Case No. IP-2020-000140

v Management Agency and Music Ltd [1985] QB 428 (“O’Sullivan”):“The effect of such an agreement was considered in Instone v. A. Schroeder Music Publishing Co. Ltd. [1974] 1 All E.R. 171, affirmed in the House of Lords under the name A. Schroeder Music Publishing Co. v. Macaulay [1974] 1 W.L.R. 1308. The Court of Appeal held that because the agreement was in unreasonable restraint of trade it was unenforceable in so far as it had not been carried out. and Lord Reid, dismissing the appeal against that decision, concluded his speech with these words, at p. 1315: “It must therefore follow that the agreement so far as unperformed is unenforceable.” (Waller LJ [p. 470D]).106.In the light of that ruling by the Court of Appeal, Mr Richards submitted that it was clear, and unarguable, that in the absence of a finding of some additional fiduciary duty (as in Schroeder and in O’Sullivan) the consequence of a finding that an agreement is in restraint of trade is that it is voidable and unenforceable.107.108.Finally, Mr Richards submitted that permission to introduce the alternative restraint of trade pleading should be refused not only on the grounds that it has no realistic prospect of succeeding at trial but also on the basis of proportionality and the overriding objective. He referred to the costs and burden on the parties of preparing for a restraint of trade case. Mr Richards submitted, by reference in particular to the Panayiotou case, that such cases give rise to the need for substantial factual and expert evidence. In his submission such costs and the burden of the parties and the Court could not be justified where the case for which permission is sought is only a tertiary alternative case and has at very best a fanciful chance of succeeding on the substance and ultimately of assisting the party seeking to raise it.109.110.As with many other aspects of the Amendment Application, the submissions relating to the proposed amended pleading on restraint of trade were complex, albeit packed into a fairly short period of time.111.Mr Richards raised a number of very significant legal and practical hurdles to be overcome by Mr Hebden if he is to succeed on this pleading. These relate not only to the substantive elements of the common law doctrine of restraint of trade, but also to the utility to Mr Hebden of any such finding given the clear statements in the authorities that the effect of a finding that a contract is in restraint of trade is that the contract is voidable, and an inability to enforce the contract against the other party. I have reviewed the authorities to which I was referred and conclude that, in the light of those authorities, it would be very difficult for Mr Hebden to succeed at trial in obtaining the relief he seeks as a consequence of the proposed amendments on restraint of trade.112.Mr Carter’s submissions that Schroeder might ultimately be less compelling in itself because the conclusion was based on a concession rather than full argument were eloquent. However, in my view, the conclusions of the Court of Appeal in Sullivan, applying Schroeder and drawing a clear distinction between cases in which a contract was held to be voidable and unenforceable in consequence of a finding of restraint of trade and those in which a contract was held to be void and unenforceable owing to some breach of a fiduciary duty would make it very difficult indeed for Mr Hebden’s proposed amended case on restraint of trade to succeed.113.As mentioned above, it is necessary for the Court deciding any application for permission to amend to have regard both to the utility of the application (both as to prospects of success and otherwise) and to the need to balance all other considerations, including proportionality and justice as between the parties and as against third parties.114.Taking all of the above into consideration, I have concluded that it would be inappropriate to grant Mr Hebden permission to introduce a new case on restraint of trade as an alternative to the other new claims for which permission has been granted. I reached this view in part on the basis of the significant legal difficulties such a case would face as well as the difficulties Mr Hebden faces in obtaining a useful remedy likely to give the claim utility in the context of the action as a whole. Additional considerations are the likely disproportionate cost and time burdens on the parties of preparing for such a claim (which is in any event only a tertiary fall back, with limited prospects of success), the additional pressure on Court resources in dealing with it, and fairness for other litigants. On balance, I concluded that, given the requirements of CPR 17 and the overriding objective, permission for this proposed amendment should not be granted.115.