Trustee of the Property of F C Jones and Sons (A Firm) v Jones

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
Judgment Date10 October 1996
Date10 October 1996

Court of Appeal

Before Lord Justice Simon Brown, Lord Justice Morritt and Lord Justice Phillips

Rock Refrigeration Ltd
and
Jones and Another

Employment - restrictive covenant - not unreasonable

Restrictive covenant can be upheld

A restrictive covenant which was expressly provided to take effect upon the termination of a contract of employment "howsoever occasioned" was not necessarily an unreasonable restraint of trade and thus void and unenforceable.

The Court of Appeal so held in allowing an appeal by the plaintiffs, Rock Refrigeration Ltd, against a decision of Sir Michael Davies that a restrictive covenant imposed against the first defendant, Michael Anthony Jones, a former employee of the plaintiffs was unenforceable against him and the second defendants, Seward Refrigeration Ltd, his new employers.

Mr Eldred Tabachnik, QC and Mr Antony Sendall for plaintiffs; Mr Andrew Stafford for the defendants.

LORD JUSTICE SIMON BROWN said that in holding the covenants unenforceable the judge had founded his decision squarely on the judgment of Mr Justice Laws in D v MTLRUNK (The Times March 18, 1996; [1996] IRLR 192).

The starting point for that line of authority was General Billposting Co v AtkinsonELR ([1909] AC 118) where the employers had dismissed their employee "in deliberate disregard of the terms of the contract" so as to "evince an intention no longer to be bound by the contract".

In those circumstances it was held that the employee "was thereupon justified in rescinding the contract and treating himself as absolved from the further performance of it on his part" so as no longer to be bound by the restrictive trade covenant which the employers were seeking to enforce. It was worth noting that the case was decided "on broader lines than those…as to mutual and independent covenants."

Next came Briggs v OatesICR ([1990] ICR 473) where the question arose whether a solicitor whose contract had been brought to an end by the dissolution of the partnership which had employed him was nevertheless bound by a restrictive provision expressed to operate once the agreement "shall have determined for whatever reason".

Mr Justice Scott had held not for three reasons; the first of which appeared to rely on the "mutuality" approach and the second was the General Billposting approach.

However, he went on to give his third reason as follows: "But the point goes further. Suppose I am wrong. Suppose (the submission) is right that under the true construction of the contract, clause 8 binds the defendant regardless of whether the agreement was brought to an end by…some…wrongful dismissal of the defendant…"

He continued: "If (those submission) are right I would regard the clause 8 restraint as unreasonable as between the parties. A contract under which an employee could be immediately and wrongfully dismissed but would nevertheless remain subject to an anti-competitive restraint seems to me to be grossly unreasonable. I would not be prepared to enforce the restraint in such a contract."

It was that third reason which was critical for present purposes since it was that which expressly...

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