Proactive Group Holdings Inc & Anor v HJ 2024 Limited & Ors
[2024] EWHC 2821 (KB)
Derma Med Limited & Anor v Dr Zack Ally & Ors
23 February 2024
[2024] EWCA Civ 175
Court of Appeal
A business owner sold his company and agreed not to compete afterwards. He broke that agreement, so the buyer got a court order to stop him. The judge cancelled that order because the buyer hadn't told the judge everything. The appeals court said the buyer hadn't hidden anything important enough to cancel the order, and put the order back in place.
Key Facts
- •Dr. Zack Ally, a leading aesthetics practitioner, sold his business, Derma Med Ltd, to Peal Athena Ltd.
- •The sale agreement included non-compete and confidentiality clauses.
- •Claimants suspected Dr. Ally of diverting business and using confidential information.
- •Dr. Ally was suspended, resigned, and claimed constructive dismissal.
- •A without-notice injunction was initially granted, then discharged due to alleged non-disclosure by claimants.
- •Claimants appealed the discharge of the injunction.
Legal Principles
Duty of full and frank disclosure in without-notice injunction applications.
Brink’s Mat Ltd v Elcombe [1988] 1 WLR 1350; Tugushev v Orlov [2019] EWHC 2031 (Comm)
Adequacy of damages as a remedy for breach of non-compete covenants.
Sunrise Brokers LLP v Rodgers [2014] EWCA Civ 1373; D v P [2016] EWCA Civ 87
Standard of review for appeals against discretionary decisions.
None explicitly stated, but implied throughout the judgment.
Outcomes
Appeal allowed.
The judge erred in finding significant failures of full and frank disclosure and in refusing a fresh injunction. The court found the non-disclosure issues were not serious enough to warrant discharging the injunction, and damages were not an adequate remedy given the evidential difficulties in proving losses from a breach of a non-compete clause.
Injunction against competition granted until March 24, 2024.
Strong prima facie case of breach of contract; damages inadequate; importance of the non-compete clause to the sale agreement.
Interim injunction to protect confidential information granted.
To prevent further misuse of confidential information pending trial.