Uzor Holding Limited v Tommy Fordham & Anor

On an application for an interim injunction enforcing post-termination restraints, the court should assess the merits only to the extent necessary to identify a serious issue and to inform the balance of convenience. A restraint is enforceable only where it protects an objectively identified legitimate business interest and goes no further than reasonably necessary. Confidential information, trade connections and workforce stability may constitute legitimate interests. A non-compete clause may be justified where narrower covenants would be difficult to police, but that justification remains fact-sensitive. Even where enforceability and breach appear likely, an injunction may be refused if it creates a materially greater risk of irremediable harm. More targeted non-solicitation, non-dealing and employee-poaching injunctions may nevertheless be granted.

Uzor Holding Limited, a 50% shareholder of Mallet Footwear Limited, brought a derivative claim against Tommy Fordham, the other 50% shareholder, seeking relief for alleged breaches of post-termination restrictions in Mr Fordham’s service agreement.

Mr Fordham had resigned from Mallet Footwear and launched CTRNE, a luxury trainer business. He was also associated with Condition, a clothing brand. Uzor applied for an interim injunction restraining alleged competition, solicitation, dealing with customers and sales agents, and poaching employees. Permission for the derivative claim was granted in stages before the application was heard.

The central issues were whether the restrictions were enforceable, whether CTRNE and Condition competed with Mallet Footwear, whether breaches had occurred or were threatened, and where the balance of convenience lay pending trial.

1. Interim injunction principles. Applying American Cyanamid Co v Ethicon Limited, the court first considered whether there was a serious issue to be tried, then the adequacy of damages and, ultimately, the course carrying the lower risk of irremediable injustice. Because the restrictions would expire before any likely trial, some preliminary assessment of the merits was appropriate, but not a final determination of difficult facts or law.
2. Enforceability. The restrictions had to be construed first, followed by identification of legitimate business interests and assessment of whether the restraints were reasonably necessary. Clauses 13.2(a)–(d) were provisionally enforceable. The restriction on employing a former employee under clause 13.2(e) could not be justified. The words “or indirect” and “concerned or interested in” could, if necessary, be severed.
3. Legitimate interests and duration. Confidential information, trade connections and workforce stability were legitimate interests. The court considered that a non-compete covenant could in principle be justified where narrower confidentiality or customer restrictions would be difficult to police. A 12-month period was provisionally reasonable, having regard to product-development lead times and the time needed to rebuild important customer, agent and employee relationships. The fact that the employee was a founder or had negotiated on relatively equal terms did not determine reasonableness.
4. Competition and breach. Competition was assessed broadly and factually. Products need not be interchangeable if they were sufficiently similar or comparable. CTRNE competed with Mallet Footwear, while Condition did not, on the evidence then available. There was a real risk of breaches concerning competition, customers, sales agents and employees.
5. Balance of convenience. Damages were not an adequate answer for either side. An injunction enforcing the non-compete covenant was refused because it risked destroying CTRNE and causing difficult-to-quantify loss, while the likely harm to Mallet Footwear was more limited, particularly given Mr Fordham’s undertaking not to sell through existing retailers before 31 October 2024. Delay and Mallet Footwear’s limited steps to protect its connections were relevant to the discretionary relief, although not to contractual reasonableness.
6. Orders. Injunctions were granted in relation to non-solicitation and non-dealing restrictions concerning customers and sales agents, and in relation to poaching employees. The non-compete injunction was refused. The parties were invited to agree the form of order, and cross-undertakings in damages were to extend to MAHL.