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Mr Petter issued proceedings in the High Court seeking a declaration that the 12-month post-termination restrictive covenants in his contract of employment were unenforceable.

He issued an application notice seeking a speedy trial shortly thereafter. Mitting J ordered a speedy trial of the claim and his former employer appealed against that order. The Court of Appeal considered the principles to be applied in exercising the discretion to order a speedy trial, held that the judge had exercised his discretion lawfully and dismissed the employer’s appeal against the speedy trial order.  

Orders for expedited (or “speedy”) trials in employee competition cases are frequently made when there is a dispute as to the enforceability of a restrictive covenant on the basis that the enforceability of the same needs urgent determination by the Court. The former employee (or, in the case of an alleged team move, the former employees) is usually subject to an interim injunction or has given undertakings to abide by the covenants until the determination of their enforceability at trial.  

The longer the former employee has to wait until such trial, the further into the period of the post-termination restrictive covenants he will be and the greater the extent of unfairness and disruption he will face by being kept out of the market in the interim if the covenants are ultimately held to have been unenforceable.  

The covenants in issue in the present case were a 12-month non-compete clause and a 12-month non-solicit employees clause. Mr Petter had told his former employer that he would honour the non-solicit clause though it was unenforceable. He and his former employer disagreed about the enforceability of the non-compete clause and he started work with a competitor called Pure Storage UK Limited (“Pure”) two days after the termination of his employment with EMC Europe Ltd (“EMC Europe”).  

What was unusual about the circumstances of the speedy trial order in this case was that Mr Petter was not subject to any interim injunction.  

EMC Europe contended that cases in which an interim injunction had been obtained to enforce a restrictive covenant fell within the special category apt for expedition and cases in which an interim injunction had not been obtained fell outside the special category and are not.  

Vos LJ held that the correct principles in considering an application for a speedy trial were:  

  1. 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. For that reason, the overriding objective requires that there should be a good
    reason for expedition.  
  2. But the categories of case in which expedition is appropriate are not closed. There may be many and varying situations in which expedition will be held to be just and appropriate, taking into account all aspects of the overriding objective and the
    court’s resources, and the interests of other court users in particular.  
  3. Expedition will only be justified on the basis of real, objectively viewed, urgency. 
  4. The four factors to be considered are:
       a. Whether the applicants have shown good reason for expedition;
       b. Whether expedition would interfere with the good administration of justice;
       c. Whether expedition would cause prejudice to the other party;
       d. Whether there are any other special factors.  

Vos LJ held that

  1. It was relevant that EMC Europe had not sought an injunction against Mr Petter but that was not determinative.
  2. The judge was entitled to place reliance on EMC Europe’s refusal to undertake not to sue Mr Petter and that put Mr Petter at risk of an unquantifiable claim for damage.
  3. EMC Corporation (EMC Europe’s US indirect parent company) had sued Mr Petter in Massachusetts so he was on notice that the group as a whole was not happy with how he had behaved and what he was doing.
  4. The judge was not wrong as a matter of principle to think that a claim for damages could in itself justify a speedy trial. Much depends on the circumstances.
  5. Two large corporations cannot normally ask the court for an expedited hearing merely to determine how much one has to pay the other. But this is an unusual case in that Mr Petter is the claimant and it only now appears that no injunction will be sought even if EMC Europe succeeds at trial in demonstrating enforceability.
  6. Mr Petter wants certainty because he does not wish to risk doing a job for Pure that may result in damages being awarded against him some time in the future.
  7. When an employee faces the might of a large corporation, these circumstances would present an objectively justifiable reason for expedition, albeit not always enough by themselves.
  8. In each case the need for commercial certainty needs to be evaluated in its proper context.
  9. Expedition was objectively justified in this case for the reasons the judge gave.
  10. No prejudice to EMC Europe was made out apart from the lawyers having to work hard, but that is a factor of limited importance where a well-resourced corporation is concerned.
  11. Certainty will benefit EMC Europe too, albeit that it might prefer tactically to hold a sword of Damocles over Mr Petter’s head for a longer period.  

The Court of Appeal has thus made clear that an interim injunction enforcing posttermination restrictive covenants is not a necessary prerequisite for a speedy trial order in a claim for a declaration as to the enforceability of the covenants.

The full judgment can be read here.  

Paul Goulding QC, instructed by Allen & Overy LLP, acted for Mr Petter.  

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