City Site Solutions Limited v Liam Baker & Ors
[2023] EWHC 2064 (KB)
Proactive Group Holdings Inc & Anor v HJ 2024 Limited & Ors
4 November 2024
[2024] EWHC 2821 (KB)
High Court
Three ex-employees started a rival business and poached clients and staff from their old company. A judge temporarily stopped them, saying they likely broke their contracts by stealing secrets and clients.
Key Facts
- •Proactive Group Holdings Inc and Brighter IR Limited (Claimants) sought interim injunctive relief against HJ 2024 Limited, Peter Kevin Meadows (Second Defendant), and Scott Macdonald-Thomson (Third Defendant) (Defendants).
- •The Second Defendant was the former CEO of Brighter IR and CTO of Proactive, while the Third Defendant was the former Sales and Operations Director of Brighter IR.
- •All three defendants left their employment with the Claimants and joined HJ 2024 Limited, a competitor.
- •The Claimants alleged breaches of confidentiality, non-solicitation of clients and employees, and breaches of restrictive covenants.
- •The Defendants denied the allegations and raised counterarguments regarding the validity and enforceability of the restrictive covenants.
Legal Principles
Interim relief is granted if just and convenient (Senior Courts Act 1981, s.37)
Senior Courts Act 1981, s.37
American Cyanamid principles for interim injunctions: serious issue to be tried, adequacy of damages, balance of convenience.
American Cyanamid v Ethicon Limited [1975] AC 396
In assessing the balance of convenience, the court may consider the plaintiff's prospects of success, particularly if the trial will occur after the restraint period expires (Lansing Linde Ltd v Kerr [1991] ICR 428).
Lansing Linde Ltd v Kerr [1991] ICR 428
Test for enforceability of restrictive covenants: (1) meaning of covenant, (2) legitimate business interests, (3) reasonableness, (4) discretion to grant injunction (TFS Derivatives Limited v Morgan [2004] EWHC 3181).
TFS Derivatives Limited v Morgan [2004] EWHC 3181
Severance of unenforceable provisions from contracts (Beckett Investment Management Group Ltd v Hall [2007] EWCA Civ 613; Sadler v Imperial Life Assurance Company of Canada Ltd [1988] IRLR 388).
Beckett Investment Management Group Ltd v Hall [2007] EWCA Civ 613; Sadler v Imperial Life Assurance Company of Canada Ltd [1988] IRLR 388
Restrictive covenants must be no wider than reasonably necessary (Tillman v Egon Zehnder Ltd [2019] UKSC 32).
Tillman v Egon Zehnder Ltd [2019] UKSC 32
Elements of the tort of inducement of breach of contract (Aerostar Maintenance International Ltd v Wilson [2010] EWHC 2032; OBG Ltd v Allan [2008] 1 AC 1).
Aerostar Maintenance International Ltd v Wilson [2010] EWHC 2032; OBG Ltd v Allan [2008] 1 AC 1
Interlocutory injunction applications are not for resolving substantive issues (Planon Limited v Gilligan [2022] EWCA Civ 624).
Planon Limited v Gilligan [2022] EWCA Civ 624
Outcomes
Interim injunctions granted against all three Defendants.
Claimants demonstrated a strong case for breach of confidentiality, non-solicitation, and restrictive covenants; balance of convenience favoured Claimants.
Order to deliver up confidential materials granted.
Strong claim of breach; justified as a matter of discretion.
Application for provision of client list and communications refused.
Claimants had sufficient information to plead their case; disclosure should be sought through normal litigation processes.