Jump Trading International Limited v Damien Couture & Anor

At the interim stage, the court need only determine whether there is a serious issue to be tried. The enforceability of a restrictive covenant should not ordinarily be finally determined on limited evidence at an interlocutory hearing.

Where an employer delays unreasonably after learning of an intended breach, and that delay causes prejudice or permits an expedited trial to be arranged, the delay may make it unjust to grant an interim injunction. That may be sufficient to decide the balance of convenience, even where the covenant raises serious questions of construction and enforceability.

The court may nevertheless order a speedy trial where the covenant remains operative and early determination would resolve the dispute before the covenant becomes redundant.

The claimant sought an interim prohibitory injunction restraining the first defendant, a former quantitative researcher, from commencing employment with the second defendant, a hedge fund, until the expiry of a contractual non-compete period. The claimant also sought an expedited trial.

The covenant permitted the claimant to elect a non-compete period of up to twelve months following the defendant’s notice and garden leave. The defendants argued that the covenant was uncertain, excessive in duration and too wide in scope. The claimant had known for many months that the defendant intended to join the second defendant but did not issue proceedings until shortly before the intended start date.

The issues were whether there was a serious issue to be tried, whether damages were adequate, and where the balance of convenience lay, together with whether the claim against the second defendant disclosed a serious issue and whether the trial should be expedited.

1. Interim injunction refused. Applying the principles in American Cyanamid and the usual approach to restrictive covenants, there were serious issues to be tried concerning the covenant’s uncertainty, duration and width. The court could not properly determine those issues finally at the interlocutory stage.

2. The claimant had legitimate interests capable in principle of supporting a non-compete covenant, including confidential information, intellectual property, trade secrets, goodwill and business connections. It was arguable that a non-compete restriction could protect confidential information where policing its use would be difficult.

3. Damages were not an adequate remedy for either the claimant or the first defendant. The defendant would suffer further loss of professional skills and the second defendant had taken steps to establish a team. Those considerations did not, however, outweigh the effect of the claimant’s delay.

4. The claimant knew by July 2022 that the first defendant intended to join the second defendant. It received a detailed letter in November 2022 confirming the intended start date and the defendant’s position that the covenant was unenforceable, but took no action until March 2023. The delay was unreasonable and unexplained. Earlier proceedings could probably have enabled an expedited trial, or arbitration under the contract, before the intended start date.

5. The delay, the resulting prejudice and the availability of an early trial made it unjust to grant interim relief. Delay alone was sufficient under the balance of convenience and the court’s general discretion. The apparent length and width of the covenant provided an additional, if necessary, factor against relief.

6. As against the second defendant, legal advice that the covenant was probably unenforceable meant that there was no serious issue to be tried on inducement, applying Allen v Dodd.

7. A speedy trial was nevertheless ordered. The covenant remained operative until March 2024, an early trial was available, and determining enforceability promptly would prevent the issue becoming effectively redundant.