United Kingdom House of Lords Decisions

You are here: BAILII >> Databases >> United Kingdom House of Lords Decisions >> Cory & Son, Ltd v. Harrison and Others [1905] UKHL 571 (23 November 1905)
URL: http://www.bailii.org/uk/cases/UKHL/1905/43SLR0571.html
Cite as: 43 ScotLR 571, [1905] UKHL 571

[New search] [Printable PDF version] [Help]

SCOTTISH_SLR_House_of_Lords

Page: 571↓

House of Lords.

(On Appeal from the Court op Appeal in England.)

Thursday, November 23 1905.

(Before the Lord Chancellor (Halsbury), Lords Robertson and Lindley.)

43 SLR 571

Cory & Son, Limited

v.

Harrison and Others.

Subject_Contract — Construction — Sale of Business — Contract not to “Directly or Indirectly Carry on, or be Engaged, or Concerned, or Interested in” the Business.
Facts:

A coal merchant, engaged both in the home and foreign trade, sold his home business to a company, entering at the same time into an agreement with the company not to “directly or indirectly carry on, or be engaged, or concerned, or interested in the coal trade in any part of Great Britain or the Isle of Man.” He subsequently sold his foreign business to another company on credit, looking for payment to the company's future profits. The company subsequently started a home business in Great Britain.

Held that the mere fact of his being a creditor of the company did not make him “concerned or interested in” the coal trade in the meaning of the agreement.

Headnote:

This was an appeal from a judgment of the Court of Appeal ( Williams, Stirling, and Cozens-Hardy, L.JJ.), who had affirmed a judgment of Joyce, J.

The facts were as follows:—The respondent Harrison carried on business as a coal merchant, being engaged both in the home trade and also in an export trade. He sold his home trade to the appellants, who were also coal merchants, retaining the export trade, and entered into a covenant not to “directly or indirectly carry on, or be engaged, or concerned, or interested in the coal trade in any part of Great Britain or the Isle of Man.” He afterwards sold his export trade to a company. The sale was not for cash, and he looked to the profits of the company's trade for payment of the purchase money. The company afterwards began to carry on a home trade, and the appellants brought this action for breach of covenant, asserting that the respondent Harrison was “concerned or interested in” the company's coal trade in Great Britain.

Joyce, J., and the Court of Appeal gave judgment for the defenders. The pursuers ealed to the House of Lords.

At the conclusion of the argument for the appellants their Lordships gave judgment.

Judgment:

Lord Chancellor (Halsbury)—I think that we are all of opinion that what is complained of here is not within the covenant. It would be absolutely impossible, I think, to lay down with precision what is or is not comprehended in such words as “interested or concerned in.” All that I can say about it is that you must look at the facts of the particular case, and look at the business meaning of the words. I agree that the question to be determined is, What was the business meaning of these words dealing with such a subject-matter as is dealt with by these agreements? And to my mind it is impossible to say that the words of the covenant make this gentleman “concerned or interested in” this particular business. Of course, the ambiguity is created when words so very wide in their extension are applied to a business of this character. The words “concerned or interested in” would in popular signification undoubtedly include a great deal more than would have been intended by the business meaning of this covenant. When it is put that you are “interested” if you lend money to a person, if you supply him with capital, if you do this, that, and the other which enables a business to be carried on, in a certain wide sense it cannot be denied that you are “interested”; and being “interested” may also include terms of affection, because, speaking in one sense, they may give a person an interest in something. But when you are dealing with the subject-matter which is here dealt with—namely, the carrying on of a business, and endeavouring to prevent the carrying on of that business directly or indirectly, or having any part or concern in that business—I think that every business man would quite comprehend that the mere fact of being a creditor of the firm is not being “concerned or interested in” it. Although in a certain sense every creditor is “interested in” the solvency of his debtor, and in that sense there is an interest, that is not the sort of interest which is contemplated by this covenant It appears to me that this is really the short point which we have to decide, and as far as I am concerned I think there is no doubt about it—that it is not within the covenant. For these reasons I am of opinion that this appeal should be dismissed with costs.

Lord Robertson—I am of the same opinion. I think that the case of the appellants is much too far fetched. When J. & O. Harrison entered into the agreement for the sale to John Harrison and

Page: 572↓

Tidswell, they were carrying on their foreign business quite legitimately, and it is that foreign business which they sold to John Harrison and Tidswell. Now, if John Harrison and Tidswell had simply taken over the foreign business, and the clauses which have been referred to had been inserted in the agreement, there could not have been a word to say in support of the appeal. Does the mere fact that the new arm, who themselves are quite free from the obligations of the covenant, intend not to limit their business to the foreign trade, but to carry on the home trade, involve the present respondents in a breach of this contract? It seems to me that the position is really not substantially different from that of a moneylender, or, at all events, that the reasoning must apply to the one case as well as to the other; because the basis upon which the appellants have ultimately rested their case is a very narrow one, that inasmuch as you have these clauses applicable not merely to the export business, but to the other operations of the new firm, therefore the respondents are liable in this action. I think that untenable, and I am quite content to face the challenge which was made by the learned connsel for the appellants to treat this in a business aspect. It appears to me that to apply the word “interested” in this sense would be to give it an extension which would prove most embarrassing, and indeed impracticable, in the ordinary conduct of business.

Lord Lindley—I am of the same opinion, and I cannot usefully add anything to the reasons which have been given.

Order appealed from affirmed, and appeal dismissed with costs.

Counsel:

Counsel for Appellants— Warmington, K.C.—Haldane, K.C.—Austen-Cartmell. Agents— Deacon, Gibson, Medcalf, & Marriott, Solicitors.

Counsel for Respondents— Neville, K.C.—Hughes, K.C.—Sheldon. Agents— Keene, Marsland, Bryden, & Besant, Solicitors.
1905