Employee Competition: A hat trick of decisions on speedy trials

The fundamental principles

In deciding whether or not to exercise the discretion to order a speedy trial, the Court will apply the following four principles:

1. There must be a good reason shown by the applicant for expedition, having regard to the fact that expedition can only be justified on the basis of real, objectively viewed urgency;
2. The Court exercises its discretion to expedite proceedings against the backdrop that the Courts are busy and that expediting one case will often slow the progress of others - whether expedition would interfere with the good administration of justice is relevant;
3. Any prejudice to the other party caused by expedition should be considered; and
4. Finally, any other special factors should be considered, including delay, although delay is not determinative.

(See WL Gore & Associates v Geox [2008] EWCA Civ 622 at §25 – 38 and Petter v EMC Europe Limited [2015] EWCA Civ 480 §17.)

Jump Trading

In Veriton Advisors v Jump Trading International [2023] EWCA Civ 701 the first instance Judge refused Jump’s application for an interim injunction to enforce a post-termination non-compete covenant (which, at Jump’s discretion, could last anywhere from 0 to 12 months). The employee was on garden leave for 12 months until 31 March 2023. In November 2022 he made clear that he considered the covenant was unenforceable and that he would start work with Verition in April 2023, but Jump only issued its application for an interim injunction half way through April 2023. The Judge refused an injunction because of the delay, but ordered a speedy trial on the issues of enforceability of the covenant and final injunctive relief to take place in June or July 2023. Veriton appealed the decision to order a speedy trial.

The first point of particular interest is that, in words that are likely frequently to be quoted going forwards, Simler LJ in refusing the appeal, said:

Restraint of trade litigation in the employment context frequently gives rise to real urgency, where enforcement of the restrictive covenant is necessary to avoid uncompensatable damage being suffered. Such cases are common examples of cases in which orders for expedition are made because in almost all such cases, the period of restriction will have expired or substantially expired before trial unless an order for expedition is made. Accordingly, regardless of whether interim injunctive relief has been ordered, there is almost always real urgency in such cases justifying an order for a speedy trial…. This case is no different: the mere fact that the non-compete clause is time-limited and will expire within a relatively short time, is a reason to conclude that there was objectively viewed urgency.

It will therefore be rare indeed that an order for a speedy trial is refused in an employee competition case. However, as I will come to, one such case has already arisen.

Secondly, Simler LJ noted the absence of evidence of any prejudice to the defendant in a speedy trial, rejected the argument that an expedited trial would involve increased costs (not least given the reduced time for protracted disclosure disputes) and held that “As for the difficulties caused by a condensed timetable, again these are likely to be limited”. In my experience, it may be true that the difficulties caused by a condensed timetable in a speedy trial dealing with the enforceability of a covenant may be limited (because the issues are limited). However, those difficulties increase considerably when the claim is a team move claim, with expansive allegations of unlawful means conspiracy/dishonest assistance in breach of fiduciary duty/breaches of confidence and the like, and where the relief sought typically goes beyond enforcement of covenants.

The final point of interest (so far as the decision relates to ordering a speedy trial) is Simler LJ’s confirmation that “whether or not there is a serious issue to be tried is simply irrelevant to the question whether or not there should be a speedy trial. There is no threshold that must be met before a party can pursue a claim; subject to an application to strike out a claim (not made here) a claimant has an absolute right to litigate his claim.” That means that, even if faced with a judge at the interim relief hearing who is highly sceptical about the enforceability of a restrictive covenant, claimants should still be able to obtain an order for a speedy trial. In practice, that not infrequently results in a favourable settlement for a claimant given the substantial cost and time involved in litigating a speedy trial, in circumstances where a defendant will normally want to be focused on carrying on their new job.

Mimo Connect

In Mimo Connect Limited v Buley & Ors [2023] EWCA Civ 909, the Court of Appeal allowed an appeal against a first instance judge’s refusal to order a speedy trial, and refusal to continue interim relief to (amongst other things) enforce a non-compete covenant in a shareholders’ agreement and grant springboard relief arising out of alleged breaches of fiduciary duty by directors and (former) employees.

The Court of Appeal’s written judgment does not contain much reasoning, but does note that the “point of general application … is our view that a speedy trial should plainly have been granted”. The Court found that “In common with many, if not most cases, to enforce covenants for a limited period by way of injunction, this case cried out for an order for a speedy trial”. In July 2023, the Court ordered a speedy trial to take place in the following term (i.e. from 2 October), and found that, in the context of a shareholders’ covenant with a 12 month duration “The prospect of there not being a trial until the second half of that period, if not towards the end of it, is potentially seriously unjust to the claimant.” It was therefore “not reasonably open” to the first instance judge to refuse to order a speedy trial.

Patricot

With two Court of Appeal decisions in short order stressing that speedy trial should be ordered in employee competition cases, it might be thought that first instance judges would be wary indeed about refusing to order one. However, in Patricot v Adrian Lee & Partners [2023] EWHC 2493, HHJ Baumgartner (sitting as a HC Judge) did just that.

The Claimant’s employment terminated on 3 February 2023. On 17 April 2023, the Claimant issued a claim for a declaration that his 12-month non-compete covenant was unenforceable. He then got a job in Switzerland (which was permitted by his covenant). On 18 September 2023 (seven and a half months after his employment terminated) the Claimant issued an application for an expedited trial, on the basis that he wanted to return to England.

In refusing the application, the Judge placed particular emphasis on:

1. The fact that the Claimant’s own delay had eaten into eight of the 12 months of the covenant (and his three-month notice period with his current employer would eat into almost all of the rest);
2. The fact that the Claimant had not contacted the listing office to find out when a two-day listing could be accommodated. This was a “singular omission”, not least given the emphasis of the Court on the potential prejudice to other court users. Nor was a sensible timetable to a speedy trial proposed by the Claimant.
3. The Defendant’s evidence as to prejudice – careful work had clearly been done by the Defendant’s legal team to set out all the issues that would need to be dealt with, and accordingly the disclosure issues that would arise, and to evidence the availability issues for key witnesses.

This is a good lesson in the need for proper preparation in dealing with an application for a speedy trial (something that, in my experience, is all too often forgotten by litigators caught up in bringing/defending an application for injunctive relief). Those seeking a speedy trial should not only act expeditiously, and lead evidence as to why expedition is sought, but also ensure that Counsel’s clerks have contacted the listing office so the Court knows when a trial can be listed. Those resisting should carefully delineate the issues for the court, and lead evidence explaining the practical difficulties in an expedited timetable (c.f. Simler LJ’s assessment – in the absence of evidence – of “limited difficulties” in Jump referred to above).

Conclusion

The Court of Appeal’s guidance means that speedy trials are likely – if anything – to be even more common in employee competition cases going forwards.

It is worth remembering that, in Forse v Secarma [2019] IRLR 587, Underhill LJ (in the context of a speedy trial in a team move claim involving springboard injunctive relief ordered to take place just over four months from the date of the interim injunction), said this: “I was surprised that the application proceeded on the basis that a trial could not take place before April; but I was also surprised that, as we were told, Secarma said that it could not be properly prepared by the earlier date offered by the Court. In a case where a defendant is subject to an interim injunction of a kind which is of its nature damaging to its business claimants may reasonably be expected to pull out all the stops.” For anyone with experience of litigating team move speedy trials, that should send shivers down the spine.

As I have said above, my experience is that the issue of final injunctive relief to enforce a restrictive covenant can sensibly be litigated in a three-to-four month expedited timescale. When it comes to large team moves (which often give rise to issues such as the extent of liability, expert evidence on foreign law, and the scope of injunctive relief), even six months, with large, well-resourced legal teams is very tight, and puts everyone involved under immense pressure. However, the jurisprudence means that, as practitioners, we are all going to have to work towards enabling that to happen – a good start would be for the parties to be realistic in the timescales they propose to the court for a speedy trial of that nature.