Corporate Express Ltd v Lisa Day

JurisdictionEngland & Wales
JudgeMR JUSTICE DOUGLAS BROWN,Mr Justice Douglas Brown
Judgment Date17 December 2004
Neutral Citation[2004] EWHC 2943 (QB)
Docket NumberCase No: 04/TLQ/1126
Date17 December 2004
CourtQueen's Bench Division

[2004] EWHC 2943 (QB)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Mr Justice Douglas Brown

Case No: 04/TLQ/1126

Between:
Corporate Express Ltd
Claimant
and
Lisa Day
Defendant

J Crosfill (instructed by Duffield Harrison LLP, Hoddesdon) for the Claimant

M Barklem (instructed by Mills & Reeve, Cambridge) for the Defendant

Hearing dates: 1 st and 2 nd December 2004

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

MR JUSTICE DOUGLAS BROWN Mr Justice Douglas Brown
1

The parties are Corporate Express Ltd (Corporate) who are a substantial company selling office products to business users, and Mrs Lisa Day who has been a sales executive in the business stationery field for many years. She joined Corporate as a sales executive in 1992, left in 1995 and rejoined in 1998. In 2002 she became Sales Manager for National Accounts. The contract, signed on 2 nd January 2003 contained the usual clauses plus in clause 11.1 a covenant in the form of a six-month solicitation and dealing ban and clause 11.2 a six-month ban on working for named competitors. In both cases the period commenced after termination.

2

On 23 rd June 2004 after a dispute between the parties they entered into compromise agreement in which it was agreed:

i) That Mrs Day's contract of employment would terminate on 25 June 2004 with salary and all other benefits paid up to the termination date.

ii) Corporate would pay her by the termination date the sum of £15000.00 by way of compensation for loss of employment, redundancy, breach of contract and settlement of all claims which she might have against the employer before an employment tribunal.

iii) Mrs Day agreed to comply with the post termination undertakings in clause 11.

3

It is not necessary to refer further to that agreement. Corporate claim two breaches of the contract and the compromise agreement. Firstly in July 2004 it is said Mrs Day attempted to solicit the custom of one of Corporate's customers whom she had dealt with when in their employment. This allegation was not proceeded with and I have disregarded it.

4

Secondly in July 2004 she entered into an employment contract with Banner Business Supplies Ltd, a competitor identified as 'Banner' in clause 11.2

5

The validity of clause 11.1 is not challenged.

6

As to the alleged breach of 11.2 and the compromise agreement it is admitted that Mrs Day in July 2004 became a Corporate Account Manager with Banner Business Supplies Ltd. It is not now disputed that this is the "Banner" mentioned in clause 11.2.

7

Mrs Day disputes that the ban on working for a major competitor is necessary for the protection of Corporate's legimate protectable interests.

8

Corporate seek injunctive, and in the alternative declaratory relief. There was no letter before action and immediately after these proceedings were commenced in August 2004 Mrs Day gave undertakings that she would not, in breach clause 11.1, solicit business from a named list of customers. That undertaking is effective until the 24th December 2004. With suitable modifications, Banner gave a similar undertaking.

9

In relation to clause 11.2 at the date of the hearing only 22 days remained of the six-month period. At the date of this judgment only 5 days remain. Corporate say through their Counsel Mr Crosfill that not only is there a breach of the employment contract, but there is a clear and calculated breach of the compromise agreement reached after Mrs Day had independent legal advice (albeit paid for by Corporate). If the Court was not prepared to grant injunctive relief, and at this stage that was readily foreseeable, then a declaration sought was that clause 11.2 is enforceable. This was a course followed by the Court of Appeal in Marion White Ltd v Francis [1972] 1WLR 1432. If that stage is reached then Mrs Day by her counsel Mr Barklem does not oppose a declaration, if it is confined to the circumstances of the instant case.

10

Clause 11 is in these terms:

"11.1 You shall not, in relation to any products /services which are competitive with those supplied by the Company during your engagement hereunder (other wise that in the proper performance of your duties) nor within the period of 6 months following the termination of your employment, whether solely or jointly with others as manager, agent, officer, employee or other wise directly or indirectly solicit, deal, interfere with or endeavour to entice away from the Company any person, firm or company who was a customer of the Company at any time during the period of 12 months prior to such termination (or if you are employed by the Company for any shorter period, for such period) and with whom during such period you shall have had contact on behalf of the Company.

11.2 You shall not, during your engagement hereunder (otherwise than in the proper performance of your duties), nor within the period of 6 months following the termination of your employment, whether solely or jointly with others as manager, agent, officer, employee or otherwise directly or indirectly be engaged, concerned or interested in the business of the sale, and/or marketing, of office products for the following companies (or any subsidiary and associated companies); Guilbert, Dudley, ISA, Viking, Staples, Orion, Office Depot, Office World, Banner and Lyreco.

Save that this clause does not prohibit you from holding up to 5% of the shares of a publicly quoted company."

11

Mrs Day does not dispute the validity of clause 11.1. Her case is that on its own that clause is entirely sufficient to protect Corporate's legitimate interests.

12

The issue for determination is whether clause 11.2 is necessary for the legitimate protection of those interests.

13

Corporate's case is that the business supply trade is fiercely competitive with a relatively small number of main suppliers – the household names of the business and office supply trade. Because of buyouts and amalgamations the ten named companies are reduced to four at the present time.

The Claimants Case

14

Corporate's case is summarised in the particulars of claim in this way:

"Paragraph 3: The claimant employs salesmen and women to manage its customers accounts. The claimant uses the expression National Accounts to describe substantial customers who are not situated only in one geographical location. The National Accounts are the most valuable customers of the claimant.

Paragraph 4: The defendant was employed to supervise and manage the salesmen and women who were allocated to National Accounts. In the course of her employment the defendant would have had access to confidential information in respect of the National Accounts which she managed.

Particulars of confidential information

The defendant has access to and was aware of confidential information including but not limited to (1) any particular requirements of the customers and (2) discounts, prices and profit margins in relation to each of the customers and (3) contact details of those people employed by the customers who were responsible for placing orders and (4) the commencement and termination dates of any supply agreements and (5) any customer service difficulties including but not limited to any complaints, expressions of dissatisfaction or threats to change supplier."

15

That confidential information would be of significant benefit to any one of the named competitors when Mrs Day approached customers and their behalf. This was important to Corporate because of the loss of a single National Account would have a substantial effect on Corporate's profits. This is well illustrated by the list of customers governed by the undertaking which includes Vodafone, Thistle Hotels, The Open University and other nationally known concerns. It is agreed that in her last year of employment her team achieved a turnover of nearly £8.5 million, approximately 9% of Corporate's annual turnover.

16

She was a senior employee managing between 5 and 7 account managers. She had a line manager above her who in turn reported directly to the Board.

17

To make good the pleaded allegations, the claimant relied on an admission in the defence and on concessions by Mrs Day in her written and oral evidence that she had access to and was aware of confidential information by way of discounts, prices and profit margins in relation to each of Corporate's customers. Mr Harrington, called on behalf of Mrs Day, who is Banner's Human Resources Manager agreed with this.

18

Secondly, Corporate relied on the evidence of Mr Carney, their own Human Resource's Manager. Although his duties were mainly to do with personnel matters, he had a direct supervisory sales remit with some major accounts; he was in charge of Corporate's sales training and as a member of the small executive board was regularly involved in discussions on matters such as pricing and the sales policy. He was an impressive witness, obviously honest who gave sensible and candid evidence. It is right to say that all the witnesses were impressive and obviously truthful. Mrs Day was clearly very capable and personable and it is easy to see how she has succeeded in her chosen field. Mr Harrington is a vastly experienced Human Resources Executive, but not as experienced as Mr Carney in the field of sales.

19

In summary Mr Carney's evidence was this. It is very difficult to police the illicit divulging of confidential information. The importance of the information carried in the head by sales managers is in part intangible as it has to do with goodwill built up over a period of time by that employee with senior purchasing officers of customer companies.

20

However, the tendering process is an obvious area involving...

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