Mr Huggett worked for Prophet Plc, a software company. He had signed a restrictive covenant to prevent him from working in competition, the important clause in this case being the following:

'The Employee shall not during the continuance of this Agreement, or for a period of twelve months from the determination thereof (for whatever reason or in whatsoever manner), without the consent in writing of the Board of Directors of the Company, either solely or jointly with, or as, a Director, Manager, Agent, Consultant or Employee of any other person, firm or company, directly or indirectly, carry on or be engaged, concerned or interested in any business which is similar to, or competes with, any business of the Company in which the Employee shall have worked whilst employed hereunder (in that they provide computer software systems of whatever kind to any company involved in the fresh produce industry) within the geographical area (namely the United Kingdom), except as a shareholder or debenture holder not having a controlling interest in any Company the shares of which are quoted on a recognised Stock Exchange...'

So far, so protected for the employer, or so they thought, although both counsel for the claimant and defendant accepted that, as it stood, the first sentence would constitute an unreasonable restraint of trade and would be unenforceable. 

Fortunately for Prophet Plc, the clause contained a second sentence:

'Provided that this restriction shall only operate to prevent the Employee from being so engaged, employed, concerned or interested in any area and in connection with any products in, or on, which he/she was involved whilst employed hereunder.'

Whilst this might arguably limit the extent of the first sentence, it also, in the view of the Court of Appeal, limited the extent of the covenant to Prophet Plc's products. The competitor didn't sell any of their products, so the employee could not be in breach of the restrictive covenant and the employee's appeal against the injunction was granted. There was no scope to interpret the clause differently just because the employer had poorly drafted it. As Rimer LJ, giving the lead judgement put it, "Prophet made its clause 19 bed and it must now lie upon it."


Practical Lessons

Restrictive covenants can be useful contractual tools to protect employers' legitimate business interests but they require careful drafting by qualified legal advisers.
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