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You are here: BAILII >> Databases >> England and Wales High Court (King's Bench Division) Decisions >> Kau Media Group Ltd v Hart [2025] EWHC 553 (KB) (12 March 2025) URL: http://www.bailii.org/ew/cases/EWHC/KB/2025/553.html Cite as: [2025] EWHC 553 (KB) |
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KING'S BENCH DIVISION
Strand, London, WC2A 2LL |
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B e f o r e :
SITTING AS A DEPUTY JUDGE OF THE HIGH COURT
____________________
| KAU MEDIA GROUP LIMITED |
Claimant |
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| - and - |
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| THOMAS HART |
Defendant |
____________________
James Wibberley instructed by Acuity Law for the Defendant
Hearing dates: 3-4 March 2025
____________________
Crown Copyright ©
Jeremy Hyam KC sitting as a Deputy Judge of the High Court:
Background
"The Defendant
1) Must not be engaged or concerned or interested or participate in a business the same as or in competition with the KAU Media Group Ltd, including MiSmile Media Ltd or any associated company to MiSmile Media Ltd for a period of 6 months from 1st January 2025.
2) Deal or provide or supply any Relevant Person as defined in his employment contract, with any Products or Services as defined in his employment contract for a period of 12 months from 1st January 2025."
(a) the Defendant's proposed new employment does not put him in breach of the PTRs in his employment contract because his proposed new employment with MML is not in competition with KMG and will not involve him competing for the work of clients for whom he was responsible whilst he was employed by KMG;
(b) In so far as the covenants are engaged, they are not enforceable because (i) KMG has not demonstrated any legitimate business interest they seek to protect; and (ii) they go wider than is reasonably necessary to protect any legitimate interests that KMG might seek to demonstrate; and
(c) The Court should in any event refuse to grant injunctive relief as there is no risk of loss to the Claimant and an injunction would serve no legitimate purpose.
The issues
"We live in a free market economy, and the employer must be prepared to face competition from others, including its ex-employee. It cannot therefore impose a restrain on its employee simply to stop them competing. ….On the other hand, the employer is entitled to protect its rights. It is entitled to keep what it has, and can legitimately seek to stop its ex-employee from making use of that which may be regarded as belonging to the employer."
(a) First, identifying what the terms of the PTRs mean and whether they are engaged on the facts by the Defendant's proposed employment.
(b) Second, if those terms are engaged on the facts, whether the Claimant has established its pleaded case that it has a legitimate business interest deserving of protection by the Court upholding such restrictions. If not, then the analysis ends there.
(c) Third, if the legitimate business interest is established, whether the covenant is in all the circumstances reasonable, to protect that interest.
(d) If the covenant is not reasonable, and therefore not enforceable, a further question may arise whether the objectional parts of the PTR can be removed or 'severed' without altering or re-writing the clause (for example by deleting words/clauses an issue considered by the Supreme Court most recently in Tillman v. Egon Zehnder Ltd [2019] UKSC 32.)
Procedural history
"As you are well aware, MiSmile is a large dental network owned by Sandeep Kumar and his wife and children, including Rahil Kumar, for whom KMG has been providing marketing services for over six years. On 30 April 2024 a connected entity was established by Rahil Kumar, named MiSmile Media Limited. MiSmile Media provides marketing for dental practices which is in direct competition with the services provided by KMG. Despite this you confirmed in a meeting with your line manager, Ben Heayberd, the COO of KM, Abid Masood, an HR representative and Mr Khokhar on 25 September 2024 that you had signed an employment contract with MiSmile on 18 September 2024 and that your role would start on 1 January 2025. Your formally emailed KMG with notice of your resignation on the same day.
Prior to your resignation, on 31 July 2024, MiSmile served a notice of termination on KMG. The agreement will terminate on 31 December 2024 just one day before your new role is due to begin. In discussion with our client Sandeep Kumar said that MiSmile Media would now be providing MiSmile with its marketing service and it is clear form the later conversations noted above that these services will be led by you"
"You agree that you shall not either on your own account or on behalf of any other person, firm or company directly or indirectly:
"2.1 during the Initial Restricted Period: (a) be engaged or concerned or interested or participate in a business the same as or in competition with the Business or relevant part thereof provided always that this paragraph shall not restrain you from being engaged or concerned in any business concern in so far as your duties or work shall relate solely to services or activities with which you were not concerned to a material extent during the Protected Period…"
2.2 during the Extended Restricted Period: (a) in respect of any Products or Services solicit, facilitate the solicitation of or canvass the custom or business of any Relevant Person; (d) in respect of any Products or Services, deal with or provide or supply any Relevant Person…"
"Initial Restricted Period" means the period of 6 months following the Termination Date.
"Extended Restricted Period" means the period of 12 months following the Termination Date.
"Protected Period" means the period of 12 months immediately preceding the earlier of the Termination Date and the commencement of any Garden Leave Period.
"Business" means the business of the Claimant or any other member of its group as at the date of termination.
"Products or Services" means "… any products or services competitive with those supplied by the Company or any member of the Group at any time during the Protected Period and in the supply of which you were involved or concerned or for which you were responsible at any time during the Protected Period…".
"Relevant Person" means "… any person, firm or company who or which at any time during the Protected Period: 6.9.1 was a client or customer of the Company or any member of the Group; 6.9.2 received Products or Services from the Company or any member of the Group; 6.9.3 introduced clients or customers to the Company or any member of the Group; or 6.9.4 with whom or which the Company or any member of the Group was in negotiations during the Protected Period with a view to providing the Products or Services; and with whom or which you had material dealings or for whom or which you were responsible at any time during the Protected Period"
"Breaches
In view of your close involvement and relationship with MiSmile since September 2021 and the termination of the MiSmile service agreement alongside your resignation and commencement of your new role, which neatly coincide, our client believes that you have acted in bad faith and in breach of your obligations in order to assist MiSmile in establishing a competitive threat to KMG.
Additionally, you have confirmed to our client that once your employment with KMG has ended, you intend to work for MiSmile and/or MiSmile media providing media services to MiSmile in breach of the post termination restrictions referred to above and appended to this letter in full.
Urgent next steps
In light of the above, as a matter of urgency, our client requires you by no later than close of business on 16 October 2024 to execute and return the Deed of Undertakings appended to this letter."
"As you will be well aware, the courts have consistently demonstrated a reluctance to enforce post- termination restrictions where the result would be to unreasonably restrict an individual's ability to earn a living. The courts will not enforce restrictions that prevent our client from pursuing lawful employment, particularly when KMG's legitimate business interests are already adequately protected. In this case, preventing Mr Hart from working for MiSmile Media—a company that does not directly compete with KMG—would be disproportionate and unenforceable, particularly in light of Mr Hart's preparedness to enter into undertakings.
Our client has no intention of interfering, enticing or poaching staff, customers, or otherwise acting in a way that would damage KMG's business. To reinforce this, Mr Hart is prepared to sign undertakings to the following effect
The Pleadings
"provided for MiSmile specifically paid search marketing, paid social media marketing, display advertising, web design, creative services, and video advertising. He would have daily contact with MiSmile"
This was uncontentious save to the frequency of contact with MiSmile – "MiSmile" being the Claimant's shorthand for the client MiSmile Network Limited referred to in this judgment as MNL.
"In addition the Defendant had access to the client book, potential clients being targeted, business practices and processes, supplier contacts, commercial price data, and confidential information about employees and employment terms. All of this information would be exceptionally useful to a competitor looking to compete with the Claimant." (my emboldening).
(a) "Knew the identities and key contacts of the clients he was the Account Director for ….The Defendant was only aware of other clients of the Claimant in so far as: (i) they were mentioned in passing by other employees; or (ii) publicly advertised by the Claimant on its website (as most of the Claimant's key clients, including MiSmile, are). The Defendant does not know the key contacts at clients for which he was not the Account Director.
(b) Only knew the identity of potential clients if and in so far as he was asked for input by the Claimant's sales team.
(c) Had a broad idea of the Claimant's charging structure, but nothing more. Commercial terms were negotiated and agreed by the Claimant's sales and finance teams.
(d) Knew what the Claimant's business practices and processes were; however, these were standard within the industry. Agencies specialising in performance marketing work with a limited number of search providers (e.g. Google) and social media firms (e.g. Facebook). There is nothing confidential about the way in which the Claimant operates.
(e) Does not understand the reference to "supplier contacts" and had no knowledge of anyone's employment terms bar his own. "
"MiSmile Ltd established MiSmile Media Ltd with a view to undertake its own in house marketing work, and to compete in the market to provide services to other dental and/or healthcare practices. This would be in direct competition with the Claimant"
And that
"the value of any loss of market position, arising from the use of confidential information, poaching potential target customers, and soliciting current clients is incalculable."
And that:
"Moreover MiSmile Media Ltd is a new company attached to a very large and profitable company (MiSmile Ltd) with significant industry reach. The Defendant would be able to provide them with significant marketing industry knowledge taken from the Claimant's process and systems which have been refined over many years at substantial cost and would provide them with an accelerated market position that no-one but the Defendant could provide"
"Paragraph 9 is inadequately pleaded and is in any event denied. The Claimant has failed to identify the "confidential information" in question or why it is said that the same was known to, and moreover would have been retained by, the Defendant following the end of his employment. The Defendant was an Account Director with responsibility for specific accounts; it does not follow that he knew or would have retained knowledge of the Claimant's wider client base or the terms on which the Claimant provided services to them. In so far as the Defendant knows and has retained any "confidential information" (and that Defendant cannot provide a direct response to such allegation, because it is inadequately particularised) the same can be protected by specific (and limited) covenants governing the use of confidential information alone.
The Claimant has additionally failed to set out any basis for asserting that MiSmile Media would look to target the Claimant's clients, as opposed to looking to sell additional services to practices who are already clients of the MiSmile Group. If there are practices using the Claimant's services and MiSmile Media wants to know details of the package provided by the Claimant, it can simply ask the practice in question for details of its package with the Claimant.
Paragraph 10 is similarly inadequately pleaded because it fails to provide any particulars of the "processes and systems" in question or why it is said they are confidential (as opposed to knowledge of how the performance marketing industry works being part of the Defendants' so-called 'stock in trade'). As set out above, the Defendant will say there is nothing unique or confidential about the way in which the Claimant provides services to clients. So far as the Defendant is aware, MiSmile Media want to employ him because of his knowledge of MiSmile's business (i.e. not his knowledge of how the Claimant operates)."
Analysis of pleaded case
- Is basing the claim for injunctive relief on the allegation that MML is in direct competition with KMG a provider of digital marketing services;
- Is alleging that Mr Hart, by dint of his position of Account Director at KMG has acquired knowledge of objective information worthy of protection such as lists of customers, costings and strategy for those clients he has worked with which might be used to the Company's detriment;
- Is arguing that Mr Hart is subject to a 'non-compete' PTR on the basis that MML is a direct competitor of KMG occupying the same space in the relevant market place;
- Is arguing that Mr Hart is subject to a "non-deal/non-solicitation" PTR with respect to relevant persons – customers/clients of KMG during the period of 12 months prior to termination (including MNL) with whom the Defendant had material dealings.
The evidence
Mr Khokhar
40. At paragraph 26 of his statement Mr Khokhar said "A key purpose of having a restrictive covenant is to stop a client taking an employee or employees of our agency… the covenants are to stop clients taking staff and their knowhow and gaining a competitive advantage of in-housing the marketing". That was a surprising way of putting the purpose of the PTRs when looked at objectively from the standpoint of when the contract of employment was made. Mr Khokhar was challenged about this in evidence. He accepted that no similar (no poaching) clauses were imposed in any contract with any client. Mr Khokhar was also questioned about the extent to which there was any "confidential information" worthy of protection since the information that the Defendant had about MNL and the operations of the group that Mr Hart had obtained working for KMG, was not confidential since it was information already known by MNL itself and would be shared with MML as a matter of course. Mr Khokhar maintained that he considered the information including spend budgets was information that would give a competitor an advantage in the marketplace.
Mr Hart
Dr Sandeep Kumar
The Law
(1) Covenants in restraint of trade are prima facie unlawful and accordingly are "to be treated with suspicion" see per Laddie J in Countrywide Assured Financial Services Limited v. Smart ChD, Laddie J, 7 May 2004.
(2) It is for the covenantee to identify a legitimate business interest that is capable of protection.
(3) It is for the covenantee to show that the covenant extends no further than is reasonably necessary to protect that interest and the court will enforce the covenant only if it goes no further than is reasonably necessary to protect the trade secrets or other legitimate interests of the previous employer: see, for example, Scott LJ (as he then was) in Scully UK Ltd v. Lee [1998] 1 ICCR 259.
(4) The court will scrutinise more carefully covenants in employment contracts, as opposed to ordinary commercial contracts where it will more readily upheld the covenant as being agreed between parties of assumed equal bargaining power.
(5) A covenant should be assessed for its validity at the date upon which the contract was made.
(6) A covenant will be upheld if the employer can show that it has been designed to protect his legitimate interests that, properly construed, the covenant extends no further than is reasonably necessary to protect those interests: see Mason v. Provident Clothing and Supply Ltd [1913] AC 724; Herbert Morris v. Saxelby [1916] 1 AC 688.
(7) If a covenant can be construed in two ways, one of which leads to its invalidity, then the court should prefer the alternative construction: see Tern v. Commonwealth and British Minerals Ltd [2000] IRLR 114 at paragraph 14.
(8) A covenant should be interpreted in the context of the agreement as a whole so as to give effect to the intention of the parties.
(9) The legitimate interests which justify the imposition of a covenant in restraint of trade are (i) trade connection; (ii) trade secrets or confidential information akin to a trade secret; and (iii) staff stability.
(10) Trade connection is established where it can be shown that, by virtue of his position with the employer, the employee will have recurrent contact with customers or, as in this case, suppliers, such that the employee is likely to acquire knowledge of and influence over the customers or suppliers.
(11) An employee has a legitimate interest in maintaining the stability of his workforce.
(12) In order to determine whether an item of information is a trade secret or confidential information akin to a trade secret, the court should have regard to a number of factors as described the Court of Appeal in Faccenda Chickens v. Fowler [1987] 1 Ch 117 at pages 137B to 138H, including the nature of the employment and the nature of the information itself. It is clear that this must be a trade secret or information of such a highly confidential nature as to require the same protection. This was explained by Lord Shaw in Herbert Morris v. Saxelby (supra) at page 714 as follows:
"Trade secrets, the names of customers, all such things which in sound philosophical language are denominated objective knowledge - these may not be given away by a servant; they are his master's property, and there is no rule of public interest which prevents a transfer of them against the master's will being restrained. On the other hand, a man's aptitudes, his skill, his dexterity, his manual or mental ability - all those things which in sound philosophical language are not objective, but subjective - they may and they ought not to be relinquished by a servant; they are not his master's property; they are his own property; they are himself. There is no public interest which compels the rendering of those things dormant or sterile or unavailing; on the contrary, the right to use and expand his powers is advantageous to every citizen, and may be highly so for the country at large. This distinction, which was also questioned in argument, is just as plain as the other.
An excellent concrete example of the latter point may be found in the present case. The second head of the injunction claimed is "from divulging or communicating … information as to the customers or affairs of the plaintiff company and from otherwise divulging or using such information". This [is] purely objective, and it was with exact correctness made the subject of a separate claim."
A trade secret has also been defined as information used in a business, the disclosure of which to a competitor would be liable to cause real or significant harm to the owner of the information and the dissemination of which has either been limited or not encouraged: see Lansing Linde v. Kerr [1991] 1 WLR 251 at 260B to D per Staughton LJ. Other factors include whether the employer impressed upon the employee the confidentiality of the information (the attitude of the employer towards the information provides evidence which may assist in determining whether the information can properly be regarded as a trade secret); whether the relevant information can be easily isolated from information which the employee is free to use; and whether it is information, the use of which a man of average intelligence and honesty would regard as improper.
(13) It is clear that an area or non-competition covenant may be justified where the interest to be protected is trade secrets or confidential information akin to a trade secret, notwithstanding that there is an obligation present in the contract not to divulge confidential information post termination. Such a covenant, the authorities show, may be justified because it can be difficult for a former employer to police compliance with an obligation relating to trade secrets or confidential information akin to a trade secret. In addition, such a covenant can be justified by the fact that there are serious difficulties in identifying precisely what is, or what is not, a trade secret, or confidential information akin to a trade secret; see Littlewoods Organisation v Harris [1997] 1 WLR 1472 at pages 1479A-E, where
Lord Denning said:
"But experience has shown that it is not satisfactory to have simply a covenant against disclosing confidential information. The reason is because it is so difficult to draw the line between information which is confidential and information which is not: and it is very difficult to prove a breach when the information is of such a character that a servant can carry it away in his head. The difficulties are such that the only practicable solution is to take a covenant from the servant by which he is not to go to work for a rival in trade. Such a covenant may well be held to be reasonable if limited to a short period."
Likewise in CR Smith Glaziers Limited v Greenan (1993) SLT 1221, the court said at page 1223F:
"… it is well established that a prohibition against disclosing trade secrets is practically worthless unless it is accompanied by a restriction upon the employee possessed of secrets against entering the employment of competitors."
See also Printers & Finishers Limited v. Holloway [1965] 1 WLR 1 at page 6; Faccenda Chicken Limited v Fowler [1987] 1 Ch 117 at pages 137G-138G; Turner v. Commonwealth & British Minerals Limited [2000] IRLR 114 at paragraph 18; Kall-Kwik Printing v Rush [1996] FSR 114 at page 124. However, the courts will scrutinise their covenants with particular care because of their broad anti (inaudible) effect, enquiring whether a lesser form of restriction (for example a non-solicitation clause) might not have given the employer sufficient protection and have been a more proportionate form of embargo than one which bars out competitive employment in the whole of the United Kingdom; see Office Angels Limited v Rainer-Thomas [1991] IRLR 214 paragraphs 45-58 and Countrywide Assured Financial Services Limited v Smart (supra).
In any event, a balance has to be struck between the degree of protection legitimately required by the claimant (which is permissible) and the degree of restriction or legitimate use of skill and knowledge and legitimate competition (which is impermissible); see Office Angels (supra) at paragraph 58. In considering the anti-competitive effect of the area covenant, the court should consider whether the existence of the provision would diminish the defendant's prospects of employment; Stenhouse Australia Limited v Phillips [1974] AC 391 at page 124C-D.
(iii) In cases where a restrictive covenant is sought to be enforced the trade secret (or confidential information akin to a trade secret) must be particularised sufficiently to enable the court to be satisfied that the employer has a legitimate interest to protect, but no more than that; see Scully UK Limited v. Lee (supra) [1998] IRLR 259 at paragraph 23.
(iv) The covenant to protect the use or disclosure of trade secrets (or confidential information akin to a trade secret) does not depend upon the employee taking documents or memorising the contents of documents. It can properly apply to trade secrets (or confidential information akin to a trade secret) which the employee may carry away in his head; see, eg, Polly Lina Limited v Finch [1995] FSR 751 at page 757.
35 ….the relevant legal principles to be applied in order to answer that question [whether a restrictive covenant is reasonable and enforceable] were set out by the Court of Appeal in the case of Office Angels Limited v Rainer Thomas & O'Connor [1991] IRLR 214, in the judgment of Sir Christopher Slade, with whom the other members of the court agreed. At paragraphs 21 to 25 he summarised the relevant principles as follows:
"(1) If the Court is to uphold the validity of any covenant in restraint of trade, the covenantee must show that the covenant is both reasonable in the interests of the contracting parties and reasonable in the interests of the public: (see for example Herbert Morris Ltd v Saxelby [1916] AC 688 at p.707 per Lord Parker of Waddington).
(2) A distinction is, however, to be drawn between (a) a covenant against competition entered into by a vendor with the purchaser of the goodwill of a business, which will be upheld as necessary to protect the subject-matter of the sale, provided that it is confined to the area within which competition on the part of the vendor would be likely to injure the purchaser in the enjoyment of the goodwill he has brought, and (b) a covenant between master and servant designed to prevent competition by the servant with the master after the termination of his contract of service: (see for example Kores Manufacturing Co Ltd v Kolok Manufacturing Ltd [1959] Ch 109 at p 118 per Jenkins LJ).
(3) In the case of contracts between master and servant, covenants against competition are never as such upheld by the court. As Lord Parker put it in Herbert Morris Ltd v Saxelby (supra) at p 709:
'I cannot find any case in which a covenant against competition by a servant or apprentice has, as such, ever been upheld by the Court. Wherever such covenants have been upheld it has been on the ground, not that the servant or apprentice would, by reason of his employment or training, obtain the skill and knowledge necessary to equip him as a possible competitor in the trade, but that he might obtain such personal knowledge of and influence over the customers of his employer, or such an acquaintance with his employer's trade secrets as would enable him, if competition were allowed, to take advantage of his employer's trade connection or utilize information confidentially obtained.'
On this appeal we are not concerned with trade secrets. The plaintiff's staff handbook contained special provisions (in clause 4.3) dealing with confidentiality, but no issue concerning confidentiality has been raised in this court.
(4) The subject-matter in respect of which an employer may legitimately claim protection from an employee by a covenant in restraint of trade was further identified by Lord Wilberforce in Stenhouse Ltd v Phillips [1974] AC 391 (at p.400) as follows:
'The employer's claim for protection must be based upon the identification of some advantage or asset inherent in the business which can properly be regarded as, in a general sense, his property, and which it would be unjust to allow the employee to appropriate for his own purposes, even though he, the employee, may have contributed to its creation.'
(5) If, however the Court is to uphold restrictions which a covenant imposes upon the freedom of action of the servant after he has left the service of the master, the master must satisfy the Court that the restrictions are no greater than are reasonably necessary for the protection of the master in his business: (see Mason v Provident Clothing & Supply Co Ltd [1913] AC 724 at p.742 per Lord Moulton). As Lord Parker stressed in Herbert Morris Ltd v Saxelby (supra) at p.707, for any covenant in restraint of trade to be treated as reasonable in the interests of the parties 'it must afford no more than adequate protection to the benefit of the party in whose favour it is imposed' [Lord Parker's emphasis]."
36. Thus, [a relevant clause will be] unlawful unless it is justified by [the Claimant] as being reasonable, in the interests both of the parties and of the public. In assessing reasonableness, there is essentially a three-stage process to be undertaken.
38. Firstly, the court must decide what the covenant means when properly construed. Secondly, the court will consider whether the former employers have shown on the evidence that they have legitimate business interests requiring protection in relation to the employee's employment. ….Thirdly, once the existence of legitimate protectable interests has been established, the covenant must be shown to be no wider than is reasonably necessary for the protection of those interests. Reasonable necessity is to be assessed from the perspective of reasonable persons in the position of the parties as at the date of the contract, having regard to the contractual provisions as a whole and to the factual matrix to which the contract would then realistically have been expected to apply.
39. Even if the covenant is held to be reasonable, the court will then finally decide whether, as a matter of discretion, the injunctive relief sought should in all the circumstances be granted, having regard, amongst other things, to its reasonableness as at the time of trial.
Trade Secrets - The Law
On the question of the validity of a restrictive covenant for the protection of an employer's trade secrets Mr Tabachnik QC cited decisions of this court for a statement of the applicable principles: Littlewoods Organisation Ltd -v- Harris [1977] 1 WLR 1472; Office Angels Limited -v- Rainer-Thomas [1991] IRLR 214; and Lansing Linde Limited -v- Kerr[1991] 1 AER 418. Those cases expound and exemplify well settled legal propositions affecting restrictive covenants in an employment contract:-
1. The court will never uphold a covenant taken by an employer merely to protect himself from competition by a former employee.
2. There must be some subject matter which an employer can legitimately protect by a restrictive covenant. As was said by Lord Wilberforce in Stenhouse Limited -v- Phillips [1974] AC 391 at page 400 E (cited by Slade LJ in the Office Angels case supra):
"The employer's claim for protection must be based upon the identification of some advantage or asset inherent in the business which can properly be regarded as, in a general sense, his property, and which it would be unjust to allow the employee to appropriate for his own purposes, even though he, the employee, may have contributed to its creation."
3. Protection can be legitimately claimed for identifiable objective knowledge constituting the employer's trade secrets with which the employee has become acquainted during in his employment.
4. Protection cannot be legitimately claimed in respect of the skill, experience, know-how and general knowledge acquired by an employee as part of his job during his employment, even though that will equip him as a competitor, or potential employee of a competitor, of the employer.
5. The critical question is whether the employer has trade secrets which can be fairly regarded as his property, as distinct from the skill, experience know-how, and general knowledge which can fairly be regarded as the property of the employee to use without restraint for his own benefit or in the service of a competitor. This distinction necessitates examination of all the evidence relating to the nature of the employment, the character of the information, the restrictions imposed on its dissemination, the extent of use in the public domain and the damage likely to be caused by its use and disclosure in competition to the employer.
6. As Staughton LJ recognised in Lansing Linde Ltd (Supra) at p.425h the problem in making a distinction between general skill and knowledge, which every employee can take with him when he leaves, and secret or confidential information, which he may be restrained from using, is one of definition. It must be possible to identify information used in the relevant business, the use and dissemination of which is likely to harm the employer and establish that the employer has limited dissemination and not, for example, encouraged or permitted its widespread publication. In each case it is a question of examining closely the detailed evidence relating to the employer's claim for secrecy of information and deciding, as a matter of fact, on which side of the boundary line it falls. Lack of precision in pleading and absence of solid evidence in proof of trade secrets are frequently fatal to enforcement of a restrictive covenant. Later decisions have not improved upon, or doubted the correctness of, the approach adopted by Cross J in Printers & Finishers Ltd -v- Holloway [1965] 1 WLR 1 at 5 A-C:
"If the information in question can fairly be regarded as a separate part of the employee's stock of knowledge which a man of ordinary honesty and intelligence would recognise to be the property of his old employer and not his own to do as he likes with, then the court, if it thinks that there is a danger in the information being used or disclosed by the ex-employee to the detriment of the old employer, will do what it can to prevent that result by granting an injunction."
Cross J gave examples of clear cases for restraint of an ex-employee eg using or disclosing a chemical formula, a list of customers, methods of construction or design features made known to the employee while in employment. He then considered knowledge which was not readily separable from the employee's general knowledge and his acquired skills: eg knowledge of the difficulties encountered in a process or of an expedient which the employee had found out for himself by trial and error during his employment. He doubted whether " any man of average intelligence and honesty would think that there was anything improper in his putting his memory of particular features of his late employer's plant at the disposal of his new employer." (p.6C-D).
Summary of the arguments of the parties.
Determination of the issues
What the terms of the restricted covenant – in this case described as post termination restrictions - are and whether they are engaged on the facts?
Clause 2.1
62. Clause 2.1 provides that for a six month period from the termination date, [Mr Hart] must not be engaged or concerned or interested or participate in a business the same as or in competition with KMG … provided always that this paragraph shall not restrain [Mr Hart] from being engaged or concerned in any business concern in so far as [his] duties or work shall relate solely to services or activities with which [he was] not concerned to a material extent during the 12 months immediately preceding the Termination Date (24. 12.2024).
"MiSmile will be actively promoting media services to MiSmile practices, MiSmile will not be actively targeting practices outside of the MiSmile network. Notwithstanding this, if any independent dental practices want to engage with MiSmile Media, we will have discussions with those practices to see what services they need, how we can help them and what if any bespoke services we can offer them."
"It must be possible to identify information used in the relevant business, the use and dissemination of which is likely to harm the employer, and establish that the employer has limited dissemination and not, for example, encouraged or permitted its widespread publication. In each case it is a question of examining closely the detailed evidence relating to the employer's claim for secrecy of information and deciding, as a matter of fact, on which side of the boundary line it falls. Lack of precision in pleading and absence of solid evidence in proof of trade secrets are frequently fatal to enforcement of a restrictive covenant"
Clause 2.2.(a) and (d)
"Covenants restraining employees from soliciting business from a defined class of customers or clients (or suppliers or other key business partners) of their former employer will potentially be an enforceable restraint and generally likely to be viewed more favourably by the court than non-competes, being more concerned with a legitimate interest and less about restrictions on economic activity in a free market".
DISPOSAL