Joan Reiter v Christine Ness and Doreen Koban 1996 Civil Jur. No. 241

• Jurisdiction: Bermuda
• Judgment Date: 22 July 1997
• Docket Number: Civil Jurisdiction No. 241
• Date: 22 July 1997
• Court: Supreme Court (Bermuda)

In the Supreme Court of Bermuda

Meerabux, J

Civil Jurisdiction No. 241

Joan Louis Reiter

Plaintiff>

and

Christine Ness

First Defendant

Doreen Koban

Second Defendant

Mrs. A. Cartwright DeCouto for the Plaintiff

Mr. R. Hector, Q.C. for the Defendants

Esso Petroleum Co. Ltd. v. Harper's Garage (Stouport) Ltd. (H.L)UNK [1967] 1 All ER 699

Nordenfelt v. The Maxim Nordenfelt Guns & Ammunition Co. Ltd.ELR [1894] AC 535

Marion White Ltd. v. FrancisUNK [1972] 3 All ER 857

Herbert Morris Ltd. v. SaxelbyELR [1916] 1 AC 688

S. Nevanas Ltd. v. Walker and ForemanELR [1914] 1 Ch 413

Business Seating (Renovations) Ltd. v. BroadICR [1989] ICR 729

Davies v. DaviesELR (1887) 36 Ch.D. 359

Ealing L.B.C. v. Race Relations Board (H.L.)ELR [1972] AC 342

L.J. in Euro-Dian Ltd. v. Bathurst (C.A.)ELR [1990] 1 QB 1

Saunders v. EdwardsWLR [1987] 1 WLR 1116

R v. Chief National Insurance CommissionerELR [1981] QB 758

Human Rights Act 1981 s.2(1); 2(2)(a)(i); 6(1)(g); 12(2); 22(1)(a)

Contract of employment — Restrictive covenant — Whether restraint of trade clause is enforceable — Discrimination — Bermudian and non-Bermudian — Place of origin — Ex turpi causa

PRELIMINARY

The Plaintiff has sued the Defendants in these proceedings and has claimed the following:

• (a) an interlocutory and permanent injunction, for a period ending on the 27 April 1997, to restrain the First Defendant from carrying on, or being employed directly or indirectly, concerned or interested either as a master, manager, assistant, or otherwise howsoever in any business of a ladies hairdresser at ‘Images’ Salon or any place in the Islands of Bermuda;

• (b) an interlocutory and permanent injunction, for a period ending the 27 April 1997, to restrain the First Defendant, her servants, her agents, or otherwise howsoever from soliciting, interfering with, or endeavouring to entice away from the Plaintiff any person, firm or company who at any time during the continuance of the First Defendant's employment with the Plaintiff was a customer of the Plaintiff;

• (c) an interlocutory and permanent injunction, for a period ending on the 27 April 1997, restraining the First Defendant, her servants, agents, or otherwise howsoever from personally, or by letter, advertisements, or otherwise obtaining or attempting to obtain customers within the Islands of Bermuda for ‘Images’ Salon or any other person, firm or company who carries on any business of a ladies hairdresser within the Islands of Bermuda;

• (d) an interlocutory and permanent injunction, for a period ending on the 29 April 1997, to restrain the Second Defendant from carrying on, or being employed, directly or indirectly, concerned or interested either as a master, manager, assistant, or otherwise howsoever in any business of a ladies hairdresser at ‘Images’ Salon or any place in the Islands of Bermuda;

• (e) an interlocutory and permanent injunction, for a period ending the 29 April 1997, to restrain the Second Defendant, her servants, her agents, or otherwise howsoever from soliciting, interfering with, or endeavouring to entice away from the Plaintiff any person, firm or company who at any time during the continuance of the Second Defendant's employment with the Plaintiff was a customer of the Plaintiff;

• (f) an interlocutory and permanent injunction, for a period ending on the 29 April 1997, to restrain the Second Defendant, her servants, agents, or otherwise howsoever from personally, or by letter, advertisements, or otherwise obtaining or attempting to obtain customers within the Islands of Bermuda for ‘Images’ Salon or any other person, firm or company who carries on any business of a ladies hairdresser within the Islands of Bermuda;

• (g) general damages;

• (h) interest until Judgment or payment;

• (i) costs;

• (j) such further and other relief as this Honourable Court may deem just.

Counsel on behalf of the parties agreed that the only issue for determination by the Court is liability.

FACTUAL BACKGROUND

From the evidence I find the following facts. The Plaintiff was the owner of Mayfair Beauty Salon, an hairdressing business at Queen Street West, Hamilton for forty-four years and employed Bermudians as well as non-Bermudians. The Plaintiff held the work permits of the First and Second Defendants as hairstylists for fifteen and nineteen years respectively and required them to enter into written contracts of employment. Bermudians and persons with Bermudian rights were not required to enter similar contracts of employment.

The First Defendant is originally from Scotland and is of British nationality. The Second Defendant is originally from England and is also of British nationality. On 6 November 1995 and 28 December 1995 the First and Second Defendants respectively entered into contracts of employment with the Plaintiff. The contracts of employment contain the covenants to which these present proceedings relate.

By the employment contracts the Plaintiff agreed to employ the First and Second Defendants and the First and Second Defendants undertook to work for the Plaintiff at the Mayfair Salon as ladies' hairdressers for a period of twelve months and thereafter until the employment was terminated by notice as provided in the contracts.

All the employment contracts which were executed each year by the parties contained a similar clause 7 which appeared in the employment contracts dated 6 November 1995 and 28 December 1995. Clause 7 read as follows:

• ‘7. The Employee expressly agrees as follows:—

  • (a) Not at any time during the period of one (1) year after the determination of his/her employment hereunder (whether the same shall be determined by notice or otherwise) to undertake or carry on or be employed or directly or indirectly concerned or interested either as master manager, assistant, or otherwise howsoever in any business of a Ladies Hairdresser at any place in the Islands of Bermuda. Not at any time, either during or after the determination of said employment, and either on his own account or for any other person or for any firm or company to solicit, interfere with or endeavour to entice away from the Employer any person, firm or company who at any time during the continuance of the said employment shall have been a customer of the Employer,

  • (b) Not at any time during the same period to attempt personally or by letter advertisements or otherwise to obtain customers within any of the beforementioned areas for any person, firm or company other than the Employer carrying on any business of the kind aforesaid whether within or outside the said Islands of Bermuda.

  • (c) Not at any time, without the authority of the Employer to divulge to any person any information in connection with the Employer or any member of his/her family or any of his businesses or customers which he/she may acquire during or as incident to his/her employment.‘

Although the Defendants discussed with the Plaintiff the contracts as a whole they did not consider with her specific clauses in the contracts. The phrases ‘within or outside the Islands of Bermuda’ they did not understand but everything else in the contract was clear to them.

From 1985 onwards the Second Defendant performed the functions of a manager of the salon. Apart from hiring staff and overseeing the running of the salon she carried on her hairdressing duties.

She approached the Plaintiff about upgrading the Mayfair Salon and offered to put some money into the business but she received no reply. She indicated to the Plaintiff that she needed some kind of security and again there was no response from her.

In February 1996 she entered into discussions with another hairdressing salon called Images because she knew that the premises of Mayfair Salon would be closing in light of the Salon's lease for the premises not being renewed for the last three years. The premises were rented on a month to month basis. The Plaintiff made unsuccessful efforts to find other locations for Mayfair Salon. She refused an offer to buy Images Salon for the reason that the price was too high.

On 11 April 1996 the Defendants gave the Plaintiff written notices tendering their resignations from employment and were willing to stay on until the Plaintiff found other hair stylists which would be about six weeks. The Plaintiff by letters dated 17 April 1996 accepted their resignations for she did not want them any longer.

The Plaintiff subsequently went to the then Minister responsible for immigration and wrote to the department in order to prevent the Defendants from being granted work permits.

In the two final weeks of employment the Second Defendant ensured that all the repeat customers were re-booked and the appointments made at the Mayfair Salon. The Defendants did not during their employment at Mayfair tell customers that they would be working at Images Salon or elsewhere. They told customers that they were not at liberty to say and in any case they did not know whether they would be working or not.

The Second Defendant obtained advice from her attorney. The Defendants were aware that customers followed hairdressers and usually they followed their stylist even without being asked to do so. The First Defendant felt that customers in Bermuda came from all over the Island.

About the end of February 1996 the Defendants decided to buy Images Salon. On 27 May 1996 they obtained permission from the Bermuda Monetary Authority to become shareholders of Images Salon. They did not discuss with anyone their movements. Presently they are joint managers of Images Salon.

On 17 May 1996 work permits were granted to the Defendants to commence work on 17 May 1996. Under the permits they were allowed to engage in gainful occupation as hairstylists and no other gainful occupation. Once they had their work permits they telephoned the people who specifically asked them to call and told...