One Money Mail Ltd v RIA Financial Services & Anor

An exclusivity clause operating during an agency agreement does not ordinarily engage the restraint of trade doctrine where it is a normal incident of the commercial arrangement and absorbs, rather than sterilises, the agent’s services. A post-termination restriction is enforceable where the principal has a legitimate interest in protecting its investment and the restriction is reasonable in duration and geographical scope.

A competitor procures a breach of contract where, knowing of or being reckless as to an exclusivity obligation, it contracts with the agent for the very conduct constituting the breach. Gain-based equitable damages require evidence from which the gain can be calculated.

One Money Mail Ltd appointed Mr Wasilewski as its agent for money remittances between the United Kingdom and Poland. The agreement required him to work exclusively for the company during its term and imposed a six-month post-termination restriction within five miles of his place of business. While the agreement remained in force, he contracted to act for RIA Financial Services Ltd.

Her Honour Judge Faber held that both restrictions were unenforceable restraints of trade and that One Money Mail had not proved loss. She nevertheless found that RIA would have procured the agent’s breach had the restrictions been enforceable.

One Money Mail appealed concerning enforceability and equitable damages. RIA cross-appealed concerning procurement of breach.

1. The appeal was allowed on enforceability, but dismissed on equitable damages. RIA’s cross-appeal was dismissed. Judgment was entered for One Money Mail, although it received no damages or other relief.

2. The restraint of trade doctrine may apply to restrictions operating during a contract: A Schroeder Music Publishing Co Ltd v Macaulay [1974] 1 W.L.R. 1308. Ordinary sole agencies, however, are a normal incident of commerce. Under the approach in Esso Petroleum Co Ltd v Harper’s Garage (Stourport) Ltd [1968] A.C. 269, the central distinction is between absorbing an agent’s services and sterilising the agent’s capacity to work.

   The agreement did not permit One Money Mail to sterilise the agent’s activities. It was obliged to process the remittances he obtained and to pay commission. Its ability to appoint another local agent, and its termination rights, did not make the exclusivity obligation unreasonable. Mr Wasilewski therefore breached the agreement by contracting with RIA while it remained in force.

3. One Money Mail had a legitimate interest supporting the post-termination restriction. It invested time and money in training and supporting its agents, while customers tended to remain loyal to the individual agent. Return of the company’s software and customer information did not protect that investment because customers could simply follow the agent to another provider. A five-mile radius was narrow and six months was a commonly agreed duration. The restriction was reasonable and enforceable.

4. RIA knew of, or was deliberately blind or reckless as to, the exclusivity obligation. Its contract with Mr Wasilewski provided for the very activity that breached his agreement with One Money Mail. The parties had therefore combined to secure the act constituting the breach. RIA procured the breach, consistently with the accessory-liability principles in OBG v Allen [2008] 1 A.C. 1 and Fish & Fish Ltd v Sea Shepard UK [2015] A.C. 1229.

5. There was no evidence enabling the court to calculate either One Money Mail’s loss or the respondents’ gain. RIA had not been asked to provide the relevant disclosure, and the trial was intended to determine all issues. Remittal would give One Money Mail an impermissible second opportunity to prove quantum and would be disproportionate.

1. Court of Appeal (Civil Division): By [2015] EWCA Civ 1084, allowed One Money Mail’s appeal on enforceability, dismissed its appeal concerning equitable damages, and dismissed RIA’s cross-appeal. Judgment was entered for One Money Mail, but no relief was awarded.

2. Central London County Court: Her Honour Judge Faber held that the contractual restrictions were unenforceable restraints of trade and that loss had not been proved. She also held that RIA would have procured the agent’s breach if the restrictions had been enforceable.