Neutral Citation No:  NICA 7
Judgment: approved by the Court for handing down
(subject to editorial corrections)*
STEPHENS LJ (delivering the judgment of the court)
(a) The total area contained in the folio which extended to some 5 ½ acres ("the total area") of which Mr Shortall was the freehold owner until he conveyed ownership of the lands in the folio to Peninsula Securities Limited on 27 April 1983.
(b) The part of the lands in the folio which is subject to the lease to Dunnes Stores (Bangor) Limited which part extends to approximately 1.05 acres ("the area subject to the lease").
(c) The remaining part of the lands in the folio which was not subject to the lease from Mr Shortall to Dunnes Stores (Bangor) Limited which part extends to some 4 ½ acres ("the remaining lands"). It was this part which was subject to the restrictive covenant.
The terms of the lease
"That any development on the lessor's lands comprised in the lessor's folio and on his other lands adjoining the premises shall not contain a unit in size measuring 3,000 sq ft or more for the purpose of trading in textiles, provisions or groceries in one or more units."
"In case the said shop units or any other premises on the lessor's adjoining lands or any part thereof shall be sold, conveyed, demised, licenced or otherwise disposed of by the lessor or become vested in any other person or persons whomsoever the lessor will so deal with the said premises or part thereof only on condition that the purchaser or lessee or other person to whom any interest or licence respecting the said premises shall be disposed shall enter into a covenant for the benefit of the lessee that he or any person deriving title under him shall observe the covenants on the part of the lessor and conditions herein contained and the lessor further covenants that he will at the request of the lessee join as plaintiff in any action by the lessee to enforce these covenants and the conditions."
"Part of the land herein is subject to a lease made on 2 February 1981 from P Shortall to Dunnes Stores (Bangor) Limited for 999 years from 1 February 1981…"
The first instance judgment
(a) Does the restraint of trade doctrine apply to this type of long lease?
(b) Did the transfer of the freehold from Mr Shortall to the (appellant) make a covenant which was void and (unenforceable) against Mr Shortall enforceable against the (appellant)?
(c) Does the Competition Act 1998 exclude the application of the restraint of trade doctrine?"
The last sub-question arose as it was submitted on behalf of the respondent that in accordance with its analysis of the decision in Days Medical Aids v Pihsiang  EWHC 44, once the appellant abandoned its claim under the Competition Act 1998 the court was precluded from ruling that the covenant was unreasonable under the common law doctrine of restraint of trade.
(a) Principle 1 – The doctrine of restraint of trade applies to a person who gives up a "pre-existing freedom" when he enters into the covenant.
(b) Principle 2 - The doctrine of restraint of trade does not apply to either a lessee who accepts a negative covenant in a lease or a purchaser of freehold land who accepts a negative covenant in respect of the land he purchases.
(c) Principle 3 – The doctrine of restraint of trade, in respect of both freehold and leasehold land, does not extend to successors in title of the original covenantee and covenantor.
"… there is authority that the doctrine does not apply to Tulk v Moxhay type covenants. This is shorthand for saying the doctrine does not apply to successors in title of freehold land burdened by a restrictive covenant."
The submissions of the parties
(a) Esso Petroleum is confined to its facts and does not extend beyond solus agreements;
(b) The High Court did not indicate the form of restraint required to satisfy the doctrine of restraint of trade;
(c) The judge erred in holding that Mr Shortall gave up a pre-existing freedom when granting the lease and making the restrictive covenant, and failed to consider the commercial benefits accruing to him from the bargain;
(d) The judge erred in concluding that Esso applies to a vendor who when selling or leasing part of his land agrees to enter into a restrictive covenant on his retained land; and
(e) The judge failed to apply the judgment in Days Medical Aids v Pihsiang  EWHC 44. In relation to this ground the respondent stated that since the judge made no express finding on the parties' submissions, the issue ought to fall to be considered expressly by the High Court should the appeal succeed and the proceedings be remitted as the "remaining issues of reasonableness and justification will have to be determined by the Court at first instance."