Attwood v Lamont
| Jurisdiction | England & Wales |
| Judgment Date | 1920 |
| Date | 1920 |
| Year | 1920 |
| Court | Court of Appeal |
Restraint of Trade - Contract of Service - Severability of Covenant.
The plaintiff carried on business at Kidderminster as a draper, tailor, and general outfitter. By a contract of employment of the defendant by the plaintiff, after reciting that the defendant had requested the plaintiff to employ him as an assistant in his business at an annual salary and commission on turnover above a certain amount in the tailoring department and that the plaintiff was willing to do so only upon his entering into the agreement not to trade in opposition to him thereinafter expressed, the defendant agreed that he would not at any time thereafter “either on his own account or on that of any wife of his or in partnership with or as assistant, servant, or agent to any other person, persons or company carry on or be in any way directly or indirectly concerned in any of the following trades or businesses; that is to say, the trade or business of a tailor, dressmaker, general draper, milliner, hatter, haberdasher, gentlemen's, ladies' or children's outfitter at any place within a radius of ten miles of” Kidderminster. The defendant subsequently set up business as a tailor at Worcester, outside the ten miles' limit, but obtained and executed tailoring orders in Kidderminster. The Divisional Court held that the covenant was wider than was reasonably necessary for the protection of the plaintiff's business. but that it was severable by striking out the enumerated trades except that of a tailor and limiting its operation to the trade or business of a tailor, and granted an injunction restricted to the tailoring trade:—
Held, that the covenant being a single covenant for the protection of the plaintiff's entire business and not several covenants for the protection of his several businesses could not be severed.
Held, also, by Atkin and Younger L.JJ. that even if the covenant could be severed by confining it to the tailoring business it would still be void as being in restraint of competition.
Per ATKIN AND YOUNGER L.JJ. The following points may now be taken to be established by the decisions of the House of Lords in the above cases:—
First. It is the covenantee who has to show that the restraint sought to be imposed upon the covenantor goes no further than is reasonable for the protection of his business.
Secondly. The restraint must be not only in the interests of the covenantee but in the interests of both the contracting parties.
Thirdly. An employer is not entitled by a covenant taken from his employee to protect himself after the employment has ceased against his former servant's competition, although a purchaser of goodwill is entitled to protect himself against such competition on the part of his vendor.
Fourthly. Previously accepted ruler as to the doctrine of severance require careful application if not entire reconsideration.
APPEAL by the defendant from the judgment of a Divisional Court (Bailhache and Sankey L.JJ.) on appeal from the Kidderminster County Court.F1
The following statement of facts is taken from the judgment of the Master of the Rolls: “In this case the plaintiff is the proprietor of a business which may be called that of a general outfitter. It contained different departments which are enumerated in an agreement referred to later as follows: ‘the trade or business of a tailor, dressmaker, general draper, milliner, hatter, haberdasher, gentlemen's, ladies’ or children's outfitter.' The defendant was employed as a cutter and head of the tailoring department by the plaintiff and his then partner in 1909. His employment was terminable by a month's notice. He was not concerned with any of the other departments but, no doubt, some of the customers in the tailoring department were also customers in some of the others.
“On entering into the service of the firm he executed the following agreement: ‘An agreement made between Harry Attwood and Robert Isaac (hereinafter called “the employers”) of the one part and James Duncan Lamont (hereinafter called “the assistant”) of the other part. Whereas the assistant has requested the employers to employ him as an assistant in their business at Kidderminster at an annual salary commencing at 208l. and two and a half per cent. commission on turnover above 1000l. in the tailoring department and the employers are only willing to do so upon him entering into the agreement not to trade in opposition with them which is hereinafter expressed. Now this agreement witnesseth that in consideration of the employers employing him in the capacity and at the salary aforesaid the assistant hereby agrees with the employers that he will not at any time hereafter either on his own account or that of any wife of his or in partnership with or as assistant servant or agent to any other person persons or company carry on or be in any way directly or indirectly concerned in any of the following trades or businesses, that is to say, the trade or business of a tailor, dressmaker, general draper, milliner, hatter, haberdasher, gentlemen's ladies’ or children's outfitter at any place within a radius of 10 miles of the employers' place of business at Regent House Kidderminster aforesaid And also that this agreement shall not be affected by any change or changes in the constitution of the employers' firm but that in the event of any change or changes therein the right to enforce this agreement shall continue to the surviving or continuing partner or partners and his or their executors administrators or assigns.'
“In February, 1919, he asked the plaintiff to release him from the agreement or make him a partner, and the plaintiff refused. The defendant then left the plaintiff's service and established himself in business on his own account at Worcester, which is outside the ten-mile radius mentioned in the agreement. There he did business with several of the plaintiff's customers and had personal dealings with them such as taking orders in Kidderminster. The plaintiff then brought an action to restrain him from acting in breach of the agreement and asked for an injunction in the following terms: ‘An injunction restraining the defendant from committing any future breach of the said agreement.’ The defendant in answer to the claim contended that the agreement was invalid as being in restraint of trade and too wide in its terms to be reasonable.
“It was not seriously contended on behalf of the plaintiff that the agreement could be supported to the full extent of its terms, but it was argued that the restrictions as to the tailoring business could be severed from those relating to the other businesses, and that when so severed it was a reasonable and valid agreement.
“The case was tried in the county court at Worcester, and the learned county court judge decided that the contract was not severable and was wider than was reasonably necessary for the protection of the plaintiff's business. He, therefore, gave judgment for the defendant. On appeal to the Divisional Court that Court held that the contract was severable and that when so severed and confined to the tailoring business it was reasonable and valid. Judgment was therefore given for the plaintiff.”
The plaintiff appealed. The appeal was heard on June 18 and 21, 1920.
Disturnal K.C. and R. A. Willes for the appellant. The Divisional Court held that the covenant was severable by striking out all the enumerated trades except that of a tailor, and granted an injunction restricted to the tailoring trade. It is submitted that even if that severance be made the covenant is still unreasonable and void, and that the Court ought not to sever it. The business is a comprehensive one consisting of many departments, and the covenant, as cut down, is wider than that is reasonably required for the plaintiff's protection. It prevents the defendant from being employed in any capacity by a person carrying on a tailor's business within the ten-mile limit. The Court can only sever a covenant of this kind when it contains distinct negative obligations on the part of the covenantor. An agreement merely for the purpose of preventing competition is bad. An agreement with the object of protecting property — i.e., trade secrets or trade connection — may be enforced. If it goes beyond that the agreement is void. The recital in the agreement in this case shows that the express object of the employer is to prevent any competition with him directly or indirectly in this wide area. The defendant could not be engaged in any capacity in a business which had a branch within the radius. Treating it as a tailor's business alone it prevents any form of competition and that is enough to vitiate it. The law is well settled by Mason v. Provident Clothing and Supply Co.F2 and Morris v. Saxelby.F3
With regard to the severance of a covenant “that ought only to be done in cases where the part so enforceable is clearly severable, and even so only in cases where the excess is of trivial importance, or merely technical, and not a part of the main purport and substance of the clause”: see per Lord Moulton in Mason's Case.F4 It is not permissible to cut out words which form the main part of the construction of the covenant. The attempt to cut out here is to alter the main effect of the agreement. The business is a composite one and the covenant is with respect to the entirety. What is attempted is to cut the covenant down to a tailor's business.
[They also referred to Eastes v. RussF5 and Great Western and Metropolitan Dairies v. Gibbs.F6]
Compston K.C. and R. H. Norris for the respondent. The respondent only desires to protect his trade connection. It is only persons in the position of managers of departments who...
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