Exception Var Ltd & Anor v Goff & Anor

Delay does not automatically disentitle a claimant to interim injunctive relief. The court must exercise its discretion on a principled basis, considering the strength of the claim, the respondent’s reliance on any expectation created by the claimant, and whether the delay caused material prejudice.

Springboard relief may restrain a continuing unfair advantage obtained through serious breaches of contractual or fiduciary duties. It is preventive, not punitive, and must last no longer than the continuing advantage requires. A period spent on gardening leave may be excluded where the defendant was then acting in breach and had not begun to observe the relevant restraints.

The claimants sought interim relief against a former managing director. The proposed second claimant sought to enforce restrictive covenants in an investment agreement. The first claimant sought springboard relief arising from alleged breaches of contractual and fiduciary duties, misuse of confidential information and related wrongdoing.

The application was made shortly before existing restraints expired and after earlier interim orders had created an expectation that the first defendant could begin work for a competitor. The central issues were whether the restraints and springboard claim had sufficient prospects of success, and whether delay and resulting expectation or prejudice justified refusing relief.

1. Interim relief and prospects of success. The court was satisfied that the claimants had more than a serious issue to be tried and had real prospects of establishing both the existence and enforceability of the employment and investment-agreement restraints. The relevant question was whether legitimate business interests required protection and whether the restraints went no wider than reasonably necessary, applying the principles discussed in Beckett Investment Management Group Ltd v Hall [2007] EWCA Civ 613 and Dawnay, Day & Co Ltd v D’Alphen [1998] ICR 1068.
2. Springboard relief. Following UBS Wealth Management UK Ltd v Vestra Wealth LLP [2008] EWHC 1974 (QB), the jurisdiction was not confined to misuse of confidential information. It could prevent future or further economic loss resulting from an unfair start obtained through serious breaches. The relief had to address a continuing advantage and could not punish past breaches or improve the claimant’s position beyond what it would have been without the wrongdoing.
3. Duration. A principled application of the springboard doctrine justified counting the six-month period from the date when the defendant began to observe the restraints, rather than from the start of gardening leave. Relief was therefore justified until 23 October 2010. The investment-agreement restraint was limited to 29 September 2010, six months after receipt of the share consideration.
4. Delay. The claimants’ agreement to restraints expiring on 18 July created an expectation that the first defendant could then work for the competitor. Nevertheless, the evidence did not show that the delay caused sufficient detrimental reliance or prejudice to defeat the claimants’ prima facie rights. The application was granted on the stated conditions.
5. The proposed second claimant was required to be joined and amended Particulars of Claim served by the end of July.