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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> X-R Touring LLP v Javor & Anor [2025] EWCA Civ 497 (17 April 2025) URL: https://www.bailii.org/ew/cases/EWCA/Civ/2025/497.html Cite as: [2025] EWCA Civ 497 |
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ON APPEAL FROM THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
THE HON MR JUSTICE KERR
Strand, London, WC2A 2LL |
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B e f o r e :
LORD JUSTICE MOYLAN
and
LORD JUSTICE PHILLIPS
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| X-R TOURING LLP |
Appellant |
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| - and – |
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| (1) JOSHUA JAVOR (2) WILLIAM MORRIS ENDEAVOR ENTERTAINMENT U.K. LIMITED |
Respondents |
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David Reade KC (instructed by Marriott Harrison LLP) for the First Respondent
Adam Solomon KC (instructed by Morgan, Lewis and Bockius UK LLP) for the Second Respondent
Hearing date: 06 March 2025
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Crown Copyright ©
Lord Justice Bean:
"5. X-R was incorporated in 2005. Among the founding members was the late Mr Stephen Strange, a legend in the industry. X-R's business is to organise and schedule concerts in many countries at which artists perform; and to negotiate and agree the terms on which they will perform, customarily though not always in return for a percentage of the artist's gross earnings from the performance.
6. Mr Javor joined X-R in 2008 as an employee and booking agent, working as part of Mr Strange's team. By the time Mr Strange died in September 2021, Mr Javor had become his leading team member and is described by Mr Ian Huffam of X-R as Mr Strange's "trusted right hand man". Mr Javor took over Mr Strange's roster of illustrious artists, including many well known names.
7. X-R's case, assumed for present purposes to be correct, is that the lead time for arranging a performance can be long; many concerts are negotiated, arranged and booked months, sometimes years, in advance of the performance. X-R's case is that Mr Javor was involved in discussions in 2022 and 2023 with concert promoters and client artists about performances that subsequently took place, or were scheduled to take place, after he left X-R to work for WME.
8. From 1 April 2022 Mr Javor entered into an employment contract with X-R. Although it is dated "May 2022" and he did not sign it until 29 June 2022, it is common ground that it took effect from 1 April 2022 which is the start date mentioned in clause 1, with continuity of employment since January 2008. He was employed, as before, as a booking agent securing bookings for X-R's artists and negotiating with promoters the terms on which the artists would perform.
9. Clause 1 provided for a fixed term of almost one year's employment up to 30 March 2023, unless extended by agreement, or unless the contract were terminated earlier. X-R could terminate on three calendar months' notice, or immediately on payment of three calendar months' pay in lieu of notice, within the one year term; or, at X-R's option, with part or all of the three month period spent on garden leave and/or working from home or performing different duties from the usual ones.
10. Mr Javor's "basic salary" was, by clause 4, £350,000 per annum, payable in monthly instalments. That sum was described as his "basic" salary but he was not entitled to any further remuneration such as bonus or commission. He was, straightforwardly, employed on a fixed salary.
…
12. Mr Javor then worked for X-R under his contract through the rest of 2022. In January 2023, he was considering alternative career options, including joining WME, as he told Ms Lucy Dickins, a California based manager of WME (or its US parent), at the time. He showed Ms Dickins the salient parts of his employment contract, including the termination provisions and the post-termination obligations (respectively, clauses 1 and 13).
13. Ms Dickins' evidence is that WME took legal advice on clause 13 and, without waiving privilege in respect of the advice received, she and WME's chief operating officer, Mr Dan Limerick, formed the view on the basis of that advice that the commission provision was unenforceable. On the other hand, she considered that the non-solicitation covenant "should be adhered to by [Mr Javor]" (see paragraphs 10 and 11 of her witness statement).
14. On 3 March 2023, Mr Matt Woolliscroft, a promoter of proposed concerts by Coldplay (a major client of X-R) at Wembley in August 2025, emailed Mr Javor about the proposed string of dates and possible clashes with international football fixtures. A decision from the Football Association would be sought by September 2023, Mr Woolliscroft explained. Mr Javor was then, of course, still employed by X-R, but the one year term was due to expire at the end of March 2023.
15. After it did expire, on 16 May 2023 Mr Javor informed the directors of X-R verbally that he had decided to leave X-R. The next day, he confirmed that in an email saying it should be considered his "notice of resignation". He noted in the email that his employment contract had "expired on 30 March 2023" but he had "continued to work beyond that date on the basis that we were negotiating new terms, but those discussions have been unsuccessful". His employment would, he said in the email, "terminate on 31 May 2023".
16. … Mr Javor signed a detailed written contract with WME, of which I have a heavily redacted copy. The start date or proposed start date, if there was one, is redacted out (clause 1.2). It is not clear from the document what country's or state's law governs it; though I was told at the hearing there is a redacted out choice of law clause stating that the governing law is that of England and Wales. The inference is that Mr Javor would start at WME once he had extricated himself from X-R."
17. As early as 19 May 2023, solicitors' correspondence between X-R and Mr Javor started. X-R were clearly highly suspicious of Mr Javor's activities and sceptical about his continuing loyalty to X-R. It is clear from the correspondence that X-R already believed Mr Javor's allegiance lay elsewhere. An injunction application against him was threatened and undertakings sought. The barrage of correspondence continued unabated for months thereafter but without any application for an injunction being made.
18. On 31 May 2023, Mr Javor's solicitors stated in a letter that to be helpful, he was willing to extend his employment until 14 June. After that, it was extended for further short periods week by week in June 2023, though Mr Javor (not on garden leave) did not attend X-R's offices between 16 May and 11 July 2023. During that absence from his place of work, Mr Javor and at least one of his X-R team provided on 22 June 2023 an update to Coldplay's manager about the August 2025 Wembley dates, together with the "rate card" for the venue of £700k per night.
19. On 12 July 2023, X-R's solicitors noted in a letter Mr Javor's reappearance at the office. They accepted that he would work out his notice and that his last day of employment would be 17 August 2023. The tense correspondence continued; undertakings were refused and Mr Javor's solicitors said in a letter of 19 July 2023 that he "does not agree to be gagged" and if "asked a straightforward question about his future plans, our client is entitled to say that he is leaving [X-R] and that he intends to join WME at a later date".
20. On 20 July 2023, Coldplay's management announced concert dates in 2024 and "holding" dates in 2025. X-R's Mr Huffam formed the view that Mr Javor had been in discussions with Coldplay about concert dates intended to be performed after Mr Javor's departure from X-R; as well as similar discussions about concerts in other countries, namely Hong Kong, Japan, South Korea, Mexico, Spain and Brazil. In his view, as he explained in his witness statement, these concerts were "precisely what clause 13 is intended to capture".
21. On 11 August 2023, with a week of his employment left, his solicitors refused to provide information about his client contacts. His solicitors wrote that he "will not be providing a running commentary regarding the clients he had, or did not have, material or personal contact with during the last 12 months". The solicitors assured X-R that he "will abide by the terms of the non-solicitation restrictive covenant in the first sentence of clause 13 of his employment contract".
22. Next, Ms Dickins explains in her witness statement that "[a]round 14 August 2023" (a Monday), WME released a press statement to certain media outlets regarding Mr Javor joining WME. It is common ground that this would be a matter of interest in industry circles. The day before the statement was released to the media, Mr Javor received another email of 15 August from Coldplay's manager about financial terms for the Coldplay shows and in particular the commission payable.
23. The press statement was in fact dated 16 August 2023, the penultimate day of Mr Javor's employment with X-R, and marked "London, UK". In it, WME announced that he "has joined the agency's London office as Partner and co-head of London's music department". In his 17 years with X-R Mr Javor had "guided the careers of a diverse range of artists". They were then named, with Coldplay first on the list, followed by Eminem. There were 32 named artists. Mr Javor had, according to a quote attributed to Ms Dickins:
"not only built a roster of artists that shape music, he's also been an integral part of building the international touring industry as we know it today".
24. Mr Javor was then himself quoted as saying:
"Steve Strange and I built an incredible business at X-Ray over the last 18 years through teamwork and passion for our artists … I'm excited to start this next chapter at WME and to continue this legacy with the team in London and across the world."
The statement ended with a list of WME's roster of artists, client highlights and achievements.
25. Mr Javor's last day of employment with X-R was 17 August 2023….
26. Mr Javor began working for WME the next day, 18 August 2023."
Evidence of Mr Javor's relationship with artists
"Of particular importance was clause 13 in the Employment Contract. Whilst we did not anticipate a situation where Josh, if he left, would dispute our entitlement to our commission on work that had been, to use the words of clause 13, "discussed, scheduled, made or contemplated", the language clarified what we expected in the event that this occurred and what Josh knew (and agreed) was the default position.
As I have explained, the planning and arranging of a concert, a tour or a music festival appearance by an artist can take months and sometimes more than two years in a 'post covid' world – for example, I first started working in 2020 on Blur's appearance at Wembley Stadium in July 2023, their first major UK show in many years. Naturally therefore, we wanted to be paid commission on all income streams that were the product of Josh's work. So, that could be definite concert bookings in the diary prior to his departure or, at the other end of the scale, commission that is the product of a first idea for a tour put together before Josh left. This was important because in the case of some artists when an international tour is being arranged, it is the first contemplation of the tour that is the real trigger for it. Relevant questions they will ask include: whether the artist can perform (given their personal/family/other work commitments); what time they want/need to spend writing and recording new material; whether the artist wants to perform, in the sense that he/she/they have anything to promote; whether the artist wants to travel, which can involve relevant tax considerations (where sometimes artists take what is known as a "year out" i.e. they stay outside the territory where they are tax domiciled for financial reasons); and whether they just have other reasons that dictate when they may or may not want to tour. These are all the types of questions that need to be asked. There are multiple initial considerations before the idea for a tour or a concert gets the greenlight which in turn puts the rest of the process into motion and which in due course leads to the artist stepping foot on stage. These first questions are critical, so if a tour or show was being contemplated before Josh left, X-Ray wanted and expected to be able to commission it if it came to fruition. I believe this would generally be viewed as industry standard.
Indeed, as it has transpired, before Josh left X-Ray one of Steve's acts that has followed Josh to the Second Defendant ("WME"), Coldplay, announced (on 20 July 2023) a series of what I would expect to be financially lucrative concerts in 2024. Since Josh left we have also discovered that Coldplay is "holding" ten dates at Wembley Stadium in 2025 as well as numerous additional 2025 concerts (see the schedule dated 4 May 2023)
The 2025 Wembley Stadium concerts were, in my view, clearly therefore being discussed before Josh left X-Ray in August 2023 (unsurprising to me because big venues like Wembley Stadium need to be secured early on given that demand is high and the Stadium only has a certain number of dates it can offer each year when it is available for music events). Further, the evidence now is that Josh was involved in the discussions about 2025 concerts in Hong Kong, Japan, South Korea, Mexico, Spain and Brazil, none of which have yet been announced but which, if performed, fall within clause 13. All these 2025 concerts were precisely what clause 13 is intended to capture; they reflect how far in advance is required to bring a concert from contemplation to performance and all the work that goes on in the intervening period."
Clause 13 of Mr Javor's contract with X-R
"You shall not during your period of employment or for a period of 12 months from the date of termination (howsoever termination occurs) endeavour to entice away from the Company or solicit or interfere with any employee, client, artist, person, firm or company who was at any time during the 12 months immediately preceding the termination date engaged by, doing business with or was a client / artist of the Company and with whom you had material or personal contact during the 12 months immediately preceding the termination date. You shall not interfere or seek to interfere with the continuance of the supply (or the terms of such supply) of services to or by the Company from any business or customer who was at the date of termination of your employment providing or supplying material business services to the Company. All commission and other monies related to bookings or potential bookings discussed, scheduled, made or contemplated (whether or not actually contracted) or to be made prior to the date of termination of your employment (whether or not such bookings are to take place after the end of your employment with the Company), shall belong to the Company, and if any such commission or other monies are received by you or any other person or entity associated with you (including any future employer) you undertake to hold such monies on trust for us, and pay to us immediately all such monies without deduction or set off. You shall ensure that all such bookings are contracted via the Company and that the Company shall be entitled to receive 100% of all applicable commission(s) payable in respect of such bookings." [emphasis added]
"75. The issues I have to decide are: whether there is any realistic prospect that the commission provision could at a trial be upheld as valid and enforceable; and if so, whether there is any prospect of X-R obtaining a declaration to that effect, the only remedy now sought. No allegation is made that WME induced Mr Javor to breach the commission provision. At this stage I must consider whether it is subject to the restraint of trade doctrine and, if so, whether it goes beyond what is necessary to protect any legitimate business interest of X-R."
"3. The applicable principles are familiar to the parties and the court. The rules in play are CPR rule 3.4 and rule 24.2. The court can strike out a claim or part of it if it appears that the statement of case or part discloses no reasonable grounds for bringing the claim (rule 3.4(2)(a)). The correct approach in summary judgment applications may be found in authorities such as Easyair Ltd v. Opal Telecom [2009] EWHC 339 (Ch) per Lewison J (as he then was) at [15]. There must be grounds for bringing a claim. Its prospects must be more than fanciful.
4. I must not conduct a mini-trial. I can look at uncontradicted accounts and documents. Generally, I take the facts and the law at their highest in the claimant's favour, except for any facts that are implausible even without further investigation. If a decisive short point of law or construction is suitable for summary determination, I should grasp the nettle and decide it. But if disclosure or testimony is needed to decide a point, there should be a trial on that point. I should take into account not just current evidence but also evidence that can reasonably be expected to be available at trial."
The judge's reasoning and conclusions
"91. Before considering the restraint of trade doctrine in the context of this provision, I find it helpful to remind myself of the factual context. Mr Javor was paid a fixed salary by X-R. He did not receive any remuneration in the form of a bonus or commission. The present case is therefore different factually from cases such as Marshall v. NM Financial Management Ltd and Steel v. Spencer Road LLP. In those cases (and probably also in Stenhouse Australia Ltd v. Phillips), the departing employee's remuneration included commission or bonus; not so here.
92. It is X-R, not Mr Javor, that receives payment in the form of commission. Indeed, receipt of commission from its clients is how it makes its living. Where a booking is made, payment of a commission is made by the client, artist, promoter etc (whom I will call the counterparty) directly to X-R. That payment is not made by or to the booking agent, a person such as Mr Javor, who has secured the booking. As I have said, his reward for his service is his salary.
93. To ensure that the counterparty pays the right person (X-R) where an X-R booking is secured by Mr Javor while still employed by X-R, X-R could in principle require the counterparty to enter into a contractual obligation to pay the due commission payment only direct to X-R and not via any third party such as Mr Javor. If the counterparty then paid the wrong person, X-R could sue the counterparty (and/or perhaps secure restitution from the payee).
94. If the booking is for a concert performance that takes place before Mr Javor leaves X-R, the case should be a simple one. X-R receives its commission direct from the counterparty and Mr Javor receives his salary. If the booking is secured by Mr Javor before leaving X-R's employment but the concert performance takes place after his departure, X-R can still insist, in principle, on a contractual obligation by the counterparty to pay X-R direct and not via any third party.
95. Whether that has actually occurred in this case is not clear from the evidence. The terms on which a booking is secured may vary, depending on the relationship with the counterparty. The evidence does not suggest X-R contracted on standard terms. It is a matter for negotiation between X-R (perhaps acting through Mr Javor where he was the booking agent before he left X-R) and the counterparty whether his departure from X-R would affect the counterparty's obligations to X-R under the booking contract.
96. Pausing there, if X-R had a direct contractual right to a commission payment and Mr Javor wrongfully persuaded the counterparty to pay him or WME instead, then he (and perhaps WME) would be inducing the counterparty to break its contract with X-R and, other things being equal, he and/or WME would be liable to X-R for inducing breach of the booking contract in addition to the counterparty being liable for breach of the booking contract.
97. I mention these scenarios because it is striking that none of them involves invoking any post-termination restraint. They are examples of how the law of contract and tort could affect relations between X-R, its counterparties and the departing Mr Javor, irrespective of any post-termination restraint. It is only if X-R fails to secure appropriate contractual rights directly against its counterparty that X-R may need to have recourse to a post-termination restraint imposed on Mr Javor.
98. The first possibly relevant post-termination restraint would be the non-solicitation covenant. I have already considered that. A second could be a non-dealing clause, if there were such a clause in Mr Javor's employment contract; but there is not. A third could be a temporary prohibition against working for a competitor. Again, there is not one. Fourthly, the commission provision could come into play. It is against the background I have just outlined that I turn now to consider it.
99. The first question is whether the commission provision operates in restraint of trade. In my judgment, it clearly does and there is no realistic prospect of X-R persuading a judge otherwise at trial. I accept the submissions of Mr Reade and Mr Solomon that the provision, by its terms, operates as a strong disincentive to Mr Javor to work for any employer that has any clients in common with X-R.
100. He would have to account to X-R for commission received by him or a person associated with him including a current employer such as WME, even if his discussions with the client before termination were tentative, vague and inconclusive and did not lead to a booking; and even if he were not involved in and not even aware of the subsequent booking of the same artist by the relevant person. The obligation to "ensure that all such bookings are contracted via [X-R]" is absolute and unworkable.
101. I do not accept Mr Croxford's submission that the commission provision clarifies the legal position of Mr Javor as similar to that of a fiduciary as regards bookings discussed by him prior to his departure. The contractual structure I have outlined above does not leave any room for further obligations such as that of a fiduciary. The parties' respective obligations are a matter of contract and negotiated contract terms. Nor is there any legitimate analogy with the bonus clawback provisions considered by Bacon J in Steel v. Spencer Road LLP.
102. By the same reasoning, I accept the submissions of the defendants that it is obvious the restraint is unreasonably wide and that a trial is not needed to reach that conclusion. The commission provision is not time limited and the lead times between discussions and concerts (and presumably payment) can be long, as Mr Huffam's evidence shows. If valid, the commission provision would make Mr Javor's job with WME not worth his while, even though he is not restrained from dealing with clients, artists etc of X-R (provided he does not solicit them).
103. X-R could have protected itself, within the bounds of reasonableness, by means of a non-dealing covenant. As the cases show, such a covenant often accompanies other post-termination restraints such as non-solicitation obligations or a time limited prohibition against working for a competitor. There is no such covenant here. The commission provision cannot be saved by reading it down, nor by severance. It is in my judgment clearly unenforceable, as was the clause at issue in Stenhouse Ltd.
104. There is no present claim before the court against WME for damages (or any other monetary remedy) for inducing breach of the commission provision. There is an imperfectly pleaded claim against WME asserting that it has induced Mr Javor to commit an anticipatory breach of the commission provision and that it holds or may hold monies on trust for X-R as a consequence. The only relief sought is a declaration that the commission provision is valid, a proposition I have rejected.
105. In my judgment, any claim against WME arising from the commission provision is doomed to fail. Even if the provision were valid, WME is not bound by it. WME's liability to X-R would have to rest on some principle of trust law, restitution, knowing assistance, or some other such cause of action. Unless the provision itself were enforceable, it is impossible to see how such a cause of action could be established. None that has any chance of success at trial is pleaded."
Grounds of appeal
(1) The judge misdirected himself to or misapplied the test for strike out / summary judgment.
(2) The judge wrongly decided that there is no real prospect of the trial judge finding that the commission provision does not operate in restraint of trade.
(3) The judge failed to consider whether there is a real prospect that the commission provision is not subject to the doctrine of restraint of trade.
(4) The judge failed to consider or identify [X-R's] legitimate business interests protected by the commission provision.
(5) The judge wrongly decided that there is no real prospect that any unreasonable parts of the commission provision could be severed.
(6) The judge wrongly decided that there is no real prospect that the commission provision severed insofar as necessary is no wider than reasonably necessary to protect [X-R's] legitimate business interests.
Discussion
"In deciding whether to exercise its power of summary disposal the Court must have regard to the overriding objective. The Court should be slow to deal with single issues in cases where there will need to be a full trial on liability involving evidence and cross-examination in any event and/or where summary disposal of the single issue may delay, because of appeals, the ultimate action."
On this basis, Mr Goulding submitted that the judge, having upheld the validity of the non-solicitation clause (or at least having declined to strike it out), ought to have summarily rejected the application to strike out the claim for commission.
"I draw together the relevant legal principles from the authorities (including most recently Peninsula) as follows:
i) The doctrine is not confined to immutable boundaries or rigid categorisation, but there are certain categories of covenants to which the doctrine traditionally applies, in particular those by which an employee undertakes not to compete with his employer after leaving the employer's service and those by which a trader who has sold his business agrees not thereafter to compete with the purchaser of the business. The doctrine has been held to apply to franchise agreements, share-purchase agreements and the assignment of a patent;
ii) There are no clear limits on the scope of the doctrine and no precise or exhaustive test can be stated. The doctrine is to be applied to factual situations with a broad and flexible rule of reason (see Esso (at 331G per Lord Wilberforce)). The question is whether or not in all the circumstances the contract should be excluded from the application of the doctrine or, as Lord Wilberforce put it in Esso (at 332G), whether it is appropriate to dispense the contract "from the necessity of justification under a public policy test of reasonableness";
iii) Contractual restraining provisions which are of a sort which have become part of the accepted machinery of a type of transaction which have generally been found acceptable and necessary – reflecting the accepted and normal currency of commercial or contractual conveyancing relations - will generally fall outside the scope of the doctrine (following the "trading society" test discussed above and approved in Peninsula Securities);
iv) Determining whether contractual restraints fall outside the range of a normal commercial contract imposing restrictions on a contracting party's ability to carry on a business activity is a question of evaluating all the relevant factors to be assessed cumulatively (see in particular PSM (at [99] per Arden LJ));
v) The assessment of application of the doctrine is to be carried out by reference to the position as at the time that the contract is made (not by reference to subsequent performance and events). How the contract turns out may be relevant only in so far as it furnishes evidence of the nature of the contract in question when made (see in particular Schroeder (at 1309 per Lord Reid); PSM (at [104] per Arden LJ and at [149] per Gross LJ));
vi) The application depends less on legal niceties or theoretical possibilities than on the practical effect of the restraint in hampering the freedom to trade (see in particular Esso (at 298A-B per Lord Reid)). It is a question of substance not form (see in particular Stenhouse (at 402G-H per Lord Wilberforce));
vii) The doctrine can apply to restraints operating during the currency of the contract, as well as post-contractually. However, the distinction between pre-and post-termination restraints is not without relevance. The fact that a restraint is limited to the period of the contract may be a factor in favour of excluding the doctrine (or a factor to be brought into account on the side of justification) …;
viii) As already set out above, where the doctrine applies, the contractual restraints are prima facie unenforceable but all, whether partial or total, are enforceable if reasonable."
"i) Whether or not, in practical terms, the restraints in the covenant amount to a restraint of trade;
ii) If so, whether or not the covenant should be excluded from the application of the doctrine. The question is whether or not (as a matter of public policy) it is appropriate to dispense the contract from the necessity of justification under a public policy test of reasonableness;
iii) If the doctrine is engaged, whether or not the covenant is reasonable by reference to the private interests of the parties and to the public interest."
"Whether a particular provision operates in restraint of trade is to be determined not by the form the stipulation wears, but, as the statement of the question itself shows, by its effect in practice………The clause in question here contains no direct covenant to abstain from any kind of competition or business, but the question to be answered is whether, in effect, it is likely to cause the employee to refuse business which otherwise he would take: or, looking at it in another way, whether the existence of this provision would diminish his prospects of employment. Judged by this test, their Lordships have no doubt that the clause operates in restraint of trade. First, it is to be noticed that the employee comes under obligation to pay or procure payment even if business is obtained without his knowledge. Secondly, the proportion which he is committed to pay or procure is 50% of the gross commission regardless of the size of the financial benefit obtained by him. Thirdly, the clause may operate for a period of five years and thereafter the obligation to pay may continue for a further five years. All of these provisions are far more than "profit-sharing" provisions, and contain in aggregate a substantial element of restraint of trade. Finally, it must be appreciated that Clause 5 is closely linked with Clause 6. Indeed if one reads them together the two clauses amount to a restriction, as stated in Clause 6, against acting as insurance broker for clients, unless payment is made according to Clause 5. This too shows that essentially Clause 5 forms part of provisions operating and intended to operate in restraint of trade. Once it is accepted that Clause 5 operates in restraint of trade, the conclusion follows inevitably that it does so unreasonably. This follows from the severity, as regards the employee, of the clause as already explained. Furthermore it is relevant that some protection has already been provided for the employer by the non-solicitation clause (Clause 4, as above). The presence of one restraint diminishes the need for others, or at least increases the burden of those who must justify those others. It cannot be said that provisions such as those in Clauses 5 and 6 are no more than is necessary for the employer's protection when he is already protected against solicitation."
The issues of reasonableness and severance
"Contrary to the false impression given by X-Ray, the Commission Provision is not limited to those of its clients with whom Mr Javor dealt during the course of his employment, unlike the solicitation clause which is so limited. ... therefore it purports to capture all bookings made or contemplated by employees or members of X-Ray. That is the case even if Mr Javor had no knowledge or any involvement in the same. That is of itself sufficient to render this clause unenforceably wide."
Lord Justice Moylan
"5. In the event that any client of Stenhouse shall within a period of five years from the said July 9, 1971 (and that whether or not such client is a client of one or more of the Stenhouse companies at the time) place insurance business whether or not business of a type presently transacted by Stenhouse for such client through the agency of Mr, Phillips or through any agency other than that of one of the Stenhouse companies referred to in clause 2 of this agreement so that Mr. Phillips or any person firm or corporation for whom Mr. Phillips is a principal or agent or by whom Mr. Phillips is employed and with whom he is associated or connected in any other way receives or becomes entitled to receive directly or indirectly any financial benefit from the placing of such business then Mr, Phillips agrees to pay or procure that there shall be paid to Stenhouse a one-half share of the commission received-in respect of such transaction…"
It was argued that this provision was "not in its terms a restraint of trade at all" (p.394 C). This was rejected and the Privy Council decided that it operated in restraint of trade. It can be seen, from the passage quoted above by Bean LJ, that this question was analysed solely by reference to the terms of the provision itself and not by reference to any evidence of other matters. The key aspects of the clause which made it in restraint of trade were: (i) that "the employee comes under obligation to pay or procure payment even if business is obtained without his knowledge"; (ii) "the proportion which he is committed to pay or procure is 50 per cent, of the gross commission regardless of the size of the financial benefit obtained by him"; (iii) "the clause may operate for a period of five years and thereafter the obligation to pay may continue for a further five years". This was far more than the suggested "profit-sharing" and were "in aggregate a substantial element of restraint of trade".
Lord Justice Phillips