Create Financial Management LLP v Lee & Anor

An interim springboard injunction may be granted where the claimant shows a serious issue to be tried concerning unlawful conduct and an unfair competitive advantage. The claimant must identify the precise nature and period of the advantage; the remedy restores the competitive position and is not punitive.

Where interim relief may substantially determine the final relief, the court must assess the claimant’s prospects of success. For an interim springboard injunction, the American Cyanamid approach applies where the gap to trial is insignificant. A longer gap may require the more intensive Lansing Linde assessment. The application succeeded because the contractual breaches and alleged advantage had a real prospect of being established, damages were inadequate for the claimant but adequate for the defendants, and the clean-hands objection failed.

Create Financial Management LLP sought an interim springboard injunction restraining Roger Lee and Karen Scott from soliciting named clients pending an expedited trial. The defendants had formerly owned the claimant, had later acted as consultants, and had undertaken contractual obligations concerning client handover, confidentiality and deletion of client contact details.

After the consultancy ended, the defendants established a competing financial-advice business and contacted or remained connected with some claimant clients. The central issues were whether there was a serious issue to be tried as to breach, whether those breaches created an unfair competitive advantage, whether damages were adequate, whether the claimant lacked clean hands, and how the interim injunction principles applied.

1. Applicable principles. A springboard injunction is directed to removing an unfair competitive advantage obtained through unlawful conduct. It restores the competitive position that would have existed without the wrongdoing and must not punish the defendant. The claimant must identify the precise nature and period of the advantage; ephemeral or short-term advantage is insufficient.
2. Interim approach. The court applied the American Cyanamid stages. The claimant had to show a serious issue to be tried, meaning a real prospect of succeeding in obtaining a permanent injunction. It also had to show that damages were inadequate. Damages were adequate for the defendants because their potential loss was quantifiable and covered by the cross-undertaking.
3. In an interim springboard case, the Lansing Linde approach is required where the time gap to trial is significant by reference to the period of final relief sought. Where the gap is insignificant, the ordinary American Cyanamid approach applies. The court held that, on either analysis, stage four was not reached because the claimant had shown a serious issue and damages were adequate for the defendants.
4. The claimant had a real prospect of establishing that the contractual handover obligation required more than merely transferring information, and that the defendants’ failure to conduct sufficiently thorough handovers breached the Consultancy Agreements and Settlement Agreement. It also had a real prospect of establishing breach of the obligation to delete client contact details. The case concerning preparatory acts before the consultancy ended was arguable, but those acts were not said to have caused the relevant competitive advantage and could not properly be used to punish the defendants.
5. The alleged advantage was weakly evidenced, particularly as to its asserted duration of 18 months or several years. Nevertheless, the evidence did not show that the claim had no real prospect of success. There was a real prospect that thorough handover would have created some client inertia and delayed solicitation sufficiently to support final relief.
6. The clean-hands objection failed. The claimant’s conduct concerning the consent order and communications with third parties was, in places, misjudged or insufficiently precise, but it was not dishonest or serious immoral and deliberate misconduct. The interim injunction was therefore granted until conclusion of the speedy trial. Its precise wording and client schedule required further consideration, and the cross-undertaking was extended to Quilter.