Merits relevant in granting interim injunction: Berry Recruitment Limited v Brooke Donovan [2018] EWHC 2280 (QB)

Ms Donovan was employed by the claimant as a recruitment consultant from 12 September 2016 until 1 June 2018 pursuant to an employment contract dated 12 September 2016 [4]. Clause 18.1 of Ms Donovan’s contract contained a non-solicitation and a non-dealing clause:

“In order to protect the confidential information, trade secrets, and business connections of the company to which they had access as a result of the employment, the employee covenants with the company that they shall not:

(a) For six months after termination solicit or endeavour to entice away from the company the business or custom of a restricted customer or restricted candidate with a view to providing goods or services to that restricted customer or restricted candidate in competition with any restricted business; or [...]

(d) For six months after termination be involved with the provision of goods or services to or otherwise have any business dealings with any restricted customer or restricted candidate in the course of any business concern which is in competition with any restricted business.” [12]

The terms “restricted customer”, “restricted candidate”, “restricted business”, and “confidential information” were defined by reference to the contract of employment.

On 25 May 2018 Ms Donovan emailed the claimant’s Ms Dowling, saying that she had been offered new employment which she wished to start as soon as possible and asking to be released from the requirement to work her notice period. The claimant agreed [5].

The Application

The claimant sought an order requiring Ms Donovan to comply with clause 18.1 “Until the earlier of judgment or further order, or 2 December [2018]”; and also sought the following:

“Until the earlier of judgment at trial or further order, the defendant shall not use or disclose to any person, company, or other organisation whatsoever and shall use their best endeavours to prevent the publication or disclosure of any confidential information. This does not apply to:

(a) any use or disclosure required by law; or

(b) any information which is already in the public domain other than through the defendant’s unauthorised disclosure.” [7]

The Allegations

Ms Donovan had commenced employment with another recruitment company, Swanstaff [13]. The claimant argued that (a) its client PCL was a restricted client; (b) on 14 June 2018 Ms Dowling received a call from PCL who was “irate” that eight workers placed by the claimant had failed to turn up for work; (c) Ms Dowling spoke to four of the workers who each said that Ms Donovan had contacted them and told them their shift had been cancelled; (d) similar problems occurred up until 20 June 2018; (e) four of the employees spoken to said that Ms Donovan had sent them Swanstaff application forms or registration packs, telling them from next week “they would be working for Swanstaff”; (f) Ms Donovan had set up an account for PCL with Swanstaff; (g) whilst working for Swanstaff, Ms Donovan placed candidates for training with PCL; and (h) this had had “a serious impact on the claimant’s commercial relationship with PCL and a financial impact on the claimant” [14-16]. Ms Donovan’s response was that PCL had a longstanding relationship with Swanstaff so she had not solicited or enticed PCL staff away [17].

Further allegations concerned another restricted client, GI. Ms Donovan had sent a restricted candidate who had been placed with GI a Swanstaff registration pack. Ms Donovan did not deny making contact, but suggested he had contacted her [18-19]. The claimant also alleged a breach of clause 18.1 regarding another restricted client, Joseph Roach Gardens Ltd [20].

The decision

Serious issue to be tried. The Judge noted that Ms Donovan’s response to the PCL allegations only addressed the non-solicitation, and not the non-dealing, clause: “PCL would still be a restricted client even if ... it is already a client of Swanstaff. In any event, there is clearly a serious issue to be tried and, in my judgment, a strong claim” [17]. As to GI, the Judge held there was “clearly a serious issue as to whether [the contact claim] is true but even if it is, Ms Donovan has again ignored the non-dealing covenant” [19]. As to Joseph Roach, the claimant had “put forward substantial evidence in support of its case” supporting an inference of misuse of confidential information. The Judge had “no doubt that there is a serious issue to be tried” [21].

Adequacy of damages. The Judge held that damages would not be an adequate remedy for the claimant because (a) the claimant could suffer serious financial loss; (b) aside from the difficulty in identifying or calculating such loss, it was unlikely that Ms Donovan had sufficient means; and (c) Ms Donovan had not offered an undertaking to the court [22].

Balance of convenience. The Judge noted: “In so far as it is necessary to apply a higher standard in respect of the merits... that higher threshold is clearly met in this case. As I have said, I consider the claimant has a strong case. Looking at the balance of convenience more broadly, the claimant is not seeking to stop Ms Donovan from continuing in her new employment but only to enforce time limited restrictive covenants and to prevent misuse of confidential information. This is a clear case in which the balance of convenience falls in favour of granting the injunction sought” [23].

Reflecting a line of post-American Cyanamid cases including Lansing Linde Ltd v Kerr [1991] ICR 428, the Judge justified the weight she placed on the merits (“a strong claim”) via the observation that “Cases can arise in which...the grant or refusal of an injunction at the interlocutory stage will, in effect, dispose of the action finally... In any event, the grant of an interim injunction will give the claimant at least a substantial part of the remedy it seeks. In such a case, it is appropriate for the court in assessing the balance of convenience to go beyond merely considering whether there is a serious issue to be tried and give some consideration to the relative merits of the claim and defence.” Since the non-solicitation and non-dealing clauses had effect for six months from Ms Donovan’s termination date, it was possible this was such a case [10].