Allan Janes LLP v Johal
| Jurisdiction | England & Wales |
| Judgment Date | 23 February 2006 |
| Neutral Citation | [2006] EWHC 286 (Ch) |
| Docket Number | Claim No: HC05C02796 |
| Court | Chancery Division |
| Date | 23 February 2006 |
[2006] EWHC 286 (Ch)
Bernard Livesey QC
sitting as a Deputy Judge of the Chancery Division
Claim No: HC05C02796
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
James Laddie, instructed by the claimant
Simon Devonshire, instructed by RR Sanglivi & Co, of South Harrow, Middlesex, for the defendant
APPROVED JUDGMENT
The defendant was employed by the claimant as an assistant solicitor at its offices in High Wycombe in Buckinghamshire. After her employment came to an end a partner discovered that she was sending emails to the firm's clients soliciting work for a new partnership with the second defendant in what appeared to be a breach of certain restrictive covenants in her contract of employment.
On 27 October 2005 HH Judge Rich, sitting as a judge of the High Court, granted an interim injunction in the terms of the contractual restrictions and ordered that a speedy trial of the issues take place. Shortly prior to the trial the claimant compromised its claim against the second defendant (whom I will hereafter where necessary call Anu Kapila) and the third defendant (the intended partnership itself which I will hereafter call 'Kapila Law') by discontinuing the claim against them with no order for costs.
The trial of the issues between the claimant and first defendant (whom I will hereafter refer to simply as 'the defendant') took place over a period of two and a half days between the 6th and 8th February. There was some written and much documentary evidence; two senior partners of the firm, Mr Hitchen and Mr Hay gave evidence before me. The defendant elected not to give evidence. I found Mr Hitchen and Mr Hay to be impressive and truthful witnesses whose evidence as to fact I unreservedly accept.
The facts
The claimant is a fairly small firm of solicitors practising from Easton Street, High Wycombe. It had and still has five partners and between five and seven assistant solicitors of varying degrees of seniority. Contrary to what the defendant suggested, it is not a typical High Street firm of solicitors though it started life that way in the distant past. It gave up criminal practice in 1996, family and most personal injury work a couple of years ago and does not compete for fixed fee residential conveyancing. It practises on a departmental basis, specialising in five areas of work including commercial and property in one combined department, litigation, private client work and financial planning. It had on its database the names of something in the order of 2,000 clients who had given instructions on one or more occasions in the three year period from 2002 to 2005. In the year 2004/05 it opened files on about 750 new matters for something in the region of about 650 different clients. Of these clients the vast majority were former clients rather than new clients; some of the matters were inter-departmental referrals within the firm. Of the 650 clients in the past year, the claimant had dealt in the same period with 64 as the solicitor handling the matter and had contact with about a further 34 when covering for an absent colleague.
High Wycombe is the major population centre in the area in which the claimant practises. The town has a population of about 62,000; the district a population of about 162,000. There are many industrial estates which attract a thriving commercial sector. There is of course a wide selection and strong presence of national names in banking, building society and other financial services businesses locally. It is the commercial sector that the claimant seeks to target, particularly the owner managed business with a turnover of between £3 and £20 million. A download from the Law Society website produced a list of some 45 or so firms of solicitors with offices in the area. They range in size from much larger firms (some with multiple offices) than the claimant to single practitioners. There was no analysis of the type of clientele which each firm targeted but some will and others will not target the same sort of clientele as the claimant.
The defendant is 41 years of age. She qualified as a solicitor in 1989. She trained in London; since qualification she worked in private practice, specialising in commercial property, initially with Charles Russell in Lincoln's Inn and Howard Kennedy in the West End of London before moving to Buckinghamshire, to a firm called BP Collins in Gerrard's Cross.
By letter dated 9 December 1999 she was offered a position with the claimant at an initial salary of £40,000 per annum plus bonus and benefits. The letter continued:
As I think I made clear, this is a senior position which we hope would lead to an offer to join the partnership after a suitable period of assessment on both sides. The position involves dealing with clients at all levels and providing an efficient and effective service including the marketing of the firm and developing the business. Whilst the position primarily involves property work there may well be opportunities for you to develop other skills complementary to that work.
Her contract of employment was dated 2 November 2000. It contained the following covenants:
Clause 20 —Restrictions of indefinite duration:
You shall not during the period of your employment or at any time afterwards whether on your own behalf or as the employee, partner or agent of any other person or firm.:
20.1 …
20.2. In connection with the business or profession of a solicitor or conveyancer or any business or profession involving the work of any solicitor or conveyancer directly or indirectly canvass or solicit or in any way interfere with any person who shall have been a client of the Firm at any time during the shorter of the period of three years immediately preceding the date when your employment terminates or the period of your employment by the Firm PROVIDED THAT the provisions of this paragraph shall not apply to your relatives or to any company wholly owned or controlled by you or your relatives.
Clause 22 Post employment restrictions of limited duration:
You will not on your own behalf or as the employee, partner or agent of any other person or persons:
22.1. in the areas of the following local authorities at today's date:
Wycombe District Council
Chiltern District Council
South Bucks District Council
during a period of one year following the date of the date of termination of your employment by the firm directly or indirectly act as a solicitor or do the work of a solicitor for any person who shall have been a client of the Firm at any time during the shorter of the period of one year immediately preceding the termination of your employment or the period of your employment with the firm.
[This has been referred to in argument, and will be referred to in this judgment as the 'radial restriction'.]
22.2.where your employment ends after the expiry of whichever is the longer of the periods specified in the first column of sub-paragraphs (a) and (b) of this sub-clause you will not on your own behalf or as the employee, partner or agent of any other person or persons practise as or do the work of a solicitor at any place within the area and during the period set out below which is applicable to the longest of the periods specified in the first column of those sub-paragraphs (a) and (b) of this sub-clause. But this restriction will not prevent you within those areas and periods from working in fields of work in which the Firm does not practise at the termination of your employment or from working for a local authority, building society, bank or an industrial company (which has not within the period of three years immediately before the termination of your employment been a client of the Firm).
[This has been referred to in argument and will be referred to in this judgment as the 'non-dealing restriction']
It is common ground that in addition to the express terms there were a number of implied terms, including a duty of good faith, loyalty and fidelity; a duty not to act in competition with the employer; and a duty not to make use of and/or disclose confidential information belonging to the employer and his trade secrets.
The defendant accepted the offer and began work on 6 March 2000. I am told that her work was of good technical quality and that the firm's clients liked her and returned. I am satisfied that the expression of hope that the position might lead to partnership was genuine and represented an expectation, if all went well, that was shared by both parties. However, the defendant consistently failed to generate work and bring into the firm new clients and as a result her billed fee income did not rise to the heights which would need to be achieved before an offer of partnership would be forthcoming.
On 30 April 2005, after a discussion about partnership prospects, the defendant wrote to the claimant giving the required three months notice of resignation 'with much regret' and with her 'very best wishes for the continued future success of the firm'; she worked her notice and left on 29 July 2005. I mention, in passing, that she attempted to contend in a written statement that she came to the conclusion that she had been unfairly and improperly overlooked for partnership very probably because of her gender and ethnic background. I reject this contention. There is no truth in it. It is regrettable that the defendant thought to advance it.
On the contrary her departure was on very friendly terms. While she was working her notice, it was apparent that she was absent from the office during working hours with much greater frequency than before; but this went unchallenged. She continued to have unrestricted access to the claimant's offices, including at weekends when she would be the only person in the premises. She returned, after her employment had formally...
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