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.
