Visage Ltd & Anor v Mehan & Ors

At the interim stage, restrictive covenants should be enforced where there is a serious issue as to enforceability, damages are inadequate, and the balance of convenience favours temporary protection. The court must not remodel the covenants. It may, however, clarify their scope in the order without extending them.

Springboard relief is available to prevent continuing loss from an unfair competitive advantage obtained through serious breaches of employment obligations. The advantage must still exist and be likely to continue without restraint. Exceptional disclosure orders require focused justification and should not be made routinely where prohibitory injunctions and ordinary disclosure provide adequate protection.

The claimants, companies operating in the fashion industry, sought interim injunctions against former senior employees and family members. They alleged breaches of contract and fiduciary duty, including the creation of a competing business, solicitation of customers and employees, and misuse of confidential information and materials.

The applications concerned enforcement of post-termination restrictive covenants, springboard relief, compelled disclosure about contacts and product samples, and consequential directions pending an expedited trial. The central issues were whether interim protection was justified and whether exceptional disclosure orders were necessary and proportionate.

1. Restrictive covenants. Applying American Cyanamid Co v Ethicon Limited [1975] AC 396, the claimants had shown serious issues to be tried, inadequacy of damages, and a balance of convenience favouring relief. The enforceability of the covenants could not finally be determined interlocutorily. Applying Arthbuthnot Fund Managers Ltd v Rawlings [2003] EWCA Civ 518, they should be treated as having a reasonable prospect of being upheld unless it was plain and obvious that they would fail at trial.
2. The court had no power to remodel the covenants. The respondents’ proposed narrower undertakings did not adequately protect the claimants during the short period to trial. The respondents were therefore held to the covenants as drafted. Reference to the New Family Business merely clarified the order and did not enlarge the contractual restraint.
3. Springboard relief. The principles in UBS Wealth Management (UK) Ltd v Vestra Wealth LLP [2008] IRLR 965 and QBE v Dymoke [2012] IRLR 485 supported relief where an unfair head start from serious contractual breaches continued and would cause future or further loss. The evidence showed a real prospect of success and a continuing unfair advantage. Relief was granted to trial, including against the third respondent because there was evidence that she had facilitated the others’ plans.
4. Disclosure. Exceptional disclosure orders were governed by the considerations identified in AON Limited v JCT Reinsurance Brokers Limited and others [2009] EWHC 3448. The requested orders were insufficiently clear, disproportionate, unnecessary for pleading or policing the injunctions, and liable to generate satellite disputes. Following Dellner Woodville Limited v Blackham [2012] EWHC 1739 (QB), no special circumstances justified them. The disclosure applications were refused.
5. The issue concerning possible bonus counterclaims was left to be addressed after pleading. Costs of the hearing against the first defendant were awarded to her, subject to detailed assessment. Other costs were reserved to the trial judge.

First-instance interim decision. Restrictive covenant and springboard relief granted; exceptional disclosure applications refused. Costs were partly ordered and otherwise reserved.