Elsevier Ltd v Robert Munro

JurisdictionEngland & Wales
JudgeMr Justice Warby
Judgment Date31 July 2014
Neutral Citation[2014] EWHC 2648 (QB)
Date31 July 2014
Docket NumberCase No: HQ14X02276
CourtQueen's Bench Division

[2014] EWHC 2648 (QB)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Mr Justice Warby

Case No: HQ14X02276

Between:
Elsevier Limited
Claimant
and
Robert Munro
Defendant

Martin Griffiths QC and David Craig (instructed by Baker & McKenzie LLP) for the Claimant

Paul Nicholls QC (instructed by Lewis Silkin LLP) for the Defendant

Hearing dates: 9–11 July, 14–16 July 2014

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 Warby Mr Justice Warby

Introduction

1

The Claimant in this action is a company within Reed Elsevier, an Anglo-Dutch publishing and information group. The Claimant company forms part of the Elsevier Division of Reed Elsevier. The Elsevier Division is a collection of businesses operating internationally in over 20 countries generating very substantial revenues from the provision of books, journals and information services to a range of sectors including health practitioners, scientists, teachers, students, and technology professionals. The Defendant is a Chartered Accountant. After graduating in 1986 he worked for Price Waterhouse and qualified in 1990. He has worked for companies within Reed Elsevier since 1995, rising to a senior level. Since 2009 he has been employed by the Claimant, working most recently as Chief Financial Officer (CFO) of a sub-division of the Elsevier Division known as Elsevier Research, a post which he took up on 1 February 2014.

2

On 11 April 2014 the Defendant gave the Claimant notice of resignation. He had received a job offer to join Cengage Learning Inc ("Cengage") as its CFO. The Defendant proposed to take up that offer after a period of transitional arrangements which he suggested, ending on 31 May 2014. The Claimant objected to that proposal, relying on the requirement of the Defendant's contract of employment that he give them 12 months' notice. After further exchanges, the Defendant ceased working for Elsevier Research at the end of May 2014, claiming that his contract was at an end.

3

On 4 June 2014 the Claimant issued these proceedings, relying on the 12 month notice clause and contractual duties owed by the Defendant during the period of his employment. The principal remedy sought is injunctions to restrain the Claimant until 10 April 2015 from commencing employment with or providing services to Cengage or any other competitor and from breaching his duties of good faith, fidelity, trust and confidence. The Defendant resists the claim, asserting that he is entitled to move to Cengage as he was constructively dismissed by the Claimant, and is thus free of the contractual restraints on which it relies. Alternatively, the Defendant argues that there should be no injunction, with the Claimant left to a remedy in damages, or only a limited injunction.

4

On 11 June 2014 directions were given for an expedited trial and the Defendant gave undertakings to the Court, which included an undertaking not until trial or further Order to commence employment with or provide services to Cengage or any other third party. This judgment on liability and final injunctive relief only is given after that expedited trial which started less than a month after the order for directions and took place over 6 days. The parties had reduced a mass of disclosure to 13 lever arch files of trial documentation. Evidence was given by 9 witnesses, 6 for the Claimant and 3 for the Defendant. Eight of those witnesses were cross-examined. For the Claimant, oral evidence was given by Gavin Howe, the Claimant's Executive Vice President of Human Resources; Eser Keskiner, Director of Strategy; John Danaher, President of the Education Business Unit; Katherine Lunn, UK HR Director; and Stuart Whayman, Global CFO since 12 May 201Evidence from Byron Lloyd-Jones of Stroz Friedburg Ltd, forensic digital analysts, was read by agreement. The Defendant gave oral evidence himself and called evidence from Fernando Bleichmar, Chief Strategy Officer of Cengage and David Lomas, currently CFO of the Elsevier division. There was no evidence from the CEO of the Elsevier Division, Ron Mobed, or from the CEO of Cengage, Michael Hansen, though hearsay evidence was given about what they – and in particular Mr Mobed — had said at various times. I have had regard to the need for caution in approaching that hearsay evidence.

5

I allowed some of the evidence to be given in private, pursuant to CPR 39.2(3)(a), (c) and (g), to protect what was said to be confidential information of the Claimant. To the limited extent that this judgment needs to incorporate information that I accept is confidential it is contained in a Confidential Annex to the judgment. However, whilst the evidence explored a range of matters in fine detail, examining some parts of the history day by day or even hour by hour, the nature of the case is such that the parties need to know sooner rather than later where they stand. To meet that objective it has been necessary for me to limit the amount of detail included in this judgment, and to concentrate on the main and decisive points.

Issues

6

The two broad issues that arise for decision are these:

(1) Is the Defendant still bound by his contract of employment, or has he been constructively dismissed?

(2) If the Defendant is still bound by his contract, should its terms be enforced by any, and if so what form of, injunction?

7

The resolution of the first issue calls for determination of whether the Claimant acted in repudiatory breach of the contract of employment as the Defendant alleges and, if so, whether the Defendant accepted such breach. If the answers are yes, that is the end of the claim. If the contract remains in existence the second issue arises. On that issue the parties are in dispute both as to the facts and as to the applicable principles of law. The Claimant says that the Court should restrain the Defendant from breaking his contract as it has not only a contractual right to prevent but also a legitimate interest in preventing the Defendant from working for Cengage, which is a competitor. In addition or alternatively it argues that the injunctions sought are justified as a means of protecting the Claimant against misuse of its confidential information.

8

The Defendant's primary case is that even if his contract remains in force an injunction is not necessary because Cengage is not a competitor or not a significant competitor of the Claimant, there is no real risk of him misusing confidential information, and the Claimant would not suffer any substantial harm if he took up the new job. The claim, says the Defendant, should be treated as an application for a "garden leave" injunction and, applying the principles established in that category of case, the injunctions sought are not required in order to prevent damage to any interest which the Claimant is entitled to protect. The Defendant argues in the alternative that any injunction would need to be strictly limited in scope or duration. It is suggested that none is needed any longer. Additionally, or in the alternative, it is said that damages would be an adequate remedy for any breach.

Contractual terms

9

The contract of employment current at the time of the events in dispute is one first entered into in 2009 by means of a document signed by the Defendant on 10 July 2009 ("the 2009 Contract"). The 2009 Contract included, among others, the following express terms (I have added the numbering, for ease of reference later in this judgment):

"[1] JOB TITLE

[a] Your job title is Chief Financial Officer, Elsevier Health Sciences, and you will report directly to Michael Hansen, CEO Health Sciences Division.

[b] Your duties and responsibilities will be discussed with you and may include any role, task, project or function which may be reasonably required of you or assigned to you by the Company from time to time in its absolute discretion, and may be for any member of the Group.

[2] HOURS AND PLACE OF WORK

Except where prevented by illness, accident or holiday as provided below you will devote the whole of your time and all of your attention and skill to the affairs of the Company (or any Group Company which you are performing duties for) and use your best endeavours to promote its interests".

[3] NOTICE

[a] You are entitled to receive and required to give not less than twelve months' written notice of termination of your employment" (emboldened text in original).

[b] During the notice period the Company shall be under no obligation to assign to or vest in you any powers, duties or functions or to provide any work for you and may at any time suspend you from the performance of any duties or exclude you from any premises of the Company provided always that the Company shall continue to pay your salary and contractual benefits whilst you remain employed by the Company.

[4] OUTSIDE INTERESTS

[a] You shall not during your employment with the Company (except with the prior written consent of the Company) be concerned or interested directly or indirectly in any capacity, whether as principal or agent, in any business in competition with or similar to the business of any company in the Group other than as holder for investment purposes only of securities which do not exceed 75% in nominal value of the share capital or stock of any class of any one company quoted on a recognised Stock Exchange or dealt in on the Unlisted Securities Market or the Third Market".

[b] You must not undertake any other paid employment without the prior written permission of the Company, and you must not engage in any outside activity, paid or unpaid, which might interfere with the effective discharge of your duties or adversely affect the Company...

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3 cases
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    • Court of Appeal (Civil Division)
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    ...they should be entitled to obtain an injunction". 31 Mr Craig sought to derive some support from the recent decision of Warby J in Elsevier Ltd v Munro [2014] EWHC (QB) 2648, [2014] IRLR 766. But I do not see how it assists him. The claim in that case was for an injunction preventing the em......
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    ...abuse by an employer of a garden leave provision is well recognised…." 31 Counsel for the claimant also relied on the case of Elsevier Limited v Robert Munro [2014] EWHC 2648 (QB) and the judgment of Warby J at [58]: "There is a public policy against the compulsory sterilisation and potenti......
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    ...I should deal with it. 91 The law in relation to constructive dismissal has been very helpfully recently summarised by Warby J in Elsevier Limited v Munro [2014] EWHC 2648 (QB), where he stated as follows: "Constructive Dismissal 29. The relevant legal principles are clear and undisputed. C......

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