Freely Available British and Irish Public Legal Information
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
High Court of Ireland Decisions
You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Octavio Hernandez v Vodafone Ireland Ltd [2013] IEHC 70 (21 February 2013)
URL: http://www.bailii.org/ie/cases/IEHC/2013/H70.html
Cite as: [2013] IEHC 70
[New search] [Help]
Judgment Title: Octavio Hernandez v Vodafone Ireland Ltd Neutral Citation: [2013] IEHC 70 High Court Record Number: 2013 1496 P Date of Delivery: 21/02/2013 Court: High Court Composition of Court: Judgment by: Laffoy J. Status of Judgment: Approved |
Neutral Citation [2013] IEHC 70 THE HIGH COURT [2013 No. 1496P] BETWEEN OCTAVIO HERNANDEZ PLAINTIFF AND
VODAFONE IRELAND LIMITED DEFENDANT Judgment of Ms. Justice Laffoy delivered on 21st day of February, 2013. The application
(b) howsoever interfering with the plaintiff’s new contract of employment with 02. The factual background 3. The plaintiff, who is now aged forty one years, is a native of Mexico. He has lived and worked in Ireland for a number of years. He was in the employment of the defendant for over seven years from October 2005 to January 2013. 4. The plaintiff was initially retained by the defendant as a Business Case Analyst. His terms of employment were set out in a so-called “Contract of Employment [Permanent]” (the Contract) furnished to him with a letter dated 27th October, 2005 from the defendant’s Human Resources, the terms of which he accepted on 3rd November, 2005. The terms of the Contract which are of relevance for present purposes are the following.
“You shall not, without the prior written consent of Vodafone, within 6 months after the termination of your employment with Vodafone howsoever caused, whether directly or indirectly and whether alone or with any other person, either as principal, shareholder, director, employee, agent, consultant or otherwise, work or be engaged or interested in . . . any business or commercial activity in Ireland which competes or conflicts (or is likely to compete or conflict) with any business interest or commercial activity of Vodafone.” (b) Clause 9.4 which provided as follows: “You will not, without the prior written consent of Vodafone, within 6 months after the termination of your employment with Vodafone howsoever caused, directly or indirectly and whether alone or with any other person, solicit or entice away or attempt or cause others to solicit or entice away from Vodafone any person who shall have been an employee, customer, or agent of Vodafone in the 6 months immediately preceding the termination of your employment. (c) Clause 10, which was headed “Confidentiality” and contained detailed provisions protecting and restricting disclosure by the plaintiff of information obtained during his employment relating to any aspect of the defendant’s business, which may be reasonably regarded as being of a confidential nature. (d) Clause 13.1 under which the plaintiff was required to give not less than 1 month’s notice of termination of his employment, subject to the proviso that the parties could agree to pay in lieu of notice. 6. The plaintiff was offered alternative employment by 02 by letter dated 20th December, 2012. The role he was offered was that of Business Product Manager, with a start date of 21st January, 2013. The terms of employment offered to him also contained post-employment restrictions which included post-termination restrictions for six months in relation to –
(b) procuring or seeking to procure or solicit orders from or do business with any person who had been at any time during the period of two years immediately preceding the cessation of his employment a customer of 02; and (c) soliciting the services of or engaging or attempting to engage any person who was an employee of 02 at any time during that two year period. 7. It is common case that the fact that the plaintiff had decided to leave the defendant’s employment was communicated by him to his Line Manger on 24th December, 2012. Obviously, the Christmas break intervened. However, by letter dated 4th January, 2013, Ms. Mooney wrote to the plaintiff informing him of the following matters:
(b) Referring to Clause 9 of the Contract, he was advised that he was prohibited from taking up his role with 02 until a period of six months from the Termination Date had expired and he was informed that he was “restricted from taking up any role with 02 until after 24th July, 2013”. (c) He was also reminded of the contents of Clause 10 of the Contract. 8. On the same day, 4th January, 2013, the solicitor for the defendant wrote directly to 02 informing 02 that the plaintiff would remain an employee of the defendant until 24th January 2013. It was pointed out that the plaintiff would continue to be bound by, inter alia, “a strict six month non-compete and non-solicitation provision and a comprehensive confidentiality clause”. In the final paragraph of the letter the possibility of the defendant seeking undertakings from 02 was adverted to and it was stated that –
9. In any event, there was communication between 02 and the defendant, although the plaintiff’s position is that he was not involved. As e-mails passed between their respective lawyers demonstrate, between 31st January, 2013 and 1st February, 2013 consensus was reached between Vodafone and 02 that the plaintiff would not commence working with 02 before 1st May, 2013 and that the defendant would release him from the restrictions in his contract as of that date. 10. Correspondence between the solicitors on record for the plaintiff in these proceedings and the solicitor for the defendant commenced on 30th January, 2013 with a letter from the plaintiff’s solicitors of that date in which the complaints which are the subject of these proceedings were made and injunctive proceedings were threatened if a satisfactory response was not obtained. The response was dated 5th February, 2013. In that letter it was asserted that the defendant was entitled to rely on its contractual arrangements with the plaintiff, which were characterised as legitimate, reasonable and proportionate. However, the agreement with 02 in relation to a start date of 1st May, 2013 was also referred to. 11. As things stand, the outcome of the plaintiff’s decision to leave employment with the defendant and to take up employment with 02, in consequence of the arrangement reached between the defendant and 02, is that the plaintiff is going to be without any income for the last week of January and the months of February, March and April this year. The plaintiff is a married man with two young children aged eight and three years, who has to meet the usual household expenses, mortgage repayments, utility costs, health insurance and so forth on a continuous basis. The plaintiff has also averred that he has supported his parents, who are in Mexico, and who are in poor health. He is concerned as to whether he will qualify for Jobseeker’s Allowance, given that he resigned from his employment. He faces the prospect of having no income to meet his and his family’s needs until 1st May next. Respective positions of the parties on the core issue 13. Counsel for the defendant submitted that it would be inappropriate for the Court to determine that core issue on an interlocutory application. He submitted that evidence, which I understand to mean oral evidence, would be necessary to reach a determination as to whether any business interest or commercial activity of the defendant would be affected by the plaintiff taking up new employment. In that connection, counsel for the defendant made it clear that the defendant would co-operate in procuring an early trial as to the issue of the enforceability of the non-compete clause. Apart from that, the central plank in the defendant’s opposition to the application is that damages would be an adequate remedy for the plaintiff, having regard to the fact that, in the light of the arrangement between the defendant and 02, in reality the measure of damages is the plaintiff’s lost salary for three months. 14. In reliance on two recent authorities of this Court, counsel for the plaintiff submitted that it is open to the Court to determine at this juncture that Clause 9.3 is void and unenforceable. The authorities cited were:
(b) Net Affinity Ltd. v. Conaghan & Anor. [2012] 23 ELR 11 15. As the headnote in the report succinctly sets out, in that case the plaintiff company was engaged in the provision of intellectual property services. The defendant was employed by the plaintiff as a European patent agent under a written service agreement which provided that it was to last for a period of three years and could be renewed for a further three years. The service agreement also contained a non-competition clause which provided that the defendant would not work within the Republic of Ireland for a period of twelve months following determination of his employment on his own account and in competition with the plaintiff company. The defendant left the plaintiff’s employment and immediately commenced practising. The first procedural step in the proceedings was an application for an interlocutory injunction in which judgment was given by Clarke J. on 14th April, 2005 (Neutral Citation [2005] IEHC 110). 16. While counsel for the plaintiff did not refer the Court to the judgment of Clarke J. on the interlocutory application it is of particular relevance to the determination this Court has to make. As is clear from the judgment, there was, at the interlocutory stage, a factual dispute as to whether the defendant employee had continued to be bound by the non-compete clause. Moreover, it had been argued on behalf of the defendant that, even if the non-compete clause, as a matter of agreement between the parties, was still in existence, it should not be enforced as being an unreasonable restraint of trade. Clarke J. stated that those issues could not be resolved at the interlocutory stage, but he was satisfied that they raised a fair issue to be tried. Therefore, his decision on the application for an interlocutory injunction by the plaintiff employer to enforce the non-compete clause pending the trial of the action turned on the questions whether damages would be an adequate remedy for the plaintiff and where the balance of convenience lay, both issues being “somewhat interlinked”. The conclusions of Clarke J. on those issues were as follows:
In the circumstances it seems to me that damages would not be an adequate remedy for the Plaintiff. However the issue in respect of the balance of convenience is more difficult. On balance I have come to the view that the balance of convenience would not favour the grant of an interlocutory injunction in respect of non competition provided that this aspect of the matter can be made ready for trial in a very short period of time. In the circumstances I propose that a preliminary issue should be tried as to the applicability and enforceability of the non competition clause and further propose imposing very strict time limits indeed on the parties to ensure that the trial of that issue can occur very quickly.” 17. In his judgment, having found that the non-competition clause was applicable, that is to say, that it remained operative until the termination of the defendant’s employment, Clarke J. went on to address the issue of enforceability (at p. 20 et seq.). It is clear from the judgment that that issue had been heard on oral evidence. Clarke J. concluded, on the facts, that a geographical restriction based upon the jurisdiction of the Irish state was not unreasonable having regard to the way in which the business (patent attorneys) operated in Ireland and he was also satisfied that the period of twelve months was not unreasonable. He continued (at p. 21):
In those circumstances I have come to the view that the prohibition in this case on all competition is too wide. A prohibition on dealing with (in addition to soliciting of) customers of the plaintiff would, in my view, have been reasonable and sufficient to meet any legitimate requirements of the plaintiff. The wider prohibition which restricts dealing with those who might be, but are not, such customers is excessive.” Net Affinity v. Conaghan & Anor. 19. The outcome of the application for an interlocutory injunction was that the Court (Dunne J.) restrained both the defendants from approaching, soliciting or dealing with any existing customers of the plaintiff for a period of twelve months, but refused to restrain the first defendant from taking up employment with the second defendant for such period on the ground that the non-compete clause was void and unenforceable as it contained no geographical limitation and it prohibited the first named defendant from engaging in any employment which involved services similar to that of her former employer, following the Murgitroyd decision. In her judgment (at p. 30), Dunne J., having stated that she had no issue with a period of twelve months, went on to consider the fact that the scope of the restriction was not limited geographically and she stated:
21. In the light of the stance adopted by the defendant, as was the case in the Murgitroyd case, it is not open to the Court to determine the issue as to the enforceability of the non-compete clause in the Contract at this juncture. The only determination the Court may make is whether the plaintiff is entitled to interlocutory injunctions in the terms sought pending the trial of the action. Plaintiff’s entitlement to interlocutory injunctions 23. However, the nub of the matter is that, in reliance on the non-compete clause, which may or may not be enforceable, the defendant has created the situation in consequence of which the plaintiff is not able to take up his employment with 02 until 1st May, 2013 and will lose in excess of three month’s salary. If the non-compete clause is unenforceable, the defendant has done wrong in preventing the plaintiff taking up his employment with 02 on the 24th January, 2013, resulting in him being unemployed and without an income for three months. It is on the basis of the plaintiff’s contention that the defendant has committed such a wrong, that the plaintiff’s entitlement to an interlocutory injunction falls to be considered. 24. As regards the first criterion for the grant of an interlocutory injunction, whether the plaintiff has established that there is a fair issue to be tried, I have absolutely no doubt that the plaintiff has established that there is a fair issue to be tried that, by its actions, the defendant has wrongfully prevented him taking up his employment with 02 as of 24th January, 2013. As I have made clear, that issue turns on whether Clause 9.3 of the Contract is enforceable. In determining that issue, in due course, it will be immaterial that, as Ms. Mooney averred, the plaintiff was “fully aware” of the provision in Clause 9.3 and that he was entering into and accepting a contract from 02 which contains what is asserted to be “a broadly similar restraint”. 25. The second criterion is whether damages would be an adequate remedy for the plaintiff if the Court were to refuse to grant the injunctive relief sought and it was subsequently to transpire on the determination of the substantive action that Clause 9.3 was unenforceable. It is true, as counsel for the defendant submitted, that what the plaintiff is being deprived of is three month’s remuneration and, presumably, perquisites. The quantum of that loss would be less than €20,000. Nonetheless, on the basis of the facts averred to by the plaintiff in the grounding affidavit, it is of crucial importance to the plaintiff and his family that he has a continuing source of income. On that basis, I am satisfied that he has made out a strong case that damages would not be an adequate remedy. On the other hand, the defendant has not made the case that damages would not be an adequate remedy for it, if an injunction was granted and it was to transpire subsequently that the non-compete clause is valid and enforceable. As I have already recorded, the plaintiff accepts that he is bound by the non-solicit clause (Clause 9.4) and the confidentiality clause (Clause 10) in the Contract. Subject to the plaintiff giving an undertaking to the Court to comply with those provisions pending the trial of the action, the defendant should have ample protection by reason of that undertaking and the plaintiff’s usual undertaking as to damages, the adequacy of which has not been questioned by the defendant. 26. The final criterion is where the balance of convenience lies. It is important to emphasise that the interlocutory relief which the plaintiff is seeking against the defendant is merely to restrain the defendant from interfering with his contractual relationship with 02. He is not, as happens in many employment injunction cases, seeking an order for the payment of his salary by the defendant pending the trial of the action. Indeed, Ms. Mooney has averred that the payment of the plaintiff’s salary from 24th January, 2013 to 1st May, 2013 “is not a matter for the account of the” defendant. However, the actions of the defendant have created the situation in which the plaintiff now finds himself, which is obviously distressful not only for him but also for his family. That being the case, the balance of convenience lies in favour of granting the injunction. Order 28. The Court will endeavour to assist the parties in having the substantive issue tried at the earliest possible date.
|