NET AFFINITY Ltd v CONAGHAN

• Jurisdiction: Ireland
• Judge: Ms. Justice Dunne
• Judgment Date: 22 March 2011
• Neutral Citation: [2011] IEHC 160
• Date: 22 March 2011
• Court: High Court
• Docket Number: [2011 No.

[2011] IEHC 160

THE HIGH COURT

[No. 1574 P/2011]

Net Affinity Ltd v Conaghan & Revmac Ltd t/a Avvio

BETWEEN

NET AFFINITY LIMITED

PLAINTIFF

AND

MICHELLE CONAGHAN

FIRST DEFENDANT

AND

REVMAC LIMITED TRADING AS AVVIO

SECOND DEFENDANT

MCELLISTRIM v BALLYMACELLIGOTT CO-OPERATIVE AGRICULTURAL & DAIRY SOCIETY LTD 1919 AC 548

HERBERT MORRIS LTD v SAXELBY 1916 1 AC 688

STENHOUSE AUSTRALIA LTD v PHILLIPS 1974 AC 391 1974 2 WLR 134 1974 1 AER 117

LITTLEWOODS ORGANISATION LTD v HARRIS 1977 1 WLR 1472 1978 1 AER 1026

CR SMITH GLAZIERS (DUNFERMLINE) LTD v GREENAN 1993 SC 161 1993 SLT 1221 1993 SCLR 231

JOHNSON & BLOY (HOLDINGS) LTD & JOHNSON & BLOY LTD v WOLSTENHOLME RINK PLC & FALLON 1987 IRLR 499 1989 1 FSR 135

TFS DERIVATIVES LTD v MORGAN 2005 IRLR 246 2004 EWHC 3181 (QB)

MURGITROYD & CO LTD v PURDY 2005 3 IR 12 2005/40/8428 2005 IEHC 159

FACCENDA CHICKEN LTD v FOWLER & ORS; FOWLER v FACCENDA CHICKEN LTD 1985 1 AER 724 1984 ICR 589 1984 IRLR 61 1985 FSR 105

LANSING LINDE LTD v KERR 1991 1 WLR 251 1991 1 AER 418 1991 ICR 428 1991 IRLR 80

PRINTERS & FINISHERS LTD v HOLLOWAY & ORS 1965 1 WLR 1 1964 3 AER 731

NORBROOK LABORATORIES (GB) LTD v ADAIR & ANOR 2008 IRLR 878 2008 EWHC 978 (QB)

EMPLOYMENT LAW

Injunctions

Interlocutory relief - Employment contract - Confidentiality - Non-compete clause -Employee left to work for competitor - Contractual notice period - Twelve month non-compete period - Storage of electronic data - Retention of confidential information on leaving employment - Direction to hand over electronic devices - No intention use confidential information after employment finished - Break down of trust - Restraint of trade - Terms of injunction - No geographical limitation - Clause prohibited all competition - Clause unenforceable - Whether defendant to be prevented from taking up employment for period - Injunctive relief to prevent breach of duty of confidentiality - Injunctive relief to prevent defendant and new employer soliciting or dealing with plaintiff's customers for twelve months - No injunction to prevent taking up new employment - McEllistrim v Ballymacelligot Co-Operative Agricultural and Dairy Society Limited [1919] AC 548 applied; Herbert Morris Ltd v Saxelby [1916] AC 688, Stenhouse Limited v Philips [1974] AC 391, Littlewoods Organisation Ltd v Harris [1978] 1 All ER 1026, CR Smith Glaziers (Dunfermline) Ltd v Greenan [1993] SCLR 231, Johnson & Bloy (Holdings) Ltd v Wolstenholme Rink Plc [1987] IRLR 499, TFS Derivatives v Simon Morgan [2004] EWHC 3181 [2005] IRLR 246, Faccenda Chicken Limited v Fowler [1985] 1 All ER 724, Lansing Linde Ltd v Kerr [1991] 1 All ER 418, Printers and Finishers Ltd v Holloway [1964] 3 All ER 731 and Norbrook Laboratories (GB) Limited v Adair [2008] IRLR 878 considered; Murgitroyd and Co Ltd v Purdy [2005] IEHC 159 [2005] 3 IR 12 followed - Injunctive relief granted (2011/1574P - Dunne J - 22/3/2011) [2011] IEHC 160

Net Affinity Ltd v Conaghan

EMPLOYMENT LAW

Restraint of trades

Contract of employment - Confidentiality clause - Injunctions - Interlocutory - Documents copied in electronic format by electronic means - Whether non-compete clause too wide - Whether non-compete clause void and unenforceable- Whether injunctive relief appropriate - Whether legitimate interests of employer protected - Whether necessary to prevent employee working for competitor - Whether temporal limitation appropriate - Whether geographical limitation necessary - Whether customer connections could be provided to competitor - Whether breach of confidentiality - CR Smith Glaziers (Dunfermline) Ltd v Michael John Greenan [1993] SCLR 231; Faccenda Chicken Ltd v Fowler [1987] Ch 117; [1986] 3 W.L.R. 288; Herbert Morris Ltd v Saxelby [1916] 1 AC 688; Johnson & Bloy (Holdings) v Wolstenholme Rink [1987] IRLR 499; Kores Manufacturing Co Ltd v Kolok Manufacturing Co Ltd [1959] Ch 108; Lansing Linde Ltd v Kerr [1991] 1 WLR 251; Littlewoods Organisation Ltd v Harris [1977] 1 WLR 147; McEllistrim v Ballymacelligot Co-Operative Agricultural and Dairy Society [1919] AC 548; Marion White Ltd v Francis [1972] 1 WLR 1423; [1972] 3 All E.R. 857; Murgitroyd & Co Ltd v Purdy [2005] IEHC 159, [2005] 3 IR 12; Norbrook Laboratories (GB) Ltd v Adair [2008] EWHC 978, [2008] IRLR 878; Printers & Finishers Ltd v Holloway [1965] 1 WLR 1; Stenhouse Ltd v Phillips [1974] AC 391 and TFS Derivatives Ltd v Morgan [2004] EWHC 3181, [2005] IRLR 246 considered - Injunction granted (2011/1574P - Dunne J - 22/3/2011) [2011] IEHC 160

Net Affinity Ltd v Conaghan

Facts: The plaintiff was a company specialising in the provision of reservation and booking engine systems for independent and group hotels in Ireland. A confidentiality clause was expressly contained in the contract of employment of the first named defendant. She had left her employment to work for a competitor. The issue arose as to whether she had retained confidential client data electronically. An injunction was sought inter alia restraining the first named defendant from assisting and/ or becoming engaged or employed by the second named defendant for a period of twelve months. Damages were also sought for breach of contract and breach of duty. The issue arose as to whether the prohibition on working for a competition was void as an unlawful restraint of trade, whether the confidentiality was necessary and whether the duty had been breached by her.

Held by Dunne J. that to grant the injunction in the terms sought would be more extensive than reasonably necessary to protect the employers interest. The non-compete clause was void and unenforceable. There was no doubt that Ms. Conaghan retained confidential information of the company on leaving her employment. She had and retained information by virtue of her employment of benefit to a competitor. In the circumstances, it was appropriate to grant injunctive relief to prevent her from breaching her duty of confidentiality as set out in express terms in her contract of employment for a period of twelve months. However, it was not necessary to prevent her taking up employment with Avvio. It was appropriate to grant injunctive relief against Avvio which would prevent Avvio from soliciting, approaching or dealing with exist clients of the plaintiff for twelve months.

Reporter: E.F.

1 JUDGMENT of Ms. Justice Dunne delivered the 22 day of March 2011

2 The plaintiff in theses proceedings has sought a number of injunctions against the first named Defendant (Ms. Conaghan) and the second named Defendant (Avvio) at an interlocutory hearing before me. The relief sought on the notice of motion issued herein on the 17 ^th February, 2011 and which came on for hearing before on the 10 ^th March, 2011, is as follows:-

3 2 "1. An injunction restraining the first named defendant from assisting and/or becoming engaged or employed by the second named defendant for a period of twelve months, or such suitable period as to this Court shall appear appropriate;

4 2. An injunction restraining the second named defendant from engaging or employing the first named defendant for a period of twelve months, or such suitable period as to this Court shall appear appropriate;

5 3. An injunction restraining the second named defendant from using the materials, documents, confidential information of the plaintiff in the conduct of its business;

6 4. An injunction restraining the first named defendant from commence (sic) or assist any competing individual, company or entity for a period of twelve months or such suitable period as to this Court shall appear appropriate;

7 5. An injunction restraining the first named defendant from soliciting any existing customers of the plaintiff or customers who have been such in the last six months, to do business with the second named defendant or any other competitor of the plaintiff for a period of twelve months;

8 6. An injunction restraining the first named defendant from discussing or disclosing any information of a confidential nature and/or the intellectual property of the plaintiff such as business information, secrets, secret processes, methods of manufacture, prices, accounts, dealings, transactions, affairs and other information relating to the plaintiff with the second named defendant or any third party;

9 7. An injunction restraining the second named defendant from discussing or disclosing any information of a confidential nature and/or the intellectual property of the plaintiff such as business information, secrets, secret processes, methods of manufacture, prices, accounts, dealings, transactions, affairs and other information relating to the plaintiff with the first named defendant or any third party;

10 8. An injunction requiring the first named defendant and/or the second named defendant to deliver up and return to the offices of the plaintiff all documents, materials and related files, articles and copies in their possession, power or control which contain information or data of or relating to the business and to clients of the plaintiff, to include material in hard copy and/or in digital format including inter alia, memory sticks and any other devices holding and storing data relevant to the plaintiff's business."

11 The notice of motion also sought damages for breach of contract, breach of duty and/or interference with the plaintiff's business relationships and/or for inducement of breach of contract. Of course, those are issues that can only be dealt with at the full hearing of the proceedings between the parties.

Background

12 Net Affinity is a small company set up by William Cotter in 2000. It is a hotel marketing agency specialising in the provision of reservation and booking engine systems for independent and group hotels in Ireland. According to the grounding affidavit of William Cotter the...