Associated Foreign Exchange v IFX UK Ltd and Another
| Jurisdiction | England & Wales |
| Judge | MR JEREMY COUSINS QC |
| Judgment Date | 26 May 2010 |
| Neutral Citation | [2010] EWHC 1178 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC10C00888 |
| Date | 26 May 2010 |
[2010] EWHC 1178 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Before: Mr Jeremy Cousins Qc, Sitting as a Deputy Judge of the Chancery Division
Case No: HC10C00888
Mr Patrick Green (instructed by Messrs Sibley & Co, of 1 Heathcock Court, 415, Strand, LONDON WC2R ONT) for the Claimant
Mr Marcus Pilgerstorfer (instructed by Messrs Keystone Law, 53, Davies Street, LONDON W1K 5JH) for the Defendants
APPROVED JUDGMENT
MR JEREMY COUSINS QC:
BACKGROUND
The Claimant (“AFEX”) seeks to enforce a restrictive covenant contained in a contract of employment (“the employment contract”) made between it and the Second Defendant, Mr Saeed Abbassi, which was made on 1 st December 2008.
AFEX's business consists of trading in foreign currencies. Mr Abbassi was engaged as an account executive.
On 24 th September 2009, AFEX placed Mr Abbassi on 3 months’ garden leave because it concluded that he had wrongly speculated with €350,000 worth of client funds. Whilst the propriety of Mr Abbassi's dismissal has not been formerly conceded in these proceedings, it is common ground that his employment with AFEX terminated on 24 th December 2009. At least for the purposes of the hearing before me, no suggestion was made on Mr Abbassi's part to the effect that the circumstances of termination of his employment would entitle him to treat himself as discharged from observing the provisions of the restrictive covenants in his contract of employment.
In December 2009 or January 2010 (there is an issue as to the precise timing) the First Defendant, International Foreign Exchange (UK) Limited (“IFX”), employed Mr Abbassi as a senior dealer. IFX also deals in foreign exchange transactions, and is therefore a trade competitor of AFEX.
AFEX maintains that since commencing his employment with IFX, Mr Abbassi has acted in breach of the restrictive covenants to which he was subject under the terms of his contract with AFEX. An injunction is sought to restrain any further breaches.
THE EMPLOYMENT CONTRACT
Mr Abbassi's employment with AFEX began on 8 th March 2004, but the employment contract containing the relevant covenants was dated 1 st December 2008. It was signed by Mr Abbassi and on behalf of AFEX.
The employment contract provided that Mr Abbassi would be employed as an Accounts Executive, and that his remuneration would be £35,000 per annum, together with 20 per cent commission on monthly revenue. It was common ground at the hearing before me that the annual value of the commission was approximately £100,000.
Mr Abbassi's role was to buy from and sell foreign currency to AFEX's existing clients and to pursue new contacts with the purpose of expanding AFEX's business.
The employment contract made detailed provision in respect of Mr Abbassi's usual hours of work “during which 45 minutes may be taken for lunch between 12:00 p.m. and 2:00 p.m.”. Under clause 5.3 he waived his right under the Working Time Regulations 1998 to have his working time limited to an average of 48 hours per week. Mr Abbassi was entitled to 20 days holiday per annum which could not be taken in periods of more than 10 days at a time. Detailed provisions were made in respect of sickness and absence. He was entitled to join AFEX's pension scheme to which AFEX would make a contribution.
With regard to termination, the employment might be terminated by either party's providing to the other not less than 2 months’ notice, but there was an express reservation to AFEX of the right to place Mr Abbassi on garden leave. It was envisaged that AFEX might pay for Mr Abbassi to attend courses in the course of his employment; in the event that he gave notice of termination within 6 months of attending such a course, or in the event of dismissal for gross misconduct, Mr Abbassi was to reimburse AFEX in respect of all costs associated with such attendance.
Mr Pilgerstorfer, learned counsel for IFX and Mr Abbassi, emphasised that the contract of employment was not negotiated by means of collective bargaining, and he suggested that it was therefore made with inequality of bargaining power.
The restrictive covenants were contained in clause 13.1 and were in the following terms:
“13.1 The Employee undertakes that he will not, in any Capacity (without the previous consent in writing of the Employer) for:
…
13.1.2 A period of 12 months immediately after the Termination Date, [in any Capacity for a Competitor] negotiate or, solicit Business from, or endeavour to entice away from the Employer a Customer, or a Potential Customer.
13.1.3 A period of 6 months immediately after the Termination Date, undertake [for a Competitor], to provide or supply either directly or indirectly, any Restricted Services to or for any person who is or was a Customer, or a Potential Customer.
…
13.3 The periods for which the restrictions at clauses … 13.1.2, 13.1.3 … apply shall be reduced by any period that the Employee spends on Garden Leave (pursuant to clause 10) immediately prior to the Termination Date.”
I shall refer to the provisions of clauses 13.1.2 and 13.1.3 respectively as “the non-solicitation covenant” and the “non-dealing covenant”.
The terms used in clause 13 were defined in as follows:
“Business” means all and any business or other commercial activities of the Employer in the field of international payment services, foreign exchange risk management, buying and selling foreign exchange, or foreign exchange outsourcing with which the Employee has been concerned or involved to any material extent at any time during the 12 month period immediately prior to the Termination Date.
“Capacity” means as an agent, consultant, director, employee, owner, partner, shareholder or in any other capacity.
“Competitor” means – any institution, bank, firm, company or other business entity that engages in Business similar to that carried on by the Employer during the period of the Employee's employment including but not limited to: Travelex, Moneycorp, Corporate FX, Cambridge Mercantile, Baydonhill, Worldfirst Currencies, Currencies Direct, Globex, HIFX, IFX, Schneider FX, Raphael Bank, Customs House, AMEX, Interchange, Smart Currency Exchange and PEX.
“Customer” means any firm, company or person who during the 12 months prior to the Termination Date has been supplied with any Restricted Services and with whom the Employee had contact in order to supply Restricted Services in the course of his employment.
“Potential Customer” means a Customer who the Employee has had contact with at any time during the 12 month period prior to the Termination Date and with whom the Employee has been actively soliciting business for the purpose of providing Restricted Services.
“Restricted Services” means all and any services of any kind including the provision of foreign exchange services which shall be provided by the Employer [or any Group Company] in the normal course of Business.
It is the enforceability of the non-solicitation covenant only that is now in issue before me, but alleged breach of the non-dealing covenant is relied upon by AFEX as part of its case (though not presently pleaded). AFEX alleges that since at least the 16 th February 2010, IFX has been aware of the terms of the employment contract and has procured Mr Abbassi to breach it.
THE APPLICATION
On 17th March 2010 AFEX issued the Claim Form and an application for an injunction. The application came before Mr Justice Roth on 18 th March 2010 who made an order by consent upon the undertakings of IFX and Mr Abbassi, and upon a cross-undertaking in damages given by AFEX. Mr Abbassi undertook not to breach the non-dealing clause until 24 th March 2010 (the date upon which the operation of that clause contractually terminated), and further, until the return date, not to breach the non-solicitation clause. IFX undertook, pending the return date, not to procure Mr Abbassi's breach of his undertakings. The consent order included directions for the serving of evidence before the return date, and it is pursuant to those directions that the matter is now before the Court.
A Defence, on behalf of both IFX and Mr Abbassi, was served on 13th April 2010, and evidence, as I shall describe below, has been served on behalf of all the parties.
AFEX's application is supported by three witness statements from Mr Stuart Holmes who since November 2004 has been the global sales director of AFEX.
IFX and Mr Abbassi rely upon two witness statements from Mr Thomas Greenwood, a director of IFX, a statement from Mr Abbassi and a statement from Mr Sean Collins, a dealer employed by IFX. Although initially there appeared to be some dispute with regard to whether Mr Holmes’ second and third statements, Mr Greenwood's second statement and Mr Collins’ statement might be admitted in evidence, very sensibly the parties agreed at the hearing that the application should proceed with all of the statements being considered.
IFX and Mr Abbassi maintain that an injunction should not be granted because the non-solicitation covenant is unenforceable. Further, they contend, that Mr Abbassi has not committed a breach of the non-solicitation covenant, and that in any event the evidence does not establish any liability as against IFX. It is further submitted that other equitable considerations militate against the grant of an injunction.
It is common ground that, assuming the non-solicitation covenant to be enforceable, the latest date upon which it would still operate is the 23 rd September 2010, and that there is therefore no prospect of this action's being tried before the expiration of the relevant period. Both counsel...
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