Gledhow Autoparts Ltd v Delaney
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE SELLERS,LORD JUSTICE DANCKWERTS,LORD JUSTICE DIPLOCK |
| Judgment Date | 21 June 1965 |
| Judgment citation (vLex) | [1965] EWCA Civ J0621-2 |
| Court | Court of Appeal |
| Date | 21 June 1965 |
[1965] EWCA Civ J0621-2
Lord Justice Sellers
Lord Justice Danckwerts and
Lord Justice Diplock
In The Supreme Court of Judicature
Court of Appeal
(From: Mr. Justice Glyn-Jones - Middlesex)
Mr. WILLIAM BARNETT (instructed by Messrs. J. Sanson & Co.) appeared on behalf of the Appellant (Defendant).
Mr. D. J. TURNER-SAMUELS (instructed by Messrs. Garber Vowles & Co.) appeared on behalf of the Respondents (Plaintiffs).
I do not recall learned counsel for the appellant appearing in this Court previously and I would like to express our appreciation of the clarity and conciseness of his address to us. Both learned counsel have been helpful in advancing their respective arguments in this somewhat difficult branch of the law.
The appellant entered into the employment of the plaintiffs (who are respondents) in 1956 and after a short period of probation he was accepted as a traveller in the commodities in which they dealt. The terms of the appellant's employment were set out in a written document of the 1st December, 1956. The commodities dealt in by the plaintiff company were, as the judge states, lighting'bulbs, contact sets, insulated cables, switches and fuses, all of them accessories to the lighting system of motor-cars. It had been I think the business of the plaintiffs for some considerable time to employ travellers to go round garages in various localities in order to obtain orders for that very limited range or class of commodities. The defendant, the appellant, served them for some years until the 15th February, 1963, when he was dismissed. In the course of his employment - towards the end of it I think, probably not all along - he acted discreditably and in breach of his duty to his employers. He sold on his own behalf, during the time in which they were employing him, similar goods to those which he had agreed to sell for the plaintiffs, much to the prejudice, of course, of the plaintiffs. He is undeserving of sympathy and perhaps undeserving of protection but his position has to be considered in accordance with the law.
The contract specified that the company should employ the appellant in their business of automobile and electrical spares and electrical equipment factors and that "the traveller" (that is the appellant) should obey their orders and in particular that he should "use his best endeavours to obtain orders for and promote the interests of the Company within the districtswhich the Company shall from time to time direct and shall not as traveller or otherwise be concerned in any other business".
Clause 3 of the agreement dealt with his remuneration. It appears that he started off at £8 a week. That basic salary was increased and during the course of his employment he may have earned as much as something like £1,400 a year. By clause 4 he was to keep books and records of what he did.
The important clauses in the agreement are for present purposes clauses 5, 6 and 8. Clause 5 is: "This agreement may be terminated by either party giving to the other at any time one week's notice of intention so to determine it or by the Company without notice or payment in lieu of notice in the event of a breach by the traveller of any of the provisions in this agreement". That short notice shows that this was a relatively simple form of employment, without great stability or duration possibly, but no doubt it could be a well-remunerated occupation.
Clause 6: "For the period of three years from the determination of his employment hereunder the traveller shall not either on his own account or for any other person firm or company solicit or seek to obtain orders in respect of any goods dealt in by the Company (the sale of which the traveller is engaged to promote under this agreement) from any person firm or company situate or carrying on business within the districts in which the traveller has operated during the course of this agreement or during any periods of employment with the Company".
By clause 8 "The traveller shall not at any time during or after the determination of the said employment, without the consent of the Company divulge to any person firm or company any information relating to the Company or its business or customers which he may acquire during or as incident to his employment".
After his employment had been terminated on the 15th February, 1963s the appellant it appears continued to solicit orders and to do business in the same class of goods in thearea in which he had been working for the plaintiff company - the areas in which he operated during the course of the agreement. On the 30thJuly, 1963, an interlocutory injunction was obtained against him, based on the provision of the contract which I have just read in clause 6. That interlocutory injunction was upheld ultimately by the learned judge, Mr. Justice Glyn Jones, in his judgment from which this appeal comes. "It is Ordered and Directed that the defendant Gerald George Delansy by himself or his agents or servants or otherwise be restrained, and an injunction is hereby granted restraining him from soliciting or seeking to obtain orders in respect of automobile and electrical spares and electrical equipment, being in each case goods of a class dealt in by the plaintiffs during the defendant's employment by the plaintiffs, either on his own account or for any other person firm or company situate or carrying on business within the counties of Surrey Berkshire Oxford and in all that area south of Amesbury or Warminster in the County of Wiltshire; Farnborough and Aldershot in the County of Hampshire, and Colnbrook and Slough in the County of Buckinghamshire, until after the trial of this action or until further order". After hearing evidence and argument, on the 12th February, 1965, the learned judge granted an injunction in similar terms.
The injunction for which the plaintiffs asked and which they received is admittedly less than the clause in its terms would have permitted as regards area - that is, places where the appellant had operated. But when the clause is said to be unenforceable (which in the contention on behalf of the appellant, who was the defendant in the action) because it is in restraint of trade, it must be construed as it stands and not to the extent that the employer seeks to enforce it. The modified request may reveal an apprehension as to the full effects of the clause. Whether this clause is (as the learned judge held) enforceable and not in restraint of trade or whether it is too wide and not to be invoked is a question of law and has to bedecided on the authorities.
There is no occasion here, I think, for this Court again to review the law but rather to apply it. It is to be borne in mind that the law that has to be applied here is the law in respect of restraint in a contract of service between a master and a servant, which is to be distinguished and has been distinguished in the authorities from the restraints which may be imposed in a contract where there is a sale of a business. It is convenient to turn to the case of Attwood v. Lamont, in 1920 3 King's Bench Division at page 571, where this Court reviewed the position which had been established by two leading decisions in the House of Lords, ( Mason v. Provident Clothing & Supply Company 1913 Appeal Cases 724) and ( Morris v. Saxelby 1916 1 Appeal Cases 688). The judgment of Lord Justice Younger was approved by Lord Justice Atkin. The effect of the decisions of the House of Lords was established to bet First, that it is for the covenantee to show that the restriction sought to be imposed upon the covenantor goes no further than is reasonable for the protection of his business; secondly, that the restraint must be reasonable not only in the interests of the covenantee but in the interests of both the contracting parties; and thirdly, that 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 the vendor. Some other observations in that case were made about the severance of restrictive clauses such as this, but no such question arises in this case.
At page 590, if I may take a brief extract from the case of Attwood v. Lament, Lord Justice Younger, after dealing, as I have said, with the authorities, said this: "The employer's goodwill is always necessarily subject to the competition of all persons, including the employee, who choose to engage in a similar trade. 'The employer in such a case is not endeavoring to protect what he has, but to gain a special advantage hecould not otherwise secure'. Accordingly covenants against competition by a former servant are as such not upheld; and the permissible extent of any covenant imposed upon a servant must be tested in every case with reference to the character of the work done for the employer by the servant while in his service and by the consideration whether in that view the covenant taken from him goes further than is reasonably necessary for the protection of the proprietary rights of the covenantee. 'The reason, and the only reason', says Lord Parker in Morris v. Saxelby. 'for upholding such a restraint on the part of an employee is that the employer has some proprietary right,...
To continue reading
Request your trial
-
Tradition Financial Services Ltd v Andrea Gamberoni and Others
...of a PTR is determined by reference to the circumstances of the parties at the time the contract of employment was concluded. In Gledhow Autoparts Ltd v Delaney [1965] 1 WLR 1366, Diplock LJ, as he then was, said this at p. 1375: "The defendant was in fact employed for over six years by the......
-
Cavendish Square Holdings Bv and Another v Talal El Makdessi
...a reasonable assessment of the future: Bridge v Deacons (supra) at 718: see also Putsman v Taylor [1927] 1 HB 637 at 643 and Gledhow Autoparts Ltd v Delaney [1965] 1 WLR 13 66 per Lord Diplock at 1377. "Deferred restraint" is permissible as a "means of protecting the plaintiff's interest i......
-
P14 Medical Ltd v Edward Mahon
...restriction is determined by reference to the circumstances of the parties at the time the contract of employment was concluded: Gledhow Autoparts Ltd v Delaney [1965] 1 WLR 1366; iv) The court will not uphold a covenant taken by an employer merely to protect himself from competition by a ......
-
Harcus Sinclair LLP and another v Your Lawyers Ltd
... ... Dicta of Diplock LJ in Gledhow Autoparts Ltd v Delaney [ 1965 ] 1 WLR 1366 , 1377, CA applied. (2) That in order for an ... ...