England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		23rd February 2006

1. The defendant was employed by the claimant as an assistant solicitor at its offices in High Wycombe in Buckinghamshire. After her employment came to an end a partner discovered that she was sending emails to the firm's clients soliciting work for a new partnership with the second defendant in what appeared to be a breach of certain restrictive covenants in her contract of employment.

2. On 27 October 2005 HH Judge Rich, sitting as a judge of the High Court, granted an interim injunction in the terms of the contractual restrictions and ordered that a speedy trial of the issues take place. Shortly prior to the trial the claimant compromised its claim against the second defendant (whom I will hereafter where necessary call Anu Kapila) and the third defendant (the intended partnership itself which I will hereafter call 'Kapila Law') by discontinuing the claim against them with no order for costs.

3. The trial of the issues between the claimant and first defendant (whom I will hereafter refer to simply as 'the defendant') took place over a period of two and a half days between the ₆th and ₈th February. There was some written and much documentary evidence; two senior partners of the firm, Mr Hitchen and Mr Hay gave evidence before me. The defendant elected not to give evidence. I found Mr Hitchen and Mr Hay to be impressive and truthful witnesses whose evidence as to fact I unreservedly accept.

   The facts

4. The claimant is a fairly small firm of solicitors practising from Easton Street, High Wycombe. It had and still has five partners and between five and seven assistant solicitors of varying degrees of seniority. Contrary to what the defendant suggested, it is not a typical High Street firm of solicitors though it started life that way in the distant past. It gave up criminal practice in 1996, family and most personal injury work a couple of years ago and does not compete for fixed fee residential conveyancing. It practises on a departmental basis, specialising in five areas of work including commercial and property in one combined department, litigation, private client work and financial planning. It had on its database the names of something in the order of 2,000 clients who had given instructions on one or more occasions in the three year period from 2002 to 2005. In the year 2004/05 it opened files on about 750 new matters for something in the region of about 650 different clients. Of these clients the vast majority were former clients rather than new clients; some of the matters were inter-departmental referrals within the firm. Of the 650 clients in the past year, the claimant had dealt in the same period with 64 as the solicitor handling the matter and had contact with about a further 34 when covering for an absent colleague.

5. High Wycombe is the major population centre in the area in which the claimant practises. The town has a population of about 62,000; the district a population of about 162,000. There are many industrial estates which attract a thriving commercial sector. There is of course a wide selection and strong presence of national names in banking, building society and other financial services businesses locally. It is the commercial sector that the claimant seeks to target, particularly the owner managed business with a turnover of between £3 and £20 million. A download from the Law Society website produced a list of some 45 or so firms of solicitors with offices in the area. They range in size from much larger firms (some with multiple offices) than the claimant to single practitioners. There was no analysis of the type of clientele which each firm targeted but some will and others will not target the same sort of clientele as the claimant.

6. The defendant is 41 years of age. She qualified as a solicitor in 1989. She trained in London; since qualification she worked in private practice, specialising in commercial property, initially with Charles Russell in Lincoln's Inn and Howard Kennedy in the West End of London before moving to Buckinghamshire, to a firm called BP Collins in Gerrard's Cross.

7. By letter dated 9 December 1999 she was offered a position with the claimant at an initial salary of £40,000 per annum plus bonus and benefits. The letter continued:

   As I think I made clear, this is a senior position which we hope would lead to an offer to join the partnership after a suitable period of assessment on both sides. The position involves dealing with clients at all levels and providing an efficient and effective service including the marketing of the firm and developing the business. Whilst the position primarily involves property work there may well be opportunities for you to develop other skills complementary to that work.

8. Her contract of employment was dated 2 November 2000. It contained the following covenants:

   Clause 20 - Restrictions of indefinite duration:

   You shall not during the period of your employment or at any time afterwards whether on your own behalf or as the employee, partner or agent of any other person or firm.:

   20.1 …

   20.2. In connection with the business or profession of a solicitor or conveyancer or any business or profession involving the work of any solicitor or conveyancer directly or indirectly canvass or solicit or in any way interfere with any person who shall have been a client of the Firm at any time during the shorter of the period of three years immediately preceding the date when your employment terminates or the period of your employment by the Firm PROVIDED THAT the provisions of this paragraph shall not apply to your relatives or to any company wholly owned or controlled by you or your relatives.

   Clause 22 Post employment restrictions of limited duration:

   You will not on your own behalf or as the employee, partner or agent of any other person or persons:

   22.1. in the areas of the following local authorities at today's date:

   Wycombe District Council

   Chiltern District Council

   South Bucks District Council

   during a period of one year following the date of the date of termination of your employment by the firm directly or indirectly act as a solicitor or do the work of a solicitor for any person who shall have been a client of the Firm at any time during the shorter of the period of one year immediately preceding the termination of your employment or the period of your employment with the firm.

   [This has been referred to in argument, and will be referred to in this judgment as the 'radial restriction'.]

   22.2 .where your employment ends after the expiry of whichever is the longer of the periods specified in the first column of sub-paragraphs (a) and (b) of this sub-clause you will not on your own behalf or as the employee, partner or agent of any other person or persons practise as or do the work of a solicitor at any place within the area and during the period set out below which is applicable to the longest of the periods specified in the first column of those sub-paragraphs (a) and (b) of this sub-clause. But this restriction will not prevent you within those areas and periods from working in fields of work in which the Firm does not practise at the termination of your employment or from working for a local authority, building society, bank or an industrial company (which has not within the period of three years immediately before the termination of your employment been a client of the Firm).

   [This has been referred to in argument and will be referred to in this judgment as the 'non-dealing restriction']

9. It is common ground that in addition to the express terms there were a number of implied terms, including a duty of good faith, loyalty and fidelity; a duty not to act in competition with the employer; and a duty not to make use of and/or disclose confidential information belonging to the employer and his trade secrets.

10. The defendant accepted the offer and began work on 6 March 2000. I am told that her work was of good technical quality and that the firm's clients liked her and returned. I am satisfied that the expression of hope that the position might lead to partnership was genuine and represented an expectation, if all went well, that was shared by both parties. However, the defendant consistently failed to generate work and bring into the firm new clients and as a result her billed fee income did not rise to the heights which would need to be achieved before an offer of partnership would be forthcoming.

11. On 30 April 2005, after a discussion about partnership prospects, the defendant wrote to the claimant giving the required three months notice of resignation 'with much regret' and with her 'very best wishes for the continued future success of the firm'; she worked her notice and left on 29 July 2005. I mention, in passing, that she attempted to contend in a written statement that she came to the conclusion that she had been unfairly and improperly overlooked for partnership very probably because of her gender and ethnic background. I reject this contention. There is no truth in it. It is regrettable that the defendant thought to advance it.

12. On the contrary her departure was on very friendly terms. While she was working her notice, it was apparent that she was absent from the office during working hours with much greater frequency than before; but this went unchallenged. She continued to have unrestricted access to the claimant's offices, including at weekends when she would be the only person in the premises. She returned, after her employment had formally come to an end, in order to complete a small amount of work outstanding on one file. She requested and was permitted to take with her two clients with whom she was friendly and whom she had introduced to the firm.

13. It is evident from what has now been disclosed and admitted by the defendant that in the week following the termination of her employment she sent unsolicited emails to a large number of persons who were established clients of the firm. One was sent to a Mr Goodman, a very close friend of Mr Hitchen, to whose attention he brought the contents. Mr Goodman was a long standing client of the firm and the defendant had been the solicitor who had attended to his most recent instruction. The email to him stated that the defendant had entered into partnership with a university friend called Anu Kapila and that their partnership would practise under the name 'Kapila Law Solicitors'. An attachment to the email contained a 'Mission Statement' which explained that the firm would be a 'niche commercial law practice offering legal advice in the areas of Commercial Property, Residential Conveyancing, Landlord and Tenant, Dispute Resolution, Employment Law and Wills and Probate' and would 'have office facilities in High Wycombe and Ealing'. The address at Ealing was in fact the home of Anu Kapila; the premises at High Wycombe were serviced office accommodation at Oakridge House, Wellington Road, High Wycombe, a property owned by a Mr Bradbury, a client of the claimant for whom the defendant had also done substantial work in the recent past, including the purchase of the property itself. On a visit to those premises on 23 September 2005 Mr Hitchens noticed that there was a button on the entry phone for an organisation called 'Kapila Law'. Oakridge House was only some 1.5 miles from the claimant's offices.

14. The discovery led to a letter before action to the defendant and to Anu Kapila and the firm 'Kapila Law'. An application was made on 7 October 2005 to the court claiming injunctive relief against all three and a claim form was issued on 10 October 2005 against them. The sole evidential foundation for the claim at this stage was the discovery of the email to Mr Goodman and the defendant's proposal to practise from Oakridge House.

15. The matter came on for hearing on 19 October 2005. After a two-day hearing HHJ Rich gave judgment on 27 October and granted interim orders which, in broad terms, restrained (1) all defendants from practising as solicitors within a radius of six miles of the claimant's offices and in the relevant fields of practice; and (2) restraining the first defendant from canvassing or soliciting those who had been clients of the claimant in the three years prior to the determination of her employment. Directions were given for the three defendants to serve defences, provide standard disclosure and exchange witness evidence.

16. Largely as a result of the disclosure and evidence given by Anu Kapila, and also further enquiries and 'detective work' carried out by the claimant, the following state of affairs seems to have been established sufficiently for the defendant to admit the allegations either in a statement served by her in the proceedings or by 'submitting to judgment' (as it was put) when the trial was called on.

17. First, during the period in which she worked her notice, the defendant seriously abused her position of trust and acted in breach of the express and implied conditions of her contract in at least the following different respects:

    a. she worked as a solicitor for at least three other firms during the period; namely Hardcastles (at least two files), Fendom Dawson (at least one file) and Kapila Law (at least six files);

    b. she did at least some of this work in the claimant's time, using the claimant's facilities and indeed accessing its office account and postage services;

    c. she diverted business from the claimant to Kapila Law (three of the files were in respect of clients of the claimant);

    d. she deliberately waived fees owing in respect of one client of the claimant, namely Mr Bradbury, the owner of Oakfield House. She was the solicitor who acted for him in the purchase of Oakfield House between about March and July 2005. The transaction was completed by the time of her departure. It has become evident that she ceased recording time on the file on 13 April 2005, at about the same time when she must have been contemplating giving in her notice, and seems not merely deliberately to have failed to charge him any profit costs but to have altered the records of the claimant in order to cover up what she had done. She appears to regard him as her business adviser. It appears that he made available to her a room in Oakridge House without charge. The allegation was made, denied in a number of witness statements but at the commencement of the trial the claimant through her counsel 'submitted to judgment' in respect of the allegation;

    e. Over a period of several weeks she methodically ransacked the claimant's entire library of forms and precedents. She did this by sending them out of the office attached to emails (a total of about 50) to her husband and to Anu Kapila, to which there was a total of about 515 attachments. A significant proportion of these contained information that was not merely confidential to the claimant but was client confidential as well, such as actual powers of attorney for named clients, statutory declarations, change of name resolutions, heads of terms of compromise and instructions to counsel, to mention just a very few;

    f. she searched for and copied the claimant's partnership agreement and other confidential files in relation to the management of the partnership;

    g. from a disclosure list provided by her it is evident that she took with her in electronic form a copy of a 'List of Company Clients' prepared for a marketing exercise in the recent past.

18. Secondly, in the week after her employment came to an end, in alleged breach of the post-termination covenants, she began sending emails soliciting the clients of the claimant and indicating the intention to practice out of Oakridge House in High Wycombe. The extent of the defendant's marketing exercise, before it came to an end at the time when the letter before action was sent, is difficult to determine as she has elected not to give evidence. Certainly Anu Kapila has disclosed the existence of 75 emails of which she is aware but the identity of many of the recipients has been redacted on the copies supplied. Detailed factual allegations and enquiries made by the claimant have received the simple response from the defendant that the restrictions are unenforceable in law.

19. This brings me to a consideration of the validity of the restrictive covenants themselves. When this case was called on I expressed the view, which echoed an observation of HH Judge Rich, that I would require considerable persuasion before I were able to conclude that a restriction against solicitation which was expressed to be without restriction as to time could be justifiable. It may or may not be for that reason that the claimant abandoned the attempt. The argument before me has therefore been concentrated on whether the radial and non-dealing restrictions are justifiable. My attention has been drawn to a large number of cases. I hope I will be forgiven for summarising the propositions which I deduce from them fairly briefly.

    The law

20. Restrictive covenants in an employment contract are pi facie void, and will only be enforced if they go no further than reasonably necessary to protect the employer's legitimate interests (which include customer connections and goodwill, and trade secrets and confidential information).

21. For any 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'; per Lord Parker in Herbert Morris Ltd v Saxelby [1916] AC 688 at 707 (his emphasis).

22. The employer's claim for protection must be based upon the identification of some advantage or asset inherent in the business which can properly be regarded as, in a general sense, his property, and which it would be unjust to allow the employee to appropriate for his own purposes, even though he, the employee, may have contributed to its creation: per Lord Wilberforce in Stenhouse Ltd v Phillips [1974] AC 391 at p 400. It is common ground that an employer has a legitimate interest in the protection of is customer or client connections.

23. The covenant is either valid or it is not. The court is not entitled to re-write an unreasonable covenant to render it reasonable and proportionate. Moreover:

    As a matter of policy, 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 restraints in appropriately limited terms. Thus would be perpetuated the long-recognised vice of ex-employees being left subject to apparently excessive restraints and yet quite unable, short of expensive litigation and at peril of substantial damages claims, to determine precisely what their rights may be. See JA Mont (UK) Ltd v Mills [1993] IRLR 172 at 173.

    Equally, in construing a covenant, a court should disregard fanciful hypotheses or arguments leading to a reductio ad absurdum: see Home Counties Dairies v Skilton [1970] 1 WLR 526; and Littlewoods Organisations Ltd v Harris [1977] 1 WLR 1472.

24. The court can, however, sever from a covenant words which render it too broad 'if the severed parts are independent from one another and can be severed without the severance affecting the meaning of the part remaining' and/or where the covenant is not really a single covenant but is in effect a combination of several distinct covenants: see Attwood v Lamont [1920] 3 KB 571.

25. The validity of a covenant falls to be judged at the time it is entered into: see esp. per Diplock LJ in GledhowAutoparts Ltd v Delaney [1965] 1 WLR 1366 at 1377. If on this basis the covenant is too wide it will not be enforced simply because the conduct complained of could have been restricted by a proportionately drafted restraint.

26. The burden of demonstrating the validity of the covenant is on the party seeking to enforce it.

27. Whether a covenant is reasonable or not is a question of fact that falls to be considered by reference to the evidence in any given case. It is an error of law to say that because similar covenants have been upheld in previous cases, the instant covenants should be upheld, or to search for 'tariffs' from the decided cases. This has been underscored by the Court of Appeal in Dairy Crest Ltd v Piggott [1989] ICR 92 esp at 94F to 95H.

28. The definitive modern re-statement of these principles is found in Office Angels Ltd v Rainer-Thomas [1991] IRLR 215. As Sir Christopher Slade made clear (at page 220 paragraph 48):

    The court cannot say that a covenant in one form affords no more than adequate protection to a covenantee's relevant legitimate interests if the evidence shows that a covenant in another form, much less far-reaching and less potentially prejudicial to the covenantor, would have afforded adequate protection.

    This clearly invites comparison with hypothetical covenants the employer could have imposed, as well as other provisions or restraints that the employer has in fact imposed in comparable or analogous circumstances.

29. In applying these principles, the first task facing the court is to construe the words of the covenant in order to determine what exactly they mean. A court's approach should be to construe in the light of the object and intent of the contract as a whole, and not to construe literally: see Littlewoods Organisation Ltd v Harris [1977] 1 WLR 1472. The second is to consider whether the employer has shown that he has a legitimate interest requiring protection and to define as precisely as is possible what that interest is. In the light of such legitimate interests, as may be demonstrated to exist, to decide whether the covenant is no wider than necessary for the protection of those interests.

    Solicitors – are they a special case?

30. It has been submitted that solicitors are not 'a special case' and my attention was drawn to the judgment of the Court of Appeal in Wallace Bogan v Cove [1997] IRLR 453 in which Leggatt LJ observed at page 455 in paragraph 12, in relation to a solicitor's client connection:

    The essential question is whether the solicitor is entitled to canvass clients of the firm. In doing so, the solicitor is indeed taking advantage of a professional connection with clients. But that connection is no different in principle form the trade connection that, for instance, a milk roundsman may acquire with his employer's customers.

31. It is important to note that the case was one where there were no contractual restrictions in the assistant solicitor's contract of employment and the employer was arguing that restrictions should be implied because of the special relationship that every solicitor enjoys with his client. The attempt failed. No such terms were to be implied. If an employing solicitor wanted them he had to incorporate them expressly.

32. 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.

33. I have not heard evidence in relation to the solicitors' profession in general but have some experience at one remove from it, listened 'to submissions and been referred to Cordery on Solicitors paras 513 to 530.

34. It is a fundamental requirement that the claimant should establish that it has an interest which it is entitled to protect. It is common ground that there is such an interest in this case and it is to be found in the firm's goodwill and client connections. The first point of resort for identifying the client connection is in the list of current clients on a firm's database. But, unlike customers of milkmen and newsagents, the clients of a firm of solicitors do not usually make a daily demand on the firm for its services; they come only when they have a matter on which they require advice or assistance. Even the most loyal and satisfied client will not necessarily return even annually, though some will, depending on their line of business and needs. The satisfied customer of the milk or newspaper salesman might be regarded as having ceased to be a customer if he stops buying his milk or newspaper from the supplier for a week or two because, apart from considerations of holidays and the like, an inference may be drawn that he is probably satisfying his continuing needs by buying elsewhere. The same is not true of the client of the solicitor who may go for a long period before sending fresh instructions, on the one hand, but will not serve notice that he is going to another solicitor, if he does, on the other.

35. Another distinction of some significance is that although the customer who normally buys his milk from the milk roundsman may well buy other dairy produce from the same person if he develops a need for it, a loyal client who usually attends the firm for commercial matters will often accept a referral to a different person in the same firm if he has the need for a different legal speciality such as a will or commercial property advice.

36. An argument can be made that the goodwill of a firm of solicitors is not limited to its established client base but extends also to include the reputation it has built up for itself over the years. When one considers the marketing events described to me in evidence, it is clear that the claimant, in common with many other firms of solicitors and other professionals, has put a large amount of money and effort into promoting not merely itself but also the individual members of the firm to the sector of the public which it has targeted. The importance of the image and reputation in the industry can also be seen in the way in which the defendant has marketed herself and been marketed. In an issue of their publication 'Legal Eye' shortly after her arrival she was introduced to the readers in the following terms: 'Balraj moves to Allan Janes from another South Buckinghamshire firm, but prior to that spent some 7 years with two well-known West End property firms. She brings with her 10 years' experience and will specialise in the field of commercial property'. In a similar way, when the claimant sought to set up in practice in competition with the claimant, the fact that she had been with them was a significant element in her promotion of herself to its former clients.

37. The marketing events to which I briefly referred included 'Golf days' followed by dinner at which those in the firm who did not play golf attended and circulated; 'Rugby days', on a similar basis; lunches in the firm's boardroom to specially identified business persons, seminars and talks to an invited audience and the sending of a regular publication called 'Legal Eye', which was sent quarterly to around 800 clients on the firm's database. At 'the events, a large number of the firm's fee earners attended, the purpose being not merely to cement the valued relationship that a fee earner might have with existing clients but also to help created a new relationship with clients of other departments, with a view to the obvious. People who were not clients were also specifically identified and invited to events in the hope that they would establish relationships with those whom they met sufficient to persuade them to become clients. The defendant was one of those whom the claimant wished to promote as an important member of its team, particularly because it was hoped that she might become a partner in due course. She was therefore invited to many of the events; she gave talks at some of the seminars; she was highlighted in the publication on four occasions in the four or so years that she was at the firm. It is not unreasonable to think that there may well have been introductions which might have matured into instructions which would have been directed to her, had she not left.

38. The defendant contends that the case needs to be looked at on the basis that she has personally dealt with only a small proportion of the clients of the firm and has turned out not to be very good at marketing herself and generating new clients. I do not accept that submission. It is a fundamental principle that the reasonableness of the restriction must be interpreted in accordance with what was in the contemplation of the parties at the date when the contract was made and not as matters in the end turned out. The reason for this is that the covenant will have been formed at the beginning of the employment in the light of what was in the contemplation of the parties at that time. If the covenant was unreasonable for those expectations it will be wholly unenforceable -not partly unenforceable to the extent of what the outcome turned out to be. As Diplock LJ observed in Gledhow Autoparts Ltd v Delaney (ibid):

    The defendant was in fact employed for over six years by the plaintiffs and no doubt became a valuable servant ... It is natural in those circumstances to look at what in fact happened under the agreement. But the question of the validity of a covenant in restraint of trade has to be determined at the date at which the agreement was entered into and has to be determined in the light of what may happen under the agreement, although what may happen may cover many possibilities which in the result did not happen. A covenant of this kind is invalid ab initio or valid ab initio. There cannot come a moment at which it passes from the class of invalid into that of valid covenants.

39. Since the defendant was recruited into a senior position with a mutual hope that it would mature into a partnership offer, it clearly was within the actual contemplation of the parties that the claimant would promote the defendant to all its actual and target clients, that she would assist in marketing, would generate relationships with actual and potential clients and might well be successful in generating clients from just the sort of introductions as were the natural consequence of each of the marketing events on which the claimant spent its money.

    The area restriction

40. I have set out in extenso the terms of the area restriction in paragraph 8 above. I draw attention to the following features of it: the restriction purported not to allow the defendant '[to] practise as or do the work of a solicitor at any place within the area [of a radius of 6 miles] and during the period [of one year].' There was a proviso that 'this restriction will not prevent you ... working in fields of work in which the Firm does not practise ...'.

41. The first task is to construe the wording of the covenant. The first point taken is as to the meaning of the words '[to] practise as or do the work of a solicitor at any place within the area'. The defendant argues that the clause does not restrict her, provided she has a place of practice outside the area, from doing work within the area. The claimant argues the contrary and argues that just such a problem arose in the case of Edmundson v Render [1905] 2 Ch 320 where Buckley J. observed:

    The other [class of case] which I think would be equally a breach, is as follows. Suppose a client residing within the prohibited area comes to Harrogate to consult the solicitor, and the solicitor, after taking time to consider the matter, advises him by letter sent to him at his address within the prohibited area, is he acting as solicitor within the area? In my opinion he is. It does not matter whether he goes in person to the man 's house and says 'I advise you' so and so, or whether he writes him a letter and says, 'I advise you' so and so.

42. The claimant invites me to follow Edmundson v Render. To this the defendant responds that the case is very old and the interpretation is strained and invites me instead to apply the fourth proposition of Lord Hoffmann in Investors Compensation Scheme v West Bromwich Building Society [1988] 1WLR 896.

43. In my judgment, the addition of the words 'or do the work of a solicitor' were intended to, and do, add something to the words 'to practise'. 'Do[ing] the work of the solicitor' within the area would clearly include visiting within the radius to give oral advice to a client, interview witnesses, serve notices or appear in court. Properly construed in my judgment it would also include delivering a letter of advice either personally or via the post.

44. Ultimately this question of interpretation is a side issue because it is argued by the claimant and not denied by the defendant that the words in dispute are in any event severable. In which case, the question is whether the area restriction against practice is reasonable. The claimant draws attention, I think with some diffidence, to the cases of Fitch v Dewes [1921] 2 AC 158 and Hollis & Co v Stocks [2000] IRLR 712 both of which concerned solicitors where area restrictions were upheld.

45. Fitch v Dewes is worth reading if only to remind ourselves how far the practice of the law has changed since 1921, and public policy with it, The employee was an assistant solicitor aged 27 at the time the covenant was signed – at which date he had already worked for his employer for 13 years. The restriction was for an area of the radius of seven miles of the Town Hall of Tamworth for an unlimited duration. The complaint was not about the area but the temporal restriction. I draw attention to a couple of passages of the speech of Lord Birkehead LC which give the flavour of the approach at that time:

    What are the facts here? A boy of the age of 14 is taken from a humble employment in the office of the local co-operative society and he is trained in the office of a solicitor of position in this particular neighbourhood (at page 163).

    … Indeed I am of the opinion that it is in the public interest that a proper restrictive agreement of this kind between an established solicitor, possibly an elderly man, and a younger man should be allowed. It is in the public interest because otherwise solicitors carrying on their business without a partner would be extremely chary of admitting competent young men to their offices and to the confidential knowledge to be derived by frequenting those offices' (at page 165).

46. In Hollis & Co v Stocks there was a 10-mile radial restriction for 12 months. The Court of Appeal quoted the following finding of the trial judge:

    The claimant's are a small firm with a local clientele, much of it being clients who are frequently in trouble with the law in all sorts of fashions, in crime, in matrimonial affairs, in motoring matters, frequently having extended families with children who are getting into trouble and new generations appearing from time to time that provide the staple work o a small solicitor in the provinces ... and other similar small towns ... Such clients frequently attach themselves to one firm and they and their families come back to the same firm throughout generations for their divorce cases and for their matrimonial troubles and for their petty crime and on occasions their more substantial crime.

    The Court concluded that the trial judge was in a particularly good position to come to the conclusion that a 10-mile radius was reasonable. He knew the area well, as he said, and it really was a decision for him, being the county court judge in the particular area.

47. In my judgment, the claimant was right to be diffident. The cases to which he referred were decisions on their own facts. The facts and circumstances in the instant case are different and the differences reinforce my initial impression that an area clause, which is not limited to the clients of the claimant, is wider than is necessary to protect the claimant's legitimate interests. Having regard to the size of the population within a radius of 6 miles of the claimant's offices, a radial restriction would serve mainly to protect the claimant from competition for the business of a very large number of business persons who were not, or had well and truly ceased to be, clients of the firm. The claimant is not entitled to that sort of protection.

    The non-dealing clause

48. The clause is set out in extenso in paragraph 8 above. I draw attention to the following salient features of it: the prohibition was for the period of one year post termination; it was from 'directly or indirectly act[ing] as a solicitor or do[ing] the work of a solicitor for any person who shall have been a client of the Firm' [in the previous 12 months].

49. There is the curiosity that there is also within the clause an area limitation – to 'Wycombe District Council, Chiltern District Council and South Bucks District Council'. This is not in my judgment of any consequence. This is mainly because the area restriction merely serves to limit yet further the scope of the restriction by limiting the number of clients within the prohibition to those who are within the stated area. It follows that there may well be clients of the firm residing outside the area in respect of whom the defendant might act (subject of course to the point of interpretation which I considered in paragraph 37 above) notwithstanding that she might have formed a very close connection while acting for them in the last year of her employment. This further limitation on the scope of the clause may not have been intended by the claimant, but that is neither here nor there. It cannot be an objection to enforceability that the parties agreed a restriction which could have been wider.

    The defendant's arguments

50. The defendant argues that the clause is too wide and should be struck down for a number of reasons. At the heart of his submission was the proposition that in Office Angels and other cases following it, the Court of Appeal has emphasised the importance of a limitation of the prohibition to clients with whom the employee had had personal dealing during a specified period pre-termination. In Office Angels Sir Christopher Slade identified a prototype non-solicitation covenant likely to suffice in most cases where there was a need to protect client connection/goodwill (para 45):

    At least at first sight, a suitably drafted covenant precluding the defendants, for a reasonable period of time after the termination of their employment, from soliciting or dealing with clients of the plaintiff with whom they had dealt during the period of their employment would appear to have been quite adequate for the plaintiff's protection in this context.

    In Wallace Bogan (cited above) both Leggatt and Potter LJJ also identified the sort of covenant likely to be reasonable in similar terms. As Potter LJ put it (at para 19):

    Since the employer plainly has an interest in retaining customers who are current or recent, an express non-solicitation covenant which is limited to customers with whom the ex-employee has had contact in the course of his employment and which is limited in time, is likely to be justifiable under the first head. However, the question of justification will always depend on the precise terms of the covenant, and evidence as to the nature of the business and the extent or reality of the customer connection. (Leggatt LJ's formulation has already been set out in the citation above.)

    See too Dentmaster (UK) Ltd v Kent [1997] IRLR 636, in which the Court of Appeal upheld a 12-month post-termination non-solicitation restriction that extended to recent customers of the employer (last 6 months) with whom the employee had dealt during his employment (though not specifically in the last six months) because (per Waite LJ at para 17):

    … given the brevity of the restraint period and the limitation of this restraint to customers within the previous six months, I find nothing illogical in the absence of a backward temporal limit on the employee 's dealings with such customers.

51. In the instant case, the defendant argued, she had direct dealings with only 9–10 per cent and indirectly (ie by provision of holiday cover) with a further 5 per cent of those clients for whom the firm did work in the last 12 months of her employment; and that a wider restriction to all clients was not appropriate; all of the cases, referred to above, recognised that, generally speaking, a non-solicitation, or indeed, a non-dealing covenant will need to be limited (i) to the clients with whom the employee in fact built up a connection during his employment, and (ii) in time (post-termination). Specific examples of non-solicitation restraints that foundered because they applied to all of the employer's clients and not merely those with whom the ex-employee had dealt, were to be found in, for example, The Marley Tile Co Ltd v Johnson [1982] IRLR 75 esp at paras 14 to 17 (the employee had contact with, at most, 15 or 16 per cent of the defined class of customers); and Austin Knight (UK) Ltd v Hinds [1994] FSR 52 at 58 (employee known to only one-third of the relevant customers).

52. Apart from this, the defendant argued that a non-dealing covenant would preclude the her from doing work for a client who, without any solicitation on the her part, had elected to choose her as his solicitor; such a restriction is said to be in breach of a fundamental principle (enshrined in the Solicitor's Practice Rules) that a solicitor shall not do anything in the course of practising that compromises or impairs 'a person's freedom to instruct the solicitor of his or her choice'.

53. In addition, a property solicitor's ability to deal with banks and lending institutions is obviously a key requirement; the defendant had dealt with a 'significant' number of residential property transactions; it is reasonable to assume that these as well as the commercial property transaction would have involved acting on behalf also of a lender who, as a matter of law, is undeniably also a client of the solicitor; it would be wholly wrong that a property solicitor should be unable to act for any lender who was behind any client for whom she had acted in the 12 months preceding her departure. If she were so restricted it would render her unemployable as a property solicitor.

54. Additional reasons for the clause being too wide were that it does not exempt working in fields of work in which the firm does not practice; nor does it include persons for whom the firm worked in the previous 12 months but who have since ceased to be clients of the firm.

    The claimant's arguments

55. The claimant argued that the restriction was no more than necessary for the protection of the claimant's interests, having regard to the defendant's special position in the firm. It also sought to justify the restriction on the ground that it is legitimate to look at what the defendant did, that is to say the matters which are set out in paragraph 17 above; the removal of confidential information by her and the other misbehaviour gave rise to such potential dangers to the claimant's business that, regardless of whether the restrictive covenants are enforceable by reference to the restraint of trade doctrine, they should be granted in order to protect the claimant against the abuse of confidential information improperly removed by the defendant. 'Equity', he says, 'demands that the covenant be granted in terms identical to, or similar to, the restrictive covenant because (i) the defendant agreed to abide by such a covenant and (ii) only such a restriction would adequately protect the claimant against the defendant's removal of confidential information.' He supported this argument by reference to the observations of Lord Denning in the case of Shell v Lovestock [1976] 1 WLR 1187, observations, I note, with which the other two members of the court disagreed.

    My conclusion on the non-dealing clause

56. In my judgment, the only question for me to determine is whether the restriction is in all the circumstances reasonable for the protection of the legitimate interests of the claimant.

57. In so far as the claimant was seeking to argue that the defendant behaved so badly that the restrictive covenant should be enforced whether, on a strict reading, it was reasonable or not, I reject the argument. I did not understand the claimant's argument to have been intended to be any wider than this until the last five minutes of the closing argument. There was not either a specific case pleaded to allege those matters which would have to be proved to justify a 'springboard' injunction nor a prayer in the statement of case for any relief other than injunctions to enforce the restrictive covenants. In the circumstances I did not think that it was in the interests of justice that there should be any amendment at that late stage or any adjournment for the appropriate case to be further pleaded and argued.

58. As regards the arguments advanced by the defendant: I take first the point made in relation to Rule 1 of the Law Society's Rules. It seems to me that the Rule is an admirable and reasonable expression of a legitimate aspiration of solicitors. However, solicitors do not operate in accordance with a 'cab-rank' rule; they can and do choose, for a variety of reasons or no reason, whether to act for a person who wishes to instruct them. The Rule does not purport to deal with the case where there is a restrictive covenant. The practice of solicitors imposing restrictive covenants on employees cannot have escaped the knowledge of the Law Society over the last 85 years since Fitch v Dewes was decided, yet it has not chosen to cater for the situation within its Rules.

59. In my judgment, the aspiration of the Law Society is a matter between the Society and its members but is not ultimately a matter which determines whether I should find a restriction to be unreasonable from the point of view of the interests of the public. A reasonable restriction appears to be permissible in every other area of commercial activity; it is surely the corollary of solicitors not being 'a special case' that they are not entitled to claim exemption from normal principles on the grounds of Rule 1.

60. The fact that in a number of cases the Court of Appeal has emphasised the appropriateness of limiting the restriction to clients with whom the employee had enjoyed recent contact is of course an important matter. That said, it is also important for me to remember that reasonableness is a question of fact not law and it is important to give effect to the different facts in the instant case. Office Angels, for example, concerned an employment agency where the manner of doing business was entirely different. The employees of the agency frequently solicited local businesses in the area, trying to place with them temporary and even permanent employees. The employer had 34 offices and about 7,000 clients. The defendants had worked at only one (of four) offices in the City of London and dealt with no more than 100 clients. A non-soliciting and non-dealing covenant failed because it was drawn irredeemably too wide. Although Sir Christopher Slade observed that he had little doubt that its validity would have been properly upheld had it been limited to clients with whom the employee had had contact, he added that 'Possibly a covenant against solicitation or dealing with could properly have been framed in terms rather wider than this.'

61. There are obvious differences in the facts of the cases to which reference was made from the instant case. Most of them concern salesmen of one sort or another. Solicitors are not salesmen of a product. Their work does not involve them in regular canvassing of the clientele of the firm in an attempt to sell a product. The defendant does not argue that the observations in the cases to which I have referred do not have the result that a wider restriction cannot as a matter of law be reasonable. In the last analysis reasonableness always was and remain a question of fact in the light of all the circumstances of the case.

62. Nonetheless, 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.

63. The emphasis on the statistics of personal client dealings in the last year of employment is superficially attractive but fundamentally misconceived for inter alia the important reason that it neglects the importance of judging the reasonableness of the restriction as at the date in November 2000 when the contract was made and not the date in July 2005 when it came to an end. As I have indicated in paragraph 39 above, it was within the contemplation of the parties in November 2000 that in pursuance of the objective of developing the relationship of the claimant with the defendant to the doors of partnership, she would be introduced widely to a large proportion of the firm's very best and most loyal and 'key' clients either in person at marketing events or in the 'Legal Eye' or by a colleague making a recommendation that she is a person in whom the firm has confidence. All of this was done with a view to the defendant either establishing an actual relationship with those clients or potential clients during a transaction, or being endowed with a recommendation that she be considered for a future transaction either in relation to commercial property or such other areas of practice into which it was thought in 2000 she might have extended her expertise. Her very presence as a respected member of the firm in which the partners had trust endowed her with a special status on which she could rely vis-à-vis even those clients with whom she had no prior contact.

64. I reject the argument that the covenant is too wide on the grounds that there will be, within the prohibition, persons who will have ceased being clients of the firm. I reject it for a number of reasons, including the fact that I do not believe it is possible to say that there are such persons who can be said to be ex-clients (for the reasons mentioned in paragraph 34 above); if there were such persons they would be very few and would be unlikely to want to transfer to the defendant anyway, perhaps specifically because of her own association with the claimant.

65. I reject also the argument that the covenant is too wide because it prohibits dealing with clients in classes of work with which the claimant does not deal. This is in my judgment a specious argument. As a matter of reality, the claimant is unlikely within the 12 months following termination of her employment with the claimant to give up her own specialism in commercial property and practise solely in aspects of law in which the claimant has not had for a number of years any specific expertise.

66. The argument that the present clause would prevent the defendant practising as a commercial property solicitor because it would prohibit her dealing with any conveyancing transaction where the lender had also been a lender in a transaction for a client for whom she had acted while with the claimant is a serious argument. However, I do not accept that, on a proper construction of the covenant, that this is its proper meaning and effect. When the proposition was put to him, Mr Hay roundly rejected that the intent of the clause was to prevent the defendant from acting for such lenders. Although he had to accept that as a matter of law lending banks and building societies were also to be regarded as persons to whom the firm owes duties as clients of the firm, he pointed out that the lenders do not appear as clients in the firm's database. He says that they were never intended to be within the restriction. I note, in passing, that a party to a contract is not entitled either to adduce evidence as to his subjective intentions at the time of the formation of the contract, or to give his opinion as to its meaning. However, in my judgment, the interpretation which Mr Hay in response to a question in cross examination advanced is entirely sensible. The interpretation does to my mind stand the 'officious bystander' test. Had any person asked either the claimant or the defendant at the time when they were entering into the contract whether the term 'client' would prohibit the claimant from dealing with any lender who was funding a client of the firm, both would have replied 'of course not'.

67. It is possible to advance a barrage of individual criticisms which bite at the edges of the scope of the covenant. It is, however, reasonable to infer that some of those clients on whose files the defendant did not work in 2004/05 might well have been clients for whom she had worked in a previous year; or were clients to whom her own skill and expertise had been promoted by the firm in one of the marketing events. Although it is discoverable from records which of the files were for clients for whom the claimant worked it is not possible from records to determine which other clients were those to whom an introduction or recommendation was made or with whom a relationship was formed. It might be possible to express a covenant in such detail as would cater for each of these situations but it would become unnecessarily unwieldy and uncertain in the process.

68. In my judgment the non-dealing covenant has the advantage of being certain as to its area of application and, having regard to those matters which were in the minds of the claimant and defendant at the time when the contract was made, the protection which it provides is reasonable both as regards the restriction and the limited period of time for which the restriction is to operate.

69. In these circumstances, I judge it to be appropriate that there should be a final injunction in the terms of the non-dealing covenant. The interim order, which provided for interim injunctive relief should be otherwise discharged.