Thurstan Hoskin & Partners v Jewill Hill & Bennett (a firm) & Ors

A non-solicitation covenant may legitimately extend beyond clients with whom an employee personally dealt, provided it protects a legitimate proprietary interest and goes no further than reasonably necessary. Enforceability is fact-sensitive. The surrounding circumstances are relevant, including whether the covenant was reaffirmed in a represented settlement of litigation, whether consideration was given, the nature and size of the business, the covenantor’s access to the client base, its duration and its practical scope. A covenant protecting the client connection of a small specialist firm may therefore be enforceable even though it covers clients outside the covenantor’s personal caseload.

The claimant solicitor sued his former salaried partner and an assistant solicitor for soliciting clients after their departure. The relevant covenant prohibited canvassing, soliciting or endeavouring to take away clients of the practice who had been clients within the preceding year, for six months after termination.

The salaried partner had entered into a represented compromise of earlier proceedings. That agreement released him from a separate restraint but expressly preserved the client-solicitation covenant, subject to four named exceptions. The county court found the covenant enforceable and found solicitation. Permission to appeal was limited to the enforceability issue.

1. Appeal dismissed. The finding of solicitation was not open to challenge on this appeal. The issue was whether the client-solicitation covenant was an unreasonable restraint of trade.
2. The enforceability question remained whether, in all the circumstances, the covenant protected a legitimate interest and went no further than was reasonably necessary. The covenant’s inclusion in the later settlement did not necessarily alter its broad nature, but it radically altered the circumstances in which it operated. The settlement ended the partnership relationship, was made in litigation with legal representation, involved valuable consideration and modified the restriction in the appellant’s favour by exempting four clients.
3. The covenant protected the claimant’s client connection and associated goodwill. Its six-month duration was not excessive. In a small solicitor’s practice serving a rural and relatively close community, clients of one department might use other departments, and a salaried partner with unrestricted access to the client lists could affect the wider client base. The restriction was therefore capable of extending beyond clients with whom he had personally dealt.
4. The county judge applied no wrong principle. His conclusion was akin to a finding of fact and was properly available on the special facts. The covenant was comparable, in context, to the approach in Plowman v Ash [1964] 1 WLR 568.
5. Jonathan Parker LJ agreed with the lead reasoning. He additionally considered, as an alternative ground, that the appellant could not challenge the enforceability of an obligation expressly preserved by the compromise, but that point was unnecessary to the decision. The appeal was dismissed, costs were awarded to the respondents, the stay of the interim costs order was lifted and permission to appeal to the House of Lords was refused.

• Court of Appeal (Civil Division) [2002] EWCA Civ 249: appeal from the county court dismissed; costs awarded to the respondents; permission to appeal to the House of Lords refused.
• Truro County Court: His Honour Judge McKintosh, 24 January 2001, held the covenant enforceable and found solicitation in breach of it.