Wincanton Limited v Cranny & Anor

Restrictive employment covenants must be framed by reference to the legitimate protection required from the particular employee. A standard-form restraint drafted to cover the widest possible range of situations cannot be read down to make it enforceable where it lacks that focus. A non-solicitation covenant may nevertheless be reasonable where its wording contains cumulative limits tied to the employee’s own activities and dealings. Interlocutory relief also depends on the balance of convenience. Where the restrained period is substantially spent, the claimant delayed in pursuing the appeal, and loss can be quantified in damages, injunctive relief should ordinarily be refused.

Wincanton appealed against an order of Mr Wolton QC, sitting as a deputy High Court judge, dated 6 December 1999. The judge refused interlocutory injunctions intended to enforce restrictive covenants in Mr Cranny’s contract of employment, holding the relevant restraints too wide.

Wincanton challenged that conclusion concerning non-competition and non-solicitation covenants. The respondents also raised issues concerning the existence and consideration of the covenants and the effect of any wrongful dismissal. The central issues were whether the covenants were enforceable and whether interlocutory relief remained appropriate when the appeal was heard.

1. Disposition. The appeal was dismissed. By the hearing, only three months of the 12-month restraint remained. The balance of convenience lay decisively with the respondents, and any loss was capable of assessment in damages.
2. Clause 15. The non-competition covenant was plainly too wide. It purported to prevent engagement in any capacity in any business competing with any business carried on by Wincanton or its associated companies. The court held that the approach in GW Plowman v Ash, Littlewoods Organisation Ltd v Harris and Business Seating (Renovations) Ltd v Broad, allowing a covenant to be read down, could not apply to a standard-form clause deliberately drafted for the widest possible range of situations. JA Mont (UK) Ltd v Mills was fatal to enforcement of a clause drawn in that way.
3. Clause 16(i). The non-solicitation covenant was intrinsically self-limiting. It applied only where the solicitation concerned services or goods provided by Wincanton, involved services or goods with which Mr Cranny had been engaged during his final 12 months, concerned a person who had been a customer or regular client within the specified period, and involved a person with whom he had dealt. The different periods of 12 months and two years were not inconsistent because they served different purposes.
4. Clause 16(ii). The court considered the enforceability of the separate dealing restriction less clear and left it for determination, if necessary, at trial.
5. Interlocutory relief. The proper course had been to seek a speedy trial. An application to restrain further solicitation could possibly have been justified when the first-instance decision was made, but delay in pursuing the appeal meant that the practical value of an injunction had disappeared. The respondents were therefore permitted to continue trading, subject to any later claim for damages. Lord Justice Sedley agreed with the result and with the views expressed on the covenants.

• Court of Appeal (Civil Division): appeal from the order of Mr Wolton QC, sitting as a deputy High Court judge, dated 6 December 1999, dismissed. The costs order below remained undisturbed, and Wincanton was ordered to pay half the respondents’ appeal costs.