The Delivery Group Ltd v Christopher Mark Yeo
| Jurisdiction | England & Wales |
| Judge | Mr Justice Saini |
| Judgment Date | 01 July 2021 |
| Neutral Citation | [2021] EWHC 1834 (QB) |
| Docket Number | Case No: QB-2021-001940 |
| Court | Queen's Bench Division |
[2021] EWHC 1834 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
THE HONOURABLE Mr Justice Saini
Case No: QB-2021-001940
Adam Solomon QC (instructed by Hill Dickinson LLP) for the Claimants
Daniel Tatton Brown QC (instructed by B P Collins LLP) for the Defendant
Hearing dates: 30 June 2021
Approved Judgment
This judgment is in 6 parts as follows:
| I. Overview: | paras. [1–8] |
| II. Outline Facts and the Deed: | paras. [9–25] |
| III. Non-dealing covenant: | paras. [26–41] |
| IV. Confidentiality injunction: | paras. [42–45] |
| V. Ancillary orders: | paras. [46–48] |
| VI. Conclusion: | para. [49]. |
| Annexe: Terms of the Injunction Sought |
I. Overview
This is an application for an interim injunction, on notice to the Defendant, Mr Christopher Yeo (D), a former employee of the Second Claimant (C2). C2 is a company operating in the mail and parcel delivery services industry. Earlier this year, D joined a competitor in this industry and the application for an injunction concerns alleged breaches of covenants. In the Claim Form issued on 19 May 2021 relief is sought in equity and in contract, seeking to enforce a number of obligations said to be owed by D to C2, and to C2's holding company, C1, as more fully described below. Particulars of Claim and a Defence have been served.
For ease of reference, I have annexed to this judgment, the material terms of the draft Order sought against D. That document also contains relevant definitions which I will not set out in the body of this judgment. D has offered undertakings (subject to certain clarificatory points) on the terms of para. 2 of the Annexe (solicitation of Restricted Customers) and paras. 3 and 4 (dealing with and solicitation of Pipeline Customers). D has however refused to provide undertakings in relation to para. 2 insofar as it seeks to restrain him “dealing” with Restricted Customers or, in relation to paras. 1, 5 and 6 of the draft Order (each of which concerns the defined “Confidential Information”). Accordingly, it was the non-dealing with Restricted Customers and confidentiality covenants which were the main matters disputed before me. Cs also sought ancillary orders (delivery up and a disclosure affidavit: Annexe, paras.5 and 6).
Oral argument concluded yesterday afternoon but because I had a number of other interim applications to deal with, I could not provide a ruling until the following morning. This is my judgment on the contested aspects of the application.
Serious issue to be tried or consideration of the merits?
The relevant non-dealing covenant will expire on 14 December 2021. Subject to the court's agreement, the parties have agreed directions for an expedited trial (4 day time estimate) and have provided for a trial window of 1 November 2021 – 21 December 2021. It is accordingly agreed that the covenants will either have expired, or will probably have only a few weeks to run, by the time a judgment is delivered. Realistically, I consider it is likely that the covenants will have expired by the time of judgment.
That gives rise to an issue as to the approach I should take in the injunction application to the merits of the Cs' case, and whether I am required to undertake some assessment of whether they are likely to succeed at trial (contrary to the standard approach which merely requires a claimant to show a “serious issue” to be tried). Leading Counsel for the Cs sought to persuade me that this was not such a case and the merits was not a relevant issue. Leading Counsel for D argued the contrary position.
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 were reached following a full review of the leading authorities including NWL Ltd v Woods [1979] 1 WLR 1294, and Lansing Linde Ltd v Kerr [1991] 1 WLR 251.
It has long been recognised that where an interim injunction will give the claimant all or substantially all of the relief sought by way of final injunction (because by the time of trial the period of any final injunction will have expired), there must assessment of the claimant's merits. In short, this is the price a claimant in such circumstances must pay as a condition of obtaining an injunction which creates a risk of an innocent defendant being wrongly injuncted if a claimant only has to overcome the modest “serious issue to be tried” hurdle.
Accordingly, I will consider the merits of the Cs' claims (prospects of success). It matters not whether that issue is considered at the “serious issue to be tried” stage or as part of the “balance of convenience”, but it probably falls more clearly within the latter question. I will however only undertake “some assessment” of the merits (using Staughton LJ's language in Lansinge Linde at 247B), mindful that this is a case where there are disputes of fact, which I cannot resolve on an interim application.
II. Outline Facts and the Deed
C1 is the parent of various companies operating in the mail and parcel delivery services industry, including C2 (which trades as ‘ONEPOST’) and which specialises in the Downstream Access (DSA) mail marketplace. That is a business area in which commercial organisations with large mailings gain access to wholesale costs for mail delivery. C2 specialises in direct marketing mail and delivery of magazine subscriptions. In its evidence before me, it says it has a unique selling point which is the management of all aspects of mailing from data management, print procurement and delivery based on principles of excellent customer service.
C1 is one of the three most prominent operators in the DSA marketplace alongside Whistl and UKMail. Whistl is the largest operator in terms of volume and handles over 3.6 billion mail items per year, and is Cs' main competitor.
It is said that neither Whistl nor UKMail currently offer the same full management service which is provided by Postal Choices, and which is its unique selling point, and instead rely on a self-service process. However, the Whistl group is in the process of launching a new service trading as ‘Posthub’ which mimics C2's full management service business model. In the course of the last 12 months it has targeted a number of C2's senior employees for its Posthub business, and has recruited three of C2's six senior Heads of Department. It is significant that the documents before me show that it is expressly marketing itself to customers on the basis that it has been built “with the ethos and methodology that was put into building ONEPOST over a number of years” and has recruited a number of senior individuals from C2.
C2 says that it prides itself on its excellent client relationships, and all client contact is managed through a small team of individuals, and the Client Services Team in particular develops day-to-day working relationships with clients.
As I have said above, D is a former employee of C2. He was first employed on 6 April 2010 as an Account Manager, and in 2014 became Head of Client Services. His contract of employment included obligations of confidentiality, which expressly continued to apply post-termination. Leading Counsel for D took issue with the description of his client by the Cs as “a senior member of C2's management team” and a “senior manager”. He submitted that D was not a board director, nor had any strategic or board level responsibilities. Leading Counsel said that D would (with no disrespect to him) more accurately be described as “middle management”. I can express no concluded view on this but would note that in D's own LinkedIn profile he describes himself as having experience “for almost 11 years as Head of Client Services [at ONEPOST]” and that he was “also a senior member of the management team”. That tends to support the Cs description of his seniority and responsibilities. It was argued for D that in his role as Head of Client Services he was not responsible for winning business or determining the terms on which business was conducted. His role was to ensure fulfilment of contracts that had been already been won. He was simply a “point of contact” for C2's Sales team, answering technical product-related queries. Again, the level of his knowledge and duties are in dispute and there will be an issue for trial as to whether D is right in this regard or whether the Cs' description is correct.
In early 2020, in light of the targeting of its staff by Whistl, Postal Choices commenced a process of reviewing staff contracts. The background as to why changes were made to contracts seems to be in dispute, but it is common ground that following discussions between the D and Mr Plant (MD of Postal Choices) on behalf of Cs, it was agreed that:
(i) D's notice period would be increased to six months. This was recorded in a letter dated 4 June 2020 from Mr Plant to D confirming a variation to the notice provisions in D's employment contract such that both parties were required to give six months' notice of termination;
(ii) D would enter a Restrictive Covenant Deed (the “Deed”) containing various post-termination restrictions. The Deed was executed by D and the Group in June 2020.
(iii) The Deed included the following express terms:
(i) A prohibition on D from misusing any Confidential Information, which continues after the termination of his employment (clause 3.1);
(ii) A 12 month restriction on soliciting or dealing with any Restricted Customer, or assisting others to do so (clause 4.2.1);
(iii) A 12 month restriction on soliciting or dealing with any Pipeline...
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