Rush Hair Ltd v Hayley Gibson-Forbes and Another
| Jurisdiction | England & Wales |
| Judge | Mr Chamberlain |
| Judgment Date | 21 October 2016 |
| Neutral Citation | [2016] EWHC 2589 (QB) |
| Docket Number | Case No: HQ16X02756 |
| Court | Queen's Bench Division |
| Date | 21 October 2016 |
[2016] EWHC 2589 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Martin Chamberlain QC
(Sitting as a Deputy Judge of the High Court)
Case No: HQ16X02756
Mr Chris Quinn (instructed by Osborne Clarke LLP) for the Claimant
Mr Aidan Briggs (instructed by Goldstein Legal) for the Defendants
Hearing date: 9 September 2016
Mr Chamberlain QC:
Introduction
Hayley Gibson-Forbes, the First Defendant, is a successful hairdresser and businesswoman. She is the sole director and 76% owner of Cre8heir Ltd (" Cre8heir"), which was incorporated on 16 September 2014. The remaining shares in Cre8heir are owned by Ms Gibson-Forbes's husband, Mr Sean James McElhill. On 27 May 2016, S.J. Forbes Ltd (" SJFL"), the Second Defendant, was incorporated with Ms Gibson-Forbes and Mr McElhill as directors and shareholders. On 6 July 2016, the entire share capital of SJFL was transferred to Cre8heir.
Rush Hair Ltd (" Rush"), the Claimant, is a hair and beauty business. It runs 80 salons, of which 30 are franchises. The franchised salons are licensed to use the Rush brand and trade marks. They are required to use Rush's system and to promote certain products with whose manufacturers or distributors Rush has commercial agreements. These have at times included L'Oréal (hair and beauty products) and GHD (electrical hair care appliances).
The background to the present dispute goes back to 2008, when Ms Gibson-Forbes was a director and sole shareholder of another company, Hair (WNDSR) Ltd, which later changed its name to Hair (Windsor) Ltd. I shall refer to this company, in both of its guises, as " Hair Windsor". On 1 August 2008, Rush (as Franchisor) entered into an agreement (" the Franchise Agreement") with Hair Windsor (as Franchisee) and Ms Gibson-Forbes (as Principal). Under the Franchise Agreement, Rush granted Hair Windsor the right and licence, and Hair Windsor assumed the obligation, to operate a Rush hairdressing salon at 61 Peascod St, Windsor, Berkshire. Ms Gibson-Forbes guaranteed Hair Windsor's due, proper and punctual performance of the Franchise Agreement. Ms Gibson-Forbes gave covenants that, for a period of one year following termination, she would not do certain things, including:
"17.10.5.1 within a radius of 1 (one) mile from the Premises (except as the holder of not more than five per cent (5%) of the shares in any company whose shares are listed or dealt with in the Stock Exchange or other recognised public market) directly or indirectly be engaged or concerned or interested in any capacity whatsoever in any business which carries on a business similar to or which competes with the RUSH Business other than as a franchisee or the Franchisor under a separate franchise agreement entered in to with the Franchisor or under any other agreement with a RUSH Company;
17.10.5.2 directly or indirectly be engaged, concerned or involved in any capacity whatsoever in a business which carries on a business similar to or which competes with the RUSH Network within a radius of 1 (one) mile from any premises (other than the Premises) in the United Kingdom on or upon which the RUSH Business is being carried on by any franchisee of the Franchisor or by the Franchisor itself if the Franchisee shall have provided Services or sold the Products to customers whose address or place of business is within any such radius".
"RUSH Business" was defined as:
"the Franchisor's hairdressing business, including the operation and management of hairdressing salons, which the Franchisor conducts and operates under a uniform business format and brand".
It is common ground that Ms Gibson-Forbes built a successful business with a loyal customer base from the salon in Windsor and, later, from two other salons in Maidenhead and Egham. The Maidenhead salon was run through a separate company, Hair (Maidenhead) Ltd (" Hair Maidenhead"). Ms Gibson-Forbes also supplied teams of stylists for fashion shows and photo shoots at other locations. She was on three occasions a finalist at the British Hairdressing Awards.
Between November 2014 and March 2015, Ms Gibson-Forbes entered into discussions with Rush with a view to selling her shares in Hair Windsor and Hair Maidenhead. They resulted, on 9 March 2015, in Ms Gibson-Forbes (as Seller) and Rush (as Buyer) signing a Share Purchase Agreement (" the SPA"). Rush agreed to buy all the shares in Hair Windsor and Hair Maidenhead. Clause 3 provided as follows:
"3. PURCHASE PRICE
3.1 The Purchase Price is £40,000. £25,000 is to be paid to the Seller at Completion (the Initial Purchase Price) with the balance of £15,000 (the Deferred Consideration) payable 6 months after completion provided the Seller has not breached any clauses in this agreement. If the Seller breaches any clauses in this agreement in the 6 months post completion the Deferred Consideration is reduced to £nil.
3.2 If the Seller breaches any of the clauses in this agreement after the Deferred Consideration has been paid the Seller must repay the Deferred Consideration to the buyer within 14 days of being notified of the breach by the Buyer. The amount of deferred consideration is not a cap on the damages the Buyer may claim under this agreement."
Clause 7 imposed restrictions on Ms Gibson-Forbes, as Seller, including the following:
"7.1.2 the Seller shall not at any time during the period of two years from Completion, canvass, solicit, entice or employ:
Jo Thompson…
Luke Harris…
Charlotte Hanson.
7.1.3 the Seller shall not within the Territory (except as the holder of not more than 5% of the shares in any company whose shares are listed or dealt in The Stock Exchange or other recognised public market) and for a period of two years from Completion directly or indirectly be engaged concerned employed or interested in any capacity whatsoever in a business which carries on a business similar to or which completes with the RUSH business."
Unlike the Franchise Agreement, the SPA contained no definition of "RUSH business". "The Territory" referred to in clause 7.1.3 was, however, defined as:
"an area within a two mile radius around the address where the Companies currently trade being 61 Peascod Street, Windsor and 68A High Street, Maidenhead."
On the same date, 9 March 2015, Ms Gibson-Forbes entered into an agreement with Hair Windsor (" the Settlement Agreement") under which she agreed to terminate her employment with Hair Windsor and waive post-termination claims in return for a termination payment of £9,995. She also agreed, in consideration for a further £5, to be bound by the restrictive covenants set out in the SPA.
Rush paid £35,000 (comprising the Initial Purchase Price under the SPA and the sums due under the Settlement Agreement) at completion on 9 March 2015. It did not pay the balance of £15,000 contemplated by the SPA because it took the view that, by that time, Ms Gibson-Forbes was in breach of covenant by employing two former employees of Hair Windsor referred to in clause 7.1.2 of the SPA: Luke Harris and Charlotte Hanson. On 7 October 2015 there was a meeting at which this was discussed between representatives of Rush and a solicitor and accountant. The solicitor, Mr Parslew, says that he was not then formally representing Ms Gibson-Forbes. The accountant, Mr Quirk, was representing her at the time.
In July 2016, Ms Gibson-Forbes opened another salon, trading under the name S.J. Forbes Windsor, at 134 Peascod St, Windsor. She advertised a launch weekend starting on Saturday 6 August 2016 and invited customers to "join our opening celebrations with a complimentary blow dry". The salon manager and senior stylist is Jo Thomson, who is engaged on a self-employed basis pursuant to a Consultancy Agreement dated 11 July 2016. Ms Gibson-Forbes signed the consultancy agreement "for and on behalf of [SJFL]".
On 26 July 2016, Rush's solicitors sent a letter before claim to Ms Gibson-Forbes and Mr McElhill in their capacities as directors of SJFL requesting that they cease to employ Jo Thomson, comply with clauses 7.1.2 and 7.1.3 of the SPA and cease any business competing with Rush within the Territory, as defined by the SPA. Ms Gibson-Forbes refused, saying that the covenants had been made under duress and contesting their validity. Rush issued its claim on 2 August 2016, alleging in paragraph 8 of the Particulars of Claim that Ms Gibson-Forbes, acting through SJFL, had breached clauses 7.1.2 and 7.1.3 of the SPA in that she had "(a) Set up a competing hair and beauty salon…; (b) Employed Jo Thomson as Salon Manager of the same". (There was no pleaded allegation that the SPA had been entered into under duress.) Rush applied for interim injunctive relief. That was refused by Knowles J after a hearing on 5 August 2016. Instead, he ordered a speedy trial, which was listed before me on 27 September 2016.
On 22 September 2016, Rush applied to amend its Particulars of Claim to plead that Ms Gibson-Forbes had not only "employed" Jo Thomson but had also, or alternatively, "canvassed or solicited" her to work as salon manager at S.J. Forbes Windsor. That application came before me at the start of the hearing on 27 September 2016. I made clear that I would decide the application after the trial.
In the course of the hearing, which lasted one day, I heard evidence from Mr Andreas Panteli, the Chief Financial Officer of Rush; and from Ms Gibson-Forbes, Ms Jo Thompson and Mr Chris Parslew. There was a witness statement from Mr Jeffrey Quirk. I was told that he was in hospital and so was unable to give oral evidence. I took into account his witness statement, making due allowance for the fact that he had not been cross-examined.
At the trial, I invited the...
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