X-R Touring LLP v Joshua Javor & Anor [2025] EWCA Civ 497

[2025] EWCA Civ 497Case No CA-2024-000753
IN THE COURT OF APPEAL (CIVIL DIVISION)
[2024] EWHC 562 (KB)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
KING’S BENCH DIVISION
THE HON MR JUSTICE KERR
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 17 April 2025
Before
LORD JUSTICE BEANLORD JUSTICE MOYLANLORD JUSTICE PHILLIPS
Between
X-R TOURING LLPAppellantJOSHUA JAVORRespondentsWILLIAM MORRIS ENDEAVOR ENTERTAINMENT U.K. LIMITEDRespondentPaul Goulding KC and Celia Rooney (instructed by Russells) for AppellantDavid Reade KC (instructed by Marriott Harrison LLP) for First RespondentAdam Solomon KC (instructed by Morgan, Lewis and Bockius UK LLP) f or the Second RespondentHearing Hearing date: 06 March 2025
Approved JudgmentThis judgment was handed down remotely at 10.00am on 17 April 2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives..............................
[1]The Appellant X-R Touring LLP operates a UK-based concert booking agency for artists in the music industry. The First Respondent, Joshua Javor, left the employment of X-R in August 2023 to work for the Second Respondent, WME, a company in the same business. X-R brings this appeal from a decision of Kerr J handed down on 13 March 2024 striking out its claim for a declaration of entitlement to commission as having no real prospect of success at a trial.[2]The primary facts are not in dispute and are set out in the decision of the judge:- “5. X-R was incorporated in 2005. Among the founding members was the late Mr Stephen Strange, a legend in the industry. X-R's business is to organise and schedule concerts in many countries at which artists perform; and to negotiate and agree the terms on which they will perform, customarily though not always in return for a percentage of the artist's gross earnings from the performance. 6. Mr Javor joined X-R in 2008 as an employee and booking agent, working as part of Mr Strange's team. By the time Mr Strange died in September 2021, Mr Javor had become his leading team member and is described by Mr Ian Huffam of X-R as Mr Strange's "trusted right hand man". Mr Javor took over Mr Strange's roster of illustrious artists, including many well known names. 7. X-R's case, assumed for present purposes to be correct, is that the lead time for arranging a performance can be long; many concerts are negotiated, arranged and booked months, sometimes years, in advance of the performance. X-R's case is that Mr Javor was involved in discussions in 2022 and 2023 with concert promoters and client artists about performances that subsequently took place, or were scheduled to take place, after he left X-R to work for WME. 8. From 1 April 2022 Mr Javor entered into an employment contract with X-R. Although it is dated "May 2022" and he did not sign it until 29 June 2022, it is common ground that it took effect from 1 April 2022 which is the start date mentioned in clause 1, with continuity of employment since January 2008. He was employed, as before, as a booking agent securing bookings for X-R's artists and negotiating with promoters the terms on which the artists would perform. 9. Clause 1 provided for a fixed term of almost one year's employment up to 30 March 2023, unless extended by agreement, or unless the contract were terminated earlier. X-R could terminate on three calendar months' notice, or immediately on payment of three calendar months' pay in lieu of notice, within the one year term; or, at X-R's option, with part or all of the three month period spent on garden leave and/or working from home or performing different duties from the usual ones. 10. Mr Javor's "basic salary" was, by clause 4, £350,000 per annum, payable in monthly instalments. That sum was described as his "basic" salary but he was not entitled to any further remuneration such as bonus or commission. He was, straightforwardly, employed on a fixed salary. …12. Mr Javor then worked for X-R under his contract through the rest of 2022. In January 2023, he was considering alternative career options, including joining WME, as he told Ms Lucy Dickins, a California based manager of WME (or its US parent), at the time. He showed Ms Dickins the salient parts of his employment contract, including the termination provisions and the post-termination obligations (respectively, clauses 1 and 13).13. Ms Dickins' evidence is that WME took legal advice on clause 13 and, without waiving privilege in respect of the advice received, she and WME's chief operating officer, Mr Dan Limerick, formed the view on the basis of that advice that the commission provision was unenforceable. On the other hand, she considered that the non-solicitation covenant "should be adhered to by [Mr Javor]" (see paragraphs 10 and 11 of her witness statement).14. On 3 March 2023, Mr Matt Woolliscroft, a promoter of proposed concerts by Coldplay (a major client of X-R) at Wembley in August 2025, emailed Mr Javor about the proposed string of dates and possible clashes with international football fixtures. A decision from the Football Association would be sought by September 2023, Mr Woolliscroft explained. Mr Javor was then, of course, still employed by X-R, but the one year term was due to expire at the end of March 2023.15. After it did expire, on 16 May 2023 Mr Javor informed the directors of X-R verbally that he had decided to leave X-R. The next day, he confirmed that in an email saying it should be considered his "notice of resignation". He noted in the email that his employment contract had "expired on 30 March 2023" but he had "continued to work beyond that date on the basis that we were negotiating new terms, but those discussions have been unsuccessful". His employment would, he said in the email, "terminate on 31 May 2023".16. … Mr Javor signed a detailed written contract with WME, of which I have a heavily redacted copy. The start date or proposed start date, if there was one, is redacted out (clause 1.2). It is not clear from the document what country's or state's law governs it; though I was told at the hearing there is a redacted out choice of law clause stating that the governing law is that of England and Wales. The inference is that Mr Javor would start at WME once he had extricated himself from X-R.”17. As early as 19 May 2023, solicitors' correspondence between X-R and Mr Javor started. X-R were clearly highly suspicious of Mr Javor's activities and sceptical about his continuing loyalty to X-R. It is clear from the correspondence that X-R already believed Mr Javor's allegiance lay elsewhere. An injunction application against him was threatened and undertakings sought. The barrage of correspondence continued unabated for months thereafter but without any application for an injunction being made.18. On 31 May 2023, Mr Javor's solicitors stated in a letter that to be helpful, he was willing to extend his employment until 14 June. After that, it was extended for further short periods week by week in June 2023, though Mr Javor (not on garden leave) did not attend X-R's offices between 16 May and 11 July 2023. During that absence from his place of work, Mr Javor and at least one of his X-R team provided on 22 June 2023 an update to Coldplay's manager about the August 2025 Wembley dates, together with the "rate card" for the venue of £700k per night.19. On 12 July 2023, X-R's solicitors noted in a letter Mr Javor's reappearance at the office. They accepted that he would work out his notice and that his last day of employment would be 17 August 2023. The tense correspondence continued; undertakings were refused and Mr Javor's solicitors said in a letter of 19 July 2023 that he "does not agree to be gagged" and if "asked a straightforward question about his future plans, our client is entitled to say that he is leaving [X-R] and that he intends to join WME at a later date".20. On 20 July 2023, Coldplay's management announced concert dates in 2024 and "holding" dates in 2025. X-R's Mr Huffam formed the view that Mr Javor had been in discussions with Coldplay about concert dates intended to be performed after Mr Javor's departure from X-R; as well as similar discussions about concerts in other countries, namely Hong Kong, Japan, South Korea, Mexico, Spain and Brazil. In his view, as he explained in his witness statement, these concerts were "precisely what clause 13 is intended to capture".21. On 11 August 2023, with a week of his employment left, his solicitors refused to provide information about his client contacts. His solicitors wrote that he "will not be providing a running commentary regarding the clients he had, or did not have, material or personal contact with during the last 12 months". The solicitors assured X-R that he "will abide by the terms of the non-solicitation restrictive covenant in the first sentence of clause 13 of his employment contract".22. Next, Ms Dickins explains in her witness statement that "[a]round 14 August 2023" (a Monday), WME released a press statement to certain media outlets regarding Mr Javor joining WME. It is common ground that this would be a matter of interest in industry circles. The day before the statement was released to the media, Mr Javor received another email of 15 August from Coldplay's manager about financial terms for the Coldplay shows and in particular the commission payable.23. The press statement was in fact dated 16 August 2023, the penultimate day of Mr Javor's employment with X-R, and marked "London, UK". In it, WME announced that he "has joined the agency's London office as Partner and co-head of London's music department". In his 17 years with X-R Mr Javor had "guided the careers of a diverse range of artists". They were then named, with Coldplay first on the list, followed by Eminem. There were 32 named artists. Mr Javor had, according to a quote attributed to Ms Dickins:
"not only built a roster of artists that shape music, he's also been an integral part of building the international touring industry as we know it today". 24. Mr Javor was then himself quoted as saying: "
Steve Strange and I built an incredible business at X-Ray over the last 18 years through teamwork and passion for our artists … I'm excited to start this next chapter at WME and to continue this legacy with the team in London and across the world." The statement ended with a list of WME's roster of artists, client highlights and achievements. 25. Mr Javor's last day of employment with X-R was 17 August 2023…. 26. Mr Javor began working for WME the next day, 18 August 2023.”

Evidence of Mr Javor’s relationship with artists

[3]The Appellant relied before the judge on a witness statement of Mr Ian Huffam, a member of the LLP and one of its founders in 2005. His statement, referring to the First Respondent as “Josh” and the Appellant company as “X-Ray”, said at [21]-[24]:- “Of particular importance was clause 13 in the Employment Contract. Whilst we did not anticipate a situation where Josh, if he left, would dispute our entitlement to our commission on work that had been, to use the words of clause 13, “discussed, scheduled, made or contemplated”, the language clarified what we expected in the event that this occurred and what Josh knew (and agreed) was the default position. As I have explained, the planning and arranging of a concert, a tour or a music festival appearance by an artist can take months and sometimes more than two years in a ‘post covid’ world – for example, I first started working in 2020 on Blur’s appearance at Wembley Stadium in July 2023, their first major UK show in many years. Naturally therefore, we wanted to be paid commission on all income streams that were the product of Josh’s work. So, that could be definite concert bookings in the diary prior to his departure or, at the other end of the scale, commission that is the product of a first idea for a tour put together before Josh left. This was important because in the case of some artists when an international tour is being arranged, it is the first contemplation of the tour that is the real trigger for it. Relevant questions they will ask include: whether the artist can perform (given their personal/family/other work commitments); what time they want/need to spend writing and recording new material; whether the artist wants to perform, in the sense that he/she/they have anything to promote; whether the artist wants to travel, which can involve relevant tax considerations (where sometimes artists take what is known as a “year out” i.e. they stay outside the territory where they are tax domiciled for financial reasons); and whether they just have other reasons that dictate when they may or may not want to tour. These are all the types of questions that need to be asked. There are multiple initial considerations before the idea for a tour or a concert gets the greenlight which in turn puts the rest of the process into motion and which in due course leads to the artist stepping foot on stage. These first questions are critical, so if a tour or show was being contemplated before Josh left, X-Ray wanted and expected to be able to commission it if it came to fruition. I believe this would generally be viewed as industry standard. Indeed, as it has transpired, before Josh left X-Ray one of Steve’s acts that has followed Josh to the Second Defendant (“WME”), Coldplay, announced (on 20 July 2023) a series of what I would expect to be financially lucrative concerts in 2024. Since Josh left we have also discovered that Coldplay is “holding” ten dates at Wembley Stadium in 2025 as well as numerous additional 2025 concerts (see the schedule dated 4 May 2023) The 2025 Wembley Stadium concerts were, in my view, clearly therefore being discussed before Josh left X-Ray in August 2023 (unsurprising to me because big venues like Wembley Stadium need to be secured early on given that demand is high and the Stadium only has a certain number of dates it can offer each year when it is available for music events). Further, the evidence now is that Josh was involved in the discussions about 2025 concerts in Hong Kong, Japan, South Korea, Mexico, Spain and Brazil, none of which have yet been announced but which, if performed, fall within clause 13. All these 2025 concerts were precisely what clause 13 is intended to capture; they reflect how far in advance is required to bring a concert from contemplation to performance and all the work that goes on in the intervening period.”

Clause 13 of Mr Javor’s contract with X-R

[4]Clause 13, which the judge rightly described as being at the heart of the case, was headed “Post-Termination Obligations”. It provided as follows:- “You shall not during your period of employment or for a period of 12 months from the date of termination (howsoever termination occurs) endeavour to entice away from the Company or solicit or interfere with any employee, client, artist, person, firm or company who was at any time during the 12 months immediately preceding the termination date engaged by, doing business with or was a client / artist of the Company and with whom you had material or personal contact during the 12 months immediately preceding the termination date. You shall not interfere or seek to interfere with the continuance of the supply (or the terms of such supply) of services to or by the Company from any business or customer who was at the date of termination of your employment providing or supplying material business services to the Company. All commission and other monies related to bookings or potential bookings discussed, scheduled, made or contemplated (whether or not actually contracted) or to be made prior to the date of termination of your employment (whether or not such bookings are to take place after the end of your employment with the Company), shall belong to the Company, and if any such commission or other monies are received by you or any other person or entity associated with you (including any future employer) you undertake to hold such monies on trust for us, and pay to us immediately all such monies without deduction or set off. You shall ensure that all such bookings are contracted via the Company and that the Company shall be entitled to receive 100% of all applicable commission(s) payable in respect of such bookings.” [emphasis added][5]The first sentence of clause 13 was a non-solicitation covenant. A major part of the argument before the judge concerned whether that covenant was valid and enforceable. For reasons given at paragraphs 28-73 of his judgment the judge dismissed that part of the Defendants’ application to strike out the claim. He held that the claims alleging breach of, and inducing breach of the non-solicitation covenant were fit for trial and should proceed. It does not appear that any further steps have been taken to progress that claim to trial, and I note that the period of the covenant expired in August 2024. The judge was not asked to grant an injunction to enforce the clause for the remaining period of its duration.[6]However, the Defendants’ application to strike out the claim for commission was successful. In introducing that part of the judgment, the judge said:- “75. The issues I have to decide are: whether there is any realistic prospect that the commission provision could at a trial be upheld as valid and enforceable; and if so, whether there is any prospect of X-R obtaining a declaration to that effect, the only remedy now sought. No allegation is made that WME induced Mr Javor to breach the commission provision. At this stage I must consider whether it is subject to the restraint of trade doctrine and, if so, whether it goes beyond what is necessary to protect any legitimate business interest of X-R.”[7]Earlier, he had said:- “3. The applicable principles are familiar to the parties and the court. The rules in play are CPR rule 3.4 and rule 24.2. The court can strike out a claim or part of it if it appears that the statement of case or part discloses no reasonable grounds for bringing the claim (rule 3.4(2)(a)). The correct approach in summary judgment applications may be found in authorities such as Easyair Ltd v. Opal Telecom [2009] EWHC 339 (Ch) per Lewison J (as he then was) at [15]. There must be grounds for bringing a claim. Its prospects must be more than fanciful. 4. I must not conduct a mini-trial. I can look at uncontradicted accounts and documents. Generally, I take the facts and the law at their highest in the claimant's favour, except for any facts that are implausible even without further investigation. If a decisive short point of law or construction is suitable for summary determination, I should grasp the nettle and decide it. But if disclosure or testimony is needed to decide a point, there should be a trial on that point. I should take into account not just current evidence but also evidence that can reasonably be expected to be available at trial.”[8]On the substance of the application to strike out the claim for commission, the judge said:- “91. Before considering the restraint of trade doctrine in the context of this provision, I find it helpful to remind myself of the factual context. Mr Javor was paid a fixed salary by X-R. He did not receive any remuneration in the form of a bonus or commission. The present case is therefore different factually from cases such as Marshall v. NM Financial Management Ltd and Steel v. Spencer Road LLP. In those cases (and probably also in Stenhouse Australia Ltd v. Phillips), the departing employee's remuneration included commission or bonus; not so here.92. It is X-R, not Mr Javor, that receives payment in the form of commission. Indeed, receipt of commission from its clients is how it makes its living. Where a booking is made, payment of a commission is made by the client, artist, promoter etc (whom I will call the counterparty) directly to X-R. That payment is not made by or to the booking agent, a person such as Mr Javor, who has secured the booking. As I have said, his reward for his service is his salary.93. To ensure that the counterparty pays the right person (X-R) where an X-R booking is secured by Mr Javor while still employed by X-R, X-R could in principle require the counterparty to enter into a contractual obligation to pay the due commission payment only direct to X-R and not via any third party such as Mr Javor. If the counterparty then paid the wrong person, X-R could sue the counterparty (and/or perhaps secure restitution from the payee).94. If the booking is for a concert performance that takes place before Mr Javor leaves X-R, the case should be a simple one. X-R receives its commission direct from the counterparty and Mr Javor receives his salary. If the booking is secured by Mr Javor before leaving X-R's employment but the concert performance takes place after his departure, X-R can still insist, in principle, on a contractual obligation by the counterparty to pay X-R direct and not via any third party.95. Whether that has actually occurred in this case is not clear from the evidence. The terms on which a booking is secured may vary, depending on the relationship with the counterparty. The evidence does not suggest X-R contracted on standard terms. It is a matter for negotiation between X-R (perhaps acting through Mr Javor where he was the booking agent before he left X-R) and the counterparty whether his departure from X-R would affect the counterparty's obligations to X-R under the booking contract.96. Pausing there, if X-R had a direct contractual right to a commission payment and Mr Javor wrongfully persuaded the counterparty to pay him or WME instead, then he (and perhaps WME) would be inducing the counterparty to break its contract with X-R and, other things being equal, he and/or WME would be liable to X-R for inducing breach of the booking contract in addition to the counterparty being liable for breach of the booking contract.97. I mention these scenarios because it is striking that none of them involves invoking any post-termination restraint. They are examples of how the law of contract and tort could affect relations between X-R, its counterparties and the departing Mr Javor, irrespective of any post-termination restraint. It is only if X-R fails to secure appropriate contractual rights directly against its counterparty that X-R may need to have recourse to a post-termination restraint imposed on Mr Javor.98. The first possibly relevant post-termination restraint would be the non-solicitation covenant. I have already considered that. A second could be a non-dealing clause, if there were such a clause in Mr Javor's employment contract; but there is not. A third could be a temporary prohibition against working for a competitor. Again, there is not one. Fourthly, the commission provision could come into play. It is against the background I have just outlined that I turn now to consider it.99. The first question is whether the commission provision operates in restraint of trade. In my judgment, it clearly does and there is no realistic prospect of X-R persuading a judge otherwise at trial. I accept the submissions of Mr Reade and Mr Solomon that the provision, by its terms, operates as a strong disincentive to Mr Javor to work for any employer that has any clients in common with X-R.100. He would have to account to X-R for commission received by him or a person associated with him including a current employer such as WME, even if his discussions with the client before termination were tentative, vague and inconclusive and did not lead to a booking; and even if he were not involved in and not even aware of the subsequent booking of the same artist by the relevant person. The obligation to "ensure that all such bookings are contracted via [X-R]" is absolute and unworkable.101. I do not accept Mr Croxford's submission that the commission provision clarifies the legal position of Mr Javor as similar to that of a fiduciary as regards bookings discussed by him prior to his departure. The contractual structure I have outlined above does not leave any room for further obligations such as that of a fiduciary. The parties' respective obligations are a matter of contract and negotiated contract terms. Nor is there any legitimate analogy with the bonus clawback provisions considered by Bacon J in Steel v. Spencer Road LLP.102. By the same reasoning, I accept the submissions of the defendants that it is obvious the restraint is unreasonably wide and that a trial is not needed to reach that conclusion. The commission provision is not time limited and the lead times between discussions and concerts (and presumably payment) can be long, as Mr Huffam's evidence shows. If valid, the commission provision would make Mr Javor's job with WME not worth his while, even though he is not restrained from dealing with clients, artists etc of X-R (provided he does not solicit them).103. X-R could have protected itself, within the bounds of reasonableness, by means of a non-dealing covenant. As the cases show, such a covenant often accompanies other post-termination restraints such as non-solicitation obligations or a time limited prohibition against working for a competitor. There is no such covenant here. The commission provision cannot be saved by reading it down, nor by severance. It is in my judgment clearly unenforceable, as was the clause at issue in Stenhouse Ltd.104. There is no present claim before the court against WME for damages (or any other monetary remedy) for inducing breach of the commission provision. There is an imperfectly pleaded claim against WME asserting that it has induced Mr Javor to commit an anticipatory breach of the commission provision and that it holds or may hold monies on trust for X-R as a consequence. The only relief sought is a declaration that the commission provision is valid, a proposition I have rejected.105. In my judgment, any claim against WME arising from the commission provision is doomed to fail. Even if the provision were valid, WME is not bound by it. WME's liability to X-R would have to rest on some principle of trust law, restitution, knowing assistance, or some other such cause of action. Unless the provision itself were enforceable, it is impossible to see how such a cause of action could be established. None that has any chance of success at trial is pleaded.”

Grounds of appeal

[9]X-R applied for and was granted permission to appeal to this court on six grounds:-(1) The judge misdirected himself to or misapplied the test for strike out / summary judgment.(2) The judge wrongly decided that there is no real prospect of the trial judge finding that the commission provision does not operate in restraint of trade.(3) The judge failed to consider whether there is a real prospect that the commission provision is not subject to the doctrine of restraint of trade.(4) The judge failed to consider or identify [X-R’s] legitimate business interests protected by the commission provision.(5) The judge wrongly decided that there is no real prospect that any unreasonable parts of the commission provision could be severed.(6) The judge wrongly decided that there is no real prospect that the commission provision severed insofar as necessary is no wider than reasonably necessary to protect [X-R’s] legitimate business interests.[10]Shortly before the hearing in this court the Appellant applied to adduce evidence of payments actually made to them in January 2025, “without admission of liability, and without prejudice to the ongoing litigation”, in respect of shows by Coldplay and other artists included in a schedule of bookings produced by Mr Javor prior to his departure from X-R. That material was fresh evidence, since the payments had been made subsequent to the judge’s decision; and was properly placed before us for the very limited purpose of contradicting an assertion in open correspondence that the Respondents “will not comply” with any of the Appellant’s demands for payment. But in my view the subsequent payments are not admissible as an aid to interpretation of the commission provision, nor on the issue of whether it went no further than reasonably necessary to protect the Appellant’s legitimate interests.

Discussion

[11]Mr Goulding began his submissions by referring to the decision of this court in Partco Group Ltd v Wragg [2002] 2 Lloyd’s Rep 343 at 352, where Potter LJ said:- “In deciding whether to exercise its power of summary disposal the Court must have regard to the overriding objective. The Court should be slow to deal with single issues in cases where there will need to be a full trial on liability involving evidence and cross-examination in any event and/or where summary disposal of the single issue may delay, because of appeals, the ultimate action.” On this basis, Mr Goulding submitted that the judge, having upheld the validity of the non-solicitation clause (or at least having declined to strike it out), ought to have summarily rejected the application to strike out the claim for commission.[12]I am sceptical about the suggestion that there will in any event be a trial of the claim based on the non-solicitation covenant. No evidence has so far been adduced that there were breaches of the non-solicitation covenant causing damage to the Appellants, other than a press statement issued by WME. We were not told that any steps have been taken to progress the non-solicitation claim since the service of the Particulars of Claim. If the judge was correct in his view that X-R has no real prospect of upholding the validity of the commission clause the fact that, at least in theory, there might be a trial relating to the non-solicitation covenant (the period of which expired last year) would not vitiate his decision.[13]The next argument advanced on behalf of the Appellant is that the restraint of trade doctrine is simply inapplicable. In Quantum Actuarial LLP v Quantum Advisory Ltd [2022] 1 All ER (Comm) 473; [2021] EWCA Civ 227 Carr LJ (as she then was) said at [60]:- “I draw together the relevant legal principles from the authorities (including most recently Peninsula) as follows: i) The doctrine is not confined to immutable boundaries or rigid categorisation, but there are certain categories of covenants to which the doctrine traditionally applies, in particular those by which an employee undertakes not to compete with his employer after leaving the employer's service and those by which a trader who has sold his business agrees not thereafter to compete with the purchaser of the business. The doctrine has been held to apply to franchise agreements, share-purchase agreements and the assignment of a patent; ii) There are no clear limits on the scope of the doctrine and no precise or exhaustive test can be stated. The doctrine is to be applied to factual situations with a broad and flexible rule of reason (see Esso (at 331G per Lord Wilberforce)). The question is whether or not in all the circumstances the contract should be excluded from the application of the doctrine or, as Lord Wilberforce put it in Esso (at 332G), whether it is appropriate to dispense the contract "from the necessity of justification under a public policy test of reasonableness"; iii) Contractual restraining provisions which are of a sort which have become part of the accepted machinery of a type of transaction which have generally been found acceptable and necessary – reflecting the accepted and normal currency of commercial or contractual conveyancing relations - will generally fall outside the scope of the doctrine (following the "trading society" test discussed above and approved in Peninsula Securities); iv) Determining whether contractual restraints fall outside the range of a normal commercial contract imposing restrictions on a contracting party's ability to carry on a business activity is a question of evaluating all the relevant factors to be assessed cumulatively (see in particular PSM (at [99] per Arden LJ)); v) The assessment of application of the doctrine is to be carried out by reference to the position as at the time that the contract is made (not by reference to subsequent performance and events). How the contract turns out may be relevant only in so far as it furnishes evidence of the nature of the contract in question when made (see in particular Schroeder (at 1309 per Lord Reid); PSM (at [104] per Arden LJ and at [149] per Gross LJ)); vi) The application depends less on legal niceties or theoretical possibilities than on the practical effect of the restraint in hampering the freedom to trade (see in particular Esso (at 298A-B per Lord Reid)). It is a question of substance not form (see in particular Stenhouse (at 402G-H per Lord Wilberforce)); vii) The doctrine can apply to restraints operating during the currency of the contract, as well as post-contractually. However, the distinction between pre-and post-termination restraints is not without relevance. The fact that a restraint is limited to the period of the contract may be a factor in favour of excluding the doctrine (or a factor to be brought into account on the side of justification) …; viii) As already set out above, where the doctrine applies, the contractual restraints are prima facie unenforceable but all, whether partial or total, are enforceable if reasonable.” i) The doctrine is not confined to immutable boundaries or rigid categorisation, but there are certain categories of covenants to which the doctrine traditionally applies, in particular those by which an employee undertakes not to compete with his employer after leaving the employer's service and those by which a trader who has sold his business agrees not thereafter to compete with the purchaser of the business. The doctrine has been held to apply to franchise agreements, share-purchase agreements and the assignment of a patent; ii) There are no clear limits on the scope of the doctrine and no precise or exhaustive test can be stated. The doctrine is to be applied to factual situations with a broad and flexible rule of reason (see Esso (at 331G per Lord Wilberforce)). The question is whether or not in all the circumstances the contract should be excluded from the application of the doctrine or, as Lord Wilberforce put it in Esso (at 332G), whether it is appropriate to dispense the contract "from the necessity of justification under a public policy test of reasonableness"; iii) Contractual restraining provisions which are of a sort which have become part of the accepted machinery of a type of transaction which have generally been found acceptable and necessary – reflecting the accepted and normal currency of commercial or contractual conveyancing relations - will generally fall outside the scope of the doctrine (following the "trading society" test discussed above and approved in Peninsula Securities); iv) Determining whether contractual restraints fall outside the range of a normal commercial contract imposing restrictions on a contracting party's ability to carry on a business activity is a question of evaluating all the relevant factors to be assessed cumulatively (see in particular PSM (at [99] per Arden LJ)); v) The assessment of application of the doctrine is to be carried out by reference to the position as at the time that the contract is made (not by reference to subsequent performance and events). How the contract turns out may be relevant only in so far as it furnishes evidence of the nature of the contract in question when made (see in particular Schroeder (at 1309 per Lord Reid); PSM (at [104] per Arden LJ and at [149] per Gross LJ)); vi) The application depends less on legal niceties or theoretical possibilities than on the practical effect of the restraint in hampering the freedom to trade (see in particular Esso (at 298A-B per Lord Reid)). It is a question of substance not form (see in particular Stenhouse (at 402G-H per Lord Wilberforce)); vii) The doctrine can apply to restraints operating during the currency of the contract, as well as post-contractually. However, the distinction between pre-and post-termination restraints is not without relevance. The fact that a restraint is limited to the period of the contract may be a factor in favour of excluding the doctrine (or a factor to be brought into account on the side of justification) …; viii) As already set out above, where the doctrine applies, the contractual restraints are prima facie unenforceable but all, whether partial or total, are enforceable if reasonable.”[14]At [68] of the Quantum case Carr LJ said that there were three steps to consider:- “i) Whether or not, in practical terms, the restraints in the covenant amount to a restraint of trade; ii) If so, whether or not the covenant should be excluded from the application of the doctrine. The question is whether or not (as a matter of public policy) it is appropriate to dispense the contract from the necessity of justification under a public policy test of reasonableness; iii) If the doctrine is engaged, whether or not the covenant is reasonable by reference to the private interests of the parties and to the public interest.”[15]The “trading society test”, derived from the dissenting speech of Lord Wilberforce in Esso Petroleum Co Ltd v Harpers Garage (Stourport) Ltd [1968] AC 269 and adopted by the Supreme Court in Peninsula Securities Ltd v Dunnes Stores (Bangor) Ltd [2021] AC 1014; [2020] UKSC 36, was described by Lord Wilson in the latter case as “an inherently difficult standard to define or apply”. Mr Huffam’s evidence that a commission clause of this kind is industry standard may prove to be correct at a trial, but I do not regard it as sufficiently clear to be a decisive point in the Appellant’s favour at this stage.[16]In the present case the basis on which the commission clause is said to amount to a restraint of trade is that (viewed at the time of the contract being concluded) it would tend to diminish Mr Javor’s prospects of employment or his ability to carry on business on his own account after leaving X-R. As to this, Mr Reade and Mr Solomon both set great store by the decision of the Privy Council in Stenhouse Australia Ltd v Phillips [1974] AC 391. Mr Phillips was an employee of the appellant (“Stenhouse”), a member of a group of companies carrying out insurance broking and re-insurance business. Clause 4 of his contract was a covenant for a five year period against solicitation of business from any client of Stenhouse or any of its associated companies with whom he had had dealings or negotiations in the course of his employment. Clause 5 provided that in the event that any client of Stenhouse (using the same definition) should within a period of 5 years place insurance business (whether or not business of a type presently transacted by Stenhouse for such client) through the agency of Mr Phillips or through any agency other than that of one of the Stenhouse companies, Mr Phillips agreed to pay half the commission received in respect of such transaction. Lord Wilberforce, delivering the advice of the Privy Council, said at 402G:- “Whether a particular provision operates in restraint of trade is to be determined not by the form the stipulation wears, but, as the statement of the question itself shows, by its effect in practice………The clause in question here contains no direct covenant to abstain from any kind of competition or business, but the question to be answered is whether, in effect, it is likely to cause the employee to refuse business which otherwise he would take: or, looking at it in another way, whether the existence of this provision would diminish his prospects of employment. Judged by this test, their Lordships have no doubt that the clause operates in restraint of trade. First, it is to be noticed that the employee comes under obligation to pay or procure payment even if business is obtained without his knowledge. Secondly, the proportion which he is committed to pay or procure is 50% of the gross commission regardless of the size of the financial benefit obtained by him. Thirdly, the clause may operate for a period of five years and thereafter the obligation to pay may continue for a further five years. All of these provisions are far more than “profit-sharing" provisions, and contain in aggregate a substantial element of restraint of trade. Finally, it must be appreciated that Clause 5 is closely linked with Clause 6. Indeed if one reads them together the two clauses amount to a restriction, as stated in Clause 6, against acting as insurance broker for clients, unless payment is made according to Clause 5. This too shows that essentially Clause 5 forms part of provisions operating and intended to operate in restraint of trade. Once it is accepted that Clause 5 operates in restraint of trade, the conclusion follows inevitably that it does so unreasonably. This follows from the severity, as regards the employee, of the clause as already explained. Furthermore it is relevant that some protection has already been provided for the employer by the non-solicitation clause (Clause 4, as above). The presence of one restraint diminishes the need for others, or at least increases the burden of those who must justify those others. It cannot be said that provisions such as those in Clauses 5 and 6 are no more than is necessary for the employer's protection when he is already protected against solicitation.”[17]Stenhouse was not a summary judgment or strike out case, but an appeal from a first instance decision following a trial with three days of oral evidence (see the report and appended documents on BAILII at [1973] UKPC 1). Lord Wilberforce said (in a passage referring to the non-solicitation clause, but which I consider to be of general application), that “it is for the judge, after informing himself as fully as he can of the facts and circumstances relating to the employer’s business, the nature of the employer’s interest to be protected, and the likely effect on this of solicitation, to decide whether the contractual period is reasonable or not”,[18]Stenhouse appears to be the origin of the test of whether the existence of the challenged provision would diminish the employee’s prospects of employment. But I do not accept that it demonstrates that any commission clause of this kind must inevitably diminish the individual’s prospect of employment; or, at any rate, that it must inevitably do so unreasonably. In the present case the judge had before him the evidence of Mr Huffam as to the nature of the close personal connection between Mr Javor and “his” artists. There was no evidence, either from Mr Javor or anyone else, contradicting what Mr Huffam said. Even without the benefit of hindsight derived from the fact that Mr Javor secured employment with WME, there is plainly a triable issue as to whether, viewed at the time of signature in 2022, the existence of the commission provision would diminish Mr Javor’s prospect of new employment or his ability to set up in business on his own. At the stage of strike out or reverse summary judgment I do not think that this was or should have been a knockout blow for either side.[19]Mr Goulding’s next complaint is that the judge failed to identify or consider X-R’s legitimate interests, which the commission clause sought to protect. Mr Reade and Mr Solomon say there were no such legitimate interests and none was pleaded in the Particulars of Claim. (I am not much impressed with the pleading point: to this day no Defence has been served alleging that the clause was unenforceable). It is well-established - see for example Dawnay, Day & Co Ltd v D’Alphen [1998] ICR 1068 and the Quantum case at [60(i)] - that the categories of protectable interest are not closed. For my part I do not see why it should be impossible for an employer to protect its interest in obtaining the fruits of the work done by an employee in company time. Suppose, for example, this claim had been for commission due on a single Coldplay concert scheduled to take place six months after the date of Mr Javor’s departure and for which detailed negotiations had reached an advanced stage by the time he left. It could not be said in those circumstances, entirely foreseeable at the time of signing the contract, that the employer had no legitimate interest to protect. The judge’s omission to identify this legitimate interest was, with respect, an error of principle which calls his evaluative decision into question. Whether the commission clause was reasonable as going no further than what was reasonably necessary to protect the employer’s legitimate interests is a different question, to which I now turn.

The issues of reasonableness and severance

[20]It is axiomatic that before deciding whether a contractual provision in restraint of trade is reasonable the court must first decide what it means. In doing so the well-known rules of interpretation should be applied. In particular, authoritative guidance is to be found in the decision of the Supreme Court in Egon Zehnder Ltd v Tillman [2020] AC 154; [2019] UKSC 32.[21]The validity principle set out by Lord Wilson JSC at paragraph [38] of Egon Zehnder provides that in circumstances in which a clause in a contract is capable of having two meanings, one which would result in its being void and the other which would result in its being valid, the latter should be preferred, provided (see para [42]) that the latter construction is realistic. The skeleton argument for Mr Javor begins with an assertion that the commission clause is plainly unenforceable on the face of its wording, and that the grounds of appeal misrepresent its terms, because:- “Contrary to the false impression given by X-Ray, the Commission Provision is not limited to those of its clients with whom Mr Javor dealt during the course of his employment, unlike the solicitation clause which is so limited. ... therefore it purports to capture all bookings made or contemplated by employees or members of X-Ray. That is the case even if Mr Javor had no knowledge or any involvement in the same. That is of itself sufficient to render this clause unenforceably wide.”[22]The remarkable feature of this argument is that the judge appears to have proceeded on the basis that the commission clause on its proper interpretation referred only to bookings secured by Mr Javor (see [94]). That is, in my view, at the very least a realistic interpretation of the clause. I agree with Mr Reade and Mr Solomon that on the face of it an entitlement to commission on bookings even if Mr Javor had had no involvement at all in the discussions might well be held to be unreasonable, but it is not obvious that that is what the clause means; indeed, as it seems to me, the interpretation limiting its operation to bookings or prospective bookings involving Mr Javor is the more plausible meaning.[23]The next question is whether any part of the clause can or should be severed using the “blue pencil” test considered in detail in Egon Zehnder. This provides that the correct approach to severance is whether any unenforceable provision is capable of being removed without the necessity of adding to or modifying the wording of what remained and “crucially” whether the removal of the unenforceable provision would not generate any major change in the overall effect of all the post-employment restraints in the contract. Mr Goulding argues that “or contemplated” can be severed on this basis; and also, if necessary, “discussed”. The judge did not consider what individual words might be severed. In my view “discussed” cannot be severed: to do so would be to change substantially the overall effect of the clause, referring as it does to bookings or potential bookings, and not merely to actual bookings scheduled or made. But I do consider that the words “or contemplated” bookings can properly be severed without altering the overall effect of the clause: or at any rate, for present purposes, that it is not plain and obvious that the reference to contemplated bookings is incapable of being severed.[24]The question is then whether clause 13, with the reference to contemplated bookings severed, plainly goes further than reasonably necessary to protect the employer’s legitimate interests. In this context it is very striking that (as was noted by the judge at [103] of his judgment), a non-dealing covenant of reasonable duration would have been valid. Yet that would have constituted a far more drastic restriction on Mr Javor’s earning capacity in his new employment. I do not consider it plain and obvious that clause 13 went no further than reasonably necessary to protect the employer’s legitimate interests. The case was, in my view, unsuitable for summary determination.[25]For all these reasons I would allow the appeal.[26]I am grateful to Bean LJ for setting out the background to this appeal but I respectfully disagree with his conclusion, with which Phillips LJ agrees. In my view, the appeal should be dismissed. I propose to set out my reasons very briefly because their decision means that, assuming the matter goes to trial, it will be subject to a full determination in due course.[27]The first issue is whether the judge was wrong to decide, at [99], that there was “no realistic prospect of X-R persuading a judge otherwise” than that “the commission provision operates in restraint of trade”. Although they both are in clause 13, the non-solicitation provision and the commission provision have been considered separately.[28]Whether a provision operates in restraint of trade is to be determined as at the date of the contract. In my view, it is a relatively straightforward question in this case which does not require any further evidential investigation. The clause stipulates that all “commission and other monies related to bookings or potential bookings discussed, scheduled, made or contemplated (whether or not actually contracted) or to be made prior to the date of termination of your employment (whether or not such bookings are to take place after the end of your employment with [X-R]), shall belong to [X-R], and if any such commission or other monies are received by you or any other person or entity associated with you (including any future employer) you undertake to hold such monies on trust for us, and pay to us immediately all such monies without deduction or set off”. It then seeks to place further obligations on Mr Javor in respect of such bookings including that he “shall ensure that [X-R] shall be entitled to receive 100% of all applicable commission(s) payable in respect of such bookings”. I will assume, as submitted by the Appellant, that, by implication, the relevant bookings are limited to those in respect of “a client/artist of [X-R] and with whom [Mr Javor] had material or personal contact during the 12 months immediately preceding the termination date” (the wording from the non-solicitation part of clause 13). Although I would note that the 12 months limit only applies to the identity of the artist/client and not to the date when any, say, discussion about a booking might have taken place.[29]The Appellant’s case is, in very brief summary, that the commission provision “will not deter Mr Javor from dealing with clients who follow him to his new employer and it will not diminish his prospects of employment”.[30]It is agreed that the question of whether a provision is in restraint of trade is to be determined, as set out in Stenhouse at p.402 G, not “by the form the stipulation wears, but … its effect in practice”; or as was said in Quantum, at [60(vi)], it “depends less on legal niceties or theoretical possibilities than on the practical effect of the restraint in hampering the freedom to trade”.[31]The relevant clause in Stenhouse provided as follows:
“5. In the event that any client of Stenhouse shall within a period of five years from the said July 9, 1971 (and that whether or not such client is a client of one or more of the Stenhouse companies at the time) place insurance business whether or not business of a type presently transacted by Stenhouse for such client through the agency of Mr, Phillips or through any agency other than that of one of the Stenhouse companies referred to in clause 2 of this agreement so that Mr. Phillips or any person firm or corporation for whom Mr. Phillips is a principal or agent or by whom Mr. Phillips is employed and with whom he is associated or connected in any other way receives or becomes entitled to receive directly or indirectly any financial benefit from the placing of such business then Mr, Phillips agrees to pay or procure that there shall be paid to Stenhouse a one-half share of the commission received-in respect of such transaction…”
It was argued that this provision was “not in its terms a restraint of trade at all” (p.394 C). This was rejected and the Privy Council decided that it operated in restraint of trade. It can be seen, from the passage quoted above by Bean LJ, that this question was analysed solely by reference to the terms of the provision itself and not by reference to any evidence of other matters. The key aspects of the clause which made it in restraint of trade were: (i) that “the employee comes under obligation to pay or procure payment even if business is obtained without his knowledge”; (ii) “the proportion which he is committed to pay or procure is 50 per cent, of the gross commission regardless of the size of the financial benefit obtained by him”; (iii) “the clause may operate for a period of five years and thereafter the obligation to pay may continue for a further five years”. This was far more than the suggested “profit-sharing" and were “in aggregate a substantial element of restraint of trade”.[32]The same applies to the provision in the present case. The obligation to pay arises regardless of whether Mr Javor was involved in the bookings; the amount he is required to pay is 100% regardless of whether he receives any financial benefit at all; the clause is unlimited in time in that it applies to every potential booking discussed or contemplated prior to the date on which Mr Javor left X-R regardless of when the booking in fact takes place (and the evidence is that lead times can be several years). It seems to me, therefore, that as in Stenhouse, it can be seen that these elements in the commission provision “contain in aggregate a substantial element of restraint of trade”.[33]In any event, looking at it more broadly, as Carr LJ said in Quantum, at [57], as “between employer and employee, the court more jealously guards the freedom of an employee to earn a livelihood elsewhere”. This applies to provisions which have the effect of limiting the freedom of an employee to work after the termination of their employment. In the present case, I see no answer to this being a provision which is in restraint of trade because it has the effect of diminishing Mr Javor’s prospects of employment and/or hampering or inhibiting his freedom or ability to make use of his skills and abilities including by, for example, setting up in business as a booking agent especially because, as set out in the Appellant’s evidence, “agents necessarily build and establish close personal relations with their artists”. Accordingly, I consider that the judge was right to decide that “there is no realistic prospect of X-R persuading a judge otherwise at trial”.[34]The next issue is whether the clause is no wider than reasonably necessary to protect X-R’s legitimate business interests.[35]The case as advanced on behalf of X-R is that the commission provision is designed to ensure that X-R retains the benefit of the product of Mr Javor’s work during the course of his employment with X-R and that this provision is no wider than is necessary to protect that interest. As set out in Mr Huffam’s statement, as quoted by Bean LJ, “we wanted to be paid commission on all income streams that were the product of Mr Javor’s work [which] could be definite concert bookings in the diary prior to his departure or, at the other end of the scale, commission that is the product of a first idea for a tour put together before Josh left”.[36]In my view, this is also not realistically arguable. The provision goes far wider than necessary to achieve this and, it seems to me, it is seeking to retain the benefit of Mr Javor’s relationship with the artists/clients with whom he worked. The fact that it seeks to recover 100% of all commission and other monies received in respect of bookings regardless of how far advanced they were when Mr Javor left X-R and regardless of how much work was still required, in my view wholly undermine the contention that it is no wider than reasonably necessary. Accordingly, in this respect also, I agree with the judge’s conclusion.[37]During the course of the hearing, Mr Goulding submitted that the commission provision could be saved, if necessary, by severing any offending parts. I do not accept that this is feasible in this case. The width of the provision is a core element in terms of the bookings to which it applies, the amount which it seeks to recover and the length for which it could operate. It would require substantive changes which would have the effect of making it an entirely different provision.[38]For the above brief reasons, I would have dismissed this appeal.[39]I agree that this appeal should be allowed for the reasons given by Bean LJ.[40]X-R’s evidence, which must be accepted for present purposes, is that clause 13 of Mr Javor’s employment contract is standard in the industry. In those circumstances, and without the benefit of expert evidence on the issue, I am unable to conclude for summary judgment purposes that its effect, in practice, is to limit the employment prospects of the employee so as to be a restraint on trade. It may be established that, in an industry in which personal relationships between an individual booking agent and “their” artists (or their representatives) is at the heart of the business, it is recognised that recruiting such an agent and gaining the benefit of their relationships comes at the acceptable price of accounting to the previous employer for bookings already “in the works”. It is noteworthy, in that regard, that WME has passed substantial commission it has received to X-R, albeit without admission of liability.[41]Even if clause 13 is in restraint of trade, I consider that the question of its reasonableness is also a matter for determination at trial, in the light of a full understanding of the industry and how the clause operates in that context. In common with Bean LJ, I consider that the clause can and should be interpreted narrowly in certain respects, and I do not rule out the possibility that, if necessary, certain words could be severed consistently with the blue pencil test.