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UNCAGED TIGER: SPRINGBOARD APPLICATION FAILS IN TRAILER COMPETITION CASE

S Cartwright & Sons (Coachbuilders) Limited and Tiger Trailers Ltd compete in the design, manufacture, supply and maintenance of trailers.  In May 2018 one of Cartwright’s Regional Sales Directors, Stephen Pollock, gave 3 months’ notice of termination and, it transpired, had done so to join Tiger. On the face of it, doing so was in breach of certain restrictive covenants in his contract of employment with Cartwright and, in a speedy trial before HHJ Pearce, sitting as a Judge of the High Court at Manchester Civil Justice Centre, Cartwright  (i)  sought to enforce those restrictions and; (ii) sought a Springboard injunction to restrain Mr Pollock’s employment and (iii) pursued a claim against Tiger for inducing Mr Pollock to beach his Service Agreement.

Joel Heap and Nikki Hussey of DWF LLP instructed Chris Quinn of Littleton on behalf of both Mr Pollock and Tiger who had given interim undertakings prior to the speedy trial which occurred in late November 2018. On 5th December 2018 the Judge informed the parties that he was discharging their clients from the interim undertakings with judgment to follow. That judgment, dismissing the claim, was handed down on 8th February 2018.

The restrictive covenants in issue were 6 month non-solicitation, non-dealing and non-competition covenants. The Defendants took three points as to their enforceability. The first two of these were (i) not all senior management were subject to similar covenants and (ii) the evidence of the Defendants was that such covenants are not common in the industry. Although the Judge made no finding as to (i), he stated as of (ii) that “The absence of any industry standard is certainly not fatal to the Claimant’s case but deprives it or what might be important evidence to inform the court’s judgment on the employer’s legitimate interests.”

Of more clout was the third point taken as to the enforceability of the restrictions, namely that the Claimant had failed to identify any genuine legitimate business interest worthy of protection, not least because the identity and custom of customers was shared between competitors in the same business as the Claimant. The Judge upheld this submission, stating at paragraph 123 of his judgment that:

“The difficulty with the Claimant’s case lies in showing just what the business interest is that requires protection. It is true that the First Defendant had access to information such as that relating to the contacts from potential customers. Such information is on the face of it worthy of protection. But such protection arises from the general duty of loyalty owed by employees. The Claimant has failed to show any further legitimate interest that calls for the wider protection of a restrictive covenant.”

Turning to the claim for springboard relief, the Judge noted that although there was evidence which was clearly capable of amounting to a breach of Mr Pollock’s duty of confidentiality, such a claim could not succeed “given the failure of the Claimant to identify exactly what information has been disclosed and/or used in breach of such duties of confidence” and he noted of the Claimant’s evidence in general that “It is no more than speculation as to the conduct of Mr Pollock with no convincing material in support”.  An attempt by the Claimants made on the last day of the trial to amend its pleading so as to broaden grounds on which it had initially been sought had been refused. The Judge held that the Claimants had failed to establish that Tiger had gained any sort of head-start due to the conduct of Mr Pollock and, accordingly, refused to grant a Springboard Injunction.

Finally, the Judge in any event dismissed the claim against Tiger, holding that contrary to the Claimant’s submission that there was “clear evidence” of it having actively encouraged the removal of confidential information from the Claimant and/or of being a willing recipient of information disclosed in breach of contract in reality it had produced no such evidence.

You can follow this LINK to the judgment.

Posted: 14.02.2019 at 09:31
Tags:  Cases  Employment Law
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