Adorn Spa Ltd v Amjad
| Jurisdiction | England & Wales |
| Judge | Mr Richard Salter |
| Judgment Date | 14 March 2017 |
| Neutral Citation | [2017] EWHC 1313 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Case No: IHQ/2017/0091 |
| Date | 14 March 2017 |
[2017] EWHC 1313 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London WC2A 2LL
Mr Richard Salter, QC
(Sitting as a Deputy Judge of the Queen's Bench Division)
Case No: IHQ/2017/0091
Mr A Ohringer (instructed by DPH Legal Ltd) appeared on behalf of the Claimant
Dr C Chatterjee (instructed by Diplock Solicitors Ltd) appeared on behalf of the Defendant
THE DEPUTY JUDGE: This is an application for an interim injunction to enforce what are said to be the restrictive covenants contained in the contracts of employment of the two defendants. The claimants in this case are associated companies which own and operate a chain of eight beauty salons. The defendants were employed by the first and second applicants at branches of the chain in Aylesbury. Specifically the first claimant employed the first defendant at a beauty salon called Adorn Beauty in the Hale Leys Shopping Centre in Aylesbury, and the second claimant employed the second defendant at another salon also called Adorn Beauty, but this time in the Friars Square Shopping Centre in Aylesbury. As is described by Ms Shingala (who is one of the two directors of the first claimant) in paragraph 19 of her witness statement dated 1 March 2017, Aylesbury is a small town with two shopping centres, one called the Friars Square Shopping Centre and the other called the Hale Leys Shopping Centre. The map which has been produced by Ms Shingala shows that those two shopping centres are within a comparatively small distance one of the other. On this application, the claimants were represented by Mr Adam Ohringer of counsel, and the defendants by Dr Chatterjee of counsel. I am grateful to both advocates for their helpful submissions.
To return to the facts of the case, both of the defendants ended their employment by the claimants in February 2017, and what is said is that they thereafter set up a new and competing business called the Deluxe Beauty Salon at premises at 40 High Street, Aylesbury, within 100 metres of one of the claimants' salons and within 600 metres of the other claimant's salon. The claimants' case is that that is a plain breach of the restrictive covenants contained in what the claimants say were the employment contracts of both defendants. These were in materially identical terms and contained in clause 17 restrictions which in broad terms prevented the defendants from setting up a competing business within 2.5 miles of their normal place of work within three months after their termination, from soliciting orders or accepting orders from prior customers of the claimants for some six months after the end of their employment, and from soliciting or enticing away any of the claimants' employees for a period of nine months from the ending of their employment.
The application is supported by a number of witness statements. I have mentioned the witness statement of Ms Shingala. There are also witness statements from Ketan Shingala, Kamlesh Shingala and Klara Freitas. Each of the defendants has also served a witness statement setting out their side of the story. The witness statements that have been served by the defendants raise both factual and legal issues which may, if this matter proceeds to trial, be relied upon by the defendants as a complete defence to the claims made against them by the claimants. With regard to the first defendant, she accepts that she signed a contract of employment, but she asserts that the circumstances in which she came to sign that contract (particularly her youth and inexperience, and the fact that she was given no explanation of what she was signing) entitle her under some legal doctrine to set that contract aside, or at least to say that it is not binding on her. It is suggested that that she may be able to rely on the doctrine of undue influence, or of inequality of bargaining power, or perhaps on some breach of the common law or statutory implied terms of her contract of employment.
With regard to the second defendant, she rather more fundamentally says that the assertion that she signed a contract of employment in these terms is untrue. She says that her purported signature to the contract which has been produced in evidence by Ms Shingala was not written by her, and she has supported that assertion by a letter report from a forensic handwriting analyst called Ms Ruth Myers. Ms Myers' conclusion is that there is a strong likelihood that the questioned document (the contract of employment) has been authored by another hand. The second defendant has a further line of defence outlined in her witness statement. That is that the conduct of the claimant as her employer amounted to constructive dismissal and that accordingly, even if there were restrictive covenants which were binding upon her, they would no longer be binding under the well-known doctrine first enunciated in the General Billposting case [1909] AC 118 HL.
It is common ground between the parties that since the periods of at least the first and probably the second of the covenants which are now sought to be enforced will either have expired or at least have substantially expired, I must approach the exercise of my discretion whether or not to grant an interim injunction on a basis which takes into account the prospects of success of the claimant. In doing so I apply the well-known principles stemming from the decision of the House of Lords in NWL v Woods [1979] 1 WLR 1294, which principles have been more recently applied in Lansing Linde v Kerr [1991] 1 WLR 251 and CEF Holdings Ltd and another v Mundey and others [2012] IRLR 912 (QB).
Fortunately Dr Chatterjee has not invited me to determine the fundamental issues raised by way of defence by either of the two defendants. He accepts that I am in really no position, on the basis of the very limited evidence before me at present and the straightforward conflicts apparent from some of that evidence, to resolve those issues at this stage. He has therefore confined his submissions squarely to the question of the enforceability of the restrictive covenants. His broad submission is that the restrictive covenants do not protect any legitimate interest of the claimants because they have no such interest to protect, given the nature of their business. He also asserts that each and every of the covenants of which enforcement is sought is expressed in terms which are much too wide to protect any legitimate interest, even if (contrary to his principal submission) the claimants had such an interest to protect.
With that background I turn to the law. It is trite law that all covenants and restraint of trade are prima facie unenforceable at common law and are enforceable only if they are reasonable with reference to the interests of the parties concerned and of the public. Unless the unreasonable part can be severed by removal of either part or the whole of the covenant in question, its inclusion renders the covenant or in certain circumstances the entire contract unenforceable. The doctrine of restraint of trade is probably one of the oldest applications of the doctrine of public policy. Mr Ohringer did not dispute that the covenants in clause 17 of the contracts of employment of these defendants on which he relied were prima facie in restraint of trade. Nor did either party dispute the basic principles of law which I should apply in deciding whether these particular clauses in this particular contract were reasonable with reference to the interests of the parties concerned and of the public.
Those principles were helpfully and accurately summarised by Sir Bernard Rix in his judgment in the case of Coppage & Anor v Safety Net Security Ltd [2013] EWCA Civ 1176, [2013] IRLR 970 (QB) at paragraph 15. Sir Bernard Rix stated the principles as follows:
"(i) Post-termination restraints are enforceable, if reasonable, but covenants in employment contracts are viewed more jealously than in other more commercial contracts, such as those between a seller and a buyer.
(ii) It is for the employer to show that a restraint is reasonable in the interests of the parties and in particular that it is designed for the protection of some proprietary interest of the employer for which the restraint is reasonably necessary.
(iii) Customer lists and other such information about customers fall within such proprietary interests.
(iv) Non-solicitation clauses are therefore more favourably looked upon than non-competition clauses, for an employer is not entitled to protect himself against mere competition on the part of a former employee.
(v) The question of reasonableness has to be asked as of the outset of the contract, looking forwards, as a matter of the covenant's meaning, and not in the light of matters that have subsequently taken place (save to the extent that those throw any general light on what might have been fairly contemplated on a reasonable view of the clause's meaning).
(vi) In that context, the validity of a clause is not to be tested by hypothetical matters which could fall within the clause's meaning as a matter of language, if such matters would be improbable or fall outside the parties' contemplation.
(vii) Because of the difficulties of testing in the case of each customer, past or current, whether such a customer is likely to do business with the employer in the future, a clause which is reasonable in terms of space or time will be likely to be enforced. Moreover, it has been said that it is the customer whose future custom is uncertain that is 'the very class of case against which the covenant is...
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