Ronbar Enterprises Ltd v Green
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE JENKINS,LORD JUSTICE HODSON |
| Judgment Date | 28 April 1954 |
| Judgment citation (vLex) | [1954] EWCA Civ J0428-2 |
| Court | Court of Appeal |
| Date | 28 April 1954 |
| Docket Number | 1954. R. No.202. |
[1954] EWCA Civ J0428-2
In the Supreme Court of Judicature,
Court of Appeal.
Lord Justice Jenkins
Lord Justice Hodson and
Mr Justice Harman.
Mr T. MICHAEL EASTHAM (instructed by Messrs Isadore Goldman & Son) appeared on behalf of the Appellant (Defendant).
Mr G.T. HESKETH (instructed by Messrs Norris Allens & Co.) appeared on behalf of the Respondents (Plaintiffs).
This is an appeal by the defendant, Mr Isidore Green, from an order of Mr Justice Roxburgh dated the 12th March 1954 whereby Mr Green, the defendant, was restrained until after Judgment in the action or until further order from directly or indirectly carrying on or being engaged or interested in any business competing with the business formerly carried on by the plaintiffs, Ronbar Enterprises Limited, and the defendant in partnership, and in particular writing or publishing articles or other matter in a paper known as "Sport & Show News".
It appears that the plaintiff company, Ronber Enterprises Limited, was incorporated on the 28th November 1951. The company was formed with a view to entering into the arrangement with the defendant which I am about to state. The defendant had for some time previously been publishing a weekly newspaper known as the "Weekly Sporting Review and Show Business" containing feature articles and general news about the sporting and entertainment business. The company was formed to enter into partnership with the defendant in his business, and to pay him £10,000 for a 40 per cent interest. There was to be a partnership agreement under the terms of which the paper was to be carried on, and the agreement as in fact executed is dated the 5th December 1951. The partnership was to commence from the 1st December 1951. By clause 7 of the agreement, the net profits of the business were to be divided as to 60 percent to the defendant, and as to 40 per cent to the plaintiff company, and there were provisions in clauses 13 and 14 to the effect that the defendant should be managing editor of the partnership business and devote his whole time and attention thereto, and as such managing editor should receive salary at the rate of £1,000 per annum. The partnership was, apart from particular events to be determinable by either partner giving to the other three months previous notice in writing expiring on the 1st December in any year after the 1st December 1956, so that it was in effect to run for six years certain unless cause for sooner determination arose.
Clause 19 provided that in the event of either partner committing a breach of the terms of the agreement, the other party should be at liberty to give notice to the offending partner determining the partnership, and the partner giving such notice was to have the option of purchasing the share of the other partner and the capital assets of the business upon the like terms as were set out in clause 20. That clause provided for the purchase by a surviving or continuing partner of the share of a deceased or bankrupt partner at a valuation.
Clause 21 is the most material clause for the purpose of this appeal. It provides: "On the purchase by one partner of the share of the other partner pursuant to the last preceding clause hereof the purchase money shall be paid with interest thereon at the rate of 5 per centum per annum from the date of determination or dissolution of the partnership within one year from such date and the partner whose share is purchased shall not for five years from such date directly or indirectly carry on or be engaged or interested in any business similar to or competing with the business of the partnership" - that is the business to be carried on under partnership agreement under the name of the "Weekly Sporting Review and Show Business Publications".
A case arose for the plaintiff company to determine the partnership by reason of a breach of its provisions by the defendant. There was a provision in clause 16 of the deed that each partner should punctually pay his separate debts, which was said to have been broken by the defendant. In lieu of valuation as contemplated by the partnership agreement the price to be paid by the plaintiff company for the defendant's share in the business was agreed at £7,000. On the 31st July 1953 the defendant was adjudicated bankrupt.
In these circumstances the restrictive provisions of clause 21 of the partnership deed came into operation. It appears that after the events which I have described - that is to say, after the defendant's connection with the plaintiff company had been severed - a company known as Jocal Productions Limited was incorporated on the 9th October 1953 with a nominal capital of £100. The directors of that company were the defendant's wife, Mrs Ada Green, and a Mrs Calvert, and it commenced publication of a periodical called "Sport and Show News". That paper is in character and make-up very much the same as the partnership's Show Business periodical, and it has been published at intervals since October 1953. It is clear that the defendant has been writing for this paper, and various issues of it have containednotices of the fact of his so writing, and commending to readers of the paper his merits and reputation as a writer on sporting subjects.
The questions that fall to be determined are first whether what the defendant has been doing in relation to "Spert and Show News" is a breach of the restrictive covenant contained in clause 21 of the partnership deed, assuming it to be valid; and accordingly if so, whether the restrictive covenant is valid, I will read it again. "The partner whose share is purchased shall not for five years from such date" - that is, the time of purchase - "directly or indirectly carry on or be engaged or interested in any business similar to or competing with the business of the partnership".
Mr Eastham, on behalf of the defendant, argued that there had been no breach of that restrictive provision because on its true construction it does not extend to the rendering of services for a salary or wages as distinct from being engaged in business on one's own account. I do not agree. In my opinion the words "carry on or be engaged or interested in any business similar to or competing with the business of the partnership" are apt, particularly in view of the word "engaged, to include a case where the party subject to the restriction takes employment in a business of either of the kinds mentioned at a salary or wages, as well as a case in which he embarks on such a business on his own account or in a partnership. In my view, therefore, assuming that the covenant is valid, what has been done does prima facie amount to a breach of it.
As to its validity, that was attacked by Mr Eastham on these grounds. First, he said that if, contrary to his primary submission, it did extend to prevent the defendant working as a salaried employee, it was on that account too wide. In my view, that is not so. I do not think it can be said that this covenant is too wide merely because it would extend to cases of salaried employment, or employment at a wage in a business of either of the kinds mentioned.
Next Mr Eastham contends that the covenant is unreasonable as being unlimited in point of area....
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