1923-03-14

Page

BALDBECK, MACGREGOR CO. . . WOOD.

THE HONGKONĠ DAILY PRESS, WEDNESDAY, MARCH 14TH, 1923.

(3)

It was not even sug

FARM NEWS

Just Received.

“GUILLAUME

(SWISS)

TELL

GRUYERE CHEESE.

80 Cents Per lb.

RESTRAINING - COVENANT, asked the plaintiffs for sanction to do so make any daim so to do, but many recent to the case of Attwood v. Lamont in the supplied direct from the factory it was DAIRY

cases have laid stress upon the duty of course of which both case mentioned urged "that he thereby became acquainted and been rafused.

The material parts of the agreement are the Court in considering these convenanta above were considered. Here Younger, with their names IMPORTANT DECISION IN H. M

as follows. It is made between the com- and the possibility of enforcing them or LJ. in a judgment concurred in by AdHin, gested that he knew or could have known SUPREME COURT.

pany and the defendant as, the "assistant any part of them to start with the L. which was thus the judgment of the the names of the other customers not I need Court examined the law as laid down by supplied direct from the factory: much factory manager,' The defendant was to original covenant as a whole. serve in the capacity of assistant factory only refer to the judgment of Younger, the House of Lords in the well known of the trade of the plaintiffs is carried manager of the factory and works beLJ. in Attwood v. Lamont L.R.3.K.B. cases of Mason (1913 A.C. 791) and on through their own branches and At H. M. Supreme Court at Shanghai longing to the company at Shanghai for on p.305. I start the consideration of Saxelby (1016 A. C. 688). It is clear that agencies, but the plaintifs have utterly last week, Sir Skinner Turner gave distilling and the manufacture of aorated this case then with the position that the thoes two cases had modified the former failed to show that the defendant at the such communication with the customers judgment in favour of Mr. B. B. Wood, waters for a term of three years. His plaintiffs have inserted in this agreement theory of the law in these cases and the factory had or was likely to have any Lainst whom, his former employeṛty | remunerations are then set out, and there a 'covant unnecessarily and unreason learned Lord Justice summarized thesering his employment ng would render ! Misra Caldbeck, Macgregor & Co., in provision for termination of the ably wide, which could never, have been alterations as follows:- brought an action to ontores the terms agreement by the company at any time ou enforced under way state of the law and (1) It is the covenantee who has to show it possible for him on the termination of that the restraint sought to be in bis employment to take away the plain- tiffs' customers from him. As I read the of an agreement restraining him from payment of three months remuneration. which they do not syk to enforce now.

But what I am asked to do is

posed upon the covenanter goes no gaging in hay capacity in the mineral Then follows:-

further than is reasonable for the cam it is not enough for the defendant merely to know, the names of some of the water business in the Far East for

The assistant factory manager shall disentangle a valid and reasonable res

protection of his business period of 3 years. Alternatively, plain-

during his continuance in the said traint from the invalid and unreasonable Tis sought damages to the amount of

employment obey all the lawful irceone and enforce that This is what is (2) The restraint must be not only in the customers: there must be something more interests of the covenantes hat in the than that and that something is entirely interests tions of the company either in the known as the doctrine of severance and

of both the contracting absent in this case. Then as to the serot $,000 on the ground that, daring his

recipes: I agree in an ordinary ent term of service with plaintiffe, defendant

conduct of the said business ar other-it may be stated thus I take this gener

parties, gained a knowledge of seret recipes and

wise in relation thefeto and shall keep ally from Jenks Digest, vel. 4)-No might use them in the trade 10-the

all accounts which they may require transaction having for its object the per: An employer is not entity, by that they are proprietary rights which covenant taken from his employee, to might deserve protection, but what are „des riment of plaintiffs,

and should the company desire his formance of an illegal net or ons deemeil

protect himself after the employment the Facts here? For something nearly services in their general wine business to be contrary to public policy (.g., a

has crased from his former survant's approaching four years (1017 to 1921) the there or elsewhere instead of in the transaction contemplating an unreason.

competition; although a purchaser af defendant was employed in this factory aforesaid factory he shall undertake toable atraint of trade) will be enforcçil. a lawful

goodwill is entitled to protect himself to inserts and supplied with HOUSE TO LEE, Furnished at the Peak. conform to and by their directions in But when, in return for

sev ral distinct promises,

against such competition on the pars them by the plaintiffs and daring all that time he was under no restrictive covenant of his vendor. any capacity in which the may require consideration,

at all. Why should this Court now be his services to the best of his ability. some of which contemplate such an objet

And he deduced from these rules that asked to disentangle the contract for the The assistant factory maunger shall not and some do not are made, the promises

the plaintiffs confess I can see no reason during the above mentioned term or which do not can be enforced; (note, pot

severance require careful at all. And I therefore hold that assUM any prolongation thereof or within 10 will be enforced"). And the Courts, Previously accepted rules as to years from the expiration thereof carry holding that partini restraints of tradetrine of

The learned Judge proceeded to say able, this is not a case in which the Court on or be concerned or interested in any sure prima facie valid and that it inyplication if not entire reconsideration, ing the covenant in question to be sever-

that may capacity whatever or in any manner upon the covenanter to show

it may have. whatsoever in the like or any other restriction was unreasonable, felt it their that the cases in which Courts have will exercise such powers of severance as

bind ham severed these restrictive covenants when trade business or peenpation whatsoever duty by means of a severance whether for profit or otherwise and to such a restraint when reasonable. Toeting on the view that, being prima facie either in China, Hongkong. Japan, take a very recent statement of this valid it was their duty to bind the I ought perhaps, as the matters have Singapore or the Straits Settlements. position I quote from the judgment of ovenant or as far as permissible wers been argued before me, "to express my ance, where the covenant as a whole is covenant is grammatically severable and And in case of any default in the Peterson, J. in the Ropeways ease (1919, now obsoletes and that in his view sever-opinion as to the other questions, observance of the terms of this clause 33.T.L.R.235):~- he shall forfeit and pay to the com- pany the sum of £20,000 by ascertained. and liquidated damages."

Mr. M. Brader Harris appeared For plaintiffs, thil Mr. R. N. Macleod for defendants

Ilis Lordship's judgment folors:

WAS 118

In this case Meuses, Caldbeck, Macgre gor & Co., Tal., manufacturers of arrated waters, ank for an injunction restraining tl defendant Wood from entering into certnin employment in Shinghai as being a breach of ovenant entered into by him, in June, 1921. It is not denied that the defendant has entered into the employ vangther manufacturer of Aerated Shanghai. The defendant waters in

leads that the covenant sought to be forced is too wide and unreasonable nal therefore is ant enforceable in, law, The plaintiffs reply that even if the riginal covenant is too wide (ns indeed they knitted) it can be severed and effect must be given to the Bevered part

Then there is a provision for dismissal in case of incapacity, etc., and further provisions for the renewal of the agree

'ment.

No suggestion is made of any compul sion on the defendant to sign such an agreement, hut it is noteworthy that the defendant had served for some four years without any agreement at all or

nny

gestion of a restraining covenant, and during that time he had learned the secret recipes of the plaintiffs and bad had the

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If on the true construction of the invalid should not in the general case similar covenants have been held sever- covenant the Court is of opinion that be allowed. That seems to me, if I may able: it is on the blue pencil theory pos- more respectfully say 20, to be an accurate sible to eliminate the words "and other" it really consists of two separate covenants, it must reject that statement of the legal position to-day: and "either" and "Hongkong, Japan, which is too wide and enforce that part from the fact that the judgment is Singapore and the Straits Settlements' presumably binding upon me here just without such reverance affecting the The facts are short: the plaintiffs are

which is free from objection."

at it was stated to be binding on the meaning of the part remaining. And I well-known manufacturers of these waters

But that statement of the law and of Court of Appeal at. Home by Atkin, L.J. think this covenant was severables it with a trade connexion, throughout the coast ports of China, up the Yangtze and

the duty of the Court has not always been in one of the last causes on the subject, seems to me to be composed of more than West Rivers and in Hongkong. In their they make use of ertain greret

accepted. I quoto. from Neville, J. in Clarke, Shary & Co., Solomon. 1920.37 one independent covenant. Then I de not business the netted to the foreign

Goldzell r. Goldman, T. R. 1814.2 Ch. 015): T.L.R. 176. It is enforced by the views of think it can be said to be a covenant Queen's Rond Central.

"It seems to me to be in accordance Lord Moulton and Shaw in Mason's case against mere competition per se: the both with principle and justice that if and by thow of Neville, J. quoted above. admitted existence of trade secrets which employees in the factory and memorized

a man seeks to restrain another from And the judgment itself was given shortly ordinarily are the subject of protection by them. There are only some five other

exercising his laciul calling to an ex after the same learned judge had agreed helps me to that conclusion. At the same minanfacturers of these waters in China,

tent which the nw even, as it now

in confirming a lifelong restriction of n time I do not think this was a case where The plaintiffs fuctory is in Shanghai.

stands deems unreasonable, the contract licitar in the case of Dewes Fitch from the inture of the defendant's employ The defendant is now a man of seme 80

tiffs could obtain protection for that which by which he does sp, whether gram 1920. Ch. 150, unanimously affirmed in ment the only method by which the plain- years of age and 27 years in China, opportunities of getting to know

matically severable" "or not, «should be the House of Lords. 1921, 'A.C.158. Originally, at sen, he afterwards wenme their customers as existed from funn 192), till the end of his services in 1922.

In my view then the whole covenant, they, we're entitled to protect was to held to be void ir tolą, „The hold other-i manager of a steam laundry, the secretary

As regards the restraining covenant

wise seeing to me to expose the coven; aves, if grammatically severable, is not prohibit the defendant's employment in of the Charity Organization Society and

an entitled to look at it in its entirety.

antor to the most inevitable risk of one from which this Court "should be China in any capacity whatever in any then manager of an hotel. In 1817 hitself: I have to constran it and then I

litigation which in nine cases out of astute to glean something which it can like business for a period of 10 years. joined the plaintiffs as an

10 he is very ill able to afford should enforce. It is open to all the objections And lastly I hold that restraint as to ananager in their factory here without any It seems to me to be clear that it really

I want to mention one other matter: he venture to act upon his own opinion so forcibly pointed out by the two learn- China alone is too wide. manufacture of aerated waters. written agreement. At that time he had refers to the business of distilling, and

as to how far the restraint upon himed Lards mentioned and by Neville, no preuliar qualifications for the manu-

But in case I am wrong about this it was suggested that rules of public would be held by the Court to be renson- inclure of these waters. In June, 1991, true that, the wine business is mentioned, he entered into a "written agreement but I hold that the like trade, ale means a similar business to that really the object

able: while it may give the covenante must face the further question suggested policy may differ here from what they are the full benefit of unvasonable provi by Younger, LJ, whether this is one of is England. I do not agree, this Court dating back to January, 1990, to serve

"sions if the covenantor is unable to face the specini cases in which severance if administers the law of England, and as the plaintiffs as an assistant factory of the agreement; f, the aerated water" business it is, therefore, a covenant res-

possible should be allowed. The special part of it, its public policy. litigation.?

Finally I wish again to thank Mr. manager. He served under that agree nent is an assistant manager and acting training the defendant from carrying on

Tip to that time then there was a differ-circumstances alleged are two ir number: manager till the termination of his trees or untering an aerated waters business or met as provided, in 1999. He then any other business for a period of 10 obtained employment is the Electricity years in an area which practically covers ence of judicial opinion on the question (1) Knowledge of the plaintiffs' customers

Court bound to suggested in the evidence that the defend have been indebted to them in coming Department of the S.M.C. and at the the Far East, and such a covenant is on which I put during the arguments in this and (2) knowledge of the plaintiffs' secret Harris and Mr. Macleod for their argu

fitant care into contact with the customers to my decision.

There will be judgment for the defend- beginning of this year he entered the its face unnecessarily and oppressively case: assuming the original covenant to recipes. As to the customers it is not ments in this case and to say how much service of Watson's Mineral Water Co. wide. It would even have prevented him be severable, ie the

Chinese corporation carrying on a rival joining the Electricity Department of the enforce the unobjectionable part business here in Shanghai, This is the Shanghai Municipal Council. True, the But since those cases further dicial themselves; but inasmuch as certain cus breach complained of. Ele and previously plaintiffs do not seek to enforce it or pronouncements have been made: I refer tomers in Shanghai and other places were ant with costs.

assistant

It is

PREPAID WANTED

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