Ward Evans Financial Services Ltd v Fox & Anor

Permission to appeal should be granted where the proposed grounds have a real prospect of success. An arguable issue concerning the construction and application of an employment covenant may satisfy that threshold even though the alleged breach has not been finally determined. The issue may arise where an employee, before termination, tells a customer that he is leaving and that his new company can undertake the customer’s work, despite the absence of positive solicitation. An eight-day delay may be excused where it is satisfactorily explained, including by the need to obtain advice and instructions, particularly where the proposed appeal has merit.

Ward Evans Financial Services Ltd v Fox & Anor concerned claims by an employer against two former employees for breach of contract, misuse of confidential information and breach of express covenants in a Trust and Confidence Agreement. His Honour Judge Altman, sitting in the Queen’s Bench Division, dismissed the claims in a reserved judgment delivered on 30 August 2000.

Mantell LJ refused permission on paper on 11 December 2000 because the application was eight days out of time and the proposed grounds had no realistic prospect of success. The employer renewed its applications orally. The central issues were whether the trial judge had properly construed the covenant against inducing customers and whether the delay should be extended.

The Court of Appeal, giving judgment through Lord Justice Mummery with Lord Justice Rix agreeing, allowed the renewed applications for permission to appeal and for an extension of time. The application to amend the applicant’s skeleton argument was also allowed.

1. The proposed challenge to the construction of clause 4.3 of the Trust and Confidence Agreement had a real prospect of success. The trial judge had construed “induce” as requiring a degree of soliciting and an intention to say or do something designed to lead the customer to transfer its business. It was reasonably arguable that the covenant could be breached where, while still employed, an employee answered customer questions by stating that he was leaving and that his new company could undertake the customer’s work, even without positive persuasion.
2. The issue was not confined to the meaning of “induce”. There was an arguable question whether the employee had used information and opportunity obtained through his employment to serve his own company rather than his employer. The construction and application of clause 3.3, including sub-clauses 3.32 and 3.33 concerning an employee’s material interest in another company, also required consideration.
3. The trial judge’s alternative conclusion that any inducement had not involved disclosure or abuse of confidential business information was arguably difficult to reconcile with his earlier finding that confidential information gathered during employment had been used in undertaking the customer’s work.
4. The eight-day delay should not prevent the appeal proceeding. The solicitor’s explanation was satisfactory: the judgment had to be considered with counsel and instructions obtained, and judgment had been delivered during a holiday period. The time for appealing was therefore extended.

1. Court of Appeal (Civil Division) — On 24 January 2001, the renewed applications for permission to appeal and for an extension of time were allowed in [2001] EWCA Civ 48. The skeleton argument was also permitted to be amended.
2. Queen’s Bench Division — His Honour Judge Altman dismissed the employer’s claims in a reserved judgment delivered on 30 August 2000.
3. Permission application on paper — Mantell LJ refused permission on 11 December 2000 because the application was eight days late and the grounds were considered to have no realistic prospect of success.