3173 Bidco Limited & Anor v Christopher James Roberts & Anor

A post-termination restraint is enforceable only if objectively reasonable in the parties’ interests and not contrary to the public interest. Where a holding company protects the business of a subsidiary managed by the employee, the covenant must protect that subsidiary’s legitimate business, not unrelated businesses elsewhere in the group. The relevant business is identified by its essential commercial nature; the provider’s particular delivery model is ordinarily incidental. Narrow non-solicitation and non-competition covenants tied to the employee’s connections and a 12-month period were reasonable. Wider covenants covering customers of unrelated group businesses, or lasting 19 months, were invalid. They could not be severed where the proposed excision left the overbroad business definition intact. Contractual payment conditions may exclude restitution where no repayment machinery is provided, and a springboard injunction is unavailable once any unfair advantage has become stale.

The first claimant engaged Mr Roberts as managing director of Dalriada Trustees under a Service Agreement. On his departure, a Settlement Agreement modified and supplemented post-termination restrictions in return for payments. Bidco and Dalriada alleged breaches through LinkedIn posts, discussions with Beaverbrooks and an appointment with Anglian Water. Bidco also claimed damages and restitution, and sued CJR Pensions for procuring breaches. Injunctions and an account were sought. Mr Roberts counterclaimed for unpaid termination and bonus instalments. The trial concerned the validity and scope of the restraints, the alleged breaches, remedies and the conditional payment scheme.

Disposition. Bidco obtained judgment against Mr Roberts for nominal damages of £100. The remaining claims, including the claims for injunctions and damages against CJR Pensions, failed. Mr Roberts’s counterclaim was dismissed.

1. The court held that a restraint of trade was enforceable only if reasonable in the interests of the parties and not contrary to the public interest. Bidco bore the initial burden of proving reasonableness. Where the employer contracted to protect the business of an associated company managed by the employee, the restriction had to protect that company’s legitimate business rather than unrelated businesses of third parties.
2. Dalriada’s relevant business was the provision of services concerning the governance and management of trusts, particularly pension scheme trusts and trustee appointments. Its team-based method of delivery was incidental. The 12-month non-solicitation and non-competition covenants in the Service Agreement were reasonable, although the competition restriction was at the outer limits of validity.
3. The Settlement Agreement’s non-solicitation covenants were too wide because they extended to customers of other group companies carrying on distinct businesses. Their 19-month duration was also excessive. The proposed blue-pencil severance could not cure the defect because the remaining definition still included unrelated trading companies. The 19-month non-competition covenant was likewise an unlawful restraint. The court accepted that the parties might assess duration more accurately near termination, as recognised in Stenhouse v Phillips [1974] AC 391, but applied an objective evidence-based assessment.
4. The LinkedIn posts were preliminary acts of solicitation and technically breached the Service Agreement. Discussions with Beaverbrooks also amounted to solicitation, despite the possibility that Beaverbrooks had initiated contact. The Anglian appointment was not a solicitation because Mr Roberts had no relevant prior connection, but it breached the competition restriction. An implicit and vague request for consent, followed by silence, did not establish consent or a reasonable basis for estoppel.
5. Contractual breaches were actionable per se, but only nominal damages were proved. The procurement claim failed because damage caused by the breaches had not been established. In a conditional alternative observation, the court treated the principle stated in Barton v Morris [2023] UKSC 269 at [96] as supporting the conclusion that contractual payment machinery without a repayment provision left no room for restitution.
6. The Settlement Agreement restraints could not support an injunction. The Service Agreement restrictions had expired, and any unfair advantage from Mr Roberts’s knowledge had become stale, so no springboard injunction was justified. Further termination payments were conditional on compliance with the contractual restrictions and were not due after the established breaches. The claim for the future bonus instalment was premature.