Political Lobbying & Media Relations Limited v William Savage

On an interim application to enforce post-termination restrictive covenants, the court applies the American Cyanamid principles, supplemented where the injunction may effectively determine the dispute by an assessment of the likelihood of success at trial.

A covenant in an employment contract is enforceable only so far as reasonably necessary to protect legitimate business interests, assessed at the date of contracting. Customer connection and confidential information may constitute such interests. The court may sever or blue-pencil wording that is wider or uncertain, while enforcing the remaining covenant where appropriate.

Where damages are difficult to quantify, continuing breaches threaten client relationships, and no substantial countervailing factor exists, an injunction may be granted despite the short remaining duration of the covenant.

Political Lobbying & Media Relations Limited applied urgently for an injunction enforcing six-month post-termination restrictive covenants against its former senior employee, William Savage.

The covenants restrained competition and solicitation or dealings with current and prospective clients. Mr Savage accepted that he had established a competing business but argued that the covenants were an unreasonable restraint of trade, that PLMR had delayed, and that too little time remained for injunctive relief to be appropriate.

The central issues were whether there was a serious issue to be tried, whether damages were adequate, where the balance of convenience lay, and whether the covenants were enforceable after construing and, if necessary, severing their wording.

1. Relief granted. The court granted injunctive relief in the terms to be finalised with counsel. The serious-issue threshold was conceded and satisfied.
2. Because a final trial could not realistically take place before the covenants expired, the court applied the usual American Cyanamid test together with the likelihood that PLMR would succeed at trial. That assessment formed part of the balance of convenience and substantially overlapped with the serious issue to be tried.
3. Applying the three-stage approach in TFS Derivatives v Morgan, the court first construed the covenants, then identified legitimate business interests, and finally considered whether the restraints were no wider than reasonably necessary. The protected interests were confidential information and customer connection, including personal knowledge of and influence over clients.
4. The six-month non-competition covenant was clear and reasonable. The words requiring the employee to have been concerned or connected with the relevant business during the preceding three months narrowed the covenant; they did not widen it.
5. The non-solicitation covenant was enforceable after removing by blue pencil the words concerning prospective clients and other persons with whom the employer was in the habit of doing business. Those words were wider and potentially uncertain. The remaining covenant was clear, concise and no wider than reasonably necessary.
6. On the evidence, there were existing breaches concerning Muse, ECF and Frasers, and PLMR would succeed at trial. Damages were inadequate for both sides, particularly because loss of client relationships and future business was difficult to quantify.
7. There was no material delay. The correspondence seeking undertakings, without-prejudice negotiations, and short period before proceedings were commenced did not militate against relief. The fact that approximately one-third of the covenant period remained meant that an injunction would not act in vain.
8. No strong countervailing factor displaced the strong balance of convenience in PLMR’s favour. The residual discretion against granting relief was correspondingly limited.