Quantum Actuarial LLP v Quantum Advisory Ltd: Court of Appeal reconsiders the application of the doctrine to commercial contracts

Date

25 Feb 2021

Comment

Guy Adams acted for the successful Respondent in Quantum Actuarial LLP v Quantum Advisory Ltd [2021] EWCA Civ 227, a dispute relating to the legal doctrine of restraint of trade.

 

In its judgment, handed down on 24 February 2021, the Court of Appeal has reconsidered the application of the doctrine to commercial contracts in light of the recent Supreme Court case of Peninsula Securities Ltd v Dunnes Stores (Bangor) Ltd [2020] UKSC 36.

 

The Court of Appeal unanimously rejected the Appellant's argument that the Supreme Court had laid down a universal test (the "trading society test") for the application of the doctrine.

 

Lady Justice Carr reiterated that there is no bright line between covenants that are properly to be treated as part of the parties' mutual agreement without more and those which may be in restraint of trade and consequently require justification in order to be enforceable. The court has to decide which side of the line any particular provision falls, applying a broad practical rule of reason.

 

There is no single test of universal application. Rather, where, as in this case, a commercial contract does not fall into a category of accepted and normal commercial dealings, "the search is for one or more features of the [agreement] which, in all the circumstances, can be said to be such a cause for concern (or apparently oppressive) as to justify (as a matter of public policy) requiring the covenantee to prove reasonableness" - per Lady Justice Carr at [80].

On the facts, the judge had been correct to find that the restrictive covenants in the agreement were not oppressive, but rather were fairly and properly ancillary to the positive commercial arrangements under the contract.

The judgment can be found here.

Contributors

Guy Adams