Bridge v Deacons
| Jurisdiction | UK Non-devolved |
| Judgment Date | 1984 |
| Date | 1984 |
| Year | 1984 |
| Court | Privy Council |
Restraint of Trade - Solicitor - Partnership agreement - Covenant restraining retiring partner from acting for firm's clients for five years - Partner only acting for clients of particular department - Whether restriction reasonable in interests of parties and public interest - Whether restriction enforceable against retiring partner
In 1967 the appellant joined the respondent firm, one of the oldest and largest firms of solicitors in Hong Kong. In 1974 at the age of 31 he became a full capital partner with a 5 per cent. share in the business and assets, including the goodwill. Clause 28(a) of the partnership agreement provided that no partner ceasing to be a partner should for five years thereafter act as a solicitor in the Colony of Hong Kong for any person, firm or company who was at the time of his ceasing to be a partner or had during the period of three years prior thereto been a client of the partnership. The number of partners increased and the practice was divided into separate departments. The appellant became the partner in charge of the intellectual and industrial property department acting only for clients of that department and having no contact with 90 per cent. of the firm's clients. He retired from the partnership at the end of 1982 transferring his share of the assets to the continuing partners in accordance with the partnership agreement. In 1983 the firm issued a writ against him in the High Court claiming, inter alia, an injunction restraining him from acting contrary to clause 28(a). Hunter J. granted an interlocutory injunction and the Court of Appeal dismissed the appellant's appeal and, by agreement, the injunction was treated as a permanent injunction.
On the appellant's appeal to the Judicial Committee: —
Held, dismissing the appeal, (1) that whether a covenant in restraint of trade was enforceable as being reasonable both in the interests of the parties and in the public interest was to be determined not by a classification of the type of business the covenant sought to protect but by a consideration of the legitimate interests of that business; that, although the business of the respondent firm was separated into departments, the partners' interests were in the assets and the goodwill of the partnership as a whole and, as experienced solicitors, they had determined the period of the restrictions necessary to protect their goodwill; that, in the absence of evidence to the contrary, the duration of the restrictions were to be assumed to be reasonable (post, pp. 839H, 841C–E, 842A–B, F–843A, 844B–D).
(2) That, although the appellant had not been paid the market value of the goodwill of the partnership at the time ceased to be a partner, the adequacy of the consideration and the reasonableness of the restrictions had to be judged at the time the parties entered into the partnership agreement in 1974; that, since there were good reasons for requiring only a nominal sum when a new partner entered into the partnership, it was reasonable that, on retirement from the partnership, a solicitor was paid only a nominal sum for the goodwill (post, pp. 844H–845D).
(3) That it was in the public interest that younger men were taken into partnership by established solicitors so that there was continuity in the practice and young men were encouraged to enter the profession; that, accordingly, the covenant to protect the firm's goodwill was neither unreasonable nor contrary to public policy (post, p. 845D–E).
The following cases are referred to in the judgment of their Lordships:
British Reinforced Concrete Engineering Co. Ltd. v. Schelff [
Edwards v. Worboys [
Esso Petroleum Co. Ltd. v. Harper's Garage (Stourport) Ltd. [
Fitch v. Dewes [
Geraghty v. Minter (
Leather Cloth Co. v. Lorsont (
Lynch v. Bailey (
Mitchel v. Reynold (
Morris (Herbert) Ltd. v. Saxelby [
Nordenfelt v. Maxim Nordenfelt Guns and Ammunition Co. Ltd. [
Oswald Hickson Collier & Co. v. Carter-Ruck [
The following additional cases were cited in argument:
Connors Bros Ltd. v. Connors [
Craig v. Cole [
Kores Manufacturing Co. Ltd. v. Kolok Manufacturing Co. Ltd. [
Ronbar Enterprises Ltd. v. Green [
Sharah v. Healey [
Stenhouse Australia Ltd. v. Phillips [
Whitehill v. Bradfrot [
APPEAL (No. 35 of 1983) with leave of the Court of Appeal of Hong Kong by Robin M. Bridge (the defendant appellant) from a judgment and order of the Court of Appeal of Hong Kong (Leonard V.P., Cons and Fuad JJ.A.) given on 3 May 1983 dismissing an appeal by the appellant from an order made in the High Court on 1 March 1983 granting the respondent firm of solicitors, Deacons (the plaintiff), an interlocutory injunction restraining the appellant, inter alia, from without the written consent of the respondent acting as a solicitor in the Colony of Hong Kong for any person, firm or company who was at the time of his ceasing to be a partner or had during the period of three years prior thereto been a client of the respondent firm.
The facts are stated in the judgment of their Lordships.
Sir Patrick Neill Q.C. and Paul Andrew Smith for the appellant.
Leonard Hoffmann Q.C. and Richard McCombe for the respondent firm.
26 March. The judgment of their Lordships was delivered by LORD FRASER OF TULLYBELTON.
The question in this appeal is whether a restrictive covenant in a partnership agreement between the partners in a firm of solicitors is enforceable against one of their number who has ceased to be a partner, or whether it is unenforceable as being in unreasonable restraint of trade.
The respondent (plaintif) is Deacons, one of the oldest and largest firms of solicitors in Hong Kong. The appellant (defendant) Mr. Bridge was a full (capital) partner in the firm from 1 April 1974 until he retired from the firm at 31 December 1982. The partnership agreement contained a clause (clause 28(a)) whereby a partner who ceased to be a partner was restricted for a period of five years thereafter from acting as solicitor in Hong Kong, for any client of the firm, including any person who had been a client during a period of three years immediately before he ceased to be a partner. The respondent is seeking to enforce the restriction by injunctions against the appellant. The appellant contends that the restriction is not enforceable against him, as being in unreasonable restraint of trade.
Hunter J. granted injunctions substantially in the terms sought by the respondent. Before the appeal to the Court of Appeal was heard, the appellant gave undertakings in accordance with two subsidiary injunctions ordered by the judge, respectively against soliciting clients and against inducing employees of the respondent to break their contract of employment with the respondent. The appeal was limited to the central issue of the enforceability of the restriction against the appellant's acting for clients of the firm. The parties agreed that the interlocutory order by Hunter J. which was under appeal should be treated as having been in the form of a permanent injunction as if made at trial. The Court of Appeal (Leonard V.P., Cons and Fuad JJ.A.) dismissed the appeal against that order.
The clause imposing the restriction is in the following terms:
“28(a) Except on dissolution, no partner ceasing to be a partner for any reason whatsoever shall for a period of five years thereafter act as a solicitor...
To continue reading
Request your trial
- Adamson v New South Wales Rugby League Ltd
-
Re-Use Collections Ltd v Mr. Keith Sendall and Another
...to whether or not the consideration also had to be adequate. Mr Choudhury relied upon a passage in the judgment of the Privy Council in Bridge v Deacons [1984] 1 AC 705, given by Lord Fraser of Tullybelton, where he considered the adequacy of the consideration in the context of assessing th......
-
Heller Factoring (Singapore) Ltd v Ng Tong Yang
...Commissioner v Muller & Co Magarine Ltd [1901] AC 217, Bollinger v Costa Brava Wine Co Ltd (No 3) [1960] Ch 262 and Bridge v Deacons [1984] AC 705. Stated in a different form, a clause intended to protect an employer against use by the former employee of confidential information but also ag......
-
Cavendish Square Holdings Bv and Another v Talal El Makdessi
...matrix is admissible in that regard: see in particular as to restraint of trade Haynes v Doman [1899] 2 Ch 13 at 24, Bridge v Deacons [1984] 1 AC 705 at 714 and Dawnay Day & Co v De Braconier d'Alphen [1998] ICR 1068 at 1075, 1086 – 1087 (Walker J) and 1100 D-H (CA) and as to the law of p......
-
Duties
...to a company. The Court of Appeal held that the company, which was not a party to the partnership agreement, was 26 Deacons v Bridge [1984] 2 All ER 19. 27 Trego v Hunt [1896] AC 7. 28 Darby v Meehan and another (1998) The Times , 25 November. 29 Prescott v Dunwoody Sports Marketing [2007] ......
-
Table of Cases
...Ch 406, [1978] 2 WLR 73, [1978] 2 All ER 89, ChD 74, 75 Darby v Meehan (1998) The Times , 25 November, ChD 67 Deacons (A Firm) v Bridge [1984] AC 705, [1984] 2WLR 837, [1984] 2 All ER 19, HL 54, 67 Dean & Dean (a firm) v Angel Airlines SA [2009] EWHC 447 (Ch), [2009] BPIR 409, [2009] All ER......
-
Illegality
...to commercial transactions”). 186 Oswald Hickson Collier & Co v Carter-Ruck , [1984] 2 All ER 15 (CA). 187 Deacons (A Firm) v Bridge , [1984] AC 705 (PC). THE LAW OF CONTR ACTS 534 that the nature of the relationship may vary in its intensity from one area of specialization to another, both......
-
Property
...another [1999] 2 All ER 663. 15 Beaver v Cohen and others [2006] EWHC 199 (Ch). 16 Trego v Hunt [1896] AC 7 at 24. 17 Deacons v Bridge [1984] 2 All ER 19. Property 55 expense of revaluation and was the only practical way of ensuring that new partners could afford to join. In Miles v Clarke ......