Jump Trading International Ltd v Damien Couture and Another
| Jurisdiction | England & Wales |
| Judge | Lord Justice Bean |
| Judgment Date | 11 May 2023 |
| Neutral Citation | [2023] EWCA Civ 670 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: CA-2023-000836 |
[2023] EWCA Civ 670
Lord Justice Bean
Case No: CA-2023-000836
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
MR MICHAEL FORD KC (SITTING AS A DEPUTY JUDGE)
The Royal Courts of Justice
Strand, London, WC2A 2LL
James Laddie KC appeared on behalf of the Appellant
The claimant, Jump Trading, applies for permission to appeal against a decision of Michael Ford KC sitting as a deputy judge of the King's Bench Division, refusing an injunction to stop the first defendant joining the second defendant until the trial of this claim, which is at present the subject of an order for a speedy trial to be listed in late June or early July.
The history of the matter is this. Mr Couture, the first defendant, began employment with the claimant in June 2016. His contract included a provision for termination by notice of one year on either side, the right of the employers to place the employee on garden leave once he had given notice and to be paid basic pay during that period, and a somewhat unusual clause providing for post-termination restraint of up to one year at the employer's option. When I say “post-termination”, that means after the end of the garden leave period, so it provided for a second year of protection for the claimant's asserted trade secrets.
On 23 March 2022 the first defendant accepted a job offer from the second defendant. At this stage the claimant was unaware of his intentions. On 30 March he gave 12 months' notice to resign. He was immediately placed on garden leave, and the following day he was told that the claimants had opted for the maximum period of post-termination restraint, that is one year. The first respondent then began his period of garden leave. On 15 July he informed the claimant of his offer from the second respondent. There was then a period of without prejudice discussions which the judge was told lasted until November. While these were going on, on 23 September the claimant wrote to the first defendant about his restrictive covenants and confirming that going to work for the second defendant would violate those covenants. On 17 November, the without prejudice discussions having failed to reach a settlement, Mr Couture wrote to say he would be starting work for the second defendant in April 2023, on the expiry of his one year notice period, and contended that the non-compete covenant was unenforceable.
Nothing happened for the next three-and-a-half months. On 6 March 2023 the claimant or its solicitors wrote to Mr Couture, reiterating that in its view the non-compete clause was enforceable and that taking up the post with the second defendant would be a violation of it. On 31 March Mr Couture's employment with Jump Trading terminated. On 13 April proceedings were issued against the first and second defendants. An application for an interlocutory injunction was served and came on before Mr Ford on 29 April. In his judgment given orally that day, and of which I have been supplied with a helpful note to Mr Mark Greaves, junior counsel for the claimant (a transcript not yet being available), Mr Ford noted that it was common ground that this is a Lawrence David Ltd v Ashton type of case where a trial can take place before the end of the restraint period which the claimant seeks to enforce.
Mr Ford then considered a number of issues between the parties under the heading “Serious question to be tried”. One of the defendants' arguments in the case is that a non-compete clause which gives the employer the option to choose any period from 0 to 12 months is very unusual, and the defendants say it is open to attack on the grounds of lack of certainty. The judge found that there was a serious question to be tried on that issue.
The next issue was the length of the restraint. Assuming (as one does at this stage) that the lack of certainty point has been rejected or at least shelved, the question is whether a further year of restraint following on one year of garden leave (which I seem to recall in one reported case was described as “piling Pelion on Ossa”) was more than reasonably necessary for the protection of the claimant's legitimate interest. The judge said in his judgment that he had hesitated about this but, after hesitating, found that on this issue too the claimant had shown a serious question to be tried.
The third issue was the width of the restraint: again with apparently some hesitation, the judge found there was a serious question to be tried.
So the claimant had succeeded in getting past American Cyanamid stage one. The judge went on to hold that damages would not be an adequate remedy for either side if a decision was made at the interlocutory stage which turned out to be the wrong decision at a trial. This was plainly correct and Mr Laddie does not contend otherwise. The judge then rightly moved on to the question of the balance of convenience.
On that issue he said this, according to Mr Greaves's note:
^“I turn to the balance of convenience and deal first and foremost with delay. It is accepted that it is a legitimate factor, but Mr Laddie says it should be given limited weight because the claimant did not make the application after the first defendant started [his new job]. He has referred me to various cases.”
Then the judge listed them: Planon v Gilligan [2022] IRLR 684, Boydell v NZP Ltd & Anor [2023] EWCA Civ 373 and Legends Live Ltd v Harrison [2016] EWHC 1938. Continuing with the note of his judgment:
^“Mr Laddie referred me to the questions set out by Edis J in Legends Live v Harrison on the relevance of delay, where he referred to Spry on Equitable Remedies, (i) was there unreasonable delay; (ii) is it unjust in all the circumstances to grant the relief sought? In that particular case, after the claimant learned that the defendant was to begin work in January 2016 for a competitor, there was then a period of negotiation to try to resolve their difficulties in February, which then led to a threat by the claimant, giving the defendant an ultimatum and then a period after March 2016 where nothing happened until almost two months later, when a letter was sent in May and the proceedings were issued in June. On the facts of that case Edis J found that delay after March was unreasonable and did not grant an injunction in the absence of an explanation for it.
Here the facts are fairly stark in relation to delay. First, the claimant knew the first defendant would join the second defendant in July. Even if there were some without prejudice discussions, it was clear at that point that the claimant knew that the first defendant would be joining a competitor. Second, after the first defendant wrote the letter of 17 November 2022 saying he did not think the clause was enforceable, the claimant did nothing at all. The first defendant said that if the claimant had any queries it should contact the second defendant's general counsel. In that letter the first defendant gave his start date and gave a proposal to resolve the matter and asked the claimant to confirm if it was acceptable. After that, the claimant did nothing at all until 6 March 2023. There is no explanation or evidence, and Mr Laddie conceded that that amounted to an unreasonable delay between November and March.
It seems to me there are two critical issues about delay. First, if an application had been made earlier, an expedited trial could have been arranged before the first defendant started work, which would have made it possible to resolve the issues without the need for interim relief at all. Second, there would be the possibility of arbitration between the parties because the contract [contained an arbitration clause] …
The first defendant will suffer prejudice if he cannot start work in April 2023 but only start in June/July 2023, causing further atrophy of his skills in the market. The second defendant has also suffered prejudice because it seems it has gone ahead to take steps to engage individuals.
In those circumstances, given the unreasonable delay, I consider it is unjust to grant relief. That is in...
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