A matter of distinction?

By Legal Eagle

I’ve written before about our Australian High Court showing a “trendy” side in transcripts.

Via Roll On Friday, I learnt of a Scottish case which had the judge making a rather hilarious distinction:

Lava Ignite nightclub in Edinburgh tried to stop the HMV Picture House from holding club nights. Lava sold the venue to HMV, and it claimed the terms of the sale agreement prevented HMV from putting on competing events. HMV rejected the claim on the grounds that it was targeting a very different audience and the judge, who clearly knows his Timberland from his Kylie, agreed with him.

In his judgement, Judge Lord Glennie stated that he had ruled for the defendant as HMV Picture House was “studenty” and “trendy“, whilst Lava Ignite was “a place to go to get trashed” and where “people go to pull“.

The Scotsman had further details:

The legal action was only raised late on the day of the Picture House’s first club night in September 2008. Around 1,000 people turned up for the club night but the dancefloor was cordoned off in a bid not to risk legal action.

During the legal case, Luminar [the owner of Lava & Ignite] said an agreement had been struck with Mama [the owner of Picture House] for it to not put on entertainment “in direct competition on a like-for-like basis with the discotheque business” of Lava & Ignite.

I find these restraint of competition clauses fascinating. I tend to think that generally, courts will interpret them as narrowly as possible; we don’t really like restraining people in this fashion.

Of course, if I get my way and persuade courts of the efficacy of disgorgement damages, in cases where there has been a breach but the court is reluctant to restrain, we can always make the infringing party cough up some of his or her profits.

10 Comments

  1. Posted September 27, 2009 at 10:28 am | Permalink

    Coles and Woolworths have done a beaut job of restraining trade for decades, whined about, but unchallenged.

    It was only a few weeks ago that they finally agreed to have trade restraint clauses removed from their leases, that is, clauses that prevented other supermarket operators from being given space in malls or shopping strips.

  2. Posted September 27, 2009 at 3:27 pm | Permalink

    It’s all limiting trade, just different points on the spectrum. It surprises me how much it goes on, and how infrequently it’s challenged.

    Free markets, ‘ey.

  3. Posted September 27, 2009 at 6:04 pm | Permalink

    Anything that craps on the Lava Ignite chain of nightclubs has got to be a good thing. I live around the corner from Oxford’s Lava Ignite, and it’s quite possibly the cheesiest venue in town.

    Restraint clauses are badly sucky, although with former employees they at least make sense (to stand up to scrutiny, they do need to be very narrowly drafted). I’m glad landlords (some of whom are wealthy enough to ping the larger supermarkets) are going after them for their anti-competitive behaviour.

    Caz: global restraint clauses are the antithesis of free markets. They only reason things like this have been able to stand is because the Law Society in every state is a very nasty union engaging in very nasty ‘closed shop’ behaviour. Yes, middle-class professionals do it too.

  4. Ken N
    Posted September 28, 2009 at 4:23 pm | Permalink

    Supermarkets do raise a difficult question about competition.
    In Australia, although two chains dominate, they compete very strongly on price and service. So if consumers are satisfied with what the two of them offer (range, format and so on) they get a fairly good deal.
    That I think is what the ACCC means when it says the market is competitive.
    But they do make it very difficult for another entrant to come in – that is what the shopping centre lease argument was about.
    Again, from the consumer’s point of view a new entrant probably would offer a different kind of service – for example Aldi’s low price/limited range. The US has a much wider range of store types than here, which makes it more fun to go shopping. The UK is closer to us.
    My knowledge of competition law is way out of date but I believe the ACCC has found it difficult to force the chains to allow new entrants when, in narrow terms, the market is already competitive.

  5. Posted September 28, 2009 at 5:47 pm | Permalink

    “studenty” and “trendy“,as opposed to “a place to go to get trashed” and where “people go to pull“

    Mmmmm.

    If ever there was a false dichotomy….

    I have no idea why people are allowed to even contemplate this sort of litigation. Since when is a business entitled privileges viz a certain sort of market? They are. I have a friend who started a business selling crepes in the Postal Office. He’s not allowed to sell coffee tho’ because other places nearby don’t like it.

    That could hurt his business. It doesn’t seem to be but I reckon it could. And the coffee there starts at $3.50. Ridiculous.

    ‘Free market’ is the mantra that people cry when they want to be unencumbered by regulation. Give ’em some competition and they do their darndest to make it a closed circle smartly.

    That’s why I like the Queen Victoria Markets. 20+ vendors selling the same thing, shouting at each other with blood curdling hatred. 🙂

    But you get better stuff and it’s cheaper too. And waaay more pleasant than a supermarket.

  6. John Greenfield
    Posted September 29, 2009 at 6:30 pm | Permalink

    LE

    Many moons ago, I took a Public Law course, which included Civil Disobedience. This very plummy-mouthed lecturer read from the judge’s summing up, which went something like thus:

    “I have listened very intently to testimony from the police, witnesses, and the accused, on the Saturday evening stated in Kings Cross at 2 am. I am particularly persuaded by the colourful language used once more in this very court room. So, I find that the accused did indeed say to the police

    fock off all youse conts, and get focked cunts

    Our little 19 year old heads were swimming. The lecturer then advised, unprompted:

    “And yes, as I tell this class every year, if in the exam, you forget the case name it is perfectly acceptable to cite The Fock Off All You Conts, and Get Focked Conts Case“! 🙂

  7. John Greenfield
    Posted September 29, 2009 at 7:12 pm | Permalink

    LE

    I don’t suppose it really matters if I semi-out the lecturer as s/he has been around for years. But s/he was from South Efrica (and a lovely and very effective lecturer to boot). So imagine this very posh Sth. Efrican lady intoning those words. 🙂

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