Le Puy Ltd v Potter & Anor

For an interim injunction enforcing post-termination employment restraints, the Cyanamid threshold remains applicable where a speedy trial will occur before the restraints substantially expire. The court must determine whether there is a serious question to be tried, without resolving disputed affidavit evidence or difficult legal issues finally. The merits may nevertheless inform the balance of convenience where the injunction would enforce a fundamentally disputed claim for much of the restraint period. Customer connections and sufficiently valuable customer information may constitute proprietary interests capable of protection. Damages may be inadequate where loss, causation and reputational harm are difficult to assess. Disclosure orders may assist enforcement, but must not turn ordinary accusatorial litigation into an inquisitorial investigation.

Le Puy Limited, trading as Harpur Recruitment, sought continuation of an injunction against Christopher Potter and Abstract Recruitment Limited. The injunction was intended to enforce restrictive covenants and confidentiality obligations said to arise under an employment contract dated 16 October 2013.

Mr Potter denied signing or agreeing to the alleged contract. He also disputed the enforceability of the covenants and denied post-termination breaches. The application raised the appropriate interim-injunction test, the arguability and enforceability of the covenants, the adequacy of damages, the balance of convenience, and the scope of ancillary information orders.

1. Interim injunction test. The American Cyanamid Co v Ethicon Ltd approach remained applicable because a speedy trial could take place before the 12-month covenants substantially expired and the interim decision would not dispose of the action. There was a serious question to be tried on whether Mr Potter was bound by the alleged contract, whether the restraints were enforceable, and whether the confidentiality provisions protected information capable of legal protection.
2. The court should not resolve conflicts in affidavit evidence or difficult questions of law at the interim stage. The evidence established a sufficiently good arguable case, but the disputed matters were for trial. The merits could nevertheless be considered in the balance of convenience because any injunction would enforce a fundamentally contested claim for approximately half the restraint period.
3. The evidence showed an arguable proprietary interest in Harpur’s customer connections. The restrictions were arguably limited by the customers and services with which Harpur had dealt during the relevant period. The expression “deal with” was not, by itself, too wide where the prohibited class of customers was properly limited.
4. Customer and worker contact information could arguably amount to protectable confidential information. Applying the approach explained in Lansing Linde v Kerr, the information was used in the business, its dissemination was limited, and disclosure could cause significant competitive harm.
5. Damages were not an adequate remedy. Loss, causation, the period of attributable loss and reputational harm could be difficult to establish. The balance of convenience favoured protection of Harpur’s established customer relationships pending a speedy trial, despite the effect on Mr Potter and Abstract.
6. The injunction was granted, with directions for a speedy trial on liability issues. The undertaking in damages was to extend to losses suffered by Mr Potter, Abstract and others, but no personal guarantee from Mr Day was required. Information and delivery-up orders were granted where justified to give effect to the injunction or undo identified harm; wider inquisitorial orders were refused.