OUTER HOUSE, COURT OF SESSION [2007] CSOH 80 |
|
P134/07 |
OPINION OF LORD KINCLAVEN in the Petition of FIRST PEOPLE
SOLUTIONS GROUP LIMITED Petitioners for Interdict
and interdict ad interim against KAREN JACK First
Respondent and ORION ENGINEERING SERVICES LIMITED Second Respondents ญญญญญญญญญญญญญญญญญ________________ |
Petitioners:
Marney, Advocate; Lindsays
First and Second Respondents: Strain, Solicitor-Advocate;
Biggart Baillie
Introduction
[4] On
[6] Mr Marney appeared for petitioners. Mr Strain appeared for both respondents.
The Background
"The Lord Ordinary having heard counsel on the motion of the petitioner, no caveat having been lodged, ad interim (1) interdicts the Karen Jack, for a period of six months from 31 October 2006, from soliciting, canvassing or seeking to transact business with any of the petitioner's customers with respect to the provision of any services in aviation recruitment in which the petitioner deals and with whose provision to those customers, during her employment with the petitioners, the said Karen Jack has had personal dealings except that such customers shall not include any division, branch or office of a firm, company or other organisation with which the said Karen Jack has had no personal dealings during her employment with the petitioners.
(2) interdicts the said Karen Jack, for a period of six months from 31 October 2006, from soliciting, canvassing or seeking to transact business with any of the petitioners' prospective customers with respect to the provision of services in aviation recruitment in which the petitioner deals, such prospective customers being any person, firm, company or other organisation with whom the petitioners have had negotiations or discussions in the 12 month period prior to 31 October 2006 and with whom the said Karen Jack has had personal dealings except that such prospective customers shall not include any division, branch or office of a firm, company or other organisation with which the respondent had no personal dealings in the 12 month period prior to 31 October 2006.
(3) interdicts the said Karen Jack (a)
from conveying or disclosing to any third party and (b) from using or
attempting to use in any manner which may injure or cause loss to the
petitioners, by any means, the confidential information comprising details of
candidates and customers and their requirements and notes related thereto; the prices charged to and terms of business
with customers; sales techniques,
discount structure, financial results and forecast (save to the extent that
these are included in published audit accounts); the names, addresses, telephone numbers and
curricula vitae of candidates and notes relating thereto; the contact names, addresses and telephone
numbers of customers and potential customers;
advertising and promotional material not in the public domain; training material; any proposals relating to the acquisition of
disposal of the company or business or any part thereof or to any proposed
expansion or contraction of activities;
details of employees and officers and of the remuneration and other
benefits paid to them.
(4) interdicts the said Orion
Engineering Services Limited (a) from inducing or inciting Karen Jack to convey
or disclose to them the confidential information comprising details of
candidates and customers and their requirements and notes related thereto; the prices charged to and terms of business
with customers; sales techniques,
discount structure, financial results and forecast (save to the extent that
these are included in published audit accounts); the names, addresses, telephone numbers and
curricula vitae of candidates and notes relating thereto; the contact names, addresses and telephone
numbers of customers and potential customers;
advertising and promotional material not in the public domain; training material; any proposals relating to the acquisition of
disposal of the company or business or any part thereof or to any proposed expansion
or contraction of activities; details of
employees and officers and of the remuneration and other benefits paid to them,
(b) from using or attempting to use the said confidential information in any
manner which may injure or cause loss to the petitioners, (c) from conveying or
otherwise disclosing the said confidential information to any third party."
[11] On
[13] The motion for recall first came before me
on
[14] On 29 March 2007, on the unopposed motion
of the petitionersPetitioners
made orally at the barBar
of Court I allowed the prayer of the Petition (as adjusted to 28th
February 2007) to be amended (by insertion of the words "in the course of her
employment" after the words "personal
dealings" where they appear firstly, on page 13, line 5 and secondly, on page
13, line 17 thereof and by deletion of the word "of" where it appears firstly
on page 13 line 34 and where it appears secondly on page 14 line 7 and the
substitution therefor of the word "or").
Those amendments were not sufficient to meet the
Respondents' concerns.
[15] Finally, in order to conclude submissions prior to vacation,
I further continued consideration of the motion until
The
Petitioners' averments
[17] In particular, in paragraph 2 of the
petition, the petitioners aver:-
"[2] That the petitioners are engaged in recruitment, human resource
consultancy and training. They locate,
identify and assess candidates for their customers and for their prospective
customers. They invest time and money in
securing candidates and in building and fostering relationships with them. They invest time and money in securing
customers and in building and fostering relationships with them. They enter into commercial arrangements with
their customers in respect of the provision of candidates. They also provide a consultancy service. Their business is organised by
divisions. The business divisions are
Technical and Manufacturing;
Construction & Design;
Contract Centre; Office &
Business Support; Information
Technology; Sales & Marketing; Accountancy & Finance; Industrial & Warehousing: Construction & Labour Trades; Driving;
Legal; Aviation; Financial Services. They operate in a competitive market."
[18] In paragraph 3 of the petition, the petitioners aver inter alia:-
"[3] That the first respondent was employed by the petitioner. Her job title was 'Client Development within
the Aviation Division'. On joining the
company she was given a copy of the staff handbook. She agreed to the incorporation thereof into
her terms and conditions of employment.
The first respondent attended an induction meeting on
[19] In paragraph 4 of the petition, the petitioners aver:-
"[4] It was the first respondent's job inter alia to recruit and
select appropriate candidates for vacancies arising with the petitioners'
customers. She was also involved in
identifying and securing new clients within the aviation industry. She was involved on a day to day basis with
the petitioners' commercial customers.
She spoke to the petitioners' customers on the telephone. She had knowledge of the petitioners'
commercial customer base. She had
knowledge of their candidates. She had a
full access to the petitioners' data base.
She was aware of the petitioners' charge rates. She was aware of the extent and the specific
nature or services provided to the petitioners' customers and the level of
charge in respect of those services. She
was aware of the nature and extent of services which the petitioners sought to
supply to prospective customers and the proposed level of charges. The petitioners trusted her with that
information. With reference to the
respondents' averments in answer it is admitted that the first respondent was
initially employed to undertake business development for the petitioners. Admitted that it was her duty to target new
clients and develop new accounts. Admitted
that the respondent had previously been employed with CHC Helicopters. Admitted that her role changed in January
2006 when she was tasked with recruiting and placing candidates. Quoad ultra denied. Explained and averred that the first
respondent was not successful in business development. She was unable to secure any new
customers. CHC Helicopters were an
established and important customer prior to the first respondent taking up
employment with the petitioners. The
first respondent's role within CHC required her to deal with CHC's own
clients. They were mostly companies
involved in the offshore oil industry.
They were not directly involved in aviation. They were not potential customers. The first respondent's role with the
petitioners changed. She was asked to
deal with a small number of existing customers in the rotator market. She recruited and placed candidates with
those customers. That business generates
turnover in excess of ฃ1 million per annum."
[20] In paragraph 5 of the petition, the petitioners aver inter alia:-
"[5] The first respondent had been resident in
[21] In paragraph 6 of the petition, the petitioners aver inter alia:-
"[6] That, effective
[22] In paragraph 7 of the petition, the petitioners avers:-
"[7] That the written contract of employment provides
'4.1 Confidentiality
You shall both during the
continuance of this Agreement and also after the termination thereof observe
the utmost confidentiality and respect of all business information, secrets,
processes, methods, prices, accounts, dealing, transaction, affairs,
intellectual property and other information of the Company and its clients ...
For the purposes of this
clause and by way of illustration, information will prima facie be secret and
confidential if it relates to:
ท
Research and Development
ท
Inventions
ท
Formulae and formation
ท
Customers and details of their particular requirements
ท
Costings, profit margins, discounts, rebates and other
financial information
ท
Marketing strategies and tactics
ท
Current activities and current and future plans relating to
all or any developments, production or sales - including the timing of all or
any such matters.
ท
The development of software products.
ท
The production or design secrets relating to computer
software or
ท
Design or specifications of the Company's or Client's
software products.'
The contract further
provides
'5.1 Confidential Information & Company Documents
You shall neither during your
employment (except in the proper performance of your duties) nor at anytime
(without limit) after the termination of your employment:
(a) divulge or communicate to any person, company, business
entity or other organisation; or
(b) use for your own purpose or for purposes other than those of
the Company or any Associated Company (which here and where elsewhere referred
to shall mean any holdings company of the Company or any subsidiary of the
Company, or such holding company as defined in Section 736 Companies Act 1985,
as amended) or;
(c) through any failure of exercise due care and diligence, cause
any unauthorised disclosure of any trade secrets or Confidential Information
relating to us or any Associated Company, but so that these restrictions shall cease
to apply to any information which shall become available to the public
generally otherwise than through your default.
5.2 "Confidential Information" shall mean details of
Candidates and Customers and their requirements and notes related thereto, the
prices charged to and terms of business with customers, financial information
including without limitation, marketing surveys and plans, market research
reports, sales techniques, discount structure, financial results and forecast
(save to the extent that these are included in published audit accounts), the
names, addresses, telephone numbers and curricula vitae of Candidates and notes
relating thereto, the contact names, addresses and telephone numbers of
Customers and Potential Customers, advertising and promotional material not in
the public domain, training material, any proposals relating to the acquisition
of (sic) disposal of the company or business or any part thereof or to any
proposed expansion or contraction of activities, details of employees and
officers and of the remuneration and other benefits paid to them, any
information which you are told is confidential and any information which has
been given to us or any Associated Company in confidence by Customers,
suppliers or other persons.
5.3
All notes, memoranda,
reports, list of Candidates and Customers and employees, correspondence,
documents, computer and other discs or tapes, data listings, codes and other
documents and material whatsoever (whether made or created by you or otherwise)
relating to our business or any Associated Company (and any copies of the
same):
a) shall be and remain the property of the relevant Associated
Company: and
b) shall be handed over by you to use or to the relevant
Associated Company on demand and in any event on the termination of your
employment.
6.1 Confidentiality
For the purposed of clauses
5.1, 5.2, 5.3 and 6.1 the following words have the following meaning:
a) "Candidate" means any person:-
i) in respect of whom within 6 months prior to the Termination
date, we had written record to the effect that this was a person seeking
temporary or permanent employment or engagement; or
ii) who within 6 months prior to the Termination date, has been
interviewed by any other employee for the purpose of seeking temporary or
permanent employment or engagement with a Customer or Potential Customer, of
whom you had knowledge through your duties, such knowledge maybe implied;
b) "Company Service" means any service supplied by with which
your duties were concerned or which you were responsible during the two years
immediately proceeding your Termination date;
c) "Confidential Information" has the meaning given in
clause 5.2.
d) "Customer" means any person, firm, company or other
organisation whatsoever to whom or which we supplied Company Services during
the two years immediately preceding the Termination date and with whom or
which, during such period:
i) you had personal dealings in the course of your
employment; or
ii) any employee, who was under your direct or indirect supervision,
had personal dealings in the course of his/her employment.
But in the case of a firm,
company or other organisation shall not include any division, branch or office
of such firm, company or other organisation with which you and/or any such employment
had no dealings during the said period;
e) "Prospective Customer" means any person, firm, company or
other organisation whatsoever, with whom or which we shall have had
negotiations or discussions regarding the possible supply of Company Service
during the 12 months immediately proceeding the Termination Date and with whom
or which, during such period:
i) you shall have had personal dealings in the course of your
employment by the Company; or
ii) any employee who was under direct or indirect supervision
shall have had personal dealings in the course of his/her employment by the
Company. But in the case of firm,
company or other organisation shall not include any Division, branch or office
of such firm, company or other organisation with which you and/or any such
employee had no dealings during the said period;
f) "Restricted Services" means Company Services or services of
a similar kind and;
g) "Restricted Period" means the period of 6 months commencing
with the Termination Date.
h) "Termination Date" means the date of termination of your
employment.
6.2 Restricted Period - Clients
You hereby undertake with us
that you will not either during your employment nor during the Restricted
Period without our prior written consent (such consent not to be unreasonably
withheld) whether by yourself, through your employees or agents or otherwise
howsoever and whether on your own behalf or on behalf of any other person,
firm, company or other organisation, directly or indirectly:
a) in competition with us, be employed or engaged or otherwise
interested in the business of supplying the Restricted Services; or
b) in competition with us, solicit business from or canvass any
Customer or Prospective Customer if such solicitation or canvassing is in
respect of the Restricted Service; or
c) in competition with us, accept orders for the Restricted
Services from any Customer or Prospective Customer...'
The petitioners have a
legitimate interest in protecting their trade connections and their
confidential information. They invest
resources in establishing and maintaining their customer base. They incur significant marketing costs in
order to do so. They devote a
considerable amount of employee time to this.
They invest time in establishing lines of communication with prospective
customers. They invest in discussing
their requirements and the ability of the petitioners to meet those. They formulate proposals and deliver
presentations. A relationship is built
up over time. They invest time in
negotiating levels of service and financial terms. They incur associated legal and accounting
costs in considering and setting up financial arrangements with their
customers. They rely upon repeat business
with their customers. This forms part of
the goodwill of the business which they have a legitimate interest in
protecting. Protection is also required
in order to allow the petitioners to adjust to the loss of a member of
staff. They require to take on a new
member of staff. They will have to
advertise and to interview. The new
employee may have to work out a period of notice. They may have to be trained and then
introduced to the customers and prospective customers. They require time to become established. A six month period is reasonable. The restriction is limited to customers and
prospective customers with whom the first respondent has had personal dealings
over a restricted period of time. The
petitioners have a legitimate interest in protecting their confidential
information. Use of that information by
a former employee is potentially injurious to the petitioners. It gives that employee an unfair competitive
advantage. The respondents' averments in
answer are denied."
[23] In paragraph 8 of the petition, the petitioners aver inter alia:-
"[8] That, having taken up and remained in employment with Orion the
first respondent has been involved in setting up an aviation division with them
and in attempting to recruit candidates.
She has been involved in soliciting business from the petitioners'
customers. On or about 22 December
2006 advertisements were placed by Orion Engineering Services Limited on
an industry website,
'aviationjobsearch.com'. They were
materially similar in style and content to those advertisements customarily
placed by the petitioners. The first respondent
had been instructed and trained by the petitioners to frame such advertisements
in that way. The advertisement sought to
recruit helicopter staff in relation to precisely the same helicopter types
ordinarily serviced by the petitioners.
Enquiries with Orion regarding aviation recruitment are directed to
Karen Jack. Callers are advised to send
their CV to her. On
[24] Finally, in paragraph 9 of the petition, the petitioners
aver:-
"[9] The petitioners are reasonably apprehensive that the first
respondent intends to seek to transact business with their customers with
respect to the provision of services in which the petitioner deals, contrary to
the terms of clause 6.2. The petitioners
are reasonably apprehensive that the first respondent will disclose to a third
party the confidential information which has been gained during the course of
her employment with them in breach of the her express contractual obligations
and in any event in breach of her duty of honest and faithful service implied
in her contract of employment. They are
reasonably apprehensive that confidential information has been disclosed to
Orion, that Karen Jack and Orion continue to have access to information
confidential to them and that the respondents will make use of the confidential
information to solicit business from customers of the petitioners. A significant proportion of the petitioner's
business derives from the
The Respondents'
Answers
[26] The petitioners' averment in Paragraph 2
of the petition are believed to be true.
[27] In Answer 3 the respondents aver inter alia:-
"3. Admitted the First Respondent was employed by the Petitioner. Admitted her job title was 'Client Development within the Aviation Division'. Admitted on joining the company she was given a copy of the Staff Handbook. Admitted the Statement of Particulars of Employment was executed by both parties. Reference is made to the Statement of Particulars and the Staff Handbook beyond which no admission is made. Quoad ultra denied. Explained and averred that the Statement of Particulars of Employment makes no reference to the restrictive covenants contained within the Staff Handbook. The Staff Handbook is an extremely lengthy document which is broken down into nine independent sections covering inter alia a company overview, values and visions statement, equal opportunity policies and procedures, dress code, holidays, sickness, absenteeism, absence, maternity, disciplinary rules and procedures, redundancy, retirement, commission, bonuses, pension scheme, private health care, car policy, health and safety, accidents, company meetings and training. The terms of the restrictive covenants contained within sections 5 and 6 of the Handbook were not expressly drawn to the attention of the First Respondent when she signed the Statement of Particulars of Employment. The contents of the Employee Handbook have not been incorporated into the First Respondent's terms and conditions of employment."
[28] In Answer 4 the respondents aver inter alia:-
"4.
Admitted the First Respondent was involved in identifying and securing
new clients within the aviation industry.
Admitted she spoke to customers on the telephone. Admitted she had knowledge of the
Petitioner's aviation customer base.
Admitted she had access to the Petitioner's charge rates and was aware
of the extent and specific nature of services provided to aviation customers
and the level of charges. Quoad ultra
denied. Explained and averred that the
First Respondent was initially employed to undertake business development for
the Petitioner within the aviation industry.
It was her duty and responsibility to target new clients and develop new
accounts. All of this was with specific
regard to the aviation market. The First
Respondent had previously been employed with CHC Helicopters and accordingly
had extensive knowledge of and dealings with contacts within the aviation
sector. The First Respondent's role
changed in January 2006 when she was then tasked with recruiting and placing
candidates for vacancies arising within the aviation industry. The First Respondent extended the Petitioner
client base with CHC by developing and sourcing contacts for their Global
divisions and offered recruitment for both Pilots and Engineering
personnel. The First Respondent sourced
contacts for Bristow Helicopters in
[29] In Answer 5 the respondents aver inter alia:-
"5.
Admitted the First Respondent had been resident in
[30] In Answer 6 the respondents aver inter alia:-
"6.
Admitted that as at
[31] In Answer 7 the respondents aver inter alia:-
"7. Reference is made to the clauses 4, 5 and 6 of the Staff Handbook beyond which no admission is made. Quoad ultra denied. Explained and averred that the restrictive covenant provisions are not part of the First Respondent's Contract of Employment with the Petitioner. Esto they were (which is denied) the covenants are unfair, unduly restrictive, unreasonable and excessive. They go well beyond what would be necessary to protect the legitimate business interests of the Petitioner. Separatim Esto, the Petitioners were in fundamental and repudiatory breach of the parties' contract of employment. They are not entitled to enforce its terms."
[32] In Answer 8 the respondents aver inter alia:-
"8.
Admitted on or about
[33] In Answer 9 the respondents' averments are as follows:-
"9.
Denied. Explained and averred as
above condescended upon, the First Respondent is not under any contractual
restriction. Esto she is such terms are unfair, unreasonable, excessive and in
restraint of trade. Separatim, the Petitioners being in fundamental and repudiatory
breach of the parties' contract are not entitled to enforce its terms. The First Respondent has not disclosed any
information, which would constitute confidential information. An insignificant amount of business derives
from the
Productions
[34] Parties lodged and referred to a number of productions during the hearing.
[35] In particular, the petitioners lodged two inventories containing, inter alia :-
6/1 Copy Staff Handbook.
6/2 Copy Statement of Particular of Employment.
6/3 Copy
advertisement for the petitioners placed on
6/4 Copy advertisement for Orion Engineering
Services placed on
6/5 Copy advertisement for Orion Engineering
Services placed on
6/6 Copy advertisement for Orion Engineering
Services placed on
6/7 Copy email from Graham Shaw, Orion Engineering Services Ltd (undated).
6/8 Copy email from Michelle McCombie, CHC Europe.
6/9 Copy letter from Macdonalds, Solicitors,
Glasgow to Miss Karen Jack dated
6/10 Copy letter from Macdonalds, Solicitors,
Glasgow to Orion Engineering, Orion House,
6/11 Copy letter from Macdonalds, Solicitors,
Glasgow to Orion Engineering, ...
6/13 Affidavit
of Debbie Ross dated ...
6/17 "Screen Dumps" of Orion web-site (1 to 6).
6/18 Print out of job search from Orion web-site, and
6/19 Letter
from Orion to Lindsays dated
The
Submissions for the Respondents
[40] Mr Strain argued, in essence:-
1. that the restrictive covenants had not been validly incorporated into the contract of employment;
2. that in any event, the covenants were unreasonable and in restraint of trade; and
3. that there were insufficient relevant averments of wrongful actings to make out a prima facie case.
[41] Mr Strain also provided me with the following authorities:-
1. McConnell and Reid v Smith 1911 SC 635.
2. Coyle v The London, Midland and Scottish Railway Company 1930 SLT 349.
3. System Floors UK Limited v Daniel [1981] IRLR 475.
4. Living Design (Home Improvements) Ltd v Davidson [1994] IRLR 69.
5. Lux Traffic Controls Ltd v Healey 1994 SLT 1153, see particularly pages 1157, 1159 and 1160.
6. Berry Birch & Noble Financial Planning Limited v Berwick & Others [2005] EWHC 1803 (QB) see particularly paragraphs 23 and 27.
7. Employment Rights Act 1996 Section 1, and
8. Gloag on Contract, page 404-405, in relation to the maxim expressio unius est exclusio alterius.
[45] Clause 5.2 was in effect a
non-solicitation clause without limit of time.
The Submissions
for the Petitioners
[4745] On behalf or the petitioners, Mr Marney
submitted that the interim interdicts
granted by Lord Brodie should remain in force.
[4846] Mr Marney accepted that the clauses concerned
could have been clearer but invited me to accept that there was a prima facie case in relation to all four
heads of the interdict sought.
[4947] Mr Marney provided me with the following
authorities:-
1. PR Consultants Scotland Ltd v Mann 1997 SLT 437, see particularly pages 440 H-K and 441 H-K.
2. Gledhow Autoparts Ltd v Delaney [1965] 1 WLR 1366, see particularly pages 1370 C-F, 1373 C-F and 1377 G to 1378 A.
3. International Consulting Services (UK) Ltd v Hart [2000] IRLR 227, see particularly paragraphs 9 and 10 (page 229), and paragraphs 27 to 3 and paragraph 34 (page 231) and paragraphs 38 and 39 (page 232).
4. Axiom
Business Computers Limited and Jeannie Frederick or Kenny [2003] ScotCS 288,
5. G W Plowman & Son Ltd v Ash [1964] 1 WLR 568, see particularly pages 572, second paragraph.
6. Huw
Thomas v Farr plc [2007] EWCA Civ 118,
7. Lord Advocate v The Scotsman Publication Ltd. 1989 SC (HL) 122, see particularly pages 141-143, and page 164.
8. TSB Bank plc v Connell 1997 SLT 1254 see particularly pages 1255 L‑1256 B, and 1259 K-1260 L.
9. Thomas
10. International
Computers Limited v Kenneth Eccleson
and Others, [2000] ScotCS 245, Lord Gill,
[5048] I was also referred to McBryde on Contract at paragraph 8-18, 8-32 and
8-99 in relation to the correction of patent mistakes.
[5149] Mr Marney made it clear that his arguments
were based on contract rather than common law.
[5250] In essence, Mr Marney submitted that the
motion for recall should be refused - although it was open to me to grant the
motion in whole or in part.
Discussion
[5351] There was relatively little dispute between
the parties as to the relevant law. The
main areas of contention were, with a few exceptions, how agreed principles of
law fell to be applied in the circumstances of this particular case.
[5452] Obviously each case requires to be considered
on its own particular facts and circumstances.
[5553] There was, as noted above, no argument from
the respondents based on balance of convenience.
[5654] The main contentious issues were whether the
pursuer hade made out a prima facie
case and whether the terms of interim interdicts
before me were sufficiently precise.
[5755] Having heard parties, I have decided that
heads (1) and (2) of the interim interdict falls to be dealt with differently
from heads (3) and (4) - as follows.
Head (1) and
(2) of the interim interdict
[5856] In my opinion, in the circumstances outlined
above, the submissions advanced by the petitioners fall to be preferred in
relation to heads (1) and (2) of the interim
interdict - but those heads of interdict fall to be amended and restricted in
light of the position adopted by the petitioners before me.
[5957] The amendments and restriction are, I trust,
clear from the terms of the interlocutor which is detailed below.
[6058] My reasons are, broadly,
as follows.
[6159] Although the petitioners' averments might have
been clearer, and although the drafting of the provisions (set out in paragraph
7 of the petition) left a lot to be desired, those averments and those provisions
are not so defective, in my opinion, as to justify the conclusion that there
was no prima facie case.
[6260] I reject the respondents various arguments to
that effect.
[6361] There are, in my view, sufficient averments to
the effect that that the restrictive covenants had been validly
incorporated into the contract of employment of the first respondent.
[6462] On a proper construction, in my view, the various
words defined in clause 6.1 have a similar meaning where they appear elsewhere
in the contract.
[6563] The words "the company" fall to be read into
clause 6.1 (b) so that it reads ""Company Service" means "any
service supplied by the company". That corrects" to
correct what seems a simple mistake. See McBryde on Contract at paragraphs 8-18, 8-32 and 8‑99.
[6664] The petitioners found upon their productions -
including Production 6/2 rather than the document lodged by the respondents.
[6765] Production 6/7 is a plain example of a solicitation.
[6866] The petitioners are reasonably apprehensive
that the first respondent is targeting the petitioners' customers.
[6967] The six month period referred to in heads (1)
and (2) is reasonable.
[7068] There is no need for a geographic limitation
in thea
non-solicitation clause. See for example
Axiom Business Computers Limited and
Jeannie Frederick or Kenny [2003] ScotCS 288, 20 November 2003, Lord
Bracadale, at paragraph 33 and G W
Plowman & Son Ltd v Ash
[1964] 1 WLR 568, at page 572, second paragraph.
[7169] In relation to the respondents other
arguments, I gratefully adopt the summary of the law provided by Lord Bracadale
in the case of Axiom Business Computers
Limited v Jeannie Frederick or Kenny,
[2003] ScotCS 288, 20 November 2003 (at paragraph 10) namely:-
"[10] In
(1) a covenant in restraint of trade is void
unless it is reasonable in the interest of the parties and in the public
interest.
(2) covenants between an employer and employee
will be viewed more strictly by the Court than other forms of covenant where
some consideration had past.
(3) for a restraint to be reasonable it must
afford no more than adequate protection.
(4) an employer is not entitled to seek protection
against mere competition from a former employee. Trade secrets and old established customers
may be legitimate objects of concern.
(5) an employee may have acquired additional
skills and knowledge through his employment but, however, that belongs to him
and cannot be protected by the employer.
(6) an employee has a duty of confidence but that
once employment terminates the duty is restricted to not disclosing trade
secrets and trade information.
The proper approach is to
ascertain what legitimate interest the employers are entitled to protect and
then to see if restraint is required."
[7270] In the circumstance of the present case, despite
the respondents' criticisms, I am satisfied that the petitioners have
averred enough (in the petition as adjusted and amended) to entitle them to interim interdict in the terms set out
below.
[7371] In my opinion, despite the respondents'
arguments to the contrary, the petitioners' averments (particularly in paragraphs
3 and 5 of the petition) are sufficient to show a prima facie case.
[7472] In any event, the petitioners contentions are
sufficiently supported by the affidavit of Debbie Ross dated
[7573] The clauses themselves, although not models of
clarity, are sufficient in my view to provide a proper foundation for heads (1)
and (2) of the interdict as outlined below.
[7674] Further, had there been any doubt, I would
have been influenced in favour of the petitioners by the inconsistency between
(a) the respondents' averments in answer 8 and (b) the position stated by the
second respondents in their letter of
[7775] The balance of convenience favours the
petitioners. The contrary was not
argued.
[7876] A question also arises as to whether the petitioners
are entitled to interim interdict in
terms of head (2) in relation to "negotiations or discussions".
[7977] In International Consulting Services (UK) Ltd v Hart [2000] IRLR 227 Nicholas Strauss QC sitting as a deputy High
Court judge stated inter alia (at paragraphs 32 and
39):-
"I do not think that his 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."
[8078] At paragraph 39 he concluded:-
"I do not think that it 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."
[8179] In Axiom Business Computers Limited and Jeannie Frederick or Kenny
[2003] ScotCS 288,
"I also accept that it is
legitimate to protect the interests of the petitioners with respect to
negotiations."
[8280] In the circumstances of the present case, I am
satisfied that the petitioners are entitled to interim interdict in relation to "negotiations" as specified in
head (2) of the interim interdict but I agree with the respondents that the
words "or discussions" are not sufficiently precise.
[8381] I shall restrict the interim interdict accordingly (a) by deleting the words "or discussions"
and (b) by inserting the words "the duties of" (before "her employment") in
head (2) - as I was invited to do during the hearing.
Head (3) and
(4) of the interim interdict
[8482] However, in relation to heads (3) and (4) of the interim interdict I have reached a
different conclusion.
[8583] On those heads, in my opinion, the arguments
of the respondents prevail.
[8684] It seems clear that, in principle, the
petitioners can rely on Lord Advocate v
The Scotsman Publication Ltd 1989 SC (HL) 122 (particularly pages 141-143, and page 164) for the general proposition
that a person to whom a duty of confidence is owed has a right to protect
confidentiality against third parties who receive the information with the
knowledge that it had originally been communicated in confidence. That is not disputed.
[8785] However, in my opinion, the terms of the interim interdict which are sought by
the petitioners in heads (3) and (4) of this petition, as amended, are not
sufficiently clear and are not sufficiently specific to survive the
respondents' challenge.
[8886] In Lux
Traffic Controls Ltd v Healey
1994 SLT 1153, on the facts of that particular case, Lord Abernethy concluded inter alia (at page 1159-1160) that:-
"Even if some of the information on the customer database did amount to trade secrets it seems to me to be impossible now to separate and specify the knowledge the first respondent acquired from the database as opposed to the knowledge he acquired generally in the course of his employment as area sales manager. At any rate the petitioners have not separated and specified it."
[8987] Lord Abernethy also concluded (at page 1160)
that:-
"It is trite law that a person subjected to interdict must know precisely what it is he is interdicted from doing. In my opinion it is impossible to tell from the interdicts sought here what it is that the first respondent would be interdicted from doing."
[90] Although Lord Abernethy was dealing with a
different factual situation in Lux, [88] I have reached a similar
conclusion on the facts of the present case in relation to heads (3) and (4).
[9189] I was not satisfied that the petitioners'
contentions were borne out by Huw Thomas
v Farr plc [2007] EWCA Civ 118,
20 February 2007.
[9290] On the contrary, paragraph 42 of the judgment
of Lord Justice Toulson supports the view that:-
"a non-competition clause may be
the more satisfactory form of restrain, provided it is reasonable in time and
space".
[9391] The respondents also accepted
that here was some force in the approach adopted by in TSB Bank plc v Connell
1997 SLT 1254 - provided the property concerned was adequately specified.
[9492] A question also arose as to the significance
or otherwise of the absence of a time restriction in heads (3) and (4).
[9593] In TSB
Bank plc v Connell the pursuer
relied on a condition which "contained no time restriction". In that case Lord Osborne stated (at page
1260 K-L) that:-
"It does not appear to me that
that feature of the condition is necessarily fatal to the pursuer's case."
[9694] However, in International Computers Limited v Kenneth Eccleson and Others, [2000] ScotCS 245, 4 May 2000, Lord Gill stated inter
alia:-
"[27] In
general, any restraint on the actions of a former employee imposed by a
confidentiality clause in his contract of employment must be justified on the
ground of reasonableness (cf. Gloag, Contract,
2nd ed, p. 570; McBryde, Contract,
pp. 591-3; 597-9; Gurry, Breach of
Confidence, p. 203-5). If interdict
is to be granted, it should be no wider in scope than is adequate for the
protection of the employer's legitimate interests (Malden Timber Ltd v McLeish,
supra; Bridge v Deacons [1984] AC 705). The
length of time during which the restraint applies is a material consideration (Gurry, op cit, p 216).
[9795] In the circumstances of the present case, as outlined in some
detail above, I have reached a similar conclusion to that reached by Lord
Gill in International Computers
Limited v Kenneth Eccleson and Others.
[99] The respondents did not go so far as to
say that Lord Gill's approach was correct - but in the result that does not
alter my conclusion. I reject the petitioners' argument to the effect
that Lord Gill was wrong.[96] I reject the respondents' argument to the effect that Lord Gill was wrong.
[102] I shall grant the respondents'motion
to the extent of recalling heads (3) and (4) of the interim interdict.
Decision
[103101] In the whole circumstances, and for
the reasons outlined above, I propose toshall
pronounce an interlocutor in the following terms:
"The Lord Ordinary having heard counsel for the petitioners and the solicitor-advocate for the first and the second-named respondents on the opposed motions of the respondents dated 19 February 2007 recalls the interim interdicts granted by Lord Brodie in his interlocutor dated 19 January 2007 and of new grants interim interdict in the following amended terms namely:-
The Lord Ordinary ad interim (1) interdicts
the said Karen
Jack, for a period of six months from 31 October 2006, from soliciting,
canvassing or seeking to transact business with any of the petitioner's
customers with respect to the provision of any services in aviation recruitment
in which the petitioner deals and with whose provision to those customers,
during her employment with the petitioners, the said Karen Jack has had
personal dealings in the course of the duties of her employment except that
such customers shall not include any division, branch or office of a firm,
company or other organisation with which the said Karen Jack has had no
personal dealings during her employment with the petitioners; and (2) interdicts the said Karen Jack, for a period
of six months from 31 October 2006, from soliciting, canvassing or seeking
to transact business with any of the petitioners' prospective customers with
respect to the provision of services in aviation recruitment in which the
petitioner deals, such prospective customers being any person, firm, company or
other organisation with whom the petitioners have had negotiations in the 12
month period prior to 31 October 2006 and with whom the said Karen Jack has had
personal dealings in the course of the duties of her employment except that
such prospective customers shall not include any division, branch or office of
a firm, company or other organisation with which the respondent had no personal
dealings in the 12 month period prior to 31 October 2006."
[104102] I shall also continue the cause on the
question of expenses and for further procedure.