P14 Medical Ltd v Edward Mahon

JurisdictionEngland & Wales
CourtQueen's Bench Division
JudgeMr Justice Cavanagh
Judgment Date09 July 2020
Neutral Citation[2020] EWHC 1823 (QB)
Docket NumberCase No: QB-2020-001915
Date09 July 2020

[2020] EWHC 1823 (QB)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Mr Justice Cavanagh

Case No: QB-2020-001915

Between:
P14 Medical Limited
Claimant
and
Edward Mahon
Defendant

Rebecca Page (instructed by Willans LLP) for the Claimant

Chris Quinn (instructed by Harrison Clark Rickerbys) for the Defendant

Hearing date: 6 July 2020

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 Cavanagh

Introduction

1

This judgment follows the hearing of an application for an interim injunction, in which the Claimant company seeks orders restraining the Defendant from breaching restrictive covenants which the Claimant contends are contained in his contract of employment, and restraining him from disclosing or using confidential information belonging to the Claimant.

2

The Claimant is a company which carries on business as the supplier of pain-management devices for the relief of chronic pain, including both standard and cooled radiofrequency pain-management systems. The Claimant also provides training to clinicians and patients regarding procedures involving standard radiofrequency devices, peripheral nerve implants for pain management, and on the use of radiation protection garments. The Claimant's customers are primarily NHS Trusts and private hospitals.

3

Until his resignation with immediate effect on 7 May 2020, the Defendant was the Claimant's Sales Director. He was also a registered director of the Claimant and owned (and owns) 40% of the shares in the Claimant's parent company, Pain Medical Limited. He had previously owned the same proportion of shares in the Claimant. The other shareholders in the parent company are the other two directors at the time of the Defendant's resignation, Mr Stephen Dechan, who owns 50% of the shares, and Mrs Kate Dechan, who owns the remaining 10% of the shares.

4

From 1 December 2017 until 24 May 2020, the Claimant had an exclusive distribution agreement (“the Distributor Agreement”) for the UK and Ireland with Avanos Limited (“Avanos”) for its radiofrequency products for the relief of chronic pain (“IVP products”). Avanos was formerly known as Halyard Health UK Limited. Avanos itself did not sell or supply its IVP products to the end-users. This was done via the Distributor Agreement with the Claimant. On 23 April 2020, Avanos gave written notice of its intention to terminate the Distributor Agreement with effect from 24 May 2020. From that date onwards, Avanos has sold and supplied its IVP products in the UK and Ireland directly to end-users, in direct competition with the Claimant, which continues to supply other pain-management devices for the relief of chronic pain to end-users.

5

The Defendant stated in his evidence that on 23 April 2020, the same day that Avanos gave notice to terminate the Distributor Agreement, a senior employee of Avanos, Ms Arnols, telephoned him to inform him of Avanos's decision to sell directly to end-users and to notify him that Avanos intended to make him an offer of employment. On 27 April 2020, Avanos offered the Defendant a position as its Business Development Manager in the UK and Ireland in respect of its IVP products. In this position, the Defendant's role would involve selling essentially the same products in the same territory as he had previously done for the Claimant. (In the Claimant's evidence, it is contended that Avanos had, in fact, approached the Defendant much earlier, in Autumn 2019, with a proposal that the Defendant join Avanos in order to assist the Company to sell directly to end-users, but is not necessary, for present purposes, for me to resolve this dispute of fact.)

6

The Defendant resigned his employment with the Claimant on Thursday 7 May 2020 and commenced employment with Avanos on the next working day, Monday 11 May 2020 (Friday 8 May being a Bank Holiday).

7

The Defendant accepts that the functions that he has been employed by Avanos to perform would involve the solicitation of, and dealing with, clients of the Claimant in competition with the Claimant. However, he denies that this would place him in breach of any express restrictive covenants in his contract of employment with the Claimant. This is because he denies that there were any such express covenants in his contract of employment with the Claimant, and he further contends that, even if there were such express covenants, they are unenforceable as being unlawfully in restraint of trade. Similarly, the Defendant denies that there were any express terms in his contract of employment which prohibited him from using or disclosing confidential information after the termination of his employment, and contends that, even if there were, they were too broad and too vague to be enforceable.

8

In addition to reliance upon alleged express terms, the Claimant claims that, in proposing to make use of trade secrets and/or confidential information, the Defendant will be in breach of his implied contractual duty of fidelity, his equitable duty of confidence, and/or his director's duties. The Defendant denies these allegations also.

9

The Claimant issued its application for injunctive relief on 3 June 2020. The application was listed to be heard on 17 June 2020, but, on 12 June 2020, the parties agreed to a Consent Order pursuant to which, inter alia, the Defendant gave interim undertakings and it was agreed the application would be heard on 6 July 2020.

10

In addition to the applications for injunctive relief, I have been asked to deal with an application to amend the Claimant's Particulars of Claim and to deal with matters arising from a number of procedural applications that have been made by the Defendant in these proceedings, including an application to transfer the proceedings to the Business and Property Courts in Birmingham. I have also been asked to give directions with a view to a speedy trial of this action taking place in September 2020. It was agreed that I would first deal with the application for interim injunctions, and I would then hear submissions and make orders on the remaining issues. This judgment deals only with the application for interim injunctions.

11

The Claimant is represented by Ms Rebecca Page and the Defendant by Mr Chris Quinn. I am grateful to both of them for their helpful submissions, both oral and in writing.

12

The issues that arise in this application can conveniently be dealt with in the following order:

(1) What approach should be taken to the merits of the claims in injunction proceedings such as these? The Claimant says that I should apply the standard test for interim injunctions that was laid down by the House of Lords in American Cyanamid v Ethicon Limited [1975] AC 396. This involves asking (1) Is there a serious issue to be tried?; (2) If so, would damages be an adequate remedy for the party injured by the Court's grant of, or its failure to grant, an injunction?; and (3) if damages would not be an adequate remedy, where does the balance of convenience lie? (In addition, the Court retains a residual discretion as to the grant of an injunction, which is a discretionary remedy). The Claimant submits, therefore, that, in looking at the merits of the claims, I need only be concerned with whether there is a serious issue to be tried. The Defendant, on the other hand, says that this is one of the exceptional category of case in which, when considering the balance of convenience, the Court should look more closely at the prospects of success, and should take into account whether it is likely, on the basis of the evidence currently before the Court, that the Claimant will succeed at trial;

(2) Did the Defendant's contract of employment contain the express restrictive covenants that are relied upon by the Claimant? It is common ground that the Defendant was employed by the Claimant until the termination of his employment on 7 May 2020. In addition, it is common ground that the Defendant entered into a contract of employment in 2016 which contained the express restrictive covenants that are relied upon by the Claimant. However, it is also common ground that the 2016 contract of employment was entered into between the Defendant and another company, Platform 14 Medical Limited (“Platform 14”). The Claimant contends that the Claimant took over the business of P14 Medical Limited in 2017 and that:

(a) The Defendant's terms of employment under his employment with Platform 14, including the restrictive covenants, automatically transferred from Platform 14 to the Claimant pursuant to the Transfer of Undertaking (Protection of Employment) Regulations 2006 (“TUPE”);

(b) In the alternative, there was an agreement between the Claimant and the Defendant, or a novation of the Defendant's contract of employment, with the effect that the same terms, including the restrictive covenants, as had existed in his contract with Platform 14 carried over into his contract with the Claimant, on the basis that the Defendant consented by conduct to such an agreement or novation;

(c) In the further alternative, the Claimant is estopped by convention from denying that he was employed by the Claimant on terms that included the restrictive covenants; and/or

(d) Even if the terms of the Defendant's contract of employment with Platform 14 did not transfer to the Claimant in one of the aforementioned ways, the Defendant signed a new written contract of employment with the Claimant on 12 November 2018 on identical terms to his former contract with Platform 14, including the restrictive covenants;

(3) If, at the time of his resignation from the Claimant, the Defendant's contract of employment contained the express restrictive covenants which were originally contained in...

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2 cases
  • Credico Marketing Ltd v Benjamin Gregory Lambert
    • United Kingdom
    • Queen's Bench Division
    • 4 Junio 2021
    ...obligations of the original contracting party towards the other contracting party. See, for example, P14 Medical Ltd v Edward Mahon [2020] EWHC 1823 (QB), [2021] IRLR 39, at paragraph 48. In the Seakom case, Carr J said, at paragraph 147, “The necessary agreement may be express or may be i......
  • The Delivery Group Ltd v Christopher Mark Yeo
    • United Kingdom
    • Queen's Bench Division
    • 1 Julio 2021
    ...for D argued the contrary position. 6 I reject Cs' submission and I propose to adopt the approach taken in P14 Medical v Mahon [2020] EWHC 1823 (QB); [2021] IRLR 39 at [14]–[25], and in Create Financial Management LLP v Lee and another [2020] EWHC 1933 (QB) at [53] – [54]. Those decisions......

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