‘There are grounds to consider that you may have potentially seriously breached a number of provisions of the Executive Service Agreement and/or your fiduciary duties as a director of [Derma Med]. The allegations the subject of the investigation are that: • You have taken cash payments for treatments provided to clients and/or encouraged or permitted other employees to accept cash payments. • You have failed to properly respond to sales leads and/or to pass them on to [Derma Med]. • That you have failed to properly keep clinical records of treatments and ignored a client complaint. • You have been disloyal in suggesting to senior employees that they should leave the company to work with you at a competing business.’
‘12. On the evidence placed before the Court, I am persuaded that the inference from the investigation so far carried out is that Dr Ally has both pre and post the sale of the business conducted significant “off books” treatments, the latter at least being in breach of the SPA. These have been facilitated by conduct through DM and email. In doing so, there is a strong prima facie case that he would have been using Confidential Information for his own end, in breach of the SPA. The constant deletion of DM messages within the ZA Account is itself evidence that the nature of the communications was such that Dr Ally did not wish that content to be exposed as it would evidence that conduct. There is also a strong prima facie case that Dr Ally has been paid for such treatments either in cash or through a Zettle card account linked to what was effectively a personal bank account (in the name of the Second Defendant) rather than to the proper Derma Med account. On the face of it, any such funds should belong to Derma Med. …’
‘23. Without reaching a firm conclusion on the other matters complained of by Mr Solomon, I conclude that overall there was a serious failure to make full and frank disclosure of relevant matters. I am not in a position to conclude that it was deliberate, but it can certainly be described as culpable. …’
‘i) The duty of an applicant for a without notice injunction is to make full and accurate disclosure of all material facts and to draw the court’s attention to significant factual, legal and procedural aspects of the case; ii) It is a high duty and of the first importance to ensure the integrity of the court’s process. It is the necessary corollary of the court being prepared to depart from the principle that it will hear both sides before reaching a decision, a basic principle of fairness. Derogation from that principle is an exceptional course adopted in cases of extreme urgency or the need for secrecy. The court must be able to rely on the party who appears alone to present the argument in a way which is not merely designed to promote its own interests but in a fair and even-handed manner, drawing attention to evidence and arguments which it can reasonably anticipate the absent party would wish to make; iii) Full disclosure must be linked with fair presentation. The judge must be able to have complete confidence in the thoroughness and objectivity of those presenting the case for the applicant. Thus, for example, it is not sufficient merely to exhibit numerous documents; iv) An applicant must make proper enquiries before making the application. He must investigate the cause of action asserted and the facts relied on before identifying and addressing any likely defences. The duty to disclose extends to matters of which the applicant would have been aware had reasonable enquiries been made. The urgency of a particular case may make it necessary for evidence to be in a less tidy or complete form than is desirable. But no amount of urgency or practical difficulty can justify a failure to identify the relevant cause of action and principal facts to be relied on; v) Material facts are those which it is material for the judge to know in dealing with the application as made. The duty requires an applicant to make the court aware of the issues likely to arise and the possible difficulties in the claim, but need not extend to a detailed analysis of every possible point which may arise. It extends to matters of intention and for example to disclosure of related proceedings in another jurisdiction; vi) Where facts are material in the broad sense, there will be degrees of relevance and a due sense of proportion must be kept. Sensible limits have to be drawn, particularly in more complex and heavy commercial cases where the opportunity to raise arguments about non-disclosure will be all the greater. The question is not whether the evidence in support could have been improved (or one to be approached with the benefit of hindsight). The primary question is whether in all the circumstances its effect was such as to mislead the court in any material respect; vii) A defendant must identify clearly the alleged failures, rather than adopt a scatter gun approach. A dispute about full and frank disclosure should not be allowed to turn into a mini-trial of the merits; viii) In general terms it is inappropriate to seek to set aside a freezing order for non-disclosure where proof of non-disclosure depends on proof of facts which are themselves in issue in the action, unless the facts are truly so plain that they can be readily and summarily established, otherwise the application to set aside the freezing order is liable to become a form of preliminary trial in which the judge is asked to make findings (albeit provisionally) on issues which should be more properly reserved for the trial itself; ix) If material non-disclosure is established, the court will be astute to ensure that a claimant who obtains injunctive relief without full disclosure is deprived of any advantage he may thereby have derived; x) Whether or not the non-disclosure was innocent is an important consideration, but not necessarily decisive. Immediate discharge (without renewal) is likely to be the court’s starting point, at least when the failure is substantial or deliberate. It has been said on more than one occasion that it will only be in exceptional circumstances in cases of deliberate non-disclosure or misrepresentation that an order would not be discharged; xi) The court will discharge the order even if the order would still have been made had the relevant matter(s) been brought to its attention at the without notice hearing. This is a penal approach and intentionally so, by way of deterrent to ensure that applicants in future abide by their duties; xii) The court nevertheless has a discretion to continue the injunction (or impose a fresh injunction) despite a failure to disclose. Although the discretion should be exercised sparingly, the overriding consideration will always be the interests of justice. Such consideration will include examination of i) the importance of the facts not disclosed to the issues before the judge ii) the need to encourage proper compliance with the duty of full and frank disclosure and to deter non-compliance iii) whether or not and to what extent the failure was culpable iv) the injustice to a claimant which may occur if an order is discharged leaving a defendant free to dissipate assets, although a strong case on the merits will never be a good excuse for a failure to disclose material facts; xiii) The interests of justice may sometimes require that a freezing order be continued and that a failure of disclosure can be marked in some other way, for example by a suitable costs order. The court thus has at its disposal a range of options in the event of non-disclosure.’
‘… where facts are material in the broad sense in which that expression is used, there are degrees of relevance and it is important to preserve a due sense of proportion. The overriding objectives apply here as in any matter in which the Court is required to exercise its discretion. … I would add that the more complex the case, the more fertile is the ground for raising arguments about non-disclosure and the more important it is, in my view, that the judge should not lose sight of the wood for the trees. … In applying the broad test of materiality, sensible limits have to be drawn. Otherwise there would be no limit to the points of prejudice which could be advanced under the guise of discretion.’
‘It is a basic principle of justice that an order should not be made against a party without giving him an opportunity to be heard. The only exception is when two conditions are satisfied. First, that giving him such an opportunity appears likely to cause injustice to the applicant, by reason either of the delay involved or the action that it appears likely which the respondent or others would take before the order can be made. Secondly, when the court is satisfied that any damage which the respondent may suffer through having to comply with the order is compensatable under the cross-undertaking or that the risk of uncompensatable loss is clearly outweighed by the risk of injustice to the applicant if the order is not made.’
‘As a matter of principle no order should be made in civil or family proceedings without notice to the other side unless there is a very good reason for departing from the general rule that notice must be given. Needless to say, the more intrusive the order, the stronger must be the reasons for the departure. It is one thing to restrain a defendant from what would in any event be anti-social behaviour for a short time until a hearing can be arranged at which both sides can be heard. It is quite another thing to make a “without notice” order directing defendants to leave their home immediately and banning them from re-entering a large part of the area where they live.’
‘20. I also consider that the judge should have been shown the letter dated31 May 2023 , telling Dr Ally that the claimants wished to investigate allegations that he had taken cash payments, not properly responded to sales leads, failed to keep proper clinical records and ignored a client complaint and been disloyal by soliciting other senior employees to leave the business. That too would have led the judge to ask why it was thought necessary to restrain competition without notice.’
‘21. A further failure has been accepted by Mr Siddall KC today. He appeared for the claimants below. He represents them again today, leading Tim Matthewson. The definition of confidential information, which was used in all of the operative provisions of the injunction other than the non-compete injunction, was hopelessly wide. It used the phrase ‘including but not limited to’, which was disapproved in Caterpillar Logistics Services (UK) v de Crean[2012] EWCA Civ 156 ,[2012] IRLR 410 at paragraph 68. It depended on a judgment being made as to what was reasonably regarded as confidential. And it extended far too widely to any information relating to the business affairs and customers of Derma Med or the Athena Group. There was a failure to draw the judge’s attention to the unsuitability of that provision or the authorities which were relevant to it. Mr Siddle has today accepted that he fell into error in that regard.’
‘68. I add that the form of interim relief sought by CLS is hopelessly wide and vague. It does not specify the confidential information to be the subject of restriction with any certainty, but simply describes it as “all or any confidential information acquired by the respondent during her employment with [CLS] in whatever form”. Paragraph 10 of CLS’s Particulars of Claim does attempt to identify some of the confidential information it seeks to protect. I say some, because the allegation is that the respondent had access to the identified information “in particular, but not limited to” the listed information. …’
‘22. I also consider that the judge’s attention should have been drawn to the fact that the first claimant had failed to pay a large sum due to Dr Ally under the SPA and was not suggesting that it had any defence to liability other than a possible set-off, which on the face of it was barred by a term of the contract. Whether or not the claimants should at that point have anticipated that the defendant would purport to repudiate the SPA, causing restrictive covenants potentially to fall away, and should have drawn that possibility to the judge’s attention is more debatable. But where discretionary remedies were being sought, and in a case where a picture was being painted of unlawful conduct by Dr Ally, I consider fairness demanded that the court be told about that non-payment.’
‘27. The Claimant points to the following factors which demonstrate that damages would not be adequate. First, it is likely to be problematic to identify and quantify the loss to the Claimant which is attributable to D1’s wrongdoing. Whilst this may be less likely in respect of the use of the Zettle machine (although this might depend if it was being used for some legitimate purpose as well), this point clearly has force where, as here, the evidence suggests that cash has been taken. Second, the Claimants would face a number of evidential problems, including how to prove that the loss of a client was due to Dr Ally’s misuse of Confidential Information or rather than for other reasons; and how to prove that the departure of a client was due to the Defendants’ actions (and not something else). Knock-on consequential losses because even further difficulty. …’
‘53. … In a case of this kind there are evident and grave difficulties in assessing the loss which an employer may suffer from the employee taking work with a competitor; even where it is possible to identify clients who have transferred their business (which will not always be straightforward, particularly where the new employer is outside the jurisdiction) there may be real issues about causation and the related question of the length of the period for which the loss of the business could be said to be attributable to the employee’s breach. … There may be other intangible but real losses to the employer’s reputation. I do not say that there may not be particular cases in which relief should be refused on the basis that damages are adequate remedy – Mr Craig referred us to Phoenix Partners Group LLP v Asoyag[2010] EWHC 846 (QB) ,[2010] IRLR 594 -- but unless a specific case to that effect was explicitly advanced, the judge was in my view fully entitled to proceed on the assumption that injunctive relief was the appropriate remedy.’
‘15. The substantive effect of the defendant’s opposition to the claim for injunctive relief was to ask the court to release him from this contractual restraint so that he could be free to take up immediate employment with the very type of competitor in respect of whom the restraint was intended to apply. Had the claimant made an alternative claim for damages for breach of the restriction (which it did not), it might be said that he was not substantively seeking a total release from the restraint since he would or might still be exposed to a claim for damages for its breach. But in cases such as this damages are not what an employer wants. The damage potentially sufferable by a covenantee such as the claimant by a breach of the relevant restraint will usually be unquantifiable and will rarely, if ever, provide the covenantee with an adequate substitute for an injunction. That is what the judge said about a remedy in damages in this case. 16. Why, therefore, in circumstances such as these, should the court's approach to the claimant's claim be other than one reflecting a firm recognition that the remedy to which it ought prima facie to be entitled is an injunction? As Lord Cairns LC said in his well-known dictum in Doherty v Allman(1878) 3 App Cas 709 , at 720: “If parties, for valuable consideration, with their eyes open, contract that a particular thing shall not be done, all that a Court of Equity has to do is to say, by way of injunction, that which the parties have already said by way of covenant, that the thing shall not be done; and in such a case the injunction does nothing more than give the sanction of the process of the Court to that which already is the contract between the parties. It is not then a question of the balance of convenience or inconvenience, or of the amount of damage or of injury – it is the specific performance, by the Court, of that negative bargain which the parties have made, with their eyes open, between themselves.” 17. That statement is bottomed in the recognition of a basic principle of which sight should not readily be lost, namely that contracting parties should ordinarily be held to their bargain, which is all that the claimant was asking for by claiming the injunction that it did. 18. That said, I do not lose sight of the also basic principle that an injunction, like all equitable remedies, is a discretionary remedy which will not be granted as a matter of course. In his review of the authorities in Insurance Co v Lloyd’s Syndicate[1995] 1 Lloyd’s Rep 272 , 276-277 (under the heading “The availability of a permanent injunction”) Colman J correctly recognised this in his conclusion that negative covenants will generally be enforced without proof of damage but that: “Although absence of damage to the plaintiff is not in general a bar to relief, there may be exceptional cases where the granting of an injunction would be so prejudicial to a defendant and cause him such hardship that it would be unconscionable for the plaintiff to be given injunctive relief if he could not prove damage. In such cases an injunction will be refused and the plaintiff will be awarded nominal damages”.’ “If parties, for valuable consideration, with their eyes open, contract that a particular thing shall not be done, all that a Court of Equity has to do is to say, by way of injunction, that which the parties have already said by way of covenant, that the thing shall not be done; and in such a case the injunction does nothing more than give the sanction of the process of the Court to that which already is the contract between the parties. It is not then a question of the balance of convenience or inconvenience, or of the amount of damage or of injury – it is the specific performance, by the Court, of that negative bargain which the parties have made, with their eyes open, between themselves.” “Although absence of damage to the plaintiff is not in general a bar to relief, there may be exceptional cases where the granting of an injunction would be so prejudicial to a defendant and cause him such hardship that it would be unconscionable for the plaintiff to be given injunctive relief if he could not prove damage. In such cases an injunction will be refused and the plaintiff will be awarded nominal damages”.’