+44 (0) 207 8227325
In determining whether a non-compete covenant had been breached, Freedman J applied a broad approach to defining the scope of a former employee’s new business, looking to services which it intended to provide at some unspecified time in the future. It also rejected a defence invoking the General Billposting Rule based upon the employer’s conduct during its preliminary investigations.
Argus is a price reporting agency. Dr Halim was its Business Development Manager working in the area of fertilisers. Argus produced global pricing reports on the fertiliser markets. Dr Halim resigned in July 2018. Argus then discovered that within days of his employment ending, he had been attending industry conferences promoting his new business, ‘Afriqom’, which offered pricing reports on African fertilisers. Argus alleged a breach of restrictive covenants and successfully obtained final injunctions at trial (though the court refused further springboard relief). The judgment contains two points of particular interest for practitioners.
Freedman J found that Dr Halim’s Afriqom business was “similar” or “sufficiently comparable” to Argus so as to be in competition with it. In this regard, Afriqom’s website and promotional materials advertised not only its weekly pricing reports but also broader consultancy and training services, which were considered to compete with Argus even though they were not yet being offered to the market and would not be until the non-compete covenant expired. Freedman J held that “the scope of the business of Afriqom is not limited to what it was doing at a snapshot of time… the consultancy was more than merely some long-term hope, but was part of the scope of the services which Afriqom intended to offer” -. He drew support from the earlier case of Invideous Ltd v Thorogood  EWHC 3015 (Ch) which had taken a similarly broad approach to defining the scope of the employer’s business, holding that the business incorporated not just those products actually offered but “more broadly …the kind of products they sell and the way that such products are likely to develop” .
During Dr Halim’s garden leave, his line manager accessed his work inbox and read his emails without his knowledge, some of which were to his wife. Several of those emails were then relied on at trial. It was argued that the reading of his emails was a breach of his privacy rights and was therefore also a repudiatory breach (of the implied contractual term of trust and confidence). That breach was said to have been accepted by Dr Halim by his pleadings and/or skeleton arguments in the legal proceedings so that he could rely on the General Billposting Rule to discharge himself from the post-termination restrictive covenants.
Freedman J rejected the contention that the reading of Dr Halim’s emails breached his privacy rights, finding that Argus was exercising its unfettered right (reserved in its internal policies) to ‘access’ and ‘inspect’ employee emails. He also rejected the alternative argument that Argus’ right under the policy was so broad as to violate Dr Halim’s privacy rights under Article 8 of the European Convention on Human Rights. This was because, first, that Dr Halim knew about Argus’ broad rights of inspection under its IT policy. Second, the policy was not so broad as to reduce his private social life in the workplace to zero because “this did not prevent his communicating in respect of private life through a phone or computer”. Third, the core emails to Dr Halim’s wife were “by reference to the work interests of Dr Halim” . In the alternative, any such breach was not repudiatory in nature because it had been targeted towards uncovering evidence of a suspected breach of contract which related to Argus’ business .
The extension of the broad ‘scope of business’ test seen in Invideous to the former employee’s business raises a number of issues. Freedman J’s distinction at  between a mere “long-term hope” and an intention to provide services indicates there is a threshold for future plans to be considered – but how concrete must future plans be? And is it relevant to look at whether the future plans might come to fruition within the lifetime of the restrictive covenants?
The robust rejection of the defence based upon the General Billposting Rule ought to reassure employers who start investigating an employee even before their notice period has ended. However, the reasoning also underlines the importance of employers being clear about their contractual rights to inspect or monitor employee communications. Had Argus fallen foul of their own policy – or applied it in a less tailored fashion - they would have been on weaker ground.
This case raised, but sadly left unanswered, the question of whether the General Billposting Rule can be invoked in circumstances where the employer breaches the contract between the employee’s resignation and the termination of the employment, but that breach is only accepted by the employee after it has ended . Is it enough that at the date of the purported acceptance, the post-termination covenants remain operative, if not the remainder of the employment contract? This is neat question of principle. Though in practice, a significant lapse of time between breach and acceptance will of leave an employee vulnerable to the argument that they have impliedly affirmed the contract in the interim.
The judgment is available here.
Naina Patel instructed by Pennington Manches LLP, acted for the respondent at trial.
Jane Mulcahy QC acted for the respondent at the interim stage.
+44 (0) 207 8227325
Deputy Senior Clerk
+44 (0) 207 8227327
Deputy Senior Clerk
+44 (0) 207 8227326
+44 (0) 207 8227331
+44 (0) 207 8227323
+44 (0) 207 8227339
+44 (0) 207 8227330
+44 (0) 207 8227329
+44 (0) 207 8227338
+44 (0) 207 8227324
+44 (0) 207 8227322