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Colonial Cases

A.S. Wilson and Co. Ltd v. Cooper, 1899

[appeal - employment law]

A.S. Wilson and Co. Ltd v. Cooper

Supreme Court for China and Japan
Hannen CJ. 15 March 1899
Source: North China Herald, 20 March 1899

Shanghai, 15th March.
(Before Sir Nicholas Hannen, Chief Justice.)
This was an appeal by the plaintiffs, from a decision delivered by the British Consular Court at Amoy.
  Mr. H. P. Wilkinson appeared for the plaintiffs and appellants; the defendant and respondent was not represented.
  The original Petition of the plaintiffs was as follows:
  [1.] The plaintiffs are a British Company carrying on the business of Chemists and Druggists, Aerated Water Makers, Wine, Spirits and Cigar Merchants at Victoria, in the Colony of Hongkong, and at Shanghai, Tientsin, Hankow, and elsewhere in the Empire of China.
  [2.] The defendant is a British subject, resident at Amoy, and at present General Manager to Messrs. N. Moalle & Co., Ltd., of that place.
  [3.] By an agreement dated the ninth day of February one thousand eight hundred and eighty-eighty, made between the plaintiffs of the one part and the defendant of the other part, the defendant agreed to serve the plaintiffs in their business at Hongkong, and at any treaty port in China, Japan, and elsewhere in the Far East where they carried on business, as dispensing chemist and general assistant and clerk for the period of four years for the remuneration and subject to the terms and conditions named therein.
  [4.] In consideration of the said employment of the defendant by the plaintiffs as aforesaid the defendant did thereby agree with the plaintiffs that he, the defendant, would not within twenty years from the date of the said agreement engage directly or indirectly in the business of a Chemist, Druggist, Aerated Water Manufacturer, Wine and Spirit or Cigar Merchant or Dealer, or become assistant to any other person or persons carrying on any such business, whether wholesale or retail, or simply as agent or agents thereto, or as merchant either at Hongkong or at any treaty port of China or Japan or Manila or the Philippine Islands or the Straits Settlements or Siam or Cochin China, without the consent in  writing of the plaintiffs, under the hand of their General Manager first had and obtained, and in the event of the defendant engaging in such businesses or business as aforesaid in breach of the said agreement without such consent being first obtained as aforesaid, the defendant did thereby undertake to pay to the plaintiffs the sum of (one hundred pounds) £100 sterling for each and every month or part of a month during which he should have been so engaged, whether directly or indirectly, the said sum to be payable and recoverable monthly and every month as and for liquidated damages and not as penalty.
  [5.] The defendant duly entered into the service of the plaintiffs as aforesaid and remained in their service until the month of April, 1897, and then returned to England his passage being paid by the plaintiffs.
  [6.] On or about the month of December 1897 the defendant returned to China and entered the service of Messrs. N. Moalle and Company, Limited, of Amoy, carrying on the business (amongst other things) aerated water manufacturers and wine and spirit and cigar merchants, Amoy being one of the treaty ports above referred to and adjacent to Hongkong, and without the consent of the company in writing as aforesaid first had and obtained.
  [7.] The plaintiffs have communicated on several occasions with the defendant and pointed out that the entry of the defendant into the service of Messrs. Moalle and Company, Limited, constituted a breach of the said agreement as set out in paragraph 4 hereof and have refused to give their consent to his remaining in the service of the said Messrs. Moalle and Company, Limited, but the defendant has refused to recognise any right or claim of the plaintiffs in the matter and has not paid to the plaintiffs the said sum of £100 sterling per month for every month or part of a month which he has been engaged as aforesaid or any part thereof.
  The plaintiffs therefore pray:
  [1.] That the defendant may be decreed to pay to the plaintiffs the sum of £800 sterling being at the rate of £100 sterling per month or part of a month for which he has been so engaged as aforesaid.
  [2.] That the plaintiff s may be decreed the costs of their suit.
  [3.] Such further or other relief as the nature of the case may require.
  Defendant's reply to the petition was as follows:
  [1.] That the agreement made between the plaintiffs on the one hand and the defendant on the other is an agreement which imposes an unreasonable restraint in trade and is opposed to public policy.
  [2.] That the restriction is so wide that it exceeds what is reasonably necessary for the protection of the plaintiffs as it extends over the whole of the Far East from Penang to Japan.
  [3.] That the agreement tends to create or secure a monopoly of business.
  [4.] That the Assistant General Manager for the plaintiffs held the position of Attorney or Agent or General Manager for the plaintiffs during the absence in England of the General Manager on May 22nd, 1897 and did on that date endorse the said agreement as follows:
"The within named Edwin Cooper served with us during the period of this agreement at the expiration of which he served with the firm in Shanghai, Tientsin, and Hankow, until January 1897 when he assumed management of our branch here. He leaves us today at his own wish and we are sorry to lose him.
  For A. S. Watson & Co., Ltd.,
Henry Humphreys, Assistant General Manager,
Amoy, 22nd May 1897."
being at the time fully aware that the Defendant had entered or was about to enter the employment of Messrs. Moalle and Co., Ltd., and at the same time making no objection or comment at the time of endorsing upon his doing so.
  [5.] That whereas a notice in writing under the hand of the General Manager, or other, the Manager, Agent or any attorney acting for him in his absence, may annul the agreement as per clause 8, so also the defendant begs to submit the agreement may be annulled by the Assistant General Manager acting as Attorney for the General Manager his endorsement in lieu of the consent in writing of the Company under the hand of their General Manager as required by clause 10.
The defendant therefore prays:
  [1.] That the petition of the plaintiffs be annulled.
  [2.] That the defendant may be decreed the costs of this suit.
  [3.] Such further or other relief as the nature of the case may require.
  The judgment of the Court below was
as follows on the 12th December 1898:
"I find for the defendant with costs, as
in my judgment the restriction
goes beyond what was reasonably
necessary for the protection of plaintiffs, regard being had to the nature of their business.
(Signed) CHRIS GARD'NER, Provincial Judge."
"I agree because Messrs. Moalle & Co., on a general view are quite distinct from Watson & Co., in business, and the local accident that ship chandlers and stevedores also sell soda is not weighty enough to make a restraint on defendant reasonable.
(Signed) R. H. BRUCE, Assessor."
"I consider the contract good and reasonable, and that the defendant is liable for violation.
(Signed) FRANK LEYBURN, Assessor."
  Against this finding the plaintiffs now appealed on the following grounds:
  [1.] For that the restriction in no way goes beyond what was reasonably necessary for the protection of plaintiff-appellants.
  [2.] For that no trade or business in which plaintiff-appellants do not deal was imported into the covenant.
  [3.] For that the Lower Court had had no regard to the nature of plaintiff-appellants' business.
  [4.] For that the Lower Court has been unable to record a single reason in support of its finding.
  [5.] For that the finding of Mr. Assessor Bruce is based on matter which was never raised by the pleadings inasmuch as the conflicting interests of Messrs. Moalle & Co., and plaintiff-appellants was never in issue.
  [6.] For that in any case the defendant-respondent has sufficiently admitted that the firm of Moalle & Co. (in which he, the defendant, is now engaged) do in certain trades and businesses compete with the plaintiff-appellants.
  [7.] For that it is clear from the defendant-respondent's evidence before the Lower Court that Messrs. Moalle & Co., do not only "sell soda water," but do also manufacture aerated and table waters of all sorts and do sell wines and spirits and cigars.
  [8.] For that the defendant-respondent has further admitted that Messrs. Watson & Co.'s special recipes for the manufacture of aerated and table waters were in his (defendant's) possession during his management and the said firm's business at Amoy, and he is accordingly in a position to actively and particularly assist Messrs. Moalle & Co. as against the interests of the plaintiff-appellants in this line.
  [9.] For that the covenant is perfectly good and reasonable in law as found by Mr. Assessor Leyburn.
  [10.] For that the defendant-respondent has admittedly committed a breach of the said covenant and is liable for its violation in the full sum claimed.
  [11.] For that there is sufficient on the record to justify this Hon. Court in finding against the defendant-respondent on the second issue raised by his answer, viz. whether plaintiff-appellants had in fact or in law consented to a breach of the covenant, on which question the Lower Court has failed to record a finding.
  [12.] For that in any case the contract is divisible and may be valid as to such portions as are held reasonable even although valid as to other portions.
  [13.] For that a breach of such valid portion entitles the covenantee to the damages liquidated and specified in the contract quite apart from those portions of the covenant that have been held invalid.
  [14.] For that the breach alleged is in respect of portions of the covenant which are on the face of it perfectly reasonable and good.
  Wherefore appellants pray that the judgment irder and decree of the Lower Court be set aside, this Hon. Court do decree this appeal with costs, granting leave to refer to original petition for term of relief sought.
  The defendant's reply o the appeal was:
  [1.] The respondent was engaged by the appellant as "dispensing chemist" and also as general assistant and clerk at Hongkong, Shanghai, etc., as shown in the agreement filed in the Lower Court. The respondent submits that it was unreasonable to restrict him from engaging in other trades than that of dispensing chemist and that it was not necessary for the protection of the appellants to restrict respondent from other trades than that of dispensing chemist.
  [2.] The statement is not accurate to say that no trade or business which appellants do not deal was imported into the covenant. Appellants are not general merchants and yet by clause 10 respondent was debarred from becoming a merchant within the sphere of the contract. Again had appellants been universal providers respondent would have been debarred from gaining any livelihood and that could not have been necessary for protection of appellants.
  [3.] The Lower Court did pay regard to the risks of appellants' business, that of dispensing chemists.
  [4.] The Lower Court was not unable to give reasons for its decision. In fact it did give reasons both to the appellants and the respondent, but stated that it refrained from placing the reason on record as it wished in case of appeal that the matter should be decided on its general merits and not on the individual reasons of the Lower Court.
  [5.] The reasons of assent given by Mr. Assessor Bruce form no part of the judgment. Statement is in the proceedings and in the documents put in that the alleged breach of covenant of the respondent is the entering into the service of Messrs. Moalle & Co., who are tug and lighter men, ship stevedores and ship chandlers, and they only incidentally deal in the same articles that the appellants also incidentally deal in, and though the question of quantum was not raised in the pleadings it was raised in the proceedings (see letter put in by respondent informing appellants of his intention to join Messrs. Moalle & Co.), and the Lower Court would have been justified, when one party was unrepresented by counsel, in taking the quantum into consideration. There is nothing on the record to show that the Court did so, however; Mr. Assessor Bruce as a long time resident at Amoy, knows the nature of both the businesses of Messrs. A. S. Watson & Co. and Messrs. Moalle & Co.
  [6.] Messrs. Moalle & Co. only compete with Messrs. A. S. Watson & Co. In a trifling manner, as a fact no detriment has accrued to appellants by respondent's joining Messrs. Moalle & Co.
  [7.] With the manufacture of aerated water by Messrs. Moalle & Co. respondent had nothing to do. Statement is on record that that part of the business us made under other supervision. Respondent admits that that Messrs. N. Moalle & Co. do sell wines, spirits and cigars, but this is not a necessary or essential part of a dispensing chemists'' business.
  [8.] Messrs. N. Moalle & Co. are quite satisfied with their own recipes and have never asked and have no intention of asking respondent with regard to Messrs. A. S. Watson & Co.'s recipes.
  [9.] In all cases quoted no single case was cited where a restraint on more than one trade was supported by the Court. In the covenant in question respondent is restrained from half a dozen trades; the covenant therefore is in general and not partial restraint of trade.
  [10.] Respondent submits he has made no breach of the valid part of the covenant, the business of Messrs. A. S. Watson & Co. as dispensing chemists being distinct from the business of Messrs. N. Moalle & Co. who are tug and lighter men and ship chandlers.
  [11.] Respondent admits that covenants are divisible but submits he has committed no breach of the reasonable portion of the covenant under litigation.
  [12.] Respondent submits he made no breach of the valid part of the covenant, he has not set up as dispensing chemists nor engaged himself to a dispensing chemist within the sphere of the covenant.
  Further that the damages claimed are in the way of penalty and not liquidated damages.
  Respondent is perfectly willing to pay appellants any damages his joining Messrs. N. Moalle & Co. may have inflicted upon Messrs. A. S. Watson & Co., such damages to be assessed either by the Honourable Court of Appeal or by two arbitrators, one to be chosen by each of the parties.
  Respondent believes no damage whatever has been inflicted upon appellants and where there has been no loss there is no injury.
  [13.] The breach, if any had been committed, is on portions of the covenant that are unreasonable and unnecessary for the protection of the appellants.
  Wherefore respondent prays, that the judgment order and decree of the Lower Court may be sustained and that the Honourable Court do dismiss the appeal with all costs.
  And the respondent further prays the said Court to decide the case on the record.
  Respondent is a poor man, unable to afford the cost of learned Counsel, but he trusts implicitly in the Honourable Court.
  Dated in Amoy this twentieth day of January 1890. EDWARD QUIBELL COOPER.
After a lengthy argument,
 His Lordship reserved judgment.

Published by Centre for Comparative Law, History and Governance at Macquarie Law School