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Adam Solomon and Charlotte Davies successful in obtaining novel form of springboard relief

Adam Solomon and Charlotte Davies successful in obtaining novel form of springboard relief. Read a copy of the Judgment HERE.

Springboard relief and orders for affidavit evidence

In the recent case of Dorma UK Ltd v Bateman & Ors (2015) the High Court granted a
springboard injunction against a team of ex-employees to restrain them from
working for a competitor, and poaching customers or employees, in the terms of
restrictive covenants found in only one of their employment contracts. It also
granted injunctions to protect Dorma’s confidential information, but declined
to make an order for the provision of affidavit evidence on the basis that
there would be a speedy trial.

Facts

The claimant, “C”,
manufactured and installed commercial doors. It had a branch in Somerset run by
the first defendant (“D1”). His contract contained restrictive covenants
including a geographically limited non-compete clause, non-solicit and non-deal
clauses, and a non-poach clause in respect of employees. D2 was a surveyor at
the same branch, and D3 and D4 were service co-ordinators also based at that
branch who handled customers and complaints. D2-D4 had no restrictive covenants
in their contracts, although they did have provisions relating to confidential
information.

D1 approached a
competitor of C, D5, with a view to working for them. He was offered a position
and shortly afterwards D2, D3 and D4 also approached D5 and were offered
employment. They all resigned on the same day but did not tell C they were
going to D5. During his notice
period, D1 was required to return his company laptop and phone. When he did so,
he had wiped them of all information. During their own notice periods, D3 and
D4 made various requests for confidential information ostensibly for the purposes
of their role. A few days after the employees left C, D5 opened a new Somerset
branch just a few miles away, in which D1-D4 all began work in competition with
C.

C applied for
interim injunctions, arguing that there had been an unlawful team move
orchestrated by D1, enabling D5 to launch a new Somerset office with a
ready-made team and to make use of C’s confidential information. The Ds’ case
was that they had been unhappy in their employment with C, and that they had
all left independently.

Springboard relief reflecting restrictive covenants

C applied for,
amongst other things, springboard relief against Ds. It put forward two
alternative forms of springboard relief: (i) an order that D1 to D4 must not be
employed, engaged or involved in the business of manufacturing and installing
commercial doors, or in any way assist any other defendant in such business;
(ii) alternatively, an order against D1 to D4 in the form of D1’s contractual
restrictive covenants, including non-compete, non-solicit, non-deal and
non-poach covenants.

C relied on the
case of Devere Holding Co Ltd v Belgravia Wealth Management Europe Kft [2014]
EWHC 3189 (QB)
as authority
for this approach, in particular for ordering springboard relief in a team move
case in the form of restrictive covenants, even where individual defendants’
contracts did not contain any post termination restrictions.

The High Court
carried out a review of the relevant authorities relating to springboard
relief, and ultimately held that:

  • There
    was a serious issue to be tried, and a real prospect of success for C at trial.
    The evidence in this case gave rise to a strong inference that there had been
    an unlawful team move.
  • Springboard
    relief was available to prevent economic loss caused by former staff members
    taking unfair advantage of a breach of their contract terms, and its purpose
    was to restore a level playing field.
  • It was
    not confined to cases of breach of confidence.
  • C was entitled
    to springboard relief in the alternative form, following the approach in Devere.

 

The significance
of this decision is that, combined with Devere, there is now High Court precedent for using one defendant’s
non-compete covenant to frame the scope of springboard relief against other
defendants involved in a coordinated team move. This approach can be used to
present the court with an alternative to a wide-ranging springboard order that
may have the effect of preventing an individual working at all, as non-compete
covenants are frequently more targeted. Such an order can therefore be less
oppressive than a ‘freestanding’ form of springboard relief, whilst still
serving the purpose of restoring a level playing field following an unlawful
team move.

Confidential information

The High Court
also held that C was entitled to an interim order for the delivery up of its
confidential information and an injunction to prevent its misuse. However, it
declined to order Ds to produce affidavits setting out what confidential
information they had, and what use they had made of it.

The Court
considered the well-known case of Aon Ltd v JLT Insurance Brokers Ltd [2010] IRLR 600 and held that:

  • In the
    circumstances of the case, and having regard to the Aon guidance it waswithin the court’s discretion to order affidavit evidence in relation to
    confidential information.
  • However,
    as there was an order for a speedy trial and directions for imminent filing of defences
    and exchange of witness statements, there was no practical utility in ordering
    affidavits, as the defences and witness statements should contain that
    information in any event.

 

This is an
interesting approach and one that should be noted by practitioners dealing with
protection of confidential information. In particular, that where a speedy
trial is ordered, this may mean the court is reluctant to order affidavit
evidence notwithstanding that the stringent guidance in Aon (above) has been met.

Adam Solomon and Charlotte Davies were instructed by
Hill Dickinson LLP and appeared for the Claimant, Dorma UK Ltd.

 

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