Marshall v N M Financial Management Ltd

JurisdictionEngland & Wales
CourtChancery Division
Judgment Date16 Jun 1995

Chancery Division

Before Mr Jonathan Sumption, QC

Marshall
and
NM Financial Management Ltd

Employment - contract in restraint of trade - unlawful provisions severable

Proviso in restraint of trade

Where a contract of employment stipulated that commission should be payable to an employee after the termination of his employment provided that he did not compete with his former employer, the proviso was in restraint of trade and unlawful.

Since the real consideration for the payment of post termination commission was the employee's provision of services during his employment the unlawful proviso could be severed leaving the employee's right to commission enforceable under the contract.

Mr Jonathan Sumption, QC, sitting as a deputy judge of the Chancery Division so held in a reserved judgment granting a claim by Anthony Arthur Marshall against NM Financial Management Ltd for commission after the termination of his employment with that company.

Mr Andrew Lenon for Mr Marshall; Mr David Garland for the company.

HIS LORDSHIP said that Mr Marshall was employed by the company, which sold financial services, mainly life and term assurance and pension contracts, as a sales agent between November 21, 1980 and August 18, 1992.

The terms of his contract of engagement provided that he should be an independent contractor remunerated by commission on business introduced and that his relationship with the company should be that of agent and principal.

Clause 10 of the commission schedule provided:

"(g) If at the date of termination of this agreement … the agent has for a period of not less than five years been continuously an agent of the company and either:

"(i) within the period of one year after the date of such termination the agent does not become an independent intermediary or become employed by or represent or become an appointed representative of any company or organisation which may directly or indirectly be in competition with the company; or

"(ii) at the date of termination the agent (if an individual) has attained the age of 65 years,

"then the company shall pay to the agent renewal commission arising up to his death … in respect of any investment agreement which results from applications submitted by the agent prior to such termination at the rates and upon and subject to the terms and conditions set out in the commission schedule".

The company claimed that Mr Marshall did not qualify for renewal commission because within a year of the...

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34 cases
  • Marshall v N M Financial Management Ltd
    • United Kingdom
    • Court of Appeal
    • 13 March 1997
    ...NM Financial Management, against a decision of Mr Jonathan Sumption, QC, sitting as a deputy judge of the Chancery Division, ([1995] 1 WLR 1461) that the defendant, Anthony Arthur Marshall, was entitled to renewal commission under his contract of employment even though a proviso to the paym......
  • East England Schools CIC (trading as 4Myschools) v Luci Palmer and Another
    • United Kingdom
    • Queen's Bench Division
    • 20 December 2013
    ...parties entered into at all"' (paragraph 19). This approach was followed in the later case of Marshall v NM Financial Management Ltd [1996] IRLR 20 (High Court), in which the approach in Sadler was followed, but with the addition of a fourth condition, ie that the severance must be con......
  • IBM United Kingdom Holdings Ltd and Another v Stuart Dalgleish and Others
    • United Kingdom
    • Chancery Division
    • 20 February 2015
    ...salary increases nonetheless. 115 Of more assistance, I think, is the decision of Mr Jonathan Sumption QC (as he then was) in Marshall v NM Financial Management Ltd [1995] 1 WLR 1461 upheld by the Court of Appeal at [1997] 1 WLR 1527. In that case, a covenant in a commission was found to b......
  • Tullett Prebon Plc and Others v BGC Brokers LP and Others
    • United Kingdom
    • Queen's Bench Division
    • 18 March 2010
    ...(i) Restraint of trade 264 Two authorities were relied on on behalf of the brokers. In Marshall v NM Financial Management Limited [1995] ICR 1042 the court had to consider a provision that a commission agent would be paid commission following the termination of his agency provided that he d......
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