Alan James Boydell v NZP Limited & Anor
[2023] EWCA Civ 373
Literacy Capital PLC v Vanessa Jane Webb
31 July 2024
[2024] EWHC 2026 (KB)
High Court
A company tried to stop a former employee from working for a competitor for 10 years, covering many different types of work. The court said this was unfair and unreasonable, throwing out the company's attempt to stop her. The restrictions were too long and covered too much, going beyond protecting the company's legitimate interests.
Key Facts
- •Literacy Capital PLC (Claimant) sought an interim injunction against Vanessa Jane Webb (Defendant) to prevent her from competing with its subsidiary companies, including Mountain Healthcare Limited (Mountain).
- •The Defendant, a qualified nurse and doctor, co-founded and grew Mountain, a SARC provider, before selling her shares to the Claimant.
- •The 2021 Investment Agreement and Loan Note Agreement contained restrictive covenants preventing the Defendant from competing with the Claimant's group of companies for 10 years.
- •The Defendant formed a competing company, Nurture Health and Care Limited, which won a contract to provide SARC services to South Wales Police.
- •The Claimant argued that the covenants were valid and enforceable, while the Defendant argued they were void and unenforceable due to their excessive scope and duration.
Legal Principles
Covenants in restraint of trade are prima facie unenforceable unless reasonable in the interests of the parties and the public.
Chitty on Contracts, Nordenfelt v Maxim [1894] AC 535
In ex-employee restrictive covenants, the employer must show the restrictions are no greater than reasonably necessary to protect legitimate business interests.
Office Angels v Rainer-Thomas [1991] IRLR 214
The reasonableness of restrictive covenants is assessed at the time the contract was made, considering factors such as scope, geography, and duration.
Quantum Advisory v Quantum Actuarial [2021] EWCA Civ 227
The test for a serious issue to be tried in an interlocutory injunction application is not demanding, excluding only frivolous or vexatious claims.
Planon v Gilligan [2022] EWCA Civ. 642
In commercial cases, the level of scrutiny applied to restrictive covenants is less onerous than in employment cases, but depends on all circumstances.
Credico Marketing v Lambert [2021] EWHC 1504
Outcomes
The Claimant's application for an interim injunction was dismissed.
The restrictive covenants were deemed void and unenforceable due to their excessive scope (covering businesses unrelated to Mountain) and duration (10 years). The judge found that the Claimant failed to provide evidence justifying such a wide and long-lasting restraint.