Grants Waterhouse Agency v Singh [2000] FJHC 101; Hbc0372j.2000s (15 September 2000)

Fiji Islands - Grants Waterhouse Agency v Singh - Pacific Law Materials

IN THE HIGH COURT OF FIJI

At Suva

Civil Jurisdiction

CIVIL ACTION NO. 0372 OF 2000

Between:

GRANTS WATERHOUSE AGENCY

Plaintiff

- and -

TARA SINGH

(s/o Surat Singh) trading as

T.J. Agency of 422 Fletcher Road, Nabua

Defendant

Mr. V. Kapadia for taintiff

Mr. R. Naidu for the Defendant

JUDGMENT

This case concerns what mmonly referred to as a `restraint of trade’ agreement entered into between ween the plaintiff company and the defendant on 19^th April 2000 whilst the defendant was acting General Manager of the plaintiff company. The agreement clearly bound the defendant :

`... not to compete with ... or to assist any person or entity to compete with (the plaintiff company) ... in any business in the Fiji Islands ... during (the defendant’s) employment (with the plaintiff company) and for three years after any conclusion of (the defendant’s) employment.’

It is common ground that by letter dated 1^st May 2000 the defendant who was an employee o plaintiff company for the the past eighteen (18) years was indefinitely suspended without pay from his employment with the plaintiff company pending the outcome of police investigations into allegations of computer fraud committed during his managership of the plaintiff company’s affairs. The investigation remains unconcluded.

Four (4) months later, at the end of August 2000,defendant despite being warned against competing with the pthe plaintiff company’s business, sought and obtained from the District Officer, Suva two (2) licences `to exercise the calling of AGENT BETTING’ in respect of two (2) premises, one at Fletcher Road and the other at Waimanu Road under the Business name of `T.J. Agency’. He also printed and circulated a leaflet advertising his business as a betting agent for Australian Horse Racing events in NSW, Victoria and Queensland which appears to contravene the prohibitions contained in Regulation 33 of the Lotteries Regulations (Cap.273).

It does not require a rocket scientist to conclude that the defendant’s activities in late August were and amounted to a to acts likely to and in clear breach of the `restraint of trade’ agreement entered into between himself and the plaintiff company and the same is not seriously denied.

On 1^st September 2000 this Court on the application of counsel fo plaintiff company granted an ex-parte injuncnjunction against the defendant inter alia restraining him `from ... being in anyway engaged or concerned or interested in the business of a gaming, lottery or betting shop in Fiji until further order’.

By motion dated 5^th September 2000 the defendant now seeks the dissolution of the ex-parte injunction on various grounds but principally because : `... the agreement dated 19<sup>th</sup> April 2000 (i.e. the `restraint of trade’ agreement) is of no legal effect’ since he had allegedly signed it `under duress’ and, in any event, defence counsel submits the agreement is unenforceable in so far as it contravenes the provisions of Section 27 of the Fair Trading Decree 1992 which prohibits any contract that `has the purpose, or has or is likely to have the effect of substantially lessening competition ...’

Counsel for the plainin opposing the application and in reliance on an affidavit deposed by the General ManagManager of the plaintiff company, submits that the question of whether or not the `restraint of trade’ agreement was voluntarily entered into by the defendant raises a serious issue which must be tried, in addition to, the vexed question whether or not the agreement contravenes the provisions of Section 27 of the Fair Trading Decree 1992.

I say `vexed question’ because Section 14 of the Fair Tradinree 1992 expressly stat states :

`This Decree does not affect the operation of -

(a) &nnbsp;  p;& &nsp; &nsp; &bsp; aw relating to rest restraint of trade in so far as that law is capable of operating conntly this e.’ &nbs>

Whatsmore, even if the `restraint of trade’ Section 27, nevertheless, this Court would still have to consider whether or not the agreement is enforceable at common law.

In this latter regard the learned editors of Vol.16 of Halsbury’s Laws ofand (4^th/sup> edn) state at para.528 :

`A covenant or agreement between an employer and an employee which is on the face of it in restraint of tradunenforceable unless both (oth (1) it is reasonable as between the parties, and (2) it is reasonable with reference to the public interest. The onus of establishing that an agreement is reasonable as between the parties is on the person who puts forward the agreement. The onus of establishing that an agreement which is reasonable between the parties is contrary to the public interest is on the person alleging that it is contrary to the public interest.’

In this latter regard in Herbert Morris Limited v. Saxelby (1916) 1 A C 688 which concerned an employer/employee oyee `restraint of trade’ case where the restraint was for seven (7) years duration and covered the whole of the United Kingdom and Ireland, the House of Lords in refusing the injunction said : (per Lord Parker of Waddington at 709) :

`I cannot find any case in which a covenant against competiby a servant or apprentice has, as such, ever been upheld beld by the Court’

N-GB>

and (per Lord Shaw of Dunfermline at 714) :

`Incase of restraints upon upon the opportunity to a workman to earn his living a different set of considerations comes into play .e contract (in restraint of trade) is an embargo upon upon the energy and activities and labour of a citizen, and the public interest coincides with his own in preventing him, on the one hand, from being deprived of the opportunity of earning his living, and in preventing the public, on the other, from being deprived of the work and service of a useful member of society’ ;

and further (per Lord Shaw) :

`... a man’s aptitude, his skill, his dexterity, his manual or mental ability ---- all those things which ... are ... subjective ---- they may and they ought not to be relinquished by a servant ; they are not his master’s property ; they are his own property ; they are himself. There is no public interest which compels the rendering of those things dormant or sterile or unavailing ; on the contrary, the right to use and to expand his powers is advantageous to every citizen, and may be highly so for the country at large.’

In light of the foregoing there is no doubt in my mind that there are serious issues to be tried in this case not the least of which is the question of the reasonableness of the duration of the restraint, and further, owing to the nature of the plaintiff company’s business, that damages are an inadequate remedy in the circumstances.

I turn then to consider the `balance of convenience’. In this regard defence counsel force submits that this Court shrt should be slow to prevent the defendant from utilising his personal knowledge and skills in earning a living in whatever way he chooses to do, even if, it is in direct competition with the plaintiff company his former employer.

Whatsmore defence counsel invthe Court to consider the relative strength of each party’s case in assessing where the e `balance of convenience’ lies. In that regard defence counsel submits that the `Fiji-wide’ coverage of the restraint and its extended duration for three (3) years is ex facie unreasonable and unjustifiable. Neither `reason’ however has been canvassed in any meaningful way by the defendant in his affidavit or Statement of Defence which are limited to the alleged circumstances in which the agreement came to be executed by the defendant and the Fair Trading Decree.

In my considered view thve factors as well as the relatively senior management position held by the defendant beforbefore his suspension sufficiently distinguishes this case from that in Fellowes and Anor. V. Fisher (1975) 2 ALL E.R. 829 where the injunction was refused.

Counsel for the plaintiffany on the other hand, equally forcefully, submits that the `restraint of trade’< agreement between the parties is neither void nor illegal per se, and as such, must be considered binding and enforceable until determined otherwise.

Whatsmore counsel argues, if the defendant was truly confident of the unenforceability and invalidity of the `restraint of trade’ agreement he could have easily tested the matter in Court proceedings before embarking on a course of conduct which was in clear breach of its terms.

Then counsel submits that what the plaintiff company’s long-established business of some thirty-six (36) years stands to lose, by allowing the defendant to compete with it, is wholly disproportionate in terms of the unquantifiable loss of goodwill and custom, than any loss that might be suffered by the defendant who has barely operated his business for a day and whose start-up costs are readily quantifiable.

As for the defendant’s right to earn a livelihood counsel submits that there is no evidence or suggestion that the defendant possessed such unique personal knowledge and skills that he could not earn a reasonable living from some other lawful business venture or paid employment which did not directly compete with the plaintiff company’s business.

Branson J. in rejecting a relatedment in Warner Brothers Pictures Incorp. v. Nelson (1937) 1 K.B. 209 (the `Bette Davis’ case) said at p.219:

`It was also urged that the difference between what the defendant can earn as a film artiste and what she might expect to earn by any other form of activity is so great that she will be driven to perform her contract. That is not the criterion adopted in any of the decided cases. The defendant is stated to be a person of intelligence, capacity and means, and no evidence was adduced to show that, if enjoined from doing the specified acts ... she will not be able to employ herself both usefully and remuneratively in other spheres of activity, though not as remuneratively as in her special line.’

As a last resort counsel submits that the relevant `status quo’ which thrt should protect in this chis case, is that which prevailed before the defendant began to operate his betting business.

Weighing as best I can the various factors hihted by counsels, I am satisfied that the `balance of convenience’ strongly fgly favours the continuation of the injunction. Accordingly the application to dissolve the injunction is dismissed and the injunction is extended until judgment in this action.

D.V. Fatiapan>

JUDGE

At Suva,

15^th September, 2000.

HBC0372J.00S