Evening Standard Co Ltd v Henderson

An employee’s unaccepted repudiation of a contract of service leaves the contract in force. On an interlocutory application, the court may restrain an employee from working for a competitor during the unexpired contractual notice period where the breach is clear, the employer’s likely loss cannot be quantified, and the balance of convenience favours relief.

Such an injunction does not improperly compel service or leave the employee without means where the employee remains free to return voluntarily and the employer undertakes to provide salary and all contractual benefits without seeking damages for the employee’s non-service. The restraint must remain within the contractual negative obligation.

The employer appealed from Evans J’s refusal, on 28 October 1986, of an interlocutory injunction. The employee, its production manager, had given two months’ notice despite a contractual requirement for one year’s notice. He intended to join a proposed rival London newspaper.

The employer accepted that the employee’s production expertise was not confidential information. It relied instead on the continuing contract and its express requirement that the employee devote his entire services to the employer’s interests. It offered to pay salary and all contractual benefits until lawful expiry of the notice period, and not to claim damages for the employee’s non-service.

The central issue was whether the balance of convenience justified restraining the employee from working for a rival pending trial.

1. Appeal allowed. Lord Justice Lawton held, with whom Lord Justice Balcombe agreed, that there was no serious issue as to the employee’s liability for present purposes. The suggested repudiatory breaches by the employer were no more than fanciful on the evidence. The material issue was the appropriate interlocutory remedy.

2. An employee’s repudiation does not end a contract of service unless the employer accepts it. The employer was therefore entitled to treat the contract, including its express obligation to devote the employee’s entire services to the employer’s interests, as continuing. It was correspondingly bound to provide the employee’s contractual salary and benefits.

3. The employer would suffer damage if an experienced production manager joined a rival at its launch, and that damage would be almost impossible to quantify. Ordinarily, however, an injunction enforcing a negative covenant in a service contract cannot put the employee to the choice of serving the former employer or starvation or idleness: Warner Brothers Pictures, Incorporated v Nelson (1937) 1 K.B. 209.

4. That objection did not prevent relief here. The employee remained free to return to work, but was not compelled to do so. If he chose not to return, the employer undertook to pay his salary and provide all contractual benefits until the contract lawfully expired, without claiming damages for his non-service. The balance of convenience therefore favoured an injunction preventing employment by a rival during that period.

5. Lord Justice Balcombe distinguished Whitwood Chemical Co. v Hardman (1891) 2 Ch 416, because that contract contained no negative restriction and the injunction sought there was wider. He added, obiter, that the evidence did not show that the employee had no alternative work in another field.

The appeal was allowed with costs. Each side was to bear its own costs before Evans J. Leave to appeal to the House of Lords was refused.

• Court of Appeal — allowed the employer’s appeal and granted interlocutory relief, subject to the employer’s undertakings.
• High Court, Queen’s Bench Division (Evans J) — on 28 October 1986, refused the employer an interlocutory injunction restraining the employee from working for a rival.