Tenon FM Ltd v Susan Cawley, B38 Support Services Ltd and Others
| Jurisdiction | England & Wales |
| Judge | Neil Bidder |
| Judgment Date | 25 July 2018 |
| Neutral Citation | [2018] EWHC 1972 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Case No: HQ18X02082 |
| Date | 25 July 2018 |
[2018] EWHC 1972 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
HIS HONOUR JUDGE Neil Bidder QC
Sitting as a High Court Judge
Case No: HQ18X02082
Diya Sen Gupta (instructed by Gowling WLG) for the Claimant
Chris Quinn (instructed by Wright Hassall LLP) for the 1 st Defendant
John Boumphrey (instructed by Chadwick Lawrence LLP for the 2 nd, 3 rd & 4 th Defendants
Hearing dates: 25 th July 2018
APPROVED JUDGMENT
His Honour Judge Neil Bidder QC
Wednesday, 25th July 2018
Ruling by HIS HONOUR JUDGE Neil Bidder QC
This is my ruling after an on notice adjourned hearing of the claimant company's application against the first defendant for interim injunctive relief enforcing post-termination restrictive covenants (which the claimant contends were part of the first defendant's contract of employment with them) and against the second, third and fourth defendants for an interim injunction prohibiting them, until after the date when the first defendant (Miss Cawley) is allegedly prohibited by her restrictive covenants from working for them, their being a competitor of the claimant company, from inducing her to work for them in relation to services specified in the relevant restrictive covenant.
The matter came urgently before Sweeney J on 18 June of this year when undertakings were given to the court by all defendants. I shall refer in this judgment to the first defendant as “Miss Cawley”; to the claimant as “Tenon”; and to the second, third and fourth defendants, who are represented by one team of lawyers, as “B38”.
The undertakings last until the last day of the three-month notice period given by Miss Cawley when she resigned from Tenon. Sweeney J gave directions for the further hearing of Tenon's applications and there was no objection to my varying one of his directions extending the time for the claimant to serve evidence in response, giving relief from sanctions and allowing reliance on that evidence.
There was opposition to an amendment of the particulars of claim, the substantive part of which was to alter the date of the contract of employment relied upon by the claimant. I have given ex tempore reasons for allowing the amendment in the draft attached to the application with a minor typographical error also being allowed because, in brief, it was in the interests of justice that I should do so and I considered that there was no prejudice to any of the defendants to allow it.
One of the directions also sought by the claimant consequent upon my determination of the injunctive relief was to order an expedited trial. If I were to grant the injunctive relief it would obviously be desirable in the circumstances of this case to order an expedited trial. I canvassed the views of all three counsel about the length of that trial, initially estimated by the claimant to be three days including a reading day. There is, as well as evidence relating to the contract of employment and the actions of Miss Cawley, a live issue as to whether the contract was terminated by the acceptance by Miss Cawley of constructive dismissal, based on the allegation that Tenon had exposed her to, and to some extent necessarily involved her in, a possible fraud that was avoidance of the payment of tax and/or National Insurance payments by the payment to Polish cleaners of direct cash payments.
In answer to that allegation Mr King, Tenon's CEO, has reported that fraud or potential fraud to HMRC and on one reading of his letter — on one reading of his letter — implicated Miss Cawley in it. Evidence of the fraud, who was involved in it, whether Miss Cawley was involved would necessarily involve witnesses who have not yet made statements and would undoubtedly lengthen the hearing time.
I am satisfied, having heard the submissions of counsel, that the trial of this matter would in all probability take six days including a reading day. Queen's Bench listing has told me and the parties that they would try to list an expedited trial between October and December of this year, and I accept Mr Quinn's submissions that before a trial could take place there would need to be a cost budgeting hearing and that is unlikely to take place before early September. Thus my conclusion is, realistically, that even an expedited hearing would not take place before November of this year and could be as late as December.
The restrictive covenants said to apply to Miss Cawley under her employment contract differ in the length of application. Some, in what is called the first period of restriction, last for three months after the termination of her employment and the others for six months, that is the second period of termination. If this is a case of termination by notice, the first period of restriction ends on 3 November 2018 and the second on 3 February 2019. It is unnecessary, I consider, for me to consider the date of any constructive dismissal to fix the dates for the expiry of the two periods, because in the event of a constructive dismissal being established the restrictive covenants would fail anyway.
The effects of the inevitable delay in even an expedited hearing taking place affects the approach I should take to the grant of an interlocutory injunction. The basic principles of grant are, of course, contained in American Cyanamid Co v Ethicon Ltd [1975] AC 396. That is, in summary, the claimant must establish that there is a serious question or issue to be tried, that damages would not be an adequate remedy and that the balance of convenience favours the grant of an injunction. There may be special factors in individual cases, and the grant of what is, of course, an equitable remedy remains discretionary.
Those principles were to a limited extent modified in Lansing Linde v Kerr [1991] 1 WLR 251. Staughton LJ's judgment at 258A to D states:
“For my part I readily accept the last of Mr. Brodie's contentions; but I reject the others. If it will not be possible to hold a trial before the period for which the plaintiff claims to be entitled to an injunction has expired, or substantially expired, it seems to me that justice requires some consideration as to whether the plaintiff would be likely to succeed at a trial. In those circumstances it is not enough to decide merely that there is a serious issue to be tried. The assertion of such an issue should not operate as a lettre de cachet, by which the defendant is prevented from doing that which, as it later turns out, he has a perfect right to do, for the whole or substantially the whole of the period in question. On a wider view of the balance of convenience it may still be right to impose such a restraint, but not unless there has been some assessment of the plaintiff's prospects of success. I would emphasise ‘some assessment,’ because the courts constantly seek to discourage prolonged interlocutory battles on affidavit evidence. I do not doubt that Lord Diplock, in enunciating the American Cyanamid doctrine, had in mind what its effect would be in that respect. Where an assessment of the prospects of success is required, it is for the judge to control its extent.”
Later, when considering the approach of the first instance judge, his Lordship said:
“The judge was therefore right in my judgment to take into account the strength of the plaintiff's claim. He would have been wrong to regard that as the sole consideration.”
Beldam LJ made a similar point at 267A in the report and stressed that at the interlocutory stage, of course, the evidence was incomplete. And finally, Lady Justice Butler-Sloss on page 269 adopted a passage to much the same effect in Balcombe LJ's judgment in Lawrence David Limited v Ashton [1989] ICR 123, the extract from his judgment being at 135.
This is a case in which the first period of restraint is likely to have expired before trial and where a large part of the second period — effectively half or more — will have done so. Thus I consider I must not only apply American Cyanamid principles but I may also take into account the strength of the claimant's claim, recognising as I do that the evidence to date is incomplete.
The facts are amply set out in the quite admirable skeleton argument of Miss Gupta for the claimant and need only be summarised by me in the briefest of detail. The claimant is a large cleaning company or rather more accurately, as Mr Colin King, the Chief Executive Officer of that company, sets out in his first statement, it is a facilities management company working at some 1500 customer sites in various locations throughout the United Kingdom.
On any version of the parties — who disagree about most things — but on any version of their evidence Miss Cawley was prior to her resignation a senior employee at that company. She was the Operations Director. Tenon allege that Miss Cawley, having resigned on 3 May of this year giving three months' written notice, has then breached restrictive covenants governing her during and post her employment cessation and has in fact, in effect, become employed by a rival company, probably D2 though D3 and D4, the third and fourth defendants, are also joined and may also be implicated. It is further alleged by the claimant that B38, for short, has induced her to breach her contractual terms and her duty of fidelity by (a) herself coming to work for them, and (b) attempting to persuade another employee of the claimant, Miss Freitas, to come to work for B38. The first defendant effectively agrees that she did try to persuade another employee — that is Miss Freitas — to come to work for B38, although in somewhat different circumstances to that portrayed by the claimants.
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