Verition Advisors (UK Partners) LLP v Jump Trading International Ltd
| Jurisdiction | England & Wales |
| Judge | Lady Justice Simler,Elisabeth Laing LJ |
| Judgment Date | 20 June 2023 |
| Neutral Citation | [2023] EWCA Civ 701 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: CA2023 000837 |
[2023] EWCA Civ 701
Lady Justice Simler
and
Lady Justice Elisabeth Laing
Case No: CA2023 000837
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM KING'S BENCH DIVISION
MICHAEL FORD KC SITTING AS A DEPUTY HIGH COURT JUDGE
KB 2023 001793
Royal Courts of Justice
Strand, London, WC2A 2LL
Adam Solomon KC and Charlotte Davies (instructed by Paul Hastings (Europe) LLP) for the Appellant
David Craig KC, Judy Stone and Celia Rooney (instructed by Allen & Overy LLP) for the Respondent
Hearing dates: 7 June 2023
Approved Judgment
This judgment was handed down remotely at 10.30am on 20 June 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
Introduction
The issue in this rolled-up application for permission to appeal (with the appeal to follow) is whether the judge ought not to have ordered a speedy trial of a claim brought by Jump Trading International Limited (“Jump Trading”) to enforce a non-compete covenant contained in the contract of employment of a former employee, Damien Couture. The impugned decision is a case-management decision made in exercise of discretion. An appeal from such a decision can only succeed in limited circumstances as discussed below. At the end of the hearing the court announced that it refused permission to appeal. These are my reasons for that decision.
Jump Trading are a proprietary quantitative, algorithmic and research-based trading and technology firm, focussing on developing statistical research techniques and tools and pairing the research with applications used by traders in finance. Mr Couture is a quantitative researcher employed by Jump Trading from 13 June 2016 until his resignation with notice on 30 March 2022. Following 12 months spent on “garden leave”, he was due to commence employment in April 2023 with Verition Advisors (UK Partners) LLP (“Verition”), a global hedge fund. According to the claim, Verition conducts quantitative low and medium frequency trading and is actively seeking to grow its business in this area in competition with Jump Trading, and in the area of activity in which Mr Couture was employed.
Jump Trading's claim against Damien Couture and Verition (as currently pleaded) is for injunctive relief only, to enforce the covenant until its expiry, on the basis that any breach of the covenant is likely to cause immeasurable and/or undiscoverable damage to Jump Trading by misuse of their confidential information. Jump Trading have applied to amend the claim. This court is not concerned with that application; nor any of the other pre-trial applications to which we were referred.
On 28 April 2023, the judge, Michael Ford KC (sitting as a Deputy High Court Judge), ordered a speedy trial of the claim. At the same hearing, the judge refused Jump Trading's application for an interim injunction. Directions for the speedy trial were agreed by the parties (without prejudice to any appeal), and on 17 May 2023, the parties were informed that the expedited trial has been listed for five days, to start on or about 26 June 2023.
Verition seek to appeal the order for a speedy trial. They were represented by Adam Solomon KC, who appeared below and in this court, with Charlotte Davies. Damien Couture has not challenged the speedy trial order. He did not appear and was not represented. Jump Trading resist the appeal and were represented by David Craig KC, Judy Stone and Celia Rooney (none of whom appeared below). I am grateful to all counsel for their submissions.
There are four grounds of appeal seeking to challenge the speedy trial order. Verition recognised and accepted the high hurdle to be surmounted by this challenge, but Mr Solomon KC submitted that the judge's decision to order expedition in this case was plainly wrong. In summary:
i) By ground one he argued that Jump Trading's own excessive and unexplained delay disentitled them to an order for expedition. Such urgency as there was here was created by their own delay. Prompt action by them would have avoided the need for a speedy trial.
ii) Grounds two and three together challenge the test adopted and applied by the judge in ordering expedition: it is said that the judge failed to apply the test set out in Petter v EMC Europe Ltd & EMC Corporation [2015] EWCA Civ 480 (that an order for expedition could only be justified on the basis of real, objectively viewed, urgency in the case). Instead the judge wrongly considered whether any trial could take place before there was any material harm to Jump Trading. In any event, expedition could not be justified because on Jump Trading's own evidence immediate, unquantifiable and irreparable damage occurred from the moment Mr Couture joined Verition, and by inference no further damage would be suffered.
iii) The fourth ground of appeal is a challenge to the judge's conclusion that there was a serious issue to be tried. Mr Solomon submitted that a true construction of the non-compete covenant leads to the inevitable conclusion that this highly unusual (even unique) clause is so obviously objectionable as to be unenforceable on its face, irrespective of the factual matrix. The two specific features relied on as obviously objectionable are the discretion retained by Jump Trading as to the length of the restraint period (between zero and 12 months) leaving Mr Couture uncertain and vulnerable as to what temporal restriction bound him in law during the currency of his employment; and the absolute length of the restriction in tandem with a 12-month garden leave period. Each of these features rendered the clause obviously unenforceable as the judge should have found, and there was therefore no serious issue to be tried and no justification for a speedy trial.
Factual and procedural background
It is unnecessary to set out the full history of the claim and ensuing litigation. By way of brief background, Damien Couture resigned with notice on 30 March 2022, having accepted an offer of employment from Verition on 23 March 2022. He made no mention of this offer or of his acceptance of that offer when he resigned. He was placed on garden leave for 12 months from 30 March 2022.
On 31 March 2022, Peter Deaner, on behalf of Jump Trading, informed Mr Couture during a meeting that a 12-month non-compete period would apply in accordance with clause 1.1 of his contract of employment, which would end on 30 March 2024. This was confirmed in writing by letter dated 7 April 2022.
On 11 April 2022, Jump Trading wrote to Mr Couture to remind him of the terms of the post-termination restrictive covenants by which he was bound, including the non-compete covenant, and to inform him that any breach of his obligations would be regarded very seriously.
On 15 July 2022, Mr Couture informed Jump Trading (for the first time) that he had accepted a job offer from Verition. Without prejudice discussions followed.
On 23 September 2022 Jump Trading wrote to Mr Couture about the restrictive covenant, confirming that working for Verition would constitute a breach.
On 17 November 2022 Mr Couture responded that the non-compete covenant was unenforceable and said he would start working for Verition in April 2023.
By letter of 6 March 2023 (almost 4 months later), Jump Trading wrote to Mr Couture stating that the covenant was considered enforceable and taking the job with Verition would be in violation of it. On 31 March 2023, Mr Couture's employment with Jump Trading terminated on the expiry of his notice period.
Proceedings were issued by Jump Trading on 14 April 2023 and served on both defendants on 18 April 2023.
The relevant restrictive covenant, the non-compete clause, was at clause 19.1 of Mr Couture's employment contract. It provided as follows:
“In order to protect Confidential Information, Intellectual Property Rights, trade secrets, goodwill and business connections of each Group Company to which you have access as a result of your Employment, you agree to refrain at all times from directly or indirectly engaging in Competitive Activity during your Employment and during any notice period, Garden Leave and the Non-Compete Period.”
The term “the Non-Compete Period” is defined in clause 1.1, the definitions section of the contract, as follows:
“Non-Compete Period: means the zero (0) to twelve (12) month period after the Termination Date as elected by the Company within twenty (20) business days following the notice of termination. The Non-Compete Period shall commence at the conclusion of any applicable Garden Leave or notice period.”
There are definitions of ‘Termination Date’, ‘Competitive Activity’ and ‘Competitive Entity’ but it is unnecessary to set these out.
Applicable legal principles
In WL Gore & Associates GmbH v Geox SpA [2008] EWCA Civ 622 at paragraph 25, Lord Neuberger identified the factors relevant to the exercise of discretion as to whether or not to expedite a trial. First, there must be good reason shown by the applicant for doing so and expedition will only be justified on the basis of “real, objectively viewed, urgency” (see Petter at paragraph 17, citing with approval the judgment of Lloyd J in Daltel Europe Ltd (In Liquidation) v Makki (No. 2) [2004] EWHC 1631 (Ch) at paragraph 13). Secondly, the court exercises its discretion to expedite proceedings against the backdrop that the courts are busy and that expediting one case will often slow the progress of others, so that the question whether expedition would interfere with the good administration of justice is relevant. Thirdly, any prejudice to the other party caused by expedition should be considered. Finally, any other special factors should be considered, including delay, though this is not...
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