Allied Irish Banks Plc and Others v Diamond and Others

• Jurisdiction: Ireland
• Judge: Mr. Justice Clarke
• Judgment Date: 14 October 2011
• Neutral Citation: [2011] IEHC 505
• Court: High Court
• Date: 14 October 2011

Allied Irish Bank PLC & Ors v Diamond & Ors

COMMERCIAL

BETWEEN

ALLIED IRISH BANK PLC, AIB CAPITAL MARKETS PLC, ALLIED IRISH BANKS INTERNATIONAL FINANCIAL SERVICES LIMITED, AIB ADMINISTRATIVE SERVICES LUXEMBOURG S.A.R.L., AIB HUNGARY ADMINISTRATIVE SERVICES KFT, AIB ADMINISTRATIVE SERVICES SCHWEIZ GMBH, AIB ADMINISTRATIVE SERVICES NEDERLAND B.V.

PLAINTIFFS

AND

PAT DIAMOND, AIDAN FOLEY, GERRY MCEVOY, DEREK O'REILLY, ANDREW O'SHEA, JOE WALSH, CENTRALIS S.A., CENTRALIS SWITZERLAND GMBH, CENTRALIS HUNGARY KFT, AND NANCYAN S.A.

DEFENDANTS

[2011] IEHC 505

[No. 8022 P/2011]

THE HIGH COURT

EMPLOYMENT LAW

Injunctions

Springboard injunctions - Principles to be applied - Whether applicable law to be determined at interlocutory stage - Fiduciary duty - Duty of fidelity - Confidential information - Extent employee entitled to put in place plans regarding competitive employment - Restrictions on use of information - Whether strong arguable case - Whether damages adequate - Balance of convenience - Nature of order - Whether springboard injunction appropriate - Bergin v Galway Clinic Doughiska Ltd [2007] IEHC 386, [2008] 2 IR 205; Bristol and West Building Society v Mothew [1998] Ch 1; Campus Oil v Minister for Industry (No 2) [1983] IR 88; Crowson Fabrics Ltd v Rider [2007] EWHC 2942 (Ch), [2008] IRLR 288; Evans v IRFB Services (Ireland) Ltd [2005] IEHC 107, [2005] 2 ILRM 358; Faccenda Chicken Ltd v Fowler [1987] 1 Ch 117; Helmet Integrated Systems Ltd v Tunnard [2007] EWCA Civ 1735, [2007] IRLR 126; Hivac, LD v Park Royal Scientific Instruments, LD [1946] Ch. 169;ICDL GCC Foundation FZ-LLC v European Computer Driving Licence [2011] IEHC 343, (Unrep, Clarke J., 4/8/2011); Industrial Development v Cooley (Assizes) [1972] 1 WLR 443; Lingam v Health Service Executive [2005] IESC 89, [2006] 17 ELR 137; Metro Inter v Independent News [2005] IEHC 309, [2006] 1 ILRM 414; Net Affinity Limited v Conaghan [2011] IEHC 160, (Unrep, Dunne J., 22/3/2011); Nottingham University v Fishel [2000] ICR 1462; NWL Ltd v Woods [1979] 1 W.L.R. 1294; Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134; Robb v Green [1895] 2 QB 1; Roger Bullivant Ltd v Ellis [1987] ICR 464; Salinas de Gortari v Smithwick [1999] 4 IR 223; Sanders v Parry [1967] 1 WLR 753; Sectrack NV v Satamatics Limited [2007] EWHC 3003, (Unrep, Commercial Court, Flaux J., 19/12/2007);SG & R Valuation Service Co LLC v Boudrais [2008] EWHC 1340; [2008] IRLR 770; Shelbourne Hotel Ltd v Torriam Hotel Operating Co Ltd [2008] IEHC 376, [2010] 2 IR 52; The Pulse Group Limited v O'Reilly [2006] IEHC 50, (Unrep, Clarke J., 17th February, 2006); Vestergaard Frandsen A/S v Bestnet Europe Ltd [2009] EWHC 1456 (Ch), [2010] FSR 2 and Wessex Dairies Ld v Smith [1935] 2 KB 80 considered - Rules of the Superior Courts 1986 (SI15/1986), O 50 - Regulation (EC) No 593/2008, arts 4, 6 and 14 - Regulation (EC) No 864/2007 - Regulation (EC) No 44/2001 - Interlocutory injunction granted (2011/8022P - Clarke J - 14/10/2011) [2011] IEHC 505

Allied Irish Banks plc v Diamond

Facts: AIB sought a series of interlocutory orders inter alia to restrain the defendants from soliciting AIB customers, concluding contracts with such customers, preventing the solicitation of employees and orders relating to the return of information. It was contended that the personal defendants took actions whilst employees of AIB and in breach of their contract of employment and used the information so as to compete with AIB. The Court considered the question of a springboard injunction and whether the injunction sought to obtain a restraint remedy which it had not negotiated in contractual arrangements, as well as the adequacy of damages and the form and duration of the order sought. The Court also considered the applicability of Irish law or whether the law of the individual countries where the personal defendants was working applied (Luxembourg, Hungary, Switzerland and the Netherlands) , having regard to Regulation (EC) No. 593/2008 on the law applicable to contractual arrangements (Rome I) and Regulation (EC) No. 864/2007 on the law applicable to non-contractual obligations (Rome II).

Held by Clarke J. that AIB was entitled to an interlocutory injunction to prevent the soliciting of customers, the conclusion of business with customers where there had been solicitation, the use of confidential information and returning confidential information. It was difficult to see how an injunction for a period longer than six months was necessary. AIB had made out a strong case that Irish law applied.

Reporter: E.F.

NWL LTD v WOODS 1974 1 WLR 1294

EEC REG 593/2008

EEC REG 864/2007

EEC REG 44/2001

CAMPUS OIL v MIN FOR INDUSTRY & ENERGY (NO.2) 1983 2 IR 88

SALINAS DE GORTIARI v SMITHWICK 1999 4 IR 223

RSC O.50

RSC O.50 r6

RSC O.50 r12

EEC REG 864/2007

ICDL GCC FOUNDATION FZ-LLC & ORS v EUROPEAN COMPUTER DRIVING LICENCE FOUNDATION LTD UNREP CLARKE 4.8.2011 2011 IEHC 343

SHELBOURNE HOTEL LTD v TORRIAM HOTEL OPERATING CO LTD 2010 2 IR 52

KIRWAN INJUNCTIONS LAW & PRACTICE 1ED 2008

MAHA LINGAM (ORSE MAHALINGHAM) v HEALTH SERVICE EXECUTIVE (HSE) UNREP SUPREME 4.10.2005 2005/36/7565 2005 IESC 89

EVANS v IRFB SERVICES (IRELAND) LTD 2005 2 IRLM 358

BERGIN v GALWAY CLINIC DOUGHISKA LTD 2008 2 IR 205

REGAL (HASTINGS) LTD v GULLIVER 1942 1 AER 378 1967 2 AC 134

INDUSTRIAL DEVELOPMENT CONSULTANTS LTD v COOLEY 1972 AER 162

BRISTOL & WEST BUILDING SOCIETY v MOTHEW 1996 4 AER 698

NOTTINGHAM UNIVERSITY v FISHEL 2000 ICR 1462

CROWSON FABRICS LTD v RIDER & ORS 2008 IRLR 288

HELMET INTEGRATED SYSTEMS LTD v TUNNARD 2007 IRLR 126

WESSEX DAIRIES LTD v SMITH 1935 2 KB 80

HIVAC LIMITED VPARK ROYAL SCIENTIFIC INSTRUMENTS LIMITED & OTHERS 1946 1 CH 169

SANDERS v PARRY 1967 1 WLR 753

NET AFFINITY LTD v CONAGHAN & REVMAC LTD T/A AVVIO UNREP DUNNE 22.3.2011 2012 ELR 11 2011 IEHC 160

METRO INTERNATIONAL SA v INDEPENDENT NEWS & MEDIA PLC 2006 1 ILRM 414

ROGER BULLIVANT LTD v ELLIS 1987 IRLR 491

SECTRACK NV v SATAMATICS LTD & ORS 2007 AER (D) 312

SG & R VALUATION SERVICE CO v BOUDRAIS & ORS 2008 IRLR 770

VESTERGAARD FRANDSEN A/S & ORS v BESTNET EUROPE LTD & ORS 2009 AER (D) 57

FACCENDA CHICKEN LTD v FOWLER & ORS 1986 1 AER 617

PULSE GROUP LTD & PULSE MARKETING SERVICES LTD v O'REILLY & EYE GEN LTD T/A BRANDO UNREP CLARKE 17.2.2006 2006/49/10390 2006 IEHC 50

1. Introduction

2 2 1.1 The backdrop to these proceedings is the collapse of the Irish banking system in recent years. As is well documented the first named plaintiff ("AIB" which term also, where the context admits, applies to the plaintiffs collectively) suffered severe difficulties which resulted in the bank becoming almost wholly owned by the State. Without State support it seems unlikely that AIB could have survived. As part of the strategy to place AIB back on a sound financial footing, a general policy of seeking to recapitalise by means of the sale of non-core assets has been adopted. In addition, there has been significant public controversy over the payment of bonuses to employees in banks which have been in receipt of significant State aid. Aspects of both that bonus issue and the strategy of the sale of non-core assets form part of the backdrop to these proceedings.

3 3 1.2 The third named plaintiff ("AIB IFS") and the fourth, fifth, sixth and seventh named plaintiffs (respectively "the Luxembourg Company", "the Hungarian Company", "the Swiss Company" and "the Dutch Company" and collectively "the operating companies") have operated as a unit within AIB providing particular services in relation to international financial business to which it will be necessary to refer in more detail in due course. It is also of some note that the second named plaintiff ("AIB Capital Markets") is the immediate parent of AIB IFS and the operating companies.

4 4 1.3 As part of its strategy for the disposal of non-core assets, AIB and AIB Capital Markets decided to attempt to sell AIB IFS and the operating companies. Some of the senior employees of those companies became involved in a proposal for a management buy out ("MBO") of AIB IFS and the operating companies. There was, however, a third party offer which came from the Capita Group ("Capita"). Ultimately, Capita was declared to be the preferred bidder and it engaged in a due diligence process. It would appear on the evidence currently available that a reduction in the price which Capita was prepared to pay, of the order of €22m, occurred in or around this time. The circumstances leading to that reduction and the factors which might have justified same are a matter of some controversy. However, AIB asserts that the principal, if not the exclusive, reason for that reduction was a plan implemented by each of the defendants which was designed to move as much as possible of the business of AIB IFS and the operating companies into the seventh to tenth named defendants ("Centralis" unless the context otherwise requires). The terms on which it is alleged that it was contemplated that that business might be moved was that relevant AIB personnel would themselves leave their employment with AIB and take up employment with a relevant Centralis entity. In addition, it is said that arrangements were contemplated whereby the same personnel would become entitled to a significant shareholding in Centralis dependent on the amount of early new business which could be said to have been brought to Centralis by those individuals. On AIB's case it is said to be clear that most if not all of the anticipated new business was likely to come from attracting customers of AIB IFS to Centralis.

5 5 1.4 Against that background AIB seeks a series of interlocutory orders directed principally towards restraining all of the defendants from soliciting AIB IFS customers, concluding contracts with such customers,...