Jump Trading International Ltd v Damien Couture
| Jurisdiction | England & Wales |
| Judge | Mr Michael Ford |
| Judgment Date | 28 April 2023 |
| Neutral Citation | [2023] EWHC 1305 (KB) |
| Court | King's Bench Division |
| Docket Number | No. KB-2023-001793 |
[2023] EWHC 1305 (KB)
Mr Michael Ford KC
(Sitting as a Deputy Judge of the High Court)
No. KB-2023-001793
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
Royal Courts of Justice
Strand
London, WC2A 2LL
Mr J Laddie KC, Mr E Kemp and Mr M Greaves (instructed by Allen & Overy LLP) appeared on behalf of the Claimant.
Mr N De Silva KC (instructed by Excello Law) appeared on behalf of the First Defendant.
Mr A Solomon KC and Ms C Davies (instructed by Paul Hastings (Europe) LLP) appeared on behalf of the Second Defendant.
THE DEPUTY JUDGE:
This hearing concerns an application notice dated 20 January 2023 in which the claimant seeks an interim prohibitory injunction to restrain commencement of the first defendant's employment with the second defendant until the end of a non-compete period. The claimant also seeks directions for an expedited trial. The hearing was listed for one day and the representation before me has been Mr Laddie KC, Mr Kemp and Mr Greaves for the claimant; for the first defendant, Mr de Silva KC; and for the second defendant, Mr Adam Solomon KC and Ms Davies. I am grateful to all counsel for their excellent submissions and to the solicitors for the efficient preparation of the bundles.
For the purpose of this hearing, I was presented with a bundle including witness statements for the claimant from Mr Peter Deaner (the claimant's managing director of its European operations) and two statements from Mr Pierre Lafitte, a quantitative trader working for the claimant; from the first defendant from Mr Damien Couture himself; and for the second defendant from Mr Robert Ellis (its general counsel) and Mr Marc Vesecky (a senior managing director of the second defendant). All parties submitted written skeleton arguments, and I was treated to a bundle of some 46 authorities. This judgment was given at the conclusion of the hearing.
In this judgment I will refer to the first and second defendants as “D1” and “D2”.
Background
The claimant is a leading trading and investment firm with 1,500 employees globally. It uses quantitative and algorithmic methods to trade in financial assets. It has a trading team in London comprised of about 200 individuals engaged in what is called high frequency, medium frequency and low frequency trading. It includes traders, developers and quantitative researchers.
D1 is a quantitative researcher in algorithmic trading: that is, trading where computers make the final decision. He worked as a quantity researcher in the claimant's trading team in London from June 2016 until he resigned with notice, giving one year's notice on 30 March 2022.
D2 is a global hedge fund based in Connecticut with offices in the US, London, Hong Kong and Singapore. It recruited D1 in March 2022 to commence working for it once his notice period ended. He was due to start to work for it this month, April 2023.
D1 signed his contract of employment (the “Contract”) with the claimant in August 2015 and commenced employment on 13 June 2016. The Contract included a provision for one year's notice in clause 10.1 and a provision for garden leave in clause12.1, by which he could be required not to work during his notice period. During that period, defined as “Garden Leave”, he could not enter or attend the premises of the company and nor do various acts, such as work for any third party.
The critical clause for the purpose of the hearing today is clause 19.1 which states as follows:
“Non-Compete
In order to protect the Confidential Information, Intellectual Property Rights, trade secrets, goodwill and business connections of each Group Company to which you have access as a result of your Employment, you agree to refrain at all times from directly or indirectly engaging in Competitive Activity during your Employment and during any notice period, Garden Leave and the Non-Compete Period.”
The “Non-Compete Period” is defined in clause 1.1, the definitions section of the Contract, in the following terms:
“ Non-Compete Period: means the zero (0) to twelve (12) month period after the Termination Date as elected by the Company within twenty (20) business days following the notice of termination. The Non-Compete Period shall commence at the conclusion of any applicable Garden Leave or notice period.”
“Termination Date” is defined as the date of termination of employment.
“Competitive activity” is defined in clause 1.1 as follows:
“Engaging in any of the following activities with or for the benefit of a Competitive Entity in any Capacity:
(a) providing similar services to the services provided by the Employee to any Group Company.
(b) directly or indirectly utilizing or developing quantitative analytics that are based on, substantially similar to or derived from quantitative analytics that you utilized or developed or had access to while you were employed by any Group Company”
The definition then it goes on to give at (c) to (e) further instances of what are deemed to be “Competitive Activity”, referring to working with quantitative analytics.
In turn, “Competitive Entity” is defined in wide terms in clause 1.1, which begins by saying:
“ Competitive Entity: For the purpose of this Agreement
‘Competitive Entity’ shall mean those entities engaged in or preparing to engage in (i) business activities identical or similar to any of those engaged in by the Company; (ii) ownership or control of greater than five percent (5%) in any entity that engages in business activities identical or similar to any of those engaged in by the Company..”
Then it goes on to give three other categories, (iii) to (v), which fall within the definition..
By clause 20 of the Contract D1 agreed to various matters in respect of the restrictive covenant in clause 19, including that he had had the opportunity to receive legal advice. The Contract included a notification obligation imposed on him by clause 19.5, by which if he was offered or approached to be involved in any capacity in a business, undertaking or organisation which was or was intended to be a “Competitive Activity”, he undertook to give that person a copy of the Contract and to inform the claimant of the identity of the third party.
D1 was paid a salary of £175,000 plus a discretionary bonus. After D1 informed the claimant that he was going to resign, he was given an exit interview by the claimant's human resources team on 22 March 2022 where, according to Mr Deaner, he said he was going to set up his own low frequency trading business, as recorded in an email in May 2022. On 23 March 2022, according to a letter from 3 April 2023 from D1, on this date he accepted an offer to work with D1, having met them earlier in November 2021. He explains that on that day he signed an agreement with D2 that he and a friend would both join D2 and create a new team with a mandate for what is called “Stack-Arb”. D2 was placed on garden leave from 30 March 2022, and on that date he gave written notice of resignation in a very short letter which he gave to Mr Lafitte.
On 31 March 2022 D2 received brief legal advice that, according to its solicitor, the non-compete covenant to which D1 was subject under clause 19.1 of the Contract was not enforceable, and privilege has been waived to that extent. On the same day, Mr Deaner informed D1 that he would impose the full twelve-month non-compete period on him pursuant to clause 19.1. According to D1, he said this was not acceptable.
Subsequently D1 received communications from D2 reminding him that the claimant had elected a non-compete period of 12 months, which would commence after the “Termination Date” of 30 March 2024. On about 12 July 2022, D1 informed Mr Deaner for the first time by Zoom that he intended to join D2. According to Mr Deaner, he told D1 that he would consider this to be competing.
In the period between June and November, without prejudice discussions took place between the parties in order to see if the dispute between them about the enforceability of clause 19.1 could be resolved. On 17 November 2022 D1 wrote an important letter to Mr Deaner saying he did not believe the restrictions on him were enforceable and confirming that he was going to join the D2 with an intended start date of 3 April 2022 (it is common ground that the letter should have said 3 April 2023). He said that his intention was to set up a new investment team, a minimum of 12 months would be spent on writing software and not trading, and he did not believe that those activities would be in competition with the claimant. There was no reply to that letter until 6 March 2023 and, in fact, it seems there was no communication at all between the parties during this period: see Mr Couture's statement at para.23. There is, as Mr Laddie frankly accepted, no explanation for the almost four-month gap of time before 6 March.
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