Supreme Court.— In Banco.

Auckland Star, Volume XVII, Issue 199, 25 August 1886, Page 5

Supreme Court.— In Banco.

THIS DAY. (Before His Honor Mr Justice QiUes. Tho Law as to Restraints npon Trado Competition. Habuis axd OTihiiia v. Bluett.—Tho argument iv respect of the validity oC a contract between the parties herein was hoard last Court day, Mr Thoo.Cooperappearii.il} fortho pi pin" UnV and Mr 0. N. Hra»scy for the dufohdant' His Hdnor delivered judgmont as follows:— OTe duestion in this caso is purely a loyal Clio, vl«., as lo the validity of a covonant In restraint of trado. Tho plaintiffs aro dairylrion and milk dealers carrying on business in rho oity of Auckland and the surrounding district, and , the dofendant is a milkman or mjlk. seller forpierly in their employ. On onterlng (ioir employ the defondant bound himself by tno following covenant: " Tho employed shall not. without tho consent in writing of tho employere.eitherduriUKorwithin 12months after tho termination of tho servico hereby created either on bohalf of himiiolf or of any othor person or persons whomsoever wltliln a distance-of threo miles from tho Postrofllce of Auckland otherwise than in tho serTice horoby creator!, either directly or indireotly.sell or doli ver or deal inor disposo of any uiilk or any liquid called or known by the nanio ot milk to any person or porsons whomsoever, undor a penalty, etc." This Is clearly a covenant in restraint of tnido which, ia order to its validity, must comply with tlireo requisites:—l. Thero must bo a pood consideration for it. 2. It must bo partial only. 3. It must bo reasonable (Collins v. Locko, L.lt., 4 app. cases, OS6). As to the first question, it is sulhcient if there Is a consideration. The parties to tho contract, not tho Court, must bs the judges of the sufficiency of tho consideration, as in tho case of all othor contracts. Here there was the consideration of tho taking tho defondant into tho plaintliFs' employment at an agreed on remuneration, which in various cases has been held to bo a cood consideration for such a povonant. With the sufficiency of that consideration tho Court has nothing whatever to do any more than it would liavo if tho dofendant In an action for goods sold and dolivered at agreed prices wore o plead that tho price was exorbitant. If parties choosq to ontqr into foolish and improvident bargains, then it has no powor to lnt«rforo with thoir freedom of contracting. On tho second question tho covenant is clearly a limited ono. both in point of time and in respect of area. The covenant is limited in point of time to ono year after dofendant leaves plaintiffs' Eorvico. and in point of area to a radius of three miles from tho Auckland Postoffice. In neither of these limitations do I find anything unroaaonablo having regard to tho naturs of tho business. On the third point, tha unreasonableness of the covenant, tha defendant's counsel mainly based his argnmont on this point, and I must quota from and agree with tho judgment of Fry, J., In Rousillon v. Rousillon. L.R., 14 chap., div: 363; " Now what is the critcrioß by wlilcli t.fio unreasonableness of tbo contract Is to be judged ? I will take tho law on that point from the language of Chief Justice Tindol ie delivering the judgment of the Court of Exchequer Chamber on appeal from the Court of Queen's Bench in Hitchcock v. Coker (6 A and X, 435). Ho said—' Wo agreo in the general principlo adopted by tho Court that when tho restraint of a party from carrying on a trade is larger and widor than tho protection of tho party -with whom the contract fa made oan possibly require, such restraint should bo considered unreasonable in law, and the contract which would enforce it must be thoreforo void.' That passage was adopted by Lord Wensleydalo, whon a Baron of tho Cirart of Exchequer. In delivering judgment in Ward v. Uyron, 5 M. and W.. MS-oSI, and therefore tho rulo so expressed has tho authority of tho Courts of Queen's Bench, Exchequer, and Exohequor Chamber. If, therefore, tho extent of tho restraint is not groater than can bo possibly required for the protection of tho plaintiff, it is not unreasonable." And this rulo was ovidently in the mind of "Vioe-Chancellor Wickons, whon, in giving Judgment for dofendant in Allsopp v. Whoatcroft, L.R. 15, Eg. OS, he said :." But the covenant goes further than this, and in fact befond anything that can be reasonably required for the plaintiff's protection." Now tested by this rule Is the restraint in tho present case further than can bo possibly or reasonably required for tho plaintiffs' protection 1 It was strongly urged for the defendant that a covenant not to 801 lto tho plaintiffs' customers would bo Bufflciont for plaintiffs' protection and co perhaps in some trades or professions it might be, but whon we look at tho nature df tho trado wo see at once that such a restriction would be Mtllo. The plaintiffs supply tho milk to tho milkman, who soils it on thoir behalf and roturns them the money. They do not know their oustdmors, who may vary from day to day and from week to week. The milkman alone knows tho customer and conies into direct contact with thorn. It is mainly a cash, not a credit business. Wore tho covenant restriotod to selling to tho plaintiffs' customers only, how could tho plaintiffs possibly enforce it or proteot thomselves ? Their customer of to-day may bo to-morrow the customer of a riral company. How could thoy prove that dofondant in Belling to one who hod beon their customer for a week was not soiling to ono who had deliberately and of his own free will ceasod to be a customer 1 Then again is it unreasonablo that the plaintiffs should say to the defendant, "You, through your employment By üb, obtain a knowledge of tho milkbuying publio which you would not otherwise have gained, and you ought not to bo allowod to tako advantage of the knowledge se gained either amongst our already customers or amongst thoso who, as wo oxtond our operations, might become our oustomors." Tested, therefore, by rules already referred to, I am compelled to say that tho rostraint In the present oaso 13 not shown to bo groater than can bo possibly or reasonably reqnired for the plaintiffs protection. It was strongly urged that tho covenant was unreasonable, because it virtually excluded tho dofendantforayearfrom the moans of livelihood fora Tory inadequate consideration. Andatnrst Bight this struck mo forcibly. But tho answer is that Buch a hardship was caused by tho def endant'a own deliberate contract, from which this Court cannot roliovo him.—Judgment for tho plaintiffs for 103, tho ponalty agreod on for any breach, thoro being no number of specific breaches alleged in tho claim. ... Mr Cooper said that ho would not ask for an injunction but he applied for cost 3on the lower ecalo. Tho object of tho plaintiffs had been to prove tho validity of tho agreoment and thoy had come to the Supremo Court for this purposo bocauso its judgment would be more binding than that of tho lower court. The costs. H ordered according to the lower scale, would amount to about £11 or £10. As His Honor hesitated to grant costs on me °Mr Cooper said he would bo content with costs as if judgmenthad gone by default Ihot would only come to about £5. Ho understood the plaintiffs were not in a position to pay costs. His Honor then fixed tho costs at fc>. This was all tho business, and the Court theref oro rose.