Hamilton v Lethbridge [1912] HCA 20; (1912) 14 CLR 236 (6 May 1912)

This is an action brought by the plaintiff, the appellant, against the respondent, claiming an injunction to restrain a breach of covenants contained in articles of clerkship of 28th April 1905 by which the defendant, who was then a minor, bound himself to serve the plaintiff for five years as an articled clerk. The premium to be paid was 200 guineas, for which defendant's father executed a bond. The defendant's father also executed a covenant that on the admission of defendant as a solicitor he would not at any time thereafter practise as a solicitor at Toowoomba, where the plaintiff was then practising, or within 50 miles thereof, without his consent in writing, and that if defendant should be guilty of a breach of that obligation, the father should be liable to pay to the plaintiff, his executors, administrators, or assigns, the sum of £2,000, as liquidated damages, to be deemed and taken in full satisfaction and discharge of the covenant, and not in the nature of a penalty. The father further covenanted that immediately upon the defendant attaining 21 he would enter into a covenant with the plaintiff, his executors, administrators and assigns, similar to the covenant I have just stated, and by which, on breach of the covenant, he should be liable to pay as liquidated damages £2,000. On defendant's failure to enter into such covenant the plaintiff was to be at liberty to cancel the articles. There was also a further stipulation that the plaintiff should be at liberty, at any time during the term of five years "and without any compensation" either to the father or the son, to assign the articles to any solicitor of the Supreme Court practising in Toowoomba or elsewhere in Queensland. The defendant entered into the plaintiff's service at Toowoomba, and attained the age of 21 in August 1907. He did not execute the covenant stipulated for, and was not, indeed, asked to do so, and the plaintiff did not cancel the articles. The defendant continued his service. More than two years afterwards, on 2nd November 1909, at the defendant's request, the articles were assigned to plaintiff's son, who was also his partner. The defendant finished his service under the assignment, and on 7th June 1910 he was admitted as a solicitor. He practised elsewhere for a little while, and in June 1911 he began to practise in Toowoomba, where the plaintiff and his son were still practising in partnership. The learned Chief Justice under these circumstances granted an interim injunction until the hearing. On appeal the motion was treated as the hearing of the action, and the Court, by majority, Lukin J. dissenting, dismissed the action.

Two main points were raised for the defendant; first, that as he was a minor the contract contained in the articles was not binding upon him, not being a beneficial but a prejudicial contract, and that, at any rate, the covenant not to practise within 50 miles of Toowoomba was not binding upon him. The second point was that the restriction of the covenant is void as being unnecessarily large. These two points are quite distinct from one another, although they have been treated too much as if they were interwoven. The majority of the Court were of opinion, as I understand, that the contract as a whole was one not binding on an infant as not being for his benefit, and that that consideration practically concluded the case. As to any suggestion of ratification they thought that the defendant was prejudiced by the plaintiff could not exercising his power of cancellation, and that the plaintiff could not therefore set up any ratification. If I do them any injustice I am sorry, but that is what I understand to be the argument. With all respect, in the view I take of the law of the case, the validity or invalidity of the contract regarded as a contract made by an infant, is quite immaterial, as I shall endeavour to show. In the case of Bromley v. Smith[1] it is true that Channell J. seems to have assumed that an invalid contract made by an infant cannot be enforced against him after he becomes 21, notwithstanding ratification, but the learned Judge seems to have had some doubt about the grounds of his judgment, which was obviously right in the result. I do not think, for the reasons I shall give, that we are bound to follow that view.

From respect to the learned Judges from whom I am differing, I will briefly state the view I take of the law as applicable to this point. Some contracts made by an infant are said to be absolutely void, but that rule does not in general apply, as I understand it, to executory contracts still open to be performed on the attainment of majority. Other contracts by an infant are in general voidable only. It cannot be suggested that articles of apprenticeship or articles of clerkship are absolutely void, although there is high authority for saying that a covenant, although contained in articles of apprenticeship, is void and cannot be enforced against an infant after attaining 21 as was pointed out by Chitty J., in the case of De Francesco v. Barnum[2]. A contract made by an infant cannot be enforced against him during infancy unless it is held to be for his benefit. For the purpose of determining that question the whole of the contract must be looked into, and not a particular portion only. Clements v. London and N. W. Railway Co.[3] is sufficient authority for that proposition. When an infant comes of age he is free to affirm or disaffirm the contract as to anything remaining to be done under it. If he affirms it the question of it being for his benefit no longer arises. If he disaffirms it there is an end of the matter. He must do one thing or the other. The principal objections taken to this contract now in question, as showing that it was not for the benefit of the infant, were based on the covenant restricting the right of practice, and the provisions as to assignment of the articles. The first of these objections is based upon public policy. So far as regards public policy the point is just the same whether the covenantor is an infant or an adult. If the restriction is not against public policy and is not too wide for the protection of the master, the question would be whether on the whole it was for the benefit of the infant to enter into a contract in which such a stipulation regarded per se was reasonable. The question of minority is quite irrelevant. One point taken was that the restriction was unusual in Queensland. In my opinion, in the present circumstances of Queensland, in which the conditions are constantly changing with the growth and distribution of population, it is impossible to say that any stipulation in articles is usual or unusual. All that can be said is that in the still comparatively small number of cases that have occurred some stipulations have been used oftener than others, or rather that one has been more frequently adopted than others. It appears, indeed, that in fact a stipulation in the terms of this covenant has been by no means infrequent in Queensland. The amount of the premium cannot be, as suggested by the learned Judges, any test of the reasonableness of the restriction.

The stipulation as to assignment must be read reasonably. It cannot mean that the plaintiff was to have the power to sell the defendant's services against his will as a bond slave. That would be an unlawful and a void stipulation. When an agreement is made for doing some act which can be done lawfully without transgressing any rule of law, it will not be held void for illegality, but it will be assumed that the parties intended to do what they lawfully could do. The purpose of the stipulation is apparently three-fold: that plaintiff should be at liberty to assign without repayment of any part of the premium, without the consent of the father, and without losing the benefit of the father's covenant. That is all. The assignment of articles is a well-known incident of service, and has been for centuries. No argument, therefore, can be founded upon that.

I have said so much, not because I think these matters of any importance, but because the learned Judges seem to have given great weight to them. In truth, the question whether covenants in articles of clerkship can be enforced against a clerk after admission as a solicitor as being beneficial to him as an infant can never really arise unless in the highly improbable case of a clerk who elects on attaining his majority to avoid his articles altogether and enters into fresh articles for the whole term of service with another solicitor. When a case of that sort arises it will be time enough to express an opinion upon it. Possibly it would be held in such a case that he would not be bound.

The contract now in question as a whole is clearly not void, but at most voidable. When an infant by whom a voidable contract has been made comes of age he must, as I have already stated, elect whether he will affirm or disaffirm it. If he elect to disaffirm it, which in this case he did not do, he must do so within a reasonable time. In the case of Edwards v. Carter[4], Lord Watson says (at p. 366):—"The law gave this minor the privilege of repudiating the obligations which he had undertaken during his minority within a reasonable time after he came of age. It laid no obligation upon him—it merely conferred upon him a privilege of which he might or might not avail himself, as he chose. If he chooses to be inactive, his opportunity passes away; if he chooses to be active, the law comes to his assistance. In this case, my Lords, it appears to me that the period of four years and eight months which he permitted to elapse before he took any steps in the matter cannot possibly be regarded as a reasonable time." Lord Halsbury merely quoted and adopted the words of Lindley L.J., who said:—"Whether the defendant could have repudiated the deed in five or six or nine months after he came of age I do not care to discuss; but to ask us to hold that he repudiated within a reasonable time is to ask us to hold that which no reasonable man could think of holding." In this case after the defendant came of age he continued to serve under the articles for more than two years after the assignment. That, of itself amounts to ratification and adoption by the infant. I will read what was laid down in the case of Harris v. Wall[5]:—"Any act or declaration which recognises the existence of the promise as binding is a ratification of it, as, in the case of agency, anything which recognises as binding an act done by an agent, or by a party who has acted as agent, is an adoption of it. Any written instrument signed by the party, which in the case of adults would have amounted to the adoption of the act of a party acting as agent, will in the case of an infant who has attained his majority amount to a ratification."

As I said, the defendant continued in the plaintiff's service for more than two years after the assignment, and I should be disposed to hold, if it were necessary, on the authority of Cornwall v. Hawkins[6], that that in itself would be sufficient. But that is not all. In the deed of assignment, executed more than two years after the defendant came of age, it is recited that "by articles of clerkship dated the twenty-eighth day of April one thousand nine hundred and five the said Christopher Baron Lethbridge (of his own free will and with the assent of his father William Baron Lethbridge of Mitchell in the State of Queensland Clerk since deceased) did bind himself Clerk to the said Charles William Hamilton to serve him from the day of the date thereof for the term of five years thence next ensuing and subject to the covenants and conditions therein contained." By the same deed it was agreed that, notwithstanding the assignment, the father's covenant in the original articles that he should not practise in Toowoomba or within 50 miles thereof and that if he did he should be liable to pay £2,000 as liquidated damages, and further the covenant by the father that the son should enter into a covenant to that effect immediately on attaining 21, should remain in full force and effect as if the assignment had not been executed.

I do not know how a more clear and distinct ratification and adoption of the obligations contained in the original articles could be expressed. Alternatively it may be regarded, if necessary, as a new contract by the defendant himself. It is, indeed, both a new contract and a ratification of the old one. Further, the defendant applied to the Supreme Court for admission as a solicitor on the faith of these articles, and of his service under them, and put them forward as the basis and foundation of his right to admission. For these reasons I think the fact that he was a minor when the articles were originally executed is quite irrelevant, and that he is bound by the ratification of the original contract, from whatever point of view you look at it. The only question for determination, therefore, is whether the restriction in the covenant, regarding the contract as between persons sui juris, is too wide. The rule as to that may be taken to be as laid down by Chief Justice Tindall in Horner v. Graves[7] which was adopted in the case of Nordenfeldt v. Maxim Nordenfeldt Guns and Ammunition Company[8] by Lord Herschell L.C.: "We do not see how a better test can be applied to the question, whether reasonable or not, than by considering whether the restraint is such only as to afford a fair protection to the interests of the party in favour of whom it is given, and not so large as to interfere with the interests of the public. Whatever restraint is larger than the necessary protection of the party can be of no benefit to either; it can only be oppressive, and, if oppressive, it is, in the eye of the law, unreasonable." I do not think the restriction that the defendant should not practise within 50 miles of Toowoomba can be said to be obnoxious to public policy. I think from that point of view the observations of Lord Macnaghten, at p. 573, are very relevant. Referring to a case before Lord Langdale in which a solicitor sold his business covenanting not to practise in Great Britain and then began to practise again; his Lordship said: "His defence was that a covenant so wide was against public policy. But it did not occur to him to return the price: that he kept in his pocket. Lord Langdale thought the public would not greatly suffer if Mr. Howe withdrew for a time from the ranks of an honourable profession. I cannot think he was very wrong. It seems almost absurd to talk of public policy in connection with such a case. It is a public scandal, when the law is forced to uphold a dishonest act: would the public find suitable compensation in the privilege of employing an unprincipled lawyer practising in violation of his solemn engagement?"

The objection, therefore, that it is contrary to public policy, that is, in the words of Tindal C.J.: "that it is so large as to interfere with the interests of the public," fails. As to the question whether it is too large, as being larger than was necessary for the interests of the employer, regard must be had to all the circumstances of the case, the time, the place, and the conditions of the country. In this instance the area of Queensland from which the defendant is restricted from practising is a very small fraction of the whole. Many instances are reported in the books of similar restrictions which have been held good. A large number of them were mentioned in the very careful and able judgment of Lukin J. I think that no objection can be taken to the covenant on that ground. These are the two main points of the appeal, and upon these the defendant's case fails.

There were some minor points taken, to which I will briefly refer. First it is said the plaintiff has no right to sue, having assigned the covenant. Here we have a covenant subsisting between the defendant and the plaintiff, and unless the assignment can be construed as an accord and satisfaction and a discharge of that covenant by the substitution of a new covenant by the defendant with the assignee under the articles, the point fails. That is a matter of construction. Moreover, if the assignment had been to a solicitor also practising in Toowoomba, not connected with the plaintiff, I think it is quite clear the plaintiff could have sued as trustee for him, and might, indeed, have been bound to do so whether the assignee would or would not have been joined. The assignment, indeed, recites that what is agreed to be assigned is "all benefit and advantage to him the said Charles William Hamilton under or by virtue of the said recited articles for all the residue of the said term of five years;" and there is an express declaration that the father's covenant should be kept in force, so that it is clear that there was no intention that the plaintiff should be in any way discharged or released from the rights he had against the defendant.

Another point taken was that the stipulation about the £2,000 damages had the effect of depriving the plaintiff of any right that he might otherwise have had to an injunction. That point was discussed in the case of the National Provincial Bank of England v. Marshall[9]. In that case there was in the contract a covenant by the defendant who was in the employment of the plaintiff bank. He entered into a bond that if he should enter into a specified employment within a prescribed distance he should forfeit £1,000, and the contention was that was only a contract to pay £1,000, and that if he was willing to pay the £1,000 there was an end of it. But the Court held that the real nature of the transaction was an agreement between the parties that he should not enter into such employment, and the Court granted an injunction. In the plaintiff's case there is an express obligation not to practise.

The only other point I need mention was that as the plaintiff was entitled to cancel the articles and did not do so, he has in some way forfeited any right to insist on the obligation. I have great difficulty in following that argument. It is based on some sort of equitable estoppel, but equitable estoppel involves among other things that the position of the other party must be altered for the worse. It is impossible to suggest that the position of the defendant was in any way altered for the worse by the plaintiff not taking advantage of the stipulation that he might cancel the articles.

In my opinion, therefore, all the defences set up in this case fail, and, treating this, as we must, as a hearing of the suit, I think an injunction must be granted and made perpetual.

The first question is whether the defendant's covenant, considered as if made by him as an adult, is against the public interest as an unreasonable restraint of trade. The question was argued at some length for the plaintiff, and though the defendant's counsel did not discuss it with any vigour, I deem it right to consider it at some length in view of its general importance.

It is certain that, as Lord Herschell L.C. says in a case I shall presently cite[10]:—"In early times all agreements in restraint of trade, whether general or restricted to a particular area, would probably have been held bad; but a distinction came to be taken between covenants in general restraint of trade and those where the restraint was only partial." He quotes inter alia the statement of Willes C.J. in the case of Master &c. of Gunmakers v. Fell[11], that to the general rule "that all restraints of trade, which the law so much favours, if nothing more appear, are bad, ... there are some exceptions, as, first, if the restraint be only particular in respect to the time or place, and there be a good consideration given to the person restrained." The weight of modern authority, however, shows that the test to be applied in determining whether a covenant, be it general or limited, is void as an unreasonable restraint, is, as stated in the judgment of the Court of Exchequer in Mallan v. May[12], "whether it be prejudicial or not to the public interest; for it is on grounds of public policy alone that these contracts are supported or avoided." Apparently the Court regarded the question, whether a covenant is wider than is necessary for the protection of the trade of the covenantee, as a question involving the public interest, since that interest requires that none of its members should be restricted in earning their living to a greater extent than is reasonably necessary for the protection of others with whom they choose to contract. It would appear from the same judgment that, to support a partial restraint at any rate, it was enough to show that it was consistent with public convenience and the general interest, the validity of the covenant being for the Court to determine. But for a long time it was a widely received opinion that a general restraint was void. It was regarded as in all cases something beyond reason. That is, in practice at least, it was in vain to urge in support of a general restraint that it was reasonable in the circumstances of the particular case. It is questionable, however, whether the decisions of the highest authorities went quite so far. Of Tindal C.J., Lord Macnaghten says[13]:—"There is no higher authority upon this subject in modern times." And certainly neither Tindal C.J. nor Parke B. laid down the rule as absolute in all events. As time went on, and as commerce and manufacture and means of communication increased, the view taken by the Courts in construing covenants of this kind also expanded, until in 1894 the case of Nordenfeldt v. Maxim Nordenfeldt Co. was decided by the House of Lords[14], unanimously affirming the decision of the Court of Appeal. There a patentee and manufacturer of guns and ammunition for use in war made a covenant, unrestricted as to space, with a company to which his patents and business had been transferred, that he would not for 25 years engage, except on behalf of the company, in the business of a manufacturer of guns and ammunition. It was held that having regard to the nature of the business and the limited number of the customers (namely, the Governments of the United Kingdom and other countries) the covenant, as I have stated it, was not wider than was necessary for the protection of the company, nor injurious to the public interests of the country: that it was therefore valid and enforceable by injunction.

The antecedent authorities were so closely and extensively reviewed by the learned Lords that it is unnecessary to go further than their speeches for a statement of the principles which must govern such a case as the present on the point now under discussion. Lord Macnaghten said[15]:—"The true view at the present time, I think, is this: the public have an interest in every person's carrying on his trade freely: so has the individual. All interference with individual liberty of action in trading, and all restraints of trade, of themselves, if there is nothing more, are contrary to public policy, and therefore void. That is the general rule. But there are exceptions: restraint of trade and interference with individual liberty of action may be justified by the special circumstances of a particular case. It is a sufficient justification, and indeed it is the only justification, if the restriction is reasonable—reasonable, that is, in reference to the interests of the parties concerned and reasonable in reference to the interests of the public; so framed and so guarded as to afford adequate protection to the party in whose favour it is imposed, while at the same time it is in no way injurious to the public. That, I think, is the fair result of the authorities. But it is not to be supposed that that result was reached all at once. The law has changed much, even since Mitchell v. Reynolds11 P. Wms., 181.. It has become simpler and broader too ..." He declared that "the better opinion is that the Court ought not to hold the contract void unless the defendant made it plainly and obviously clear that the plaintiff's interest did not require the defendant's exclusion or that the public interest would be sacrificed if the proposed restraint were upheld: Tallis v. Tallis21 E. & B., 391, at p. 412.." And the same learned Lord said: "a fetter is placed on trade, and trading is discouraged, if a man who has built up a valuable business is not to be permitted to dispose of the fruits of his labours to the best advantage." Lord Herschell L.C., in the same case, after alluding to the rule or supposed rule that a general restraint of trade was in all cases void, had quoted from the judgment of Fry J. in Roussillon v. Roussillon[18]:—"I have, therefore, upon the authorities, to choose between two sets of cases, those which recognize and those which refuse to recognize this supposed rule; and for the reasons which I have mentioned, I have no hesitation in saying that I adhere to those authorities which refuse to recognize this rule, and I consider that the cases in which an unlimited prohibition has been spoken of as void relate only to circumstances in which such a prohibition has been unreasonable." And on this question Lord Herschell goes on to say:—"Whether the cases in which a general covenant can now be supported are to be regarded as exceptions from the rule which I think was long recognized as established, or whether the rule is itself to be treated as inapplicable to the altered conditions which now prevail, is probably a matter of words rather than of substance. The latter is perhaps the sounder view. When once it is admitted that whether the covenant be general or particular the question of its validity is alike determined by the consideration whether it exceeds what is necessary for the protection of the covenantee, the distinction between general and particular restraints ceases to be a distinction in point of law." Lord Macnaghten, indeed, says that Sir Edward Fry in Roussillon v. Roussillon "has rightly apprehended the common law doctrine as it may be traced in the books."

The general restraint in the Nordenfeldt Case was only as to space; the restraint as to time was limited to 25 years. But the principle of the case extends to questions of time as well as of area; the same question has to be answered; is the restriction reasonable? and it is for the defendant to make it "plainly and obviously clear that the plaintiff's interest did not require the defendant's exclusion or that the public interest would be sacrificed" if the proposed restraint were upheld. In Haynes v. Doman[19] an agreement of service between the plaintiff, a hardware manufacturer, and the defendant, after binding the defendant not at any time to divulge the plaintiff's secrets or his mode of conducting his business, restrained him from serving any other person or firm in the same kind of business within 25 miles from the plaintiff's works, and the restraint was like that in the present case, without time limit. The defendant having broken the restriction, the Court of Appeal held that the plaintiff was entitled to an injunction, since the restrictive clause was not void either as being unreasonable for the plaintiff's protection or as being unlimited in point of time. Lindley M.R. said: "The agreement, no doubt, binding the defendant not to do certain things, and being unlimited as to time, binds him for his life ... But it is very remarkable that no case can be found in which an agreement in restraint of trade, free from objection in other respects, has been held void simply because its duration was not restricted. This point has often been considered, notably in Hitchcock v. Coker16 A. & E., 438.."Rigby L.J. said: "I cannot see why a man may not bind himself never to serve with a rival firm carrying on business within a limited radius, as he certainly can bind himself never to deal with a customer for the time being of his own principals."

In Hitchcock v. Coker[21] by an agreement between the plaintiff, a chemist and druggist, and the defendant, contracting to serve the plaintiff as his assistant, it was provided that if the defendant should at any time thereafter exercise the business of a chemist and druggist in the town of Taunton or within three miles thereof, he would pay the plaintiff £500 as liquidated damages. The King's Bench held that the restraint in point of time was larger than the necessary protection of the plaintiff required, and that it was therefore oppressive and unreasonable. The Exchequer Chamber reversed this judgment, and in delivering the judgment of the Court Tindal C.J. put the decision on the ground that the goodwill of a trade (and the same consideration applies to a professional practice), is a "subject of value and price": and if the restriction as to time is held to be illegal, the value of the goodwill is or may be destroyed. "If it is reasonable that the master should by an agreement secure himself from a diminution of the annual profits of his trade, it does not appear as unreasonable that the restriction should go so far as to secure to the master the enjoyment of the price or value for which the trade would sell, or secure the enjoyment of the same trade to his purchaser, or legatee, or executor. And the only effectual method of doing this appears to be, entering into the trade or business within the given limit co-extensive with the servant's life." The covenant into which the defendant has bound himself to enter may under these authorities be perfectly valid, and is so if the restrictions are reasonable and are not otherwise obnoxious to the public interest. The objections to them affect both the exclusion from practice within a radius of 50 miles from Toowoomba, and the duration of that exclusion, and they were confined to these points. As to the latter, the cases of Haynes v. Doman[22] and Hitchcock v. Coker[23] seem conclusive without more. As to the former, a radius of 50 miles does not in these days appear to be unreasonable for the covenantee's protection. In Horner v. Graves[24], Tindal C.J. observes that in one of the cases cited 150 miles was considered as not an unreasonable limit, where an attorney had bought the business of another who had retired from practice, and points out that "it is obvious that the profession of an attorney requires a limit of a much larger range" (than that of a dentist) "as so much may be carried on by correspondence or by agents." These expressions were used over 80 years ago, and I would respectfully adopt and apply to the circumstances of this case some words used by Rigby L.J. in a case already cited: "The law as to contracts in restraint of trade was originally founded on public policy according to the ideas, and having regard to the business organization, of the time. The whole business organization of society has been revolutionized by the use of railways, the post office, and the telegraph, so that a single firm may have a business extending over a vastly larger portion of the earth's surface than would have been dreamt of in the days when questions similar to those raised in this action were first dealt with. In addition to this, it has been clearly recognized in recent times that public policy is at least as much concerned in holding persons to their contracts as in prohibiting contracts in restraint of trade."

If much of an attorney's business was carried on by correspondence or through agents in 1831, what are we to say of its character in a country of great distances like ours under the newer conditions of the last two generations?

I am clearly of opinion that the defendant's covenant, considered as between adults, cannot be impeached as an unreasonable restraint of trade.

The defendant's next contention is that the articles were prejudicial to him; that they were voidable; that they did not form a contract which bound him at his maturity unless repudiated within a reasonable time, but that to bind him they required actual ratification at his coming of age, and were not so ratified.

It is admitted of course that the articles belong to a class of contracts obviously beneficial to an infant, and the objection is directed at provisions which it is said destroy the beneficial operation of the terms of this particular contract. The rule is that stated by Lord Esher M.R. in Corn v. Matthews[25]:—"The mere fact of some conditions in the deed being against the apprentice does not enable the Court on that ground only to say that the agreement is void. It is impossible to frame a deed, as between a master and an apprentice, in which some of the stipulations are not in favour of the one and some in favour of the other. But if we find a stipulation in the deed which is of such a kind that it makes the whole contract an unfair one, then that makes the whole contract void. The stipulation which is objected to must be so unfair that it makes the whole contract between the apprentice, or the infant and the master, an unfair one to the infant." The unfair stipulation in that case was a proviso to the clause providing for the teaching and payment of the apprentice, and was evidently inseparable from the promise to instruct and to pay; as A. L. Smith L.J. said, it covered the whole of the deed.

Of the provisions in the defendant's articles which are included in this objection the first is the covenant by which the defendant restricts his right of practice. As I have indicated, that covenant is in my opinion no wider than was reasonably necessary for the plaintiff's protection, and cannot therefore be said to be unfair; while the mere fact that it is, out of a number of provisions, one of those in favour of the plaintiff, there being others in favour of the defendant, does not bring it within the rule.

The other provision relied on is that which agrees that the plaintiff is to be at liberty during the term, and without compensation either to the defendant or his father, to assign the articles and all benefit under them to any solicitor practising in Toowoomba or elsewhere in Queensland. Far from being so unfair as to vitiate the whole contract, this provision is, in my opinion, not unfair at all. It is a necessary inference from its terms that any assignment was only to be with the consent of the defendant, for the reason that the defendant could not lawfully empower the plaintiff to barter away his services to any solicitor he pleased even in the face of the defendant's absolute refusal to sanction the transaction, nor on the other hand could the plaintiff lawfully dispose of him in that way and against his consent. People are not allowed in these days to sell, still less to buy themselves, into what would then be a modified form of slavery, nor when another and a reasonable construction is open can a provision of this kind be read as an attempt at such a transaction. It is unthinkable that either the plaintiff would tender or the defendant, still less his father, would accept such a stipulation. But if read as implying the defendant's consent as a condition of any assignment, the provision, if they found it necessary, is not only perfectly fair, but beneficial to all the parties.

I do not therefore find anything in the articles which can be held to make the whole contract unfair. As Channell J. says in Bromley v. Smith[26], a contract which contains the only terms on which an infant can reasonably expect to obtain employment must be for his benefit. But if its terms as a whole are fair and just, I do not think that the contract can be said to become prejudicial, merely because he could have obtained employment elsewhere on slightly better terms. Take such a contract as a clerk's articles. A great deal depends on the preferences of the clerk or his father on many points, such as the place of service, the nature and character of the solicitor's practice, the personality of the solicitor himself. An infant may be able to obtain somewhat better terms, even at a less premium, in another town or in a less desirable office, or with a less respected or less capable solicitor—and where the bargain is less advantageous in all these respects, he may probably obtain articles without any restrictive covenant, without indeed any stipulation that he does not like, at a remarkably low premium, and with an early and increasing salary; and yet such a contract may be wholly undesirable, and dangerous to the infant. All of which amounts to saying that the advantage of the contract does not depend solely on the favourable aspect of its terms as they appear on paper, and that where the conditions external to the deed are favourable, it is enough that the terms expressed should be just. Otherwise it would be open to an infant on coming of age to repudiate at his caprice a contract eminently advantageous in operation simply because he could have obtained terms better on paper, though not in substance. Now after hearing all that can be said against the defendant's articles I have come to the conclusion that they are just, and that in all probability, whatever slight advantages in terms he might have obtained elsewhere, he would not have obtained a more beneficial contract.

But even if the articles were not as a whole beneficial to the defendant, there comes the question whether they formed a contract which held good on the defendant's attaining his majority unless repudiated within a reasonable time. It is convenient to mention the principal dates at this stage. The articles were executed on 28th April 1905. The defendant's father, William Baron Lethbridge, died on the 30th March 1907. The defendant attained the age of 21 on 7th August 1907; and the articles were assigned to the plaintiff's partner, his son C. A. Hamilton, on 2nd March 1909, the defendant's admission taking place on 7th June 1910, about six weeks after the expiration of his term of service, and nearly three years after the attainment of his majority.

Sir William Anson, in his work on Contracts, 10th ed. (1903), p. 121, says that "Sir F. Pollock, in an exhaustive argument, shows clearly that by the rules of common law"—that is, before the passage in England of the Infants' Relief Act 1874, with which we are not concerned here—"the contract of an infant was not void but voidable at his option, even though it were not for his benefit." But even supposing that the rule is too widely stated by these two authorities, and that there are some acts and contracts of an infant which are entirely void, it is plain enough that an infant's articles of clerkship are not among them. They are confined to those which on their face and in their very nature are prejudicial to the infant. Articles of clerkship being obviously in their nature beneficial, they can only become prejudicial incidentally, that is, by the inclusion in them of some injurious provision covering the whole contract with unfairness. Among transactions said to be quite void are contracts made for an infant by an attorney or agent appointed by him, because he cannot validly appoint an attorney or agent. Such also are bonds with penalties, and various other contracts or deeds, of which the above are examples.

Do articles of clerkship then, if and when voidable, require actual ratification, or do they enure as binding contracts after majority unless repudiated within a reasonable time, at least when a considerable part of the benefits have been received by the infant before majority? I think that, so far as the articles as a whole are concerned, the latter is the case. "It would seem," says Anson at p. 122 of the edition already quoted, "that where an infant ... entered into a contract which involves continuous rights and duties, benefits and liabilities, and took some benefit under the contract, he would be bound unless he expressly disclaimed the contract. On the other hand, a promise to perform an isolated act—such as to pay a reward for services rendered—or a contract wholly executory, would not be binding upon an infant unless he ratified it upon coming of age." I take that to be a summary of the law as applying to such a contract as a clerk's articles, and that they hold good unless expressly repudiated at majority.

But it may be said that the covenant now in question is for this purpose separable from the articles—that it is wholly executory and therefore comes within the second branch of Sir William Anson's statement. I think we must take the articles as a whole; that it was not competent to the defendant after taking the benefit of the whole contract both before and after coming of age to say that because he did not expressly disaffirm it he is not bound by this particular covenant. I apply to the case as a whole the words of Wickens V.C. in Cornwall v. Hawkins[27]: "The defendant remained in the plaintiff's service for eighteen months after attaining his majority with a full knowledge of the terms of his contract, and well aware that the plaintiff would not have retained him in his service for a day had he suspected he was about to violate it. I think that Lord Tenderden's Act, even if it applied to this case, would not enable the defendant now to repudiate the contract, after having taken the benefit of it for eighteen months, with a knowledge that he got that benefit in consequence of the plaintiff supposing that he submitted to the terms of it." This passage applies even more strongly here than it did to the case in which it was uttered, if regard is paid to the dates which I have given.

I venture to supplement it with the following statement of law made by Lindley M.R. in Viditz v. O'Hagan[28]: "Now, what is the effect of the English law as expounded by the House of Lords in Edwards v. Carter2(1893) A.C., 360.? What is the theory of it? The theory is, I apprehend, this—that there are some contracts of infants which by English law are absolutely void. There are a few (not a great many) contracts which in the view of English law cannot possibly be for the benefit of the infant—take a bond with penalties as an illustration—and they are void. An infant cannot so contract. The great bulk of infants' contracts are only voidable. What does that mean? It means that when the infant comes of age he can elect either to affirm or to disaffirm the contract. If he does nothing within a reasonable time after he attains twenty-one, the presumption is that he has affirmed the contract. The contract is binding and has been binding on him ever since he attained twenty-one, unless he proves the contrary by repudiating it within a reasonable time. But I think it would be an entire mistake to apply that part of English law which relates to repudiation within a reasonable time if you shut out the other part which relates to the ability to ratify." If the articles were voidable, as I do not think they were, not only were they not avoided by the defendant, but he distinctly ratified and affirmed them after he came of age. First, he paid the premium out of funds to which he then became entitled. Then he continued to serve under the same articles as if they were binding, and without a sign of protest that they were not so, until, two years and more after his twenty-first birthday, he first asked for and then joined in an assignment of them to his master's partner as valid and subsisting articles; and he made these articles the basis of the admission to his profession which he sought and gained on the 7th June 1910. Up to his admission he continued to receive the benefit of this contract, which he now asserts to have been void—although had it been void he would have had no ground whatever for asking admission to the roll of solicitors. In the face of all these facts the objection that his own covenant, as well as those made by his father, was not expressly reserved to the plaintiff by the assignment is of little weight; for the assignment cannot be interpreted as excepting that covenant from the significance of the ratification. I do not think that the parties to the assignment ever thought of including that personal covenant. They probably considered that it needed no reservation. But having been affirmed already, together with the rest of the articles, it matters little if at law it was transferred by the assignment to the plaintiff's son, another member of the same firm, as it was if the argument founded on the maxim expressio unius, &c., be accepted. If the right of action upon it was assigned at law to Charles Alday Hamilton, he could scarcely be regarded as a covenantee for his own benefit. The assignment was made at the defendant's request to enable him to remain in the Toowoomba office for the five or six months of his term which were yet to run; for the plaintiff was then mainly occupied in the Brisbane office of the firm, and could not give constant attention to the defendant unless he preferred to come to Brisbane. If Mr. Charles Alday Hamilton sued on the covenant he would do so as trustee for the plaintiff. But if so the plaintiff could sue on it himself. Alternatively, there is the suggestion that if the assignment must be read as imputing a new covenant by the defendant as an adult with Charles Alday Hamilton that he would not practise within the prescribed limits, such a new covenant with the plaintiff's son and partner could only be reasonably read as an accord and satisfaction for the breach of the defendant's original covenant which had then already occurred. But if this were so the same consequences would follow. If the assignee sued he would do so as trustee for the plaintiff. And the plaintiff could bring the action instead of leaving his trustee to do so. If, again, the view is taken that the defendant's original covenant had not then been broken, and that the assignment could be read as involving an implied rescission by deed of the defendant's original covenant and the making of a new one in the same terms with the assignee, there would be no difference in the result. One thing is certain, that the defendant's covenant has not dropped out, and whether it remains as a covenant with the plaintiff or one with his partner, it remains for the advantage of the plaintiff.

There is one more contention of the defendant to be considered. It is argued that the plaintiff has misconceived his remedy: that an injunction will not be granted in such a case; because, it is said, the defendant and his father each purchased a right for the defendant to break his covenant at the cost of £2,000, and an action against him or against his father's representatives for that sum is now the only remedy. This contention is based on the case of Howard v. Woodward[30]. There a managing clerk on entering a solicitor's service gave him a bond which recited an agreement, otherwise merely verbal, to give a bond not to practise within a certain locality. The bond was conditioned on the payment of £1,000 as liquidated damages, if the obligor should so practise. Page-Wood V.C., held that the Court had power to grant an injunction to restrain the obligor from practising. So far this authority does not help the defendant. But it is argued for him that the remarks of the Vice-Chancellor in giving judgment sustain the proposition advanced. I do not agree. Adopting the view there expressed that what the Court will look to is not the form of the instrument but the substance of the transaction, I am clearly of opinion that the thing aimed at by the plaintiff in taking these covenants was the securing of the practice in which his son was his partner from a probable rivalry. It was probably of much more importance in the plaintiff's eyes that the knowlege of the law and of their affairs and their clients which a clerk would gain in five years' service under articles, should not be employed in a competitive practice, than that he should receive a money payment for the privilege to the defendant of employing the skill and knowledge which he was to gain in that period, in a course of business which must be injurious and might possibly be destructive to the interests of the plaintiff's firm.

On the whole case then I think that the interim injunction was rightly granted by Cooper C.J., and that a perpetual injunction should now be granted.

It is necessary to bear in mind throughout this appeal that the appellant's case rests upon a restrictive covenant in articles of clerkship. No formal covenant of restriction was actually made, but there was a covenant made by the respondent in infancy to enter into it on attaining majority. But it was not denied that, if the covenant actually made were not waived, its operation for the purposes of this action was sufficient. The principle of Saunders v. Milsome[31] applies. The question of waiver comes in later, but treating the covenant, if unwaived, as equivalent to the covenant which was agreed to be made, the first position taken up for the appellant was that the covenant was binding irrevocably as part of a beneficial contract, and quite independently of any question of ratification or attempted disaffirmance since the attainment of majority.

That contention, however, is not sustainable, because it overlooks a fundamental distinction. It is not necessary here to investigate the absolute accuracy of the division of infant's contracts into void and voidable, or the precise meaning of the term void as used in many of the cases. But certain rules of law are firmly established, and when recalled to mind elucidate the present point. The first is that, as Lord Macnaghten said in Cooper v. Cooper[32]:—"Infants are incapable, speaking generally, of binding themselves absolutely by contract." Then there are exceptions to that rule, and it is all important to see what those exceptions do not include. In the case of Walter v. Everard[33] the Court of Appeal laid down the law. That was an action by a master against his apprentice when the latter was of age for £300, the balance of premium due under the defendant's covenant in the apprenticeship deed. A clear question arose as to whether such a covenant was enforceable as such, and it was held that it was not. The plaintiff succeeded not on the covenant as a binding agreement, but on the findings of the jury, that the deed was a proper one, the arrangement fair and the premium fair and reasonable. Lord Esher M.R. said[34]:—"It is not true that you can sue an infant upon a bond given by him for the price of necessaries supplied to him with all the ordinary incidents of such an action." And again:—"You cannot sue the infant upon his bond as a bond. But if the bond is what is called a single bond—that is, if it is given only for the reasonable price of the necessaries supplied to the infant and there is no penalty,—the infant can be sued upon it. ... It comes in the result to this—that a bond given by an infant for the price of necessaries does not prevent the obligee from recovering that price from him if the bond is a single one, and it is not relied on simply as a bond. In the same way an infant can be sued upon a covenant by deed for the price of necessaries but the case must be treated just as if there had been no deed." The foundation of that is in Co. Litt., 172a, which is quoted in the case. The effect is—and, if possible, it is made clearer by reference to Nash v. Inman[35], and particularly to the judgment of Buckley L.J.—that an infant has a limited capacity to contract for the price of necessaries. But it is for their price, and the observations of Fletcher-Moulton L.J. go far to show the reason of that limitation. With great respect to the learned Judges who decided Gadd v. Thompson[36] it appears to me they carried the law beyond what was laid down in Walter v. Everard[37]. It is not that whatever an infant contracts for, even in regard to necessaries, binds him irrevocably on attaining full age, but that he is bound to pay a reasonable price for them.

Various cases were cited as to beneficial contracts being binding on infants, but they rest on a clear and intelligible basis. In Clements v. London and North Western Railway Company[38] Lord Esher M.R. says:—"That raises this question of law—whether this is a contract which he can now repudiate, he being still an infant." That last condition is essential—it lies at the root of the matter. The M.R. held that if it was for his advantage he could not, and if it was not he could. Kay L.J.[39] quotes Lord Kenyon in Rex v. Hindringham[40] as saying:—"I desire it may not be taken for granted that an infant who binds himself apprentice, a contract so notoriously for his own benefit, may put an end to that contract at any time during his minority." The reason is that it is the means of maintaining himself, and he is during his minority protected to this extent that he is not allowed to destroy it. He can no more dissolve a contract which the Court sees is beneficial to him than he can make one which the Court sees is to his prejudice. In Rex v. The Inhabitants of Great Wigston[41], Abbott C.J. said:—"If then it is for the benefit of the infant to bind himself an apprentice, it is impossible to say generally, that it is for his benefit to dissolve such a connexion; such a position involves a contradiction." And on this basis he is treated while a minor as liable to any statutory consequences of a contract held to be for his advantage. Thus in Meakin v. Morris[42] and Corn v. Matthews[43] he was subjected to proceedings for absenting himself. And whenever during his infancy any proceedings arise involving the validity of his contract, the Court must decide whether it was for his benefit: Stephens v. Dudbridge Ironworks Company[44]. When he is of age he decides that for himself.

And the common law is undoubted (see Viditz v. O'Hagan[45] and Nash v. Inman[46]) that, except his liability to pay for necessaries, he may, on attaining his majority, disaffirm any contract, whether beneficial to him or not—so long as he takes the proper steps to do so. What are the proper steps in any particular case depend entirely upon its nature and the circumstances existing at the time he enters upon his majority. In Bruce v. Warwick[47] Gibbs C.J., in the Exchequer Chamber, said:—"The general law is that the contract of an infant may be avoided or not at his own option," and added that he might avoid or enforce it at his pleasure. So in The Newry and Enniskillen Railway Co. v. Combe[48], Parke B., said that even a contract to take shares may be disaffirmed like any other ordinary contract. This was confirmed in The London and North-Western Railway Co. v. McMichael[49], though with a most important qualification, to which I shall presently advert. The case of Bromley v. Smith[50] certainly looks against this view. But it must be observed that the defendant there continued in the service from the age of 18 until he was 33, and it is difficult to see why he was not bound on the ground of affirmance after age, and how he could be bound otherwise. I observe, too, from the report in the Law Journal of Bromley v. Smith[51] that Channell J. expressed some doubt as to the correctness of his decision, which I think justified as to the point of infancy.

Regarding the contract as a whole, and particularly if this covenant be regarded as unobjectionable for any special reason, it is clear the respondent could at majority elect to affirm or disaffirm it.

Mr. Feez contended that the clause as to assignment being unlimited, conferred a power so prejudicial as to invalidate the whole contract. Now that the respondent is of age the point is immaterial. But as the question has been so much relied on and was dealt with in the Supreme Court I will express my opinion. When the clause is carefully read it will be seen that the governing idea is the agreement by the father that no matter what the business or qualification of the solicitor by whom the assignment may be taken, no compensation to the father is to be made by reason of the assignment. Further, it is to be remembered that no other solicitor would be at all likely to desire, or at all events to agree to, an assignment without the actual prior concurrence of the respondent and therefore, without connivance which cannot be presumed, the respondent would never have any real ground for alarm. I should consequently not be disposed—if the issue depended upon that provision—to find, as a matter of fact, the contract as a whole was prejudicial to, or was not for the benefit of the respondent when it was made. There is, however, another and, as I think, apart from ratification, a more serious provision. The respondent undertaking that he would enter into a restrictive covenant operating within a certain radius, also stipulated it should contain a provision that on its breach or non-performance the respondent should pay a sum of £2,000 "as liquidated damages as aforesaid" which, as expressed, was declared to mean that the money was to be deemed and taken in full satisfaction and discharge of such covenant and not in the nature of a penalty.

It is authoritatively decided by the Privy Council that the parties cannot by a mere designation convert what is really a penalty into liquidated damages. In the Public Works Commissioner v. Hills[52], the Judicial Committee said:—"The criterion of whether a sum—be it called penalty or damages—is truly liquidated damages, and as such not to be interfered with by the Court, or is truly a penalty which covers the damage if proved, but does not assess it, is to be found in whether the sum stipulated for can or can not be regarded as a genuine preestimate of the creditor's probable or possible interest in the due performance of the principal obligation. The indicia of this question will vary according to circumstances. Enormous disparity of the sum to any conceivable loss will point one way, while the fact of the payment being in terms proportionate to the loss will point the other. But the circumstances must be taken as a whole, and must be viewed as at the time the bargain was made." In a still more recent case: Webster v. Bosanquet[53], decided last February the Privy Council said that "whatever be ... the expression used in the contract in describing the payment, the question must always be whether the construction contended for rendered the agreement unconscionable and extravagant, and one which no Court ought to allow to be enforced."

In the present case, as in Public Works Commissioner v. Hills[54], the sum cannot possibly be taken as a genuine preestimate of loss. It applies whether the respondent should practise for one day or for life, whether he commenced the moment after his admission or ten years after. To insist on £2,000 for one day's breach, say in drawing a conveyance or preparing an agreement of sale, would be certainly unconscionable and extravagant. It is therefore a penalty. Now, an infant cannot bind himself to incur a penalty. The passage in Co. Lit., 172, before referred to, says:—"If he binds himself in an obligation or other writing with a penalty for the payment of any of them (i.e., necessaries) that obligation shall not bind him." So per Tindal C.J. in Corp v. Overton[55], and per Lindley M.R. in Viditz v. O'Hagan[56].

And there is no substantial difference between a bond and a covenant with a penalty. See Halsbury's Laws of England, vol. 3, p. 81.

This is therefore an additional reason why this covenant at all events could not be held to bind the respondent unless he elected to affirm it. Then did he elect at majority to ratify the whole bargain or to disaffirm it?

In the case of Ditcham v. Worrall[57], an infant's case, Lindley J. said:—"A ratification necessarily has reference to the past, and as applied to promises made by the person ratifying, a ratification is simply an intentional recognition of some previous promise made by him, and an adoption and confirmation of such promise with the intention of rendering it binding. In other words, a ratification of a voidable promise is a recognition of it and an election not to avoid it, but to be bound by it." Then we have to consider how an election to avoid the contract must be exercised. The same learned Judge when L.J. approved in Carter v. Silber, Carter & Hasluck[58] of the rule formulated in Bullen & Leake in these terms:—"When a person is sued upon obligations arising out of property which he has become possessed of under a contract, as shares in a company, he cannot avoid the obligation, by the simple defence that he was an infant at the time of acquiring the property, he must further plead that before coming of age, or within a reasonable time in that behalf after coming of age, he repudiated the contract on that ground and disclaimed the property."

That rule was applied by him to the case of a person who, while an infant, had made a marriage settlement to which his father was a party, and for nearly four years after his majority, the father then living, the settlor was quiescent. It was considered by the Court of Appeal and by the House of Lords (sub nom. Edwards v. Carter[59]) that after the father's death it was too late to disaffirm. It was held that he had not repudiated within a reasonable time, but it clearly appears from the judgments of Lindley L.J.[60] and Bowen L.J.[61] and Kay L.J.[62] in the one report, as well as from the judgment of Lord Chancellor Herschell[63] in the other report, that the point was not so much the length of time as the fact that the son during a period affording him beyond doubt full opportunity for consideration had delayed repudiation while the father lived and could have altered the disposition of his property, and so the son had thereby prejudiced the position of others who might not unnaturally have otherwise been provided for by the father.

The principle is that having the capacity and power to elect whether he will keep or surrender the benefit of the contract, then if he retains the benefit, he is to be taken as ratifying the bargain and to be bound by its obligations. This was the principle in which the cases of the London and North Western Railway Co v. McMichael[64]; Whittingham v. Murdy[65]; and Cornwall v. Hawkins[66] were decided. In the present case the respondent continued for about two years after his majority and until the assignment to receive all the benefits of the articles from the appellant. He continued to receive from his master the instruction, and to acquire at his hands the experience and qualification essential to equip him for entry into the ranks of the legal profession. At the same time he continued as a necessary consequence to establish a fuller acquaintance with the existing clients of the firm, and to meet additional clients as they came in. Then in accepting the assignment in completing his service under that assignment, and in his application for admission in reliance on both the original articles and the assignment, he did acts absolutely inconsistent with any notion of disaffirmance. If on attaining his majority he had disavowed the articles, left his employment and entered the profession by an entirely new and independent avenue as from the beginning, he would in my opinion have been free from the obligation of this covenant. But as it is, he is certainly bound as if he were an adult when the original articles were executed. I cannot assent to the contention that, because the appellant did not call upon the respondent on his attaining 21 to enter into the restrictive covenant, he waived it. The appellant's intention to insist on the restriction was manifested by the terms of the assignment, and so far from the exception of the father's covenant from the transfer being evidence of abandonment by tacit exclusion, I think it looks in the opposite direction. The father being dead, and unable to assent, it might well have been thought safer for the appellant's security to expressly except that covenant from the transfer, because it related to a covenant between respondent and the assignor which from the moment of execution was intended to protect his business, however much its benefit might subsequently pass. The retention of the father's covenant would have been absurd if the right to require the respondent to make the covenant were given up.

Then on that basis the covenant is challenged as being illegal because in restraint of trade.

As to this the onus is on the respondent. In Dendy v. Henderson[67] Alderson B. said:—"The defendant must perform his agreement unless he can clearly establish that the restraint is unreasonable." And in the Nordenfeldt v. Maxim-Nordenfeldt Guns and Ammunition Co. Ltd.[68] Lord Macnaghten, adopting Tallis v. Tallis[69], said:—"The Court ought not to hold the contract void unless the defendant made it plainly and obviously clear that the plaintiff's interest did not require the defendant's exclusion, or that the public interest would be sacrificed if the proposed restraint were upheld."

In Henry Leetham & Sons, Ltd. v. Johnstone-White[70] Farwell L.J. held such a covenant bad because it appeared to him on the evidence that it was quite plain the covenant was "manifestly unreasonable as being far wider than can possibly be required for the protection of the Company."

Then how has the respondent discharged his burden of convincing the Court that the restraint exceeds what was reasonable with reference to the circumstances when the contract was made—for we have, with respect to the legality of the contract, to test it by the conditions of the time when it was made (Benwell v. Inns[71]); and if so tested it is found to be void no Court of Equity can enforce it by injunction: per Lord Macnaghten in Nordenfeldt Case[72]. In other words, has the defendant shown that a radius of 50 miles from Toowoomba was in 1905, having regard to the probable circumstances of the appellant's business in 1910 and afterwards, beyond what was necessary for the protection of that business? I need not do more than express my clear opinion that he has completely failed to satisfy my mind on that point.

The contract then is good and binding, and the next question is—Has the appellant any right to enforce it, or, as Mr. Feez put it, has he any locus standi? The contention is that when he assigned the clerkship he ceased all contractual nexus with the respondent, and transferred the right of proceeding against the respondent for breach to the assignee.

There is a fallacy running through that argument which disappears the moment the true nature of such a covenant is apprehended.

Such a covenant exists only for the protection of the covenantee's business. There may be a covenant which is so worded as to be limited to protect the business only so far as the covenantee is concerned, and then as in Davies v. Davies[73] it cannot be assigned, but remains strictly personal. But in general the true nature of a restrictive trade covenant is not personal. Its benefit is attached to and passes with the goodwill. That was decided in Hitchcock v. Coker[74] and Tindal C.J. said for the whole Court that the only effective way to secure that benefit was to make the restriction co-extensive with the covenantor's life. In Jacoby v. Whitmore[75] it was held by the Court of Appeal, that a shopman at weekly wages, who had covenanted not to carry on business within a mile of the shop, was bound for life, and could be restrained at the instance of the master's successors in business, as proprietors of the goodwill, because such a covenant added to the value of the goodwill and was part of it. In Showell v. Winkup[76] the defendant, a brewer's traveller was employed by plaintiff with a restrictive covenant lasting for two years after leaving his service unless with plaintiff's consent. Plaintiff assigned his business and goodwill to a company and defendant continued in the company's service. He however left them and at once became employed in a similar business. Plaintiff the original contractee sued to restrain the defendant. It was held by Kekewich J. (1) that the benefit of the covenant passed to the company, and that the plaintiff was merely a trustee for the company, and (2) that leave might be given to plaintiff at the trial to add the company as co-plaintiffs without terms as to costs.

Then in Henry Leetham & Sons Ltd. v. Johnstone-White[77], Farwell L.J. enforced the doctrine of Jacoby v. Whitmore[78], which he had as a Judge of first instance applied in Townsend v. Jarman[79]. In Henry Leetham & Sons Ltd. v. Johnstone-White[80], he said the covenant "is not for the benefit of the individual but it is for the benefit of the business." The principle was essential to and recognized in Nordenfeldt v. Maxim Nordenfeldt Guns and Ammunition Co. Ltd.[81]. See Lord Herschell's judgment, pp. 540, 541.

Now, the appellant did not by the assignment transfer his business; he did not transfer and could not transfer any personal covenant; but by a novation, called an assignment of articles of clerkship, the respondent and the assignee thenceforth became contractually bound to each other as from that time upon whatever terms are expressly or impliedly contained in the instrument. Unless there is to be found in that document a release by the assignment of the clerk's obligation to him in respect of past service, that obligation remains; and that obligation being part of the appellant's goodwill, the real and substantial test of whether he has a locus standi is to inquire whether the goodwill is his, and if it is, he is the person to protect it, and to no one else can be assigned the right to do so. It is very like the doctrine of Tulk v. Moxhay[82]. If the respondent's contention were sound, then if by reason of his misconduct he had been dismissed, or if the articles had expired, so as to terminate the contractual relation for the future, there would be no residual right of protection. And if the articles had been assigned to one solicitor in Rockhampton, and the business to another in Toowoomba, the former would on the argument advanced be alone able to protect the interests of the latter. That cannot be. As long as there is need of protection for the business sought to be protected, the duty exists to abstain from injuring it, and is owed to the person to whom the business belongs. To put it in a phrase, the right runs with the goodwill.

Admittedly, the appellant is a partner in the business and is carrying it on, and so it cannot be said he has no locus standi, however technically his position is regarded.

In these circumstances the absence of the other Hamilton cannot be more than non-joinder, which is met by Order III., r. 11.

The only other question is whether an injunction is the proper remedy. If, as I have said, the sum of £2,000 is a penalty, of course an injunction is correct. Lord Loughborough in Hardy v. Martin[83] said:—"A penalty is never considered in this Court as the price of doing a thing which a man has expressly agreed not to do." If it were liquidated damages still, as shown by National Provincial Bank of England v. Marshall[84], an injunction could be claimed unless the contract can be read as conferring the right to compete for £2,000. But that is not the true construction, and so the appellant is entitled to the remedy claimed.

I will only add as to Capes v. Hutton[86] the Lord Chancellor may well have acted on the ground that defendant had not made a relevant covenant, but merely consented to his father's covenant.

Appeal allowed. Order and judgment appealed from discharged. Judgment for plaintiff for perpetual injunction as claimed.

[1] (1909) 2 K.B., 235.

[2] 43 Ch. D., 165.

[3] (1894) 2 Q.B., 482.

[4] (1893) A.C., 360.

[5] [1847] EngR 634; 1 Exch., 122, at p. 130.

[6] 41 L.J., Ch., 436.

[7] [1831] EngR 713; 7 Bing., 735, 743.

[8] (1894) App. Cas., 535, at p. 549.

[9] 40 Ch. Div., 112.

[10] (1894) A.C., at p. 541.

[11] Willes' Rep., at p. 388.

[12] 11 M. & W., at p. 665, per Parke B.

[13] (1894) A.C., at p. 569.

[14] (1894) A.C., 535.

[15] (1894) A.C., at p. 565.

[16] [1711] EngR 38; 1 P. Wms., 181.

[17] [1853] EngR 14; 1 E. & B., 391, at p. 412.

[18] 14 Ch. D., 351.

[19] (1899) 2 Ch., 13.

[20] [1837] EngR 482; 6 A. & E., 438.

[21] [1837] EngR 482; 6 A. & E., 438.

[22] (1899) 2 Ch., 13.

[23] [1837] EngR 482; 6 A. & E., 438.

[24] [1831] EngR 713; 7 Bing., 735.

[25] (1893) 1 Q.B., 310, at p. 314.

[26] (1909) 2 K.B., 235, at p. 242.

[27] 26 L.T., 607, at p. 608.

[28] (1900) 2 Ch., 87, at p. 97.

[29] (1893) A.C., 360.

[30] 13 W.R., 132.

[31] L.R. 2 Eq., 573.

[32] 13 A.C., 88, at pp. 107, 108.

[33] (1891) 2 Q.B., 369.

[34] (1891) 2 Q.B., 369, at p. 372.

[35] (1908) 2 K.B., 1, at p. 4.

[36] (1911) 1 K.B., 304.

[37] (1891) 2 Q.B., 369.

[38] (1894) 2 Q.B., 482, at p. 489.

[39] (1894) 2 Q.B., 482, at p. 491.

[40] 6 T.R., 557.

[41] [1824] EngR 887; 3 B. & C., 484. at p. 486.

[42] 12 Q.B.D., 352.

[43] (1893) 1 Q.B., 310.

[44] (1904) 2 K.B., 225.

[45] (1900) 2 Ch., 87, at p. 97.

[46] (1908) 2 K.B., 1.

[47] [1815] EngR 641; 6 Taunt., 118, at p. 120.

[48] 18 L.J., Ex., 325, at p. 328.

[49] 20 L.J., Ex., 97.

[50] (1909) 2 K.B., 235.

[51] 78 L.J.K.B., 745.

[52] (1906) A.C., 368, at pp. 375-6.

[53] (1912) A.C., 394; 28 T.L.R., 271.

[54] (1906) A.C., 368.

[55] [1833] EngR 812; 10 Bing., 252, at p. 257.

[56] (1900) 2 Ch., 87, at p. 97.

[57] 5 C.P.D., 410, at p. 412.

[58] (1892) 2 Ch., 278, at p. 284.

[59] (1893) A.C., 360.

[60] (1892) 2 Ch., at p. 285.

[61] (1892) 2 Ch., at pp. 286-7.

[62] (1892) 2 Ch., at p. 289.

[63] (1893) A.C., at p. 365.

[64] 20 L.J. Ex., 97.

[65] 60 L.T., 956.

[66] 20 W.R., 653.

[67] [1855] EngR 548; 11 Exch., 194, at p. 199.

[68] (1894) A.C., 535, at p. 566.

[69] 1 E. & B., at p. 412.

[70] (1907) 1 Ch., 322, at p. 326 (C.A.).

[71] [1857] EngR 778; 24 Beav., 307, at p. 311.

[72] (1894) A.C., at p. 563.

[73] 36 Ch. Div., 359.

[74] [1837] EngR 482; 6 A. & E., 438, at p. 455.

[75] 32 W.R., 18.

[76] 60 L.T., 389.

[77] (1907) 1 Ch., 322, at pp. 326, 327.

[78] 32 W.R., 18.

[79] (1900) 2 Ch., 698.

[80] (1907) 1 Ch., 322.

[81] (1894) A.C., 535.

[82] 2 Phil., 774.

[83] 1 Cox, 26.

[84] 40 Ch. Div., 112.

[85] 13 W.R., 132.

[86] 2 Russell, 357.

High Court of Australia

Hamilton v Lethbridge [1912] HCA 20; (1912) 14 CLR 236 (6 May 1912)

HIGH COURT OF AUSTRALIA