Law by Design Ltd v Saira Ali
| Jurisdiction | England & Wales |
| Judge | Jason Beer |
| Judgment Date | 28 February 2022 |
| Neutral Citation | [2022] EWHC 426 (QB) |
| Docket Number | Case No: QB-2021-003648 |
| Court | Queen's Bench Division |
[2022] EWHC 426 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Jason Beer QC
(Sitting as a Deputy Judge of the High Court)
Case No: QB-2021-003648
Selwyn Bloch QC and Nicholas Goodfellow (instructed by Mayfair Rise Solicitors) for the Claimant
Andrew Burns QC and Alice Carse (instructed by BBS Law Limited) for the Defendant
Hearing dates: 13 th – 15 th December 2021
APPROVED JUDGMENT
Jason Beer QC (Sitting as a Deputy Judge of the High Court):
A. Introduction
It all went well for a number of years. Everyone wanted the same things in their professional lives – to practise law in a small, but niche (sometimes described as “ boutique”), firm of solicitors that was free from the demands that working within larger corporate bodies often brings. That all changed in May 2021, when one of the solicitors in the firm handed in her resignation (meaning that she could leave in November 2021) and explained to the managing director, and principal shareholder, of the firm that she intended to join a much larger firm, as a partner. In this claim the firm says that the post-termination clauses contained in agreements entered into by the solicitor restrict her ability to do so for a period of 12 months after the end of her employment in November 2021. The solicitor says that the clauses are drawn too widely, last for too long, and are unenforceable.
These proceedings accordingly concern whether, and if so to what extent, the court should restrain the solicitor, Saira Ali (“ Ms Ali”), from involvement in a business that competes with the firm, Law by Design Ltd (“ LBD”) for 12 months after the termination of her employment with LBD.
In the light of undertakings given by Ms Ali in correspondence, by which she agreed to abide by the terms of the agreements insofar as they restricted her from using confidential information acquired during her employment with LBD, or soliciting clients of LBD, for 12 months after the termination of her employment with LBD, it is not necessary for me to determine the effect or enforceability of the clauses of the agreements which regulate the use of confidential information or the solicitation of clients. The sole issue was as to the meaning, effect and enforceability of the clauses of the agreement which seek to prevent Ms Ali from involvement in a business in competition with LBD for 12 months after the termination of her employment with LBD.
The hearing was conducted entirely in public, despite the existence of a large volume of material that was said to be confidential being placed before the Court. On the first day of the trial LBD made an oral application (albeit heralded in its Skeleton Argument) for orders protecting the confidentiality of that material despite the likely reference to some of it in the course of the trial. I made orders in relation to the material that was said to be confidential and which was contained in certain bundles provided to the Court (“ the Confidential Bundles”), namely: (i) disapplying the exception in CPR 31.22(1)(a), so that if a document in the Confidential Bundle was read to or by the court, or referred to, at a public hearing then this would not relieve the parties from the obligation only to use that document for the purpose of the proceedings; and (ii) any person who is not a party to these proceedings may not apply for a copy of the Confidential Bundles from the court records pursuant to CPR 5.4C and/or pursuant to the court's inherent jurisdiction save for on 21 days' written notice to LBD. As it was apparent that there was, to some extent, a live issue between the parties as to whether all of the material in the Confidential Bundle was in fact confidential, the orders were specifically made without prejudice to Ms Ali's ability to challenge in the course of the trial the question of whether the information contained within the Confidential Bundles is properly to be regarded as confidential to LBD.
B. Background
The Parties
Sue Morrison (“ Ms Morrison”) qualified as a solicitor on 15 th October 1984. She moved to Hill Dickinson LLP (“ HDn”) in 2007 – joining as a partner and working from HDn's Manchester office in the employment team (HDn had a significant presence in NHS employment law work in the North West of England).
Ms Ali qualified as a solicitor on 3 rd April 2006, and soon thereafter began work at HDn, specialising in employment law.
In 2011, Ms Ali moved within HDn to work on Ms Morrison's employment law team (by this time, Ms Morrison was an equity partner at HDn). This meant that that the majority of Ms Ali's work was for NHS clients (of which she had little, if any, previous experience). Ms Ali worked closely with an Associate Solicitor in that team, Caroline Shafar, whose work also mainly involved NHS clients.
It is apparent from the evidence of both Ms Morrison and Ms Ali that each held the other in high regard – with Ms Ali describing how she built up a really good professional and personal relationship with her manager and mentor; and Ms Morrison for her part describing Ms Ali as a friend, and a very good lawyer.
The “by Design” companies are established
Ms Morrison decided that she wished to move away from working for a large firm of solicitors. And so, in early 2013 she decided to found three companies: (i) a company that carries out investigations in human resources issues, in particular the conduct of employees: Investigations by Design (“ IBD”); (ii) a company that provides assistance and training in relation to human resources issues generally: HR Solutions by Design (“ HRSBD”); and (iii) LBD, which was incorporated as a limited company on 8 th February 2013. Ms Morrison was at that time the sole director of LBD and also the sole shareholder – holding 100% of the issued shares in LBD (she also held, and holds, shares in IBD and HRSBD).
IBD is a client of LBD: when investigations require legal advice to be given ( e.g., in relation to employment law issues that arise in the course of the investigation), that advice is given by LBD lawyers, and the time spent by them so advising is either invoiced to LBD at a commercial rate (with IBD then invoicing the paying client and passing on the money received in respect of the legal advice to LBD), or invoiced directly to the paying client by LBD.
LBD is based in offices located in Manchester – from where, before the occurrence of the pandemic, all staff worked.
Ms Ali joins LBD
As she undertook the process of establishing LBD, Ms Morrison approached Ms Ali and invited her to join LBD. It is common ground between Ms Morrison and Ms Ali that (despite an email dated 7 th May 2013, which set out in very summary form the terms of the offer of employment, suggesting that “ Your new role will include not only fee earning but business developmental work and training”), Ms Ali would not be required to undertake any business development activities – this was consistent with the fact that she did not bring significant business or client contacts with her from HDn and her skill-sets were not developed so far the funding, management and marketing of LBD were concerned. And so it was that Ms Ali joined LBD on 13 th May 2013 as an Associate Director on a salary of £50,000 per annum (she had previously been an Assistant Solicitor at HDn, on a salary of £45,000 per annum).
At about this time, and in the six month or so period that followed it, Ms Morrison also recruited Caroline Shafar from HDn, along with Katie Tomes (a Professional Support Lawyer at HDn), Neal Mellor (a Solicitor at HDn), and James Upton (a Partner at HDn).
The Contract of Employment
Ms Morrison (on behalf of LBD) and Ms Ali signed a contract of employment on 13 th May 2013 (“ the contract of employment”). As the terms of the contract of employment are not directly relied on by LBD in this claim and, as will appear below, some of the terms of that contract were superseded or supplemented by a later shareholders agreement and, still later, a service agreement (which agreements are relied on by LBD), it is not necessary to set out in detail the terms of the contract of employment. A summary will suffice. The contract of employment: (i) provided for a 3-month notice period (see Clause 4.2); (ii) contained restrictions as to the use and disclosure of confidential information (see Clause 16, read with the definition of “confidential information” in Clause 1); and (iii) contained post-termination restrictions – these sought, in broad terms, to prevent Ms Ali from soliciting clients away from LBD, and from being involved in any capacity with any business which was in competition with those parts of the business of LBD with which Ms Ali was involved to a material extent in the 12 months before termination of her employment (see Clause 22.1). These post-termination restrictions were limited in duration to 6 months after termination of Ms Ali's employment (see Clause 22.1), and did not prevent Ms Ali from being engaged or concerned in any business concern insofar as her duties or work (with that business) related “ …solely to geographical areas where the business concern is not in competition with [those parts of the business of [LBD] with which [Ms Ali] was involved to a material extent in the 12 months before the termination of her [employment]”.
Finally, it is of note that, although the pre-contractual email of 7 th May 2013 referred to above spoke of Ms Ali “ …working across both Commercial and Public employment sectors…” the contract...
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