Myerson Solicitors is pleased to have successfully defended a grounds maintenance sub-contractor in a restrictive covenant dispute in London, securing a favourable outcome and achieving a significant recovery of the client’s legal costs.
The matter was led by David Jones, with support from Kit Bevan of Myerson's Commercial Litigation team, who successfully defended an urgent interim injunction application arising from the termination of a business relationship.
The dispute concerned the enforcement of post-termination restrictive covenants in a commercial contract for grounds maintenance services, designed to protect the claimant’s customer relationships and goodwill.
The claimant sought urgent injunctive relief, alleging that the restrictions had been breached.
The outcome was of significant importance to our client, as the restrictions were said to affect business worth close to £1 million and the viability of its wider business model.
There would also be a significant impact on its staff and sub-contractors.
There were also separate, wider public-interest considerations, as the result of the injunction could have interfered with the public water supply.
More Than a Standard Injunction Application
Applications for interim injunctions are generally assessed in accordance with the principles set out in American Cyanamid Co v Ethicon Ltd.
However, this case involved a six-month restrictive covenant, creating a real risk that any trial would take place after the restriction had expired.
This would essentially mean that any interim injunctive relief granted would, in fact, constitute final relief, without any trial or cross-examination.
In those circumstances, it was successfully submitted to the Court that the applicant must also satisfy the court on the more rigorous approach established in Lansing Linde Ltd v Kerr.
Because the injunction could effectively determine the parties' rights before trial, the court needed to consider not only whether there was a serious issue to be tried but also the actual prospects of the applicant's case at trial.
The Judgment
The judgment is a helpful reminder of the relevant principles to be considered when seeking injunctive relief and guidance on both the enforceability of restrictive covenants and the need for parties to act promptly when seeking injunctive relief.
A key issue was whether the restrictive covenant was likely to be enforceable.
The Court expressed serious doubts about its enforceability at trial, placing particular weight on the imbalance in bargaining power between the parties and the broadness of the restriction.
Although the relationship was commercial rather than employment-based, the Court considered that it shared characteristics of an employer-employee relationship, where restrictive covenants are subject to closer scrutiny.
It also felt that damages would have been an adequate remedy and were quantifiable in financial terms.
The Court was also critical of the applicant's delay in seeking relief. Despite pre-action correspondence, the application was not pursued with sufficient urgency. The decision reinforces the principle that parties seeking interim injunctions must act quickly, as delay can significantly reduce the prospects of obtaining relief.
Contact Myerson’s Commercial Litigation Team
0161 941 4000
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