Towry EJ Ltd v Bennett & Ors [2012] EWHC 224
Published on: 17/02/2012
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Background
This case involved seven ex-employees in the financial services sector working as investment advisors. Following a company takeover, the seven defendants left Towry and joined Raymond James Investment Services Ltd, the eighth defendant. Subsequent to that, several customers, associated with the individual defendants, asked to transfer their accounts to Raymond James. Towry sued, claiming breaches of post termination nonsolicitation clauses and unlawful inducement by Raymond James and its new ex-Towry employees.In this exhaustive judgment (900+ paragraphs) Cox J reviews among other things, the circumstances of the acquisition, the differing business practices of the businesses involved and the recruitment processes used by the co-defendant company when employing the defendant advisers. She also analyses the current law and authorities in relation to restrictive covenants, repudiatory breach, solicitation, inducement and many other issues. The Court, dismissing the claim, found:(1) That there was no repudiatory breach by the Claimant of the contracts of employment of the Individual Defendants(2) That the Claimant has not proved the allegations of wrongful conduct against the DefendantsThe Court held that the new Employer had demonstrated:"a high degree of awareness of the need for caution and the taking of a number of steps, after obtaining legal advice, designed to ensure that each Defendant recognised the importance of compliance with the restrictive covenants and that each did in fact comply with them done everything they could to ensure that the adviser defendants did not breach their restrictive covenants."This case is a very useful example of the importance of having both non-solicitation and nondealings clauses in employment contracts, where you want to protect your client base after an employee leaves to join a competitor. The protection afforded to an employer by a nonsolicitation clause is fundamentally lower to that afforded by a non-dealing clause, due to the requirement with regards a non-solicitation clause for evidence of active solicitation on the part of the employee.http://bit.ly/ymgVTj
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The information in this article is provided as part of Legal Island's Employment Law Hub. We regret we are not able to respond to requests for specific legal or HR queries and recommend that professional advice is obtained before relying on information supplied anywhere within this article.
This article is correct at 17/02/2012
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