Praxis Capital Ltd v Burgess

An employer’s offensive or forthright management style does not necessarily amount to a repudiatory breach of the implied term of trust and confidence. The question is objective and depends on the gravity and context of the conduct, including any cumulative effect.

Post-termination restraints are enforceable only so far as reasonably necessary to protect legitimate business interests. A broad non-compete covenant is unreasonable where a narrower restriction would adequately protect the employer. Injunctive relief should not be granted where there is no real or arguable risk of breach. Valuable confidential information is not necessarily a trade secret or information akin to a trade secret.

Praxis Capital Limited sought expedited injunctive relief against Jack Burgess, a former investment manager, alleging breaches of his employment contract, duties of confidence and post-termination restraints. Mr Burgess contended that he had been constructively dismissed following his treatment by the claimant’s chief executive and therefore was not bound by the restraints.

The court considered whether the conduct amounted to a repudiatory breach, whether the restraints protected legitimate business interests, and whether there was any real or arguable risk of misuse or disclosure of confidential information.

1. The claim for injunctive relief was refused. The defendant remained bound by the contractual post-termination restraints because he had not validly accepted any repudiatory breach.

2. The implied term of trust and confidence is tested objectively. A series of acts may cumulatively constitute a repudiatory breach, and a final straw may be relatively insignificant, but it must not be utterly trivial. The chief executive’s offensive and forthright language, considered in its context, did not reach the necessary level of seriousness.

3. The failure to give a full month’s written notice did not of itself amount to repudiation. Nor did the claimant’s response to the defendant’s assertion that he had been constructively dismissed. The court noted that, had repudiation been established, it would have followed the House of Lords’ decision in General Billposting Company Limited v Atkinson [1909] AC 118, while recording reservations about the reasoning expressed in Rock Refrigeration v Jones [1997] ICR 938.

4. The restrictions concerning clients, personnel and representations were refused because there was no evidence of any threatened or likely breach. The non-compete covenant was unreasonable because it prevented the defendant from working in the relevant industry and was wider than necessary. A narrower restriction directed to exploiting particular investment opportunities could have protected the claimant’s legitimate interest.

5. The deal sheets and property pro formas were valuable confidential information, but were not trade secrets or information akin to trade secrets. There was no real or arguable risk of disclosure or use. No further relief was justified, subject only to the defendant’s undertaking to deliver up any USB memory stick if it came into his possession, after removing privileged or personal material.