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The High Court reviewed when the American Cyanamid ‘serious issue to be tried’ test applied, and when it was appropriate to consider whether the claimant is ‘likely to succeed’, in determining an application for an interim injunction to enforce a restrictive covenant. It held that where a speedy trial could be heard at a time when approximately 6 months of a 12-month covenant were still left to run, the covenant had not ‘substantially expired’, and so American Cyanamid was the applicable test.

The facts

Le Puy Ltd (t/a Harpur) is a recruitment agency supplying temporary workers. Mr Potter was an employee, director and shareholder. He was ‘the face’ of Harpur’s business so far as its customers were concerned, whom he regularly visited. Mr Potter set up a competing business and resigned from Harpur with immediate effect. Harpur applied for an interim injunction to enforce 12-month non-solicitation and non-dealing covenants.  

The issue

The principal issue in the case was this: What was the correct test for grant of an interim injunction to enforce a 12-month covenant? Was it straight American Cyanamid (serious issue to be tried), or was it the Lansing Linde approach (likely to succeed)?  

The employee argued that the American Cyanamid test did not apply. This test requires a claimant to satisfy a court only that there is a ‘serious issue to be tried’ that the covenant is enforceable. If that low threshold is crossed, the court will go on to consider whether damages are an adequate remedy (which, typically, they are not in a covenants case) and whether the balance of convenience favours the grant or refusal of interim relief. Here, the employee contended that the judge should dismiss the application unless satisfied that ‘it is more likely than not’ that the claimant would succeed at trial.  

The judge pointed out at [20] that, as Lord Diplock observed in NWL v Woods [1979] ICR 867, the Cyanamid approach:  

‘[W]as not dealing with a case in which the grant or refusal of an injunction at that stage would, in effect, dispose of the action finally in favour of whichever party was successful on the application, because there would be nothing left on which it was in the unsuccessful party’s interest to proceed to trial.’

As Staughton LJ explained in Lansing Linde v Kerr [1991] ICR 428:  

‘If it will not be possible to hold the trial before the period for which the plaintiff claims to be entitled to an injunction has expired, or substantially expired…justice requires some consideration as to whether the plaintiff would be likely to succeed at trial. In those circumstances it is not enough to decide merely that there is a serious issue to be tried.’

The relevant chronology in the case was as follows:


16 Nov 2014 Mr Potter informed Harpur that he was resigning with immediate effect. There followed a period of correspondence between the parties.

22 Dec 2014 Proceedings were commenced and an application for interim relief was issued.

2 Feb 2015 The judge heard the application for an interim injunction.

April 2015 Likely date of speedy trial.

15 Nov 2015 Expiry of restrictive covenants.

It can be seen from this brief chronology that the decision on the application for interim relief was made a little under 3 months into the 12-month covenants period. Judgment following a speedy trial would be likely with approximately 6 months of the 12-month covenants still to run.

The judge concluded at [22]:

‘In my judgment, that sort of timetable does not make the Cyanamid approach inapplicable. My decision on this application will not ‘in effect dispose of the action finally’. Nor will the relevant covenants, by the time of judgment after trial, have ‘substantially expired’. The preliminary question that I must ask myself therefore remains whether there is a serious question to be tried.'

Lesson from this case

In light of this decision, it is reasonable to assume that where a speedy trial can be heard before more than 50% of the period of the covenant has run its course, then the American Cyanamid test of ‘serious issue to be tried’ will apply, rather than the higher threshold of whether the claimant ‘would be likely to succeed at trial’.  

This will be more difficult to achieve where the covenant sought to be enforced only lasts for 6 months rather than 12. Ironically, this suggests that a stricter test will apply (‘likely to succeed’ rather than ‘serious issue to be tried’), the more reasonable the restrictive covenant (6 rather than 12 months).  

The full judgment can be read here

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