CJ Motorsport Consulting Ltd v Bird & Anor

A management agreement may engage the restraint of trade doctrine even without an express exclusivity clause. The court must assess its practical effect, using a broad and flexible approach, by asking whether it absorbs or sterilises economic activity. If the doctrine applies, the party benefiting from the restraint must show that it is reasonably necessary to protect legitimate interests. A lengthy, one-sided agreement which controls a professional’s career, imposes substantial obligations on that professional, and gives the other party few corresponding obligations may be unenforceable. Industry practice cannot rescue an unlawful restraint. Restitution for payments made under an unenforceable contract requires a total failure of basis, and claims relating to historic payments may be time-barred.

CJ Motorsport Consulting Ltd claimed damages from Sam Bird for alleged repudiation of a long-term management contract governing his professional motor-racing career. Bird contended that the contract was an unreasonable restraint of trade. CJ Motorsport alternatively claimed restitution for management services and historic financial investment. Bird applied for strike-out or summary judgment.

The court considered whether the management contract engaged the restraint of trade doctrine, whether its restraints were justified, and whether the alternative quantum meruit claim disclosed a real prospect of success.

1. Summary judgment. The court could determine the legal issue without a trial because the relevant contractual terms and the claimant’s factual case were before it. A mini-trial was impermissible, but the court should decide a short point of law or construction where the necessary evidence was available (paras [16]-[22], [34], [45]).
2. Restraint of trade. The 2016 Management Contract engaged the doctrine. Its practical effect was decisive. Although it contained no express exclusivity covenant, Bird had to submit major career decisions for CJ Motorsport’s approval, forward all approaches concerning his career and endorsements, and comply with reasonable instructions. The restraints lasted for 18 years, Bird had no equivalent termination right, and CJ Motorsport had no substantial positive management obligations (paras [63]-[66]).
3. The distinction between contracts which absorb economic activity and those which sterilise it required a practical and flexible assessment. The agreement had a sterilising rather than absorbing effect because of its one-sided terms and disproportionately long duration. It therefore had the predominant character of a restraint of trade (paras [65]-[67]).
4. Justification. Recovering historic investment and obtaining a reasonable return were legitimate aims in principle. However, the restraints were not reasonably necessary to protect those interests. CJ Motorsport retained the benefit of a separate financial agreement and could have used less restrictive contractual arrangements. Market practice could not validate an unlawful contract (paras [67]-[68]).
5. Quantum meruit. No quantum meruit arose for services under the management contracts because the agreed commissions had been paid and no failure to pay was pleaded. The investment claim failed because there was no total failure of basis, the historic sums were not advanced under the 2016 contract and were addressed by a separate agreement, and the claims were time-barred because the payments were made in or before 2012 (paras [79]-[82]).
6. Summary judgment was granted to Bird on both the repudiation damages claim and the alternative restitution claim (para [84]).