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Michael Duggan QC successful in resisting an application for injunctive relief in Bartholomews Agri Food Limited v Michael Andrew Thornton

The
High Court has given judgement in the case of Bartholomews Agri Food Limited v Michael Andrew Thornton Case No:
HQ16X00656, [2016] EWHC 648 (QB), in which Michael Duggan QC acted for the successful defendant in having a restrictive covenant
declared unenforceable at an interim hearing. The covenant provided:

“Employees shall not, for a period of six months
immediately following the termination of their employment be engaged on work,
supplying goods or services of a similar nature which compete with the Company
to the Company’s customers, with a trade competitor within the Company’s
trading area
” within
the area of six counties.

The
Court held that the covenant lacked functional correspondence between the area
and the interest to be protected. Moreover, the covenant was far wider than was
reasonably necessary for the protection of the claimant’s business
interests. It applied to all customers of the claimant and of its associated
companies, regardless of whether defendant had knowledge of those customers and
regardless of whether the defendant ever carried out any work for those
customers. The judge rejected the argument for the claimant
that it was not necessary for there to be a “backstop” provision which tied in
customers with whom the employee had dealt or about whom he had knowledge
during a period before termination. He also rejected an argument that, since
the defendant was to be paid by the claimant during the restrictive covenant
period, the covenant should be enforced, holding that “it is contrary to public
policy in effect to permit an employer to purchase a restraint”. The case
is of interest in that:

  • The
    judge was prepared to construe the covenant at an interim stage notwithstanding
    the claimant’s assertion that the
    American
    Cyanamid
    balance of convenience test should be applied
    (applying
    Arbuthnot Fund Managers Ltd v Rawlings [2003] EWCA Civ
    518 at paragraph 20).
  • The
    covenant had been imposed upon the defendant when he started work as a trainee
    in 1997 and had never been updated. It was unenforceable at the time it was
    entered into since it was too widely drafted (
    WRM Ltd v Ayris [2008]
    IRLR 889;
    Pat Systems v Neilly [2012] IRLR 979).
  • The
    case confirms that there will normally be a requirement for the employee to have
    knowledge of customers or to have dealt with them in the period before
    termination notwithstanding the claimant’s reliance upon cases such as
    GW
    Plowman & Son Ltd v Ash
    [1964] 1WLR 568, Business
    Seating v Broad
    [1998] ICR 729 and Dentmaster (UK) Ltd v Kent[1977] IRLR 636. The defendant had cited cases such as Marley
    Tile Co v Johnson
    [1982] IRLR 75, Norbrook Laboratories (GB)
    Limited v (1) Rebecca Adair (2) Pfizer Limited
    [2008] IRLR 87, WRN
    Limited v Ayris
    [2008] IRLR 889, White Digital Media Ltd v
    Weaver and Or
    [2013] EWHC 1681, Countrywide Assured Financial Services
    Limited v Pollard
    [2004] EWHC 1214 and Arbuthnot Fund Managers Ltd v Rawlings [2003] EWCA Civ 518 where a different approach was taken (though they are not
    referred to in the judgement) and distinguished the authorities relied upon by
    the claimant.
  • An
    employer cannot buy a covenant which is against public policy as being in
    restraint of trade (see Simon Brown LJ in
    JA Mont (UK) Ltd v Mills [1993]
    IRLR 1782 at paragraph 37-40).

The
case demonstrates that the court will make a determination at an interim stage
where it has all the facts it needs and the covenant can be construed. As a
result ofthe court holding the covenant to be unenforceable the claimant
accepted that the action should be dismissed with costs. Michael Duggan QC was
instructed by Abigail Trencher of Birketts Solicitors, Cambridge.

Read the Judgement HERE.

 

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