Allied Irish Banks Plc v Diamond

• Jurisdiction: Ireland
• Judgment Date: 14 October 2011
• Date: 14 October 2011
• Docket Number: [2011 No.
• Court: High Court

[2011] IEHC 505,

High Court

[2011 No. 8022P]

Allied Irish Banks plc v. Diamond

Allied Irish Banks plc, AIB Capital Markets plc, AIB 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

Cases mentioned in this report:-

Bergin v. Galway Clinic Doughiska Ltd. [2007] IEHC 386, [2008] 2 I.R. 205.

Bristol and West Building Society v. Mothew [1998] Ch. 1; [1997] 2 W.L.R. 436; [1996] 4 All E.R. 698.

Campus Oil v. Minister for Industry (No. 2) [1983] I.R. 88; [1984] I.L.R.M. 45.

Crowson Fabrics Ltd. v. Rider [2007] EWHC 2942 (Ch), [2008] I.R.L.R. 288; [2008] F.S.R. 17.

Evans v. IRFB Services (Ireland) Ltd. [2005] IEHC 107, [2005] 2 I.L.R.M. 358.

Faccenda Chicken Ltd. v. Fowler [1987] 1 Ch. 117; [1986] 3 W.L.R. 288; [1986] I.C.R. 297; [1986] 1 All E.R. 617 (C.A.); [1985] 1 All E.R. 724; [1984] I.C.R. 589 (H.C.).

Helmet Integrated Systems Ltd. v. Tunnard [2007] EWCA Civ 1735, [2007] I.R.L.R. 126; [2007] F.S.R. 16.

Hivac, LD. v. Park Royal Scientific Instruments, LD.[1946] 1 Ch. 169; [1946] 1 All E.R. 350.

ICDL GCC Foundation FZ-LLC v. European Computer Driving Licence Foundation Ltd. [2011] IEHC 343, (Unreported, High Court, Clarke J., 4th August, 2011).

Industrial Development v. Cooley [1972] 1 W.L.R. 443; [1972] 2 All E.R. 162.

Lingam v. Health Service Executive [2005] IESC 89, [2006] 17 E.L.R. 137.

Metro Inter. v. Independent News [2005] IEHC 309, [2006] 1 I.L.R.M. 414.

N.W.L. Ltd. v. Woods [1979] 1 W.L.R. 1294; [1979] 3 All E.R. 614; [1980] 1 Lloyd's Rep. 1; [1979] I.C.R. 867.

Net Affinity Ltd. v. Conaghan [2011] IEHC 160, (Unreported, High Court, Dunne J., 22nd March, 2011).

Nottingham University v. Fishel [2000] I.C.R. 1462; [2001] R.P.C. 22; [2000] I.R.L.R. 471.

Regal (Hastings) Ltd. v. Gulliver [1967] 2 A.C. 134; [1942] 1 All E.R. 378.

Robb v. Green [1895] 2 Q.B. 1; [1895] 2 Q.B. 315.

Roger Bullivant Ltd. v. Ellis [1987] I.C.R. 464; [1987] I.R.L.R. 491; [1987] F.S.R. 172.

Salinas de Gortari v. Smithwick [1999] 4 I.R. 223; [2000] 1 I.L.R.M. 463.

Sanders v. Parry [1967] 1 W.L.R. 753; [1967] 2 All E.R. 803.

Sectrack NV v. Satamatics Limited [2007] EWHC 3003 (Comm), (Unreported, High Court of England and Wales, Flaux J., 19th December, 2007).

SG & R Valuation Service Co. LLC v. Boudrais[2008] EWHC 1340 (QB); [2008] I.R.L.R. 770.

Shelbourne Hotel Ltd. v. Torriam Hotel Operating Co. Ltd. [2008] IEHC 376, [2010] 2 I.R. 52.

The Pulse Group Ltd. v. O'Reilly [2006] IEHC 50, (Unreported, High Court, Clarke J., 17th February, 2006).

Vestergaard Frandsen A/S v. Bestnet Europe Ltd.[2009] EWHC 1456 (Ch), [2010] F.S.R. 2; [2009] 32 I.P.D. 10.

Wessex Dairies Ld. v. Smith [1935] 2 K.B. 80.

Employment law - Interlocutory relief - Springboard injunction - Principles to be applied - Whether applicable law to be determined at interlocutory stage - Fiduciary duty - Duty of fidelity - Confidential information - Extent to which employee entitled to put in place plans regarding competitive employment - Restrictions on use of information - Whether strong arguable case - Whether damages adequate remedy - Balance of convenience - Nature of order - Whether springboard injunction appropriate - Rules of the Superior Courts 1986 (S.I. No. 15), O. 50, rr. 6 and 12 - Regulation (EC) No. 44/2001 - Regulation (EC) No. 864/2007 - Regulation (EC) No. 593/2008, articles 4, 6 and 14.

Motion on notice

The facts have been summarised in the headnote and are more fully set out in the judgment of Clarke J., infra.

On the 6th September, 2011, the plaintiffs issued proceedings and obtained a limited interim injunction from the High Court (White J.). On the 20th September, 2011, the plaintiffs sought an interlocutory injunction. The matter was adjourned to the 27th September, 2011, and liberty to issue a motion to set aside the interim injunction was granted which was issued by notice of motion dated the 21st September, 2011, returnable for the 27th September, 2011. The application did not proceed against the first defendant. In the course of the application, the application to set aside the interim injunction was withdrawn and the application for an interlocutory injunction against the fifth defendant was withdrawn.

The motion was heard by the High Court (Clarke J.) on the 3rd, 4th, 5th, 6th and 7th October, 2011.

The third to seventh plaintiffs operated as a unit within the first plaintiff providing particular services in relation to international financial business. The second plaintiff was the immediate parent of the third to seventh plaintiffs. The first to sixth defendants were employees of the plaintiffs. The first and second plaintiffs decided to attempt to sell the third to seventh plaintiffs and a third party was declared to be the preferred bidder. However, there was a reduction in the price that the third party was prepared to pay. The first plaintiff asserted that the reason for this was a plan implemented by each of the defendants which was designed to move as much as possible of the business of the third to seventh plaintiffs into the seventh to tenth defendants. The plaintiffs sought a series of interlocutory orders directed principally towards restraining the defendants from soliciting the third plaintiff's customers, concluding contracts with such customers, preventing the solicitation of employees of the plaintiffs and precluding the use of what was said to be confidential information allegedly brought to the seventh to tenth defendants by those employees. In addition, certain orders relating to the return of that information were sought. The plaintiffs argued that the first to sixth defendants took steps, whilst still employees of the plaintiffs, and in breach of their contracts of employment, which actions, it was said, gave the seventh to tenth defendants an opportunity to obtain an advantage, by the use of confidential information and by taking advantage of the alleged breach of contract and fiduciary duty, so as to give it a head start in competing with the plaintiffs.

Held by the High Court (Clarke J.), in granting an interlocutory injunction against the second to fourth defendants and the seventh to tenth defendants, 1, that, interlocutory orders directed principally towards restraining a defendant from soliciting the plaintiff's customers, concluding contracts with such customers, preventing the solicitation of plaintiff's employees and precluding the use of confidential information were sometimes referred to as springboard injunctions, the underlying rationale for the grant of which stemmed from the need to deal in a fair and just manner with the consequences which might flow from employees acting in breach of contract or in breach of a fiduciary duty in a way which gave those employees an opportunity to obtain a head start in competition with their employer, in circumstances where the relevant employees left their employment and either set up on their own in opposition to their former employer or joined a competitor.

2. That a springboard injunction was different in character from an injunction which sought to enforce a restrictive covenant in an employee's contract of employment which prevented that employee from competing (within defined parameters) with an employer after the employee's contract with that employer came to an end. A springboard injunction could not be used to obtain a restraint on competition as such. It could only be directed towards putting in place a reasonable measure or measures designed to take away an illegally obtained advantage. The measures would be limited in time so as to amount to a proportionate response to the illegally obtained advantage and should not normally extend beyond the period for which the unfair advantage might reasonably be expected to continue. The court must be careful to ensure that such an injunction did not put the claimant in a better position than if there had been no misuse.

Roger Bullivant Ltd. v. Ellis [1987] I.C.R. 464 andVestergaard Frandsen A/S v. Bestnet Europe Ltd.[2009] EWHC 1456 (Ch), [2010] F.S.R. 2 approved.

3. That in cases where a decision at the interlocutory stage would put an end to the action the court might have to consider the strength of each party's case. While it might not strictly be the case that the interlocutory decision brought the case to an end, the grant of a springboard injunction at the interlocutory stage had some similarities to such cases.

• N.W.L. Ltd. v. Woods [1979] 1 W.L.R. 1294 approved.

4. That in determining whether an interlocutory injunction was appropriate, the "greatest risk of injustice" criterion was the underlying principle which informed the more detailed rules. In addition, a "least risk of injustice" analysis could be a useful measure for deciding whether a somewhat different approach to the normal was needed in particular types of cases, including springboard injunctions.

Evans v. IRFB Services (Ireland) Ltd. [2005] IEHC 107, [2005] 2 I.L.R.M. 358 and Bergin v. Galway Clinic Doughiska Ltd. [2007] IEHC 386, [2008] 2 I.R. 205 approved.

5. That there was an obligation on a plaintiff seeking to obtain a springboard injunction to satisfy the court of a strong arguable case on the basis of the asserted facts for which credible evidence was presented. The court should, however, refrain from attempting to engage in the sort of detailed analysis that would be necessary to form a view as to the likely chances of success or failure on controversial facts.

6. That, in determining whether an interlocutory injunction was appropriate, the harm in respect of which damages must be found to be an inadequate remedy must be harm which...