Employment Cases Update

Towry EJ Ltd v Bennett & Ors [2012] EWHC 224 (QB)

Date published: 18/02/2012

Judgment arising from litigation where the claimant was seeking damages arising from, among other things, alleged breaches of restrictive covenants, use of confidential information, solicitation and inducement. The defendants counter-alleged that the claimant had made a repudiatory breach of their employment contracts. The claim was dismissed as the judge found that while there had been no repudiatory breach, the claimant had not proved any allegations of wrongful conduct.

The claimant was an investment services firm and had acquired the business employing the defendants, who were financial advisers. Following the acquisition the defendant advisers left to join the co-defendant company, primarily as the new company better suited their desired work culture which emphasised the local, hands-on advisory aspect of the role. A substantial number of clients followed their advisers to the new company and so the claimant initiated this litigation.

In this exhaustive judgment (900+ paragraphs) Cox J reviews among other things, the circumstances of the acquisition, the differing business practices of the businesses involved and the recruitment processes used by the co-defendant company when employing the defendant advisers. She also analyses the current law and authorities underpinning restrictive covenants, repudiatory breach, solicitation, inducement and many other issues. She concludes, broadly, that the adviser defendants had not solicited their existing clients and the co-defendant new employer, had demonstrated

"a high degree of awareness of the need for caution and the taking of a number of steps, after obtaining legal advice, designed to ensure that each Defendant recognised the importance of compliance with the restrictive covenants and that each did in fact comply with them done everything they could to ensure that the adviser defendants did not breach their restrictive covenants."

The full text of the judgment can downloaded using the link below