The Gazette 1975

the two remaining small clients The issue in this action is as to what relief, if any, the company is entitled in respect of its loss. The claim is for an injunction or alternatively damages. Having regard to the fact that the company has ceased to carry on any business an injunction to restrain the defen- dants from carrying on their business is clearly inappro- priate regardless of whether the company's rights have been infringed. Whether an action for damages lies and if so the measure of damages must depend on what breaches of contract or torts have been committed. Miss Ralston's contract considered There is no difficulty in determining what are the contracts of Mr. Mitchell and Mr. Bingham because Mr. Mitchell had a written contract and Mr. Bingham's position depends on the common law. Miss Ralston, however, as I have already indicated, entered into a written agreement allegedly with the company five days before its incorporation. The contract was therefore in law a nullity and incapable of ratification or adoption by the company when it came into existence. If the con- tract had any efficacy thereafter it could only be because the parties contracted after incorporation on the terms of the abortive agreement or otherwise contractually agreed to be bound by its terms. Whether they did so is a question of fact but to decide that they did requires proof of circumstances pointing clearly to such a new contract. I do not regard such joint and several applications as pointing to a new contract between the company and Miss Ralston incor- porating all or any of the terms of the abortive agree- ment, especially as these requests failed to secure any agreement. Nor does the fact that Miss Ralston has apparently throughout considered that she was bound by terms of service. corresponding to those in the pre-incorporation agreement provide evidence of a subsequent contract. If a company after incorporation agrees to modify a void agreement made on its behalf before incorporation it may be possible to enter a new contract incorporat- ing all the terms so far as not varied, see Howard v. Patent Ivory Manufacturing Company 28 Ch.D. 156, but Miss Ralston's salary after incorporation was the same as she had enjoyed when in the employment of the branch of Fogarty Advertising Ltd. and any in- crease agreed without express reference to the pre- incorporation contract with the company could not reasonably breathe life into that still-born body. Miss Ralston employed under a general contract I take the view, therefore, that Miss Ralston, on 1 August 1973 was employed by the company under a contract the terms and conditions of which (other than that relating to remuneration) depended on the general law and not on any specific agreement. By their act of repudiating their contracts of service on August 1 and walking out without notice, each of the defendants was in deliberate breach of contract. That repudiation did not in the absence of any evidence of agreed reccision abrogate the contracts of service. It was not challenged that, lacking any express contract, Miss Ralston's service required three months' notice to terminate, Mr. Mitchell's contract provided for one month's notice and having regard to Mr. Bingham's status, a similar notice was requisite in his case. It is a fundamental and elementary principle arising from the relationship of master and servant that until that relationship has been determined, the servant must act in the interest of his master and may not

seek to advance his own interests to the detriment of his master's. I am satisfied that the defendants intended that there should be no break in the continuity of business. If Mr. Fogarty agreed to an immediate sale, well and good. If not, the intention was to set up in opposition at once and arrangements had been made for alternative office accommodation. I am, therefore, satisfied that before the defendants went to Dublin they put to the rest of the staff a pro- position which, if accepted, necessarily involved a walk- out without any notice. The practical alternatives which were available to the staff as Miss Ralston recognised were to break their contracts with the company and go over to the defendants or to be jobless because there would be no work left to the company. Defendants conspired to induce a breach of contract The defendants therefore induced breaches of con- tract by all the staff and conspired together to achieve that end. Quite apart from any question of conspiracy or inducement of breaches of contract, each of the defendants was in clear breach of the implied duty of good faith owed to the company as their employer. At a time when both the defendants and the other mem bers of the staff were servants of the company the defendants offered to take the others into their own employment, thereby subordinating their duty to ad- vance the company's interests to their own self-interest. So to act was undoubtedly unlawful and indeed would have been so according to the authority of Sanders v. Parry (1967) 1 W.L.R. 753 at 764 even though the offer of employment was to have taken effect only after both the defendants and the staff had lawfully terminated their various contracts of employ- ment which, of course, was not the present case. Plaintiff's loss of business due to defendant's conduct The almost total loss of business by the company arises from a combination of circumstances. First it had been built up almost entirely by the defendants and its maintenance depended upon the continuance of personal contact and confidence. Secondly, it is posi- tively established and, indeed, largely admitted that the defendants simultaneously with their negotiations with the staff and certainly before August 1 were also in communication with the company's clients elplaining to them their proposals for starting business on their own and securing assurances of a continuance of custom to the new enterprise. It was because of such assurances that the defen- dants were able to put to the staff the proposition that they accept the offer of employment with R.M.B. "or take a week's notice as no jobs would be available in A.F. Associates Ltd. as there would be no clients to service." I quote paragraph 13 of Mr. Fogarty's affi- davit sworn on 18 September 1973. To canvass the customers of one's master during the subsistence of a contract of service even though it be to secure a transfer to their custom only after the con- tract of service has determined is a breach of the ordi- nary implied obligation of a servant not to use his master's time in furthering his own interests, to quote Greer L. J. in Wessed Dairies Limited v. Smith (1935) 2 K.B. 80 p. 84. Even if the soliciting of clients had only occurred after August 1 but before the proper period of notice would have expired the position would in my opinion have been no different. Long before August had expired, all substantial clients had trans- ferred to the defendants and the company as a com- 16