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The High Court refused to grant a springboard injunction because the claimant had failed to demonstrate that the defendants were continuing to benefit from a headstart.

Facts

C was an educational recruitment agency which specialised in placing teachers in schools [2]. D1, D2 and D3 were all employees of C [3]. Their employment contracts contained express confidentiality clauses [6] but no post-termination restrictive covenants [7]. On 13 December 2017 they gave notice to terminate their employment [3] but they had been planning to set up D4, a competing business, since May 2017.

C discovered D1 and D2 had taken steps to copy and use their confidential information and commenced proceedings [5]. They applied for an injunction. On 12 January 2018, Picken J made an interim order including for springboard relief [11]-[12]. The matter came before Nicholas Vineall QC sitting as a Deputy High Court Judge on 26 February 2018. He had to decide, inter alia, whether and in what terms to grant a continued springboard injunction [20].

Judgment

The Judge referred to the typical purpose of a springboard injunction as being to deprive a defendant of any head start they have obtained by improper use of information or other property belonging to the claimant and referred to the well-known principles summarised by Haddon-Cave J in QBE Management Services (UK) Ltd v Dymoke [2012] EWHC 80 (QB) [21].

He noted that insofar as C was seeking a springboard injunction, they were seeking to restrain acts that would otherwise be lawful. He said the injunction was being used to deprive the Ds of the benefit of having, earlier, acted unlawfully, rather than to restrain an act which was itself unlawful. He recognised that if such an application is decided at trial, the judge will decide factual issues on the balance of probabilities [25].

The Judge described the position as more difficult if a springboard injunction is sought on an interim application because, especially if the injunction will expire before the case can be tried, the order is in its effect a final order, despite being given at an interim hearing. Thus, if it turns out at trial to have been wrongly made that might give rise to serious difficulties in assessing the damage it has caused to the Ds by wrongly delaying the start of a legitimate business [25]. He agreed with Silber J in CEF Holdings v Mundey [2012] EWHC 1524 (QB) that the American Cyanamid approach was inappropriate and that instead he would try to assess the likely outcome on factual issues on the balance of probabilities and, in the light of that assessment, would consider the balance of convenience and any other matters that go to the exercise of discretion [26]-[29].

C sought a 9 to 12-month restraint on the basis that it would typically take 9 to 12 months for a start-up business like D4 to achieve its first placement. The Ds submitted that (i) no head start at all had been demonstrated, (ii) even if a head start had been achieved it was impossible to say what period of injunction was appropriate, and (iii) in any event any head start was less than the 6-week period that had elapsed since the order of Picken J [50]. 

The Judge considered that Ds had made a deliberate attempt, sustained from at least 17 September 2017, to use stolen information for the purpose of D4’s business. But he held that those breaches were stopped on 12 January 2018, and their success, in terms of actually generating business, appeared to have been modest [53]. The Judge noted that C’s submission that a new business like D4 would be unlikely to place any teacher for 9 to 12 months was based solely on some evidence from C’s Managing Director that he believed that it would take this long to legitimately start such a business and reach a point at which it was successfully able to place teacher candidates with schools. This evidence was expressed to be based on the MD’s experience of working in the sector for many years and running C since it was established [58].

The Judge held that he did “not derive any assistance” from this evidence and that he could “not afford it any weight” for the following reasons:

(1)   It was opinion evidence from a source which was clearly not independent.

(2)   Little detail was given of the experience on which it was based. No examples or factual material was cited in support. It was a bare expression of opinion.

(3)   Any assessment of time lag before a teacher is placed must depend on the expertise and knowledge of those whom the business employs [59]-[60].

The Judge also held that, even if it were true that, but for the breaches, it would have taken D4 9 months to secure any business, it would simply not follow that the appropriate springboard period was 9 months. The Judge explained that now that D4 was restrained from abusing confidential information, if it took D4 5 months until it booked its first teacher, the appropriate period of springboard restraint would be 4 months: the 9 months that it would have taken less the 5 months that it would in fact take because of the unlawfully achieved head start [61].

The Judge held that an unfair advantage, in terms of timing, was obtained by the Ds but it was modest. He assessed it as being in the region of 6 weeks [65]. He held that any head start that the Ds had illegitimately obtained had now gone [66] and declined to make any continuing order for springboard relief [68].

Conclusion

This case is a useful reminder of the need for the evidence in support of an application for springboard relief to be as specific as possible. Independent evidence will probably be given more weight. Further, it is best to avoid simply asserting a period of the estimated head start claimed by C without justification. In particular, opinion evidence is to be avoided and instead the evidence should be based on examples and factual material.

The full judgment can be read here.

Clerks

Staff