Brake Brothers Ltd v Ungless & Anor

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This is an action brought by the claimant, Brake Brothers Limited (“Brakes”) against the defendants, Darren Ungless (“Mr Ungless”) and Timothy Adams (“Mr Adams”), who are former employees of Brakes. Brakes seeks permanent injunctions to restrain the defendants from acting in breach of certain covenants contained in their contracts of employment. In particular, injunctions are sought that the defendants should not work for competitors of Brakes for a period of six months after termination of their respective contracts of employment.

The principal business of Brakes is the wholesale supply of frozen, chilled and ambient food products to the catering industry. Brakes carries on its business across the whole of the United Kingdom and employs about 9,000 people. It also carries on business in France. It has a turnover of in excess of £1.5 billion, based on its accounts to the end of the financial year 2003. It does not sell to the public, nor does it sell to supermarkets for resale, save for restaurants, cafes and other catering outlets in supermarkets. Its business is within a specific part of the food industry known as the food service sector. It offers an extensive portfolio of products, both own-brand and supplier-branded in each temperature range. It has a number of divisions which deal with different parts of its business.

The defendants were both employed by Brakes as national buyers; that is to say, they had responsibility for negotiating trading agreements and dealing with suppliers of food products which Brakes would, in turn, sell on to the catering industry. The

Mr Ungless is 32 years old, married with two young children and his earnings comprise the main family income. Mr Ungless was employed by Brakes pursuant to a written contract signed by him on 5 February 2003, although he had been employed by a predecessor business, Watson & Phillips Limited, subsequent acquired by Brakes in 1992 and he had been employed by Brakes since 1999. Indeed, his statutory continuous service appears to have begun in 1989. From 2000 he was employed as a purchasing manager, and as senior purchasing manager from 2002. He was in receipt of a salary of approximately £46,000 at the time he left Brakes. He was therefore, if not a senior employee, certainly one with considerable responsibilities.

On 19 December 2003 Mr Ungless gave three months’ notice of termination of his contract and, in accordance with the contract, was placed by Brakes on garden leave until the expiry of his notice on 19 March 2004. The post-termination restraints constrained in his contract, if valid, will last for six months following the end of his employment, namely 19 September 2004. He made it clear, either when, or shortly after, giving notice that he had resigned from his employment with Brakes to take up employment as a buyer with a rival company of Brakes called 3663 First Foods Service Limited (“3663”). He was not evasive in any way and no allegation is made that when he left Brakes’ employment he took confidential information in hard copy form or in any way downloaded, or improperly took, copies of computer files away with him.

Mr Adams is 25 years old. He was employed by Brakes as a purchasing manager pursuant to a written contract signed on 31 May 2002. He was in receipt of a salary of approximately £37,000 at the time he left Brakes. On 11 February 2004 he gave three months’ notice of termination of his contract. In accordance with the contract,

3663 is the largest competitor of Brakes in the UK. Brakes believes that its sales in the last financial year exceeded £1 billion. 3663 also provides food to the catering industry across the same temperature ranges as Brakes. It is in direct competition with Brakes. In addition, likewise in competition, it runs a contract distribution service on a national scale, supplying name-branded products and own-label brands in a way similar to the way in which Brakes does so.

Proceedings were issued by Brakes on 9 March 2004 when it failed to receive what it regarded as satisfactory assurances from the defendants that they would not begin their employment with 3663 prior to the expiry of the six months’ period. Also on 9 March 2004, an application notice for interim relief was issued by which Brakes sought interim injunctions against the defendants until trial. After an ineffective

The relevant provisions of the defendant’s contract which contain the constraints and restrictive covenants are in the same terms and are as follows:

“23.

Business Protection

a)

Definitions

The definitions concerning business protection are set out in Schedule 1.

b)

Acknowledgements

You acknowledge that:

•

each Group Company possesses a valuable body of

Confidential Business Information;

•

the Company will give you access to Confidential Business Information in order that you may carry out the duties of your employment;

•

the duties of your employment include, without limitation, a duty of trust and confidence and a duty to act at all times in the best interests of the Group and any Group Company that employs you from time to time;

•

the Group requires a range of managers to accept restrictions which are similar to those set out in this agreement for its and each of their mutual protection;

•

your knowledge of Confidential Business Information directly benefits you by enabling you to perform your duties;

•

the disclosure (other than as is strictly necessary for legitimate business purposes) of ay Confidential Business Information to any customer, supplier or actual or potential competitor of any Group Company would place that company at a serious competitive disadvantage and would cause immeasurable (financial and other) damage to the Group;

•

if, on leaving the employment of the Group, you were to hold any Material Interest in a customer, supplier or any actual or potential competitor or any of the Businesses, it would place the relevant Group Companies at a serious competitive disadvantage and would cause immeasurable (financial and other) damage to the Businesses;

•

the success of the Businesses depends, in part, on your successor and/or fellow employees establishing business relationships with the customers of and suppliers to the Businesses which are similar to those established and maintained by you in the course of your employment within the Group.

c)

Confidential Business Information

You must not disclose to anyone else outside the Group (or to any Group employee who does not have a business need to know) any Confidential Business Information about the Company or any Group Company, which you have acquired during your employment. This duty continues to apply after your employment comes to an end. It is not limited in time but does not apply to information ordered by a court to be disclosed or otherwise required by law to be disclosed.

You must return property of whatever kind whenever requested to do so by the Company or Group Company and which belongs to the Company or Group Company and in any event must do so when you leaves its employment.

…

f)

Conflict of interest

You shall, during the period of your employment within the Group:

•

abide by any Company or relevant Group policy on

conflicts of interest and outside business interests produced from time to time;

•

not, without the Company’s prior written permission, hold any Material Interest in any person, firm or company which:

(a)

is or shall be in competition with any of the

Businesses;

(b)

impairs or might reasonably be thought by the Company to impair your ability to act at all times in the best interests of the Group; or

(c)

requires or might reasonably be thought by the Company to require you to disclose any Confidential Business Information in order properly to discharge your duties to or to further your interest in such person, firm or company;

•

not directly or indirect receive or obtain, in respect of any goods or services sold or purchases or other business transacted (whether or not by you by or on behalf of any Group Company, any discount, rebate, commission or other inducement (whether in cash or in kind) which is not authorised by any Company or relevant Group rules or guidelines form time to time and, if you or any firm or company in which you may hold a Material Interest shall obtain any such discount, rebate, commission or inducement, you shall immediately account to the Company for the amount so received;

•

not, without the prior authority of the Company or in the ordinary course of your duties, remove from Company premises or copy or allow others to copy the contents of any document, computer disk, tape or other tangible item which may contain any Confidential Business Information or may belong to any Group Company;

•

return to the Company upon request and, in any event, at the Termination Date all documents, computer disks and tapes and other tangible items in your possess or under your control which may contain or refer to any

Confidential Business Information or may belong to any Group Company;

•

if so requested by the Company, delete all Confidential Business Information from any computer disks, tapes or other reusable material in your possession or under your control which may contain or refer to any Confidential Business Information.

g)

Obligations after employment

Unless you have the prior written authority of the board of the Group you shall not either on your behalf or on behalf of any other person, firm or company, directly or indirectly, for a period of 6 months after the Termination Date:

•

try to entice away from the Group any person who has at any time during the 12 months prior to the Termination Date to your knowledge been an Employee of the any Group Company and with whom you have worked to any material extent during any part of the 12 months prior to the Termination Date;

•

with a view to competing with any Group Company try to entice away from the Group any customer (or party negotiating with the Group with a view to becoming a customer) with whom you had material dealings (in relation to any of the Businesses) during any part of the 12 months prior to the Termination date:

•

with a view to competing with any Group Company try to entice away from the Group any suppliers (or party negotiation with the Group with a view to becoming a supplier) with whom you had material dealings (in relation to any of the Businesses) during any part of the

12 months prior to the Termination Date

•

in the United Kingdom be concerned or involved directly or indirectly in any capacity in any business activity which is undertaken in competition with any of the Businesses. However, this restriction shall only apply where the business or activity is carried out by a sole trader partnership, company or any group of the same which, when taken together, had a turnover in such section during their last complete financial year prior to the Termination Date of a minimum of £30 million;

•

…

•

at any time after the Termination Date, disclose to any person, firm or company or make use of any Confidential Business Information.

h)

Business Protection - General

Each of the restrictions in this agreement shall be independent and severable from the remaining provisions and enforceable accordingly. If any provisions shall be unenforceable for any reason but would be enforceable if part of their wording were deleted, it shall apply with such deletions as may be necessary to make it enforceable.

Wherever provisions of this agreement potentially benefits other Group Companies you have given them t the Company as trustee for itself and for each Group Company and shall at the request and cost of the Company enter into direct undertakings with any Group Company which correspond to them.

...

SCHEDULE I

DEFINITIONS

In this agreement:

‘Business’ means all and any trade or other commercial activities of the Group:

a.

with which you shall have been concerned or involved to any material extent at any time during the 12 months up to the Termination Date and which any Group Company shall carry on with a view to profit; or

b.

which any Group Company shall, at the Termination Date, have determined to carry on with a view t profit in the immediate or foreseeable future and in relation to which you possess at the Termination Date any significant body of Confidential Business Information.

‘Confidential Business Information’ includes (without limitation) all and any information about business plans, maturing new business opportunities, research and development projects, the contents of management meetings (and minutes taken), product formulae, the working of computer systems,

processes, inventions, designs, discoveries or know-how, sales statistics, marketing surveys and plans, reports, costs, unpublished information concerning profit and loss, prices and discount structures, the names, addresses and contact details of customers or suppliers and potential suppliers (whether or not recorded in writing or in other electronic form) and any other information of a commercially sensitive nature.”

The relevant covenants may be summarised as follows. The first relevant restrictive covenant for present purposes is that which I have designated (i) above in sub clause (23)(g); that is a covenant by the defendants not to entice away from Brakes anyone who had been employed by Brakes at any time during the 12 months prior to the termination of the defendant’s contract. This promise is limited to those with whom the employee worked to a material extent during any part of the 12 months prior to termination. The claimant contends that this covenant seeks to protect its interest in maintaining staff stability. In their defence, the defendants did not admit the lawfulness of this covenant. However before me they were prepared to give an undertaking in the terms of this restrictive covenant for the relevant period of six months.

The second and third covenants were promises not to try to entice away from Brakes any customer or supplier of Brakes. These promises are again limited in a number of ways. They apply only to those customers or suppliers of Brakes with whom the relevant employee had material dealings in the twelve months prior to termination of his employment. They apply to prevent enticement with a view to competing. The claimant contends that these covenants seek to protect Brakes’ confidential information and its customer and supply connection and goodwill. The defendants do not admit the lawfulness of this covenant. However, before me they were prepared to give an undertaking in the terms of the restrictive covenant for a period of six months.

The real issue, however, arises in relation to the covenant which I have designated as (iv) above and which has been referred to before me as the “area” covenant. It is, in effect, a non-competition clause which prima facie and on the assumption that it is valid, prevents an employee, who has been a buyer for Brakes from, for example, buying for certain trade rivals, whether as an employee, agent, consultant or director. Brakes contends that this clause addresses its legitimate interests in protecting trade secrets or confidential information akin to trade secrets in circumstances in which, amongst other things, policing the use or disclosure of confidential information is extremely difficult. Brakes contends that this clause is reasonable, both as to its ambit and as to its duration.

The defendants, on the other hand, argue that there is no legitimate interest warranting the imposition of such a covenant, that there is no need for protection of this type, that it is too long in duration and that it has been drafted so as to be too wide. They contend that such a restriction is unjustified in order to protect any legitimate business interests of Brakes and it is wholly disproportionate, especially when it is viewed in addition to the serving of a three month period on garden leave. In particular the defendants contend:

However, the defendants are prepared to undertake that, for the six months following termination of their employment they will not deal with the products with which those buyers dealt latterly with in their employment at Brakes. In addition, 3663 have, by

The law as to the enforceability of restrictive covenants was, in effect, common ground between the parties. The following propositions taken from both the claimant’s and the defendants’ skeleton arguments may be taken as summarising the law for present purposes.

The first issue is the true construction of the contract. Does it, as the defendants contend, prevent the defendants from being employed in any capacity by 3663, and not merely as a buyer? Or does it, as the claimant contends, merely prevent the defendants from working for 3663 as a buyer, namely from being employed in a

In my judgment (and consistently with the view taken by Treacy J on the interim relief application hearing) the definition of the expression “the businesses”, as set out in schedule 1 to the agreements, restricts the application of the fourth covenant to restraining the employee from working in any business activity which competes with work of the type which the employee had been carrying on in the previous twelve months. I remind myself that, in accordance with the seventh proposition of law set out above, if a covenant can be construed in two ways, I should prefer a construction that upholds its validity. I do not consider that the restriction goes so wide as to prevent an employee, such as Mr Ungless or Mr Adams, from being employed at all, in any post, by 3663 (for example, in human resources or as a janitor), simply because the latter company is clearly a defined competitor in the relevant area of business. Such a provision might indeed be too wide, but it is not for me to decide this. But here, in my judgment, consistent with the aims set out in the acknowledgement clause (clause 23(b)) and the definition of “businesses” in schedule 1, there is every sensible justification for construing the words “business activity” in section 23(g) as limited to a business activity with which the employee was involved and not to anything wider, here of course being employed as buyers from suppliers. Accordingly, in my judgment, it cannot be said that the restriction is too wide to be unenforceable.

It was therefore common ground that the issues that arise for determination in relation to each of the defendants are as follows.

In my judgment, having read and heard extensive evidence over a number of days as to the manner in which Brakes (and indeed its competitors) carry out their business, and the role played by the defendants in that business, the following conclusions can be reached on the evidence:

In order to explain why I have reached this conclusion, it is necessary to describe, in a little more detail, what I find as a fact to be the evidence of the operation of Brakes’

Brakes buys food products using a team of buyers, allocating a buyer to a series of products, which may change from time to time. It has trading agreements with the suppliers relating to specific types of products. Such trading agreements are typically entered into for a period of one year, and usually a calendar year. Some trading agreements may last for more than one year. The trading agreements are subject to express confidentiality clauses, as the defendants accepted they knew. Negotiations of trading agreements and variations of such agreements are confidential and treated as such. A trading agreement will typically include one or more element of discounts and payments by the supplier to Brakes. These discounts are applied to the base price, that is to say the invoice price to Brakes. The elements can include an overrider, rebate, marketing support, advertising allowance, promotional payments and other lump sums. An overrider is often a simple percentage, which often covers every product within a particular range of products, and often remains stable throughout the course of a trading agreement.

Some of the discount and payments elements may vary according to the volume of products produced by Brakes. A trading agreement typically identifies (a) the product to which it applies, (b) the discount and payment elements and (c) the nett price of the products (that is to say the base price less any overriders, PLR or guaranteed rebates but excluding the discount and payment elements are which variable). But the nett price of a product (which is the price after all elements have been taken into account, including variable elements such as lump sum and targeted elements dependent upon

Breaks issued three catalogues each year, setting out its prices and its products. The trading agreement between Brakes and the supplier included an express term which affords a supplier an opportunity to seek a price increase before the next catalogue has gone to press. The price agreed between Brakes and a supplier can be varied by agreement. But save in the rare cases of supplier with “muscle” (such as Coca Cola) the supplier cannot force a price increase on Brakes. The prices agreed between

Brakes is very concerned to ensure price stability because it does not want to place customers in the position of having to change many prices frequently. In 2003, prices were affected by two unusual events, namely the drought conditions across Europe and the hardening of the Euro against the pound. Brakes enters into strategic partnerships with some of its suppliers, by which the supplier may provide additional resources or special co-operation with a view to increasing the resale of its products by Brakes. Internally Brakes treats the discount and payment elements arising from the trading agreement as the income of the buying side of its business. Internally Brakes measure and motivates its buyers by setting targets to the team of buyers and to each buyer individually. Brakes’ buyers receive bonuses or commission depending upon how well they have performed against their targets. In order to keep its sales force motivated to secure the best resale price, Brakes does not ordinarily reveal to its sales force the nett price paid for products. Of a work force of about 9,000, only

As to the business carried on by Brakes’ trade rivals, I make the following findings of fact relevant to this case:

On the evidence before me I find as a fact that buyers employed by Brakes could be required to carry out some or all of the following tasks:

Of these various tasks two are of particular importance. These relate to the preparation and receipt of business planning information as identified in subparagraphs (g) and (h) above. The evidence shows that buyers were expected to be

The evidence demonstrates that buyers can be and are involved in the receipt of business planning information. The defendants have not disputed that the 2002 Category Review documents were presented to the buyers. Although they accepted some very limited involvement, the defendants dispute that they received or presented

So far as the submission that Brakes had and continues to have a legitimate interest in protecting its connection with its suppliers, the evidence showed as follows.

So far as Brakes’ regular dealings with its specific suppliers was concerned, on average Mr Adams and Mr Ungless dealt with each of their suppliers every two weeks, but when negotiating agreements, the contact would be more frequent. Mr

Accordingly, I reject the suggestion there is no protectable interest owned by Brakes because the supplier wants to sell to the buyer and not the other way around. I reject this submission because it is belied by the imposition of non-solicitation and nondealing covenants within the defendants’ contract.

The evidence showed that Brakes had, and continues to have, a real and legitimate interest in protecting its staff stabilities. In support of this proposition Brakes, in my view correctly, relies upon the following: Brakes is dependent upon its personnel for carrying out its business. Buyers within Brakes operate a team with team targets and individual targets. In respect of some suppliers, a buyer may be negotiating the principal terms of a trading agreement for another buyer who also purchases from the same supplier. Buyers within Brakes work in an open plan office, socialise with each other by going out to the pub at lunch, or at the end of the day, and have regular contact with each other. The buyer’s team provides support and encouragement to each other and have dealings with marketing personnel, commercial managers and product development personnel. As a consequence of these matters, a buyer is likely to know which members of staff are good to work with, and which are not, which are good at their jobs, and which are not. Accordingly, a buyer may come to be in a position of influence with employees such that an employee may be susceptible to the

In my judgment, the evidence showed the defendants were privy to, and conversant with, confidential information. I reject the submission by Mr Bloch QC that the confidential information was inadequately specified or too vague to attract the protection afforded by the restricted covenant. In summary, the confidential information was of the following types:

The evidence before me illustrated the kind of business planning information to which buyers at Brakes, such as the defendants, were privy. The 2002 Category Review documents, the Business Planning Information documents and the Chef’s Essential Food Business Planning 2004 were, in my judgment, clearly confidential. The types of information contained within these documents included:

All this information is, in my judgment, objectively plainly confidential information. It is all information which a man of average intelligence and honesty would consider improper to disclose to his employer’s trade rivals, to use the test articulated by Cross J in Printer & Finishers Limited v. Holloway [1965] 1 WLR 1 at page 6C.

Additionally, in my judgment, if a test or criteria were any different, the confidential information which I have identified above is akin to a trade secret. Thus the nature of the defendant’s employment was such they were habitually handling confidential information. Brakes had pressed upon its buyers the confidentially of information to which they were privy. For example, the defendants’ contracts of employment expressly identified types of information which are regarded by Brakes as confidential. The Trading Agreements with suppliers were marked “Private and

In submission Mr Bloch QC, counsel for the defendants, submitted that only the net net price could be useful and that, since this was unknowable until after the year end there was nothing of value which could be drawn from the terms of the trading agreement. Indeed, in his evidence Mr Ungless accepted that his point was based on the premise that price was the only useful piece of information. For the reasons advanced by Mr Stafford QC in argument, I reject this contention. My reasons are as follows. Whatever a supplier has been prepared to agree is valuable in itself to a trade rival. The individual agreements of a trading agreement are valuable to a trade rival,

For all the above reasons, I have concluded that the information that was available to the defendants was indeed confidential and was indeed adequately specified in the pleadings and in the evidence that was deployed before me.

The next submission made by Mr Bloch QC, on behalf of the defendants, was that, insofar as there was any confidential information, it was so detailed that it was not information that a buyer could reasonably be expected to recall in the six month period following the three months compulsory garden leave. I reject this contention. Although obviously much of the information and the detail of the prices might be too detailed and complex to retain in one’s memory, the evidence showed that, at least in headline terms, a buyer would retain the key information relating to the transactions with which he was involved. As Mr Radcliffe, Brakes’ Commercial Manager, said, a buyer would “live and breathe the key deals you do. You live and breathe these numbers every day.” The fact that the information was relatively simple here makes it all the more likely to be memorable.

In my judgment, in the present case, the information identified above is simple, such as, for example, the fact that Brakes plans to launch a product in 2004, the fact that at supplier had agreed a particular type of payment and the amount of the payment. The relative simplicity of the trading agreements is shown in the document at B483-6 in which Mr Adams sets out the principal elements of the Trading Agreements which he had with these suppliers. I thus reject Mr Bloch’s case that the information was all too complicated to be memorable.

Likewise, as Mr Stafford submitted, information which a buyer has helped to create is more likely to be memorable to him than information which is simply presented to him. In the present case, the Trading Agreements and the Business Planning narratives, insofar as they relate to a buyer’s own products, are the product of that buyer’s hard work. Moreover, the Trading Agreements are created as the result of intensive negotiation, thereby making it all the more memorable so far as the buyer is concerned; it is clear that buyers constantly revisit the bargains which they have struck with their suppliers. In the case of renegotiations with suppliers, both Mr Ungless and Mr Adams admitted in evidence that the starting point was the existing agreement. During the course of the year they constantly monitor prices and performance to ensure that they can spot opportunities to improve the terms and prices and can resist attempts to vary the terms and prices adversely affected. As Mr Black observed, this was useful as a reminder of the goals at which the buyers were aiming. Mr Stafford submitted, and I accept that, although it can be quite difficult to recall something in an information vacuum, it is a different position where one is recalling something where there is a reason for applying one’s mind to the matter, or there is a trigger to prompt recollection. I accept the submission that a buyer of foods who moves to work for a trade rival as a buyer is not likely to be working in an

Mr Bloch submitted that, by the expiry of the garden leave period, the shelf life or relevance of information that was indeed memorable would have expired. I reject that submission. I accept Mr Stafford’s contention that the evidence showed that there was, in effect, an annual business cycle. Targets would be set for the buying team as a whole and for the individual buyers. This would take place in the autumn. The buyers would then open negotiations with their suppliers for a trading agreement, aiming to produce the income that would enable each to contribute his share of the team’s income. Before the end of the year, plans would be made for the development of business over the next year. Agreements with suppliers might be made before the year end, but sometimes agreement was not reached until the spring. The financial performance of the team and of its individual members was based on a calendar year. Over the course of the year, new product developments would emerge and be pursued.

This suggests that the shelf life of the business planning information is likely to be a calendar year. This is the period of time over which the plans are to be carried out into effect and their success or failure measure.

A good example is the terms of the 2004 Trading Agreement. The claimant contends that the shelf life, whilst capable of varying, can undoubtedly last the length of the

Accordingly, I conclude that Brakes has established a legitimate interest in its supplier connections, staff stability and confidential information.

I turn now to consider the next issue, namely whether the covenants go no further than is necessary for the protection of those interests.

As I have already said, there was effectively no issue about this covenant. The defendants were prepared to give an undertaking not to entice any employees. In any event, in my judgment, the covenant is reasonable. It is limited to those employees with whom the buyers worked to any material extent. Thus, it covers only those employees whose capabilities and attributes are known to the ex-employee and only those over whom an ex-employee may have developed an influence. Likewise, it is

Likewise, there is no real issue as to the defendants’ obligation under the clause restraining an ex-employee from enticing away suppliers. In my judgment, it is clearly reasonable because it is limited to those suppliers with whom a buyer has had material dealings; the most intensive dealings between a buyer and a supplier will be for the purposes of negotiating a trading agreement; and despite the fact that typical trading agreements is for a period of one year, a period of six months does not necessarily allow the new buyer the chance to negotiate a renewal of the agreement. I accept the submission of Mr Stafford QC on behalf of the claimant that the covenant is reasonable in its duration.

In my judgment, contrary to the submission of Mr Bloch, the area covenant does not go beyond what is reasonable in all the circumstances to protect Brakes’ legitimate interest in protecting its confidential information. In my judgment, it is legitimate for Brakes to have done so by a clause which goes beyond a non-dealing clause. I have already referred to the relevant authorities which support the proposition that such a covenant may be reasonable. I should emphasise that it is clear from those authorities that a covenant to protect the use or disclosure of trade secrets (or confidential information akin to a trade secret) does not depend upon the employee taking documents or memorising the contents of documents. It can properly apply to confidential information akin to a trade secret which the employee may carry away in

I conclude, on the evidence before me, that, viewed objectively, a buyer at Brakes could reasonably be expected to be in a position to give significant information to a trade rival which well could be commercially damaging to Brakes as described in Poly Lina Limited v. Finch (supra).

I also conclude that the evidence shows why, on the non-dealing clause alone, a mere confidentially clause would be insufficient and why an area covenant is indeed needed. As Mr Stafford submitted, if a buyer from Brakes were to tell his new employers what products Brakes were planning to launch, that would not involve dealing or soliciting with suppliers. If that buyer were to tell his new employer what lines Brakes were planning to promote heavily, that likewise would not involve dealing with suppliers. If a buyer from Brakes were to tell his new employer that a supplier in common had been willing to finance promotional activities that would not be a traceable breach of confidence. The employer might well, in the light of the information, adjust its negotiating stance and secure a more favourable trading agreement. That adjustment need not involve telling the supplier, merely knowledge that the supplier had already given such support in the past. As Mr Ungless himself said in evidence “there’s always a tussle about lowering a price. Some [suppliers]

Moreover, because the trade rival indeed secured a better trading agreement on the back of a breach of confidence, that trade agreement necessarily would itself be subject to terms as to confidentiality. It was accepted by Mr Adams in evidence that there was no means by which Brakes could ever realistically hope to find out about the breach of its confidential information. Moreover, the risk of detection is reduced still further in an industry in which, as is accepted by the defendants, it is overwhelmingly likely that the supplier is already dealing with both Brakes and its trade rivals.

The next point is that, once the defendants have left to joint 3663, they will be required to show their allegiance to their new employer. In some respects, their evidence has been unsatisfactory in these proceedings, which has not led the court to have confidence that their obligations as to confidential information will be preserved. For example, the defendants have each been prepared to make and leave uncorrected wrong statements, in their written evidence. In particular, those have wrongly asserted that they would suffer extreme financial hardship if an injunction were to be granted. As I mentioned below, this is not in fact the position. Likewise, each

Brakes cannot control what tasks are allocated to the defendants by 3663. It will be impossible for Brakes to know what may or may not be occurring behind the scenes at their rivals. Necessarily, it will be impossible for Brakes to know what the defendants are saying or doing and whom they are meeting. The dynamics of working as part of a team with targets as such that a buyer in the new position of the defendants may well be subject to temptations or pressures to reveal what he knows. Yielding to persuasion from a new employer is not unknown, and indeed Mr Adams himself describes the economic vulnerability he felt when asked by Brakes to sign his contract with it. In my judgment, protecting non-compliance with confidentiality or other similar covenants will be almost impossible in the circumstances. It is perhaps of some relevance that Mr Ungless’ new contract with 3663 includes an area covenant. It would appear that where a buyer with 3663 is given access to confidential information akin to a trade secret, 3663 does not regard a non-dealing covenant as sufficient protection for its legitimate interests.

In my judgment, the six month period of the restraint after the garden leave period is no greater than is reasonably necessary for the proper protection of Brakes’ legitimate interest. The shelf life of the material plainly turns upon the annual business cycle and the way in which Brakes’ buyers do their work. Even if taken together with the three month period of garden leave, it is clear that the period of restraint is no greater than is reasonably necessary for the purposes of protecting Brakes’ legitimate interest.

In any event, the company is limited to trade rivals with a turnover of more than £30 million. This means that there are only three companies caught by the covenant. In reality, as the evidence shows, there are numerous other companies in the business and indeed retailers such as supermarkets would be more than willing to employ the defendants given their buying skills in the food industry. Accordingly, in my judgment, the area covenant is reasonable in all the circumstances and certainly is not too long as to its duration. It is worthy of note that both Mr Ungless and Mr Adams were required to provide services during their period of garden leave which involved further exposure to confidential information. Moreover the shelf life of the confidential information to which the defendants were privy is, in any event, at least nine months. Accordingly, in my judgment, the area covenant is a legitimate tool to protect Brakes’ legitimate interest in the confidentiality of their confidential information.

The final issue is whether, notwithstanding the court’s conclusion that the covenants are indeed enforceable, the court should, in the exercise of its discretion, grant an injunction in this case. The defendants submit that I should not do so in the exercise of my discretion, taking into account all the circumstances and in particular the undertaking offered by 3663.

I was referred to Snell’s Equity (30th edition at paragraphs 45-15) where the following statement is set out:

“Although the court has, in general, a discretion whether to grant or withhold an injunction, an order to restrain the breach of a negative covenant may be obtained almost as of right.”

The authors then cite a dictum from Lord Cairns L-C in Doherty v Orman [1878] 3 AC 709 at page 720 as follows:

“If parties, for valuable consideration, with their eyes open, contract that a particular thing shall not be done, all that a Court of Equity has to say is, by way of injunction, that which the parties have already said by way of covenant, that the thing shall not be done; and in such case the injunction does nothing more than give the sanction of the process of the Court to that which already is the contract between the parties.”

It has been suggested by the defendants that it is very unlikely that any damage will in fact be occasioned to Brakes if the injunction were not to be granted. In my judgment on the evidence there is indeed a risk that damage may be caused to Brakes by the deliberate or inadvertent contravention of the defendants’ breach of confidentiality obligations. I take into account the fact that the defendants have spent time on garden leave in the exercise of my discretion. However, for the reasons that I have given above, this fact does not seem to me to be a reason as to why I should not grant an injunction. In Credit Suisse v Armstrong [1996] IRLR 450, the Court of Appeal made the following comments:

“In the case of restrictive covenants it is the practice for the court to consider first whether the covenant, which has to be tested at the date when the contract of employment came into existence, is valid. If it is found to be valid and there is no other reason, such as the adequacy of the remedy in damages, to impede its enforcement it will be enforced according to its terms.” (See per Neill LJ at paragraph 39).

And at paragraph 44, Neill LJ said:

“I would therefore leave open the possibility that in an exceptional case where a long period of garden leave had already elapsed, perhaps substantially in excess of a year, without any curtailment by the court, the court would decline to grant any further protection based on a restrictive covenant. But that is not this case.”

I agree with counsel for the claimant’s submission that this case is not such a case either.

In any event, my discretion is affected by the fact that the proposition (as contended for in their witness statements) that the defendants will suffer hardship if the covenant is enforced is simply not true. From the end of April, or the beginning of May, Mr Adams has had an oral agreement with 3663 which means that he will be paid for the period that he is unable to work for 3663 because of these proceedings. Mr Ungless has a similar agreement, confirmed subsequently in writing. Both their costs will be met by 3663. There are at no risk as to costs themselves because 3663 has promised to pay any order in favour of Brakes. Their jobs, the court was told, would still be available for them after the expiry of the injunctions. As the cost letter shows, 3663 regards this case as important, and as a matter to be funded because it is in its interests to do so. It clearly has an interest in the outcome of this case and to have an interest in testing the validity of its trade rival’s covenants. I do not consider that the undertakings which it has offered, which nonetheless involve Mr Adams and Mr Ungless working as buyers in effectively the same capacity as they were for Brakes, as sufficient protection for Brakes’ legitimate interests.

Accordingly, in all these circumstances, I find for the claimants in these proceedings and propose to grant injunctions in the terms sought. The precise terms of the order will be for discussion.