Harcus Sinclair LLP & Anor v Your Lawyers Ltd

A solicitor’s undertaking given by a recognised body is not enforceable through the Court’s supervisory jurisdiction against the body where that jurisdiction does not extend to it, nor against a solicitor who signed expressly for the body. An undertaking may nevertheless qualify as a solicitor’s undertaking where it is given as part of a solicitorial service, even without a client transaction. A contractual restriction preventing a firm from acting for rival groups in contemplated group litigation may be enforceable and may be reasonable in restraint-of-trade terms. A term may be implied to prevent an associated corporate vehicle from circumventing the restriction. A clear negative covenant will ordinarily be enforced by injunction.

The First Claimant entered into a non-disclosure agreement with the Defendant during discussions concerning collaboration in proposed Volkswagen emissions group litigation. The agreement restricted the First Claimant from accepting instructions for or acting for another claimant group without the Defendant’s express permission. The First Claimant later formed a separate group and transferred conduct of the litigation to the Second Claimant, its corporate vehicle, while continuing to provide personnel and resources.

The Claimants sought declarations that the restriction was not subject to the Court’s supervisory jurisdiction. The Defendant counterclaimed for breach of contract, breach of confidence, damages and injunctive relief. The central issues were the construction and enforceability of the restriction, its application to the Second Claimant, and the appropriate relief.

1. Solicitor’s undertaking. Sentence 2 was given as part of a solicitorial service and therefore took effect as a solicitor’s undertaking. It was not, however, enforceable under the supervisory jurisdiction against the First Claimant as an LLP. Mr Parker had signed expressly on behalf of the First Claimant, so the jurisdiction was not available against him personally. The Second Claimant was not a party to the NDA.
2. Construction. Sentence 2 prohibited the First Claimant from accepting instructions from or acting for any rival group in the contemplated emissions group litigation, without the Defendant’s express permission. It was not confined to the January Action, nor did it expire merely because the parties later discussed collaboration.
3. Implied term. Applying the principles governing implied terms in commercial contracts, the NDA contained an implied term that the Second Claimant would not do anything which, if done by the First Claimant, would breach the NDA. Otherwise the First Claimant could defeat the agreement by using its corporate vehicle.
4. Restraint of trade. The restriction was in restraint of trade but was reasonable. It protected the Defendant’s legitimate interest in preventing a rival group being formed by a firm which had obtained access to and worked on the proposed claim. It was commensurate with the benefits secured to the First Claimant and was not contrary to the public interest.
5. Breach and confidence. The First Claimant breached Sentence 2 from 29 September 2016 and continued to breach the NDA after the Second Claimant took over conduct. The Defendant had given no express or implied permission, and had not lost its rights by acquiescence, waiver or estoppel. The First Claimant breached confidence by providing confidential material to S and G and to the Second Claimant, but neither Claimant misused the material as a springboard and Sentence 1 was not breached.
6. Relief. Sentence 2 was a negative stipulation. No special circumstances justified refusing an injunction. The First Claimant was required to cease acting for the HS Group, procure that the Second Claimant cease acting, and comply with the restrictions for six years. Damages and any financial relief for confidence breaches were left for a quantum hearing.

First instance decision following an expedited trial in the High Court (Chancery Division). The judgment records no appeal.