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You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Bartholomews Agri Food Ltd v Thornton [2016] EWHC 648 (QB) (23 March 2016) URL: https://www.bailii.org/ew/cases/EWHC/QB/2016/648.html Cite as: [2016] IRLR 432, [2016] EWHC 648 (QB) |
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QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL |
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B e f o r e :
(Sitting as a Judge of the High Court)
____________________
BARTHOLOMEWS AGRI FOOD LIMITED |
Applicant |
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| - and - |
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| MICHAEL ANDREW THORNTON |
Respondent |
____________________
Michael Duggan QC (instructed by Birketts LLP) for the Respondent
Hearing dates: 14 March 2016
____________________
Crown Copyright ©
His Honour Judge McKenna :
Introduction
Bartholomews
Agri Food Limited ("
Bartholomews
") for an interim injunction against the Respondent, Michael Andrew Thornton in which
Bartholomews
seeks to enforce the terms of a restrictive covenant contained in the Respondent's contract of employment.
Bartholomews
relies on witness statements made by Gary Scott Herman, its Managing Director (and Chief Executive of it's parent company,
Bartholomews
(Holdings) Ltd), and Timothy Andrew Gleeson, it's Company Secretary and Group Legal Counsel. The Respondent, for his part, has filed three statements of his own and in addition also relies on a statement from Mr John Bianchi, the Managing Director of Pro Cam UK Limited, the company for which the Respondent intends to work on the expiry of his notice period.
Bartholomews
is in restraint of trade, unreasonable and unenforceable. It is too wide and moreover
Bartholomews
have failed to demonstrate that there is any confidential information to be protected as opposed to information which the Respondent is permitted to use by virtue of his skill and experience developed over many years.
Background
Bartholomews
is an agricultural merchant supplying a full range of products and services to the agricultural sector including the provision of agronomic advice to individual farmers, landowners and their managers with an annual turnover of in excess of 111 Million pounds. It operates in West and East Sussex, Kent, Hampshire, Wiltshire and Dorset. It is part of a larger group of companies, the holding company for which is
Bartholomews
(Holdings) Ltd. Other group companies include Churchill Freight Services Ltd,
Bartholomews
Specialist Distribution Ltd, Shoreham Silo Services Ltd and Ultimate Fertilisers Ltd. Total group turnover in 2014 is said to be in excess of 117 million pounds.
Bartholomews
, then known as
Bartholomews
(Chichester) Limited in September 1997 as a trainee agronomist. As such, the Respondent provides advice to
Bartholomews
' customers on issues such as crop planting and rotation, seed choice, and soil condition and crop nuitrition advice in the form of fertiliser application.
Bartholomews
purported to place the Respondent on garden leave until the termination of his employment. There is an unresolved factual dispute between the parties as to whether the imposition of garden leave by
Bartholomews
on the 6 January preceded an offer from the Respondent to that effect, it being common ground that there is no provision in the Contract of Employment between the Respondent and
Bartholomews
for the imposition of garden leave.
The Relevant Provisions of the Contract
Bartholomews
(Holdings) Ltd. That document included the following relevant provisions: -
"INTRODUCTION
This document is a written form of agreement between the Employee andBartholomews
(Holdings) Ltd and therefore any Company owned by
Bartholomews
(Holdings) Ltd. Keep this document safe. Any changes to the Contract will be made to you in writing.
6 TERMINATION OF EMPLOYMENT
Employees who wish to leave the Company must give written notice of this intention. The period of notice varies with the type of job being undertaken and is notified separately to employees in a document that is an integral part of the Contract of Employment.
10. COMPANY CONFIDENTIALITY
Employees should not, during the continuance of their employment, or at any time thereafter, divulge any of the details of the business rf trade information relating toBartholomews
(Holdings) Ltd or any subsidiary Company, acquired during their employmentbyt the Company, or any person, firm, or other organisation.
10.2 PROTECTION OF KNOWLEDGE ACQUIRED DUE TO THE COMPANY'S SPECIALISED BUSINESS
Employees shall not, for a period of six months immediately following the termination of their employment be engaged on work, supplying goods or services of a similar nature which compete with the Company to the Company's customers, with a trade competitor within the Company's trading area, (which is West and East Sussex, Kent, Hampshire, Wiltshire and Dorset) or on their won account without prior approval from the Company. In this unlikely event, the employee's full benefits will be paid during this period."
It is to be observed at the outset that these provisions have not been well drafted. There are no definitions and, on one reading, the covenant prevents the Respondent from being able to work in the six specified counties at all, albeit that Bartholemews does not interpret the clause in that way. What then is meant by the words "of a similar nature?"
The Issue
Bartholomews
can demonstrate that there is a serious question to be tried so far as the enforceability of clause 10.2 is concerned. That is to say what Patten J (as he then was) described in BSW Ltd v Balltech Ltd [2006] EWHC 822(CH) at paragraph 19 as "a minimalist approach which sets the threshold at a level which does little more than exclude claims which might be characterised as frivolous or vexatious"
Bartholomews
must demonstrate that it has legitimate business requiring protection and that clause 10.2, on its true construction, is no wider than is reasonably necessary for the protection of those interests. This involves construing the restrictive covenant in order to consider the question whether, without having to resolve disputes of fact, as was submitted by leading counsel for the Defendant was the case here, the restrictive covenant is so obviously unenforceable in it's wording that even at this interim relief stage the issue can be resolved. As Chadwick LJ put it in Arbuthnot Fund Managers Ltd v Rawlings [2003] EWCA Civ 518 at paragraph 20: -
"The first task of the Court – faced with the contention that post-termination restraints on an employee's ability to engage in future business activity are not enforceable – is to construe the contract under which those restraints are to be imposed. That, as it seems to me, is a task which the Court ought to carry out on an application for interim relief (if there is one) if it can properly do so. Unless the Court is satisfied that there are disputed facts which bear on the construction of the relevant contractual terms, and that those facts cannot be resolved without a trial, the Court at the interlocutory stage is as well able to construe the relevant contractual terms as a court will be at a trial. There is no need to put off until trial determination of the question – what do the contractual terms mean? The court can, and should, determine the scope of the restraints which, as a matter of construction (the contractual) terms seek to impose "
The Evidence
Bartholomew
's customers, many of whom were small family owned businesses working in isolated conditions. The customers therefore placed considerable reliance on the Respondent and his role was very much that of a trusted advisor. The advice appropriate for a particular client would depend on a range of issues such as the client's soil type, size of his workforce, customer base and to a degree his personal temperament. The Respondent had some 52 active agronomy clients, the vast majority of whom were based in what Mr Herman described as
Bartholomew
's core trading area of West and East Sussex, Kent, Hampshire, Wiltshire and Dorset. In fact, it appears that the majority of the Respondent's clients are based in West Sussex and that there are no such clients in Wiltshire, Dorset or Kent.
Bartholomews
, for whom he was not directly responsible, at various events organised by
Bartholomews
. At those events he would have the opportunity to talk to those customers and learn more about their businesses interests and concerns.
Bartholomews
in November 2015. That was an event for its agronomist staff and those farm traders who bought and sold to farm and he exhibited to his second statement a PowerPoint presentation entitled Spring Cropping Launch which he asserted contained confidential information.
Bartholomews
is that the evidence demonstrates that the Respondent had developed relationships with
Bartholomews
customers which fell into two broad categories:
i) Customers for whom the Respondent was an exclusive agronomic advisor (of which there were 52), and;ii) Customers with whom the Respondent had dealt in the course of marketing activities. Moreover the Respondent had, as a result, acquired confidential information about
Bartholomews
' pricing, services and customer base.
Bartholomews
since, although he would still continue to carry out some agronomy advisory work for clients, he would also be taking on a national technical role advising his new employer on the development of it's arable seed portfolio and working with its national team of agronomists advising them on and promoting arable seed portfolios. He did however make it clear that he wanted to continue to work with some of his existing client base if they wished to move with him.
Bartholomews
' customer pricing structures since they would change from season to season.
Bartholomews
Spring Cropping Launch in November 2015 and sought to demonstrate why the information contained in the PowerPoint was not confidential and in any event largely obtainable elsewhere and now out of date.
Discussion and conclusions
Bartholomews
that there plainly were legitimate business interests requiring protection, namely its customer connection and its confidential information. Moreover on a true construction of clause 10.2, it was a non-dealing covenant which went no further than was necessary to protect those legitimate business interests since:
i) It was limited in time, namely 6 months, which was no longer than reasonably necessary to provideBartholomews
with the opportunity for it to introduce one of its other agronomists to customers who had been serviced by the Respondent and for that agronomist to develop a relationship with those customers, having regard to the evidence as to peak farming periods;
ii) It was limited to the supply of goods or services of a similar nature to those supplied by the Respondent in competition with
Bartholomews
;
iii) It was limited to dealings with
Bartholomews
' existing customers, a necessary provision to protect confidentiality and customer connection because of the Respondent's possession of confidential information relating to
Bartholomews
' business. In this regard reliance was placed on the authorities of GW Plowman & Son Ltd v Ash [1964] 1WLR 568, Business Seating v Broad [1998] ICR 729 and Dentmaster (UK) Ltd v Kent [1977] IRLR 636 to support the validity of a covenant of short duration, regardless of whether or not the employee concerned had himself had any recent connection and / or notwithstanding the absence of a so-called backstop temporal limit.
Bartholomews
would continue to pay the Respondent his full remuneration for the duration of the covenant even if the Respondent had entered into other employment and was being paid by his new employer (provided of course that he did not breach clause 10.2). This, it was said, tolled heavily in favour of upholding the clause since it shifted the benefit and burden of the clause away from the employer and in favour of the employee and allowed the Respondent, in effect, to receive a windfall benefit while still furthering his career.
Bartholomews
or from providing agronomic advice to customers in any other part of the United Kingdom (such as for example in Cambridgeshire where Pro Cam (UK) Ltd was based, or Surrey, which is close to the Respondent's home). Furthermore it did not prevent the Respondent from providing agronomic services which were dissimilar to those provided by
Bartholomews
or through a body which was not a competitor of
Bartholomews
such as a government agency.
Bartholomews
' behalf. To my mind clause 10.2 is in restraint of trade and unenforceable. It was imposed on the Respondent as long ago as 1997, at a time when the Respondent was a trainee agronomist with no experience and no customer contacts and it's terms were, in my judgement, manifestly inappropriate for such a junior employee and I reject the distinction sought to be made on behalf of
Bartholomews
that (contrary to the position in WRM Ltd v Ayris [2008] IRLR 889) the Respondent was never promoted but remained on the same terms and conditions throughout his employment, as a mischaracterisation of the Respondent's position. In Pat Systems v Neilly [2012] IRLR 979 Underhill J (as he then was) held that an employment non-competition covenant that had been unenforceable at the time it was agreed (which was conceded in that case, but not by
Bartholomews
in this case) given the employee's status and role at the time, remained unenforceable regardless of the employee's promotion to a role where the covenant would have been regarded as reasonable. That to my mind is the position here.
Bartholomews
' business interests. It applies to all customers of
Bartholomews
and of its associated companies, regardless of whether the Respondent had knowledge of those customers and regardless of whether the Respondent ever carried out any work for those customers.
Bartholomews
' voluminous evidence is singularly lacking in information as to the number of customers they have, the number of agronomists they employ and as to the turnover and activities of its various associated companies. This latter defect was one which leading counsel for
Bartholomews
sought to remedy, on instruction, during the course of his submissions. However what is clear form the evidence is that
Bartholomews
' 2014 turnover was in excess of £111,000,000, of which the Respondent's customers contributed £1,257,000. This means that the Respondent was responsible for just over 1% of
Bartholomews
' turnover. It follows that the remaining 98% plus of turnover was generated by customers with whom the Respondent did not directly deal. As it seems to me, it would be wrong to restrict the Respondent from having dealings with the customers representing that 98% of Bartholemews' customers.
Bartholomews
to have imposed such a wide ranging covenant on the Respondent. If the clause had provided that the Respondent could not, for 6 months, deal with or solicit customers with whom he had dealt for a period of time before the termination of his employment that would have been sufficient. There is a lack of any correspondence between the area and the customers with which the Respondent had dealings.
Bartholomews' evidence on the Respondent's attendance at the 2016 Spring Crop Launch in November 2015 and in particular to a PowerPoint presentation made at that event, which it is asserted contained confidential information. The difficulty with this aspect however is that the Respondent did not retain the document itself and it cannot sensibly be contended that he could have memorised it. As the Respondent comprehensively demonstrated in his third witness statement, the document contains a welter of general statistical information readily available elsewhere in the public domain and is in any event largely out of date. There is no evidence as to the specific confidential information which it is said the Respondent has in his possession as opposed to the skill and knowledge which he has obtained and developed by virtue of his career over the past 18 years.
Disposal