Baker Tilly UK Holdings Ltd & Others v Clough & Others
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Swift |
| Judgment Date | 17 October 2013 |
| Neutral Citation | [2013] EWHC 3616 (QB) |
| Date | 17 October 2013 |
| Court | Queen's Bench Division |
| Docket Number | Claim No: IHQ/13/0725 |
[2013] EWHC 3616 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand,
London WC2A 2LL
Mrs Justice Swift
Claim No: IHQ/13/0725
Mr G Mansfield QC and Mr A Robson (instructed by Clyde & Co) appeared on behalf of the Claimants.
Mr P Goulding QC and Ms D Sen Gupta (instructed by Bryan Cave) appeared on behalf of the Defendants.
Thursday, 17 October 2013
This is an application by the claimants for an interim injunction to enforce restrictive covenants which they say are effective against the sixth defendant. The case was listed for hearing today. In the event, because of the short time which has been available to them before the hearing, the defendants require more time to prepare for the full hearing, in particular to serve evidence. It was therefore decided at the outset, the claimants not objecting, that the substantive trial of the application would be heard on 24 and 25 October, i.e. a week from now. It is expected that full trial of the issues will not take place until February 2014 at the earliest.
The position is that the defendants are all accountants and were senior employees in the business known as RSM Tenon Limited at offices in Nottingham and Leicester. One of the defendants, Mr Julian Clough, was employed by RSM Tenon Limited only ("RSMT"). The others all had dual contracts of employment with both that company and also with RSM Tenon Audit Limited ("RSMT Audit").
The defendants' contracts of employment contained or referred to post termination restrictive covenants, each in a very similar form. The material covenants for the purpose of the claim are covenants not to solicit defined clients, and not to solicit defined (i.e. senior) employees. The defendants' employments have now all terminated, although the exact termination dates are in dispute. If the covenants were enforceable, they would run until 12 May 2014. What I must decide today is whether or not to grant the claimants an interim injunction to cover the week prior to the hearing of their substantive application for an injunction at the end of next week.
The defendants each resigned within a 6-day period of each other in May 2013. They rapidly made clear that they had resigned in order to take up employment with a competitor of the claimants, Mazars LLP. The defendants, who each had periods of notice of 6 months, were placed on "gardening leave". Their employments with the claimants were due to end on dates between 7 November and 12 November 2013. The claimants were anxious that the defendants might not abide by the covenants to which they were subject. Accordingly, there was correspondence between the parties' solicitors which culminated, on 11 June 2013, in the defendants unilaterally entering into deeds of undertaking. By those deeds of undertaking, they agreed to be bound by their covenants, albeit in a slightly different form than originally drafted, since the undertakings excluded existing clients of Mazars from the scope of the covenant relating to non-solicitation of the claimants' clients. Although the deeds of undertaking (in particular the exclusion referred to above) were never fully accepted by the claimants, nevertheless the claimants were reasonable satisfied with that position and the matter rested there until September 2013.
Meanwhile, there were changes within RSMT and its operating companies. Baker Tilly (now the claimants to this action) acquired RSMT's operating companies on 2 September 2013. It then commenced an internal reorganisation, in the course of which the business of RSMT was transferred to BT Holdings on 28 September 2013. This was what is known as a TUPE transfer. On the last working day before the transfer of RSMT's business, (i.e. on 27 September 2013) the defendants objected, as they were entitled to do, to the transfer. As a result, as a matter of law, their employment with RSMT ended on 28 September 2013, rather than at the end of the notice period in November 2013. There is a dispute as to whether or not RSMT Audit was also transferred to BT Holdings. Contradictory information about this matter was given by the claimants to their employees, and there is an issue as to whether or not there was a transfer which effectively brought the employments of the five defendants who were employed by RSMT Audit to an end.
Following those events, the claimants were once again concerned as to whether, their employment with the claimant having been terminated or being about to terminate, the defendants would abide by their covenants and their undertakings. Accordingly, the claimants' solicitors wrote to solicitors for both the defendants and Mazars, seeking confirmation by 30 September that the defendants intended to abide by the terms of the covenants. That provoked correspondence from the defendants' solicitors, indicating that they did not accept that the defendants were bound by the covenants, and raising various arguments as to why they contended that was the case.
On or about 2 October, the claimants became aware that the defendants were working for Mazars. It seems likely that their employment had started on or about 1 October (or possibly 30 September). In any event the claimants found out quite quickly that they had started to work for Mazars.
The defendants not having provided the reassurance that the claimants had sought as to their intentions to abide by their covenants, the claimants' solicitors again wrote to their solicitors, setting out a detailed response to the points and arguments which had been raised by the defendants' solicitors, and giving a further deadline of 5 o'clock on Monday 7 October for an assurance that the defendants would fully comply with their post-termination covenants. That assurance was not forthcoming, and therefore the claimants decided to bring these proceedings. They issued their application on 11 October, returnable on 17 October, i.e. today.
As I...
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