Caretower Ltd v Posner

On an application for an interim injunction, the court applies the American Cyanamid principles. A mandatory injunction requires particular caution because it creates a greater risk of injustice if wrongly granted. The court considers the least risk of injustice, the claimant’s prospects of establishing its right at trial, the adequacy of damages and the balance of convenience.

Express contractual provisions governing confidentiality should generally be considered before implying additional terms. Post-termination restraints are unenforceable unless justified as no wider than reasonably necessary to protect legitimate business interests. Relief should be tailored to the material risk and should not impose unnecessarily wide mandatory obligations.

Caretower sought an interim injunction against its former employee, Jonathan Posner, restraining alleged misuse of confidential customer and information-technology data and breach of post-termination restrictions. Epaton Limited and NG Security (UK) Limited, Posner’s new employer and an associated company, offered undertakings acceptable to Caretower.

The application was based on express contractual confidentiality and restraint provisions. The central issues were whether there was a sufficient prospect that the provisions were enforceable and had been breached, whether damages were inadequate, and what relief would create the least risk of injustice pending trial.

1. Outcome. The application succeeded against Mr Posner. The proposed order was substantially modified. It was unnecessary to rule on the application against Epaton and NG because their undertakings were acceptable.
2. Interim injunction principles. The court applied the guidance in American Cyanamid v Ethicon [1975] AC 316. The relevant matters included whether there was a serious issue to be tried, whether damages were adequate, where the balance of convenience lay and any special factors.
3. Mandatory relief. Because the relief required positive steps, the court applied the approach in Nottingham Building Society v Eurodynamics Systems [1993] FSR 468, as approved by the Court of Appeal at [1995] FSR 605. The overriding consideration was which course carried the least risk of injustice if wrongly decided. A high degree of assurance that the claimant would succeed at trial was relevant, but not essential where the risk of injustice from refusing relief substantially outweighed the risk of granting it.
4. The express contractual provisions adequately addressed confidentiality. It was unnecessary, at this stage, to imply further terms. The judge was highly satisfied that customer contacts and customer IT needs were confidential information and that confidentiality continued after termination.
5. The post-termination restraints would be unenforceable as restraints of trade unless they protected legitimate business interests and went no further than reasonably necessary. Caretower had a real prospect of establishing enforceability and breach through Posner’s contacts with two former customers.
6. Damages were inadequate because compromise of the customer list placed Caretower’s business model at significant risk, and Posner’s means were uncertain. The balance of convenience favoured requiring compliance with clauses 12 and 18.2.1–18.2.6. The order was limited to delivery up of confidential information and relevant devices containing such information or evidence of access, together with certification by witness statement.