the premises and then negotiated, or participated in, the negotiation of the lease. He was also involved in drawing up the scope of works, obtaining development approval and obtaining a bank guarantee. The third thing is to obtain the plant, machinery and equipment. Mr Minson obtained and provided to Roselink a substantial part of the equipment. The fourth thing was the fit out or installation of the equipment. There is evidence to suggest that Mr Minson participated in that part of setting up the business but it does not enable me to find that he did.

127 The defendants argue that the activities of Mr Minson which I have found amounted to being concerned in the business of Roselink could not be activities that amounted to being concerned in a corporation, firm or business that is engaged in or carries on or has an interest in an ice rink business because those activities occurred before Roselink commenced to engage in or carry on an ice rink business.

128 The defendants say that that conduct occurred before Roselink's business commenced on 30 November 2010. That is the date on which Xtreme Ice Arena was first open to the public. The fifth to tenth defendants submit that the word 'business' in the Restraint Clause means an existing commercial enterprise in the nature of a going concern, that is, activities engaged in for the purpose of profit on a continuous and repetitive basis. The defendants submit that the acts of Mr Minson and the acts of Roselink in which he participated were acts preparatory to conducting a business not the carrying on of a business.

129 The defendants relied upon the decision of Booking J and, on appeal, the Full Court of the Supreme Court of Victoria, in Pioneer Concrete Services Ltd v Galli [1985] VicRp 68; [1985] VR 675. The appellants (Pioneer and Apex), had appealed against a judgment in favour of the respondents, LG and MG, who were defendants to two actions brought against them by the appellants for breach of a number of covenants restraining them from carrying on or being concerned in certain quarrying businesses. The restraint clause relevantly provided that each of the respondents covenanted with Pioneer that they would not for a series of five one year periods ending five years from the date of the termination of the respondents' employment (22 December 1978) either directly of indirectly carry on or conduct or be engaged in or be concerned or interested in any described quarry business within certain areas surrounding the GPO Melbourne and any existing quarry operated by Apex. In May 1983, companies controlled by LG and MG entered into two agreements granting them two options to take leases of land which was believed to contain substantial deposits of basalt. LG and MG then marked out the land for the purpose of applications for licences to quarry and crush rock, and apply for such licences, engaged a geologist to enter on the land, brought equipment onto the land and caused some work to be done including sinking drill holes. The Full Court, in a joint judgment, referred to the statement of Mason J, with whom Gibbs, Stephen and Aitkin JJ agreed in Hope v Bathurst City Council [1980] HCA 16; (1980) 144 CLR 1, 8 9 where his Honour, referring to the particular activities in question in that case, said that the word 'business' denoted 'activities undertaken as a commercial enterprise in the nature of a going concern, that is, activities engaged in for the purpose of profit on a continuous and repetitive basis'. The Full Court adopted that definition as sufficient for its purposes in that case 'without necessarily adopting that as a definition which can be relied on in all cases ...'. The work carried out up to the trial was entirely exploratory and did not even amount to the direct preparation of any quarries. The drilling was directed to ascertaining whether or not suitable stone was present and where it was located; the land which was to be quarried was not yet in the possession of the respondents; neither a town planning permit nor an extractive industry licence had been obtained; and no business entity to quarry the land had been set up. The Full Court said that all this pointed to the conclusion that no business was yet in existence, nor could it reasonably be concluded that there would be a business by 22 December 1983.

130 The Full Court distinguished Batts Combe Quarry:

The most obvious difference between that case and the present is the fact that the breaches alleged in the Batts Combe Case took place well within the restraint period, so that no issue was raised as to whether the breach occurred within that period, and there seems little doubt that the sons had commenced quarrying, at least by the time the action was heard. The only issue as to time in the Batts Combe Case was whether the capital had been provided by the father at a time when the business had commenced. The question was really irrelevant but the defendant had argued that the business had not commenced until stone had in fact been extracted from the quarry. That somewhat narrow interpretation was rejected by Lord Greene MR, at ([1943] Ch) p 53, but the most significant point of distinction is that the plaintiff in that case made out its case by a combination of circumstances. The sons had set up the quarry business and the issue was whether the father's acts in relation to that admitted setting up of business came within the terms of the clause. In the present case the only acts were those of the two brothers and their related companies. Admittedly the Court of Appeal, or at least Lord Greene MR, made some reference to the business being constituted by the preliminary acts of the father and the sons. The judgments were unreserved and we would doubt that the difficulties posed by the circumstances raised in the present case were present in the minds of their Lordships. This is not to suggest that we should give a narrow meaning to clauses of this kind but the facts and circumstances of the Batts Combe Case were very different from those of the present (708).

131 The facts and circumstances of the Pioneer Concrete case are very different from those in the present case. In the Pioneer Concrete case no business had commenced by the end of the trial, and it could not be reasonably concluded that there would be a business established by the time the restraint clause expired. In this case, Roselink is carrying on an ice rink business and has been doing so since before the trial began. The defendants' argument is essentially that which the Full Court in Pioneer Concrete referred to as the narrow interpretation rejected by the Court of Appeal in Batts Combe Quarry v Ford and which the Full Court did not approve.

132 Pioneer Concrete was referred to by Pagone J in Griffiths & Beerens Pty Ltd v Duggan. One of the contentions made on behalf of the defendants in that case was that the conduct of Mr Duggan complained of predated the commencement of the Jak Max business and that, at best, the actions of Mr Duggan were preparatory in nature and could not constitute involvement in a business in competition since the competing business did not yet exist. Pagone J accepted that activities which are truly preparatory to the commencement of a business would not be in breach of a restraint clause such as that in question in that case. His Honour observed that in Pioneer Concrete the Full Court held that, on the facts in that case, there was no business in which the defendants were engaged, concerned or interested contrary to the covenant there in issue. However, the case before Pagone J was quite different. His Honour referred to the judgment of Lord Greene MR in Batts Combe Quarry. His Honour found:

The essence of the existence of a business activity is to have embarked upon an operation or commercial transaction for the purpose of profit making by the means giving rise to profit. The point at which it may be said to have been commenced may often be a difficult factual enquiry but in this case I find that commercial activities with a view to profit had been undertaken as early as April 2005 and certainly by July 2005. Those activities were taken over by Jak Max from September 2005 upon its incorporation. By September Jak Max had finance, staff, lines of supply and was actively undertaking steps to secure customers. I reject the defendants' contention that a business was only in existence once it made its first sale in 2006. I also reject the alternative contention that the business was only commenced when stock was acquired in late 2005. Whatever may have been the position in other cases, I find that in this case that Jak Max itself had commenced its business no later than upon its incorporation and its securing of funds. I also find that that business was one which had previously been commenced in April 2005 by Adam Duggan with the participation of his brother and sister, Deane Stubbs, Nick Loschiavo, Ben Canning and the involvement of Paul Duggan [108].

133 In McMahon v National Foods Milk Ltd [2009] VSCA 153; (2009) 25 VR 251 a supplier of Pura Milk, National Foods, and a distributor, McMahon's Milk, entered into a distributor agreement and Mr McMahon guaranteed the performance of the distributor's obligations. The distributor agreement bound the distributor not to be involved in any business involving the purchase, sale, distribution or marketing of any competitor's product without the distributor's prior written approval during its term and for six months after its termination. Mr McMahon, using the name of a proposed company (McMahon's Dairy) to be operated by his sons, applied to Sungold, a competitor of the supplier, to have McMahon's Diary distribute Sungold milk products, nominated himself as the person authorised to deal with Sungold on behalf of McMahon's Dairy and signed a supporting guarantee. The trial judge held that Mr McMahon's conduct in undertaking preparatory activities to establish his sons' business was contrary to the restraint of trade clause. On appeal, the appellants argued that the restraint clause applied only to involvement in an existing business and that the conduct in which Mr McMahon was involved was merely preparatory to the commencement of his children's business which had not then come into existence. The Victorian Court of Appeal dismissed the appeal. Nettle JA, with whom the other members of the court agreed, referred to Batts Combe Quarry and distinguished Pioneer Concrete:

In this case, however, it seems to me that the judge was right to say that Mr McMahon's acts amounted to him being involved in the children's business contrary to clause 23.16(a). For here, as in Batts Combe Quarry, the new business (although not in existence at the time the acts were committed) had come into existence by the time the action was instituted. The acts in question were committed a very short time before that business began. And those acts were calculated to harm National Foods' business by taking customers away from Pura Milk products and steering them towards the competing Sungold offerings. I do not say that all of Mr McMahon's acts were necessarily a breach of the covenant. For example, I do not consider that the mere preparation, as opposed to delivery, of the letter to clients, would have amounted to a breach. Additionally, as in Pioneer v Galli, there may be some difficulty in saying by what stage Mr McMahon's acts taken together was sufficient to amount to a breach. On the other hand, I am inclined to think that the act of applying for the Sungold credit facility and providing a guarantee of the facility may have been sufficient in itself to amount to a breach and, even if that were not so, I consider that taken in conjunction with the acts of canvassing for Sungold products Mr McMahon's actions would surely have summed to the critical mass of breach sometime before termination of the agreement on 15 August 2005 [50].

134 I find that Mr Minson was concerned in the business engaged in or carried on by Roselink by giving Casey plant, machinery and equipment to contribute to the business and negotiating the lease and doing the other things he did to assist in setting up the business notwithstanding that he did those things before Roselink opened to the public in November 2010. Lord Greene MR explained in Batts Combe Quarry that there can be no more effective way of being concerned in a business than by providing the capital necessary to establish it. Lord Greene observed that according to the defendants' argument in Batts Combe Quarry:

... [I]t would not be a breach of a covenant of this kind in an assignment of the goodwill of a boot shop if the covenantor purchased another shop for his sons, fitted it up, brought the stock and arranged the window display ready for the opening of the shop on a certain date. It seems to me that in such a case a breach of covenant would be established [53].

The same observation applies to the argument of the defendants in this case. Upon its proper construction, the Restraint Clause prohibits the promisor from being concerned in the carrying on of a business by, amongst other things, setting up the business. Mr Minson was concerned in Roselink being engaged in or carrying on its ice rink business because he provided part of the capital, or equipment, necessary to establish it, found and negotiated a lease for premises from which the business was to operate and did other things to set up the business.

135 In any event I find that Roselink had undertaken commercial activities with a view to profit by the time Mr Minson gave Casey the equipment to set up the ice rink in March 2010, negotiated the terms of the lease, participated in preparing the scope of works and obtaining development approval. By that time the business structure for the commercial venture had been decided upon. Roselink had been acquired to carry on the business. The Ice Nemesis Unit Trust had been established and the units in the trust had been allotted. Roselink had identified the premises from which it was to conduct its ice rink business and was negotiating a lease of the premises.

136 For the reasons stated, I find that Mr Minson breached the Restraint Clause by being directly or indirectly concerned in the ice rink business engaged in or carried on by Roselink.

137 The plaintiffs' claim against Mrs Minson is that she breached the Restraint Clause by being appointed as a beneficiary of the Minson Family Trust and was thereby directly interested in Roselink, the trustee of the Ice Nemesis Unit Trust.

138 The Minson Family Trust was established by a deed of trust dated 15 February 2010 between Ms Caffarelli as settlor and Casey as trustee. The Minson Family Trust provided that the trustee may pay any of the net income of the trust fund for any of the General Beneficiaries. The trust deed further provided that the trustee may subject to cl 9 assign, convey or transfer the whole or any part of the trust fund to any beneficiary. The trust fund refers to Specified Beneficiaries, General Beneficiaries and Beneficiaries. The Specified Beneficiaries are Casey and his brothers, Liam and Blair. The General Beneficiaries include the parents of the Specified Beneficiaries, that is Mr and Mrs Minson. Beneficiaries include specified and general beneficiaries.

139 In J D Heydon's The Restraint of Trade Doctrine (3rd ed, 2008) the learned author says that 'interest' refers to pecuniary or proprietary interest, citing George Hill & Co v Hill (771); Smith v Hancock [1894] 2 Ch 377; Farrand v Armstrong (1911) 11 SR (NSW) 193, 197. The learned author further says, referring to Southland Frozen Meat and Produce Export Co Ltd v Nelson Brothers Ltd [1898] AC 442, 446 and William Cory & Son Ltd v Harrison, that it does not refer to the interest of a creditor in the debtor's affairs and whether it does where a covenantorcreditor knows the only way the debt will be paid is out of the profits of a business run by the debtor competing with the covenantee depends on the circumstances: Bird v Lake (1863) 1 Hem & M 338. The learned author goes on to say that if the debt is specifically charged on the profits or the interest takes the form of a share of the profits, a covenant not to be 'directly or indirectly' in the business is broken: Cooper v Page (1876) 34 LT 90.

140 In Hunt v Pascoe (1990) 21 NSWLR 10 Young J considered a restrictive trade covenant which restrained the carrying or being 'interested' in the operation of a motel business. The covenant was in a deed that was executed as part of a transaction by which the covenantor sold his shares in a company that owned land on which a motel (the Squatters Motel) was erected. Before the expiry of the covenant, the covenanting party erected a motel next to the Squatters Motel and leased its operation to a third party on conditions that suggested that it was not an arms length transaction. On an application for an interlocutory injunction Young J held that there was a prima facie case that the lessor was interested in the lessee's business. His Honour said:

It is common ground that the word 'interested' in a covenant such as the one under consideration means a person who has a proprietary interest: ...

It is also fairly common ground that it is not enough that the covenantor takes an interest in the success of another carrying on a business, for instance, by being the husband of the person carrying on the business ...

Mr Harrison submitted that a creditor who is aware that the debtor has no means of paying his debt except out of the profits of a business, is not interested in the business unless there is a charge: see J D Heydon, Restraint of Trade Doctrine, (1971) at 293, a proposition supported by Bird v Lake (No 2) [1863] EngR 771; (1863) 1 H & M 338; 71 ER 147.

...

I have some doubt as to whether the principle is correct, at least in its widest form.

...

In my view, the true rule is that just because a person is a landlord does not mean that that person is interested in the business being carried on by his tenant in the premises. However, it is going too far to say that the relationship between landlord and tenant precludes the court holding that the landlord is interested in the tenant's business. It may be, from a consideration of all the aspects of the relationship between the parties, that the court may conclude that the person who is the landlord does have such an interest (14 15).

141 In WPS Enterprises Pty Ltd v Radford [2009] VSCA 22; (2009) 22 VR 1, W Pty Ltd purchased a wheel repair business from a company of which R was a director. The sale agreement, to which R was a party, contained a clause restraining R from being financially or otherwise interested or engaged in, establishing, being employed in, or advising or influencing a competitive business. Three former employees of the business, including R's son, set up a competing business (ACE). W brought proceedings against R for damages, alleging that he had breached the restraint clause by providing premises and a loan of money to ACE on noncommercial terms, assisting ACE in acquiring plant and equipment, soliciting customers, for the benefit of ACE, of the business sold to W, servicing customers of ACE, and advising and influencing ACE. The Victorian Court of Appeal upheld the decision of the County Court judge dismissing the action. Robson AJA reviewed the authorities on the meaning of the term 'interested in' in a restraint of trade clause. His Honour stated that from an examination of the cases the following principles of construction of a restraint clause emerge:

(1) Each restraint clause must be interpreted having regard to its particular terms, but in a business contract usually one should look at the business meaning of the words.

(2) The words 'interested in' as they appear in restraint clauses are normally interpreted not to include interest arising through personal affection or family relationships, but are limited to having a financial interest or perhaps an interest which gives a person some right to interfere in the business or the means of gaining some advantage from it.

(3) The mere loaning of money or leasing of premises will usually not by itself constitute being interested in a business, but the relationship of landlord and tenant and lender and borrower does not necessarily preclude the landlord or lender having an interest. The terms of a lease or the terms of a loan may be such as to constitute the landlord or lender having an interest in a business.

(4) Unless the restraint otherwise expressly provides, the family relationship between the covenanter and the person he or she assists usually should not lead to the characterisation of the conduct alleged to be in breach if it would not be so with a stranger [74].

142 I find that on the facts, Mrs Minson is not interested in the business being carried on by Roselink. She has no entitlement to receive any profits, or any payment, from Roselink or the Ice Nemesis Unit Trust. The Ice Nemesis Unit Trust is a unit trust and profit distributions will be made to the unit holders, which include the Minson Family Trust. Mrs Minson has no entitlement to receive any profits distributed by the unit trust to the Minson Family Trust, or any other payment received by the Minson Family Trust. Mrs Minson is merely a member of the class of 'General Beneficiaries' by reason of being an additional member of the class of General Beneficiaries. The class of General Beneficiaries, including additional members, is a wide class that includes many people related to the special beneficiaries, that is Casey and his brothers.

143 Mrs Minson is merely one of many beneficiaries of a discretionary trust. The entitlement of beneficiaries of a discretionary trust to income, or to corpus, is not immediately ascertainable. The beneficiaries are selected from a nominated class by the trustee. A member of the class of beneficiaries of discretionary trusts has no proprietary interest in the trust assets, although the member does have standing to compel the proper administration of the trust: Heydon J D & Leeming M J, Jacobs' Law of Trust in Australia (7th ed, 2006) [314].

144 There is no evidence that there was, or is, any agreement, understanding or expectation that any of the income or capital of the Minson Family Trust would be distributed to Mrs Minson. There is no evidence that any income or capital of the Minson Family Trust has ever been distributed to Mrs Minson.

145 The first to fourth defendants admit that Mr and Mrs Bruske lent Andrew and his sister, Kristy, in the order of $300,000 and say that the loan was used by Andrew and Kristy to acquire their interest in Roselink. The fifth to tenth defendants admit that Mr and Mrs Bruske lent to Andrew and Kristy money totalling $303,600 which was used by the Bruske Family Trust for the benefit of Andrew and Kristy to acquire units in the Ice Nemesis Unit Trust.

146 In his affidavit Andrew swears that in late August or early September 2009 when discussions had started with Mr Williams, Mr Lowick and Mr MacLellan, he spoke to his parents about borrowing some money from them to participate in the new ice rink venture. Andrew says he told his parents at the time that the estimated cost to join the business was around $200,000 per person. The next day his father told him that they would lend him the money. Andrew swears that his mother and father subsequently 'personally lent me $300,000 of which $100,000 has been deposited into Roselink's bank account' and 'the balance of $200,000 has been used to purchase equipment for Roselink (including two scissor lifts, ice mat system and refrigeration units) and a part of Roselink's bank guarantee to its landlord'. Andrew swears that at the time his mother and father told him that they would lend him the money as an interest free loan to help him out and get a start in business.

147 The fifth to tenth defendants plead that during the fit out of Roselink's ice rink building materials, equipment and food were paid for using credit cards of Mr and Mrs Bruske and Mr and Mrs Minson. Those payments were made by Andrew and Casey using their respective parents' credit cards. Those payments were reimbursed by Roselink. That is consistent with the bank statements and the expenditure statements of Roselink prepared by Mr Lowick for Ms Caffarelli.

148 I find that Mr Bruske breached the Restraint Clause by being directly or indirectly interested and concerned in the ice rink business engaged in or carried on by Roselink as trustee for the Ice Nemesis Unit Trust.

149 The mere loaning of money will usually not by itself constitute being concerned in a business but the relationship of lender and borrower does not necessarily preclude the lender being concerned in the business. Whether the lender is concerned in the business will depend upon the circumstances of the loan and the connections, if any, between the lender and the business. In this case the circumstances are such that Mr Bruske is concerned in the business. First, the loan was made specifically for the purpose of establishing the business and enabling Andrew to acquire an interest in it. Mr Bruske intended to, and did, participate in building the Roselink business for Andrew. The position was accurately described by Mr Bruske in his email sent on 21 January 2010 to Ms Caffarelli in which he said, referring to himself and his wife:

Therefore, as we intended to build the business for our children anyway, we would like to formally loan our children the investment money for them to be part owners in the new ice rink.

150 Secondly, Mr Bruske was actively involved in establishing the business. He participated in the meeting at which the business structure was decided upon. He gave instructions to Ms Caffarelli to establish the Bruske Family Trust. There is no evidence of any communications between Andrew and Ms Caffarelli concerning the establishment of the Bruske Family Trust, the Ice Nemesis Unit Trust or the allotment of shares in Roselink. It is open to infer that Mr Bruske attended to all of those matters insofar as they related to Andrew. That inference may more readily be drawn because Mr Bruske and Andrew did not give evidence. I draw the inference. Further, Mr Bruske was involved in Roselink obtaining a lease of the Mirrabooka premises. When Mr Minson was overseas in January 2010 Mr Bruske emailed Mr Klopper and told him 'we are still interested in the property'. Ms Caffarelli's emails concerning the proposed lease were generally sent to, amongst others, Mr and Mrs Bruske and do not appear to have been sent to Andrew. Mr and Mrs Bruske paid the deposit of $51,887 on the signing of the offer to lease. Mr and Mrs Bruske made their credit card available to Andrew to purchase building materials, equipment and food during the fitout of Roselink's ice rink. Finally, for the reasons I have given earlier I find that Mr Bruske participated in installing plant, machinery and equipment for the ice rink at the Mirrabooka premises and approached Mr Grasso to obtain a quote for sound and light equipment for the ice rink. Those actions together with lending money to Andrew to enable him to contribute capital to and acquire his interest in the Ice Nemesis Unit Trust through the Bruske Family Trust cumulatively amounted to being concerned in the Roselink business.

151 Furthermore, I find that Mr Bruske is interested in the Roselink business. The mere loaning of money will usually not by itself constitute being interested in a business but the relationship of lender and borrower does not necessarily preclude the lender having an interest. The terms of a loan may be such as to constitute the lender having an interest in a business: WPS Enterprises Pty Ltd v Radford [2009] VSCA 22; (2009) 22 VR 1 [74] (Robson AJA). There is no evidence that the terms of the loan by Mr and Mrs Bruske to Andrew to enable him to acquire his interest in the ice rink business have been reduced to writing. The only evidence of the terms of the loan are the statements in Andrew's affidavit. Andrew says that the loan is interest free. In [25] of his affidavit Andrew says, in effect, that the loan will be repaid from the profits of the business. In the circumstances of this case that is sufficient for Mr Bruske to be indirectly interested in the business carried on by Roselink.

152 Mr and Mrs Bruske jointly loaned about $300,000 to Andrew to acquire his interest in the Roselink business. Mrs Bruske attended the meeting at the home of Mr and Mrs Minson on 13 December 2009 when the structure of the business was decided upon. Mr Bruske's email to Ms Caffarelli of 21 January 2010 in which he gave instructions for the creation of the Bruske Family Trust stated that he and Mrs Bruske intended to build the business for their children and would like to loan their children the investment money for them to be part owners in the new ice rink. Mr Bruske said that he was speaking for himself and Mrs Bruske. He sent the email from Mrs Bruske's email address. The inference is open that Mr Bruske made his statements on behalf of Mrs Bruske. That inference may more readily be drawn because Mr Bruske and Mrs Bruske did not give evidence. I draw the inference. I find that Mr Bruske made his statements on behalf of, and with the authority of, Mrs Bruske. Mr and Mrs Bruske jointly paid the deposit of $51,887 on the execution of the offer to lease. I find that Mrs Bruske intended to, and did, participate in building the Roselink business for Andrew. I find that Mrs Bruske was directly or indirectly concerned in the business engaged in or carried on by Roselink.

153 I also find that Mrs Bruske is directly or indirectly interested in the business carried on by Roselink for the same reasons that I find Mr Bruske to be so interested.

154 In the statement of claim the plaintiffs allege that the first to fourth defendants breached the Restraint Clause in a number of other ways. It is not necessary to refer to all of those alleged breaches. However, I will refer to those which raised substantial matters.

No Breach by Mr Minson as beneficiary of resulting trust

155 The plaintiffs plead that by making a capital contribution by supply of equipment to Roselink Mr Minson breached the Restraint Clause in that he was interested as a beneficiary of Roselink. The plaintiffs say that the capital contribution was made without consideration creating a resulting trust in favour of Mr Minson, either personally or as trustee of the Minson Family Trust. I find there was no resulting trust. Mr Minson gave the equipment to Casey not to Roselink and the presumption that Mr Minson intended to retain a beneficial interest in the equipment is rebutted by the pleading of Mr Minson and Casey and the affidavit evidence of Mr Minson and Casey that it was a gift. The affidavit evidence is selfserving but it is consistent with the internal records of Roselink which record the equipment as having been contributed by Casey.

Mr Minson not proved to have purchased equipment as agent for Roselink

156 The plaintiffs plead that between about November 2009 and March 2010 Mr Minson negotiated and arranged the purchase of the ice rink plant and equipment for the ice rink joint venture or Roselink.

157 The evidence does not establish that Mr Minson purchased the ice rink equipment, or negotiated its purchase, on behalf of Roselink or the proposed ice rink venture. Mr Minson's affidavit evidence is that in November 2009 he acquired the equipment from Beckers Arena Products in the United States because the equipment had been offered for sale at an extremely competitive price and he knew that he would easily be able to offload the equipment for a profit in Australia without too much trouble. That evidence is selfserving but it is supported by emails between Mr Minson, Mr Emblem and Mr Kurcher to the effect that Mr Minson intended, or was considering, selling the equipment to interests associated with Mr Emblem and Mr Kurcher. I find that the plaintiffs have not proved that Mr Minson negotiated and arranged the purchase of the ice rink plant and equipment on behalf of Roselink or its founding members.

Plaintiffs have not proved Mr Minson provided technical advice

158 The plaintiffs plead that on or about 19 October 2010 in breach of the Restraint Clause Mr Minson was concerned and interested in the capacity of an agent for Roselink in that he sought technical advice from Beckers Arena Products in relation to Roselink's ice rink refrigeration unit at the Mirrabooka premises. I find that the plaintiffs have not proved that allegation.

159 The plaintiffs plead that in or about August 2010 in breach of the Restraint Clause Mr Minson was concerned and interested in the capacity of a consultant to Roselink in that he from time to time provided advice to Roselink during the construction of the ice rink at the Mirrabooka premises and provided to Roselink the technical advice he received from Beckers Arena Products in relation to Roselink's ice rink refrigeration unit at the Mirrabooka premises. I find that the plaintiffs have not proved that Mr Minson did either of those things.

No breach by Mr and Mrs Bruske by being beneficiaries of trust

160 By deed of trust dated 15 February 2010 between Ms Caffarelli as settlor and Andrew and Kristy as trustees, the Bruske Family Trust was established. Roselink carried on the Xtreme Ice Arena business as trustee for the Ice Nemesis Unit Trust. There were 1,000 ordinary and 1,000 special units allotted in the Ice Nemesis Unit Trust. Two hundred ordinary and 200 special units were held by Andrew as trustee for the Bruske Family Trust.

161 The Bruske Family Trust Deed refers to Specified Beneficiaries, and General Beneficiaries. The Specified Beneficiaries are Andrew and Kristy. The General Beneficiaries include the parents of the Specified Beneficiaries, that is, Mr and Mrs Bruske. The Bruske Family Trust Deed provides that the trustee may convey or transfer the whole or any part of the trust fund to any beneficiary, which includes General Beneficiaries.

162 There is no evidence there was, or is, any agreement, understanding or expectation that any of the income or capital of the Bruske Family Trust would be distributed to Mr or Mrs Bruske. There is no evidence that any income or capital of the Bruske Family Trust has ever been distributed to Mr or Mrs Bruske.

163 I find that Mr and Mrs Bruske did not breach the Restraint Clause merely by reason of their appointment as beneficiaries of the Bruske Family Trust for the same reasons that Mr and Mrs Minson did not breach the Restraint Clause by being appointed as beneficiaries of the Minson Family Trust.

No breach by de facto directorship of corporation

164 The plaintiffs allege that at all material times following 18 January 2010 both Mr Minson and Mr Bruske were in breach of the Restraint Clause in that each was interested in the capacity as a director of Roselink within the extended meaning of 'director' in s 9(1)(b) of the Corporations Act 2001 (Cth) in the trade or business of an ice rink.

165 Section 9 of the Corporations Act defines 'director' to include 'de facto' and 'shadow directors'. A de facto director is a person who is not validly appointed as a director but who acts in the position of a director. There is no evidence that Mr Minson or Mr Bruske held themselves out as directors of Roselink. A person may be a de facto director where he undertakes tasks that would typically be expected of a director even though he describes himself by some other title. Given the great variety of commercial and corporate life, defining what it means to be 'acting as a director' by reference to general principles may be unprofitable. Rather, whether a person acts as a director will often be a question of degree and requires a consideration of the duties performed by that person in the context of the operations and circumstances of the particular company concerned: Deputy Commissioner of Taxation v Austin (1998) 28 ACSR 565 (Madgwick J). The relevant factors include how the person who is claimed has acted as a director was reasonably perceived by outsiders who deal with the company and whether he exercises what might be called top level management functions. I am not satisfied by the evidence in this case that either Mr Minson or Mr Bruske acted as de facto directors of Roselink.

166 I did not understand the plaintiffs to claim that Mr Minson or Mr Bruske was a 'shadow director', that is a person in accordance with whose instructions or wishes the directors of the company are accustomed to act. In any event, the evidence does not establish that the directors of Roselink were accustomed to act in accordance with the instructions or wishes of Mr Minson or Mr Bruske.

Plaintiffs' claims against fifth to tenth defendants

167 In their statement of claim the plaintiffs allege that the fifth to tenth defendants wrongfully interfered with the contractual relations between the first to fourth defendants and the plaintiffs. The plaintiffs then plead that they have suffered loss and damage as a result of that wrongful interference with contractual relations. The particulars of loss and damage refer to the reduction in income of Jaddcal and make no reference to any loss or damage suffered by Mr and Mrs Anuriw. In their prayer for relief the plaintiffs claim against the fifth to tenth defendants damages for tortious interference in their relations between the plaintiffs and the first to fourth defendants and an injunction restraining the fifth to tenth defendants from further tortious interference in the Deed until the expiry of the period of the restraint under the Deed and in addition to or substitution for an injunction, equitable damages. In her closing submissions counsel for the plaintiffs stated that only Jaddcal claims relief against the fifth to tenth defendants. Jaddcal claims against the fifth to tenth defendants damages for tortious interference in the relations between the plaintiffs and the first to fourth defendants but does not claim an injunction against the fifth to tenth defendants. The conclusion of all that is that the only claim made by the plaintiffs against the fifth to tenth defendants is the claim by Jaddcal for damages for tortious interference in the relations between the plaintiffs and the first to fourth defendants.

168 The history and development of the tort was considered in detail by Lord Hoffmann in OBG Ltd v Allan [2007] UKHL 21; [2008] 1 AC 1 where the House of Lords redefined the tort. Two different economic torts were identified and distinguished, namely inducing breach of contract and unlawful interference with trade. Lord Hoffmann, with whom Lord Walker, Baroness Hale and Lord Brown agreed, held that, subject to one qualification, acts against a third party count as unlawful means only if they are actionable by that third party. The qualification is that they will also be unlawful means if the only reason why they are not actionable is because the third party has suffered no loss: OBG Ltd v Allan at [49]. The plaintiffs have not established that the fifth to tenth defendants caused the first to fourth defendants to breach the Restraint Clause, or not to fulfil their obligations under that provision, by unlawful means. It follows that Jaddcal's cause of action, if it has any cause of action, is for the tort of inducing a breach of contract.

169 Jaddcal's case is that the fifth to tenth defendants induced the first to fourth defendants to breach their contract with Jaddcal and Mr and Mrs Anuriw. The first point raised by the fifth to tenth defendants is that Jaddcal is not a contracting party. The contract is between Mr and Mrs Anuriw and the first to fourth defendants. Jaddcal brings its claim in reliance on the provisions of s 11(2) of the Property Law Act which provides that where a contract expressly in its terms purports to confer a benefit directly on a person who is not named as a party to the contract the contract is enforceable by that person in his own name.

170 Counsel did not cite any authority on the meaning of 'the contract is ... enforceable' in Property Law Act s 11(2). I am not aware of any authority on the issue. In its ordinary meaning the word 'enforced' means to compel observance of. In relation to a contract, the ordinary and natural meaning of enforcing a contract is to compel observance of a promise made or obligation undertaken by a party to the contract. There are two types of obligations that arise under a contract: the primary obligation of performance, and the secondary obligation to pay damages if the contract is breached. Lord Diplock outlined the obligations of contractual parties in Moschi v Lep Air Services Ltd [1973] AC 331, 350:

Generally speaking, the rescission of the contract puts an end to the primary obligations of the party not in default to perform any of his contractual promises which he has not already performed by the time of the rescission. It deprives him of any right as against the other party to continue to perform them. It does not give rise to any secondary obligation in substitution for a primary obligation which has come to an end. The primary obligations of the party in default to perform any of the promises made by him and remaining unperformed likewise come to an end as does his right to continue to perform them. But for his primary obligations there is substituted by operation of law a secondary obligation to pay to the other party a sum of money to compensate him for the loss he has sustained as a result of the failure to perform the primary obligations. This secondary obligation is just as much an obligation arising from the contract as are the primary obligations that it replaces: see R V Ward Ltd v Bignall [1967] 1 QB 534, 438. (emphasis added)

171 A contract may be enforced by an order for specific performance or an injunction which are remedies which seek to place the parties in the positions actually contemplated by contract performance. Alternatively, a contract may be enforced by an order for damages which compels performance of the secondary obligation to pay damages if the contract is breached, an obligation which as Lord Diplock stated is just as much an obligation arising from the contract as are the primary obligations that it replaces.

172 The law recognises obligations and imposes remedies that have a connection with a contract but which are not the enforcement of the contract or any obligation arising under the contract. For example, the obligation to repay money after a total failure of consideration is imposed by law and is not the enforcement of an implied contractual promise: Shepherd v Australia & New Zealand Banking Group Ltd (1996) 20 ACSR 81, 93.

173 An action for damages for inducing a breach of contract is not an action to enforce the contract. I find that Jaddcal has no cause of action against any of the fifth to tenth defendants for inducing a breach of contract. The learned authors of Fleming's The Law of Torts (10th ed, 2011) say at [1.10] that in very general terms, the tort is an injury other than a breach of contract, which the law will redress with damages. The law of contract exists for the purpose of vindicating a single interest, that of having promises of others performed. This it does either by specifically compelling the promisor to perform or by awarding the promisee damages to put him in as good a position as if the promise had been kept. Thus, while contract law as a rule assures the promisee the benefit of the bargain, tort law has the different function of primarily compensating injuries or losses. According to another distinction, tort duties are said to be primarily fixed by law, in contrast to contractual obligations which can arise only from voluntary agreement.

174 In case I am wrong in that finding I will consider whether Jaddcal has made out the elements of the cause of action for inducing a breach of contract on the assumption that Jaddcal has the right to bring such an action.

Ingredients of tort of inducing breach of contract

175 In D C Thomson & Co Ltd v Deakin [1952] Ch 646 Jenkins LJ defined the tort as:

Direct persuasion, procurement or inducement applied by the third party to the contract breaker, with knowledge of the contract and the intention of bringing about its breach (694).

Liability under the tort requires both that the defendant knew of the existence of the plaintiff's contract and that he had an intention to cause a breach of that contract. The ingredients of knowledge and intention are connected: without knowledge there can be no intention. In Allstate Life Insurance Co v Australia & New Zealand Banking Group Ltd [1995] FCA 1368; (1995) 58 FCR 26 Lindgren J said, in relation to the tort of inducing a breach of contract:

In my opinion, the authorities establish conclusively that the gravamen of the tort is intention. Although the requirement of knowledge of the contract is sometimes discussed as if it was a separate ingredient of the tort, it is in fact an aspect of intention. The requirement that the alleged tortfeasor have 'sufficient knowledge of the contract' is a requirement he have sufficient knowledge to ground an intention to interfere with contractual rights (43).

176 In OBG Ltd v Allan the House of Lords held that a defendant cannot be liable for inducing a breach of contract unless he intended to cause a breach. It is not sufficient that a breach of contract is merely a foreseeable consequence of the defendant's action. Lord Hoffmann said:

To be liable for inducing breach of contract, you must know that you are inducing a breach of contract. It is not enough that you know that you are procuring an act which, as a matter of law or construction of the contract, is a breach. You must actually realise that it will have this effect. Nor does it matter that you ought reasonably to have done so [39].

Lord Hoffmann explained that if someone knowingly causes a breach of contract, it does not normally matter that it is the means by which he intends to achieve some further end or even that he would rather have been able to achieve that end without causing a breach: [42]. However:

On the other hand, if the breach of contract is neither an end in itself or a means to an end, but merely a foreseeable consequence, then in my opinion it cannot for this purpose be said to have been intended. That, I think, is what Judges and writers mean when they say that the claimant must have been 'targeted' or 'aimed at' [43].

177 Constructive knowledge is not sufficient although if a person did not know the actual terms of the contract but had the means of knowledge which they deliberately disregarded that would be enough. It is in accordance with the general principle of law that a conscious decision not to enquire into the existence of a fact is in many cases treated as equivalent to knowledge of that fact.

Casey did not intentionally induce a breach of contract

178 Mr Minson gave the plant, machinery and equipment he had acquired from the United States to Casey for Casey to use in the new ice rink and as Casey's capital contribution to the venture. In his affidavit Casey says that he requested his father to do so. By doing so, Casey induced or procured Mr Minson to breach the Restraint Clause. The question is whether Casey did so with the requisite intention.

179 The plaintiffs say that Casey had sufficient knowledge of the restraint. In his affidavit Casey says that several weeks after Mr Lowick, Mr Williams and Mr MacLellan had been in Newcastle, he spoke to his father by phone and told his father that he was interested in joining Mr Lowick, Mr Williams and Mr MacLellan in building an ice rink business in Perth. Mr Minson said words to the effect: 'I can't help you because I don't have the funds and I can't be involved'. Casey says that Mr Minson did not at that time say why he could not be involved and Casey 'left it at that'. It cannot be inferred from that statement that Casey knew that Mr Minson had a contractual obligation that would be breached by giving the ice rink equipment to Casey.

180 There is no evidence that Casey knew that his parents had entered into a contract with Mr and Mrs Anuriw that contained a clause restraining them from being engaged, concerned or interested in another ice rink business or indeed any contract. In his affidavit Casey says that between the last week of March 2009 and the end of August 2009 he was living in Newcastle, playing ice hockey. He was aware that there were problems with Perth Ice Arena and that his parents were in a court action with Mr and Mrs Anuriw. When his father came to visit Casey in Newcastle in August 2009 to watch the grand final of the ice hockey season, his father told Casey that the court action with the Anuriws had finished and that his parents had received a payout. There is no evidence that Casey knew of any contract between his parents and Mr and Mrs Anuriw.

181 In any event, the plaintiffs must establish that Casey intended to interfere with the contractual rights of Mr and Mrs Anuriw. The requirement that the alleged tortfeasor have sufficient knowledge of the contract is a requirement to have sufficient knowledge to ground an intention to interfere with contractual rights: Allstate Life Insurance Co [43]. Lord Hoffmann said in OBG Ltd v Allan:

To be liable for inducing breach of contract you must know that you are inducing a breach of contract. It is not enough that you know that you are procuring an act which, as a matter of law or construction of the contract, is a breach. You must actually realise that it will have this effect. It does not matter that you ought reasonably to have done so [39].

182 There is no evidence that, or from which it can be inferred that, Casey knew that, in requesting and receiving the ice rink equipment from his father, or allowing or requesting his father to do other things in relation to the new ice rink, Casey intended to induce a breach of the contract between his parents and Mr and Mrs Anuriw. The plaintiffs' case against Casey is not made out.

Andrew did not intentionally induce a breach of contract

183 Mr and Mrs Bruske loaned to Andrew the money that provided his capital contribution to Roselink. Andrew requested that they do so. By doing so, Andrew induced or procured Mr and Mrs Bruske to breach the Restraint Clause. The question is whether Andrew did so with the requisite intention.

184 In his affidavit Andrew says that just after the Perth Ice Arena opened he went on an overseas holiday and was away for two months. When he returned to Perth court action between his parents and Mr and Mrs Anuriw had started. Andrew says that he was not aware of the final terms of settlement and the first time he saw the Deed was when he was served with Mr Anuriw's affidavit in the current proceedings. Andrew says that he remembers his parents telling him at the time the court action settled that one of the terms of settlement was that they could not own or operate another ice rink. That was all he knew about the restraint. In late August or early September 2009 Andrew spoke to his parents about borrowing some money from them to participate in the new ice rink venture. His parents agreed to do so.

185 Andrew knew that his parents had a contractual obligation not to own or operate another ice rink. There is no evidence that Andrew knew that his parents had contracted not to be directly or indirectly engaged, concerned or interested in an ice rink business. Andrew did not have the requisite intention to induce a breach of contract. To be liable for inducing a breach of contract he must have known that he was inducing a breach of contract. It is not enough that he knew he was inducing his parents to lend him the money as his contribution to the establishment of the ice rink and that as a matter of law or construction of the contract his parents' act was a breach of the Restraint Clause.

186 The case against Andrew for inducing a breach of contract is not made out.

187 Mr Lowick had sufficient knowledge of the restraint to ground an intention to induce a breach of the restraint.

188 On about 5 September 2009 Mr Anuriw said to Mr Lowick words to the effect:

You should be very careful because John, Cheryl, David and Louise have signed a contract with us that prevents them from having anything to do with running an ice rink business, so don't discuss anything with them relating to Perth Ice Arena.

The issue is whether Mr Lowick did something, or things, that induced the first to fourth defendants, or one or more of them, to breach their contract with Mr and Mrs Anuriw and intended to do so.

189 Mr Lowick attended the meeting on 13 December 2009 at the home of Mr and Mrs Minson. I infer that he did so at their invitation. Mr Lowick knew that Mr Minson participated in negotiating the terms of the lease because Mr Lowick received emails, or copies, from Mr Minson proposing amendments to the lease. Mr Lowick agreed to treat the ice rink equipment given by Mr Minson to Casey as a contribution by Casey to Roselink. Mr Lowick agreed to treat the lease deposit paid by Mr and Mrs Bruske as a contribution to Roselink by Andrew. Mr Lowick, as a director of Roselink, agreed to repay to Mr and Mrs Minson and to Mr and Mrs Bruske amounts paid by Casey and Andrew for building materials, equipment and food using the credit cards of Mr and Mrs Minson and Mr and Mrs Bruske. I find that that conduct taken as a whole is not sufficient to amount to inducing, and intending to induce, a breach of the contract between Mr and Mrs Anuriw and Mr and Mrs Minson and Mr and Mrs Bruske.

190 None of the acts of Mr Lowick amount to direct persuasion of Mr and Mrs Minson or Mr and Mrs Bruske to breach their contract with Mr and Mrs Anuriw. There is no evidence that Mr Lowick requested Mr Minson or Mr or Mrs Bruske to do any of the things I have referred or that he rewarded, or agreed or offered to reward them for doing so.

191 In D C Thomson & Co Ltd v Deakin Jenkins LJ identified 'inconsistent dealings' as an aspect of the tort of interference with contractual rights. Lord Jenkins said at 694:

But the contract breaker may himself be a willing party to the breach, without any persuasion by the third party, and there seems to be no doubt that if a third party, with knowledge of a contract between the contract breaker and another, has dealings with a contract breaker which the third party knows to be inconsistent with the contract, he has committed an actionable interference: see, for example, British Industrial Plastics Ltd v Ferguson [1940] 1 All ER 479, where the necessary knowledge was held not to have been brought home for the third party; and British Motor Traders Association v Salvadori [1949] Ch 556. The inconsistent dealing between the third party and the contract breaker may, indeed, be commenced without knowledge by the third party of the contract thus broker; but, if it is continued after the third party has notice of the contract, an actionable interference has been committed by him: see, for example, De Francesco v Barnum (1890) 45 Ch D 430.

192 In British Motor Traders Association v Salvadori [1949] Ch 556 Roxburgh AJ considered that 'any active step taken by a defendant having knowledge of the covenant by which he facilitates a breach of that covenant is enough' to establish the tort.

193 Commentators have considered whether engaging in inconsistent dealings or facilitating a breach is sufficient to amount to inducing a breach of contract since the more traditional approach to the tort taken by the House of Lords in OBG Ltd v Allan. O'Sullivan J in 'Intentional Economic Torts, Commercial Transactions and Professional Liability' (2008) 24 Journal of Professional Negligence 164 concluded that tortious liability based on knowingly making an inconsistent contract is entirely consistent with OBG Ltd v Allan reasoning. On the other hand, Carty H, An Analysis of the Economic Torts (2nd ed, 2010) concludes that inconsistent transactions should not be seen as tortious per se.

194 I find the reasoning of Ms Carty compelling. The tort of inducing a breach of contract requires a breach caused by the defendants' persuasion or inducement. The defendant is liable for being instrumental in the decision to breach. In Thomson v Deakin Jenkins LJ asserted that 'inconsistent dealings' could give rise to liability in this tort. The other members of the court did not consider the point. Jenkins LJ drew support for his assertion from the judgment of Roxburgh J in British Motor Traders Association v Salvadori. In Salvadori the defendant bought a car from the claimant's cocontractor knowing that the sale constituted a breach by the cocontractor of his obligation not to sell the car within a year. At one point in his judgment Roxburgh stated that inducement to breach of contract included offering a price high enough for the contract breaker to agree. He also later referred to the active steps the defendant must take, before he will be liable. Ms Carty observes that as such this would appear to be a runofthemill direct persuasion case. However, later in his judgment Roxburgh J asserted that simply by agreeing to buy the car, known by him to be on offer in breach of contract, the defendant was taking active steps by which he facilitated the breach of contract.

195 Ms Carty argues that this minimal degree of interference cannot be sufficient to render the defendant liable in tort. Arguably, the only legitimate reason for adding tort liability to the contract breaker's already existing liability in contract is precisely because the defendant has played an important part in persuading the cocontractor to break his contract. It would appear justifiable to demand a causal link before facilitation could lead to liability. If the defendant has simply said 'yes' he is better regarded as the tool of the contract breaker, rather than vice versa. That view is supported by Batts Combe Quarry. There the father breached his contract not to assist in carrying on a rival quarry business. The breach involved the provision of a sum of money to his sons to enable them to purchase a rival quarry. The Court of Appeal agreed with the trial judge that the mere acceptance by the sons of the gift did not amount to a procuring by them of the breach of contract.

196 Furthermore, Ms Carty argues persuasively at page 47 of her book that none of the cases cited in support of the 'inconsistent transaction' doctrine are solid authority for its existence. In BMTA v Salvadori the defendant induced the claimant's cocontractor to breach his contract by offering a high enough price for the contract breaker to agree.

197 In OBG Ltd v Allan the House of Lords did not address the question of whether facilitating a breach of covenant or being a party to inconsistent dealings is enough to establish the tort. However, their Lordships discuss the tort in terms of inducing, procuring or persuading a breach. And the other wide dicta of Jenkins LJ outlining varieties of the tort to include direct and indirect intervention in a contract were of course rejected. In the subsequent Court of Appeal decision in Meretz Investments NV v ACP Ltd [2007] EWCA Civ 1303; [2008] 2 WLR 904 there are dicta that seem to deny liability for inconsistent transactions: Arden LJ at [139]. So Toulson LJ in that case notes that inducing breach of contract 'requires the defendant's conduct to have operated on the will of the contracting party': [177].

The acceptance of inconsistent transactions as tortious places liability in the area of facilitating a breach. This appears to downgrade the need for causal and intentional harm, emanating from the defendant. Yet, it was accepted in Allen v Flood that 'the procuring [of] ... a breach of contract was ... the gist of the action' [1898] AC 1, 123 Lord Herschell. In effect, the defendant must be the person in the background who 'pulls the strings' [as Lord Macnaghten put it in Allen v Flood [1898] AC 1, 152]. This requires accepting Batts as correct and rejecting the wider dicta in Salvadori.

199 Once it is accepted, as I do, that merely facilitating a breach of the Restraint Clause is not enough to establish the tort, the plaintiffs' case against Mr Lowick cannot succeed. There is no evidence that Mr Lowick did anything to persuade Mr Minson or Mr Bruske or Mrs Bruske to breach the Restraint Clause or that Mr Lowick's conduct influenced them to make up their mind to breach the Restraint Clause. There is no evidence that Mr Lowick's conduct operated on the will of Mr Minson or Mr or Mrs Bruske to cause them to do the things that amounted to breaching the Restraint Clause. The plaintiffs' case in tort against Mr Lowick is not made out.

Mr Williams did not induce a breach of Restraint Clause

200 Mr Williams knew that Mr and Mrs Minson and Mr and Mrs Bruske were under a contractual obligation not to have any involvement in an ice rink business. Mr Anuriw told Mr Williams that on or about 30 September 2009. That is sufficient knowledge of the restraint to ground an intention to induce a breach of the contract between Mr and Mrs Anuriw and Mr and Mrs Minson and Mr and Mrs Bruske.

201 However, there is no evidence that Mr Williams induced or procured any of the first to fourth defendants to breach their contract or that Mr Williams intended to induce a breach of the contract between Mr and Mrs Anuriw and Mr and Mrs Minson and Mr and Mrs Bruske. At most Mr Williams facilitated a breach. For the reasons explained in relation to Mr Lowick that is insufficient to amount to inducing or procuring a breach of contract.

Mr MacLellan did not induce a breach of Restraint Clause

202 There is no evidence that Mr MacLellan knew of the restraint. It is not necessary for him to have known of the precise terms of the contract; he need only have sufficient knowledge, including knowledge of the existence of the contract, to know or deemed to know that he is inducing a breach and a conscious decision not to enquire into the existence of a fact is in many cases treated as equivalent to knowledge of that fact. However, there is no evidence that Mr MacLellan knew of the existence of the contract between Mr and Mrs Anuriw, Mr and Mrs Minson and Mr and Mrs Bruske or that Mr and Mrs Minson and Mr and Mrs Bruske were under any obligation not to be involved in an ice rink business.

203 There is no evidence that Mr MacLellan induced or procured any of the first to fourth defendants to breach their contract or that Mr MacLellan intended to induce a breach of the contract between Mr and Mrs Anuriw and Mr and Mrs Minson and Mr and Mrs Bruske. At most Mr MacLellan facilitated a breach. For the reasons explained in relation to Mr Lowick that is insufficient to amount to inducing or procuring a breach of contract.

Roselink did not induce a breach of the Restraint Clause

204 Mr Lowick and Mr Williams had sufficient knowledge of the restraint. They were directors of Roselink and their knowledge is to be imputed to Roselink. However, Roselink did not induce or procure a breach of the Restraint Clause.

205 Roselink received the ice rink equipment gifted by Mr Minson to Casey as a capital contribution. Roselink accepted and ratified the payment by Mr and Mrs Bruske of the lease deposit on behalf of Roselink. Roselink received further sums of money from Mr and Mrs Bruske.

206 Roselink permitted Mr Minson to negotiate the terms of the lease on its behalf, to apply to the City of Stirling in its name for development approval and to participate in the preparation of the scope of works required for the lease. Roselink permitted Mr Bruske to assist the fit out of the ice rink. All of those activities may amount to facilitating a breach of the Restraint Clause but for the reasons given in relation to Mr Lowick they do not amount to inducing or procuring a breach. There is no evidence that Roselink, through any of its directors, operated on the will of Mr Minson or Mr and Mrs Bruske or influenced them to do any of those things.

207 Casey persuaded, induced or procured Mr Minson to breach the Restraint Clause by giving him the ice rink equipment for the new ice rink venture. Andrew persuaded, induced or procured Mr and Mrs Bruske to breach the Restraint Clause by getting them to loan him the money which he contributed to, and provided capital for, Roselink. However, Casey and Andrew did not do those things in their capacity of a director of Roselink.

208 The plaintiffs' case against Roselink for inducing a breach of the Restraint Clause is not made out.

209 In the statement of claim the plaintiffs claimed against the first to fourth defendants damages for breach of contract; further and in the alternative, restitution of the consideration paid for the Restraint Clause, an injunction restraining the first to fourth defendants from further breaching the deed and equitable damages. The plaintiffs claimed against the fifth to tenth defendants damages in tort, an injunction restraining those defendants from further tortiously interfering in the Deed and equitable damages. In their closing submissions the plaintiffs sought damages against both the first to fourth and fifth to tenth defendants and restitution from the first to fourth defendants. The plaintiffs further submitted: 'In the event that damages are awarded, the plaintiffs accept that no injunction should issue'.

210 I required counsel for the plaintiffs to specify what relief was sought by Jaddcal and what relief was sought by Mr and Mrs Anuriw rather than stating the relief that was claimed by 'the plaintiffs'. In the course of stating the relief claimed by each of the plaintiffs counsel for the plaintiffs made equivocal statements. Eventually, counsel stated that the relief claimed by the plaintiffs is as follows. Jaddcal claims against the first to fourth defendants damages for breach of the Restraint Clause and an injunction restraining them from breaching the Restraint Clause 'in the event that no other remedy were available'. Jaddcal claims against the fifth to tenth defendants damages for inducing a breach of the contract constituted by the Deed. Mr and Mrs Anuriw claim restitution from the first to fourth defendants of the amount paid for the Restraint Clause and an injunction 'the same as Jaddcal', which I take to mean that Mr and Mrs Anuriw claim against the first to fourth defendants an injunction to restrain them from breaching the Restraint Clause 'in the event that no other remedy were available'. Mr and Mrs Anuriw do not seek any relief against the fifth to tenth defendants. I will start by considering Jaddcal's claim for damages against the first to fourth defendants for breach of the Restraint Clause.

Jaddcal's claim against first to fourth defendants for damages for breach of Restraint Clause

211 Jaddcal's claim is for damages for breach of contract. The general rule is that where a party sustains a loss by reason of a breach of contract, it is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed. That directs attention to the losses caused by the breach. The measure of damages claimed by Jaddcal is lost profits. In essence, Jaddcal's case is that Xtreme Ice Arena would not have opened, or at least would not have opened before February 2011, if the first to fourth defendants had not breached the Restraint Clause and customers of Roselink would otherwise have attended Perth Ice Arena. Jaddcal says that it suffered a reduction in income as a result of the loss of customers to Xtreme Ice Arena and claims that loss of income as damages.

212 The plaintiffs called Christopher Daws, a chartered accountant and insolvency consultant to quantify its damages. Mr Daws prepared a report dated 11 May 2011 (report) and an addendum dated 22 June 2011 (addendum). In his report Mr Daws calculated Jaddcal's loss of income, as a result of competition from Xtreme Ice Arena, from 1 December 2010 to 30 April 2011. In his addendum Mr Daws calculated the loss for the month of May 2011 and updated the calculation for the loss for the period from 1 December 2010 to 27 May 2011.

213 Mr Daws calculated the loss on two bases. First, in his report Mr Daws calculated that Jaddcal has suffered a reduction of income for the period 30 November 2010 to 30 April 2011 of $165,848.13. That was the difference between the income, or revenue, received by Jaddcal in the periods between December 2009 and April 2010 and December 2010 and April 2011. Mr Daws then made some adjustments for various reasons as set out in his report.

214 Secondly, Mr Daws calculated the income generated by Xtreme Ice between 30 November 2010 and 30 April 2011. Mr Daws said:

In light of the relative proximity of the two ice arenas and the similar product that is offered, it is reasonable in my opinion to assume that but for the opening of Xtreme Ice, a significant portion of the income generated by that business would have been generated by Perth Ice Arena.

In considering whether there are losses occasioned by the opening of Xtreme Ice, I regard it as appropriate to deduct from the Xtreme Ice income any income attributable to known differences in the two business. In this case there are two known differences, being bumper car income and the location of the two venues.

After making adjustments for those reasons Mr Daws concluded that the income derived by Xtreme Ice which would have been available to Perth Ice Arena during that period is $223,341.

215 Counsel for the fifth to tenth defendants, Mr Curwood, criticised Mr Daws' assessment on a number of bases. First, Mr Curwood said that there was no basis in the evidence for making the assumption that all income earned by Xtreme Ice Arena, but for the two deduction factors identified by Mr Daws the bumper cars and the location premium would have been earned by Perth Ice Arena. That is correct. However, it is likely that, as Mr Daws said, a significant portion of the income earned by Xtreme Ice would have been earned by Perth Ice Arena if Xtreme Ice had not opened for the reasons given by Mr Daws.

216 Secondly, Mr Curwood submitted that if there are fewer members of West Coast Ice Hockey Club, it could not have had an effect on 'ice time' earnings as ice time for ice hockey at Perth Ice Arena costs $270 per hour. Mr Curwood refers to the evidence of Mr Salmond to that effect. However, I find that Perth Ice Arena did suffer loss of revenue as a result of less patronage from West Coast Ice Hockey Club. Mr Salmond stated that West Coast Peewee division team has stopped playing and training at Perth Ice Arena and currently play and train at Xtreme Ice Arena. Mr Salmond also stated that prior to Xtreme Ice Arena, the Western Australian Ice Hockey Association divided the State Ice Hockey teams ice time for games and training between Perth Ice Arena and Cockburn Ice Arena. Ice time for the State teams is now divided up between the three Perth rinks.

217 Thirdly, Mr Curwood said that there was no analysis undertaken by Mr Daws as to what expenditure would have been incurred earning the extra income. That is correct. Mr Anuriw conceded that his company's wages bill was higher when the business was making more money in its first year of operations. Mr Daws made no analysis of that issue.

218 Fourthly, Mr Curwood submitted that a similar difficulty arises as to a comparison of year to year income earnings. There is no analysis of the expenses required to make the earnings. The award of damages must be directed towards the lost profit rather than total loss revenue. Mr Curwood submitted that the plaintiffs' case has equated income to profit. In general, that is correct.

219 Fifthly, Mr Curwood submitted that with respect to the year by year comparisons, Mr Anuriw conceded that month by month sales at Perth Ice Arena for 2009 and 2010 were lower than in the 2010 year. That is correct. In crossexamination Mr Anuriw agreed with the assertion that over the period from June 2009 until October 2010, that is the month before Xtreme Ice Arena opened, as a general proposition the month by month sales for Perth Ice Arena in 2010 were lower than in 2009. Mr Anuriw did not accept that the Perth Ice Arena business was in decline. Mr Anuriw said that his explanation for the lower sales in 2010 was that there was a honeymoon period in the first year.

220 Sixthly, Mr Curwood submitted that the two businesses do not operate for the same periods of time. Perth Ice Arena is a six and a half day a week business and Xtreme Ice Arena is a seven day a week business. Mr Anuriw did give evidence that before Mr and Mrs Minson and Mr and Mrs Bruske left the Perth Ice Arena business the rink operated seven days a week and after they left it operated six and a half days a week. Mr Anuriw also said that currently they do ice maintenance on Thursdays and the rink does not open.

221 There are substantial differences between the plaintiffs and the defendants relating to the calculation of damages. I will review a few points before determining the appropriate measure of damages.

222 The damages must be assessed having regard to a number of points. First, Mr Daws assumed that Jaddcal lost profits as a result of Xtreme Ice Arena operating between 1 December 2010 and 27 May 2011. The defendants submitted that they are not liable for any loss of revenue to Jaddcal as a result of the operation of Xtreme Ice Arena beyond 28 February 2011, that is, 18 months after the date of the deed. I have found that the reasonable period for the restraint is a period of no more than 18 months. The first to fourth defendants are, and were, at liberty to directly or indirectly be engaged, interested or concerned in an ice rink business after 28 February 2011. They were entitled to do acts prior to 28 February 2011 that amounted to being directly or indirectly concerned in an ice rink business being carried on after 28 February 2011. If that was not so then the restraint would be for a period more than 18 months. The losses to which Jaddcal is entitled are losses resulting from the operation of Xtreme Ice Arena before 28 February 2011. It is possible that Jaddcal may have suffered losses after 28 February 2011 as a result of Xtreme Ice Arena operating before 28 February 2011. However, there is no evidence of that.

223 Damages should be calculated on the assumption that Xtreme Ice Arena would have opened on the expiration of the reasonable restraint period of 18 months, that is approximately 1 March 2011. On this basis the gross revenue lost to Jaddcal would be the revenue lost to Xtreme Ice Arena between 30 November 2010 and 28 February 2011.

224 Secondly, Jaddcal must prove that, but for the breaches of the Restraint Clause by the first to fourth defendants, Jaddcal would have obtained customers and revenue that was obtained by Roselink. This requires consideration of what would have happened had the first to fourth defendants not infringed the Restraint Clause. The process involves a degree of estimation, but that is no bar to recovery.

225 I find that the breach of the Restraint Clause by the first to fourth defendants caused, or contributed to, Roselink establishing and opening the ice rink business at the Xtreme Ice Arena. The ice rink equipment given by Mr and Mrs Minson to Casey, the lease deposit paid by Mr and Mrs Bruske and the further sums loaned by Mr and Mrs Bruske to Andrew all formed part of the capital of Roselink. There is no evidence that Casey or Andrew had the means to otherwise obtain and make those capital contributions. That capital was indispensable to the ice rink venture. Furthermore, Mr Minson played an important role in establishing the business. He found the Mirrabooka premises, played an important part in negotiating the lease, participated in the development application to the City of Stirling and in preparing the scope of works. Mr and Mrs Minson hosted the 13 December meeting and Mr and Mrs Bruske attended the meeting, at which the business structure was determined. Mr and Mrs Minson and Mr and Mrs Bruske played a role in effecting that business structure.

226 I find that Jaddcal lost customers to Roselink. The evidence is that prior to the opening of the Xtreme Ice Arena ice hockey players or skaters who lived north of the river would generally patronise Perth Ice Arena. It is to be expected that the Perth Ice Arena will have lost customers to the new ice rink which is 4.8 km away and would be more readily accessible to some of Perth Ice Arena's former or prospective customers. Furthermore, some West Coast Ice Hockey Club teams left Perth Ice Arena for Xtreme Ice Arena.

227 Thirdly, the claim is not properly for loss of revenue but for loss of profits. The profits to be calculated are the lost profits, that is lost revenue less costs that would have been incurred in earning the lost revenue. Costs savings are to be brought to account. If the ice rink has fewer customers it will likely incur less costs and that should be treated as a gain to be offset against the lost revenue which forms the basis of the calculation of lost profits.

228 If Jaddcal had earned greater revenue from skating fees, hire, café sales and other sources then its expenses incurred in earning that income would have increased. Mr Anuriw conceded that. Furthermore, Jaddcal's trading figures demonstrate that. Jaddcal's sales income for the period ended 30 June 2010 was $1,398,196 and direct costs were $716,483 and gross profit $681,713. In the previous year sales were $393,713 and direct costs were $159,329 and gross profit was $234,384. The gross profit margin for the year ended 30 June 2010 was 49% and for the previous year 59%. There was also a variation in expenditure or overheads. That is to be expected because the previous year's trading was only for a period of three months. A reasonable calculation of lost profit is to apply the gross profit margin to the lost revenue. In this case the gross profit margin is approximately 49%. Accordingly, the lost profit is approximately 49% of lost revenue.

229 A calculation of damages based on likely lost profit cannot be precise. I will begin by assessing the revenue lost by Jaddcal to Roselink. I will then deduct from that lost revenue an assessment of the costs that would have been earned by Jaddcal in earning that revenue.

230 It is not realistic to assume that if Xtreme Ice Arena had not opened then the whole of the revenue earned by Xtreme Ice Arena in the relevant period would have been earned by Perth Ice Arena. In considering the losses occasioned by the opening of Xtreme Ice Mr Daws regarded it as appropriate to deduct from the Xtreme Ice income any income attributable to known differences in the two businesses. Mr Daws identified two known differences, being bumper car income and the location of the two venues. Perth Ice Arena does not offer bumper cars and hence the income earned by Xtreme Ice from that source would not have been earned by Perth Ice Arena. So far as location is concerned, Mr Daws considered that Xtreme Ice is located in a shopping centre precinct with easy access to public transport whereas Perth Ice Arena is located in a largely industrial zone with limited transport and other local facilities. Therefore, it appeared to Mr Daws that there is a location premium in Xtreme Ice's favour which would mean that it might earn additional income that Perth Ice Arena would not be able to generate purely by reason of its preferred location. Mr Daws considered that the location premium may be reflected in the difference in monthly rent paid by Roselink for the Xtreme Ice premises in Mirrabooka as compared to the rent paid by Jaddcal for the Perth Ice Arena premises in Malaga. The percentage difference is 24.51%. Therefore in considering the income of Xtreme Ice and the impact of this on Perth Ice Arena Mr Daws deducted from the total income the bumper car income and the location premium so as to calculate only that income which would have been available to Perth Ice Arena if Xtreme Ice had not opened.

231 There is no empirical evidence that the percentage difference in rent between the two premises is likely to result in a similar difference in revenue. However, some allowance must be made for that difference. There are other factors that might contribute to different revenue, such as the state of the premises and fit out and the fact that Xtreme Ice is a seven days a week operation whereas Perth Ice Arena operated only for six and a half days or for a time six days a week. There may also be factors personal to the operators of the two ice rinks that might influence customers. All of those factors lead to the conclusion that some of the customers who attended Xtreme Ice Arena would not have attended Perth Ice Arena even if Xtreme Ice Arena had not been open. Taking all these matters into account, and recognising that it is a rough and ready exercise, I will assume that if Xtreme Ice Arena had not opened in the relevant period two thirds of its income, excluding income from bumper cars, would have been earned by Perth Ice Arena.

232 Xtreme Ice Arena's gross revenue from 30 November 2010 to 28 February 2011 was $168,490. Bumper car income in that period was $23,123. Total income, less bumper car income, for the period was $145,367. I assess that the gross revenue that would have been earned by Perth Ice Arena if Xtreme Ice Arena had not been open during that period is two thirds of $145,367, that is $96,911. That is gross revenue. Profit is approximately 49% of gross revenue. In this case lost profit for the period is approximately 49% of $96,911, that is $48,456. I assess Jaddcal's damages at $48,000.

Jaddcal's damages' claim against fifth to tenth defendants

233 I have found that Jaddcal has not proved that the fifth to tenth defendants, or any of them, induced the first to fourth defendants to breach the Restraint Clause. And in any event, Jaddcal has no cause of action against the fifth to tenth defendants because it is not a party to the Deed. If Jaddcal had made out a cause of action against any of the fifth to tenth defendants for having induced the first to fourth defendants to breach the Restraint Clause then I would have assessed Jaddcal's damages in the same amount as its damages for breach of the Restraint Clause by the first to fourth defendants, that is $48,000.

234 Jaddcal claims against the first to fourth defendants an injunction restraining them from breaching the Restraint Clause 'in the event that no other remedy were available'. I have found that Jaddcal is entitled to damages of $48,000 against the first to fourth defendants for breaching the Restraint Clause. In those circumstances, Jaddcal does not pursue its claim for an injunction against the first to fourth defendants. In any event, I would not have granted an injunction because it is now more than two years since the Deed was entered into and an injunction should only be granted if a restraint for three years is reasonable. I have found that a restraint for that period is not reasonable.

235 Mr and Mrs Anuriw plead that pursuant to the terms of the Deed on or about 28 August 2009 they paid to the first to fourth defendants the amount of $160,000 each and by reason of the breach of the Restraint Clause by each of the first to fourth defendants the consideration for those payments has failed. Mr and Mrs Anuriw then plead that the consideration paid by Mr and Mrs Anuriw for the restraints contained in the Restraint Clause is severable from the consideration paid by them for the acquisition of the shares in Jaddcal and it would be unjust for the first to fourth defendants to retain the full consideration paid. Mr and Mrs Anuriw claim that they are entitled to repayment of so much of the sum of $160,000 paid to each of the first to fourth defendants which is not referable to the value of the shares in Jaddcal.

236 A plaintiff who has paid money under a contract may be entitled to restitution of that payment if the consideration for the payment has totally failed. In this context it is the performance of the defendant's promise not the promise itself which is the relevant consideration whether there has been a total failure of consideration.

237 In Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 the High Court held that there had been a failure of a distinct and severable part of the consideration for the purchase of the goods, so that there was a total failure of that consideration and the amount claimed was recoverable as money had and received to the recipients use. Rothmans was a tobacco wholesaler and Roxborough a retailer supplied by Rothmans. Under supply contracts between them, the price for a consignment of tobacco was broken down into two parts, the price for the tobacco itself and the 'tobacco licence fee', which was the licence fee payable by Rothmans, the wholesaler, in respect of the tobacco supplied. Thus, the arrangement was that Rothmans would pay the licence fee and pass the cost onto the retailers, who would of course pass it onto consumers. Because Rothmans was a licensed wholesaler, the retailers were not liable to pay any further licence fee in respect of their own sales of the tobacco supplied by Rothmans. It had previously been held that the licensing scheme was invalid as a disguised excise duty, which the New South Wales Parliament had no power to impose under the Australian Constitution. The retailers sued Rothmans, to recover the amount paid for the license fee and which Rothmans had not remitted to the taxing authority. A majority of the High Court held that there had been a failure of a distinct and severable part of the consideration for the purchase of the tobacco, so that there was a total failure of consideration and the amount was recoverable as money had and received to the retailer's use. In a joint judgment the plurality said that the amount of the net total wholesale cost referable to the tax was, from one point of view, part of the money sum each retailer was obliged to pay to obtain delivery of the tobacco products, that is it was merely part of the price for the transfer of title to the buyer of the tobacco. But the plurality said that there was more to it than that. The tax was a government imposition, in the form of a fee payable under a licensing scheme. The nature of the scheme was such that the licensed wholesaler, or, if not the wholesaler, then the licensed retailer, would pay the amount referable to particular tobacco products. The wholesaler, anticipating liability for the fee, required the retailers, when purchasing products by wholesale, to pay an amount equal to the fee. The retailers, in turn, had an interest in the wholesaler paying the fee to the revenue authorities, for they were thereby relieved of a corresponding liability. There was a purpose involved in the making of the requirement that the retailers pay the amounts described as 'tobacco licence fee', and in compliance with that requirement. At [16] the plurality said that to describe these amounts as nothing more than an agreed part of the price (or, to use the language of the parties, cost) of the goods, is to ignore an aspect of the facts. The plurality then said:

In a contract for the sale of goods, the total mount which the buyer is required to pay to the seller may be expressed as one indivisible sum, even though it is possible to identify components which were taken into account by the parties in arriving at a final agreed figure. The final figure itself may have been the result of negotiation, making it impossible to relate a cost component to any particular part of that figure. Or there may be other factors which prevent even a notional apportionment. But there are cases, of which the present is an example, where it is possible, both to identify that part of the final agreed sum which is attributable to a cost component, and to conclude that an alteration in circumstances, perhaps involving a failure to incur an expense, has resulted in a failure of a severable part of the consideration. Here, the buyers, the retailers, were required to bear, as a component of the total cost to them of the tobacco products, a part of the licence fees which the seller, the wholesaler, was expected to incur at a future time, and which was referable to the products being sold. It was in the common interests of the parties that the fees, when so incurred, would be paid to the revenue authorities by the seller, and it was the common intention of the parties (and the revenue authorities) that the cost of the goods would include the fees. In the events that happened, the anticipated licence fees were not incurred by the seller. The state of affairs, which was within the contemplation of the parties as the basis of their dealings, concerning tax liability, altered. And it did so in circumstances which permitted, and required, severance of part of the total amount paid for the goods [17].

238 The plaintiffs sought to establish that the amount paid by Mr and Mrs Anuriw for the Restraint Clause was severable from the rest of the payments made to the first to fourth defendants under the Deed by the evidence of Mr O'Hehir. Mr O'Hehir, a business broker, was called by the plaintiffs to give evidence of the value of the Perth Ice Arena business. Mr O'Hehir concluded that the most appropriate valuation method to employ for the business as at 28 August 2009 was an asset based methodology. That was because at that date Perth Ice Arena was an embryonic business which had only been trading 19 weeks. In Mr O'Hehir's opinion the business had not as of that date developed a sustainable level of revenue, nor had it developed a sustainable level of expenditure to match revenue. Applying an asset based methodology Mr O'Hehir valued the Perth Ice Arena business to be $577,022 and a four sixth interest in the business to be $384,681. Mr O'Hehir was instructed to comment on whether the consideration of $640,000 paid by Mr and Mrs Anuriw plus repayment of loan amounts of $185,598 and $205,000 (a total of $1,030,598) included any amount of premium. Mr O'Hehir concluded that a premium of $534,952 was paid based on the following:

The balance sheet shows a total of $191,365 in cash assets and a total of $24,918 in liabilities (excluding the three loans). The difference of the two is $166,447 ($191,365 $24,918 = $166,447).

2/3 of $166,447 = $110,965

Therefore;

$640,000 + $390,598 = $1,030,598 minus $384,681 + $110,965 = $534,952

Hence, a total premium of $534,952.

239 Mr O'Hehir said that the difference could be made up of numerous different components, including but not limited to:

• agreement to be restrained from entering into competition by one, several, or all of the four vendor individuals;
• goodwill;
• industry or intellectual knowledge (intangible assets) such as business plans, business software, and systems developed by the outgoing parties and transferred to the purchaser;
• a premium relating to the separation of business interests of the shareholders due to incompatibility.

240 Mr O'Hehir's evidence is that the Restraint Clause was but one of four factors that could have made up the difference between Mr and Mrs Minson and Mr and Mrs Bruske's proportionate share of the value of Jaddcal's assets and the amounts paid to them under the Deed. Furthermore, Mr O'Hehir merely identifies components that could make up the difference between the asset value of the shares and the price paid for them. There is no evidence that enables the court to identify that the four components referred to by Mr O'Hehir were taken into account by the parties in arriving at the final agreed figure or if they were whether all or only some of those components were taken into account and if so which. In any event, this case falls into the category referred to by the plurality in Roxborough v Rothmans of cases where the final figure paid for the shares was the result of negotiation and it is impossible to relate a cost component to any particular part of that figure.

241 In this case it is not possible to identify that part of the final agreed sum paid by Mr and Mrs Anuriw under the Deed which is attributable to the Restraint Clause and to conclude that a failure to observe the Restraint Clause has resulted in a failure of a severable part of the consideration.

Mr and Mrs Anuriw's claim for injunction against first to fourth defendants

243 I decline to grant an injunction in favour of Mr and Mrs Anuriw restraining the first to fourth defendants from being directly or indirectly engaged, interested or concerned in the Roselink ice rink business or any other ice rink business. I would not have granted an injunction because it is now more than two years since the Deed was entered into and an injunction should only be granted if a restraint for three years is reasonable. I have found that the restraint for that period is not reasonable.

Mr and Mrs Anuriw's claim for damages from first to fourth defendants

244 In their statement of claim Mr and Mrs Anuriw claim that the first to fourth defendants breached the contract between Mr and Mrs Anuriw and the first to fourth defendants constituted by the Deed. In the prayer for relief the plaintiffs, which includes Mr and Mrs Anuriw, claim damages for breach of the contract. Mr and Mrs Anuriw did not attempt to establish what damages they suffered as a result of the breach of the Restraint Clause by the first to fourth defendants. In her closing address counsel for Mr and Mrs Anuriw only advanced their claim for restitution.

245 A party who has breached a contract is liable to pay at least nominal damages, even if no loss has been caused: Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd [1938] HCA 66; (1938) 61 CLR 286. I will order the first to fourth defendants to pay to Mr and Mrs Anuriw nominal damages of $10.