The claimant sought to enforce a restrictive covenant against the defendant a former assistant solicitor as to non-competition within a certain distance of the practice for a period of three years. After leaving she had sought to set up partnership with others to practice in competition. During the period of her notice she worked also on files for other firms and diverted work to her new practice. She defended the action saying the restrictive covenants were not reasonable.
Held: ‘Solicitors are not therefore a ‘special case’ in the sense that they are immune from the principles in this branch of the law applicable generally to, eg milk roundsmen and every one else in commerce, merely on the grounds that they are solicitors. But that does not mean that a clause which is unreasonable for milk roundsmen would also be unreasonable for a solicitor – and vice versa. This is because whether a restriction is reasonable or not is a question of fact and is dependent on all the circumstances of the case. There are differences in the way in which milk roundsmen and solicitors pursue their business interests and obtain and secure their business connections and it does therefore follow that the different ways in which they do business may well have the effect of making a clause which is reasonable for the one to be unreasonable for the other and vice versa. It is a question of fact. ‘ The question for the court was ‘whether the restriction is in all the circumstances reasonable for the protection of the legitimate interests of the claimant. ‘ The respondent’s bad behaviour did not affect the issue. The Law Society’s professional rule 1 did not allow the employers to claim any special exemption. ‘. . . the fact that the restriction is not limited to those clients with whom the claimant had personal contact in the period of 1 year prior to termination is an important consideration which significantly widens the restriction and attempts to justify it must be carefully considered. After due consideration it is my judgment that the width of the clause is not fatal to its reasonableness.’ Events after the covenant had been made did not affect its reasonableness. The covenant would not prevent the solicitor acting for commercial lenders. The interim injunction was made final.
Judges:
Bernard Livesey QC
Citations:
[2006] EWHC 286 (Ch), [2006] IRLR 599, [2006] ICR 742
Links:
Jurisdiction:
England and Wales
Citing:
Cited – Herbert Morris Ltd v Saxelby HL 1916
For a covenant in restraint of trade to be treated as reasonable in the interests of the parties ‘it must afford no more than adequate protection to the benefit of the party in whose favour it is imposed.’ There is a need for the court to consider . .
Cited – JA Mont (UK) Ltd v Mills 1993
‘As a matter of policy, [the] court should not too urgently strive to find, within restrictive covenants ex facie too wide, implicit limitations such as alone would justify their imposition. Otherwise, employers would have no reason ever to impose . .
Cited – Home Counties Dairies v Skilton CA 1970
In construing an employee’s restrictive covenant, a court should disregard fanciful hypotheses or arguments leading to a reductio ad absurdum. . .
Cited – Stenhouse Australia Ltd v Phillips PC 2-Oct-1973
(Australia) An employer’s claim for protection from competition by a former employee under a restrictive covenant must be based upon the identification of some advantage or asset inherent in the business which can properly be regarded as, in a . .
Mentioned – Littlewoods Organisations Ltd v Harris CA 1977
When construing restrictive covenants in an employment contract, the court should construe the contract in the light of the object and intent of the contract as a whole. It may be read down and need not be read literally. Lord Denning said that it . .
Cited – Attwood v Lamont CA 2-Jan-1920
A court considering whether a restrictive covenant in an employment contract is reasonable, can sever words which render it too broad ‘if the severed parts are independent from one another and can be severed without the severance affecting the . .
Cited – Wallace Bogan and Co v Cove and others CA 7-Feb-1997
The court considered whether a contract of employment for a solicitor was in a special class when considering the implication of restrictive covenants into an assistant solicitor’s contract. As to the solicitor’s connection: ‘The essential question . .
Cited – Office Angels Ltd v Rainer-Thomas CA 1991
Reasonability Test of Post Employment Restriction
The court re-stated the principles applicable in testing whether an employee’s restrictive covenant was reasonable: ‘The court cannot say that a covenant in one form affords no more than adequate protection to a covenantee’s relevant legitimate . .
Cited – Gledhow Autoparts Ltd v Delaney CA 1965
When considering the reasonableness of an employee’s restrictive covenant, the court must test it at the time when it was entered into. If a covenant was unreasonable it will be wholly unenforceable – not partly unenforceable to the extent of what . .
Cited – Edmundson v Render 1905
The court considered a suggestion that a solicitor was not in breach of a non-compete clause promising to refrain from practising within a certain area where the work was carried out from an office outside the area.
Buckley J said: ‘The other . .
Cited – Fitch v Dewes HL 1921
An assistant solicitor had already worked for his employer in humbler status for many years when, aged 27, he signed a covenant restricting his acting in competition with his employer within seven miles of Tamworth Town Hall for an unlimited time. . .
Cited – Hollis and Co v Stocks CA 2000
The court upheld a solicitor’s covenant restricting him from practising within ten miles of the firm for twelve months.
Held: The employee’s appeal against the upholding of the covenant as reasonable failed: ‘The claimant’s are a small firm . .
Cited – Shell UK Ltd v Lostock Garage Ltd 1976
The implication of a term into a contract does not depend on the parties’ intention, actual or presumed, but on broader considerations.
As to the requirement for certainty when implying a term into a contract, the proposed implied term must be . .
Cited – Investors Compensation Scheme Ltd v West Bromwich Building Society HL 19-Jun-1997
Account taken of circumstances wihout ambiguity
The respondent gave advice on home income plans. The individual claimants had assigned their initial claims to the scheme, but later sought also to have their mortgages in favour of the respondent set aside.
Held: Investors having once . .
Cited – Dentmaster (UK) Limited v Kent CA 2-May-1997
The court was asked as to whether a post-employment non-solicitation restrictive covenant was reasonable.
Held: The covenant was upheld. It extended for a period of twelve months to customers within the last six months with whom the employee . .
Cited – Austin Knight (UK) Ltd v Hinds 1994
A post employment restrictive covenant prevented the employee dealing with any of the employer’s clients whether or not he had himself dealt with them. The defendant would be known to only one third of the customers.
Held: The covenant was not . .
Cited – The Marley Tile Co Ltd v Johnson 1982
A post employment non-solicitation restrictive covenant failed because it prevented the former employee dealing with any of the employer’s customers, and not just those the employee had himself assisted. The employee had had contact with, at most, . .
Cited – Dairy Crest Ltd v Piggott CA 1989
When considering restrictive covenants in employment cases, courts must not seek to uphold a clause as reasonable only because the same clause was upheld in a different case. It is an error of law. There is no ‘tariff’ of what is reasonable. In this . .
Lists of cited by and citing cases may be incomplete.
Employment, Legal Professions
Updated: 10 April 2022; Ref: scu.240013