England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		26 January 2000

In this case, the claimants ("ICS") claim damages for breach of a contract of employment and an injunction restraining the defendant ("Mr. Hart") who was a senior employee of ICS until 29^th March 1999, from dealing with certain of their customers and prospective customers. The claim was brought because ICS accidentally discovered in September 1999 that Mr. Hart was having dealings with an Austrian company called UTA, which they say was a prospective customer, with whom Mr. Hart had had contact during his employment.

The proceedings were issued on. 28th September. On the following day, Richards J. made an order, on an application without notice, restraining Mr. Hart from dealing with some 34 customers and potential customers of ICS. On 8^th October 1999, Klevan J. continued the injunction until 25th October, when Buckley J. made a further order continuing it until trial, and also ordered a speedy trial. The case should have been heard towards the end of November, but had to be adjourned because of difficulties over documents. Mr. Hart's computer had crashed, and relevant documents could only be retrieved, and then with difficulty, by a computer expert. They were only seen by those advising ICS immediately before and during the trial. Shortly before the trial, by agreement between the parties, the list of companies with which Mr. Hart was prohibited from dealing was reduced to about 20.

The business of ICS is the provision of consultancy services to companies in the telecommunications sector. They are concerned principally with customer care and billing systems. What ICS do, as described to me by their chief executive Mr. Khoury, is to assist their customers to establish proper systems which ensure that an order for telecommunications services is efficiently dealt with through its various stages from the placing of the order through to billing and receipt of payment. They advise on the appropriate computer systems to instal, on the necessary adaptations to the systems to suit the customer's requirements and. on the operation of the systems. An example which arose in the course of the evidence was the provision of advice on the system necessary to ensure the correct division of income where a service (such as an international telephone call) was provided with assistance from another telecommunications provider. Some of the customers are large multi-national companies, such as British Telecom; others are newcomers in the field, sometimes well financed but ill-equipped with know-how. The value of contracts which ICS seek to obtain is typically in a range between £75,000 and £500,000, in other words they seek a relatively small number of substantial contracts.

There are two principal ways in which services of this kind are usually provided to a telecommunications company. The first is by way of a "managed project", in which the consultant firm provides its own staff or consultant, who remain under its own control. This is the method preferred by ICS, which adheres to ISO quality control standards for their services. The other method is known as "body-shopping"; the consultant firm recruits independent consultants and provides their services, but under the control and management of the clients' directors and staff. Here the firm's responsibility is limited to the provision of suitable staff. Occasionally, when the client wished it, ICS did provide their own staff or consultants to work under the management and control of the client, although they were then still obliged to apply the relevant quality control standards.

Mr. Hart had more than 30 years IT experience, including extensive experience in telecommunications and information services, as well as in the field of life insurance. He was employed by ICS as a Senior Consultant by an Employment Agreement effective as of 30th September 1996 at a salary of £60,000 per annum, together with other benefits; the total value of his remuneration amounting to some £75,000 per annum. An Appendix to the Agreement defined his Job Purpose as:-

"... to manage project teams on client sites involved in the development of quality systems and high quality deliverables. Ensuring that all ICS activities on client sites are delivered within agreed time scales on word and budgets and to the satisfaction of the customer"

The same Appendix described the Principal Accountabilities; which included

"Agreeing with clients their statement of requirements and preparing proposals and outline plans for ICS assignments.

Identifying and processing opportunities for additional sales of ICS and reporting these opportunities to the UK Sales Director .

... monitor progress on all client assignments and when required, directing project leaders in the actions needed to ensure project deadlines and budget limits are met.

Assessing the impact of any changes requested by the client and agreeing the commercial term as to these changes"

Mr. Hart had frequent contact with prospective clients in the course of negotiations, in which his role was to provide technical expertise. Once a contract was concluded, he was often in effect the client or project manager. In his CV, he described his role as "Process Consultant, Project Manager", and in his witness statements he accepted that he participated as a senior consultant in the project teams for particular. clients. He also often represented ICS at conferences, at which again there would often be significant contact with customers or prospective customers.

Clause 8 of the Agreement provided as follows:-

"Employee recognises that Employer has and will have information regarding the following:

inventions

products

prices

apparatus

costs

discounts

future plans

business affairs

processes

trade secrets

technical matters

customer lists

product design

copyrights

and other vital information (collectively, "Information") which are valuable, special and unique assets of Employer. Employee agrees that the Employee will not at any time or in any manner, either directly or indirectly, divulge, disclose, or communicate in any manner any Information to any third party without the prior written consent of the Employer nor use such information for its own purposes of for any purpose other than those of the Employer. Employee will protect the Information and treat it as strictly confidential."

Clause 10 of the Agreement provided as follows:-

"The Employee undertakes to the Employer that the Employee will not (without the prior written consent of the Employer which consent may be refused by the Employer in its sole discretion) directly or indirectly whether alone or in conjunction with, or on behalf of any other company business concern or person and whether, as principal, shareholder, director, employee, agent, consultant, partner or otherwise:-

…

for a period of twelve months immediately following the date of the termination of this Agreement canvass, solicitor or approach or deal or contract with any company, firm or person who at any time during the twelve months immediately proceeding the date of termination is or was:-

(a) negotiating with the employer for: the supply of services;

(b) a client or customer of the Employer; and or

(c) in the habit of dealing with the Employer

where the dealing or contracting relates to services which are competitive with or of the type supplied by the Employer in respect of the supply of which the Employee was engaged or concerned in the last twelve months immediately proceeding the date of termination and where the Employer (or one of his subordinates) dealt or had contact with that person."

Mr. Hart of course also owed ICS implied duties of good faith and fidelity, which remained in effect until his resignation on 29^th March 1999.

ICS had regular management meetings, in which directors or senior staff who were abroad would often participate by telephone, and at which existing and prospective business was considered. A monthly Position Analysis was then produced by Mr. Khoury. This identified, for each job, the "ICS Owner" (i.e. person in charge) and an actual or hoped for order date, and an assessment was then made by Mr. Khoury on the basis of the information then available in accordance with the following criteria:

"5% means identified a business opportunity

10% means qualified the business opportunity to be real

25% means meaningful customer dialogue leading to a proposal

45% means submission of a proposal containing a business case

55%means proposal negotiations

65% means letter, of intent

75% means contract negotiations

85% means contract agreed and signed

100% means contract completed and paid for."

By January 1999 ICS's business was a low ebb. Mr. Khoury had been in Australia, where he has business interests, for several periods during 1998 and he did not have a clear idea of what had been happening within ICS. The January 1999 Position Analysis shows only 2 jobs at the 85% stage, both fairly small, 1 at 65% and 1 large job at 55%. Several members of staff had left or were leaving. Mr. Khoury became "ICS Owner" of a number of projects, that is took personal charge. Mr. Hart had in 1998 been working in Europe, mainly with Mr. Lenaerts, the sales manager for Europe. Mr. Lenaerts fell seriously ill, with heart trouble, on 14^th January 1999. Mr. Hart was prevailed upon to take on, with some reluctance, a sales role.

One of the prospective customers was UTA. It was assessed in the January 1999 Position Analysis at 10%. At some point, probably in about August 1998, Mr. Lenaerts had started adapting a letter sent to another customer for despatch to UTA, although it is not clear whether this was ever sent. A Call Report completed by Mr. Hart and Mr. Lenaerts shows that they had an initial meeting with Mr. Clemens Swanotek of UTA on 18^th December 1998. The object was to introduce ICS and to explore .the possibility of business. Mr. Swanotek apparently reacted favourably to the presentation "I can trust you – you don't appear to be gold diggers". Four requirements which UTA had were identified, namely interconnect billing, improvements under entry and customer care, best practice for processes and human resources issues: The conclusion of the visit is succinctly recorded as "ICS could call back 6 months?"

On 18^th January 1999 just after Mr. Lenaerts fell ill, Mr. Hart provided Mr. Khoury with a "brain dump on what I did with JML recently", including the following passage:-

"Austria

UTA - contact must approach Finance Director. Our next followup was due after he had a chance to do so. JH to contact end Jan/early Feb. Possibility for up to 4 projects - maybe. JH to follow up our contact to see if any progress etc."

At some time in February 1999, Mr. Hart was due to attend a conference in Singapore at which he was to make a presentation. Two days before the conference, Mr. Khoury instructed him not to go because he was needed in Europe. Mr. Hart was upset and annoyed at having to let the organisers of the conference down.

According to his affidavit (which preceded discovery and the recovery of further documents from his computer) Mr. Hart said:-

"Mr Lenaerts and I had made a single sales call in person to UTA in December 1998. The visit was triggered by my having met a UTA manager at a conference. The meeting lasted less than an hour and on the basis of a very general discussion there seemed the chance of doing some work for UTA. The Claimant will no doubt have retained on file a copy of the summary Mr Lenaerts prepared for that meeting. After Mr Lenaerts was absent through illness, I was asked by Mr Khoury to follow this up. However, in a phone call to the Billing Manager - who I understand has since resigned from UTA - I was told by this manager that they were not interested in the Claimant's services because used a large, well-known consultancy firm called EDS for consultancy services. As a result, Mr Khoury deleted UTA as a prospect in February 1999, and instructed me to concentrate on Belgacom, which I did."

In his witness statement Mr. Hart refers to this again, and gives the impression that the conversation took place before 20th January, from which date he was working at Belgacom although not full time.

Although it is clear that Mr. Hart did spend much of his time at Belgacom in February and March 1999, I do not believe the rest of what he says in the passage quoted above. As a matter of fact, documents produced by ICS show that UTA was not deleted from the Position Analysis at any time before (or after) Mr. Hart's departure. More importantly E-mails passing between Mr. Hart and Mr. Swanotek in mid-February recovered from Mr. Hart's computer at just about the time the trial was starting read as follows:-

"Mr. Hart to Mr. Swanotek 12th February "... (concerning possible meeting)

Mr. Swanotek – I would like to see if we can progress. matters since our initial meeting before Christmas. Can we meet towards the end of next week (say 18 or 19 February)? I will contact your office to set an appointment time if convenient".

Mr. Swanotek to Mr. Hart 17th February "Subject Possible meeting ..: sorry for being late - I misunderstood and was waiting for your call. Any time and date is:convenient, just drop a line some days before".

Subsequent events confirm the impression given by this brief exchange, that UTA was willing to have a further discussion at a meeting, and that there was no discussion on the telephone. Clearly, UTA had not disappeared as a prospective customer by 17th February.

Another document recovered from Mr. Hart's computer at .the last moment is a note of a meeting on 2nd March 1999 between Mr. Hart, Mr. Swanotek and Ilse Hendricks (project manager, UTA), at which there was further discussion of UTA's requirements, which were in some but not all respects the same as those discussed in December. After the detailed discussion of these requirements, the last two sections of the note read as follows:-

"Interesting Points

In view of their sharing certain secrets (will tell verbally), I explored their attitude to the New Hat concept: CS said JH is his contact, not some persons in London. IH said she knew the Old Hat people were OK and had heard the company was not so good. good. UTA is Completely happy to deal with New Hat, agree principles of collaboration, cooperation, no ripoffs either way. We supply, they pay, no contact with Old Hat.

CS said that CSC has some ex-ISIS people around looking for work ("be aware in case they are of use"). To be honest; I don't know if he means they are competition to us or are candidates for us to hire ... Please discuss.

Summary

UTA summarised: "We need people yesterday; technical freaks, we need long-term stability, want to give the operation back to Customer Service in the long term. Get us good people now"

UTA is realistic about rates (I said top people are around ATS20000 (£1000), they said this is not outside budget; or they will if necessary extend the budget).

UTA will accept from us, we can supply direct/indirect contractors from New Hat (NOT Old Hat), direct with UTA, via anyone (!). UTA (of course) prefers permanents if we know anyone who wants to go there longer-term: I suggested that maybe a compromise for some individuals, longer term security for lower rate to individual. UTA happy (of course), to avoid agency margins, but accept basis of flexible negotiation in return for results.

New Hat to respond initially within 2 weeks (proposals, profiles, candidates etc) BY EMAIL. UTA is quite happy for people to be fed in as and when they appear, and of course are looking elsewhere.

A good day.

JH"

Obviously "Old Hat" is ICS and "New Hat" is Mr. Hart's own company (Hart Consultants Ltd, a dormant company formed by Mr. Hart some years earlier). The note records an encouraging discussion about work to be undertaken by Mr. Hart or his new, company after Mr. Hart had left ICS. The words "will tell verbally" indicates that a copy was sent to someone, almost certainly (although Mr. Hart denied this) Mr. Lenaerts who was still employed by ICS, although ill. This meeting was followed up by Mr. Hart with a long and detailed letter proposing new business. Although the exact date is unknown, it is clear that it was written in March, before Mr. Hart left ICS,. It refers to the meeting of 2nd March as having taken place "last week" and the computer expert believes that it: was created on 11th March. A draft was sent to Mr. Lenaerts to "correct as needed".

According to Mr. Hart between 17th February and 2nd March (a period of less than 2 weeks), Mr. Swanotek had telephoned him to say that no funds were available to employ ICS and that anyhow they did not want a "managed solution" under any circumstances. Accordingly Mr. Hart claimed, UTA was no longer a prospective customer. Having decided to leave ICS (as it is clear he had), he was now legitimately approaching UTA to seek employment, as a consultant or possibly as an employee. I am afraid that I do not accept that there was any such telephone call, whether as described in Mr. Hart's affidavit and witness statement or as described in his oral evidence, either in January or in February. If UTA had told Mr. Hart at some time in late February that UTA did not have available funds for this kind of project, it would hardly be one of his first ports of call in seeking for work when he decided to leave ICS; even if (as may be the case) "body shopping" is cheaper than the "managed solution". Anyhow, the reasons now said by Mr. Hart to have been given by Mr. Swanotek differ from the reason said in his affidavit to have been given. On any view, the account which Mr. Hart gives in his affidavit of his dealings with UTA omits much which is relevant; the statement in paragraph 14 of is witness statement that "my next contact with UTA (after the alleged conversation in which UTA allegedly said they were not interested) was in April 1999" was a lie; and I find that Mr. Hart's failure to disclose the existence of the documents later recovered from his computer was deliberate. I do not believe his evidence that he did not think that these documents were of much relevance.

Mr; Hart sought to justify his conduct by saying that, in seeking work from UTA at a time when he was still employed and paid by ICS, he was not competing with his employer because "bodyshopping" was fundamentally inconsistent with the "managed solution" approach. I reject this. In the first place, on the facts,Mr. Hart was attending a meeting which had been arranged by him in his capacity as a consultant employed by ICS. I do not accept that, prior to the meeting, UTA had already decided not to employ ICS. Mr. Hart went to the meeting in order to persuade UTA that "New Hat" was preferable and for that reason to take such a decision, when his plain duty was to do the opposite. Secondly, the problems which are addressed by bodyshopping and the managed solution are the same and firms employing either method are therefore in competition with each other. Thirdly, in any event, ICS would have been prepared, if necessary, to accept an order for bodyshopping, especially in their then parlous position, and Mr. Hart knew this.

Later in March, there was an unpleasant incident at Belgacom, about which there is conflicting evidence. I indicated during the hearing that I did not think that it was necessary for me to decide what happened and I remain of that view. I have no doubt that Mr. Hart was sincere in his evidence that he felt very angry about the incident and that it precipitated his resignation on 29th March 1999, the requirement to give notice having been waived by agreement. Following this, Mr. Hart continued to negotiate with UTA and entered into a bodyshopping agreement with them, at which point he would have resigned anyway. Documents relating to further negotiations with UTA in September 1999 were sent to Mr. Lenaerts, and were accidentally sent on by him to ICS together with his statement of medical expenses and medical certificate. This led to the present proceedings, and also to the termination of Mr. Lenaert's employment.

Initially, in their ignorance of Mr. Hart's approach to UTA in March 1999, ICS based their case on clause 10 of the Agreement, contending that this was a reasonable covenant in restraint of trade having regard to Mr. Hart's position, and that Mr. Hart was in breach of it by reason of his dealings with UTA after the termination of his employment, and possibly dealings with other customers of which they as yet had no evidence.

The first question to consider is whether the covenant was reasonable.

The basic principles are of course well known. It is for the employer to demonstrate that the provision is reasonable and this involves showing that he has a legitimate proprietary interest to protect, and that the covenant goes no further than is reasonably necessary to protect it. Having regard to the nature and value of the kind of contracts which ICS sought to obtain, Mr. Hart's senior and central position in the organisation and the extent of his contract with customers, ICS clearly had a legitimate interest in protecting its business by an appropriate and reasonable covenant preventing him from dealing with customers. So far as the period is concerned, one year was in my view clearly justifiable. This was a worldwide business and Mr: Hart's employment was not restricted in area; the absence of a geographical limitation was not objectionable. Mr. Happé did not spend much time on these points, but sensibly concentrated his clear and forceful argument on four main points.

First, a covenant preventing Mr. Hart from dealing with companies with whom ICS had "negotiated" (as opposed to actual customers) was fatally uncertain because "negotiate" is so elastic a term; the vagueness and uncertainty of the provision in this respect rendered it unenforceable.

Secondly; ICS's business involved contracting or negotiating with large national or multi-national telecommunication companies (for example British Telecom) which are multi-faceted; the effect of the clause was therefore that Mr. Hart might well be prevented from dealing with departments or divisions of a customer, with which he had had no contact whatsoever.

Thirdly, ICS had no legitimate interest in preventing approaches to prospective customers with whom there had been negotiations, as opposed to actual customers; further the covenant was sufficiently wide to cover cases in which the negotiations had terminated up to a year previously and in which either ICS or the company in question or both might have no interest whatsoever in future contractual relations.

Fourthly, the final limitation in the provision "... and where the Employee (or one of his subordinates) dealt or had contact with that person" was insufficient, because the contact might have had nothing to do with the contract, dealings or negotiations which had existed in the year prior to the termination of the employment.

In considering these points, it is necessary to bear in bind that the burden on the employer in establishing the reasonableness of the covenant does not extend to showing that it is only capable of operating in circumstances in which the employee will have actual sway or influence over the particular customer. That this is so is demonstrated by the count's willingness,. in appropriate cases, to uphold a provision preventing the employee from carrying on a business similar to that of the employer's .in which he was previously engaged for a reasonable time and in the relevant geographical area. Such restraints often mean that the employee is prevented from dealing with some customers with whom he has had no previous contact whatsoever. Further, in cases involving non-solicitation type covenants, it has been held that it is no objection to such a covenant that it covers customers with whom the employee has never dealt: see Gilford Motor Company Limited v. Thorne [1933] 1 Ch. 935, G.W. Plowman & Son Ltd v. Ash [1964] 1 W.L.R. 568. Further, and perhaps in implicit recognition of the difficulty of framing a covenant in advance in such a way as to exclude all cases in which its application might be unduly burdensome, a covenant is not held to be unreasonable because its application might, in circumstances not contemplated by the parties; in such cases, the circumstances may be excluded. from its operation as a matter of construction; see Home Counties Dairies Ltd v. Skilton [1970] 1 W.L.R. 526, 535 and Littlewoods Organisation Ltd v.Harris [1977] 1 W.L.R. 147.

I do not think that this covenant is too vague to be enforced. Although it is true there may be borderline cases, in which it is hard to say whether communication with a prospective customer amounts to "negotiations",it does not follow that the provision is too uncertain to be enforced. In most cases, it will be clear on the facts whether it does. Where it is not, the court has to make up its mind; this is part of the ordinary process of interpreting a contract. I therefore do not accept the first point advanced by Mr. Happé. But nor do I accept Mr.Flower's submission on behalf of ICS that once a client has expressed any: interest in employing their services – for example in the way that UTA appears from the memorandum of 18th December 1998 to have done – there have been "negotiations". What is required, in my view, is a discussion between the parties about the terms of a contract which both parties have in view and which is a real possibility. If there had been no further meeting with UTA after 18th December 1998, there would have been no negotiations and Mr. Hart would have been free to approach them; however, the meeting of 2nd March, followed by Mr. Hart's letter, clearly amounted to negotiations; as a matter of law, these were conducted on behalf of ICS.

Mr. Happé's second point (which in fairness to him I should say was initially suggested by me in the course of argument) is that a restriction of this kind might well, in relation to some customers, prevent the employee from dealing with departments or divisions with whom he has had no previous contact of any kind. Mr. Flower's short and compelling answers to this are that no such argument has ever been successful (or perhaps even put forward) before and that it would be impossible in practice to devise a form of clause covering with appropriate words all the various types of organisational structure which different customers might have. In addition, where an employee has dealt with one department of a large company, there must always be the possibility that he could secure business from another by using the first department as a reference. There is therefore nothing in this point, which was not part of Mr. Happé's initial argument.

The next point arises from the application of the provision to companies which were not actual but only potential customers in the previous year. In Gledhow Autoparts Limited v. Delaney (1965) 1 WLR 1366 the employee was a commercial traveller selling accessories to the lighting system of motor cars and electric light bulbs, under a contract terminable by one week's notice. The contract contained a non-solicitation covenant for a period of 3 years preventing the employee from soliciting orders for the products in question from any person, firm or company within the relevant district. The covenant was held to be too wide because it covered not only customers and potential customers, but also persons with whom the employee had had no contact whatsoever. Sellers L.J. said at 1373:

"In my view the protection here claimed does go beyond what is necessary to protect the rights of the employers. That depends and is based upon the nature of their trade. If this provision had been restricted to customers, then I think there could be no doubt it would have been enforceable, and I would agree with the judge in that respect. But the judge continued, after holding that it would be appropriate to enforce that, that he would go further and held that it would be applicable not only to established customers but to people on whom the defendant had called in the course of his employment with the plaintiffs – potential customers, people with whom he had made some sort of initial contact which might be expected to develop afterwards. That perhaps is more questionable; but if that had been the case I would again have agreed with the judge. But then he held that an agreement such as this is enforceable notwithstanding that it would embrace all those people in the areas or districts in which the defendant had been directed to operate on whom he had never called at all and, therefore, ... who had no relationship whatsoever with the plaintiffs and who, if they were canvassed by the defendant, or anyone else, would only be canvassed in the ordinary way in competition with the plaintiffs".

Danckwerts and Diplock L.JJ. agreed in the result, although Diplock L.J. at 1377 expressed no final view as to whether a covenant could legitimately have extended to potential customers. This case therefore leaves the point open.

I was also referred in this connection to the decision of Millett J. in Business. Seating (Renovations) Ltd v. Broad [1989] I.C.R. 729, in which the defendant was a sales representative of the plaintiff which carried on the business of renovating office furniture and commercial seating. His contract contained a covenant restraining him for one year after termination of his employment from canvassing the business of an associated company, which manufactured and sold new office furniture and commercial seating. Millett J. held that this was invalid (although severable from another valid part of the covenant). He said:

"So far as the plaintiff is concerned, its only interest in customers of "the associated company" was as potential customers of its own. I would regard it as an unwarranted further extension of G.W. Plowman & Son Ltd v. Ash ... to uphold the validity of a non-solicitation covenant which prohibits solicitation of potential customers of the plaintiff company, notwithstanding that they are defined as existing customers of some other connected business".

However, this decision is plainly distinguishable 'on two grounds. First, the "potential customers" were potential customers of a different business and, secondly; the provision applied whether or not the salesmen had had any contact, substantial or otherwise, with the potential customer of the association company. Therefore, this decision does not provide much help in the present case.

This point should I think be considered in conjunction with the last point. Although the provision only applies if Mr. Hart or a subordinate has had contact with the customer or potential customer, such contact may not have had any connection with the contract or negotiations, and may indeed not even have been within the previous 12 months. Whilst I have no doubt that, as a matter of construction, contact means some substantial contact (not for example a mere handshake) in the course of Mr. Hart's employment, it can plausibly be suggested that the provision would apply even if the contact consisted of, for example, a substantial business discussion of some kind taking place at a conference two or three years before Mr. Hart left ICS, with a customer who subsequently had abortive negotiations with others at ICS.

Although because of these last two points this is a borderline case, I hold that the restraint imposed by clause 10 is reasonable. I bear in mind that non-solicitation clauses are often upheld even though they stop dealings with customers with whom the employee has never had any contact at all, and which are in that respect wider than the present clause. I do not think that is necessary to seek to establish any general rule as to whether a restraint on dealings with prospective customers is valid. In the present case, I think that it is justifiable. Because of the complexity of the subject matter of negotiations and the long period of time over which they are often conducted ICS did in my view legitimately regard the connection with customers resulting from negotiations as forming part of their business goodwill which required protection. The fact that the restraint operated even where Hart's contact with the customer was unconnected with the negotiations, and was a long time in the past does not quite tip the balance. Because of his central and influential position, it could reasonably be considered that any previous contact might give him a rapport with the customer, and that he might have some input as a consultant into the preparation of a proposal for negotiations, even if he had no actual contact with the customer in connection with the negotiations.

For these reasons, I hold that the.covenant is enforceable.

The next question is whether ICS have made out a case for an injunction on the facts in relation to the 34 customers listed in Schedule 3 to the Order made by Richards J. ("Debis Hutchison" are in fact 2 customers). Because of the cross-undertaking as to damages, this matters even in relation to the companies subsequently deleted from the list. In order to establish their case, ICS must show, in.relation to each customer, that there were contractual relations or negotiations in the period 30th March 1998 and 29th March 1999 and that Mr. Hart had contact with the customer.

This part of ICS's case was not well developed, perhaps because of the short time available. In some cases the name of the company was not clearly stated. The evidence was largely documentary, and there was little detailed cross-examination of Mr. Hart on this issue. There is no doubt that a case is made out in respect of UTA and Belgacom. No submissions were made as to "KPN International of Holland" "Torch Telecom of England", "ICO of England", "AT&T of England" or "BTC of Botswana". As to the remainder, ICS's case was largely based on what I have held to be an incorrect view of what constitutes "negotiations", for example the fact that a proposal had been made, or some expression of interest by the customer, in ICS's services. In the end, I could find no clear evidence of contractual relations or negotiations in the relevant penod with any customers. other than Viag Interkom, BT Consulting, Plus GSM, Hutchison and Swisscom; and in relation to BT Consulting and Hutchison no satisfactory evidence was led, and none was elicited in cross examination, to establish that Mr. Hart had any contact with the customer. Therefore, only an iniunction restraining Mr. Hart from dealing with VIA, Belgacom; Viag; Plus GSM and Swisscom was justified and in the ordinary way Mr. Hart would be entitled to be compensated for any loss resulting from his inability to deal with the others.

However, Mr. Flower contends that Mr. Hart's conduct left ICS in a position of ignorance in which they could not know exactly what negotiations had taken place or what contact Mr. Hart had had with prospective customers. Therefore, he submits, no order should be made on the cross-undertaking as to damages, since Mr. Hart brought any loss which he may have suffered on himself. On the other hand, Mr. Happé points out that, given ICS's view as to what constituted negotiations advanced forcefully by Mr. Khoury in the witness box, it is likely that they would have sought relief with respect to all or most of the listed companies even if Mr. Hart had not acted as he did.

There is force in both these submissions and, although it is inevitably difficult to sympathise with Mr. Hart's position, I think that the right order to make is that there should be an inquiry as to damages, arid that he should be awarded one-half of such loss as he is found to have suffered (if any) with appropriate interest. I can see no reason why I should not exercise my discretion in this way, which seems to me to meet the justice of the case.

As a result. of the belated disclosure of the documents to which I have referred above, ICS amended their claim make a further allegation, in effect that all the negotiations conducted by Mr. Hart during the period of his employment were or ought to have been conducted for the benefit of ICS, and that he was in breach of duty in using the information about UTA's requirements for services and in tendering for such services on his own behalf.

I have already found that, at the meeting on 2nd March, and subsequently by letter, when Mr. Hart was still employed by ICS, he deliberately set out to obtain UTA's custom for himself, and that he succeeded in obtaining it shortly after he left ICS's employment. It is trite law that an employee owes his employer a duty of good faith and fidelity: Wessex Dairies Ltd v. Smith [1935] 2 KB 80. As was said by Lord Greene in Hivac Ltd v. Park Royal Scientific Instruments Ltd [1946] 1 Ch. 169 at 175, 178:-

"During the subsistence of the contract of service and during his master's time the servant has to look after, not his own interests, but those of his master ... it would be deplorable if it were laid down that a workman could, consistently with his duty to his employer, knowingly, deliberately and secretly set himself to do in his space time something which would inflict great harm on his employer's business.''

Applying this principle, Havers J. in Sanders v. Parry [1967] 1 W.L:R.:753 held that an employed solicitor who agreed with one of the firm's clients that he would leave their employment and set up in practice on his own account, upon which the client would transfer all his legal work to him, was in breach of duty. While still employed by the firm; he was under an obligation – and he would have been under the same obligation even if the approach had been made by the client - to do all he could to ensure that the client's business remained with the firm.`

Mr. Hart's duty of good faith to ICS in. the present case required him to do all he could to obtain UTA's custom for ICS, and his conduct amounted to a flagrant breach of that duty, as well as a breach of clause 8 of the Agreement. I have not had detailed submissions on the question of remedies. In the course of final speeches, I was told that ICS do not seek to maintain injunctive relief which would interfere with the current "bodyshopping" arrangements with UTA. On the pleadings there is a claim for an account of profits and a claim for damages; presumably these are alternatives. If ICS proposes to seek an account of profits, I should be glad to be referred to any authorities which establish that this is an available remedy for a breach of contract of this kind and also on its extent, that is, from when (if ever) can Mr. Hart profit from contracts with UTA without having to account for them. Although I appreciate that an inquiry will be necessary, it would probably be desirable for me to give a ruling as to the principles governing the assessment. If ICS seeks an award of damages, again it seems to me that it will be necessary to direct an inquiry, but in this case I doubt whether it is necessary for me to give any particular ruling; the approach of Havers J. in Sanders v. Parry may well be applicable in this case: