Merits of the underlying claim relevant in granting an interim injunction to enforce a restrictive covenant: Berry Recruitment Limited v Brooke Donovan

Posted by Heather Welham on
In this particular employment court case, the court had to rule on an interim injunction against a former employee for a possible breach of restrictive covenant. The question as to the merits of the claim and the inclusion of the current facts were problematic in this respect, since the restrictive covenant could have expired by the time of court proceedings and the basis of the claim would therefore have been removed. Accordingly, the judge took into account the merits of the claim in this recent case of Berry Recruitment Ltd v Brooke Donovan [2018].

Facts

Ms Donovan, the defendant, was employed by the claimant as a recruitment consultant. The employment contract contained a non-solicitation and a non-dealing clause to be valid for 6 months after leaving the company.

On 28 May 2018, the defendant requested by email to immediately terminate the contract and be exempt from the obligation to observe the notice period due to a new employment opportunity. The claimant agreed to this and the defendant joined Swanstaff, another recruitment company.

The allegation concerned the defendant for possible breach of the non-solicitation and the non-dealing clause with respect to a claimant's restricted client PCL, who is now also client of Swanstaff. In addition, the claimant had received a call from PCL advising that eight workers placed by the defendant whilst working for the claimant had not arrived for work. The claimant spoke to four of the workers and was told that the defendant had contacted them and informed them that their shift had been cancelled. Four of the workers reported that the defendant had sent them Swanstaff application forms or registration packs and informed them that they would be working for Swanstaff from next week. The defendant had set up a PCL account with Swanstaff and provided candidates for PCL training while working for Swanstaff. In response to the claimant's allegation that this had serious implications for the claimant's business relationship with PCL and financial implications, the defendant replied that PCL had a long-standing relationship with Swanstaff and that she had not solicited or enticed PCL staff away.

Further allegations regarding the breach of the restrictive covenants have been made against other restricted clients. The defendant sent further Swanstaff registration packs to GI and did not deny the contact to the clients in question, but stated that the contact originated from them. Additionally, there had been a breach of contract regarding a third restricted client, Joseph Roach Gardens Ltd.

Decision in the case

The judge stated that the defendant's response to the allegations regarding PCL only concerned the non-solicitation, not the non-dealing clause, and she did not seem to deny the contact with PCL. PCL would remain a restricted client of the claimant, even if it is already a client of Swanstaff which would have prevented non-dealing. The judge therefore assumed a strong claim. The defendant also ignored the non-dealing covenant with regard to GI and thus committed a breach of contract. Finally, there is also substantial evidence regarding the third allegation concerning Joseph Roach Gardens Ltd that suggests misuse of information. In this context, there is reason to believe that the claimant's submission is justified.

It was found that a claim for damages is not an adequate remedy, since the claimant could suffer financial damage, that it would appear difficult to calculate the damage and that it is unlikely that the defendant has sufficient means to enable enforcement.

The claimant's concern in this case was not to prevent a new employment of the defendant, but to enforce the restrictive covenants and to prevent the misuse of information. In such cases, the external circumstances favoured the granting of an interim injunction.

Commentary

In the context of this decision, the possibility of including the effects of an interim injunction in the proceedings must be emphasised. The balance of convenience is of particular importance when issuing a decision on an interim injunction.

In these obvious cases, in addition to the examination of the conditions for an interim injunction, the merits of the claim must also be taken into account. Although there is a risk that the decision in the claim will be prejudged, the consideration in favour of obtaining the interim injunction must be taken in order to ensure compliance with restrictive covenants and to prevent misuse of information.

About the Author

Heather is an Associate in the Commercial Litigation team specialising in contractual disputes.

Heather Welham
Email Heather
023 8085 7493

View Profile