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A LACK OF DECORUM: DECORUS LIMITED V PENFOLD

The recent judgment of HHJ Molyneux sitting as a Judge of the High Court in Decorus Limited v (1) Daniel Penfold (2) Procure Store Limited [2016] EWHC 1421 (QB) is a timely reminder to employees of the importance of not allowing enthusiasm as to their own future business to spill over into misconduct whilst they are still employed. It is also a useful case in showing how an employer can avoid the impact of Reuse Collections Ltd v Sendall, the effect of which was to call into question an employer’s ability to vary restrictive covenants.

Mr Penfold had employed by the Claimant IT reselling company as a Sales Account Manager for a number of years under a contract that contained various post-employment restrictions including a non-compete clause which the Judge refused to uphold (whilst upholding 6 month non-solicitation and dealing clauses).

The Judge reviewed the law governing conduct during employment from Robb v Green through to QBE v Dymoke before analysing Mr Penfold’s behaviour in his last few months of employment. That behaviour had included more frequent than usual accessing of the company’s historic purchasing logs. Decorus alleged that Mr Penfold had engaged in this activity so as to arm himself with the likely renewal dates of its customers for their future hardware/ software requirements. She accepted that these logs constituted Decorus’ confidential information and that Mr Penfold had indeed been acting in breach of his duty of fidelity when accessing them. Another aspect of Mr Penfold’s conduct that had been in breach of his duties involved his dealings with one of Decorus’ customers.

The Judge would have granted springboard relief due to this misconduct whilst still employed in any event. In fact she granted relief in the terms of the enforceable covenants because she was not persuaded by Counsel for Mr Penfold that this was a case in which Reuse Collections should be followed. In that case the Court had held that post termination restrictions were unenforceable because they had been imposed in the course of employment and without proper consideration. The factual matrix in Decorus was that (arguably) more restrictive covenants had been varied in the course of the employment by less stringent covenants. This had been part of a process, one element of which had been the increase of Mr Penfold’s salary. The Judge was satisfied that when taken together an appraisal, pay rise and continued employment amounted to valid consideration for the new contract.

The Judge also made an award of damages in Decorus’ favour.

An in-depth one hour presentation about this case is available from a team of Littleton practitioners to your law firm. If you are interested in this then please email Jason@littletonchambers.co.uk

Chris Quinn was instructed by Simon Arneaud of Lamb Brooks LLP on behalf of the successful claimant.


 

Posted: 11.07.2016 at 14:50
Tags:  Cases  Employment Law
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