Tyro Payments Ltd v Kounta Pty Ltd - [2023] NSWSC 1384 - NSWSC 2023 case summary — Zoe

NSWNSWSC

Tyro Payments Ltd v Kounta Pty Ltd

[2023] NSWSC 1384

Supreme Court of NSW|2023-11-02|Before: Rees J, Ball J

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2023-11-02

Before

Rees J, Ball J

Catchwords

(1973) 133 CLR 288 Attorney-General (Cth) v Adelaide Steamship Co Ltd [1913] AC 781 Belflora Pty Ltd v Vinflora Pty Ltd (2021) 106 NSWLR 67
[2021] NSWCA 178 Blatch v Archer (1774) 1 Cowp 63 Cherry v Steele-Park [2017] NSWCA 295
(2014) 251 CLR 640 HiTech Group Australia Ltd v Riachi [2021] NSWSC 1212 Hospital Products v United States Surgical Corporation [1984] HCA 64
(1984) 156 CLR 41 Isaac v Dargan Financial Pty Ltd (2018) 98 NSWLR 343 Kingdom Animalia LLC v Mecca Brands Pty Ltd [2023] VSCA 55

Source

Original judgment source is linked above.

Catchwords

(1973) 133 CLR 288 Attorney-General (Cth) v Adelaide Steamship Co Ltd [1913] AC 781 Belflora Pty Ltd v Vinflora Pty Ltd (2021) 106 NSWLR 67[2021] NSWCA 178 Blatch v Archer (1774) 1 Cowp 63 Cherry v Steele-Park [2017] NSWCA 295(2014) 251 CLR 640 HiTech Group Australia Ltd v Riachi [2021] NSWSC 1212 Hospital Products v United States Surgical Corporation [1984] HCA 64(1984) 156 CLR 41 Isaac v Dargan Financial Pty Ltd (2018) 98 NSWLR 343 Kingdom Animalia LLC v Mecca Brands Pty Ltd [2023] VSCA 55

Judgment (26 paragraphs)

[1]

Solicitors: King & Wood Mallesons (Plaintiff) Corrs Chambers Westgarth (Defendant) File Number(s): 2023/280832

[2]

JUDGMENT

HER HONOUR: This is a restraint of trade case between large corporations. The plaintiff, Tyro Payments Ltd, provides payment processing services to businesses, including Electronic Funds Transfer at Point of Sale (EFTPOS) terminals and related services to permit customers to pay for goods and services using a card, rather than cash. The defendant, Kounta Pty Ltd (pronounced "counter"), is the Australian subsidiary of the Lightspeed group of companies based in Canada, and provides similar services. Both companies operate in a highly competitive industry where technology develops apace.
These proceedings commenced on 4 September 2023. The restraint period began two days' later, on 6 September 2023. The restraint period is 12 months and, as such, 'time is ticking.' By consent, on 21 September 2023, Ball J ordered that the questions of liability and quantum be determined separately.
The parties assembled lay and expert evidence in little over a month. Tyro relied on the evidence of the Head of Channel Partnerships, Tyrone Ho, solicitor Cameron Graham and expert Lance Blockley. Kounta relied on the evidence of the Vice President of Business Development and Strategy for the Lightspeed group of companies, Kyle Thiemke, Senior Director of Software Development, Jamie Hill, solicitor Michael do Rozario and expert Kareem Al-Bassam. Only Mr Ho was cross-examined. No issues of credit arose; I accept his evidence.
This judgment addresses liability, which involves four issues: 1. What is the proper construction of the restraint of trade clause in the "ISO Authorised Representative and Agency Agreement" dated 1 November 2019? 2. Did Kounta breach the restraint (and various other contractual obligations) and any related fiduciary duties owed to Tyro? 3. If so, was the restraint invalid as against public policy and should it be 'read down' under section 4 of the Restraints of Trade Act 1976 (NSW)? 4. Is it appropriate to grant injunctive relief?
I had the benefit of detailed written submissions from the parties and oral submissions from Mr D Thomas SC for Tyro, Ms A Munro for Kounta on issues (a) and (b) and Mr J Giles SC on issues (c) and (d).

[4]

Merchant acquirers and Tyro

Tyro stood behind the EFTPOS machine in this case. Tyro holds an Australian Financial Services Licence (AFSL), which it uses to provide payment services to businesses selling goods and services - called "merchants" - to enable them to accept non-cash payments from customers. Tyro provides EFTPOS terminals (and the associated software) and an EFTPOS facility. In providing this service, Tyro acts as a "merchant acquirer", that is, an intermediary between the merchant and their customer's issuing bank or card scheme provider (such as Visa, Mastercard or American Express).
A typical EFTPOS transaction requires Tyro to undertake five steps as a merchant acquirer. First, when a cardholder presents their debit or credit card at a Tyro EFTPOS terminal, the transaction data from the card is routed from the EFTPOS terminal to Tyro. Second, Tyro routes the transaction details to the card scheme through the EFTPOS system. Third, the card scheme then routes the transaction data through the EFTPOS system to the customer's issuing bank, which validates the authenticity of the card and sends an authorisation command, either approving or declining the transaction, back to the card scheme, which forwards the authorisation command to Tyro. Fourth, Tyro receives the authorisation command, which is displayed on the merchant's EFTPOS terminal, allowing the merchant to complete the transaction with the customer. On average, the process to this point takes about 1.5 seconds. This process is broadly summarised below:
Fifth, the card scheme advises Tyro and the customer's issuing bank of the amount to be settled, causing the issuing bank to transfer funds to Tyro's Exchange Settlement Account. Tyro reviews transactions for indications of fraud, which takes a few minutes. Assuming Tyro does not receive an indication that the transaction is fraudulent, Tyro then calculates the settlement amount owing to the merchant and submits settlement instructions directly to the Reserve Bank of Australia to transfer funds from Tyro's Exchange Settlement Account to the merchant's nominated settlement bank account, before making those funds available to the merchant.
As Mr Al-Bassam explained, a merchant acquirer provides a financial service which enables merchants to obtain the guarantee of funds in exchange for goods and services in real-time by the customer's card. The merchant acquirer bears risk as principal in relation to the payment obligations of the issuing bank. Merchants pay a fee for this service, which is distributed amongst multiple involved parties.
According to a prospectus issued by Tyro in November 2019, that is, when the contract was executed, merchant acquiring services accounted for 97% of Tyro's revenue. Remaining revenue came from complementary business banking products Tyro offered to its merchants, being loans and transaction accounts.

[6]

Getting more merchants: referrers and ISOs

Tyro obtains new merchants through referrals from partners (such as POS software partners) and independent sales organisations (ISOs). Tyro termed the former as the "Referral system", where the partner simply referred customers to Tyro, who closed the sale. As Mr Al-Bassam explained, the referrer is restricted from representing the financial service to potential customers and involvement in applications. The merchant executes an agreement for services directly with the merchant acquirer.
ISOs, on the other hand, are third parties who act as Tyro's sales agent and are authorised under Tyro's AFSL to directly promote and sell Tyro's products and services. ISOs act as authorised agents and representatives of the acquirer and, in that capacity, are able to represent, promote, price and obtain applications for the financial service on behalf of the merchant acquirer.
Both referring partners and ISOs are paid commission by Tyro in respect of merchants which they refer and which become customers of Tyro. The commission arrangements differ depending on the referrer or ISO. The commission may be a percentage of the "merchant service fee" earned by Tyro. Alternatively, Tyro may charge a retail rate to the merchant, charge a wholesale rate to the ISO, and remit the difference to the ISO.
Kounta, as a POS software partner, referred merchants to Tyro. From 2018, Kounta did so under the Tyro Activate Partner Program (TAPP). Mr Ho said that, as a referrer, Kounta supplied Tyro with the contact details of a merchant who was interested in Tyro's services. Tyro's sales team then contacted the merchant and completed the sales process, including fielding any inquiries and assisting the merchant with the application form.
Mr Hill said that, as a referrer, Kounta identified potential merchants to subscribe to the Kounta POS system and, once the merchant had cleared Kounta's internal approval system, referred the merchant to Tyro to separately approve the merchant as an appropriate customer for Tyro's services. Tyro would conduct a Know Your Customer (KYC) check and complete a risk assessment of the business based on recent financials. If Tyro approved the merchant, then Tyro would separately contract with the merchant as a Tyro customer. As all of the risk associated with the electronic transactions sat with the merchant acquirer, most of the revenue associated with the transaction fee was retained by the merchant acquirer.

[7]

Kounta becomes an ISO

By May 2019, Kounta was pressing Tyro for remuneration at a "wholesale rate" outside TAPP. Tyro circulated a proposed new arrangement with Kounta as an ISO: Kounta would complete the sales process, following which Tyro would "OnBoard" the customer, deliver terminals and ecommerce access, the "Customer remains Tyro owned, yet re[mun]erated to Kounta." Mr Hill said that, as the ISO established the relationship with the merchant, the ISO received a larger percentage of the transaction fee when compared with the referral model.
In May 2019, Tyro and Kounta participated in a workshop "to discuss Kounta becoming an ISO with Tyro" and to establish "timelines/action items for our updated "Kounta Payments" strategy." A topic for discussion was the different market models, being the referral model, the ISO model and a third model called "PayFac." Workshop notes included: Referral - Kounta sends customers to Tyro. Tyro owns customer and manages the close of the sale … ISO - (Independent Sales Organisation). Kounta … sends Tyro a completed application rather than a lead (Kounta is responsible for applications and sales cycle through to Tyro). … PAYFAC - Kounta owns complete process and holds all KYC/compliance risks. Tyro only delivers terminals. Customer 100% owned by Kounta. … Large compliance burden and risk. 12-18 Months till Tyro can offer PAYFAC.
It is necessary to pause at this point to say something about "PayFac." I have earlier described "merchant acquirers." There is another way of providing payment processing services which, effectively, adds another intermediary - called a "payment facilitator" (PayFac) or aggregator - between the customer, the merchant and their respective banks or card schemes. The PayFac processes transactions by transmitting information from an EFTPOS terminal to a merchant acquirer, who routes the transactions to the relevant payment schemes and, once approved, clears and settles those transactions to merchants. As Mr Blockley put it, PayFacs act as distributors of merchant acquiring services on behalf of the formal acquirer.
PayPal is an example of a PayFac, but, as Mr Ho explained, "there's multiple models … there's quite a lot of intricacies to how payment facilitation works … the roles and responsibilities would change depending on the parties involved in that specific agreement." The PayFac is not necessarily involved in the settlement of funds to the merchant, while a merchant acquirer must always be involved. The merchant may execute a contract with the PayFac or may have a direct relationship with the merchant acquirer. The PayFac may take on selected obligations of a merchant acquirer, such as onboarding, underwriting and customer service.
Returning to the negotiation of this contract, in June 2019, Kounta pressed Tyro for progress, where Kounta "wanted to start a new payments partnership [in the new financial year] without any clear reason for us to continue on with Tyro. … We've made good progress elsewhere and now have at least 1 PAYFAC partnership agreement ready to execute, but, as mentioned if we can make the numbers work for existing and new customers, we can partner with Tyro further. … we need to make a call now about which payments product we launch in FY19.20 and grow into the future." Tyro responded, "an ISO model with Tyro is the most logical step into this space for Kounta, and will step up efforts at our end to bring this to life."
Tyro promptly circulated a draft Heads of Agreement, proposing that the parties would move from a referral model to an ISO model, the latter to comprise Phase 1 and Phase 2. In Phase 1, Tyro and Kounta would continue existing bilateral arrangements with merchants, billing merchants separately for the services each provided. In Phase 2, "Kounta will be able to offer the POS + Payments Solution," while Tyro would continue to provide payment services directly to the merchant. Tyro would also develop a tripartite agreement between Tyro, Kounta and the merchant to govern the terms under which the POS + Payments Solution would be provided. Given the resources which Tyro was investing to support the ISO model, Tyro proposed an exclusive dealing period with Kounta after the Heads of Agreement had been finalised, so that Kounta would not participate in any discussions or negotiations or into any other form of agreement, arrangement or understanding in connection with the ISO model other than with Tyro.
Kounta balked at the proposed exclusive dealing period. On 22 July 2019, Kounta replied: Kounta agreeing to deal exclusively and in good faith with Tyro in relation to the ISO Model or any payment facilitator model (or similar) other than with Tyro, for 6 months, will not work. We've been clear that given the tripartite agreement is not yet confirmed we do need to keep moving down our parallel alternate PAYFAC path we're already on and Kounta has also invested (and continues to invest) significantly in Kounta Payments and to support Tyro's ISO Model.
On 8 August 2019, the Heads of Agreement was signed. Phase 2 was now split into Phase 2A and Phase 2B. In Phase 2A, Kounta would invoice merchants for the POS + Payments Solution via a manual work-around by Tyro and Kounta. In Phase 2B, Tyro would be able to automatically generate customer transaction reports to enable Kounta to invoice merchants for POS + Payments Solution. Subject to each phase being implemented on a specified date, Kounta agreed to deal exclusively with Tyro "in relation to the ISO Model in Australia only" and not to enter into an agreement, arrangement or understanding "in connection with the ISO Model or any payment facilitator (or similar) model in Australia other than with Tyro" for a period of time. Kounta remained entitled to refer its customers to any other payments company, including in respect of integrated payments and point of sale solutions.
In September 2019, the parties began to draft contractual documents to give effect to the Heads of Agreement. Tyro circulated two documents: the standard terms and conditions on which Tyro appointed ISOs, together with a letter setting out the commercial terms "agreed between the parties and documented in the Heads of Agreement." The documents were reviewed by the parties' lawyers. Whilst several drafts were exchanged, with various mark-ups, comments and responses, I was not taken to any particular amendment or observation of note by either party. The focus of communications appears to have been on rates, commissions and ongoing arrangements under TAPP. The critical clause, being the restraint in clause 9.1 and its embedded defined terms, remained untouched apart from formatting.
Whilst negotiations were underway, Kounta was acquired by Lightspeed. On 1 October 2019, Lightspeed POS Australia Pty Ltd and Lightspeed POS Holding Pty Ltd were incorporated, presumably to give effect to this acquisition. (Lightspeed POS Holding is wholly owned by Lightspeed Commerce Inc, the ultimate holding company of which is Lightspeed POS Inc.) Lightspeed's purchase of Kounta was completed on 1 November 2019. Lightspeed rebranded Kounta's POS software as "Lightspeed O-Series".
Negotiations between Tyro and Kounta continued during October 2019 and, on 1 November 2019, the contract was executed. At the time, Tyro did not act as a merchant acquirer for a PayFac but acted as a merchant acquirer through its own payment acceptance facilities. According to a prospectus issued by Tyro on 18 November 2019, that is, shortly after execution of the contract, its "Planned offering" included "new products … such as … payment facilitation." That is, Tyro was then contemplating offering its services to PayFacs.

[8]

The contract

The contract comprised a letter (the Letter) and four schedules, including Schedule 1 (General Terms) and Schedule 3 (Wholesale Rate). The terms of the Letter prevailed over the General Terms to the extent of any inconsistency: clause 1.2, General Terms.
The Letter, entitled "ISO AUTHORISED REPRESENTATIVE AND AGENCY AGREEMENT - COMMERCIAL TERMS," stated that Tyro wished to appoint Kounta as its Authorised Representative and agent to provide the Services in accordance with the terms and conditions set out in the Letter and the accompanying General Terms.
The term of the agreement was for three years and would automatically renew for further periods of 12 months unless either party gave at least 180 days prior written notice before the end of the then current term that they did not wish to renew the agreement: clauses 1.1, 1.2, the Letter. The contract could be terminated earlier for breach or by mutual agreement: clause 21, General Terms.
The exclusive dealing period was now described in clause 1 of the Letter, relevantly: 1.3 Until 18 April 2020, Kounta agrees to deal exclusively with Tyro and not participate in any discussions or negotiations, or enter into agreement, arrangement or understanding with any third party for the purpose of becoming an authorised representative of, or payment facilitator for, that third party in Australia in connection with business banking products provided that: 1.3.1 Phase 2A is implemented by 18 January 2020; and 1.3.2 Phase 2B is implemented by 18 April 2020. 1.4 For the purposes of clause 1.3: 1.4.1 Phase 2A means: 1.4.1.1 Kounta can offer a 'POS + Payments Solution' to potential customers; 1.4.1.2 Kounta continues to be an Authorised Representative of Tyro; 1.4.1.3 Kounta can invoice Merchants for the 'POS + Payments Solution'; and 1.4.2 Phase 2B means in addition to Phase 2A, Tyro can automatically generate Merchant transaction reports in relation to the 'POS + Payments Solution'.
Clauses 2 and 3 of the Letter concerned the payment of commission. Kounta was entitled to receive a commission on every EFTPOS transaction processed by a Referred Merchant during the term of the agreement and for two years afterwards: clause 2, clause 3.4, the Letter. A Referred Merchant was, essentially, a Merchant solicited by Kounta pursuant to the contract: clause 8.8, the Letter. The 'trail' commission ceased if the Referred Merchant ceased to be a Tyro Merchant: clause 3.4, 3.6.
The commission was now, effectively, the difference between the retail rate charged by Tyro to the Merchant and a wholesale rate charged by Tyro to Kounta as ISO: clause 2, the Letter. Kounta was obliged to charge a potential Merchant or a Referred Merchant in accordance with Tyro's pricing models and structures: clause 4.1. If the average number of Referred Merchants fell below 50 a month, then Tyro was entitled to review and vary the wholesale rate: clauses 3.1, 8.11, the Letter.
Turning then to Schedule 1, entitled "ISO Authorised Representative and Agency Agreement - General Terms", Tyro appointed Kounta as its agent (clause 2) and its Authorised Representative (clause 3) to provide the Services in accordance with the Letter and General Terms. The Services were set out in clause 10, which provided: 10. Authorisation Tyro authorises the Agent to do the following as its agent and Authorised Representative: 10.1. provide General Advice to potential Merchants and Merchants about the Tyro Products; 10.2. arrange for the issue of any Tyro Product to a Merchant, including but not limited to: 10.2.1. assisting potential Merchants in understanding and completing the Merchant Application Forms and any other documentation required to acquire the Tyro Product, including any documentation required under Tyro's policies and procedures which relate to the Services; and 10.2.2. collecting completed Merchant Application Forms, and all other documentation required under clause 10.2.1, and submit such documentation on behalf of the potential Merchant to Tyro, unless this is done directly by the potential Merchant. 10.3. arrange for any variation or replacement of any Tyro Product that is held by a Merchant; 10.4. use reasonable efforts to market the Tyro Products, and encourage (through the provision of General Advice) potential Merchants to become Merchants; and 10.5. provide Merchants with all of the necessary initial and ongoing training on the Tyro Products that is required for them to fully operate and utilise the Tyro Products.
General Advice is financial product advice that is not personal advice: clause 24; section 766B(4), Corporations Act 2001 (Cth). In short, General Advice is a recommendation or opinion intended to influence someone to make a decision in respect of a financial product.
Tyro was obliged to provide Kounta with training on the Tyro Products, including ongoing training in order to maintain and update the knowledge and skills of Kounta, so that it could properly discharge its obligations under the agreement: clause 12. Kounta was obliged to promote Tyro Products, including on its website: clause 11.2. Kounta "must not publish, circulate, issue, display, or otherwise advertise any material in relation to the Services [or] Tyro Products … unless approved by Tyro in writing": clause 11.3.
Clause 5 of the General Terms set out the parties' mutual obligations including: Each party must: … 5.3. not engage in any conduct which would breach or harm the other party's reputation or business other than to enforce its rights under the Agreement or otherwise at law;
Clause 7 imposed "general" obligations on Kounta including: The Agent must: 7.1. act competently, diligently, efficiently, honestly, fairly and in a timely manner, at all times;
Clause 8 imposed various obligations on Kounta in respect of the Services, including to provide the Services in accordance with the Letter and General Terms (clause 8.1) and to make documentation, records and information available to Tyro as it may request (clause 8.10). Clause 9 set out Kounta's obligations in respect of Merchants, in particular: The Agent: 9.1. will not, during the term of this Agreement and for a period of twelve (12) months following the termination or expiration of this Agreement, without Tyro's consent, solicit, induce or otherwise attempt to persuade any Merchant to become a merchant of any other entity providing Acquiring Services; … 9.6. acknowledges and understands that all Merchants solicited by it must have a contract directly with Tyro; and 9.7. will not disclose any information relating to a Merchant's use of the Tyro Services or any information of a Merchant obtained by the Agent solely pursuant to this Agreement to any third party without Tyro's prior written consent (which may be withheld in Tyro's absolute discretion). Clause 9.1 is the restraint of trade clause, to which I will return at [60].
Clause 17 of the General Terms dealt with confidential information. Confidential Information was defined in broad terms including "business systems, modes of operation, training manuals, contracts, agreements, financial, research, marketing, pricing, costing and sales related information, data and knowhow": clause 24. In the case of Tyro, Confidential Information also included "all Merchant information and information relating to a Transaction". Confidential Information did not include information which "was already in possession of the other in written or recorded form."
Both parties were obliged to keep confidential all Confidential Information received from the other and to only use such information for the purposes of performing their obligations under the contract: clause 17.1. The parties were obliged to securely store Confidential Information and to deliver it up on request, except to the extent necessary to provide ongoing support to the recipient's customers or to otherwise fulfill their obligations under the contract: clause 17.3. The parties' obligations in respect of Confidential Information survive the termination of the agreement: clause 17.4.
Finally, the contract provided that it is to be construed according to the laws of New South Wales: clause 23.7, General Terms. Headings are inserted for convenience only and have no effect on the interpretation of the Letter and General Terms: clause 25.5, General Terms. Every provision of the Letter and General Terms is severable in the event that any provision is found to be void, illegal or unenforceable: clause 23.6, General Terms.

[9]

CONSTRUCTION OF RESTRAINT CLAUSE

The first task is to construe the contract, in particular, the restraint of trade clause. Where neither party relied on post-contractual contract, it is convenient to do so now.
Kounta submitted that the commercial purpose of the contract was to transition Kounta and Tyro from a referral model to an ISO model and to provide the pathway to the PayFac model. The parties agreed that if Tyro could not deliver on that necessary pathway to a PayFac model, Kounta would not be bound to deal exclusively with Tyro: clause 1.3, the Letter. Kounta could then to move forward with another third party if Tyro were unable to deliver by 18 April 2020. The parties never intended Kounta to be restrained from progressing the PayFac model, if Tyro was unable to deliver that which was required to enable Kounta to progress with that model. (So far, this may be thought uncontroversial). The commercial utility of developing that relationship would be nil if Kounta were not also able to promote the PayFac model to merchants; to suggest otherwise was said to be a commercial nonsense. No reasonable businessperson would have understood clause 9.1 to apply to the promotion of the PayFac model by Kounta after the expiry of the exclusivity arrangements described in clause 1.3 of the letter.
Kounta submitted that the scope of the contract was limited to the provision of the ISO model, not promotion of the PayFac model by Kounta. The terms of the contract did not relate to such an offering by Kounta, such that "Acquiring Services" in clause 9.1 should be construed to be limited to the functions and facilities provided by Tyro pursuant to the ISO model. Otherwise, the restraint would prevent Kounta from operationalising the PayFac model with another acquiring service, even though that service could not be provided by Tyro. No reasonable businessperson would have understood clause 9.1 to have that construction. Further, when the Letter and General Terms are read together, it was submitted that Tyro gave its "consent" within the meaning of clause 9.1, if Phase 2A and Phase 2B were not implemented by 18 April 2020 as described in clause 1.3 of the Letter.
Tyro submitted that had the parties wished to insert the words "through an ISO model" or "pursuant to the ISO Model" in clause 9.1, or to create an exception permitting Kounta to market acquiring services as a payment facilitator, it would have been a simple matter of drafting to provide for that. Even if one was drawn into comparing the referral model, the ISO model and the PayFac model, each model was a different means by which Tyro's representative engaged with Merchants or potential merchants. By contrast, Kounta's argument was concerned with the facilities by which financial transactions were processed, which was the wrong focus.
Tyro submitted that Kounta's reliance on clause 1.3 of the Letter was misplaced. Clause 1.3 imposed a time-limited and conditional obligation on Kounta "to deal exclusively with Tyro" but conferred no positive rights on Kounta nor qualified any other obligation Kounta owed to Tyro in the Agency Agreement. Kounta's negative obligation concerned its dealings with other payment processing providers, not its solicitation of Tyro's customers. After 18 April 2020, Kounta was no longer subject to the prohibition stipulated in clause 1.3 of the Letter. It did not follow that Kounta was then freed from other express obligations in the Agency Agreement, which were not subject to similar conditions. The draftsperson was clearly aware of the possibility of moving to a PayFac model by stages but made no change to clause 9.1 of the General Terms on this account. In short, clause 1.3 of the Letter was a second and separate restraint which dealt with a different subject and was not engaged. If clause 1.3 of the Letter were given the meaning and operation contended for by Kounta, clause 9.1 of the General Terms would become redundant. Nor should clause 1.3 of the Letter be treated as Tyro's consent under clause 9.1 of the General Terms, where the Letter was addressed to an entirely different subject.
Likewise, Tyro submitted that reliance on the Heads of Agreement was also misplaced, in particular, where the Agency Agreement introduced a number of restrictive obligations on Kounta (such as clause 9.1 of the General Terms) which had not been contemplated by the Heads of Agreement: Walker Group Constructions Pty Ltd v Tzaneros Investments Pty Ltd (2017) 94 NSWLR 108; [2017] NSWCA 27 at [117]-[118]. If anything, the Heads of Agreement showed that the PayFac model was then being considered but the parties continued to draft clause 9.1 of the General Terms notwithstanding this possibility.

[10]

Consideration

The relevant principles are notorious, recently repeated in Laundy Hotels (Quarry) Pty Ltd v Dyco Hotels Pty Ltd [2023] HCA 6 at [27], quoting Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544 at [16]: It is well established that the terms of a commercial contract are to be understood objectively, by what a reasonable businessperson would have understood them to mean, rather than by reference to the subjectively stated intentions of the parties to the contract. In a practical sense, this requires that the reasonable businessperson be placed in the position of the parties. It is from that perspective that the court considers the circumstances surrounding the contract and the commercial purpose and objects to be achieved by it.
The only point of difference between the parties as to the applicable principles may have been whether the Court should have regard to the commercial context only in the event that the contract is ambiguous. As Leeming JA (Gleeson and White JJA agreeing) explained in Cherry v Steele-Park [2017] NSWCA 295; (2017) 96 NSWLR 548 at [68]-[86], the ambiguity of a contract may only be revealed once the surrounding circumstances are considered. That is, ambiguity is a conclusion, rather than a precondition to the admissibility of evidence of surrounding circumstances: at [79]. As such, commercial context may be considered from the outset, for example, in Laundy at [36]. However, if after considering the contract as a whole and the surrounding circumstances, the Court concludes that the language of a contract is unambiguous, then the Court must give effect to that language unless to do so would give the contract an absurd operation: Cherry v Steele-Park at [73]-[75].
The surrounding circumstances of this contract include that the contracting parties were sophisticated, substantial corporate enterprises, knowledgeable about the industry in which they operated and legally advised.
The circumstances also include the fact that, at the commencement of negotiations and during that process, Kounta was exploring a number of avenues to progress its product development and business expansion, including "to continue on with Tyro" or to enter a PayFac partnership with someone else: see [23]. Tyro was also thinking about offering its services to a PayFac, but this option was then thought to be 12 to 18 months away. The very fact that Kounta was exploring different options led to an exclusive dealing period being proposed by Tyro, initially in the Heads of Agreement but later in clause 1.3 of the Letter. Kounta resisted this course - "We've been clear that … we do need to keep moving down our parallel alternative PAYFAC path we're already on …" - but ultimately agreed.
I see no reason to read down the final wording of the exclusive dealing period in the Letter to align with the drafting in an earlier document, the Heads of Agreement. Having read all of the documents relied upon by the parties, it is evident (and unremarkable) that the Heads of Agreement provided the starting point for further drafting, negotiations and multiple amendments. The end point was sub-clauses 1.3 and 1.4 of the Letter. It is not suggested that the final wording was a mistake. The exclusive dealing period, as ultimately agreed, specified a period in which Tyro and Kounta would work together in establishing the 'POS + Payments Solution', failing which, Kounta was at liberty to pursue the PayFac model with someone else.
The documentary and affidavit evidence sheds little light on what the 'POS + Payments Solution' was. From sub-clauses 1.3 and 1.4, it appears to have been a product to be offered by Kounta to merchants to enable both the EFTPOS and POS terminals to perform their necessary functions in a merchant's business. Whilst Tyro continued to stand behind the EFTPOS terminal, Kounta would be the face of both services vis a vis the merchant. The recitals to the Heads of Agreement suggest that the 'POS + Payments Solution' fell within the rubric of the 'ISO model'. Whether this remained the position by the date of the contract, or had the potential to be something more than this, is not entirely clear. It may not matter, where there is no dispute that Stage 2A and Stage 2B were not completed, such that the exclusive dealing period came to an end.
Turning then to the contract as a whole, sub-clauses 1.3 and 1.4 of the Letter make plain that it was in the contemplation of the parties that, six months into a three year contract, Kounta may embark on a PayFac model with a third party. This would not, however, bring the contract to an end. Kounta would continue to be Tyro's agent and Authorised Representative for the remaining 30 months of the contract and any further 12 month terms, absent 180 days' notice before the end of the then current term that the parties did not wish to renew the agreement. That is, at a minimum, Kounta would continue to be Tyro's ISO for two and a half years after 18 April 2020. Assuming that, during that period, Kounta was also a PayFac, an obvious problem must have presented itself to the draftspersons of the contract: to what extent could Kounta avail itself of Tyro's Merchants to develop its business as a PayFac?
Which brings us to clause 9.1, reproduced for ease of reference: The Agent: 9.1. will not, during the term of this Agreement and for a period of twelve (12) months following the termination or expiration of this Agreement, without Tyro's consent, solicit, induce or otherwise attempt to persuade any Merchant to become a merchant of any other entity providing Acquiring Services;
Clause 24 of the General Terms contains the following definitions: "Merchant" means an entity or person to whom Tyro provides a Tyro Product. "Tyro Products" means any products or services provided by Tyro to Merchants from time to time, including Tyro's deposit product, lending product and non-cash payment facilities.
A Merchant is not only those merchants using payment services in respect of the EFTPOS facility, but Merchants using any of Tyro's products or services, albeit Merchants availing themselves of a Tyro loan or transaction account appear to have been a sub-set of Merchants using Tyro EFTPOS terminals. The definition of Tyro Products also permitted a change in the type of products being offered "from time to time." This may be thought unsurprising, where the term of the contract was at least three years.
Importantly, clause 9.1 did not use another defined term - Referred Merchant - being a Merchant solicited by Tyro under the contract: clause 8.8, the Letter. As such, Kounta was restrained from soliciting not only Merchants which it had brought to Tyro under the contract, but all Tyro merchants, whether referred under TAPP or never encountered by Kounta at all.
In addition, clause 9.1 used the following defined term: "Acquiring Services" means the functions and facilities provided by Tyro to facilitate the processing of financial transactions between Merchants, service providers, customers or the like.
The definition allowed for a change in the entities involved in processing financial transactions "between Merchants, service providers, customers or the like". Again, this expansive drafting is not surprising where the term of the contract was three years, and could extend year on year after that. The definition allowed for changes in how Tyro provided Acquiring Services and to whom. The definition of Acquiring Services was sufficiently broad to cover the merchant acquiring services then provided by Tyro and also the provision of services to a PayFac.
The definition of Acquiring Services does, however, focus on the functions and facilities provided by Tyro to facilitate the processing of financial transactions. It is only when Kounta solicits a Merchant to become a merchant of another entity providing such services that the restraint is breached. Whether the restraint is breached at any point in time will depend on the functions and facilities then provided by Tyro and whether the other entity, to which the Merchant has been solicited by Kounta, also provides those services.
The language of clause 9.1 and in the embedded definitions of Merchant, Tyro Products and Acquiring Services is tolerably clear. Nor was any ambiguity identified by Kounta. Nor do the surrounding circumstances derogate from the ordinary meaning of the words used. Kounta must not, during the term of the contract or until 6 September 2024, without Tyro's consent, solicit, induce or otherwise attempt to persuade any Tyro merchant, whether using Tyro's deposit products, lending products or non-cash payment facilities, to become a merchant of any other entity providing the acquiring services then provided by Tyro, to facilitate the processing of financial transactions between Merchants, service providers, customers or the like. Whether the restraint is breached will depend on what functions and facilities are provided by Tyro at the time, and whether the entity with which Kounta seeks to entice the Merchant to engage - including Kounta - is also providing those functions and facilities.
The suggestion that the expiry of the exclusivity period itself amounted to Tyro's consent under clause 9.1 is far from plain. In terms, clause 1.3 of the Letter sets out what Tyro consented to Kounta doing after 18 April 2020. Clause 1.3 does not, expressly or when read with clause 9.1, lift the prohibition on Kounta to "solicit, induce or otherwise attempt to persuade any Merchant to become a merchant of any other entity providing Acquiring Services". That prohibition continues. The question, in any case, is whether the functions and facilities provided by Tyro at the time of the suggested breach of the restraint are the same as those provided by the "other entity".

[11]

PERFORMANCE

Tyro provided Kounta personnel with initial and ongoing training throughout the term of the contract. Kounta began referring merchants to Tyro under the contract. Mr Ho explained that, unlike TAPP, Kounta now undertook any negotiations with the merchant and provided Tyro with a completed application form. Mr Hill said that Kounta was now authorised to collect all details from the potential merchant to be a customer of both Kounta and Tyro, including the financial information required for Tyro to conduct its risk assessment of the merchant's financial position. This included information regarding the merchant's business, their ABN, estimated monthly turnover, the number of employees and current EFTPOS terminal details. Kounta passed the completed information to Tyro for approval. Tyro would review information collected by Kounta, required for compliance with KYC and Anti-Money Laundering legislation, and determine if the merchant was approved for payment services. Once accepted by Tyro, a contract arose between Tyro and the merchant for the provision of payment services.
Mr Hill said, that in the event of technical issues or outages, merchants generally contacted the Kounta support team in the first instance. Where the issue was with the Tyro EFTPOS terminal, the merchant would be referred to the Tyro support team as the Kounta team did not have any insight into the Tyro payments processing software to troubleshoot issues. Nor was it possible for Kounta to configure payment processing functionality for customers as the Tyro software was separate from Kounta's and outside its control.
Mr Ho said that merchants variously contacted Kounta or Tyro for assistance with pairing their device or with technical issues. The merchant dealt directly with Tyro for customer support issues in relation to Tyro EFTPOS terminals or payment processing, such as maintenance and replacement of terminals, or software upgrades. In some cases, Tyro also maintained a bank account for the merchant to receive settlements, and had a banking relationship with the merchant in respect of that account. Tyro would issue a monthly invoice to the merchant. If the merchant terminated their agreement with Tyro, the merchant would be required to return their Tyro EFTPOS terminal directly to Tyro.
Kounta continued to refer merchants to Tyro under TAPP, that is, the referral model and the ISO model co-existed. Kounta could choose whether to refer a merchant under the contract or TAPP, based on what would be more lucrative in the circumstances of the particular merchant.
Kounta - now branded "Lightspeed" - promoted Tyro on its website. For example, in April 2021, Kounta included the following information on its website: Tyro offers speedy, foolproof and integrated POS payments. Tyro delivers fast, safe and error-free payments for over 32,000 Australian businesses. … In addition to this, it seamlessly integrates with Lightspeed POS. Totals automatically populate on Tyro's EFTPOS devices. This helps prevent keying errors, streamline queues and maximise customer service. Other benefits include: Flexible Payments - Tyro supports over 130 currencies and accepts payments from Alipay, AMEX ApplePay, Diners Club, GooglePay, JCB, Mastercard, Samsung Pay, UnionPay and Visa. Automatic Reconciliation - Transactions automatically reconcile with Lightspeed POS and your accounting software. Simple Pricing - Tyro has no hidden fees or lock-in contracts.
Phase 2A and Phase 2B were not implemented by 18 January 2020 and 18 April 2020 respectively. As such, Kounta was at liberty to participate in discussions or negotiations, or enter into an agreement, arrangement or understanding with someone other than Tyro for the purpose of becoming an authorised representative of, or PayFac for, that party in Australia in connection with business banking products: clause 1.3, the Letter.
Separately, in March 2021, Lightspeed acquired Vend Ltd, a New Zealand company which offered a similar POS product to Kounta, but operated in the retail market. Lightspeed rebranded Vend's POS application as "Lightspeed X-Series". In May 2021, Lightspeed management observed that the company's position "at the point of commerce puts us in a privileged position for payment processing and allows us to collect transaction-related data insights. … We believe that the broader rollout of Lightspeed Payments to our European and Australian markets represents a significant growth opportunity for the Company."

[12]

Kounta becomes a PayFac

By July 2021, a standard Lightspeed Payments Platform Agreement (Australia) had been prepared, setting out the terms of a contract between Kounta and merchants under which Kounta would "make available, via its point-of-sale platform, a fully integrated third-party payments processing solution ("Lightspeed Payments Services"). According to clause 1 of this agreement: Payment Service; Processor. Lightspeed Payments Services enables Merchant to accept credit card payments from its customers, manage retail transactions and inventory, and receive transactional reporting … and other business-related services. Lightspeed's role under this Agreement is to provide services that facilitate payment for the goods and services sold by Merchant and integrate related transactional data with Lightspeed's point-of-sale management software. As such, Lightspeed is acting as a payments facilitator not a processor. All card payment transactions submitted through Lightspeed Payments Services are authorized, processed and settled by Adyen Australia Pty Ltd. (collectively, "Processor"). Merchant is therefore required to enter into a separate agreement with Processor for the processing of such payment transactions. By consenting to this Agreement, Merchant is also agreeing to be bound by the Adyen for Platforms Terms and Conditions, … (the "Merchant Agreement").
Noteworthy, the agreement described the service as "a fully integrated third-party payments processing solution"; Lightspeed's role was "to provide services that facilitate payment for the goods and services sold by Merchant and integrate related transactional data with Lightspeed's point-of-sale management software." The agreement concluded, "In activating a Lightspeed Payments Services account, Merchant agrees to use only the payments processing services of Lightspeed and Processor, unless otherwise expressly authorized by Lightspeed": clause 18 (emphasis added).
The Merchant Agreement provided that the Merchant entered into an agreement with Dutch company, Adyen NV, to process Transactions in respect of products and services sold by the merchant. A Transaction was an authorisation request of a shopper for payment to the Merchant. The Merchant would be using the Services, being "The collective set of payment processing, fraud control, reconciliation, reporting, Settlement and other services as provided by Processor to the Merchant to enable the Merchant to use Payment Methods to receive payment from its shoppers." The Payment Method was a method of enabling payments by shoppers to Merchants such as Cards, online and offline bank transfers and direct debits.
By these arrangements, Kounta could provide payment processing services using the PayFac model, with Adyen as its merchant acquirer.

[13]

Attempted re-negotiations of the restraint

In September 2021, Kounta sought to re-visit the non-solicit provision in its contract with Tyro. Kounta set out the parties' respective positions as follows: Tyro believes that while Kounta acts as it's 'Agent' we should be prevented from soliciting ANY Tyro merchant, not just those acquired collaboratively under the ISO/Agency relationship. As we discussed last week, this is an unacceptable position for Lightspeed that needs revisiting. If we cannot refine the scope of the non-solicit then a notice of termination for the Agency agreement is likely the following result.
Negotiations ensued in respect of an "Enhanced ISO agreement" including a variation of the non-solicit obligation, limiting it to Merchants which had been referred to Tyro by Kounta, Lightspeed or Vend only. On 29 October 2021, Kounta put its position to Tyro as follows: Lightspeed is deploying its own branded payment solution across all products, in all core regions. To the maximum extent possible, this will position Lightspeed as the principal relationship holder with the Merchant for all things commerce related, including payments and financial services. The most logical way to achieve this is via a PAYFAC model … which, up until recently, Tyro had communicated was not on their roadmap. Given the longstanding partnership with Tyro, and the new willingness to pursue this model, we are interested in exploring a longer term partnership with Tyro …
Mutual non-solicit obligations were proposed. These negotiations proved unfruitful, although appear to have continued until June 2022.
Meanwhile, in December 2021, "Lightspeed Payments" was launched in Australia. Mr Thiemke said a hospitality business can use Lightspeed Payments in combination with Kounta's POS software "Lightspeed O-Series." This is a PayFac model, where Kounta has the contractual agreement with the merchant to supply POS software, payment processing services and Lightspeed-branded EFTPOS terminals that pair with the POS software. Kounta has a separate contract with Adyen as merchant acquirer. Kounta has since offered Lightspeed Payments to hospitality merchants bundled with Lightspeed O-Series.
On 9 January 2023, Tyro received the last referral made by Kounta under the contract. The number of referrals, however, had dropped steeply after December 2021. On 10 March 2023, Kounta notified Tyro that it had elected to terminate the contract, effective as of 6 September 2023. Kounta also gave notice of termination of the TAPP agreement. Kounta continued to promote Tyro on its website in the same terms as before: see [72].

[14]

Conduct complained of

On 4 July 2023, a Tyro merchant received an email from Kounta, "Important Update: We're Unifying Lightspeed Retail and Lightspeed Payments". The merchant was informed that its POS subscription would now include Lightspeed Payments but, if the merchant decided to use Lightspeed Retail without Lightspeed Payments, a transaction fee would apply. To avoid this additional cost, the merchant was asked to submit their application for Lightspeed Payments by 3 August 2023. A link was provided to Kounta's website for more information.
The link took the merchant to a document entitled "Amendment to Lightspeed Services Agreement,", which gave 60 days' written notice that a term would be added to the Service Agreement whereby merchants would be charged a monthly transaction fee if they use a payment processing service other than Lightspeed Payments. Specifically, the following clauses were proposed to be added to the Service Agreement: 5.3 Lightspeed Payments. Provided Customer (i) uses Lightspeed POS O-Series, (ii) is located in Australia and (iii) is eligible for Lightspeed Payments, Customer must use Lightspeed Payments unless otherwise agreed to by Lightspeed in writing. 5.4 Transaction Fees. If Customer falls within (i), (ii) and (iii) above and processes transactions through a payment processing service other than Lightspeed Payments, Customer will be charged a monthly Fee …
The merchant forwarded the email to Tyro, noting that the additional levy was some $240 to $300 a month for the average business, which "obviously creates a pretty large disincentive to switch to Tyro."
On 17 July 2023, a Tyro merchant received an email from Kounta, "Avoid a transaction fee-apply for Lightspeed Payments ASAP." The merchant was reminded to submit their Lightspeed Payments application by 3 August 2023, otherwise transaction fees would apply. Kounta noted, "we fully understand that there's a lot involved in switching payment processes … We're delighted to offer competitive processing rates and contract buyouts to cover any termination costs you may have. … we'll provide free replacement hardware and on-site installation services to minimise any disruption to your business." Similar emails were received by non-Tyro merchants.
On 31 July 2023, Kounta sent a further email to a Tyro merchant, "Subject: Avoid a transaction fee-apply for Lightspeed Payments ASAP." The merchant was reminded to apply for Lightspeed Payments, with the application date now extended to 17 August 2023. The merchant provided the email to Tyro, noting, "Basically, if we don't go with Lightspeed (Kounta) payment gateway, they will start charging us to process [payments] through Tyro."
On 4 August 2023, Tyro's solicitors complained to Kounta about the emails received by its merchants, said to contravene the restraint of trade clause and other contractual obligations. Tyro sought a written undertaking to refrain from such conduct and also requested copies of communications with any Merchant or potential Merchant concerning Lightspeed Payments, under clause 8.10 of the General Terms. On 7 August 2023, Lightspeed's solicitor advised that it was taking instructions. The same day, Lightspeed emailed a Tyro merchant, "[Final reminder] Switch to Lightspeed Payments to avoid fees". Lightspeed advised that it was "reaching out one final time to remind you to submit your Lightspeed Payments Application before 17 August 2023 to avoid a transaction fee."
On 9 August 2023, Kounta's solicitor provided a substantive response, denying that it was in breach of the agreement and declining to provide the undertaking or documents sought. Tyro merchants continued to receive emails from Kounta reminding them to "Switch to Lightspeed Payments to avoid fees". On 24 August 2023, the Lightspeed Service Agreement was amended to include clause 5.3 and 5.4.
On 4 September 2023, Tyro commenced these proceedings. Tyro seeks an order restraining Kounta until 6 September 2024 in the terms of the restraint clause, together with additional injunctive orders echoing Kounta's recent activities in offering Lightspeed Payments to Tyro's merchants, inviting the merchants to "switch" and amending the service agreement between the merchant and Kounta to impose additional transaction fees. In addition, Tyro seeks to be indemnified for any loss arising out of Kounta's breach or non-performance of the contract, alternatively damages, equitable compensation or an account of profits.
On 6 September 2023, the contract came to an end in accordance with the notice of termination earlier given.

[16]

Consideration

This question turns on whether, at the time of the alleged breach, being from early 2022 on, the "other entity" was providing Acquiring Services, this is, the functions and facilities provided by Tyro to facilitate the processing of financial transactions between Merchants, services providers, customers or the like. Kounta's position was that providing payment processing services using the PayFac model, with Adyen as its merchant acquirer, did not fall within the definition of Acquiring Services, where Tyro continued to act only as a merchant acquirer through its own payment acceptance facilities but did not act as a merchant acquirer for a PayFac.
I have earlier endeavoured to explain the difference between a merchant acquirer and a PayFac, albeit there appears to some variation in the PayFac model: see [24]. In doing so, I have drawn on the expert evidence. While each expert prepared a detailed report, their joint report records their agreement that the payment processing services now offered by Tyro and Kounta are broadly the same. Neither expert was required for cross examination. There was no expert conclave.
I do accept that offering payment processing services as a PayFac is quite different from Kounta's perspective. Kounta has more control of all aspects of its relationship with a merchant. Kounta is now "involved in the money flow", where the transactions processed flow into a Kounta bank account and are then distributed by Kounta to each merchant. Presumably, being a PayFac is financially advantageous to Kounta, enabling it to retain a greater portion of the fees charged to merchants for payment processing services. To implement this model, Kounta has established a different contractual regime with its merchants and a new merchant acquirer, Ayden.
But the definition of Acquiring Services, and clause 9.1 of the General Terms, is necessarily focussed on a Merchant and its perception of the competing payment processing services on offer. The operation of the clause is not governed by the nomenclature of 'models' or the branding deployed by the entity promoting its services. The clause is directed to restricting the ability of Tyro's agent to "solicit, induce or otherwise attempt to persuade" Tyro's merchants away from Tyro's custom by offering them something which Tyro is then providing. The experts agreed that, not only are payment processing services now offered by Tyro and Kounta broadly the same, but those services likely appear the same from the merchant's perspective. Mr Al-Bassam observed, "To a Merchant, PayFacs seem very similar to an Acquirer." Mr Thiemke also observed that the merchant may not be aware that Adyen is involved in processing their transactions.
Having regard to the expert evidence, I find that, by providing a "Lightspeed" EFTPOS terminal and payment processing services through merchant acquirer, Ayden, Kounta is providing an Acquiring Service within the meaning of the contract. As such, Kounta's solicitation, inducement or attempts to persuade Tyro's merchants to use that service is a breach of the restraint clause. Kounta accepted, however, that if clause 9.1 bore the meaning contended for by Tyro, and Kounta's offering fell with the definition of Acquiring Services, then the conduct complained of fell foul of that clause, as well as clauses 5.3, 7.1 and 8.1 of the General Terms.

[19]

VALIDITY OF RESTRAINT

The next question is whether the restraint of trade in clause 9.1 is valid. Tyro submitted that, where an obligation has been the subject of negotiation between commercial counterparties bargaining on an equal footing, the Court is unlikely to find that a restrictive obligation is unreasonable as between the parties: Belflora Pty Ltd v Vinflora Pty Ltd (2021) 106 NSWLR 67; [2021] NSWCA 178 at [52]; Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd [1973] HCA 40; (1973) 133 CLR 288 at 294. In these circumstances, the Court ought regard the parties as the best judges of what was reasonable as between themselves and ought not to allow Kounta to escape from an obligation into which it freely entered by now asserting that it negotiated and imposed an unreasonable burden upon itself. There was no evidence which suggested that the restraint was considered unreasonable at the time the contract was executed, nor evidence of prejudice if it was now enforced. Nor was clause 9.1 a mere prohibition on competition, but a restraint effected in circumstances where there were prior relationships between the obligor and obligee. This was not a simple agreement to "lock up a market."
Further, Tyro submitted that it had a legitimate interest in protecting its relationships with its customers. Kounta was to act as Tyro's marketing agent under the Agency Agreement - potentially for years - and was responsible for negotiation of commercial terms with many of those customers, as was recognised in Lightspeed's corporate documents which repeatedly refer to Lightspeed's "privileged position" as regards the sale of payment processing services. A Court will be more inclined to accept a non-solicitation obligation as reasonable where (as here) the obligor was tasked with building up the obligee's business: Koops Martin v Dean [2006] NSWSC 449 at [44] (per Brereton J). The solicitation of customers by Kounta for Tyro was the principal object of the agency agreement; the establishment of a customer connection was not merely incidental to Kounta's agency, but its very purpose.
Tyro submitted that at the time of the Agency Agreement, Kounta was not in the business of providing payment services. Clause 9.1 imposed no restraint on Kounta's then-current business, being the provision of POS software services. Further, the Agency Agreement conferred a number of benefits on Kounta, being 'trail' commission for two years after termination of the agreement, a restraint on Tyro in respect of Kounta's employees (clause 5.6, General Terms), and an increase in commission payments under the existing TAPP Agreement. These benefits are relevant in assessing the reasonableness of the negative obligations it assumed: Kingdom Animalia LLC v Mecca Brands Pty Ltd [2023] VSCA 55; (2023) 170 IPR 399 at [66(c)].
Kounta accepted that the restraint was reasonable until it was no longer bound by the exclusivity provisions in the Letter. After this, Kounta and Tyro offered different services to merchants which were not contemplated by the General Terms (although I note this does appear to have been expressly contemplated by clause 1.3 of the Letter). As the provider of an ISO Model, Tyro was not in the market of providing the same product as Kounta and should not be protected simply because of competition in the payments market. Further, the restraint would restrict Kounta's ability to communicate with merchants that it had no dealings with under the Contract. The restraint did not identify the Merchants with any specificity. Kounta did not have knowledge of, and had no relationship with, such merchants during the term of contract. Whilst Kounta had referred some 870 Merchants to Tyro during the term of the contract, it was not reasonable to extend the restraint beyond those Merchants to other merchants with whom Kounta had never dealt.
Kounta submitted that it had discharged the onus of establishing that the restraint was contrary to public policy by tendering the restraint. Tyro bore the onus of establishing reasonableness, on which there was said to be an absence of evidence. Further, Kounta submitted that Tyro had not identified what legitimate interest it had in the payments market that created a protectable interest under clause 9.1 of the Agency Agreement. Without this, it was said that the restraint under clause 9.1 of the Agency Agreement could not be found reasonable: Belfora Pty Ltd v Vinflora Pty Ltd (2021) 106 NSWLR 67 at [46] (per Brereton JA). Tyro had not identified with any specificity the trade secrets or confidential information in respect of Tyro's products and services that Kounta would have access to that required protection. Tyro had provided no evidence of Kounta having access to proprietary information about Tyro, including Tyro's pricing structure, costs in operating the Tyro EFTPOS terminal and software, its profit margin and the technical operation of its products and services sold in Australia. Kounta did not have access to such information under the Agency Agreement. Kounta submitted that any legitimate interest that Tyro sought to protect could be of no advantage to Kounta as they were said to provide different services and products in the payments market.
Kounta further submitted that Tyro's connection with Merchants may be a legitimate protectable interest if Kounta was the human face of Tyro's business or the person who represents Tyro's business to the Merchant. Kounta submitted that, while it was responsible for conducting the sales process for prospective merchants, Kounta was also selling its own product and establishing its own relationship with Merchants, including a contractual relationship as the POS provider. While Kounta had the details of the Merchant referred to Tyro under the contract, this was because the Merchant was also Kounta's customer. In these circumstances, it could not be said that the Merchant's details were confidential.
Kounta submitted that at no stage had it established a relationship with a Merchant during the term of the Agency Agreement that would suggest to the Merchant that Kounta was relying on the goodwill of the Tyro business in order to sell its services as a POS Provider. Kounta did not, and had not, operated its business through Tyro, including whilst providing the services under the Agency Agreement. Tyro has not thereby created a legitimate interest in the Merchant to the exclusion of Kounta, when Kounta has its own arrangements with the Merchant and established its own goodwill with the Merchant. For Kounta to then be deprived of that relationship with the Merchant would be a bare restraint on competition. Public interest lay in competition.
Finally, Kounta submitted that the 12 month period was unjustified where Tyro had limited goodwill in the Merchants, given Kounta was the one interfacing through separate arrangements with the Merchants. Any goodwill was said to be supplanted by the fact that Kounta was providing a distinct and separate offering to Merchants that Tyro did not provide. Nor was the restraint limited by geographic area. Alternatively, Kounta submitted that the restraint should be read down under section 4(3) to apply during the term of the contract but not after its termination. That is, as I understood it, the 12 months should be read down to zero.
Tyro rejoined that Kounta's complaint that it had no means of knowing who Tyro's merchants were, carried little weight as an innocent breach can be avoided by making inquiries as to whether a merchant is a Tyro customer before soliciting their custom: Australian Law of Contract at [19.1140]; G.W. Plowman & Son Ltd v Ash [1964] 1 WLR 568 at 574, 575. Nor was any difficulty posed by a limit on the solicitation of Tyro's customers as opposed to a limitation by geographic area. A covenant not to solicit customers is more precise than an area covenant as Kounta is not restricted from dealing with persons other than the Tyro customers: Australian Law of Contract at [19.1130]; Plowman at 572; Koops Martin at [86]. Alternatively, the clause should be read down to read "Merchants" in clause 9.2 as Merchants who were also customers of Kounta and its related parties, or, failing that, Referred Merchants.

[20]

Consideration

Section 4 of the Restraints of Trade Act 1976 relevantly provides: 4 Extent to which restraint of trade valid (1) A restraint of trade is valid to the extent to which it is not against public policy, whether it is in severable terms or not. … (3) Where, on application by a person subject to the restraint, it appears to the Supreme Court that a restraint of trade is, as regards its application to the applicant, against public policy to any extent by reason of, or partly by reason of, a manifest failure by a person who created or joined in creating the restraint to attempt to make the restraint a reasonable restraint, the Court, having regard to the circumstances in which the restraint was created, may, on such terms as the Court thinks fit, order that the restraint be, as regards its application to the applicant, altogether invalid or valid to such extent only (not exceeding the extent to which the restraint is not against public policy) as the Court thinks fit and any such order shall, notwithstanding sub-section (1), have effect on and from such date (not being a date earlier than the date on which the order was made) as is specified in the order.
The principles regarding the application of section 4 are summarised in Isaac v Dargan Financial Pty Ltd (2018) 98 NSWLR 343 at [61]-[78] (per Gleeson JA, Bathurst CJ and Beazley P agreeing). The Court must first consider whether the breach of contract infringes the terms of the restraint, properly construed. Second, the Court considers whether the restraint, so far as it applies to that breach, is against public policy. If it is not, the restraint is valid, subject to any order under section 4(3). The Court is focussed on the actual breach, not hypothetical or potential breaches.
The second step itself involves two questions. First, is the restraint reasonable between the parties, in respect of which the onus is on the party seeking to enforce the restraint. Second, is the restraint contrary to the public interest, in respect of which the onus is on the party seeking to avoid the restraint: Sidameneo (No 456) Pty Ltd v Alexander [2011] NSWCA 418 at [82] (per Young JA, Beazley and Basten JJA agreeing); Isaacs at [76]-[78]. In respect of the onus of proving that a restraint is against public policy, it has been said "once the court is satisfied that the restraint is reasonable as between the parties this onus will be no light one"; Attorney-General (Cth) v Adelaide Steamship Co Ltd [1913] AC 781 at 797 (Privy Council); Dr Angel-Honnibal v Idameneo (No 123) Pty Ltd [2003] NSWCA 263 (per Young CJ in Eq, McColl JA and Foster AJA agreeing).
The nature of the interest meriting protection under a covenant in restraint of trade differs according to the type of restraint under consideration, be it an employment case, an independent contractor, franchise, partnership or sale of business: Isaacs at [64]-[73]. But the plaintiff must have some legitimate interest that equity will protect, which includes legitimate commercial interests: Sidameneo (No 456) v Alexander at [32].
The validity of the restraint is to be judged at the date of its creation, but the Court may take into account future events that could have been foreseen. Thus, when exercising its discretion whether or not to grant relief, the Court considers matters as at the date of the hearing: Isaac [63].
A useful illustration of the application of these principles in a non-employment context is Belflora Pty Ltd v Vinflora Pty Ltd (2021) 106 NSWLR 67; [2021] NSWCA 178. A company operated 10 stalls at the Sydney Flower Markets at Flemington, selling roses imported from South America and Kenya. A dispute emerged between the shareholders, who decided to split the company's business into two companies, Belflora and Vinflora, which would operate five stalls each. The two companies entered into written agreements, according to which one was restrained from importing and displaying South American flowers and could only purchase those flowers exclusively from the other, with the profit from those orders to be shared. An equivalent agreement applied, with the position of the parties reversed, in respect of Kenyan flowers. Bathurst CJ observed that the restraint operated vertically, limiting the exporters and wholesalers from whom the company could acquire flowers, and also horizontally, restraining the trading activities of the two companies which would otherwise have been competing with each other: at [22].
The Chief Justice noted that a mere restraint against competition per se is unenforceable: at [26]. Whilst Bathurst CJ was prepared to accept that there may be circumstances where a restraint directed to preserving or maintaining a personal or corporate relationship with the supplier might be reasonable in the interests of the parties, the beneficiary of the restraint must have a legitimate interest to protect, analogous to goodwill, as something which adds value to the business: at [29]. In this case, the restraint fell outside the boundaries of the protection of any legitimate interest, where no justification for a blanket protection from importation from a subcontinent was offered save that it would protect the company from competition: at [30]. The fact that the restraints were freely bargained for was not a sufficient reason for concluding otherwise: at [31]. That is, the party seeking to enforce the restraint failed to discharge its onus of proving that the restraint was reasonable between the parties.
Similarly, Brereton JA noted that restraint of trade clauses between traders have been viewed more favourably by the Courts than restraints in employment contracts. Nonetheless, the traders must serve to protect a legitimate protectable interest; here, the clause "did no more than prohibit the parties from competing with each other": at [57].
Turning then to whether clause 9.1, so far as it applies to the breach of contract, is against public policy, the actual breach was offering Lightspeed Payments to Merchants from early 2022, sending soliciting emails to Merchants, including Lightspeed Payments in the Lightspeed POS subscription of Merchants, imposing a transaction fee on Merchants who use Kounta's POS software with Tyro's products, inviting Merchants to submit a Lightspeed Payments application and offering promotional terms to Merchants to switch to Lightspeed Payments.
As to whether the restraint is reasonable between the parties, the onus is on Tyro. The fact that sophisticated commercial parties agreed to the restraint is not the end of the matter. As Gleeson CJ, Gummow and Hayne JJ observed in Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; (2001) 210 CLR 181, "The fact that the restraint can be said to have freely been bargained for by the parties to the contract provides no sufficient reason for concluding that the doctrine should not apply. All contractual restraints can be said to be of that character": at [56]; followed in Belfora at [31] (per Bathurst CJ). But nor is it irrelevant. Kounta received commercial benefits from entering into the contract, in the form of a larger share of the merchant fee. The terms of the contract were the subject of negotiation between substantial corporations, legally advised.
Indeed, Kounta accepts that the restraint was reasonable up to the end of the exclusivity period. That concession likely reflected the nature of the relationship between Tyro and its agent and Authorised Representative. In particular, Kounta provided financial product advice to Merchants about Tyro Products. Clause 4.1 of the Letter contemplated that Kounta would be privy to Tyro's pricing models and structures, including rates of minimum fees and charges. Schedule 3 to the contract set out wholesale rates applicable to different categories of business. A non-publication order was made in respect of these wholesale rates. Tyro's general counsel, Sami Wilson, deposed that these rates were confidential and commercially sensitive. Kounta did not demur.
Not only would Kounta be privy to Tyro's general pricing policies, wholesale prices and minimum prices, it would also be privy to the commercial terms negotiated with each Merchant referred to Tyro. While Kounta may have been dealing with the Merchant in the course of selling its own POS product, Kounta was still the 'face' of Tyro when proffering Tyro's EFTPOS facility, assisting Merchants to apply for Tyro Products and collecting the Merchant's information and documents for Tyro. Kounta's relationship with Merchants in respect of Tyro Products was ongoing, including arranging for replacement Tyro Products and providing ongoing training in respect of such products: sub-clauses 10.3 and 10.5, General Terms. Clause 9.1 provided Tyro with reasonable protection against such information being used to undercut Tyro's business, and these relationships being exploited to support a competing service. This was a legitimate commercial interest.
Kounta's concession effectively acknowledges that Tyro had a legitimate commercial interest meriting protection under a covenant in restraint of trade, at least, until the end of the exclusivity period. However, after the exclusivity period, Tyro's legitimate commercial interest continued and, if anything, was enhanced by Kounta's dual roles going forward. As already mentioned, the parties contemplated that, after the exclusivity period, Kounta may continue to discharge its obligations as an ISO under the contract while, in parallel, endeavouring to become a PayFac. If contracting parties realise that they are dealing with a business that might be expanding, the covenant can be that which is reasonable to protect the contemplated expansion: Sidameneo (No 456) v Alexander at [71]. If Tyro was entitled to protect its Merchants from being solicited by its agent under the contract when Kounta was acting solely in its capacity at Tyro's agent, I consider that it was also reasonable for Tyro to protect its commercial relationships with its Merchants from solicitation by Kounta should it later offer the same functions and facilities.
I am satisfied that Tyro has discharged its onus of establishing that the restraint was reasonable as between the parties. The next question is whether the restraint is contrary to the public interest, in respect of which the onus is on Kounta. Beyond emphasising the importance of competition, Kounta also pointed to the fact that it would be prevented from undirected or mass marketing of its products and services in Australia, which was said to impact Kounta's ability to work in the Australian payments market. This was also said to affect the rights of merchants to be informed of Kounta's services and to make an informed choice between competing suppliers. Tyro was said to be trying to effect a bare restraint on any competition from Kounta and Lightspeed.
I accept that competition is important. Tyro does not suggest that the restraint prevents Kounta from advertising its products to the world at large, although I should not be taken to accept that it is in the public interest to receive undirected or mass marketing. But the problem here is that, unless the restraint is observed, Kounta can compete with the benefit of existing relationships with Referred Merchants established while performing its obligations as Tyro's agent and, for Merchants more broadly, with the benefit of an understanding of Tyro's pricing models, wholesale rates and the like. That is not pure competition. That is competition with an advantage gained from one's role as Tyro's agent.
Further, as Tyro submitted, clause 9.1 imposes a restraint on solicitation rather than engaging in trade per se. Such restraints are narrower, and more likely to be reasonable: Stenhouse Australia Ltd v Phillips [1974] AC 391 at 401. There is no restriction on Kounta offering its products to the world at large; Kounta cannot, however, solicit Tyro's merchants. Nor is an obligation not to solicit infringed where the obligor is approached by the obligee's customer. Kounta is subject to no ongoing prohibition on providing Lightspeed Payments to Tyro's customers who seek that service out, provided that they are not solicited or encouraged to do so by Kounta.
Nor do I consider that the 12 month restraint period is excessive. Whilst one year may not be needed to stabilise Tyro's relations with its merchants after Kounta's departure as an agent, such a period of time is reasonable to allow the confidential pricing information in Kounta's collective memory to become obsolete and to lose the competitive advantage which it presently enjoys by dint of its role as Tyro's agent. The onus of proving that the restraint is against public policy has not been discharged. The restraint of trade is valid.

[21]

OTHER CONTRACTUAL BREACHES

Before turning to the final question, Tyro asserted that Kounta had breached other provisions of the contract, which Kounta did not concede as following from the Court's conclusion in respect of the construction of the restraint clause.
Tyro submitted that clauses 8.1 and 10.4 of the General Terms imposed an obligation on Kounta to use reasonable efforts to market Tyro Products and to encourage potential Merchants to become Merchants. That obligation subsisted until the contract was terminated on 6 September 2023. The only evidence of any "efforts" to market Tyro's products in recent times was the reference to Tyro on Lightspeed's website. Kounta's failure to adduce any evidence on this subject should be taken into account in weighing what evidence there is, and in drawing inferences from that evidence contrary to Kounta: Blatch v Archer (1774) 1 Cowp 63 at 65, 66; 98 ER 969 at 970. Further, the evidence of solicitation of Tyro's clients was said to be fundamentally inconsistent with using reasonable efforts to encourage potential merchants to become Merchants. The unilateral change in Lightspeed's terms required someone holding a Kounta terminal to "switch" on pain of breaching their contract; this could not possibly constitute encouragement of potential merchants to become Merchants.
Finally, Tyro submitted that Kounta was prohibited from publishing or circulating any material in relation to Tyro Products unless approved by Tyro in writing: clause 11.3. The emails sent to Merchants and potential Merchants, inviting them to "switch" from their current payment processor to Lightspeed Payments, and stating that those Merchants would otherwise be subject to a transaction fee for using Tyro's services, were communications which related to Tyro Products albeit that Tyro was not directly named. The sending of those emails, without Tyro's written approval, constituted a breach of the Agency Agreement.
Kounta submitted that it was not in breach of its obligation to use reasonable efforts to market Tyro Products, where the nature and extent of the obligation was necessarily conditioned by what is reasonable in the circumstances, which can include circumstances that may affect an obligor's business: Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640 at 659, [41]. Nor was an obligor's freedom to act in its own business interests, in matters to which the agreement related, necessarily foreclosed or to be sacrificed by an obligation to use reasonable endeavours to achieve a contractual object: Electricity Generation Corporation v Woodside Energy Ltd at 660 [42]. Where Tyro failed to achieve Phases 2A and 2B, Kounta was not bound by any exclusivity arrangements with Tyro and, after serving its notice of termination, was transitioning out of the contract. Kounta was required to do no more than advertise the service offered by Tyro until such time as it issued the Notice of Termination. The obligation in clause 10.4 of the General Terms did not require Kounta to sacrifice its own business interests in promoting the PayFac model to Merchants and potential merchants.
As to the reduction in referrals, Kounta submitted that there was no contractual obligation to make a minimum number of referrals, nor did the reduction in referrals reflect an absence of reasonable efforts by Kounta to market the product. The drop in referrals could simply reflect the fact that there was a superior service on offer by Lightspeed. Kounta went so far as to submit that Tyro's product was "inferior." This adjective was not deployed by Kounta's lay witnesses nor either expert in their individual reports or the joint report. The evidentiary basis for this submission was slim. I make no such finding. In any event, in these circumstances, Kounta submitted that the marketing conducted by Kounta satisfied the obligation to use reasonable efforts to market the Tyro Products, and encourage potential Merchants to become Merchants, properly construed. In all the circumstances, these steps were reasonable and Tyro had failed to establish a breach of clause 10.4 of the General Terms.
Kounta submitted that Tyro had not established any breach of clause 11.3, as it had failed to identify how the offending emails related to the Services, the Tyro Products or the Agency Agreement.

[22]

Consideration

In Electricity Generation Corporation v Woodside Energy Ltd, the Court observed that the nature and extent of an obligation to use reasonable endeavours is "necessarily conditioned by what is reasonable in the circumstances, which may include circumstances that may affect an obligor's business": at [41]. The obligor does not have to use reasonable endeavours to its certain ruin or in utter disregard of the interests of its shareholders but may act in its own business interests. The obligor must resolve conflicts between the obligation to use reasonable endeavours, and its own business interests, by the standard of reasonableness: at [41]-[42].
As Dixon J also observed in Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359, the express promise to use best endeavours to obtain orders for one's principal, and to influence business on its behalf, necessarily includes an obligation not to hinder or prevent the fulfilment of that purpose: at 378. While the obligation considered there was to use 'best' rather than 'reasonable' endeavours, the obligation to use 'best endeavours (or efforts)' and 'reasonable endeavours' are substantially similar: Electricity Generation Corporation v Woodside Energy Ltd at [40]. While this does not necessarily impose an obligation not to sell a competing product, "a person who had given such an undertaking could not successfully assert that he had fulfilled it if he prepared a product of his own and promoted the sale of that product with the deliberate intention of appropriating for himself the market which he had in effect promised to do all he reasonably could to secure for the person to whom he had given the undertaking": Hospital Products at 65 (per Gibbs CJ).
The evidence does indicate that Kounta significantly reduced its efforts to promote Tyro and its products after Kounta had launched a competing product. Although Kounta regularly referred 40 to 50 merchants per month between September 2020 and November 2021, this number dropped to between 2 and 12 per month after Lightspeed Payments was launched in Australia in December 2021. No referrals were made after January 2023. Alongside the apparent reduction in effort in making referrals after December 2021, Kounta took active steps from July 2023 to encourage merchants not to be customers of Tyro. Kounta exhorted Merchants to "switch" to Lightspeed Payments, automatically bundled Lightspeed Payments with Kounta's POS software, and imposed additional fees on Merchants who chose not to apply for Lightspeed payments. Whilst Kounta continued to publish the same advertisement in respect of Tyro on its website, Kounta appears to have otherwise shifted its efforts to promoting its own competing product.
Nor is it obvious why continuing to market Tyro's products or to encourage merchants to become Merchants would bring about the certain ruin of Kounta's business, or be in utter disregard of the interest of Kounta's shareholders. I am satisfied on the evidence that, after launch of Lightspeed Payments, Kounta turned its efforts to promoting its own product rather than the product it was obliged to promote and, in doing so, breached clause 10.4 of the General Terms.
I agree, however, that Kounta has not breached clause 11.3 of the General Terms, where the soliciting emails made no reference to Tyro or its products. I note that Kounta sent the same emails to non-Tyro merchants.

[23]

INJUNCTION

The final question is whether the Court should grant the injunctive relief sought by Tyro, in the terms sought or at all. Tyro submitted that clause 9.1 was a negative stipulation. An award of damages was unlikely adequately to compensate Tyro for its breach. Nor could such damages readily be calculated.
Kounta submitted that the Court ought decline to grant injunctive relief on discretionary grounds, where damages would be an adequate remedy. An injunction in the terms sought would effectively put a stop to Kounta marketing any product or service in Australia. The Court should not exercise its discretion to grant the injunction when it would have that on commerce and trade in the Australian market.
Further, Kounta submitted that, where the restraint applies not only to Merchants with whom Kounta has dealt but other Merchants who receive Tyro's products and services, the class of Merchants was effectively unspecified, nor identified by Tyro in evidence. In addition, a merchant who is not a customer of Tyro today may become one during the period of restraint, making it difficult for Kounta to comply with any injunction ordered. Kounta's compliance with the injunction would be difficult and expose it to the risk of contempt. Nor should the Court restrain Kounta from sharing information about any Merchant with any related party, including Lightspeed, where Tyro does not have a proprietary interest in information about a Merchant under the Agency Agreement; both Kounta and Tyro were vendors of the Merchant. Finally, Kounta submitted that Tyro had not established that any breach of the Agency Agreement would cause irreparable harm or injury to Tyro in the sense that it cannot be reversed by an award of damages.
To this, Tyro did not suggest that the injunction, as sought, would prevent Kounta from general advertising to the world at large. Clause 9.1 was concerned with direct engagement such as what had occurred here, being emails, unilateral changes to Kounta's terms and conditions, imposing additional fees on customers who did not "switch" and putting customers in breach of their own contract with Kounta. Nor could Kounta seriously object to an injunction being granted in the terms of the contract to which it had agreed.
As to Kounta's complaint that Tyro had not disclosed the exact identity of each Merchant, Tyro submitted that Kounta could simply enquire of any merchant whether they were a Tyro customer before soliciting their custom: Plowman. Alternatively, Tyro would provide a customer list in the event that Kounta undertook to comply with clause 9.1 or the Court granted the injunction. Before this, however, Tyro should not be required to give over its customer list as the price for engaging in submissions on whether relief should be granted. This was hardly unreasonable in circumstances where Kounta continued to deny any ongoing obligation under clause 9.1 and continued to take aggressive steps to solicit Tyro's customers.

[24]

Consideration

In cases where a negative covenant is being sought to be enforced, damages will rarely be considered an adequate alternative remedy to an injunction. It is likely that there will be substantial difficulty in establishing causation between any loss of business and any actions of the party the subject of the restraint, and a further difficulty in calculating the quantum of any damage arising from any loss of business: HiTech Group Australia Ltd v Riachi [2021] NSWSC 1212 at [50].
It seems to me that this is just such a case. One need only consider the task involved in proving that a Merchant transferred its business to Kounta as a consequence of the conduct complained of, whether that decision was multifactorial, or whether - as Kounta might be expected to contend - it was because its product was superior. Once a Merchant transfers its custom to Kounta, their willingness to return their custom to Tyro may be significantly reduced, if for no other reason than the inconvenience involved. Proving its claim will likely involve a further impost on Tyro's relations with its merchants. The legal costs involved in establishing causation and quantum may be disproportionate to the loss suffered in respect of any given Merchant.
Against this, Kounta is in breach of contract. Unless injuncted, Kounta will presumably continue its efforts to solicitor Merchants. As Lindley LJ observed in Shelfer v City of London Electric Lighting Co [1895] 1 Ch 287, "The Court has always protested against the notion that it ought to allow a wrong to continue simply because the wrongdoer is able and willing to pay for the entry he may inflict": at 315-316.
As to the suggested problems with granting an injunction in the terms of the contract, some of these concerns have been addressed by Tyro's acknowledgement that it does not seek to injunct Kounta from general advertising to the world at large, nor from providing services to Merchants which seek Kounta out. Where injunctions are practical tools in the administration of justice, there are limits to the precision and clarity which can be obtained, but the party benefitting from the restraint of trade should not suffer an injustice through undue insistence on a precise statement of what the restrained party must do or not do: Orleans Investment Pty Ltd v Mindshare Communications Ltd [2009] NSWCA 40 at [105]. A Court should not too readily decline to require a restrained party to perform their obligations solemnly undertaken with the benefit of legal advice: Orleans at [106]. Ambiguity in an order for injunctive relief can be resolved by reference to these reasons. Further, where ambiguity arises from the terms of the parties' agreement, that does not mean that the restrained party should not be bound by injunction to what they promised: Creak v Ford Motor Company of Australia Ltd [2023] NSWCA 217 at [137]. Nor would the Court commit an injuncted person for contempt if they could show that what they had done was inadvertent and would not be repeated: Plowman at 574 (Davies LJ).
I consider it appropriate in all of the circumstances to grant an injunction in the terms of clause 9.1, but without the additional injunctive orders proposed by Tyro. If there be any problem with implementation of the injunction, these proceedings remain on foot in respect of the remaining issues between the parties and any such problem can be readily dealt with if need be. The injunction will have greater efficacy if Kounta has a list of Merchants. Whether Tyro wishes to provide that list is a matter for Tyro.

Tyro Payments Ltd v Kounta Pty Ltd

At a glance

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Cases Cited (29)

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