England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand. London. WC2A 2LL
		20 July 2005

Mr Justice Gray:

The preliminary issues

1. This is the trial of preliminary issues in an action in. which Leeds Rugby Limited ("Leeds") seek damages against Mr Iestyn Harris and Bradford Bulls Holdings Limited ("Bradford") for breach of contract and inducing a breach of contract respectively. The contract in question was dated 9 August 2001. It contained the terms on which the employment of Mr Harris by Leeds came to an end.
2. The issues which~ by agreement, have been ordered to be tried as preliminary issues are these:

i) whether clauses 5 and/or 6 of the agreement dated 9 August 2001 are void as being in restraint of trade;

ii) whether clauses 5 and/or 6 of the agreement are void on the grounds of lack of consideration; and

iii) whether clause 5 of the agreement is void for uncertainty. The reference to clause 6 in the first of those issues appears to have been inadvertent: neither Mr Harris nor Bradford contend that clause 6 is void as being in restraint of trade. They do advance that contention in relation to clause 5.

Background

3. By the summer of 1999 Iestyn Harris had shown himself to be a world-class rugby player of outstanding talent. He had previously played Rugby League football for Warrington. He was contracted to play Rugby League football for Leeds from 1 April 1997 to 31 December 2001. According to the evidence of Mr Gary Hetherington, Chief Executive of Leeds, Mr Harris was seen as a very important asset and a key player for Leeds.
4. So successfully did Mr Harris play for Leeds that in August 1999 Mr Hetherington commenced negotiations with Mr Harris's agent, Mr Tom Carroll, to extend his contract to the end of the 2003 season.
5. Shortly afterwards, however, Mr Hetherington was approached by representatives of the Welsh Rugby Union ("WRU") asking if Leeds would be prepared to release Mr Harris so that he might play Rugby Union football for a Welsh team. According to Mr Hetherington, Leeds was reluctant to release Mr Harris because he was so important to the team (by then known as "the Rhinos") and so the offer to pay a transfer fee of £300,000 which had been made by the WRU was rejected. Mr Hetherington wanted at least £1,000,000 as a transfer fee if Mr Harris was to leave Leeds before the expiry of his contract.
6. In order to encourage Mr Harris to continue to play Rugby League football for Leeds, a new player's contract was signed on 1 December 1999 which .provided for Mr Harris to remain with Leeds until 30 November 2003 on substantially enhanced financial terms.

Negotiations for the transfer of Mr Harris to Cardiff and Wales

7. By the Spring of2001, with the Rugby Union World Cup in 2003 on the horizon, Mr Harris had decided that he wanted to switch from Rugby League to Rugby Union. As he said in his evidence, it had for some time been his dream to play for Wales. The WRU remained interested in signing him up.
8. Mr Hetherington tried hard to persuade Mr Harris to stay with Leeds. But Mr Harris was adamant that he wanted to play Rugby Union. Mr Hetherington says that he was sympathetic with Mr Harris's position but at the same time was determined to ensure that, if he left, the interests of Leeds were adequately protected.
9. Negotiations between the WRU and Leeds began in earnest in May 2001. It appears that by then discussions had already taken place between Mr Harris, through his agent Mr Carroll, and both the WRU and Cardiff Rugby Football Club ("Cardiff') as to the terms that would be offered if Mr Harris obtained his release from the Leeds contract.
10. I heard evidence from both Mr Hetherington for Leeds and Mr Harris. In addition I read a witness statement from Mr Christopher Caisley, the Chairman 0.[ Bradford, .. although the latter has little bearing on the issues which I have to decide. There were differences between the accounts given by Mr Hetherington and Mr Harris of the course which the negotiations took. I should resolve these differences, although as will appear, they do not significantly impact on the questions which I have to decide.
11. Mr Hetherington sought a transfer fee from WRU in excess of £1,000,000. His evidence is that he told the WRU as early as May 2001 that Leeds also wanted the prospect of Mr Harris returning to play for Leeds in the future.
12. I accept that Leeds made it clear to the WRU at an early stage and probably as early as May 2001 that they wanted provision to be made for Mr Harris to return to play for Leeds if he left Cardiff. Certainly that was made plain by Mr Hetherington in his. fax to Mr Carroll sent on 4 July 2001 and in a further fax to Mr Christopher Ross sent on 12 July 2001.
13. What is less clear is whether and, if so, when Leeds informed Mr Harris directly of its wish to ensure that Mr Harris would return to play for Leeds if he did not want to stay with Cardiff. It was the evidence of Mr Hetherington that this was mentioned by him to Mr Harris on several occasions from May onwards. Mr Harris gave evidence that he had only two meetings with Mr Hetherington over this period, although he agreed that there were regular discussions between the two of them. Mr Harris was adamant that he did not learn of the inclusion in the proposed contract between himself and Leeds of a clause giving Leeds the option of requiring him to play for them in the event that he decided to leave Cardiff.
14. My view of this conflict in the evidence is as follows: Mr Harris struck me as a witness who was obviously doing his best to give a truthful account of events. I think that Mr Hetherington probably did indicate to Mr Harris on a number of occasions that Leeds wanted him to play for them if he was to decide to return to Rugby League. I am, however, satisfied that Mr Harris did not comprehend that it was proposed that Leeds would have the right to require him to play for them rather than for any other Rugby League club in the event that he left Cardiff. I do not think that this was because Mr Hetherington failed to make himself clear. Rather I think it was because (as became apparent during his evidence) the knowledge and understanding of Mr Harris of the various contractual provisions was and remains understandably very limited.
15. As I have already indicated, Leeds made clear to Mr Harris's agent, Mr Carroll, in early July 2001 that the package which Leeds would be prepared to accept included an option which would only allow Mr Harris to play for Leeds for one year in the event that Mr Harris exercised his option to terminate the Cardiff contract on the third anniversary of his agreement with that club. A solicitor, Mr Iwan Doull, was retained to advise Mr Harris· about the various contractual provisions affecting him. Neither Mr Carroll nor Mr Doull gave evidence. The evidence of Mr Harris was that neither Mr Carroll nor Mr Doull mentioned this proposed option to him until 8 August, which was the day before the agreement between Leeds and Mr Harris, releasing him from his contract, was signed. However, both Mr Carroll and Mr Doull were aware of the inclusion of the option in the agreement.
16. I also accept the evidence of Mr Harris that on8 August 2001 someone told him that there had been a last minute hitch because Mr Hetherington was "playing hardball", . insisting that the transfer fee had to be £1,000,000 instead of the £750,000 previously discussed. It seems that there must have been a hitch of some kind because, according to the evidence of Mr Harris, the intention had been that the agreements would be signed on 8 August but in the event that did not happen until the following day. I am satisfied that whatever might have been the reason for the hitch, it was not because Mr Hetherington at the eleventh hour insisted on a higher transfer fee. He was in Australia at the time. He denied he had done anything of the kind and I accept his denial. Mr Harris's evidence was that he was told that the hitch was sorted out by the introduction into the agreement of the option entitling Leeds to require him to play for them if he left Cardiff. Mr Harris did not indicate who it was who provided this information. Whoever it was, the information was clearly false because it is incontrovertible that the package required by Leeds had for several weeks included the option.

The interlocking agreements

17. Whatever may have been the hitch on 8 August 2001, it was sorted out by the following day when four inter-locking agreements were signed. Those agreements are:

i) the agreement between Leeds and Mr Harris for the release of Mr Harris from the subsisting contract with Leeds, which included the option to re-employ Mr Harris ("the Release Contract");

ii) the agreement by which Cardiff agreed to employ Mr Harris to play Rugby Union football for the club for a term of four years from 1 September 200 I; terminable after three years at the option of Mr Harris ("Cardiff Player's Contract");

iii) the agreement between the WRU, Cardiff and Leeds which provided, amongst other things, for the payment by the WRU to Leeds of a transfer fee of £750,000 plus use of a hospitality box at the Millennium Stadium in Cardiff for two seasons ("the Multi-Party Contract"); and

iv) the contract between. the WRU and Mr Harris which provided for the terms on which Mr Harris would, if selected, play for Wales ("the WRU Player's Contract").

All four contracts were dated 9 August 2001.

18. Before reciting the clauses which are material to the issues to be decided, I should explain the overall framework of the contracts which I have listed earlier. Leeds agreed to release Mr Harris from his existing Rugby League Player's Contract and in return received a transfer fee of £750,000 plus the use of a hospitality box at the Millennium Stadium. Leeds also reserved to itself under the agreement the options which are at the heart of the present dispute (clauses 5 and 6). This release enabled Mr Harris to enter into the Cardiff Player's Contract to play Rugby Union for Cardiff and the WRU Player's Contract to represent Wales. The Multi-Party Contract, under which the WRU agreed to pay a transfer fee to Leeds, required Leeds to enter into the release agreement.
19. The relevant clauses of the Release agreement are:

"2. RECITALS

1 Mr Harris is employed by Club under the terms of the Player's Contract for a fixed period from the 1 December 1999 until the 30 November 2003.

2 Mr Harris no longer wishes to play for the Club and proposes to enter into the Cardiff Contract and the WRU Contract.

3 In consideration of the payment of the Compensation [defined to mean the compensation payable by the WRU to the Club under the terms of the Compensation Agreement] the Club has agreed to release Mr Harris from all further obligations under the Player's Contract and accordingly it is agreed Mr Harris' employment with the Club shall cease on the Termination Date [defined as 1 September 2001]".

...

"5. OPTION TO RE-EMPLOY

1 Mr Harris further agrees that in the event he exercises the Option [defined to mean the option included in the Cardiff Contract permitting Mr Harris lawfully to terminate the Cardiff Contract on 1 September 2004] he shall contemporaneously send to the Club a copy of such notice together with a full copy of the Cardiff Contract whereupon the Club shall have the right exercisable at any time during the Option Period (time being of the essence) to require Mr Harris to enter into a written Player's Contract with the Club on the following terms:

5.1.1 Mr Harris shall be employed for the Term [defined to mean the 12 month period commencing on the date of the lawful termination of the Cardiff Contract following the exercise of the Option];

5.1.2 The remuneration payable to Mr Harris shall be no less favourable than the remuneration payable under the Cardiff Contract as at the date of this Agreement;

5.1.3 During the Term Mr Harris shall be entitled, if selected, to play in all WRU international Union matches;

5.1.4 In all other respects the standard terms and conditions as specified in the Rugby Football League RFL standard form of Player's Contract for the time being in force shall apply.

LOAN PERIOD

1 During the Loan Period [defined to mean the period commencing on the later of (a) 1 June 2004 or (b) the day following the last Cardiff fixture in the 2003/2004 season and ending on 30 September 2004 or the day following the last Club fixture in the 2004 League season whichever is the later] Mr Harris shall whenever the Club so elects (whether orally or in writing) make himself available to The Club to play League and for training sessions associated therewith at such times as may be stipulated by the Club other than for the duration of any short-term tour for which Mr Harris is selected by the WRU to play in Australia, New Zealand, South Africa, France and Argentina .

2 Mr Harris warrants and undertakes:

6.2.1 That he has procured the prior consents of the WRU and Cardiff to make himself available under the terms of this clause;

6.2.2· That· if required to play and train for "the Club during the Loan Period he shall immediately enter into a written Player's Contract on the following terms: .

6.2.2.1 Mr Harris shall be employed by the Club from the date of the Club's election until the end of the Loan Period;

6.2.2.2 The remuneration payable to Mr Harris shall be £6,000 per month gross salary and £3,000 for each First Team appearance;

6.2.2.3 During the Loan Period Mr Harris shall be entitled, if selected, to play for Cardiff in all European Cup matches;

6.2.2.4 In all other respects the standard terms and conditions as specified in the Rugby Football League standard form of Player's Contract for the time being in force shall apply".

The only clause from the Cardiff Player's Contract which it is necessary to quote is c.1ause 3.4 which provided:

"The Player shall have the option to terminate this agreement on the Anniversary date [defined to mean the third anniversary of the Effective Date, namely 1 September 2001] without further liability to either party and if the player wishes to so determine this agreement, he shall provide not less than 28 days notice in writing to the Club, such notice to expire not later than the said Anniversary Date. For the purpose of this clause . only, time shall be of the essence both in relation to the said notice and the Anniversary Date."

The Multi-Party Contract provided that it should commence on 1 September 2001. The consideration and payment were defined to include:

"3.1 In consideration of Leeds releasing the Player from the Leeds Contract and each and every provision thereof and subject to the prior receipt of a properly constituted VAT invoice addressed to the WRU for the full amount of £131,250 WRU agrees to make the payments set out in the first Column of Schedule 01 on the dates set out opposite in the second column [namely £350,000 on 1 September 2001 and £200,000 in each of the succeeding years]" .

The WRU and Cardiff undertook to procure for Leeds the use of a hospitality box for two years. Finally, clause 4 provided:

"On the date hereafter Leeds shall enter into the Player Release Contract releasing the Player from the Leeds Contract :with effect from the Effective Date and confirms and acknowledges that it is not aware of any cause of action or potential cause of action whatsoever and whensoever arising and whether arising in contract tort or otherwise against the Player and/or WRU and/or Cardiff"

It is unnecessary to say more of the WRU Player's Contract than that it too came into effect on 1 September 2001.

20. Before addressing the issues to be decided, I should explain how they arise. On 20 March 2004 Mr Harris granted to Bradford Bulls RFC an option to require him to play for Bradford for a period of four years on terms set out in a schedule to the option agreement. The consideration for the option, which was exercisable at any time up to 31 October 2004, was £1. On 1 July 2004 Mr Harris announced that he had entered into a Player's Contract with Bradford.
21. The claim of Leeds in the present proceedings is that Mr Harris and Bradford were respectively guilty of breach of contract and inducement of breach of contract.

Whether clause 5 of the Release Contract is void for uncertainty

22. I. shall deal with the three preliminary issues separately and in reverse order, starting with the issue whether clause 5 of the Release Contract is void for uncertainty. Both Ms Jane Mulcahy on behalf of Mr Harris and Mr Christopher Stoner on behalf of Bradford argue on broadly similar grounds that clause 5 is uncertain and therefore void. The clause in the Release Contract which is said to give rise to uncertainty is clause 5.1.2, which I have set out above, and in particular the reference in that clause to the remuneration payable to Mr Harris being "no less favourable than the . remuneration payable under the Cardiff Contract". There is no definition of "remuneration" in either the Release Contract or the Cardiff Player' s Contract. However, the Cardiff Player's Contract made provision for Mr Harris to receive a basic salary at the rate of £200,000 per annum; percentage bonus payments dependent on Cardiff reaching the quarter final of the European Cup, the semi final of the European Cup, winning the Welsh Challenge Cup plus squad bonuses; expenses and insurance cover. The contention on behalf of the Defendants is that the clause can bear a variety of meanings. It is said to be unclear whether it should be interpreted as meaning that Mr Harris should receive remuneration which is the same as Cardiff's (in relation to each element of that remuneration) or better. It is further said that clause 5.1.2 amounts to no more than an agreement to agree. There is no mechanism by which the amount of the remuneration payable by Leeds is to be determined. Reliance is placed on Brown v Gould [1972] CH 53 at 62 and May & Butcher Limited v R [1934] 2 KB 17.
23. Mr David Griffith-Jones QC for Leeds accepts, as he must, that clause 5 specifies no precise remuneration. There is, he submits, no uncertainty as to what the words "no less favourable" mean: Mr Harris's total remuneration payable by Leeds had to be of an equivalent value or more than he had received when playing for Cardiff. Any difficulties in applying that criterion could, if necessary, be determined by the Court. The components of the remuneration payable by Leeds by virtue of clause 5.1.2 would include basic salary, insurance, and expenses. Mr Griffith-Jones accepts that Mr Harris would be entitled in addition to a bonus element. He concedes that the events triggering Mr Harris's bonus entitlement from Cardiff are inapplicable to any employment by Leeds but says that it would be necessary for Leeds to determine at the commencement of any re-employment of Mr Harris what would be the chance of Mr Harris earning bonuses for which purpose recourse could, if necessary, be had to the historic remuneration received by way of bonus by Mr Harris during his time at Cardiff. Mr Griffith-Jones also relies on Brown v Gould (op cit) and on Mamidoil-Jet-Oil Greek Petroleum v Okta Crude Oil Refinery [2001] 2 Lloyds Rep 76.
24. The principle is not in doubt that, where a contract is in a material respect uncertain, it is in its totality void. Plainly in any employment contract the term providing for remuneration is both material and important. However, as has often been said, the Court should not be a destroyer of bargains but rather should strive to uphold terms which were intended to have legal effect. The fact that a formula or mechanism for calculating remuneration is difficult is no reason to render the contract void, providing that the term, properly construed, does not bear two or more different meanings.
25. As far as basic salary is concerned, it appears to me that the meaning of clause 5.1.2 is clear: Mr Harris is entitled to receive a basic. salary of not less than £200,000 per annum. If the basic salary element were to be less than £200;000, then it would be . incumbent on Leeds to make up the shortfall by increasing one of the other elements proportionately. I see no difficulty or uncertainty in regard to expenses or insurance cover: the obligation of Leeds is to include in Mr Harris's remuneration package an entitlement to expenses and insurance arrangements which are no less favourable to him than those provided for in the Cardiff Player's Contract. The element which causes me some concern is the bonus element contained in the Cardiff Player's Contract. I accept that, if Mr Harris were not to receive from Leeds some payment in addition to his basic salary greater than his bonus entitlement under the Cardiff Player's Contract, then he could validly complain that his remuneration from Leeds would be less favourable than the remuneration payable by Cardiff. The entitlement of Mr Harris in this respect appears to me to be conceptually clear. I agree that calculating the actual amount of the additional payment due to Mr Harris might be difficult. But that is no reason for declaring the clause or the contract as a whole to be void: see Brown v Gould at 57C to E.
26. Accordingly I reject the contention that the Release Contract is void. My answer to the third preliminary issue is in the negative.

The alleged invalidity of clauses 5 and/or 6 on the grounds of lack of consideration

27. The contention which is advanced by Mr Stoner on behalf of Bradford is that the consideration for the release of Mr Harris from his obligations owed to Leeds was the payment of compensation (i.e. the transfer fee of £750,000) by the WRU. That being so, it is argued that on the face of the contract no consideration was payable in respect of the separate collateral element, namely the option conferred on Leeds to re-employ Mr Harris. Accordingly, submits Mr Stoner, Leeds, as promisee, is not entitled to ~enforce the contract against Mr Harris. (I should record that Miss Mulcahy, whilst contending that the inadequacy, as she claimed, of the consideration was relevant to the first preliminary issue, did not argue that the Release Contract was void or unenforceable for want of consideration).
28. In my judgment it is illegitimate to compartmentalise the Release Contract in the way suggested by Mr Stoner. I think Mr Griffith-Jones is correct that the options conferred on Leeds by clauses 5 and 6 were part and parcel of what Leeds obtained as the price of releasing Mr Harris from his subsisting contract. In a tripartite arrangement of the kind set in place by the Release Contract, it was not necessary that there should be some separate payment to be made by Leeds to Mr Harris in return for the options. The consideration moving from Leeds was its agreement to release Mr Harris. That was a significant detriment to Leeds and a significant benefit to Mr Harris.
29. I reject the contention that either clause 5 or clause 6 of the Release Contract was void. or unenforceable by reason of lack of consideration. I answer the second preliminary issue in the negative ..

The restraint of trade issue

30. Before turning to the rival contentions of the parties, I should mention an application which was made at the start of the hearing by Mr Stoner for Bradford. He applied for certain passages to be struck out from the witness statement of Mr Hetherington op the ground that they were inadmissible or alternatively expressions of opinion.
31. I gave a ruling on that application at that time and I will not repeat myself. I make clear, however, that I accept that in relation to the issue whether clause 5 of the Release Contract is or is not a restraint the normal rules of construction apply. The terms of the agreement must be construed without regard to the subjective intent of the parties or to the positions adopted by them in the course of negotiations: see Investors Compensation Scheme v West Bromwich Building Society [1998] I WLR 899 per Lor4 Hoffmann at 912-3.
32. In my view the position is somewhat different when it comes to the question whether the covenant, assuming it to be in restraint of trade, is reasonable in the parties' and the public interest. I accept, in the light of Haynes v Doman [1899] 2 Ch 13 at 24, that quasi-expert evidence from persons in the relevant trade is not admissible. However, evidence of surrounding circumstances may be admitted: see North West Salt Co Limited v Electrolytic Alkali Co Limited [1914] AC per Viscount Haldane at 470:-1.
33. Broadly speaking I consider that the contents of Mr Hetherington's statement are admissible in relation to the issue of reasonableness, although the weight to be attached to what he (and Mr Harris) say on that topic may be a different matter.

The argument for the Defendants

34. The arguments on behalf of the Defendants that clause 5 of the Release Contract (but not clause 6) is void as being in restraint of trade proceeded on conventional lines.· The Release Contract was described as an agreement whereby the employment of Mr Harris was terminated. Clause 5 was a post-termination restraint in that it prevents Mr Harris from playing Rugby League (or Rugby Union) for any other club than Leeds in the event that he exercised his option to terminate the Cardiff Player's Contract in the summer of 2004. The clause is objectionable and is not for the benefit of Mr Harris in that it requires him not merely not to work for a competitor but to work again for Leeds if called on to do so. It was submitted that, according to the classic definition of a contract in restraint of trade enunciated by Diplock LJ in Petrofina (Great Britain) v Martin [1966] Ch 146 at 180, clause 5 operated as a restraint on Mr Harris because under it he agreed "to restrict his liberty in the future to carryon trade with other persons not parties to the contract in such manner as he chooses". This formulation was approved by Lords Hodson and Morris in Esso Petroleum Co Limited v Harper's Garage (Southport) Limited [1968] AC 269.
35. The covenant being such a restraint, it was argued that it requires to be justified in accordance with the test laid down by Lord Macnaghten in the Nordenfelt Case [1894] AC 535 at 565 and approved by Lord Reid in Esso Petroleum at 330. As Mr Stoner pointed out, the covenant should be no more restrictive than the legitimate interests of the employer require: see Office Angels Limited v Rainer-Thomas and O'Connor [1991] IRLR 214 at 217.
36. As Ms Mulcahy said, the type of interests which it may ordinarily be reasonable for an employer to protect will include trade secrets or confidential information, trade connections such as suppliers and customers and the skills of the workforce. She argued that in the present case Leeds had no need of such protection. Ms Mulcahy further contended, on the basis of observations of Lords Reid, Hobson and Pearce in Esso Petroleum that a question which is relevant to the reasonableness of the covenant is the adequacy of the consideration moving from the covenantee (i.e. Leeds): see pp300B-C; 318E-F and 323E; see also Panayiotou v Sony Music [1994] EMLR 229 at 328.
37. The case for the Defendants is that Leeds insisted on the inclusion of the unusual provision contained in clause 5 for the reason that Mr Hetherington had been unable to persuade the WRU to pay the £1 million transfer fee which he had asked for and wanted to make good the deficit. Reliance was placed on Mr Hetherington's concession in cross-examination that he wanted to get the best possible deal for Leeds. It was suggested that Mr Harris was being treated as a chattel by Leeds.

The argument for Leeds

38. Mr Griffith-Jones had no particular quarrel with the propositions of law advanced on behalf of the Defendants. His position was that the argument that clause 5 is to be treated as a covenant in restraint of trade is misconceived.
39. He pointed out that the option contained in clause 5 would be triggered if and only if Mr Harris chose to leave Cardiff. In the event that Mr Harris so chose, the effect of clause 5 was to give Leeds the opportunity to resume its employment of Mr Harris for a limited period of 12 months. Mr Griffith-Jones emphasised the importance of properly categorising the covenant. Far from amounting to a post-termination restraint of trade, clause 5, properly understood, is a conditional agreement to continue Mr Harris's employment. As such it would be highly unusual to treat it as being in restraint of trade. Mr Griffith-Jones relied 011 dicta supporting that proposition in Esso Petroleum per Lord Reid at 294B-F; Lord Morris at 306E-3070; Lord Pearce at 328D-329A and Lord Wilberforce at 336F.
40. Mr Griffith-Jones accepted that employment agreements, or at least contracts for the provision of services, may be struck down but that would be on the footing that the bargains are unconscionable or unfair rather than on restraint of trade grounds: see Schroeder Music Publishing v Macauley [1974] 1 WLR 1308 and Panayotiou v Sony (op cit). That, he submitted, cannot be said of the bargain in the present case. Ms Mulcahy repudiated the suggestion that the contract between her client and Leeds could possible be described as unconscionable. She emphasised that it was Leeds which had the power to determine the terms on which Mr Harris went to Cardiff.
41. The argument for Leeds was that, if the doctrine of restraint of trade is engaged at all, it does not matter significantly whether clause 5 is properly to be described as being in restraint of trade, since the clause is obviously justified as being reasonable in the interests of both parties.

Discussion and conclusion

42. In my view the appropriate starting point is to consider the circumstances under which the Release Contract was entered into .. It is not in dispute that by 1999 Mr Harris was Leeds' star player. As such Leeds were exceedingly anxious to retain his services. That was why in 1999 Leeds had increased his remuneration. However, by 2001 it had (as I have already said) become Mr Harris's dream to play for Wales. From his perspective this was understandable both in terms of achieving better remuneration from playing Rugby Union; in terms of the growing popularity of that type of rugby and because of the forthcoming World Cup series. I accept Mr Hetherington's evidence that he was sympathetic to Mr Harris's position although still keen to keep him at Leeds. In effect Mr Hetherington had to bow to the inevitable. The significance of this for the purposes of the present dispute is that, whilst it is true that Leeds had the power to determine the terms on which Mr Harris left, the. impetus for his departure came exclusively from Mr Harris.
43. The other important point, as it appears to me, is that the Release Contract was one of four interlocking agreements. I have summarised and quoted earlier the material terms of the agreements. The scheme of the contractual arrangements was in effect designed to enable Mr Harris to be transferred from playing Rugby League for Leeds to playing Rugby Union for Cardiff and (it was hoped) Wales. In financial terms the transfer was achieved at the expense of the WRU who in effect paid the transfer fee to Leeds. Mr Harris stood to gain financially from the enhanced remuneration he would obtain from Cardiff and, if selected, from the WRD. The option softened the blow of losing Mr Harris for Leeds.
44. I accept without hesitation the evidence of Mr Harris that at the time when these agreements were being negotiated his eyes were set on playing for Wales. As he put it, he was going "lock, stock and barrel" to Wales. It did not cross his mind that he might want to return to Rugby League in the future. (I think that is why he did not absorb the fact that the release Contract contained an option for Leeds to re-employ him if he exercised his right to terminate the Cardiff Player's contract after 3 years. But in my opinion Mr Griffith-Jones is right when he says that it is immaterial whether or not Mr Harris understood that the option existed,. especially as his agent and solicitor were aware of it). I do not accept the suggestion that the option in favour of Leeds was included in the Release Contract because the WRU refused to pay the £1 million fee for which Leeds had asked. It seems to me that the option reflects the keen wish of Leeds (not least from the point of view of its fans) to secure the return of Mr Harris to Leeds in the event (no doubt perceived at the time to be unlikely) that he decided to leave Wales early.
45. I have spent some time describing my understanding of the genesis of the interlocking contractual arrangements because I think it important to .note that the Release Contract is sui generis and far removed from the ordinary run of cases where the restraint of trade doctrine comes into play. It is true that it did provide for the termination of Mr Harris's employment with Leeds and the option in favour of Leeds, if exercised, would operate post-termination. However, the principal object of the contract (and the associated agreements) was to achieve the release of Mr Harris and to do so at his behest and for his· benefit.
46. I am willing to assume in favour of the Defendants that, notwithstanding the highly unusual features of the Release Contract, it is appropriate to adopt the conventional analysis in restraint of trade cases by asking first if clause 5 is a covenant in restraint of trade and, if so, to decide whether it is in the reasonable interest of the parties. (It has not been suggested that the clause is contrary to the public interest).
47. The effect of clause 5 is plainly to enable Leeds, in the event that Mr Harris terminates his contract with Cardiff early, to require Mr Harris to play for Leeds in what would otherwise have been his fourth year with Cardiff. It is true that in a sense it is a contract for the employment (at Leeds' option) of Mr Harris but that does not to my mind prevent it being a restraint. Nor do I accept that clause 5 is not to be treated as being a restraint because it could only come into effect upon Mr Harris electing to leave Cardiff after 3 years. That may be a significant factor when it comes to the issue of reasonableness. It is nothing to the point so far as the question whether the clause is a restraint is concerned.
48. In my judgment clause 5 is a restraint on Mr Harris because it prevents him, on leaving Cardiff prematurely, from playing Rugby League for any club other than Leeds (as well incidentally as preventing him. from playing Rugby Union for any other club). That is a restriction on the ability of Mr Harris to "ply his trade".
49. In that event, according to conventional analysis, the court will treat the contract as void unless the restraint can be shown to be reasonable in the interests of Leeds and Mr Harris. As to Leeds, it appears to me to be plain beyond argument that it was reasonable for the club to secure, if it could, the services for Mr Harris for another year even if that year was some distance away in time. It is true that the clause was not required for the conventional reason (trade secrets, customer connection and the like) but in circumstances such as obtain here, that is immaterial. It was in my judgment entirely reasonable for Leeds to reserve the right to call upon its former star player to play again for the Rhinos in the event that he decided to revert to Rugby League. The justification advanced by Leeds is comparable in my view with the justification advanced by Sony and upheld by the Judge in Panayitou. I reject the suggestion that securing the services of Mr Harris for that year was just another way of increasing the transfer fee or can be regarded as treating Mr Harris as if he were a chattel. I do not find it helpful to test the reasonableness of the clause by reference to fanciful scenarios such as that Mr Harris might (when still in his 20s) decide to leave rugby for a career in the media. I doubt if retaining Mr Harris on terms no less favourable to him than were payable by Cardiff was, from a purely financial point of view, commercially advantageous to Leeds.
50. Even if reasonable in the interests of Leeds, was clause 5 reasonable in the interests of the player? As to that there was some debate whether the inclusion of such a clause is "normal in sport". If it is normal, the likelihood of it being reasonable is increased. But in my view the converse does not hold good. I am prepared to assume that it is abnormal. But that does not seem to me to advance the argument that the clause is not in the interests of Mr Harris.
51. Treated in isolation, clause 5 may be said to be contrary to the interests of Mr Harris in the sense that it would be better from his point of view to have a complete freedom of choice as to which, if any, club he might play for if and when he left Wales in 2004. I consider, 'however, that at least in the context of the contractual arrangements in the present case, it wholly unrealistic to treat clause 5 in isolation and without regard to the circumstances under which the Release Contract came into existence.
52. I have summarised those circumstances in paragraphs 44-46 above. The essential points are that the Release Contract came into existence because Mr Harris wanted to play for Wales. Given the nature 6fthe employment, there was nothing which Leeds could in practice do to stop him. Whatever may have been the strength of Leeds' bargaining power vis-à-vis the WRU/Cardiff, Mr Harris had already achieved a major status in the world of rugby. Leeds had no alternative but to let him go. At the time when the Release Contract was entered into, no-one concerned had any reason to doubt that, if Mr Harris decided to return to Rugby League, Leeds would be the club of his choice. Moreover, whether he appreciated it or not at the time, I have no doubt that Mr Harris (who, it should be remembered, had both an agent and a solicitor representing him at the time) was more than willing to accept the option as part of the price to be paid for being free to pursue his dream of playing for Wales. Moreover it would be wrong to overlook the fact that it was Mr Harris's decision to leave Cardiff in 2004 which triggered the option (as he must have known by then it would do). The result of the option being exercised was that Mr Harris became employed and not that he was denied employment.
53. Ms Mulcahy advanced a cogent argument, adopted by Mr Stoner, to the effect that the remuneration to which Mr Harris became entitled under the Release Contract was inadequate. Mr Griffith-Jones conceded, rightly in my opinion, in the light of observations by Lords Reid and Pearce in their speeches in Esso Petroleum at 300 and 323 respectively, that remuneration may be relevant to the question whether the restraint is from the player's point of view reasonable. On the other hand, as, was pointed out in both those speeches, the court should be wary of presuming that it knows the party's interests better than he does himself, at least in circumstances where the parties to the contract are free and competent (see 300C and 324B; see also Panayitou at 332).
54. The main consideration moving from Leeds was not pecuniary; it was the club's reluctant agreement to release Mr Harris from a contract which was valuable to Leeds and which had two years to run. Apart from that, Mr Harris was going to be paid by Cardiff rather more than he was currently being paid by Leeds. He had the chance (which happily materialised) of obtaining additional remuneration if selected to play for Wales. Furthermore clauses 5 and 6 of the Release Contract provided for substantial remuneration to be paid to Mr Harris in the event that the options were exercised. Clause 5 was drafted so as to ensure that Mr Harris would be in no worse financial situation if he returned to play for Leeds.
55. For all these reasons I have come to the conclusion that, to the extent that clause 5 operated as a restraint on Mr Harris, it was in the circumstances a restraint which was clearly reasonable in the interests of both Leeds and Mr Harris. Accordingly I answer the first preliminary issue in the negative: in my judgment clause 5 of the Release Contract is not void as being in restraint of trade.