Quilter Private Client Advisers Ltd v Emma Falconer

JurisdictionEngland & Wales
JudgeMr Justice Calver
Judgment Date04 December 2020
Neutral Citation[2020] EWHC 3294 (QB)
CourtQueen's Bench Division
Docket NumberCase No: QB-2019-004423
Date04 December 2020

[2020] EWHC 3294 (QB)

IN THE HIGH COURT OF JUSTICE QUEEN'S BENCH DIVISION

Royal Courts of Justice

Rolls Building, Fetter Lane,

London, EC4A 1NL

Before:

THE HONOURABLE Mr Justice Calver

Case No: QB-2019-004423

Between:
Quilter Private Client Advisers Limited
Claimant
and
(1) Emma Falconer
(2) Continuum (Financial Services) LLP
Defendants

Mohinderpal Sethi QC (instructed by Womble Bond Dickinson) for the Claimant

Emma Falconer – The First Defendant as a Litigant in Person

Daniel Tatton Brown QC (instructed by Ashfords LLP) for the Second Defendant

Hearing dates: 16 October, 19–23 October, and 29 October 2020

Approved Judgment

Mr Justice Calver

INTRODUCTION

3

THE PARTIES

4

FACTUAL BACKGROUND

5

Circumstances in which EF came to be employed by Quilter

5

The conclusion of EF's employment contract

7

Mr. Brown gets back in touch with EF

13

EF's swift dissatisfaction with her job at Quilter

14

The pivotal meeting at the Holiday Inn, Exeter between EF and Mr. Brown

15

EF begins recording her dissatisfaction at Quilter

16

The scanning of Quilter documentation onto EF's personal laptop

18

EF finalises her engagement by Continuum and tells Quilter she wants to check the terms of her contract

19

Quilter's letter to EF dated 12 July 2019

24

Discussions between EF and Mr. Burden and Mr. Moore prior to her leaving Quilter

25

Events after EF begins work at Continuum

28

Quilter sends Letters Before Action

29

THE CLAIM AS FORMULATED AND THE CLAIM NOW ADVANCED

33

Against EF:

33

Against Continuum

34

Against EF and Continuum

34

CONSTRUCTIVE DISMISSAL?

35

The Law

35

Application of the law to the facts of this case

38

RELEVANT TERMS OF EF'S CONTRACT

39

Express terms of EF's employment contract

40

Implied terms: good faith and fidelity and trust and confidence

41

Existence of implied terms

41

BREACH OF IMPLIED TERMS?

43

ARE THE RESTRICTIVE COVENANTS VALID?

46

(1) Legitimate business interests requiring protection?

47

(2) Proper construction of the covenants

47

Non-competition covenant

48

The non-solicitation and non-dealing covenants

55

Post-termination restraint on use of Confidential Information

59

SOLICITATION AND DEALING ON THE FACTS

60

Dealing

60

Soliciting

60

The Law

60

The Facts: individual clients

63

Client 3 RB

63

Client 1 JB

64

Client 10 AK

65

Client 8 TH

66

Client 5 JE

67

Client 13 MO

68

Client 17 BDS

69

Client 9 RH & JH

70

Client 14 SP

70

Client 2 CSB

70

Client 11 AL

71

Client 7 LED

71

Client 18 PS

71

Client 6 HELC & NC

72

Client 4 CC and TC

73

Client 12 RN

73

Clients 4 CC & TC; 15 CS; 16 RSS

73

FAILURE TO REPAY THE GUARANTEED BONUS?

74

LIABILITY OF CONTINUUM?

75

Did Continuum induce EF's breaches of contract?

76

Is Continuum in breach of an equitable duty of confidence owed to Quilter?

82

CONCLUSION

83

INTRODUCTION

1

This case concerns the extent to which the court should restrain an FCA regulated financial services adviser from using client information acquired during her employment by company A after she has left to work for company B; whether she can be prevented from dealing with or soliciting clients of A for 12 months after the termination of her employment with A; and whether she can be prevented from working for a competitor for 9 months after leaving A. It also concerns whether Company B should be held liable for allegedly inducing the adviser to breach her contract of employment with company A.

2

On 17 December 2019 Anthony Metzer QC (sitting as a Deputy Judge of the High Court) ordered an expedited trial of the Claimant's claim limited to the issues of liability and injunctive relief only, with a 5 day trial to be set down on the first open date from Monday 30 March 2020. The Defendants gave undertakings in the interim in particular not to use or disclose confidential information belonging to the Claimant and not to solicit or deal with customers of the Claimant in alleged breach of her restrictive covenants (in the case of the First Defendant) or induce her to breach her undertakings (in the case of the Second Defendant). The restrictive covenants were of 12 months duration and they therefore expired on or about 19 July 2020.

3

By the time the trial was heard by this court in November 2020, the restrictive covenants had long since expired and I was told that the Claimant's monetary claim amounted to a mere £39,000. Despite this, the trial remained expedited and the time estimate had become 7 days. This was a significant under-estimate for a trial of this complexity involving as it did three parties, two represented by Leading Counsel and the third, Ms Falconer, being a litigant in person. It was only by the accommodation of long court sitting days that the trial was completed in 7 1/2 days. When I asked Mr. Sethi QC, counsel for the Claimant, why, in view of the fact that the covenants had expired and the claim for damages was extremely modest, the parties had continued to a full trial on an expedited basis, he candidly admitted that the dispute was in truth now largely a dispute about who should pay the costs of the action. I was told that the costs of the Claimant alone were close to an eye-watering £500,000, in circumstances where Ms Falconer, the First Defendant, had to represent herself because of a lack of funds. In view of these facts, it is highly regrettable, and to nobody's credit, that the parties failed to settle this case at a mediation in January 2020 and instead chose to occupy the court's time fighting a full-blown trial.

THE PARTIES

4

The Claimant (“Quilter”) is a financial advisory business which assists clients with their financial planning needs, including investments, estate planning and preparing for retirement. It employs a large team of financial advisers. It has 6 offices, including one in Exeter, Devon but it also has offices far removed from there, in particular in Carlisle and Leeds.

5

The First Defendant, Emma Falconer (“EF”) is a chartered financial planner who has been working in financial services for some 16 years, specialising in high net worth individuals and business owners. Before she joined Quilter she was employed as a financial adviser by Tilney Financial Planning (“Tilney”) between July 2016 and January 2019. Her contract of employment with Tilney contained restrictive covenants, in particular a 12-month non-solicitation and a 12-month non-dealing covenant in respect of clients and prospective clients of the business, but it did not contain a non-competition covenant. EF said in evidence that she was aware of these restrictions when she was employed by Tilney. At Tilney she occupied an approved person Control Function 30 (“CF30”) which was a client facing function and subject to FCA regulation, which therefore entailed, in particular, a duty to act with integrity, and with due skill, care and diligence. She has remained in CF30 adviser roles since 19 th May 2010.

6

EF gave notice of resignation from her employment at Tilney on 5 December 2018, with her employment ending on 4 January 2019. She had been on maternity leave since May 2018. She was then employed by Quilter on 7 January 2019, but after a very unhappy time just 6 months later (and within her probation period) she gave notice of her resignation to Quilter on 4 July 2019. She was then put on gardening leave for two weeks and her employment with Quilter ended on 19 July 2019. She was engaged by Continuum very shortly thereafter on 24 July 2019.

7

Continuum is also a financial advisory business. It has its Head Office in Plymouth, and at the date with which these events are concerned, it had a small staff of just 10 employees, although it engaged 49 independent financial advisers providing national coverage. Martin Brown, the managing partner of Continuum, gave evidence that whilst Continuum might compete with Quilter in certain respects and whilst they both offer the same broad service (financial advice), the two main differences between the two companies are that Continuum does not employ its advisers (they are independent) and Continuum offers, through its independent financial advisers, a “full market” service (i.e. they can offer the product of any financial provider), whereas Quilter advisers are employed and they are restricted in the range of products that they can offer to their clients, at least in the first instance (this was called the “restricted plus” service). In particular, in the first instance Quilter advisers must consider whether any of their own group's offerings (Old Mutual Wealth, Quilter Investors or Quilter Cheviot) or other Quilter-approved providers are suitable for their client's needs (i.e. those listed on the Quilter “matrix”). It is only if they are not, that the advisers can then go to the market.

8

Nonetheless, there is no doubt that Quilter and Continuum were in competition for the same type of clients in the same type of market, which is broadly financial advisory services. Indeed, it is precisely because of EF's experience and connections in that market that Mr. Brown of Continuum had been seeking to persuade her to join its business since 2016. Mr. Brown agreed in cross examination that there was competition in the market-place to recruit advisers such as EF, because there was a shortage of experienced advisers such as her.

FACTUAL BACKGROUND

Circumstances in which EF came...

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4 cases
  • Mr T E Gorczyca v Global Outdoor Media Ltd: 2203558/2021
    • United Kingdom
    • Employment Tribunal
    • 25 Abril 2022
    ...to rely upon a repudiatory breach of contract in a constructive dismissal claim. In Quilter Private Client Advisers Ltd v Falconer [2020] EWHC 3294 (QB), Calver J said, at para “It is undoubtedly the case that if the employee decides to accept the repudiatory breach, he must do so unambiguo......
  • Mr T E Gorczyca v Global Outdoor Media Ltd: 2203558/2021
    • United Kingdom
    • Employment Tribunal
    • 25 Abril 2022
    ...to rely upon a repudiatory breach of contract in a constructive dismissal claim. In Quilter Private Client Advisers Ltd v Falconer [2020] EWHC 3294 (QB), Calver J said, at para “It is undoubtedly the case that if the employee decides to accept the repudiatory breach, he must do so unambiguo......
  • Ms O Stachowicz v The Good Care Group London Ltd: 2600991/2022
    • United Kingdom
    • Employment Tribunal
    • 2 Diciembre 2022
    ...to rely upon a repudiatory breach of contract in a constructive dismissal claim. In Quilter Private Client Advisers Ltd v Falconer [2020] EWHC 3294 (QB), Calver J said, at para Case No: 2600991/2022 “It is undoubtedly the case that if the employee decides to accept the repudiatory breach, h......
  • Mr Yoosefinejad vs East Space Ltd: 2216027/2023
    • United Kingdom
    • Employment Tribunal
    • 15 Enero 2024
    ...The claimant did not work for the respondent after 14 June 2023. An analogy may be made with the reasoning in Quilter v Falconer [2020] EWHC 3294, para 121 (what matters is whether repudiatory breach has been unambiguously employee not necessarily taken to have affirmed the contract by givi......
1 firm's commentaries
  • UK People Reward and Mobility Newsletter - January 2021
    • United Kingdom
    • JD Supra United Kingdom
    • 28 Enero 2021
    ...• dentons.comNew decision on restrictive covenantsThe High Court in Quilter Private Client Advisers Ltd v. Falconer and another [2020] EWHC 3294 (QB) has decided that the non-solicitation, non-compete and non-dealing clauses in a financial adviser’s employment contract were unenforceable.Ba......

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