Estate agents — Restraint of trade on sale of estate agency business — Restrictive Trade Practices Act 1976 — Whether a sales agreement and service agreement together constituted one agreement which required to be registered under the Act — Effect of non-registration — Whether, if 1976 Act did not apply, the restrictions were unreasonable at common law — Held that the 1976 Act applied and, in the absence of registration, section 35 of the Act rendered the restrictive provisions in the service agreements void and unenforceable
in these actions, purchasers of an estate agency business previously carried on
by the defenders, a husband and wife, sought interim interdicts to prevent the
defenders from, inter alia, carrying on the business of estate agency during a specified
period within a five-mile radius of any of the offices of the pursuers shown in
a schedule to the application — In fact the area of proposed interdiction would
have prevented the defenders from setting up an estate agency business in any
reasonably well-inhabited part of Scotland — The result of the agreement for
the sale of the defenders’ business, coupled with the service agreements
entered into by the defenders, and an assignment of the business to the
pursuers, was that the defenders became employed in the capacity of directors
of the pursuer company — Their service agreements contained restrictions on
their activities in the business of estate agency — Although the female
defender was in more or less the same position as her husband, it is convenient
to refer, as the Lord Ordinary does, to the position of the latter
question before the judge was whether the two agreements, the sales agreement
and the service agreement, together constituted one agreement, both parts of
which were registrable under the Restrictive Trade Practices Act 1976, the
service agreement not being severable from the sales agreement — It was a fact
that neither agreement had been registered under the 1976 Act — The pursuers
put forward a number of submissions on the construction and application of the
Act designed to show that it did not apply in the circumstances of the present
case — Lord Grieve rejected these submissions and came to the conclusion that
there was here one overall agreement between two or more persons carrying on
business within the United Kingdom for the supply of services which required to
be registered for the purpose of section 11 of the 1976 Act — The agreement had
not been registered and accordingly, as a result of section 35 of the Act, the
restrictive provisions in the service agreement were void and unenforceable —
If this conclusion was correct the interdict sought must be refused
added that if the conclusion he had reached was wrong, the reasonableness or
otherwise of the restrictions was a matter which arose at common law — In that
context he gave reasons for concluding that the very wide scope of the
restrictions sought made them wholly unreasonable — He also held that the
balance of convenience would have been in favour of refusing an interim
interdict on any of the grounds sought — Interdicts refused
The following cases are referred to in
this report.
Bluebell Apparel v Dickenson 1980 SLT
157; 1978 SC 16
Dumbarton Steam Ship Co Ltd v MacFarlane 1899 1F
993
Littlewoods Organisation Ltd v Harris [1977] 1 WLR
1472; [1978] 1 All ER 1026, CA
Registrar of Restrictive Trading
Agreements v Schweppes
[1971] 1 WLR 1148 sub nom: Schweppes Agreement (No 2), Re Registrar of
Restrictive Trading Agreements v Schweppes [1971] 2 All ER 1473
In these actions the pursuers, Donald
Storrie Estate Agency Ltd, sought interdicts ad interim against the
defenders, Gordon Adams and his wife, Sandra Adams, to prevent them from
carrying on various activities associated with estate agency to the alleged prejudice
of the pursuers’ legitimate business within a period and an area set out in the
pursuers’ conclusions.
S N Brailsford (instructed by J & F
Anderson WS) appeared on behalf of the pursuers; H H Campbell QC (instructed by
McClure Naismith Anderson & Gardiner) represented the defenders.
Giving his opinion, LORD GRIEVE said:
This is an action in which the pursuers seek to interdict the defender in three
particular respects. These respects are set out in the conclusions and are as
follows:
1
For interdict of the defender from at any time prior to 17 November 1989
carrying on the business of valuation, estate agency or building society and
insurance company agency within a five-mile radius of any of the offices of the
pursuers as specified in the schedule appended hereto; and for interdict ad
interim.
2
For interdict of the defender from at any time prior to 17 November 1989
offering employment to any person who was employed by the pursuers in the
period of two years preceding 17 November 1987 in the business of valuation and
estate agency or building society and insurance company agency; and for
interdict ad interim.
3
For interdict from the defender from exploiting or using in any way any
information confidential to the pursuers and, in particular, for interdict of
the defender from using the computer programme known as AC Negotiator System
containing business and commercial information owned by and confidential to the
pursuers; and for interdict ad interim.
At the present stage of the proceedings
interdict ad interim in terms of all three conclusions is sought, albeit
at the end of the debate counsel for the pursuers indicated that he was not
particularly concerned with the interdict sought under the third conclusion.
There is a similar action at the instance of the pursuers against the
defender’s wife, Mrs Sandra Adams, in which interdict in only two respects is
concluded for, but the main points presently at issue are common to both
actions, and the debate before me was conducted under reference to the
averments in this action. Defences were lodged in both actions, so the
respective positions of the parties, as standing at the moment, were before me
and provided the background for the debate.
The pursuers aver that as at January 5
1987 they carried on business from 31 separate offices throughout Scotland as
property valuers,
1987 the number of their offices had risen to 33. A schedule of the location of
these premises is appended to the summons and, from a perusal of it, it appears
that the premises were situated to the west of the ‘Highland Line’, with the
bulk of them in central Scotland. For some 15 years or so prior to January 5
1987 the defender and his wife had been partners in the firm of Gordon Adams
& Partners, which carried on business as property valuers, estate agents,
and building society and insurance company agents from premises in Bearsden and
in Great Western Road, Glasgow. By an agreement, which I shall refer to as ‘the
sales agreement’, dated November 6 1986, the firm of Gordon Adams &
Partners sold its complete business to the Nationwide Building Society for the
sum of £800,000. These interests were later assigned to the pursuers.
In the said sales agreement, which
purported to be between (1) Mr and Mrs Adams as the equity partners of the firm
Gordon Adams & Partners (the ‘vendors’), (2) the partnership of Gordon
Adams & Partners (the ‘firm’) and (3) the Nationwide Building Society (the
‘purchaser’) certain conditions were set out which required to be purified*
before the sale could be held as concluded. These included, in clauses 14 and
15, certain restrictive covenants which were to be binding on the vendors (Mr
and Mrs Adams) and the firm, Gordon Adams & Partners. The provisions in
these clauses are not founded on in either of the actions as a basis for the
interdict sought. The reason for that will become apparent when I come to
consider the submissions made by counsel. Clause 5 of the sales agreement set
out the conditions required, ‘Completion of the Sale and Purchase of the
Business’. One of these, 5(H), was that:
each of the Vendors shall deliver or
cause to be delivered a duly executed contract of employment with the Purchaser
in the Approved terms . . . .
*Editor’s note: ‘Purified’ is a Scots law
term. To ‘purify’ in this context means to carry out or fulfill a condition.
Each of the vendors implemented that
condition in documents entitled ‘service agreement for Director’. I shall refer
to that as ‘the service agreement’. In his service agreement the defender
accepted certain restrictions on his employment as a director of the pursuers.
The provisions of these restrictions, which are contained in clauses 14 and 18
of the service agreement, are set out in article 3 of the condescendence
annexed to the summons, and they form the basis of the interdicts sought. In
article 5 of the condescendence the pursuers set out the various ways in which
they maintain the defender has been in breach of the provisions in the said
clauses 14 and 18. In article 6 the pursuers aver that the defender’s actings
are to the prejudice of the pursuers’ legitimate business interests, and that,
because of that, they are suffering losses in their premises in the
Milngavie/Bearsden areas of Glasgow.
In his defence the defender agrees that
he was a party both to the sales agreement and the service agreement. He
maintains, however, that these two form part of one agreement the parts of
which are not severable. He further avers that both parts of that agreement
were registrable by virtue of the provisions of section 11 of the Restrictive
Trade Practices Act 1976 (hereinafter referred to as ‘the 1976 Act’). It is a
matter of undisputed fact that neither of these documents was registered under
the Act, and the defender maintains, under reference to the provisions of
section 35 of the 1976 Act, that all the restraints put upon him by both the
sales agreement and the service agreement are void and unenforceable. The
defender admits that since the termination of his employment with the pursuers
he has been actively involved in the establishment and operation of an estate
agency business under the name of G-S Properties. In that connection he makes
averments of some significance in relation to certain of the submissions made
on his behalf. I will quote them. They read:
Admitted that, prior to opening said
estate agency, agents for the defender gave notice in December 1987 to the
pursuers of his intention to do so, under explanation and averment that there
was no response thereto until the raising of the present action eight weeks or
thereby thereafter, by which time the defender had incurred substantial
expenses, to a sum in excess of £25,000 in setting up and fitting out the
business, had engaged staff, and was already carrying out transactions on
behalf of numerous clients.
The defender goes on to aver that, if his
primary defence based on the provisions of the 1976 Act, as they relate to what
he maintains was ‘the agreement’, is ill-founded, the provisions in the service
agreement on which the pursuers rely
constitute a restraint on the defender
which is greater than that which is necessary for the protection of the pursuers’
interests.
Finally, the defender avers that, as a
result of the lack of response to his letter of December 30 1987 intimating his
intention to commence business as an estate agent, he has suffered certain
losses.
In the debate before me which, if I may
say so, was conducted with commendable expedition and admirable lucidity on
both sides of the bar, it very soon became apparent that the critical question
for my decision was whether the two agreements — the sales agreement on the one
hand and the service agreement on the other hand — fell to be regarded as one
agreement, both parts of which were registrable and the latter of which was not
severable from the former. If that were so, as neither had been registered, Mr
Brailsford readily accepted that neither action would have any foundation and
that both of the actions would have to be dismissed.
Counsel for the pursuers, in moving me to
pronounce interdict ad interim in terms of the conclusion in both
actions, submitted that there were three main issues to be considered. The
first was whether the service agreements were integral parts of the sales
agreement so as to form one agreement. The second was whether, if the service
agreements were integral parts of the sales agreement, they were registrable. As
the service agreements had not been registered, were they void and
unenforceable or, albeit they were integral parts of the sales agreement, were
they severable from it? The third was
whether if the service agreements were severable from the sales agreement, the
restrictions imposed by them were reasonable in the sense of being requisite
for the legitimate protection of the pursuers’ business interests. Counsel for
the defender agreed that these were the main issues for consideration.
Were the service agreements integral
parts of the sales agreement and, as such, did they require to be registered by
virtue of the provisions of the Restrictive Trade Practices Act 1976?
Before this question can be answered it
is necessary to look at certain of the provisions of the sales agreement. As I
have already said, that was an agreement which bore to be between three
parties, the vendors, the firm, and the purchasers. Clause 2 of the sales
agreement is headed ‘The Conditions and Pre-completion Matters’. Counsel for the
pursuers accepted that there were a number of conditions which required to be
purified before the sales agreement could be regarded as having been concluded
and, in particular, those contained in clauses 5(G), 5(H) and 5(I). These
provisions were:
(G)
The Purchaser shall hold an Extraordinary General Meeting at short
notice to approve (if necessary) the terms of the Vendors’ contracts of
employment under section 319 of the Companies Act 1985 and shall hold a meeting
of its Board of Directors and shall procure that each of the Vendors is
appointed as a Director of the Purchaser.
(H)
Each of the Vendors shall deliver or cause to be delivered to the
Purchaser a newly executed contract of employment with the Purchaser in the
approved terms (save as regards the name of the employing company which shall
be the Purchaser or its Assignee in accordance with clause 16, and save as
otherwise agreed).
(I)
The Purchaser shall procure that the contracts of employment in the
Approved Terms (unless otherwise agreed) are executed on its behalf or, if this
agreement has been assigned in accordance with clause 16, on behalf of such
Assignee.
Counsel accepted that all these
conditions had been complied with and that the purchasers had assigned their
interest in the agreement to the pursuers. The contract had been completed by
January 5 1987, all requisite conditions having by that time been purified, and
by that date the defender in each action had become a director of the pursuers.
It is important to keep in mind, when considering the present issue, that not
only was it necessary for the defenders to have been appointed directors of the
pursuers (as assignees of the purchaser) for the sales agreement to be
concluded, but it was also necessary for them to have executed service agreements
in the approved terms with the pursuers.
Restrictive covenants were incorporated
into the sales agreement by clause 14, which put certain restraints on the
defenders, but, as it was conceded by the pursuers’ counsel that the sales
agreement which had not been registered was a registrable agreement under the
Act of 1976, these covenants were not founded on in either of these actions.
The service
agreement provides by clause 14, which is headed ‘Confidentiality’, that the
director shall not disclose any trade secrets or confidential information to
any person and that on termination of his employment he will surrender notes
and other
non-competition’, provides, in the simple English proffered by Mr Brailsford,
(1) that the director is prevented from seeking orders from anyone who has
dealt with the pursuers in the 12 months before the director left the pursuers’
employment or from offering employment to anyone who at any time during the two
years prior thereto had been employed by the pursuers, and (2) that the
director is prevented from operating a business of the same sort as that
operated by the pursuers within five miles of any office occupied by the
pursuers. The service agreement with Sandra Adams was, broadly speaking, in
similar terms.
After referring to the terms of the sales
agreement and the terms of the service agreement, so far as relevant for
present purposes, counsel proceeded to look at the provisions of the 1976 Act.
Before considering them in any detail, he accepted that the business of estate
agents was a ‘service’ covered by that Act, and regulations 2(1) and (3) made
thereunder by the Restrictive Trade Practices Service Order 1976 (SI 1976, no
98). Counsel also accepted that both the sales agreement and the service
agreements were agreements to which section 1(a) of the 1976 Act applied
as being restrictive agreements as to services. The provisions of section 11 of
the 1976 Act were therefore applicable, unless the service agreements could be
exempted from the provisions of that Act.
Counsel then went on to advance reasons
why the service agreements should be regarded as separate contracts which stood
on their own and which were not caught by the provisions of the 1976 Act.
First, counsel submitted that the Act applied only to contracts in which two or
more persons accepted restrictions. He founded upon section 11(1)(a) and
(1)(b) of the Act. These provisions are:
11-(1)
The Secretary of State may by statutory instrument make an order in
respect of a class of services described in the order (in this Act referred to,
in relation to an order under this section, as ‘services brought under control
by the order’) and direct by the order that this Act should apply to agreements
(whenever made) which —
(a) are agreements between two or more persons
carrying on business within the United Kingdom in the supply of services
brought under control by the order, or between two or more such persons
together with one or more other parties; and
(b) are agreements under which restrictions, in
respect of matters specified in the order for the purposes of this paragraph,
are accepted by two or more parties.
Counsel submitted that the only persons
who had accepted restrictions in their service agreements were Mr and Mrs
Adams. They did not constitute two or more persons as required by the said
provisions of the 1976 Act. These service agreements in any event were not
between the same persons as the parties to the sales agreement and were
therefore not part of it. It is quite correct to say that the service
agreements and the sales agreement were not between the same parties, but
completion of the latter was dependent, inter alia, on completion of the
service agreements in terms of clause 5(H) of the sales agreement. The one
could not be effective without the other, nor could the other without the one.
In my opinion, that first submission made by counsel for the pursuers is not
well founded and has to be rejected.
Were the service agreements registered as
integral parts of the sales agreement?
On the assumption that his first
submission was not well founded and that the service agreements were part of an
overall agreement, counsel went on to submit that the partners and the firm
fell to be treated as a single person. He referred to section 43(2) of the 1976
Act, which provides, inter alia, that:
any two or more individuals carrying on
business in partnership with each other, shall be treated as a single person
On that approach the restrictions in the
service contracts had been accepted by only one body, namely the firm, and,
therefore, the requirements of section 11 of the Act had not been met. Counsel
realised that this submission was contrary to a decision in England, namely Registrar
of Restrictive Trading Agreements v Schweppes Ltd [1971] 1 WLR 1148,
and he very properly referred me to the opinion of Stamp J (as he then was) in
that case. That case was concerned with the supply of goods, as opposed to
services, and the exempting provisions of the Restrictive Trade Practices Act
1956 in connection therewith. The facts of the case were extensive and somewhat
complicated, but they did raise the question of when, if ever, two or more
persons fell to be treated as a single person, in that case two interconnected
bodies corporate. On pp 1168 and 1169 Stamp J gives reasons why he considers
the provisions are related to the counting of heads and not treating the
persons to whom it relates as one and the same person. In course of his opinion
Stamp J said:
It is apparent that the process of
identification of a subsidiary with its parent company, and vice versa would,
in such cases, introduce insoluble problems, and if there is a fair
construction of section 6(8) and section 8(9) which avoid such a result, it
must be adopted.
Counsel sought to distinguish that case
from this one on the ground that this case was concerned with a firm and the
partners thereof and not with two interconnected corporate bodies.
Counsel for the defender, however,
pointed out that section 43(2) is dealing with two or more individuals who are
carrying on business in partnership. These two individuals fall to be treated
as one person, but not as the same person as the firm of which they are
partners. The firm is a separate persona (see section 4(2) of the Partnership
Act 1890)*. The Act does not say that two or more individuals carrying on
business in partnership, and the firm itself shall be treated as one person for
the purpose of the exempting provisions of the 1976 Act. I agree with these
submissions made on behalf of the defender and with the opinion of Stamp J in
the Schweppes case. It follows that, in my opinion, the service
agreements, as well as the sales agreement, were registrable as agreements to
which the provisions of section 11 of the 1976 Act applied.
*Editor’s note: In Scotland a firm is a
legal person distinct from the partners of whom it is composed.
The third point made by counsel for the
pursuers, on the assumption that his first two points were rejected as unsound,
was that on completion of the agreement on January 5, that is to say the
agreement which comprised the sales agreement and the service agreements, the
firm, as in the agreement, ceased to exist. That submission, however, was
factually incorrect. As a result of the assignation the firm became the
pursuers and continued to exist.
The last point made by counsel for the
pursuers was made on the assumption that all the pursuers’ submissions so far
made had been rejected. As a last resort he prayed in aid the provisions of
section 18(1) and (6) of the 1976 Act. Section 18(6) provides that for the
purpose of determining whether an agreement is one to which the Act applies no
account shall be taken of any restriction which affects or relates to any of
the matters mentioned in section 9(6). Section 9(6) provides, inter alia,
that, in determining whether an agreement is covered by the 1976 Act:
No account shall be taken of any
restriction . . . which affects or otherwise relates to the workers to be
employed or not employed by any person, or as to the remuneration, conditions
of employment, hours of work, or working conditions of such workers
Counsel submitted that the restrictions
in the service agreements were clearly restrictions relating to the terms and
conditions of the defender’s employment with the pursuers, and were therefore
not restrictions which required to be registered under the 1976 Act. Counsel
pointed to the fact that the term ‘worker’ in section 18(6), namely, a person
who had entered into a contract of service with an employer, was just what the
defender had done. In my opinion, these provisions are not apt to cover persons
such as the defender who was a director of the pursuers and who had a service
agreement with them as such. The restrictions of the service agreement do not
relate to the type of worker to be employed, or not employed, by the pursuers,
nor do they relate to the remuneration, conditions of employment, hours of work
or working conditions of the defender. The restrictions relate to a period when
the defender had ceased to be in the pursuers’ employment, except for the first
or the restrictions which required him to surrender certain documents during
the course of his employment.
None of these submissions persuade me
that the restrictions in the service agreements can be exempted from the
provisions of the 1976 Act. I am clearly of opinion that there was one overall
agreement which comprised the sales agreement and the service agreements and
that there was, therefore, an agreement between two or more persons carrying on
business in the United Kingdom for the supply of services which required to be
registered by virtue of the provisions of section 11 of the 1976 Act. The
agreement was not registered in any of its parts and, accordingly, by virtue of
the provisions of section 35 of the Act the restrictive provisions in the
service agreements are void and unenforceable.
If I am correct in that conclusion the
interdict sought must be refused. However, if I am wrong, the question of the
reasonableness
common law and certain submissions where made in connection therewith. If I
were to hold that these restrictions, prima facie, were no greater than
were necessary for the protection of the legitimate interests of the pursuers,
then the question as to whether any of the interdicts sought should be granted
would be affected by my opinion as to the balance of convenience.
Mr Brailsford submitted that the
restrictions contained in both service agreements were reasonable. Mr and Mrs
Adams were experienced in the business of estate agency and, while employed by
the pursuers, had acquired detailed knowledge of the way the pursuers ran their
business. The restrictions imposed on the defender had three aspects. The last
concerned the alleged use of the AC Negotiator System Computer. Counsel said that
this was the least important and that he would not be unhappy if interdict in
terms of the third conclusion was refused. Having seen certain documents lodged
on behalf of the defender, he was prepared to accept that the alleged use or
knowledge of the AC Negotiator System was probably ill-founded. I think this
was a prudent approach to that aspect of the case. So far as the interdict
sought under the second conclusion is conerned, counsel for the defender
intimated that, if it were thought necessary, he would undertake on behalf of
both defenders not to offer employment to any current employee of the pursuers.
Counsel for the pursuers intimated that in light of that undertaking he would
not press for interdict in the terms of the second conclusion.
So far as the interdict sought under the
first conclusion was concerned, counsel for the pursuers maintained that it was
reasonable. The Adams had £800,000 for the sale of the business — a not
inconsiderable sum. They had acquired a detailed knowledge during their time
with the pursuers of the way the pursuers conducted their business and how they
organised it. Gordon Adams was involved in the whole activities of the pursuers
as marketing director, and while Mrs Adams had no contract with the pursuers’
clients, she had experience of their accounts and knowledge of their personnel.
Counsel referred me to the case of Bluebell
Apparel Ltd v Dickinson 1978 SC 16. That case was concerned with the
alleged acquisition by the respondent of trade secrets possessed by the petitioners
in their manufacture of ‘jeans’. The respondent left the employment of the
petitioners after six months and intimated that he was going to take up
employment with their competitor who manufactured ‘Levi’ jeans. When the
respondent left the petitioners’ employment he was alleged to have been in
possession of certain ‘trade secrets’ unknown to the petitioners’ competitors.
In that case it was held that, as at the interim stage it had to be assumed
that the respondent was in possession of trade secrets which would be of value
to competitors of the petitioners, a restriction on him to prevent his
disclosing such secrets was not unreasonable. The interdict sought was world
wide, but, in the circumstances that, on the balance of convenience, was held
to be justified. In the course of delivering the opinion of the court the Lord
President said at p 29:
If, as we have held, the restriction is
not prima facie unreasonable, ought it to be enforced by interim
interdict? We have no doubt that it
should be, for the balance of convenience strongly favours that enforcement.
The risk of serious and, it may be, irreparable damage to the petitioners’
business and interests if no interim interdict is pronounced far outweighs the
consequences to the respondent for restoring the order which was recalled in
the Vacation Court.
In this case the only averments which
could be considered as relating to a trade secret are those in connection with
the AC Negotiator System. These averments have now been departed from for all
practical purposes. Nothing in the nature of a trade secret remains, and
accordingly the decision in the Bluebell case is of no assistance to the
pursuers.
It was suggested that if the restriction
sought under the first conclusion was considered to be too wide the court might
restrict it without remaking the contract between the parties. In support of
this suggestion I was referred to a decision of the Court of Appeal in England,
Littlewoods Organisation Ltd v Harris [1978] 1 All ER 1026. In
that case the Master of the Rolls, Lord Denning and Megaw LJ held that where a
contract was expressed in general terms which, without altering the words,
could be construed in a sense which was not unreasonably wide, the court would
construe the contract in that sense, and thereby render it enforceable. Brown
LJ dissented. The opinions of their lordships were delivered extempore. If I
may say so, with respect, the opinion of the Master of the Rolls is an example
of his gift for deciding that the law is as he thought it ought to be. The
decision is clearly at variance with the principle laid down in Dumbarton
Steam Ship Co Ltd v MacFarlane 1899 1F 993. That case related to an
interdict which sought to prevent a person carrying on the business of carrier
in any part of the UK. In course of his opinion at p 997, at the bottom on p
997 and to the top of p 998, Lord Trayner said:
The pursuers said they they would be
satisfied if the defender was interdicted from carrying on the business of
carrier between Glasgow and Dumbarton. But that was not contracted for. If the
restraint, as the parties themselves expressed it, is not valid, then I think it
must be disrgarded. The Court cannot remake the contract for the parties. On
this point I agree with the views expressed by Chitty J in the case of Baker*.
*Editor’s note: Baker v Hedgecock
(1888) 39 ChD 520.
That expresses the law of Scotland in
this context as it has stood for many years and, if Lord Trayner be correct in
his reference to the views expressed by Chitty J, the law of England as well.
The opinions of the majority in the case of Harris do not persuade me
that the law of Scotland should be altered. In my opinion, the interdict sought
under the first conclusion is unreasonably wide for the legitimate protection
of the pursuers’ business interests. It would prevent in effect the defender
and his wife, or either of them, from setting up business in any reasonably
well-inhabited part of Scotland. In addition to that, according to their
averments, the only place in which they would suffer loss were the defender to
set up business as an estate agent would be the Milngavie/Bearsden area of
Glasgow. They say they are suffering losses in that area. Counsel for the
pursuers, however, agreed with me that there was nothing whatsoever he could do
to prevent an established estate agency from setting up business anywhere near
the premises occupied by the pursuers’ firm in that or any other area. In these
circumstances, having regard to the fact that there is no special expertise, or
secret, which the defenders, or either of them, are alleged to have acquired as
a result of being employed as directors of the pursuers the very wide
restrictions sought under the first conclusion seem to me to be wholly
unreasonable.
Counsel for the pursuers founded on the
fact that the defenders had received a very substantial sum for the sale of
their business and that accordingly it was not unreasonable that they should be
prevented, certainly for a period, in competing with the pursuers as estate
agents and valuers. There is a certain amount of force in that submission, but
in my opinion it does not outweigh the width of the restrictions sought.
It will be apparent from what I have just
said that not only am I of opinion that the restrictions sought to be imposed
upon the defenders are no longer enforceable, they not having been registered
as required by the 1976 Act, but that I also consider that these restrictions,
in so far as they now remain before me, namely in so far as they affect the
defenders setting up business as estate agents in Scotland, are unreasonably wide
and more than is necessary for the legitimate protection of the pursuers’
business.
The only remaining matter to be
considered, if it were to be held that I was wrong so far in the views I have
expressed, is the balance of convenience. That matter is primarily affected, in
my opinion, by the fact that, despite intimation at the end of December by the
defenders that they were about to start up business in the Milngavie/Bearsden
area of Glasgow as estate agents, no action was taken by the pursuers until eight
weeks had elapsed and the defenders had started to organise a business and
incurred some not inconsiderable expense in doing so. No really satisfactory
reason was offered as to why, if it was important to them, immediate steps to
prevent the defenders from setting up business in Glasgow were not taken until
a significant period had elapsed; a period during which the pursuers might well
have appreciated that the defenders were incurring expense and making contacts
with clients both actual and potential. In my opinion, having regard
particularly to that matter and the obvious expenses which the defenders have
incurred, I would have held, had the matter been a live one for me, that the
balance of convenience would have been in favour of refusing interdict ad
interim on any of the grounds sought.
For all of the reasons which I have
endeavoured to express it follows that, in my opinion, the interim interdicts
in terms of all the conclusions fall to be refused.
