- Under an agreement dated 13 September 1978, control of Apex Quarries Ltd (“Apex“) passed from Lorenzo Galli and Michael Galli to Pioneer Concrete services (“Pioneer“). Pursuant to that agreement, the Gallis resigned from all their positions with Apex in December 1978.
- The agreements had covenants restraining the Galli from competing with Apex and using confidential information.
- On 5 May 1983, companies controlled by the Gallis leased land which had substantial deposits of basalt, in close proximity to Apex’s quarry. Apex had previously been interested in acquiring these deposits.
- The Gallis engaged a geologist, brought equipment onto the land to obtain samples for testing.
- No action had commenced at the time of trial. No licence or permits had been obtained. No options had been exercised. No reasonable prospect of obtaining these permits and licences for a considerable time.
- Pioneer and Apex sued, alleging breaches of the covenants. The action was dismissed at first instance. Pioneer and Apex appealed.
- The appeal was dismissed.
- There was no business which the Gallis were carrying on or conducting. There was no other business in which they were engaged, concerned or interested, contrary to the covenants.
- The work carried out by the Gallis was exploratory and did not amount to the direct preparation of any quarries.
“[B]efore the business gets underway, those preparatory acts cannot be characterised as constituting or forming part of a business; nor can the participants be described at that stage as carrying on…a business.”
The full text is available here: https://victorianreports.com.au/judgment/view/1985-VR-675
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