RESTRAINT OF TRADE

Allan Janes LLP v Johal: [2006] EWHC 286 Ch

ChD: Bernard Livesey QC: 23 February 2006

In 2000, the claimant firm of solicitors employed the defendant as an assistant solicitor. The defendant's contract of employment contained a covenant that the defendant would not, after the termination of her employment, practise as a solicitor at any place within a radius of six miles of the claimant's the office, for a period of 12 months, and a covenant prohibiting the defendant, for a period of one year after termination of her employment, from directly or indirectly acting as a solicitor for any person who had been a client of the claimant in the previous year. In the year 2004–2005 the firm opened files for about 650 clients, of which the claimant dealt with 64 as the solicitor handling the matter and a further 34 when covering for absent colleagues. In July 2005 the defendant left her employment and entered into partnership with another solicitor with an office one and a half miles from the claimant's and began soliciting clients of the claimant.

The claimant sought an injunction to enforce the covenants.

BERNARD LIVESEY QC, sitting as a deputy judge of the Chancery Division, held:
(1) Restrictive covenants in an employment contract would only be enforced if they went no further than reasonably necessary to protect the employer's legitimate interests. Having regard to the size of the population within the radius of six miles of the claimant's office, the radial restriction in the defendant's contract would serve mainly to protect the claimant from competition for the business of a very large number of commercial entities which were not, or had ceased to be, clients of the claimant and, accordingly, was wider than necessary to protect the claimant's legitimate interests.

(2) While it was an important consideration that the non-dealing restriction was not limited to those clients with whom the defendant had had personal contact in the year prior to the termination of her employment, which significantly widened the restriction, that was not fatal to its reasonableness. Emphasis on the statistics of personal client dealings in the last year of employment neglected the importance of judging the reasonableness of the restriction at the time the contract was entered into and not when it came to an end. On the evidence, it was within the contemplation of the parties in 2000 that the defendant would be introduced to a large proportion of the firm's clients with a view to establishing a relationship with them and she had been endowed with a special status on which she could rely even vis-à-vis those clients with whom she had no prior contact. Therefore, as the non-dealing covenant had the advantage of being certain as to the area of application and, having regard to the matters which were in the minds of the parties at the time the contract was made, the protection which it provided was reasonable, both as regards the restriction and the limited period of time for which it was to operate, it was appropriate for injunctive relief.

Injunction granted.

Appearances: James Laddie (Allan Janes LLP) for the claimant; Simon Devonshire (Harris Cartier, Slough) for the first defendant.