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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> First People Solutions Group Ltd v.Jack & aNOR [2007] ScotCS CSOH_80 (30 April 2007)
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Cite as: [2007] CSOH 80, [2007] ScotCS CSOH_80

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OUTER HOUSE, COURT OF SESSION

 

[2007] CSOH 80

 

P134/07

 

OPINION OF LORD KINCLAVEN

 

in the Petition of

 

FIRST PEOPLE SOLUTIONS GROUP LIMITED

Petitioners

 

for

 

Interdict and interdict ad interim

 

against

 

KAREN JACK

 

First Respondent

 

and

 

ORION ENGINEERING SERVICES LIMITED

 

Second Respondents

 

ญญญญญญญญญญญญญญญญญ________________

 

 

 

Petitioners: Marney, Advocate; Lindsays

First and Second Respondents: Strain, Solicitor-Advocate; Biggart Baillie

 

 

27 April 2007

 

Introduction

[1] This is a petition for interdict and interdict ad interim in relation to alleged restrictive covenants..

[2] In outline, the petitioners found on alleged restrictive covenants and in particular non-solicitation and confidentiality clauses which are said by the petitioners to have been incorporated into the contract of employment of the first respondent.

[3] On 19 January 2007 Lord Brodie having heard counsel on the motion of the petitioner, no caveat having been lodged, granted interim interdict under the four separate heads in terms of the prayer of the petition. The full terms of Lord Brodie's interlocutor are set out below.

[4] On 19 February 2007 the respondents enrolled for recall of those interim interdicts.

[5] The motion for recall was opposed and, after various procedural steps, the motion was eventually debated before me over a period of three days in April 2007.

[6] Mr Marney appeared for petitioners. Mr Strain appeared for both respondents.

[7] For the reasons outlined below, I have decided to grant the respondents' motion for recall but only in relation to heads (3) and (4).

[8] In light of amendments made at the bar by counsel for the petitioner, I shall also pronounce a fresh interlocutor granting interim interdict in terms of heads (1) and (2) but in the amended and restricted terms detailed below.

 

The Background

[9] The petitioners have their principal place of business in Glasgow. The first Respondent lives in Aberdeen. The second respondents have a place of business in Aberdeen and in Inverness.

[10] As noted at the outset, Lord Brodie pronounce interim interdict on 19 January 2007. That interlocutor was in the following terms:-

"The Lord Ordinary having heard counsel on the motion of the petitioner, no caveat having been lodged, ad interim (1) interdicts the Karen Jack, for a period of six months from 31 October 2006, from soliciting, canvassing or seeking to transact business with any of the petitioner's customers with respect to the provision of any services in aviation recruitment in which the petitioner deals and with whose provision to those customers, during her employment with the petitioners, the said Karen Jack has had personal dealings except that such customers shall not include any division, branch or office of a firm, company or other organisation with which the said Karen Jack has had no personal dealings during her employment with the petitioners.

(2) interdicts the said Karen Jack, for a period of six months from 31 October 2006, from soliciting, canvassing or seeking to transact business with any of the petitioners' prospective customers with respect to the provision of services in aviation recruitment in which the petitioner deals, such prospective customers being any person, firm, company or other organisation with whom the petitioners have had negotiations or discussions in the 12 month period prior to 31 October 2006 and with whom the said Karen Jack has had personal dealings except that such prospective customers shall not include any division, branch or office of a firm, company or other organisation with which the respondent had no personal dealings in the 12 month period prior to 31 October 2006.

(3) interdicts the said Karen Jack (a) from conveying or disclosing to any third party and (b) from using or attempting to use in any manner which may injure or cause loss to the petitioners, by any means, the confidential information comprising details of candidates and customers and their requirements and notes related thereto; the prices charged to and terms of business with customers; sales techniques, discount structure, financial results and forecast (save to the extent that these are included in published audit accounts); the names, addresses, telephone numbers and curricula vitae of candidates and notes relating thereto; the contact names, addresses and telephone numbers of customers and potential customers; advertising and promotional material not in the public domain; training material; any proposals relating to the acquisition of disposal of the company or business or any part thereof or to any proposed expansion or contraction of activities; details of employees and officers and of the remuneration and other benefits paid to them.

(4) interdicts the said Orion Engineering Services Limited (a) from inducing or inciting Karen Jack to convey or disclose to them the confidential information comprising details of candidates and customers and their requirements and notes related thereto; the prices charged to and terms of business with customers; sales techniques, discount structure, financial results and forecast (save to the extent that these are included in published audit accounts); the names, addresses, telephone numbers and curricula vitae of candidates and notes relating thereto; the contact names, addresses and telephone numbers of customers and potential customers; advertising and promotional material not in the public domain; training material; any proposals relating to the acquisition of disposal of the company or business or any part thereof or to any proposed expansion or contraction of activities; details of employees and officers and of the remuneration and other benefits paid to them, (b) from using or attempting to use the said confidential information in any manner which may injure or cause loss to the petitioners, (c) from conveying or otherwise disclosing the said confidential information to any third party."

[11] On 19 February 2007 the respondent enrolled for recall of those interdicts.

[12] On 21 February 2007 Lord Clarke allowed the respondents' Answers to be received late and marked no.9 of process. He also allowed the petitioners to adjust the Petition for a period of seven days and he continued the respondents' motion for recall of interim interdict to a date to be afterwards fixed.

[13] The motion for recall first came before me on 22 March 2007. Owing to the lateness of the hour, it was continued part-heard to be further debated on 29 March 2007.

[14] On 29 March 2007, on the unopposed motion of the petitionersPetitioners made orally at the barBar of Court I allowed the prayer of the Petition (as adjusted to 28th February 2007) to be amended (by insertion of the words "in the course of her employment" after the words "personal dealings" where they appear firstly, on page 13, line 5 and secondly, on page 13, line 17 thereof and by deletion of the word "of" where it appears firstly on page 13 line 34 and where it appears secondly on page 14 line 7 and the substitution therefor of the word "or"). Those amendments were not sufficient to meet the Respondents' concerns.

[15] Finally, in order to conclude submissions prior to vacation, I further continued consideration of the motion until 30 March 2007 when, with the agreement of parties, I made avizandum.

 

The Petitioners' averments

[16] The current version of the petition is as adjusted as at 28 February and as amended on 29 March 2007. As they are central to the issues, itIt might be helpful to outline some of the petitioners' averments in some detail.

[17] In particular, in paragraph 2 of the petition, the petitioners aver:-

"[2] That the petitioners are engaged in recruitment, human resource consultancy and training. They locate, identify and assess candidates for their customers and for their prospective customers. They invest time and money in securing candidates and in building and fostering relationships with them. They invest time and money in securing customers and in building and fostering relationships with them. They enter into commercial arrangements with their customers in respect of the provision of candidates. They also provide a consultancy service. Their business is organised by divisions. The business divisions are Technical and Manufacturing; Construction & Design; Contract Centre; Office & Business Support; Information Technology; Sales & Marketing; Accountancy & Finance; Industrial & Warehousing: Construction & Labour Trades; Driving; Legal; Aviation; Financial Services. They operate in a competitive market."

[18] In paragraph 3 of the petition, the petitioners aver inter alia:-

"[3] That the first respondent was employed by the petitioner. Her job title was 'Client Development within the Aviation Division'. On joining the company she was given a copy of the staff handbook. She agreed to the incorporation thereof into her terms and conditions of employment. The first respondent attended an induction meeting on Monday 26th September 2005. She met with Debbie Ross then Human Resources Manager with the petitioners. The meeting lasted approximately two hours. Ms Ross discussed the terms of the staff handbook with the first respondent. She pointed out that there were restrictive covenants. She highlighted the importance of those and advised the first respondent of her obligations thereunder. Ms Ross asked Karen Jack if she understood the effect of those clauses. She indicated that she did. Ms Jack was given a copy of the staff handbook. She was asked to consider the terms of those and to return in a week's time. The purpose of the second meeting was to discuss any queries arising from consideration thereof. Ms Jack returned to see Ms Ross on 28 September 2005. Ms Jack was asked whether she had any questions. She indicated that she did not. She indicated that she clearly understood the terms and conditions of her employment. The Statement of Particulars of Employment was executed by both parties on 28 September 2005. Both documents are produced and referred to for their terms which, for the sake of brevity, are deemed to be repeated and incorporated herein. ..."

[19] In paragraph 4 of the petition, the petitioners aver:-

"[4] It was the first respondent's job inter alia to recruit and select appropriate candidates for vacancies arising with the petitioners' customers. She was also involved in identifying and securing new clients within the aviation industry. She was involved on a day to day basis with the petitioners' commercial customers. She spoke to the petitioners' customers on the telephone. She had knowledge of the petitioners' commercial customer base. She had knowledge of their candidates. She had a full access to the petitioners' data base. She was aware of the petitioners' charge rates. She was aware of the extent and the specific nature or services provided to the petitioners' customers and the level of charge in respect of those services. She was aware of the nature and extent of services which the petitioners sought to supply to prospective customers and the proposed level of charges. The petitioners trusted her with that information. With reference to the respondents' averments in answer it is admitted that the first respondent was initially employed to undertake business development for the petitioners. Admitted that it was her duty to target new clients and develop new accounts. Admitted that the respondent had previously been employed with CHC Helicopters. Admitted that her role changed in January 2006 when she was tasked with recruiting and placing candidates. Quoad ultra denied. Explained and averred that the first respondent was not successful in business development. She was unable to secure any new customers. CHC Helicopters were an established and important customer prior to the first respondent taking up employment with the petitioners. The first respondent's role within CHC required her to deal with CHC's own clients. They were mostly companies involved in the offshore oil industry. They were not directly involved in aviation. They were not potential customers. The first respondent's role with the petitioners changed. She was asked to deal with a small number of existing customers in the rotator market. She recruited and placed candidates with those customers. That business generates turnover in excess of ฃ1 million per annum."

[20] In paragraph 5 of the petition, the petitioners aver inter alia:-

"[5] The first respondent had been resident in Glasgow but relocated to Aberdeen in Spring 2006. At that time arrangements were made for her to continue in employment with the petitioners. Furniture and equipment was installed in her home. Broadband was installed together with remote access to the petitioners' main data base in Glasgow. The petitioners then began to make arrangements to lease office space in Aberdeen to accommodate her. They were then advised by her that she had been offered a job by Orion Engineering Services Limited ("Orion"). That company is a recruitment company. At that time it did not conduct business in the aviation sector. At that time she assured her manager, John Scott, that she would not be working in aviation recruitment. She also assured him that she did not intend to pass on information or contacts obtained during her employment with the petitioners. She assured him that her intention was not to start an aviation division with Orion. Within the course of that discussion Mr Scott reminded the first respondent of the terms and conditions of her employment, hereinafter founded upon. With reference to the respondents' averments in answer it is admitted, under explanation following, that during her employment in Aberdeen the first respondent was visited on one occasion by John Scott, Associate Director with the petitioners. Quoad ultra denied. ... She left the petitioners' employment because she had arranged to take up employment with Orion."

[21] In paragraph 6 of the petition, the petitioners aver inter alia:-

"[6] That, effective 31 October 2006, and by mutual agreement, the first respondent's contract of employment was brought to an end. On or about 6 November 2006 Mr Scott met with the petitioner and gave her a copy of her statement of particulars of employment and reminded her of her continuing obligations to the petitioners following employment. She indicated to him that she would adhere to those terms and conditions. At or about mid November 2006 the first respondent contacted the petitioners. She indicated that she would like to return to aviation recruitment. She asked whether she could be re-engaged by the petitioners. Her request was considered but declined. The respondents' averments in answer are denied. It is explained and averred the first respondent declined to work out her notice period. Her preference was to resign with immediate effect. She sent an e-mail to John Scott on 31 October 2006. She indicated that she was, '... happy to terminate my employment with First People Solutions Group today 31 October'."

[22] In paragraph 7 of the petition, the petitioners avers:-

"[7] That the written contract of employment provides

'4.1 Confidentiality

You shall both during the continuance of this Agreement and also after the termination thereof observe the utmost confidentiality and respect of all business information, secrets, processes, methods, prices, accounts, dealing, transaction, affairs, intellectual property and other information of the Company and its clients ...

 

For the purposes of this clause and by way of illustration, information will prima facie be secret and confidential if it relates to:

                    Research and Development

                    Inventions

                    Formulae and formation

                    Customers and details of their particular requirements

                    Costings, profit margins, discounts, rebates and other financial information

                    Marketing strategies and tactics

                    Current activities and current and future plans relating to all or any developments, production or sales - including the timing of all or any such matters.

                    The development of software products.

                    The production or design secrets relating to computer software or

                    Design or specifications of the Company's or Client's software products.'

 

The contract further provides

'5.1 Confidential Information & Company Documents

You shall neither during your employment (except in the proper performance of your duties) nor at anytime (without limit) after the termination of your employment:

(a) divulge or communicate to any person, company, business entity or other organisation; or

(b) use for your own purpose or for purposes other than those of the Company or any Associated Company (which here and where elsewhere referred to shall mean any holdings company of the Company or any subsidiary of the Company, or such holding company as defined in Section 736 Companies Act 1985, as amended) or;

(c) through any failure of exercise due care and diligence, cause any unauthorised disclosure of any trade secrets or Confidential Information relating to us or any Associated Company, but so that these restrictions shall cease to apply to any information which shall become available to the public generally otherwise than through your default.

 

5.2 "Confidential Information" shall mean details of Candidates and Customers and their requirements and notes related thereto, the prices charged to and terms of business with customers, financial information including without limitation, marketing surveys and plans, market research reports, sales techniques, discount structure, financial results and forecast (save to the extent that these are included in published audit accounts), the names, addresses, telephone numbers and curricula vitae of Candidates and notes relating thereto, the contact names, addresses and telephone numbers of Customers and Potential Customers, advertising and promotional material not in the public domain, training material, any proposals relating to the acquisition of (sic) disposal of the company or business or any part thereof or to any proposed expansion or contraction of activities, details of employees and officers and of the remuneration and other benefits paid to them, any information which you are told is confidential and any information which has been given to us or any Associated Company in confidence by Customers, suppliers or other persons.

 

5.3

All notes, memoranda, reports, list of Candidates and Customers and employees, correspondence, documents, computer and other discs or tapes, data listings, codes and other documents and material whatsoever (whether made or created by you or otherwise) relating to our business or any Associated Company (and any copies of the same):

 

a) shall be and remain the property of the relevant Associated Company: and

b) shall be handed over by you to use or to the relevant Associated Company on demand and in any event on the termination of your employment.

 

6.1 Confidentiality

For the purposed of clauses 5.1, 5.2, 5.3 and 6.1 the following words have the following meaning:

a) "Candidate" means any person:-

i) in respect of whom within 6 months prior to the Termination date, we had written record to the effect that this was a person seeking temporary or permanent employment or engagement; or

ii) who within 6 months prior to the Termination date, has been interviewed by any other employee for the purpose of seeking temporary or permanent employment or engagement with a Customer or Potential Customer, of whom you had knowledge through your duties, such knowledge maybe implied;

b) "Company Service" means any service supplied by with which your duties were concerned or which you were responsible during the two years immediately proceeding your Termination date;

c) "Confidential Information" has the meaning given in clause 5.2.

d) "Customer" means any person, firm, company or other organisation whatsoever to whom or which we supplied Company Services during the two years immediately preceding the Termination date and with whom or which, during such period:

i) you had personal dealings in the course of your employment; or

ii) any employee, who was under your direct or indirect supervision, had personal dealings in the course of his/her employment.

But in the case of a firm, company or other organisation shall not include any division, branch or office of such firm, company or other organisation with which you and/or any such employment had no dealings during the said period;

e) "Prospective Customer" means any person, firm, company or other organisation whatsoever, with whom or which we shall have had negotiations or discussions regarding the possible supply of Company Service during the 12 months immediately proceeding the Termination Date and with whom or which, during such period:

i) you shall have had personal dealings in the course of your employment by the Company; or

ii) any employee who was under direct or indirect supervision shall have had personal dealings in the course of his/her employment by the Company. But in the case of firm, company or other organisation shall not include any Division, branch or office of such firm, company or other organisation with which you and/or any such employee had no dealings during the said period;

f) "Restricted Services" means Company Services or services of a similar kind and;

g) "Restricted Period" means the period of 6 months commencing with the Termination Date.

h) "Termination Date" means the date of termination of your employment.

 

6.2 Restricted Period - Clients

You hereby undertake with us that you will not either during your employment nor during the Restricted Period without our prior written consent (such consent not to be unreasonably withheld) whether by yourself, through your employees or agents or otherwise howsoever and whether on your own behalf or on behalf of any other person, firm, company or other organisation, directly or indirectly:

a) in competition with us, be employed or engaged or otherwise interested in the business of supplying the Restricted Services; or

b) in competition with us, solicit business from or canvass any Customer or Prospective Customer if such solicitation or canvassing is in respect of the Restricted Service; or

c) in competition with us, accept orders for the Restricted Services from any Customer or Prospective Customer...'

The petitioners have a legitimate interest in protecting their trade connections and their confidential information. They invest resources in establishing and maintaining their customer base. They incur significant marketing costs in order to do so. They devote a considerable amount of employee time to this. They invest time in establishing lines of communication with prospective customers. They invest in discussing their requirements and the ability of the petitioners to meet those. They formulate proposals and deliver presentations. A relationship is built up over time. They invest time in negotiating levels of service and financial terms. They incur associated legal and accounting costs in considering and setting up financial arrangements with their customers. They rely upon repeat business with their customers. This forms part of the goodwill of the business which they have a legitimate interest in protecting. Protection is also required in order to allow the petitioners to adjust to the loss of a member of staff. They require to take on a new member of staff. They will have to advertise and to interview. The new employee may have to work out a period of notice. They may have to be trained and then introduced to the customers and prospective customers. They require time to become established. A six month period is reasonable. The restriction is limited to customers and prospective customers with whom the first respondent has had personal dealings over a restricted period of time. The petitioners have a legitimate interest in protecting their confidential information. Use of that information by a former employee is potentially injurious to the petitioners. It gives that employee an unfair competitive advantage. The respondents' averments in answer are denied."

[23] In paragraph 8 of the petition, the petitioners aver inter alia:-

"[8] That, having taken up and remained in employment with Orion the first respondent has been involved in setting up an aviation division with them and in attempting to recruit candidates. She has been involved in soliciting business from the petitioners' customers. On or about 22 December 2006 advertisements were placed by Orion Engineering Services Limited on an industry website, 'aviationjobsearch.com'. They were materially similar in style and content to those advertisements customarily placed by the petitioners. The first respondent had been instructed and trained by the petitioners to frame such advertisements in that way. The advertisement sought to recruit helicopter staff in relation to precisely the same helicopter types ordinarily serviced by the petitioners. Enquiries with Orion regarding aviation recruitment are directed to Karen Jack. Callers are advised to send their CV to her. On 15 January 2007 an approach was made by Orion Engineering Services Limited to Michelle McCombie of CHC Europe. The approach was by direct e-mail and ran ostensibly in the name of Graham Shaw of 'Orion Aerospace'. Graham Shaw has no experience or background in the aviation sector. Mr Shaw is consistently identified on the second respondent's website as the point of contact for electrical and instrumentation engineering vacancies. He is nowhere identified as involved in aviation engineering, far less head of that division. CHC Europe was (and I was informed remains) a customer of the petitioner. The first respondent had known that, and during her period of employment, had been aware that the point of contact there was Ms McCombie. By January 2007 arrangements within CHC Europe had changed. Ms McCombie was no longer the appropriate point of contact. Ms McCombie had been supplied to Orion by the first respondent as a point of contact. Her direct e-mail address was private. The petitioners had been entrusted with that information by Ms McCombie. Ms Jack had been told of each customer's specific aircraft types. That is information that had been entrusted to the petitioners by their customers. She used that information in seeking to solicit business from the petitioners' customers. That information was used by Orion in order to advance their business interests. Bristow Helicopters, Aberdeen are customers of the petitioner and were so during the respondents' period of employment. The first respondent made direct contact with them by e-mail. She has also contacted the petitioners' customers KLM and the North Deans branch of CHC Europe. She did so using private e-mail addresses that had been transferred onto her 'hotmail' account. She is engaged in recruitment in the aviation sector. She is targeting the petitioners' customers. She is soliciting their business. The petitioners are reasonably apprehensive that she has retained confidential information relating to the petitioners' customers, pricing structure, business practices, contracts and profiles. Orion knew, or ought to have known, that the first respondent remained bound by certain contractual obligations to the petitioner. They were put on notice to that effect by letters dated 5 January 2007. The respondents' averments in answer are denied. It is explained and averred that in a letter dated 5 February 2007 to Lindsays WS the second respondents asserted that Ms Jack was employed, '... in a general recruitment role primarily to recruit office based personnel ... As you can guess from our company name we principally provide engineering staff for the offshore industry. That is the work that she has carried out since she joined us.' Further, 'We have one recruiter based in Holland who deals with aviation ...' This is wholly inconsistent with the first respondent's position (1) that she moved into aviation recruitment with Orion (2) that the second respondents set up an aviation division in June 2006 headed up by Graham Shaw."

[24] Finally, in paragraph 9 of the petition, the petitioners aver:-

"[9] The petitioners are reasonably apprehensive that the first respondent intends to seek to transact business with their customers with respect to the provision of services in which the petitioner deals, contrary to the terms of clause 6.2. The petitioners are reasonably apprehensive that the first respondent will disclose to a third party the confidential information which has been gained during the course of her employment with them in breach of the her express contractual obligations and in any event in breach of her duty of honest and faithful service implied in her contract of employment. They are reasonably apprehensive that confidential information has been disclosed to Orion, that Karen Jack and Orion continue to have access to information confidential to them and that the respondents will make use of the confidential information to solicit business from customers of the petitioners. A significant proportion of the petitioner's business derives from the Aberdeen area. As a result of the actings of the respondents the petitioners are likely to suffer loss. It is not possible to quantify that loss at this stage. The petitioners accordingly seek interdict and respectfully submit that, having regard to the balance of convenience, interdict ad interim should be granted."

 

The Respondents' Answers

[25] As they were referred to in some detail during the hearing, itIt might also be helpful to outline some of the respondents' averment in their Answers as adjusted as at 9 March 2007.

[26] The petitioners' averment in Paragraph 2 of the petition are believed to be true.

[27] In Answer 3 the respondents aver inter alia:-

"3. Admitted the First Respondent was employed by the Petitioner. Admitted her job title was 'Client Development within the Aviation Division'. Admitted on joining the company she was given a copy of the Staff Handbook. Admitted the Statement of Particulars of Employment was executed by both parties. Reference is made to the Statement of Particulars and the Staff Handbook beyond which no admission is made. Quoad ultra denied. Explained and averred that the Statement of Particulars of Employment makes no reference to the restrictive covenants contained within the Staff Handbook. The Staff Handbook is an extremely lengthy document which is broken down into nine independent sections covering inter alia a company overview, values and visions statement, equal opportunity policies and procedures, dress code, holidays, sickness, absenteeism, absence, maternity, disciplinary rules and procedures, redundancy, retirement, commission, bonuses, pension scheme, private health care, car policy, health and safety, accidents, company meetings and training. The terms of the restrictive covenants contained within sections 5 and 6 of the Handbook were not expressly drawn to the attention of the First Respondent when she signed the Statement of Particulars of Employment. The contents of the Employee Handbook have not been incorporated into the First Respondent's terms and conditions of employment."

[28] In Answer 4 the respondents aver inter alia:-

"4. Admitted the First Respondent was involved in identifying and securing new clients within the aviation industry. Admitted she spoke to customers on the telephone. Admitted she had knowledge of the Petitioner's aviation customer base. Admitted she had access to the Petitioner's charge rates and was aware of the extent and specific nature of services provided to aviation customers and the level of charges. Quoad ultra denied. Explained and averred that the First Respondent was initially employed to undertake business development for the Petitioner within the aviation industry. It was her duty and responsibility to target new clients and develop new accounts. All of this was with specific regard to the aviation market. The First Respondent had previously been employed with CHC Helicopters and accordingly had extensive knowledge of and dealings with contacts within the aviation sector. The First Respondent's role changed in January 2006 when she was then tasked with recruiting and placing candidates for vacancies arising within the aviation industry. The First Respondent extended the Petitioner client base with CHC by developing and sourcing contacts for their Global divisions and offered recruitment for both Pilots and Engineering personnel. The First Respondent sourced contacts for Bristow Helicopters in Norwich, brought on new business opportunities and developed the relationship with them. The First Respondent often had placements at Bristow Helicopters in Norwich. The First Respondent developed this business entirely separately to any relationship the Petitioner had with Bristow Helicopters in Aberdeen. The First Respondent secured Aer Arann as a new customer and secured a placement with that new client. The First Respondent also secured the business of Bristow Internationals Helicopters, Aerotecnica Australia, FB Heliservices, P D G Helicopters, KLM UK, Heli-Deck and Heli-Crew. The Petitioners had no prior dealings with KLM UK and this new client was secured and developed by the First Respondent alone. The business developed with the companies referred to above resulted from the contacts the First Respondent already had within the Aviation industry prior to joining the Petitioner's organisation. The profit made by the whole of the Petitioners Aviation division in financial year 2005/2006 was in the region of ฃ400,000."

[29] In Answer 5 the respondents aver inter alia:-

"5. Admitted the First Respondent had been resident in Glasgow but relocated to Aberdeen in Spring 2006. Admitted at that time arrangements were made for her to continue in employment with the Petitioner. Admitted she had remote access to the Petitioner's system in Glasgow. Admitted that the Petitioner was advised by the First Respondent that she had been offered a job by Orion Engineering Services Limited ("Orion"). Admitted that the company is a recruitment company. Quoad ultra denied. Explained and averred that following her relocation to Aberdeen the First Respondent felt increasingly isolated and unsupported by the Petitioner. In particular she was working long hours and from her own home. The Petitioner's website was amended to state that they had an office in Aberdeen. Despite assurances that office accommodation would be sourced little or no progress had been made with regard to this. The First Respondent was provided with a desk, computer, broadband and ฃ10 per week for the use of her home as an office by the Petitioner. The First Respondent attended team meetings at the Petitioner's offices in Glasgow on 3 May 2006 and 27 June 2006, provided holiday cover in the Glasgow office on 3 and 4 August 2006 and attended her annual appraisal in Glasgow on 30 August 2006. The First Respondent had only had one visit from the director to whom she reported during her period of employment with the Petitioner. Furthermore, in terms of the Statement of Particulars of Employment entered into with the Petitioner, the First Respondent was entitled to join the company pension scheme and receive the benefit of private health care. ... The First Respondent had no option other than to resign and seek alternative employment. She advised John Scott of the Petitioner that she had been offered employment with Orion and that she would not be working in aviation recruitment."

[30] In Answer 6 the respondents aver inter alia:-

"6. Admitted that as at 31 October 2006 the First Respondent's Contract of Employment was brought to an end. Admitted on or about 6 November 2006 John Scott met with the First Respondent and gave her a copy of what purported to be her Statement of Particulars of Employment. Quoad ultra denied. Explained and averred that the First Respondent tendered her resignation by telephone to John Scott who advised the First Respondent that he would discuss with his fellow Directors whether the Petitioner would wish the First Respondent to work her notice period and would call her to confirm the position the following day. The First Respondent began work as normal on 31 October 2006 and then received an email instructing her to prepare a written handover of all current activity, not to answer the telephone and not to speak to any clients, candidates or anyone employed by the Petitioner. ..."

[31] In Answer 7 the respondents aver inter alia:-

"7. Reference is made to the clauses 4, 5 and 6 of the Staff Handbook beyond which no admission is made. Quoad ultra denied. Explained and averred that the restrictive covenant provisions are not part of the First Respondent's Contract of Employment with the Petitioner. Esto they were (which is denied) the covenants are unfair, unduly restrictive, unreasonable and excessive. They go well beyond what would be necessary to protect the legitimate business interests of the Petitioner. Separatim Esto, the Petitioners were in fundamental and repudiatory breach of the parties' contract of employment. They are not entitled to enforce its terms."

[32] In Answer 8 the respondents aver inter alia:-

"8. Admitted on or about 22 December 2006 advertisements were placed by Orion on an industry website aviationjobsearch.com. Admitted that they were materially similar in style and content to those advertisements customarily placed for the Petitioners under explanation that they are industry standard. Admitted the advertisements sought to recruit helicopter staff. Admitted that following her recruitment by Orion the First Respondent moved into recruitment in the aviation sector. Quoad ultra denied. Explained and averred that the Second Respondent set up an aviation division in June 2006. Said division was headed up by Graham Shaw of the Second Respondent. The First Respondent was previously an employee of CHC Europe and knew the contacts therein prior to working for the Petitioners. The First Respondent's contact with CHC Europe extended to her sending condolences following an air disaster, which resulted in the death of a number of CHC Europe employees whom she knew. The First Respondent knew contacts within Bristow Helicopters prior to joining the Petitioner. Bristow Helicopters have made unsolicited contact with the First Respondent. The First Respondent was aware of but has not retained any confidential documentation relating to the Petitioner's customers, price and structure, business practises, contracts and profiles. The Second Respondent did receive a letter of 5 January 2007 from the Petitioner under explanation that the First Respondent is not bound by the contractual obligations referred to."

[33] In Answer 9 the respondents' averments are as follows:-

"9. Denied. Explained and averred as above condescended upon, the First Respondent is not under any contractual restriction. Esto she is such terms are unfair, unreasonable, excessive and in restraint of trade. Separatim, the Petitioners being in fundamental and repudiatory breach of the parties' contract are not entitled to enforce its terms. The First Respondent has not disclosed any information, which would constitute confidential information. An insignificant amount of business derives from the Aberdeen area for the Petitioner. The Petitioner is a large company with a multi-million pound turnover. It is estimated that business deriving from the Aberdeen area is a small percentage, less than 10%, of the Petitioner's business. With regard to the balance of convenience interdict ad interim should be refused."

 

Productions

[34] Parties lodged and referred to a number of productions during the hearing.

[35] In particular, the petitioners lodged two inventories containing, inter alia :-

6/1 Copy Staff Handbook.

6/2 Copy Statement of Particular of Employment.

6/3 Copy advertisement for the petitioners placed on 27 December 2006.

6/4 Copy advertisement for Orion Engineering Services placed on 21 December 2006.

6/5 Copy advertisement for Orion Engineering Services placed on 22 December 2006.

6/6 Copy advertisement for Orion Engineering Services placed on 21 December 2006.

6/7 Copy email from Graham Shaw, Orion Engineering Services Ltd (undated).

6/8 Copy email from Michelle McCombie, CHC Europe.

6/9 Copy letter from Macdonalds, Solicitors, Glasgow to Miss Karen Jack dated 5 January 2007.

6/10 Copy letter from Macdonalds, Solicitors, Glasgow to Orion Engineering, Orion House, Inverness dated 5 January 2007.

6/11 Copy letter from Macdonalds, Solicitors, Glasgow to Orion Engineering, 21 Albert Street, Aberdeen dated 5 January 2007. .....

6/13 Affidavit of Debbie Ross dated 26 February 2007. .....

6/17 "Screen Dumps" of Orion web-site (1 to 6).

6/18 Print out of job search from Orion web-site, and

6/19 Letter from Orion to Lindsays dated 5 February 2007.

[36] The respondents also lodged a further production, namely, "First People Solutions Statement of Particulars" which it was alleged was handed to the First Respondent on 3 November 2006. It differs in terms from the statement founded on by the Petitioners (No. 6/2 of process).

 

The Submissions for the Respondents

[37] I do not propose to rehearse the detailed submissions of the parties ad longum. The main arguments for the respondents (and the petitioners) appear fairly clearly, I believe, from the discussion section outlined below.

[38] Suffice it to say that Mr Strain, on behalf of the respondents, submitted that the interim interdicts should be recalled.

[39] Mr Strain criticised the petitioners' pleadings and the clauses founded upon and invited me to hold that there was no prima facie case for any interdict.

[40] Mr Strain argued, in essence:-

1. that the restrictive covenants had not been validly incorporated into the contract of employment;

2. that in any event, the covenants were unreasonable and in restraint of trade; and

3. that there were insufficient relevant averments of wrongful actings to make out a prima facie case.

[41] Mr Strain also provided me with the following authorities:-

1. McConnell and Reid v Smith 1911 SC 635.

2. Coyle v The London, Midland and Scottish Railway Company 1930 SLT 349.

3. System Floors UK Limited v Daniel [1981] IRLR 475.

4. Living Design (Home Improvements) Ltd v Davidson [1994] IRLR 69.

5. Lux Traffic Controls Ltd v Healey 1994 SLT 1153, see particularly pages 1157, 1159 and 1160.

6. Berry Birch & Noble Financial Planning Limited v Berwick & Others [2005] EWHC 1803 (QB) see particularly paragraphs 23 and 27.

7. Employment Rights Act 1996 Section 1, and

8. Gloag on Contract, page 404-405, in relation to the maxim expressio unius est exclusio alterius.

[42] Mr Strain made it clear that he was not advancing any argument based on the balance of convenience. As a matter of fact, it was said, the interdicts did not bite on either of the respondents.

[43] Inter alia, Mr Strain raised the question of why, given that the petitioners said that they only have a handful of clients, those clients were not specified in the interdicts sought.

[44] It was not open to the petitioners to re-write the contract which required to be strictly construed contra proferentem.

[45] Clause 5.2 was in effect a non-solicitation clause without limit of time.

[46] Although there were certain situations where an interdict without limit of time could be obtained in relation to confidential documentation that was not what was sought in the present case - at least not with sufficient precision.

 

The Submissions for the Petitioners

[4745] On behalf or the petitioners, Mr Marney submitted that the interim interdicts granted by Lord Brodie should remain in force.

[4846] Mr Marney accepted that the clauses concerned could have been clearer but invited me to accept that there was a prima facie case in relation to all four heads of the interdict sought.

[4947] Mr Marney provided me with the following authorities:-

1. PR Consultants Scotland Ltd v Mann 1997 SLT 437, see particularly pages 440 H-K and 441 H-K.

2. Gledhow Autoparts Ltd v Delaney [1965] 1 WLR 1366, see particularly pages 1370 C-F, 1373 C-F and 1377 G to 1378 A.

3. International Consulting Services (UK) Ltd v Hart [2000] IRLR 227, see particularly paragraphs 9 and 10 (page 229), and paragraphs 27 to 3 and paragraph 34 (page 231) and paragraphs 38 and 39 (page 232).

4. Axiom Business Computers Limited and Jeannie Frederick or Kenny [2003] ScotCS 288, 20 November 2003, Lord Bracadale, see particularly paragraphs 2, 4, 10, and 33.

5. G W Plowman & Son Ltd v Ash [1964] 1 WLR 568, see particularly pages 572, second paragraph.

6. Huw Thomas v Farr plc [2007] EWCA Civ 118, 20 February 2007, see particularly paragraphs 17, 41 and 42.

7. Lord Advocate v The Scotsman Publication Ltd. 1989 SC (HL) 122, see particularly pages 141-143, and page 164.

8. TSB Bank plc v Connell 1997 SLT 1254 see particularly pages 1255 L‑1256 B, and 1259 K-1260 L.

9. Thomas Marshall (Exports) Ltd [1978] ICLR 174 see particularly paragraphs 47 and 48 (pages 182-183), and

10. International Computers Limited v Kenneth Eccleson and Others, [2000] ScotCS 245, Lord Gill, 4 May 2000 see particularly paragraphs 2, 9, 19, 27 and 28.

[5048] I was also referred to McBryde on Contract at paragraph 8-18, 8-32 and 8-99 in relation to the correction of patent mistakes.

[5149] Mr Marney made it clear that his arguments were based on contract rather than common law.

[5250] In essence, Mr Marney submitted that the motion for recall should be refused - although it was open to me to grant the motion in whole or in part.

 

Discussion

[5351] There was relatively little dispute between the parties as to the relevant law. The main areas of contention were, with a few exceptions, how agreed principles of law fell to be applied in the circumstances of this particular case.

[5452] Obviously each case requires to be considered on its own particular facts and circumstances.

[5553] There was, as noted above, no argument from the respondents based on balance of convenience.

[5654] The main contentious issues were whether the pursuer hade made out a prima facie case and whether the terms of interim interdicts before me were sufficiently precise.

[5755] Having heard parties, I have decided that heads (1) and (2) of the interim interdict falls to be dealt with differently from heads (3) and (4) - as follows.

 

Head (1) and (2) of the interim interdict

[5856] In my opinion, in the circumstances outlined above, the submissions advanced by the petitioners fall to be preferred in relation to heads (1) and (2) of the interim interdict - but those heads of interdict fall to be amended and restricted in light of the position adopted by the petitioners before me.

[5957] The amendments and restriction are, I trust, clear from the terms of the interlocutor which is detailed below.

[6058] My reasons are, broadly, as follows.

[6159] Although the petitioners' averments might have been clearer, and although the drafting of the provisions (set out in paragraph 7 of the petition) left a lot to be desired, those averments and those provisions are not so defective, in my opinion, as to justify the conclusion that there was no prima facie case.

[6260] I reject the respondents various arguments to that effect.

[6361] There are, in my view, sufficient averments to the effect that that the restrictive covenants had been validly incorporated into the contract of employment of the first respondent.

[6462] On a proper construction, in my view, the various words defined in clause 6.1 have a similar meaning where they appear elsewhere in the contract.

[6563] The words "the company" fall to be read into clause 6.1 (b) so that it reads ""Company Service" means "any service supplied by the company". That corrects" to correct what seems a simple mistake. See McBryde on Contract at paragraphs 8-18, 8-32 and 8‑99.

[6664] The petitioners found upon their productions - including Production 6/2 rather than the document lodged by the respondents.

[6765] Production 6/7 is a plain example of a solicitation.

[6866] The petitioners are reasonably apprehensive that the first respondent is targeting the petitioners' customers.

[6967] The six month period referred to in heads (1) and (2) is reasonable.

[7068] There is no need for a geographic limitation in thea non-solicitation clause. See for example Axiom Business Computers Limited and Jeannie Frederick or Kenny [2003] ScotCS 288, 20 November 2003, Lord Bracadale, at paragraph 33 and G W Plowman & Son Ltd v Ash [1964] 1 WLR 568, at page 572, second paragraph.

[7169] In relation to the respondents other arguments, I gratefully adopt the summary of the law provided by Lord Bracadale in the case of Axiom Business Computers Limited v Jeannie Frederick or Kenny, [2003] ScotCS 288, 20 November 2003 (at paragraph 10) namely:-

"[10] In Malden Timber Limited v McLeish 1992 SLT 727 at page 730 Lord Caplan quoted with approval a number of propositions advanced by counsel for the defender and not seriously disputed by counsel for the pursuers. Each of the propositions was vouched by reference to authority. The propositions were as follows:

(1) a covenant in restraint of trade is void unless it is reasonable in the interest of the parties and in the public interest.

(2) covenants between an employer and employee will be viewed more strictly by the Court than other forms of covenant where some consideration had past.

(3) for a restraint to be reasonable it must afford no more than adequate protection.

(4) an employer is not entitled to seek protection against mere competition from a former employee. Trade secrets and old established customers may be legitimate objects of concern.

(5) an employee may have acquired additional skills and knowledge through his employment but, however, that belongs to him and cannot be protected by the employer.

(6) an employee has a duty of confidence but that once employment terminates the duty is restricted to not disclosing trade secrets and trade information.

The proper approach is to ascertain what legitimate interest the employers are entitled to protect and then to see if restraint is required."

[7270] In the circumstance of the present case, despite the respondents' criticisms, I am satisfied that the petitioners have averred enough (in the petition as adjusted and amended) to entitle them to interim interdict in the terms set out below.

[7371] In my opinion, despite the respondents' arguments to the contrary, the petitioners' averments (particularly in paragraphs 3 and 5 of the petition) are sufficient to show a prima facie case.

[7472] In any event, the petitioners contentions are sufficiently supported by the affidavit of Debbie Ross dated 26 February 2007 (production 6/13) which sets events in context, sequence and time.

[7573] The clauses themselves, although not models of clarity, are sufficient in my view to provide a proper foundation for heads (1) and (2) of the interdict as outlined below.

[7674] Further, had there been any doubt, I would have been influenced in favour of the petitioners by the inconsistency between (a) the respondents' averments in answer 8 and (b) the position stated by the second respondents in their letter of 5 February 2007. As Mr Strain very fairly accepted, it appears that in that letter the second respondents' managing director "was not as forthcoming as he should have been". That gave rise to a reasonable apprehension of breach.

[7775] The balance of convenience favours the petitioners. The contrary was not argued.

[7876] A question also arises as to whether the petitioners are entitled to interim interdict in terms of head (2) in relation to "negotiations or discussions".

[7977] In International Consulting Services (UK) Ltd v Hart [2000] IRLR 227 Nicholas Strauss QC sitting as a deputy High Court judge stated inter alia (at paragraphs 32 and 39):-

"I do not think that his covenant is too vague to be enforced. Although it is true there may be borderline cases, in which it is hard to say whether communication with a prospective customer amounts to 'negotiations' it does not follow that the provision is too uncertain to be enforced."

[8078] At paragraph 39 he concluded:-

"I do not think that it is necessary to seek to establish any general rule as to whether a restraint on dealings with prospective customers is valid. In the present case, I think that it is justifiable."

[8179] In Axiom Business Computers Limited and Jeannie Frederick or Kenny [2003] ScotCS 288, 20 November 2003, Lord Bracadale stated (in paragraph 33) inter alia:-

"I also accept that it is legitimate to protect the interests of the petitioners with respect to negotiations."

[8280] In the circumstances of the present case, I am satisfied that the petitioners are entitled to interim interdict in relation to "negotiations" as specified in head (2) of the interim interdict but I agree with the respondents that the words "or discussions" are not sufficiently precise.

[8381] I shall restrict the interim interdict accordingly (a) by deleting the words "or discussions" and (b) by inserting the words "the duties of" (before "her employment") in head (2) - as I was invited to do during the hearing.

 

Head (3) and (4) of the interim interdict

[8482] However, in relation to heads (3) and (4) of the interim interdict I have reached a different conclusion.

[8583] On those heads, in my opinion, the arguments of the respondents prevail.

[8684] It seems clear that, in principle, the petitioners can rely on Lord Advocate v The Scotsman Publication Ltd 1989 SC (HL) 122 (particularly pages 141-143, and page 164) for the general proposition that a person to whom a duty of confidence is owed has a right to protect confidentiality against third parties who receive the information with the knowledge that it had originally been communicated in confidence. That is not disputed.

[8785] However, in my opinion, the terms of the interim interdict which are sought by the petitioners in heads (3) and (4) of this petition, as amended, are not sufficiently clear and are not sufficiently specific to survive the respondents' challenge.

[8886] In Lux Traffic Controls Ltd v Healey 1994 SLT 1153, on the facts of that particular case, Lord Abernethy concluded inter alia (at page 1159-1160) that:-

"Even if some of the information on the customer database did amount to trade secrets it seems to me to be impossible now to separate and specify the knowledge the first respondent acquired from the database as opposed to the knowledge he acquired generally in the course of his employment as area sales manager. At any rate the petitioners have not separated and specified it."

[8987] Lord Abernethy also concluded (at page 1160) that:-

"It is trite law that a person subjected to interdict must know precisely what it is he is interdicted from doing. In my opinion it is impossible to tell from the interdicts sought here what it is that the first respondent would be interdicted from doing."

[90] Although Lord Abernethy was dealing with a different factual situation in Lux, [88] I have reached a similar conclusion on the facts of the present case in relation to heads (3) and (4).

[9189] I was not satisfied that the petitioners' contentions were borne out by Huw Thomas v Farr plc [2007] EWCA Civ 118, 20 February 2007.

[9290] On the contrary, paragraph 42 of the judgment of Lord Justice Toulson supports the view that:-

"a non-competition clause may be the more satisfactory form of restrain, provided it is reasonable in time and space".

[9391] The respondents also accepted that here was some force in the approach adopted by in TSB Bank plc v Connell 1997 SLT 1254 - provided the property concerned was adequately specified.

[9492] A question also arose as to the significance or otherwise of the absence of a time restriction in heads (3) and (4).

[9593] In TSB Bank plc v Connell the pursuer relied on a condition which "contained no time restriction". In that case Lord Osborne stated (at page 1260 K-L) that:-

"It does not appear to me that that feature of the condition is necessarily fatal to the pursuer's case."

[9694] However, in International Computers Limited v Kenneth Eccleson and Others, [2000] ScotCS 245, 4 May 2000, Lord Gill stated inter alia:-

"[27] In general, any restraint on the actions of a former employee imposed by a confidentiality clause in his contract of employment must be justified on the ground of reasonableness (cf. Gloag, Contract, 2nd ed, p. 570; McBryde, Contract, pp. 591-3; 597-9; Gurry, Breach of Confidence, p. 203-5). If interdict is to be granted, it should be no wider in scope than is adequate for the protection of the employer's legitimate interests (Malden Timber Ltd v McLeish, supra; Bridge v Deacons [1984] AC 705). The length of time during which the restraint applies is a material consideration (Gurry, op cit, p 216).

[28] In my opinion, the objection to the duration of clause 7 is well founded. Clause 7 imposes restrictions on the respondents during the period of their employment 'or at any time thereafter'. This restriction could prevent the respondents from disclosing information that was confidential, or was classified with a security marking, long after the petitioner had any serious interest to protect it. A restriction without limit of time could be upheld if the petitioner were to discharge the exacting onus of demonstrating that it was reasonable in the circumstances of these cases. In my view, the petitioner has failed to do so. There are no averments in these petitions that could justify the granting of interdict, interim or permanent, without limit of time: nor has any cogent reason for such an interdict been put forward at the hearing. For this reason alone, I would have granted these motions."

[9795] In the circumstances of the present case, as outlined in some detail above, I have reached a similar conclusion to that reached by Lord Gill in International Computers Limited v Kenneth Eccleson and Others.

[98] Mr Marney accepted that if Lord Gill's approach was correct then the respondents would not succeed in relation to heads (3) or (4).

[99] The respondents did not go so far as to say that Lord Gill's approach was correct - but in the result that does not alter my conclusion. I reject the petitioners' argument to the effect that Lord Gill was wrong.[96] I reject the respondents' argument to the effect that Lord Gill was wrong.

[97] The respondents did not go so far as to say that Lord Gill's approach was correct - but in the result that does not alter my conclusion.

[98] Heads (3) and (4) of the interim interdicts in the present case are without limit of time. In my view, they are also fail to specify the "confidential information" with sufficient precision.

[99] In the result, in my opinion, the averments in this petition (even when supplemented by the submissions of counsel) are not sufficient to justify the granting of an interdict in the terms sought in head (3) or (4).

[100] Heads (3) and (4) of the interim interdicts in the present case are without limit of time. In my view, they are also fail to specify the "confidential information" with sufficient precision. Inter alia, the interdict sought would preclude disclosure of the first respondent's own remuneration.

[101] In the result, in my opinion, the averments in this petition (even when supplemented by the submissions of counsel) are not sufficient to justify the granting of an interdict in the terms sought in head (3) or (4).

[102] I shall grant the respondents'motion to the extent of recalling heads (3) and (4) of the interim interdict.

 

Decision

[103101] In the whole circumstances, and for the reasons outlined above, I propose toshall pronounce an interlocutor in the following terms:

"The Lord Ordinary having heard counsel for the petitioners and the solicitor-advocate for the first and the second-named respondents on the opposed motions of the respondents dated 19 February 2007 recalls the interim interdicts granted by Lord Brodie in his interlocutor dated 19 January 2007 and of new grants interim interdict in the following amended terms namely:-

The Lord Ordinary ad interim (1) interdicts the said Karen Jack, for a period of six months from 31 October 2006, from soliciting, canvassing or seeking to transact business with any of the petitioner's customers with respect to the provision of any services in aviation recruitment in which the petitioner deals and with whose provision to those customers, during her employment with the petitioners, the said Karen Jack has had personal dealings in the course of the duties of her employment except that such customers shall not include any division, branch or office of a firm, company or other organisation with which the said Karen Jack has had no personal dealings during her employment with the petitioners; and (2) interdicts the said Karen Jack, for a period of six months from 31 October 2006, from soliciting, canvassing or seeking to transact business with any of the petitioners' prospective customers with respect to the provision of services in aviation recruitment in which the petitioner deals, such prospective customers being any person, firm, company or other organisation with whom the petitioners have had negotiations in the 12 month period prior to 31 October 2006 and with whom the said Karen Jack has had personal dealings in the course of the duties of her employment except that such prospective customers shall not include any division, branch or office of a firm, company or other organisation with which the respondent had no personal dealings in the 12 month period prior to 31 October 2006."

[104102] I shall also continue the cause on the question of expenses and for further procedure.

 


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