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Company protects its business from poaching by former director

A businessman has failed in his attempt to overturn an injunction preventing him from competing with his former company and trying to poach its customers.

The court heard that the businessman had been both a director and a shareholder of the company until 2013 when his employment was terminated.  He sold back his shares and entered into a post-termination agreement that prevented him from soliciting the company’s clients for a period of 12 months.

The company later alleged that he had breached the agreement and so it applied for an interim injunction preventing him soliciting restricted customers until the issue could be resolved at a full hearing.  The businessman did not attend the hearing and claimed he had not been served with proceedings, although they had been sent by recorded delivery.

The injunction was granted in a default judgment.  The businessman applied to have the order set aside and filed a full defence, arguing that the agreements had been void.  He also addressed each allegation in turn and denied breach of contract.

The court rejected his application.  The judge said there was no real prospect of him establishing that the restrictive covenants contained in the director's service agreement and the settlement agreement were void and unenforceable.  They were of 12-month duration, and the concept of "customers" had been carefully drawn.  

Given that he had no prospect of showing that the restrictive covenants were void, or defending four of the breaches, the interim order should stand.  Damages would be assessed at a later hearing.

Please contact us if you would like more information about the issues raised in this article or any aspect of restrictive covenants and protecting your business from competition from employees.