|Once Allfiled realised that its|
employees were missing, it
didn't take too long to find out
Hildyard J had something to please both parties in his 177-paragraph judgment, since he granted interim relief -- but only in part. In his view:
* Allfiled's basic business idea was clearly the same as that developed by the new company, even if there were differences between their respective technologies. However, competition in itself was not precluded.
* Whether the conduct of departing directors and employees was permissible or not was a fact-sensitive question.
* Allfiled's non-competition and non-solicit covenants were broad; they reinforced obligations which might otherwise be implied, but they did not define what information was properly to be characterised as confidential.
* When considering whether to grant a pre-trial interim injunction, the court had to seek to protect rights and expectations which were arguably enforceable, the breach of which could not be properly compensated by damages, applying the American Cyanamid test of whether there was a serious question to be tried unless there were "extreme circumstances where a trial is rendered plainly and obviously otiose" [para 78].
|Well, they were|
* Factors against granting an injunction were that Allfiled might not even benefit from it, since it had lost its entire workforce and was in a perilous financial position, while the new company (Port Tech -- the 15th defendant) appeared interested in only one of Allfiled's customers, Magpie: this meant that leakage of information elsewhere was unlikely and an injunction could even backfire on Allfiled because, if the new company was allowed to continue trading, it was more likely to be able to pay damages than if it was forced out of business.
|Some magpies seem quite|
well able to look after
their own interests ...
* Given the court's assessment of the balance of convenience, it was not strictly necessary to consider what should be taken as the status quo for the purpose of the American Cyanamid test. Allfiled had actually delayed seeking relief and, while delay was not of itself fatal to relief, the longer the "last change" had gone unchallenged, the more likely that it would be established as the new status quo. The fact that Allfiled had taken a risk in waiting two months after issuing its first challenge to the defendants was another reason for the provisos in the injunctive relief granted.
This Kat hasn't come across an instance before in which the party seeking interim relief no longer has a workforce to service lost customers and wonders if this has happened before. Since specific performance of contracts of employment and, presumably, directors' contracts, is not an available option, the notion of protecting the interest of Magpie -- not a party but nonetheless represented in these proceedings -- seems only right and proper.