Banking and finance – Civil procedure – Contracts – Springboard relief

(1) UBS Wealth Management (UK) Ltd (2) UBS AG London branch v Vestra Wealth LLP & 5 ors: QBD (Mr Justice Openshaw): 4 August 2008.

The applicant (U) applied for an injunction for springboard relief against the defendants pending a speedy trial.

U was a wealth management business which had acquired a stockbroking firm formerly managed by the second defendant (S). Following the buyout, most of the firm's staff, including S, were offered and accepted jobs with U and many of the firm's clients transferred their business to U. The contracts of employment with U contained restrictive covenants preventing the employees, during their employment and for a period afterwards, from trading in competition with U and soliciting staff and clients away from U.

S became dissatisfied and disillusioned with U and resigned. Following negotiations, he reached an agreement with U relating to the period of application of his restrictive covenants. Once that period expired he set up a new business, the first defendant (V). Thereafter, 75 staff moved from U to V. S’s case was that the mass defection happened as a result only of separate discussions between him and the separate individuals involved, and that he had therefore not been acting unlawfully.

Held: (1) Springboard relief was not confined to cases where former employees threatened to abuse confidential information acquired during the currency of their employment, Midas IT Services v Opus Portfolio Ltd followed and Balston Ltd v Headline Filters Ltd (No1) (1987) FSR 330 Ch D not followed. It was available to prevent any future or further serious economic loss to a previous employer caused by former staff members taking an unfair advantage of any serious breaches of their contract of employment, or, if they were acting in concert with others, of any breach by any of those others. That unfair advantage had still to exist at the time the injunction was sought and it had to be shown that it would continue unless restrained.

(2) It was inherently unlikely that whole departments should leave U en masse and join V without extensive discussion between staff beforehand. That was particularly so when they were leaving well-paid employment with U for the gamble of joining a start-up business with no track record and few clients. It was overwhelmingly likely that the defectors must have been given assurances that nearly all the other members of the team, including the senior members, and the members of other teams were also going to defect; that the teams would bring many of their clients with them; and that it would be safer to move to V than to stay with U. Those assurances and the defections could only have happened with the active and knowing encouragement and assistance of many of the defectors, including the other defendants, who were senior managers.

There was evidence from which it could be inferred that S must have known what was going on and might have initiated that course of conduct. If that was found, he would be a party to an unlawful conspiracy. There was evidence from which it could be inferred that the other defendants as well as S were involved in organising and arranging the defections. It would be an obvious breach of their duty of loyalty and fidelity to U if senior employees kept silent when they knew of planned poaching raids on U’s staff or clients and when that was encouraged and facilitated by them from within U itself.

(3) There had been no culpable or inexplicable delay by U in bringing proceedings which would disentitle it from seeking relief.

(4) In the circumstances, U was in principle entitled to the springboard relief sought until trial.

Application granted.

Alistair McGregor QC, Gavin Mansfield (instructed by Herbert Smith) for the claimants; Andrew Sutcliffe QC (instructed by Fox Williams) for the first and second defendants; Charles Bear QC, Akash Nawbatt (instructed by Farrers) for the third, fourth, fifth and sixth defendants.