England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
(MR JUSTICE MITTING)

		Royal Courts of Justice Strand London, WC2A 2LL
		16 April 2015

Lord Justice Vos:

Introduction

1. The issue in this appeal is whether the judge was right to order a speedy trial of part of a hastily issued claim. The claimant, Mr James Petter ("Mr Petter"), issued proceedings against his former employer, the first defendant, EMC Europe Limited ("EMC Europe"), on 13 March 2015 seeking, amongst other things, a declaration that clauses 14 and 15 of his terms and conditions of employment were unenforceable ("clauses 14 and 15"). Clauses 14 and 15 purported for 12 months to restrict Mr Petter's right to work for a competitor and to solicit EMC Europe's employees.
2. Mr Petter also seeks in his claim form other declarations concerning certain restrictive stock unit agreements ("RSUAs") that he had entered into with EMC Europe's US indirect parent company, EMC Corporation, the second defendant ("EMC Corp"), and an anti-suit injunction requiring EMC Corp to discontinue the proceedings that it initiated against Mr Petter in the US District Court in the district of Massachusetts on 27 February 2015 ("the Massachusetts proceedings").
3. On 23 March 2015 the judge ordered a speedy trial of Mr Petter's claims for declarations that clauses 14 and 15 were unenforceable, and that Mr Petter had not breached clause 14 by working for his new employer, Pure Storage UK Limited ("Pure"). He estimated that trial at two days and gave the directions that had been agreed between the parties aimed at it coming on in a trial window between 18 and 22 May 2015. The availability of time for a short hearing at the end of term had been discussed with the clerk of the lists before the application was called on for hearing.
4. The judge gave a brief judgment in which he said that he was ordering a speedy trial of the issues arising from Mr Petter's claim against EMC Europe because "it is, in my opinion, important for him and his employers to know whether or not he can lawfully be employed doing the work he is now doing for them". That was also said in a minor respect to be in the interests of the efficient running of the UK economy. The judge's second reason was that EMC Europe had declined his invitation to undertake not to bring a civil claim against Mr Petter in relation to alleged breaches of clauses 14 and 15. In those circumstances, he thought that Mr Petter was entitled to know his legal position for certain.
5. EMC Europe challenges the judge's decision on the grounds that the judge was wrong to think that the case fell into a particular category of case that was fit for expedition, when EMC Europe had neither sought nor obtained an injunction to stop Mr Petter working for Pure, and his only legitimate concern was that he might be sued for damages in the future. The judge failed to apply the principle that expedition will only be ordered where there is objectively justified urgency, which there was not in this case. EMC Europe then contended that the matters the judge did take into account were irrelevant and that he failed to take into account relevant matters such as Mr Petter's delay between the dispute rising on 5 February 2015 and the issue of proceedings on 13 March 2015 and his attempt to gain a tactical advantage in relation to the Massachusetts proceedings.

Factual background

6. I can deal with the relevant factual background relatively briefly. Mr Petter was originally employed by EMC Europe in February 2004. Over the years, he was promoted, until on 13 November 2008, he was made director of Global Accounts for the "EMEA" regions. At that stage, he entered into a new contract of employment which included clauses 14 and 15 as follows:

"14. LIMITED NON-COMPETITION

As long as you are employed by [EME Europe], you shall devote your full time and efforts to [EMC Europe] and shall not participate directly or indirectly, in any capacity, in any business or activity that is in competition with [EMC Europe]. During your employment with [EMC Europe] and for the twelve month period following the effective date of your termination or resignation from [EMC Europe], you agree not to directly or indirectly develop, produce, market, solicit or sell products or services competitive with products or services being offered by [EMC Europe]. (You shall not be considered in competition unless you have an ownership interest amounting to at least 1% in the enterprise, whether direct or indirect by way of opinion or otherwise, or an officership, directorship or other policy making executive position with the competing enterprise).

15. RECRUITING COMPANY EMPLOYEES

For the twelve month period following the effective date of your termination for any reason or resignation from [EMC Europe], you agree not to directly or indirectly recruit, solicit, induce or attempt to induce any employees of [EMC Europe] to terminate, alter or modify their employment relationship with [EMC Europe]."

7. After negotiations with Pure which had lasted some weeks, on 12 January 2015, Mr Petter accepted Pure's offer of employment. On 15 January 2015, Mr Petter resigned from EMC Europe. On 5 February 2015, Mr Petter attended an "exit interview" with EMC Europe at which he said he would honour the non-solicitation covenant in clause 15 though it was unenforceable, but Mr Petter and EMC Europe disagreed about the enforceability of clause 14. On 14 February 2015, Mr Petter's employment by EMC Europe terminated and on 16 February 2015 his employment with Pure began.
8. On 27 February 2015, as I have said, EMC Corp began the Massachusetts proceedings against Mr Petter, and on 13 March 2015, Mr Petter issued these proceedings and informed the defendant that he would seek an expedited trial. There was no pre-action correspondence heralding either claim.
9. On 17 March 2015, Mr Petter issued his application notice seeking a speedy trial. He issued a new application seeking expedition of only his claims against EMC Europe on 20 March 2015. Mitting J made the order that is now appealed on 23 March 2015, and refused permission to appeal on the ground that he had ordered a speedy trial for "conventional reasons". Burnett LJ granted permission to appeal and ordered an expedited hearing of that appeal on 1 April 2015. He said that the relationship between this action and the Massachusetts proceedings, and the two short reasons given by the judge had led him to conclude that the appeal had real prospects of success.

The authorities on expedition

10. EMC Europe argues, in effect, that cases that fall within a special category are apt for expedition, so that a case which falls outside that category is not. It submits that this special category was noted by Balcombe LJ in Lawrence David v Ashton [1989] ICR 123 at pages 135F to G where he was referring to cases in which an interlocutory injunction had been obtained to enforce a restrictive covenant (see also Mummery LJ in Alliance Paper Group PLC v Prestwich (unreported, 4 November 1997). Mr David Craig QC, counsel for EMC Europe, submits in this connection that if claims which simply sounded in damages were fit for expedition the court would be overwhelmed with litigants demanding expedition in order to achieve economic certainty.
11. Both sides referred to the well-known judgment of Lloyd J in Daltel Europe Ltd (In Liquidation) v Makki [2004] EWHC 1631 (Ch) at paragraph 13 where he said that expedition was not "a question of choosing a slightly faster over a slightly slower method" of proceeding to trial, but could "only be justified on the basis of real, objectively viewed, urgency in the case" which justified giving preference over other cases in the court's list. Laddie J in Ifone Ltd v Davies [2005] EWHC 1504 (Ch) later emphasised at paragraph 10 of his judgment that the court would not order a speedy trial unless it was "convinced … that there are pressing reasons justifying such a course".
12. The applicable principles were then succinctly expressed by Neuberger LJ (as he then was) in WL Gore and Associates GmbH v Geox SpA [2008] EWCA Civ 622 where he alluded to four factors to be taken into account as follows: (1) whether the applicants have shown good reason for expedition; (2) whether expedition would interfere with the good administration of justice; (3) whether expedition would cause prejudice to the party; and (4) whether there are any other special factors.
13. EMC Europe also referred to Henderson J's judgment in JW Spear & Sons Ltd v Zynga Inc [2013] FSR 270 where he said at paragraph 28 that the Court of Appeal in W.L. Gore supra had not meant to lay down a narrow principle, but that the wider principles enunciated in Daltel supra were to be preferred, so that it was "only in a case of real objectively viewed urgency that such an application may be properly granted".
14. Finally, EMC Europe pointed to the dictum of Warren J in Eli Lilly & Company v Human Genome Sciences Inc [2012] EWHC 2857 (Pat), where Warren J said at paragraph 52 in relation to a reference to the Court of Justice of the European Union, that the desire for commercial certainty was "not the point" in considering expedition and that what needed to be shown was "some real and strong detriment" (see also BASF SE v Sipcam (UK) Ltd [2013] EWHC 3963 (Pat) per Birss J at paragraph 15).

Discussion

15. This is an appeal on a case management decision made by a judge at first instance. It is very well established that the Court of Appeal will only interfere with a judge's exercise of discretion on a case management issue in very limited circumstances where the judge has "not merely preferred an imperfect solution which is different from an alternative imperfect solution which the Court of Appeal might or would have adopted, but has exceeded the generous ambit within which reasonable disagreement is possible" (see Lord Fraser in G v G (Minors; Custody Appeal) [1985]1 WLR 647 at page 652, Brooke LJ in Tanfern Ltd v Cameron MacDonald [2000] 1 WLR 1311 at paragraph 32 and Potter LJ in Powell v Palaces of Hereford Ltd [2002] EWCA Civ 959 at paragraph 11).
16. The first question is whether there is any basis for the contention that the judge failed to apply the correct principles in considering the application for an expedited trial. The correct principles have been debated between the parties but do not seem to me to be much in doubt. The court exercises its discretion to expedite proceedings against the backdrop that the courts are busy and that expediting once case will often slow the progress of others. For that reason, the overriding objective requires that there should be a good reason for expedition. But the categories of case in which expedition is appropriate are not closed. There may be many and varying situations in which expedition will be held to be just and appropriate, taking into account all aspects of the overriding objective and the court's resources, and the interests of other court users in particular.
17. Thus, as the judge was well aware from the authorities that had been placed before him, expedition will only be justified on the basis of real, objectively viewed, urgency. It is against that background that Neuberger LJ's four factors from W.L. Gore supra are to be considered, namely (1) whether the applicants have shown good reason for expedition; (2) whether expedition would interfere with the good administration of justice; (3) whether expedition would cause prejudice to the party; and (4) whether there are any other special factors.
18. I do not think there is any basis for the contention that the judge overlooked these matters. The fact that he did not refer to the authorities is no reason for assuming he did not have proper regard to the principles that they enunciated. The judge was fully entitled to give his reasons briefly, and indeed it is noteworthy that EMC Europe's grounds of appeal suggest that the judge had given reasons that he had not in fact given. To summarise, the judge thought that Mr Petter reasonably wanted to know whether or not he could be lawfully employed by Pure, and that EMC Europe's refusal to undertake not to sue him was an indication that he required that certainty.
19. I move then to consider whether the judge exercised his discretion wrongly and in such a way that exceeded the generous ambit within which reasonable disagreement is possible, and whether he did, as EMC Europe contends, take into account irrelevant matters and fail to take into account relevant matters. I do not think that he did.
20. It was, of course, relevant that EMC Europe had not sought an injunction against Mr Petter in relation to clauses 14 and 15. But I do not think that was determinative. The judge was entitled to place reliance on EMC Europe's refusal to undertake not to sue Mr Petter. That put Mr Petter at risk of an unquantifiable claim for damages. Moreover, EMC Corp had sued Mr Petter in the Massachusetts proceedings, so he was on notice that the group as a whole was not happy with how he had behaved and what he was doing.
21. So far as tactical advantages are concerned, both sides were using litigation for that purpose. There is nothing particularly unusual about that, even if multiple proceedings in cases of this kind are to be regretted. EMC Corp was seeking to put pressure on Mr Petter by bringing the Massachusetts proceedings and Mr Petter was trying to bring pressure to bear on EMC Europe by bringing these proceedings and pursuing them at speed.
22. Mr Craig's main argument was that the judge was wrong as a matter of principle to think that a claim for damages could in itself justify a speedy trial. But I do not agree. Much depends on the circumstances. Of course two large corporations cannot normally ask the court for an expedited hearing merely to determine how much one has to pay the other. But this is an unusual case in that Mr Petter, the erstwhile employee, is the claimant, and it only now appears that no injunction will be sought even if EMC Europe succeeds at trial in demonstrating the enforceability of clause 14. Moreover, Mr Petter wants certainty because he does not wish to risk doing a job for Pure that may result in damages being awarded against him some time in the future. He might well wish to take avoiding action if it turns out that the clauses in question are enforceable. When an ex-employee faces the might of a large corporation, one may think that these circumstances would present an objectively justifiable reason for expedition; albeit that they may not always be enough by themselves. The dicta of Warren J in Eli Lilly supra and Birss J in BASF SE supra were in quite different contexts and do not lay down a principle applicable here. In each case, the need for commercial certainty needs to be evaluated in its proper context.
23. Here it seems me, expedition was indeed objectively justified in this case for the reasons the judge gave, as I have already explained. Thus, applying Neuberger LJ's factors, Mr Petter had shown good reasons for expedition. There were no grounds for thinking that expediting this case would interfere with the good administration of justice (since the clerk of the lists had been contacted and had indicated the court's availability). No prejudice to EMC Europe was made out apart from the lawyers having to work hard, but that is a factor of limited importance where a well-resourced corporation is concerned. Moreover, certainty will benefit EMC Europe too, albeit that it might prefer tactically to hold a sword of Damocles over Mr Petter's head for a longer period. No other special factors have been identified pointing against expedition. I do not accept that Mr Petter's delay between 5 February 2015 and 13 March 2015 is such a special factor. As I have said, Mr Petter issued these proceedings once he realised that EMC Corp was relying on his alleged breach of clause 14 by issuing the Massachusetts proceedings.
24. Accordingly, for the reasons I have sought shortly to give, I would dismiss this appeal.

Lord Justice Bean

25. I agree.

Order: Application refused