Egon Zehnder Ltd v Tillman

In an interim application where the restraint period would substantially expire before trial, the court should assess the parties’ prospects of success, while controlling the extent of that assessment. An employee covenant is valid only if, construed at the contract date, it protects a legitimate interest and goes no further than reasonably necessary. The court may consider contemplated promotion and the employee’s anticipated involvement, but cannot assume a future status that was insufficiently foreseeable. A non-compete may be justified where non-solicitation, non-dealing and confidentiality obligations leave material policing or misuse risks. Construction should favour a lawful and commercially coherent meaning where the wording is ambiguous. A covenant’s territorial reach may be limited by the businesses with which the employee was materially concerned. A six-month restraint was reasonable on the evidence.

The claimant sought an injunction enforcing a six-month post-termination non-compete against a former senior employee who intended to join a competing executive-search business. The defendant accepted the non-solicitation, non-dealing and confidentiality obligations but challenged the non-compete as an unreasonable restraint of trade.

The application was heard urgently because the restraint period would largely expire before a conventional trial. The principal issues were the proper construction of the covenant, including its territorial scope and whether it prohibited shareholdings, and whether the restraint was reasonably necessary to protect legitimate interests.

1. The court adopted the merits-based approach applicable where the restraint period would substantially expire before trial. It was necessary to assess the claimant’s prospects of success, while recognising that disputed facts could not finally be resolved on the interim evidence.

2. The covenant had to be construed first, followed by consideration of legitimate protectable interests and whether the restraint was no wider than reasonably necessary. Reasonableness was judged at the date of the contract, viewed in the light of what the parties contemplated, rather than by the employee’s later status alone.

3. The claimant had legitimate interests in client and candidate connections and confidential information. The defendant’s anticipated progression and exceptional experience were relevant because they explained the level of access and involvement contemplated from the outset. They did not justify assuming that partnership itself was certain.

4. The words restricting involvement in businesses with which the defendant had been materially concerned imposed a sufficient limitation on the covenant’s potentially worldwide operation. The expression “interested in any business” was ambiguous. Read with the separate provision permitting limited shareholdings during employment, it did not prohibit passive shareholdings after termination.

5. A non-compete was an appropriate form of protection. The other covenants did not adequately address subtle or indirect misuse of information and client connections when an employee joined a competitor. Six months was reasonable, principally to allow client relationships to be replaced and confidentiality to fade.

6. The covenant was valid and enforceable. The defendant’s intended employment with the competitor fell within it because she had been involved in competing business during the relevant period. An injunction was granted, subject to the claimant’s concession permitting a restricted training or coaching role outside financial services.