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Colonial Cases

Watson and Co. v. Cooper, 1899

[appeal - employment law]

 

Watson and Co. v. Cooper

Supreme Court for China and Japan
Hannen CJ, 29 March 1899
Source: North China Herald, 3 April 1899

 

LAW REPORTS.

H.B.M.'S SUPREME COURT.

Shanghai, 29th March

Before Sir Nicholas J. Hannen, Chief Justice.

IN RE WATSON & CO. (Appellants) and E.  Q. COOPER (Respondent.)

   Judgment was given in this matter. Mr. H. P. Wilkinson appearing for the plaintiffs and appellants.

   His Lordship said - This is an Appeal from the Judgment of the Provincial Court of Amoy, in a suit for damages and other relief instituted by the appellants against the respondent.

   The appellants are a British Company carrying on the business of chemists and aerated water manufacturers, wine and spirit merchants at Hongkong and various ports in China. The respondent is general manager to Messrs. Moulle & Co., stevedores and ships chandlers at Amoy, dealing amongst other things in aerated waters, wines and spirits and cigars. The plaintiffs in their petition claimed £800 from defendant being £100 for every month during which he had been in the employ of Messrs. Moulle in violation of a contract dated 9th February 1888, clause 10 of which was as follows:

[Not transcribed.]

   They further alleged that they had never consented to the defendant joining the firm of Messrs. Moulle & Co. The defendant in his answer alleged inter alia that the agreement imposed an unreasonable restraint of trade and was opposed to public policy. He also submitted that the plaintiffs had by their actions admitted his right to violate the covenant.

   The judgment of the Court below which consisted of the Provincial Judge and two assessors found (one assessor dissenting) for the defendant with costs on the ground that the restriction went beyond what was reasonably necessary for the protection of the plaintiffs regard being had to the nature of their business.

   In the petition of appeal the Appellants alleged inter alia that the contract was divisible and that the second issue in the pleadings whether the plaintiff had consented to the admitted breach of the covenant had not been decided by the Court. Upon this point I may at once say that it is plain that the plaintiffs never consented to the breach of Clause 10. The Court below did not decide the point because in the view which it took of the case it was unnecessary to decide it. In his answer the respondent alleged that he was employed by the appellants as dispensing chemist and that his actions could not be restrained when in any other capacity and that respondent had nothing to do with the manufacture of soda water by Messrs. Moulle & Co. Further that the breach if any was of unreasonable portions of the contract.

   The law with regard to this sort of covenant is now fairly well defined. There was a time when such agreements were considered prima facie void as in restraint of trade but, if the covenantee could show that the covenant was given for sufficient consideration and that under the circumstances of the case it was reasonable it was held valid. Afterwards the Court held that they would not investigate the adequacy of the consideration.

   The rule at present appears to be if the covenant is not more extensive than is reasonably necessary for the protection of the covenantee notwithstanding its generality it will be enforced. In the present case it would seem reasonable that the plaintiffs should frame and enforce  a covenant which would prevent an employee of theirs in Amoy from joining a firm of that port which competed with them seriously in any important branch of their business.

   It appears from the evidence and is indeed a matter of general knowledge to the residents in the Treaty Ports of China that an important part of Messrs. Watson & Co.'s business is the manufacture of aerated waters. From the fact that Messrs. Moulle & Co. are described in their own expresses as "Wine and Spirit Merchants, aerated water manufacturers, etc.," it seems to me plain that this firm competes with Messrs. Watson & Co. In the same express they state that they have manufactured aerated waters in Amoy and that their sales increased. From this I think it is plain that they compete seriously. It is difficult to understand why a firm of stevedores, if they intended to continue to make that the principal part of their business, should engage as their general manager, a pharmaceutical chemist who cannot have had any experience as a stevedore. It would seem that whatever their business had hitherto been they now intended to devote themselves very seriously to the aerated water manufactory in which the defendant's experience at Amoy would have been of material help to them. I do not think that the number of trades which the plaintiffs seek to debar the defendant from carrying on or joining in carrying on in Amoy is of itself sufficient to make this covenant void.

   It must always be a question whether the trades however numerous they are form substantial portions of the covenantee's business. I take it that the trades of wine merchants and aerated water manufacturers are substantial portions of the business of Messrs. Watson & Co. and from exhibits I and J it is also plain that these branches are substantial parts of Messrs. Watson's business. Messrs. Moulle also seem to sell Bovril meat juice, Liebig extract, etc., all articles which are commonly dealt in by chemists.  There is a very large amount of business which is common to the two firms of Watson & Co. and Moulle & Co., and it seems to me reasonable that Messrs. Watson & Co. should seek to enforce as a covenant which undoubtedly in its terms prevents the defendant from joining such a firm.

   There is no doubt that the defendant covenanted not to join a firm carrying on the business of aerated water manufacturer or wine and spirits and cigar merchants and there is no doubt that he had committed a breach of this covenant.

   The only reason there can be for not enforcing this covenant is that it would be against public policy to do so. I do not think that it is - for it is to be observed that the public are more concerned to see that solemn contracts are adhered to than to see that the individual liberty of this defendant is not interfered with. I am very unwilling to come to a conclusion differing in what is principally a matter of fact from the Court below but the assessors differed in opinion and the question is one which does not depend on the demeanour of witnesses but on the inferences to be drawn from admitted or proved facts.   As I have no doubt in my mind that the covenant as it is sought to be enforced is not more extensive than is reasonably necessary for the protection of the plaintiffs I feel bound to enforce it. The result will be that the judgment order and decree of the Lower Court will be set aside with costs here and in the Court below.

   In the original petition a claim is made for a certain sum as damages and for further relief. I think that the justice of the case will be met by an injunction against the defendant continuing in the employ of Messrs. Moulle & Co. or joining any other firm of chemists, etc., in Amoy, or in any other way acting contrary to such terms of the agreement of the 9th of February,1888, as are still in force. The exact terms of the injunction should be drawn up by the plaintiffs and submitted to me in Chambers and it should be so framed as to allow the plaintiffs to enforce their claim for liquidated damages should the defendant disregard the injunction.

 

Source: North China Herald, 24 April 1899

 

THE CASE OF MR. E. Q. COOPER.

We have been requested by Mr. Cooper to publish the following record, handed to him, on request, by the Court at Amoy.

[Documents and proceedings in the Court at Amoy. Not transcribed.]

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