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Employment Law

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06 JUN 2012

CEF Holdings Ltd & Anor v Mundey & Ors [2012] EWCH 1524 (QB); important lessons for applicants in employee competition cases

June 6th, 2012

In CEF Holdings Ltd & Anor –v- Mundey & Ors [2012] EWHC 1524 (QB), Silber J has added his voice to the growing judicial disquiet at the unnecessary and inappropriate use of without notice applications, and at the need for evidence in seeking  interim injunctions to restrain alleged unlawful competition by ex-employees  (cf O’Farrell –v- O’Farrell [2012] EWHC 123 (QB) and the Caterpillar litigation [2012] EWCA Civ 156, both covered in earlier posts on the 11KBW Employment Law Blog).   In a postscript to a comprehensive judgement (para 255), Silber J has stressed that (i) moving without notice is an exceptional step only to be followed in very limited circumstances “where to give notice would enable the defendant to take steps to defeat the injunction … or where there is some exceptional urgency, which means literally there is no time to give notice”, (ii) an application without notice will need to be carefully justified by more than a “bland statement that the defendant might do something if warned ”, (iii) a witness statement on a without notice application “should contain a statement setting out the duty to give full and frank disclosure perhaps along the lines set out by Bingham and Mummery LJJ in [Siporex and Memory Corpn –v- Sidhu] and then indicating how the duty has been complied with”, and (iv) “[a]ny application for an injunction must bebased on facts and … mere suspicion is not enough”.  These were all “serious lessons” which (as the Court found) the Claimants had failed to observe or heed, it seems by some margin. They were ordered to pay indemnity costs.

Silber J dismissed the Claimants’ application for interim springboard relief against 19 individual (employee) Defendants and the new employer that they had joined, and discharged earlier injunctions made by Collins J – effectively ex parte on half a day’s notice to the Defendants.    The Claimants had resisted the discharge application on the basis that they had given some notice, that Counsel had attended on behalf of the (employee) Defendants, and that thisattenuated the full and frank disclosure obligation.   Silber J rejected this argument: the ordinary requirement to give 3 days notice was “the minimum period specified to ensure that proper legal and factual submissions of the respondent [could] be put before the Court” (para 181); if shorter notice was given, the respondent could not be expected to be fully prepared and the full and frank disclosure obligation remained engaged, unless notwithstanding the short notice the respondent said all that could be said (paras 182-183); if this was not the case, the applicant was required to “explain all legal and factual issues which were relevant to [the respondent’s] submissions …to bridge the gap between what fell within his duty of full and frank disclosure and what [the respondent] said ” (para 184).

The Court also considered the right of the employee to be sued in his own domicile under the Judgments Regulation and the UK equivalent provisions in Schedule 4 to the Civil Jurisdiction and Judgments Act 1982 (“the 1982 Act”).   In essence, the Court said that this could not be circumvented by framing claims in tort, where the employment relationship was legally relevant to those claims.   This meant that the claims against 10 of the19 employee Defendants who were domiciled in Scotland and Northern Ireland were unsustainable.

Simon Devonshire Q.C appeared for 14 of the employee Defendants (including the 10 employees domiciled outside England) at the hearing before Silber J, instructed by Gateley LLP.

Read judgement – http://www.11kbw.com/judgments/detail.php?jid=194

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