Dyson Technology Ltd v Strutt [2005] EWHC 2814 (Ch)

Case No HC05C01533[2005] EWHC 2814 (Ch)IN THE HIGH COURT OF JUSTICECHANCERY DIVISIONCourt 53Venue Royal Courts of JusticeThe StrandLondon WC2A 2LLDate 25 th November 2005
Before
SIR DONALD RATTEE
Between
DYSON TECHNOLOGY LIMITEDClaimant-v-
Between
BEN STRUTTDefendant
Computerised Transcript ofSmith Bernal Wordwave Limited190 Fleet Street London EC4A 2AGTel No: 020 7404 1400 Fax No: 020 7831 8838(Official Shorthand Writers to the Court)
MR A HILLIER QC and MR J TURNER (instructed by Wragge & Co LLP) appeared for Claimant.MR M SUPPERSTONE QC and MR T MITCHESON (instructed by Hammonds) appeared for Defendant.
AMENDED JUDGMENT

SIR DONALD RATTEE: The claimant is a member of the Dyson group of companies, founded by Mr James Dyson to develop and exploit his innovative design of vacuum cleaners using a cyclonic system of dust extraction, which he had invented and which avoided the needed for a dust collection bag on vacuum cleaners using that technology.

[2]The claimant company is a member of the group which carries out the research and development of new engineering ideas for application in such vacuum cleaners manufactured and sold on the open market by another company or companies in the group. It employs a research and development team of engineers for that purpose. Prior to reorganisation of the group in 2004 that role was carried out by another group company, called Dyson Limited, from 1st January 2001 and, prior to that date, by yet another group company, called Dyson Research Limited.[3]The defendant, Mr Strutt, is a very able young engineer employed by Dyson Limited, and subsequently by the claimant, in its research and development business. Mr Strutt began working for Dyson Limited on 22nd January 2001 and was transferred to the claimant as part of the group reorganisation in 2004. He continued to work for the claimant until 22nd April 2005, when he left the Dyson Group. He had given notice of resignation by a letter dated 22nd March 2005. Mr Strutt then took employment as a design engineer with Black & Decker, a company in the business of designing, manufacturing and selling power tools of various sorts, including vacuum cleaners.[4]The present litigation between the claimant and Mr Strutt arises out of concern on the part of the Dyson Group that Mr Strutt may use, for the benefit of Black & Decker's business, confidential information about the Dyson Group's vacuum cleaner business.[5]When Mr Strutt first took up employment with Dyson Limited, he signed a contract of employment, which contained provisions relating to such confidential information. I should refer to some of its terms. The contract was expressed to be made between the claimant's predecessor, Dyson Research Limited, as employer, and Mr Strutt as employee, although Mr Strutt's initial employer was Dyson Limited, which by the time of his employment had already taken over research and development functions for the Dyson Group. However, it is common ground that the contract, as originally drawn, should be construed as though references therein to Dyson Research Limited were references to Dyson Limited. In fact, when the claimant took over the employment of Mr Strutt in 2004, it is agreed that there was a novation of the contract so that it should now be read as though references to Dyson Research Limited had been references to the claimant. Thus, in particular, clause 1, which in fact defined Dyson Research Limited as "the company", must be read as though it defined the claimant as "the company".[6]The contract contains the following provisions which have featured in the argument in this case, and which I should read. Clause 17.1 provides as follows:
"It is part of each employee's duties to contribute to ways of improving company products, processes and systems and to advise his or her manager promptly of any and all new ideas and inventions. By virtue of the Patents Act 1977, any inventions made by you in the course of your duties belong to the company and therefore the company is entitled free of charge to sole ownership and exclusive use of any and all such inventions."
[7]Clause 18 provides as follows:
"The contractual relationship between the company and its employees is founded on trust. You shall not, either during your employment or at any time after its termination, disclose to any person or use for your own purposes other than those of the company any private, confidential or secret information specific to the business of the company. Any breach of this trust by you, such as the unauthorised disclosure to a third party of private, confidential or secret information relating to the business of the company will render an employee liable to disciplinary action and/or to civil proceedings to restrain the employee from disclosing the information to a third party or of making use of it without authority or for damages, if loss to the company results from the unauthorised disclosure."
[8]Clause 19 provides, so far as material for present purposes:
"Obligations after employment. "
You will not, for the period of 12 months immediately after the termination of your employment, whether as principal or agent and whether alone or jointly with or as a director, manager, partner, shareholder, employee or consultant of any other person, directly or indirectly:
"1. So as to compete with the company, carry on or be engaged, concerned or interested in any business which is similar to and competes with any business being carried on by the company at the termination of the employment and with which you were involved at any time during the period of 12 months immediately preceding the termination of the employment."
[9]Clause 20 provides as follows:
"The restrictions contained in clauses 19.1 to 19.6 above are for the protection of the legitimate business interests of the company or any such affiliate company and are considered reasonable. The parties agree that: "20.1. Each restriction shall be read and construed independently of the other restrictions so that if one or more are found to be void or unenforceable as an unreasonable restraint of trade or for any other reason, the remaining restrictions shall not be affected. "20.2. If any restriction is found to be void that would be valid and enforceable if some part of it were deleted, that restriction shall apply with such deletion as may be necessary to make it valid and enforceable."
[10]Unfortunately, the term "such affiliate company" is inapt, in that the agreement contains no other reference to, or definition of, an "affiliate company".[11]It is common ground that at the commencement of his employment in the Dyson Group both Mr Strutt and his employer expected that in the course of his employment he would acquire confidential information about his employer's business, which would be of value to a competing business if disclosed to a new employer engaged in such a business. It is also common ground that Mr Strutt did in fact acquire such confidential information, which the claimant has a legitimate interest in protecting from disclosure to a competing future employer.[12]In August 2004 Mr Strutt was headhunted by a recruitment consultant for a job with Black & Decker in the north-east of England, which the headhunter told Mr Strutt might relate to vacuum cleaner development. Mr Strutt was quite keen at the time, for personal reasons, to go and live in the north-east and decided to apply for the job. He was interviewed for the job by two representatives of Black & Decker on 8th September 2004. He told them of the existence of the restrictive covenant in clause 19.1 of his employment contract with the claimant. However, he did not get that job; he was told that Black & Decker did not think the job was suitable for him. However, a few weeks later Mr Strutt was asked by Black & Decker to go for another interview with them for a different job, involving general innovative design work across the whole product rage of Black & Decker. He was eventually offered the job and accepted it.[13]As I have already said, he gave one month's notice of resignation to the claimant on 22nd March 2005 and left its employment on 22nd April. He started work with Black & Decker on 23rd May. Unfortunately, when, on the occasion of handing his notice of resignation to Mr Peter Gammack (the head of his department in which he was employed by the claimant), he was asked whether he had a new job lined up. Mr Strutt replied untruthfully that he had not. He also subsequently, and equally untruthfully, told the claimant's head of intellectual property that he was:
" ... looking to move north and maybe work in the medical products area."
[14]His explanation in his evidence for these lies was that he was afraid, judging by the experience of other employees who had left the claimant to go to possibly competing businesses of other employers, that, if he told the claimant he had a job with Black & Decker, he would be immediately and unceremoniously evicted from the claimant's premises, rather than being allowed to serve his period of notice. The claimant denies that there was any justification for such fear. Whether there was or not is immaterial, but Mr Strutt's lack of candour with his employer, when discovered by the claimant, naturally gave it some cause for concern. In fact, shortly after his resignation took effect, Mr Strutt himself telephoned Mr Gammack to ask for a reference and told him of his new job with Black & Decker.[15]On 17th May, still before Mr Strutt started work with Black & Decker, his former head of department, Mr Gammack, phoned him and asked him to confirm what he would be working on with Black & Decker. Mr Strutt told him that he understood that he would be working on power tools and outdoor products. Mr Gammack asked him if he would confirm that to Mr Martin Bowen, the head of Dyson's legal department. Mr Strutt agreed to do so. He did accordingly phone Mr Bowen. The latter told him that he was concerned that he was moving to Black & Decker, as he considered that company to be a competitor of Dyson. Mr Strutt confirmed that it was his understanding that he would be working on power tools and outdoor products such as lawnmowers, but that he could not say for certain, as he had not yet started work with Black & Decker.[16]Mr Bowen reminded Mr Strutt of the effect of clause 18 and clause 19.1 of his contract of employment with the claimant. Mr Strutt asked Mr Bowen whether he was questioning his integrity. Mr Bowen said that he was not and that he was merely following what was standard procedure when an employee moved to a competitor. Mr Strutt told Mr Bowen that he would not disclose confidential information relating to the claimant's business and that:
"He would just have to trust him."
[17]Mr Bowen's evidence, which I accept, was that he did not want to be confrontational with Mr Strutt, but that he did feel suspicious of Mr Strutt's intentions. I find this hardly surprising in view of Mr Strutt's earlier lies to the claimant regarding his intended move to Black & Decker.[18]On 20th May Mr Bowen wrote to Mr Strutt a letter which I should read: "Dear Ben, "Further to our telephone conversation on 17th May 2005, I am writing to summarise my thoughts on the subject of our discovering that you are planning to join Black & Decker as an employee. Before returning to the substantive issue, I ought to point out once again that this is not a matter of questioning your integrity, simply a matter of Dyson ensuring that there is absolutely no risk that secret and confidential information which is not in the public domain is not disclosed, even inadvertently, to any third party and especially to competitors. "In our conversation you indicated that projects you were going to work on were in the power tool and lawnmower division and that, although you had not discussed this in any detail with Black & Decker, you stated that you had no interest in working on vacuum cleaner projects. My concern, as I expressed to you in our telephone conversation, was that may be your intention but that it did not appear absolutely clear that in fact this would be the case. I was keen to ensure that you were not put in an invidious position at your new employer's. You indicated that Dyson 'would just have to trust you' and that you would not do anything to harm your relationship with Dyson. Whilst I appreciate those comments, I have to say that I am not satisfied that it is clear that Black & Decker are not expecting you to work on projects which are similar to projects that you have worked on while at Dyson and which may involve direct conflict of interest and a risk that secret and confidential information could be utilised or disclosed and that there is no breach of clause 19 of your contract of employment with Dyson. "In the circumstances I propose that we address this problem in two ways: 1. We would like you to sign and return an undertaking acknowledging your responsibilities to Dyson and reassuring us that, as far as you are concerned, you will not be working on projects connected with matters that you have working on (sic) or have intimate knowledge of whilst here at Dyson. I will contact you on Monday, 23rd May to talk further about this issue. 2. I am going to contact Black & Decker in order to appraise them specifically of your responsibilities to Dyson and seek their assurance that they have no intention of utilising your services in a way which might compromise those obligations." "If the above can be achieved satisfactorily, then I am going to recommend that the matter be left there. "I look forward to hearing from you."[19]Mr Strutt did not himself reply to this letter. He showed it to the human resources department at Black & Decker, for whom he was by then working. He then had a telephone conversation about Mr Bowen's letter with a Mr Charles Clark, who was a patent attorney in Black & Decker's European Patents Department. According to evidence given by Mr Strutt, which I accept, in that telephone conversation he read to Mr Clark clause 18 and clause 19.1 of his contract with the claimant. Following that conversation Mr Clark wrote an extraordinary letter to Mr Bowen in these terms:
"Dear Mr Bowen, As you know, Ben Strutt is now an employee of Black & Decker. He has, however, received a letter from you dated 20th May, a copy of which we have seen. In your letter you make a number of points and seek to require both Mr Strutt and ourselves to give certain undertakings regarding Mr Strutt's future employment with Black & Decker. I will deal with all your points on the basis that this is the only communication that we shall have in relation to this matter and so I shall make Black & Decker's position clear."
[20]First, I do not know what clause 19 of Mr Strutt's former contract of employment says but I shall assume that it relates to the keeping of confidentiality in relation to materials which are trade secrets or their equivalent. I do not imagine that it contains a restrictive covenant on Mr Strutt and certainly, if it did, Mr Strutt would have brought it to our attention by now. The fact that the contract of employment is no longer in existence means that Mr Strutt cannot be in breach of that contract. What I assume your letter seeks to do is to raise Mr Strutt's awareness that, in respect of information which the court regards as being a trade secret or its equivalent, Mr Strutt still owes a duty to Dyson not to disclose this to any unauthorised third party. In this respect I assure you on behalf of Black & Decker that our policy is to respect any third party rights and confidential information. We will at no time seek to misappropriate any such information from Mr Strutt or from any other employee who has worked for a competitor prior to joining Black & Decker. Mr Strutt has gone through our usual induction procedures with personnel, where this policy has been explained to him, and he fully understands our position with respect to him and his knowledge.[21]What you also seek to do is obtain undertakings from Mr Strutt as an individual and Black & Decker as a company that Mr Strutt will not be employed in respect of projects he has worked on before. We regard this as an unnecessary restraint upon both Mr Strutt and ourselves. What you seek to do is to restrict Mr Strutt from using the skill and knowledge he has learned at Dyson, which is not a trade secret and which he is legitimately entitled to use.[22]Mr Strutt is employed in our engineering group, where he will be called upon to use his skill and expertise in respect of a range of our projects. It would not, therefore, be acceptable for you to seek to stop him from utilising his own knowledge and expertise for a whole range of products which are nothing to do with your business. What I do not know is whether he will ever be asked to consider household products. As such, Black & Decker cannot and will not give the undertaking you seek.[23]Having employees leave and join competitors is something that has also happened to Black & Decker. We certainly remind our employees, before they leave, as to their continuing obligations of confidentiality in respect of our trade secrets. I consider that your letter has done that to Mr Strutt insofar as Dyson is concerned. However, we neither seek nor give the sort of undertakings you have outlined. We have, as I have set out above, explained our policy in respect of ex-employer's confidential information and have every confidence that will be respected. To my knowledge Black & Decker have never had any complaints from any other competitor about the use of confidential information belonging to them. "I trust that what I have set out will give you the necessary comfort concerning Mr Strutt and our approach to confidential information."[24]This letter was signed by Mr Clark purportedly on behalf of a Mr Shaya, head of European patents at Black & Decker. Mr Shaya was abroad at the time and took no part in the writing of that letter. What, of course, was extraordinary about the letter, apart from its unnecessarily confrontational tone, was the statement in its second paragraph that:
"I do not imagine that it [ie clause 19 of Mr Strutt's former contract of employment] contains a restrictive covenant on Mr Strutt and certainly, if it did, Mr Strutt would have brought it to our attention by now."
[25]This was plainly untrue because Mr Strutt had read the clause to Mr Clark on the telephone. The worst aspect of this letter was that it clearly suggested, quite untruthfully, to Mr Bowen of Dyson that Mr Strutt had concealed the restrictive covenant from his new employer. This was grossly unfair to Mr Strutt and naturally renewed Dyson's concerns that Mr Strutt might not be intending to respect the terms of his contract in relation to his future employment with Black & Decker. I do not have the benefit of any explanation from Mr Clark as to why he wrote in the terms he did.[26]Dyson's understandable concerns about Mr Strutt's intentions, given his apparent failure to disclose the terms of clause 19.1 of his previous contract of employment to his new employer, were spelt out to Black & Decker in a letter responding to Mr Clark's letter. On 1st June, while Mr Bowen was away on holiday, Mr Alan Briggs, the company secretary of the claimant, wrote to Mr Shaya of Black & Decker in the following terms:
"Ben Strutt, Thank you for your letter of 23rd May to Martin Bowen. I am replying in Martin's absence on holiday. I note you say that this is the only communication you will have on this matter but it is clear from your letter that you are not fully informed. In fact Ben is subject to a restrictive covenant from his contract of employment with Dyson. I attach a copy of the relevant clause. It is perhaps unfortunate that he did not show this to you. Nevertheless, you are aware of it now. I draw your attention to clause 19.1. This states that ... "
[27]Then the letter goes on to quote clause 19.1:
"You will gather from Martin Bowen's letter of 20th May to Ben that he was involved in vacuum cleaner projects in the relevant period prior to his leaving Dyson. It therefore follows that, in order to comply with this clause, he must not carry on or be engaged, concerned or interested in any such projects for you. "
As you know, we are a technology-based company. We invest heavily in research and development. We need to protect that investment, particularly at its most vulnerable stage before a product is launched and before formal intellectual property protection rights become available for whatever reason. We in no way seek to restrict Ben's ability to exercise his own skill and knowledge. He is entirely free to work with you on other projects. Indeed he has told us that he is going to work on power tools and lawnmowers. Clearly, what we are asking for should not therefore prevent him from having a successful career with you. That said, we are concerned that he has not drawn this restriction to your attention. "We are also concerned that neither you nor he are willing to give what we consider to be reasonable undertakings. Whilst I welcome your assurances on confidential information, I regret that they are insufficient in the circumstances. You will appreciate that if he works on vacuum cleaner projects for you, there is at the very least a very high risk that he will inadvertently disclose our confidential information. Indeed in my view there is a risk that whatever good intentions there may be now, at some point in the next 12 months those intentions may no longer be enough. In the circumstances I must ask that appropriate undertakings are signed. I will fax through a suggested form of undertaking tomorrow. You will see that this letter is copied to Ben. We shall ask him to sign a similar document. If these undertakings are not signed and returned to reach me by 10 am on Monday, 6th June, then we will take further action to enforce the restrictions in Ben's contract and if we decide to go to court, we may well do so without any further reference to you."[28]A copy of this letter was sent to Mr Strutt. Draft forms of undertaking were provided to Black & Decker and Mr Strutt. That intended to be given by Mr Strutt was in the following terms: "I, Ben Strutt ...[29]Then his address is given:
" ... have read and understood clauses 18 and 19 of my contract of employment dated 25th September 2000, attached to this document [the contract] and I undertake as follows: "1. I shall not, on or before 22nd April 2006, whether directly or indirectly, so as to compete with the company, take any part whatsoever in the research and development of vacuum cleaners or vacuum cleaning technology. I have not and shall not at any time, whether directly or indirectly, use for my own purposes or divulge to any person, corporation, company or organisation whatsoever, in particular, but without limitation, Black & Decker Europe or any of its subsidiary or associated companies, any confidential, secret, professional, financial or trade information belonging to the company, including but not limited to that which relates to the research and development of vacuum cleaners or vacuum cleaning technology. "3. I shall abide by the clauses contained in the contract, in particular in relation to clauses 18 and 19."
[30]The undertaking proposed to be given by Black & Decker was as follows:
"We, Black & Decker Europe ... "
[31]And then the number of the company is given:
" ... and any group company, including without limitation its subsidiaries and holding companies, as defined in sections 736 and 736A of the Companies Act 1985 and/or associated companies, collectively referred to as Black & Decker, have read and understood clauses 18 and 19 of the contract of employment dated 25th September 2000 between the company and Ben Strutt, which is attached to this document [the contract] and we undertake as follows: "1. We have not induced and shall not induce Mr Strutt to breach any provision contained within clause 19 of the contract. In particular, but without limitation, we shall procure that, whilst employed by Black & Decker, Mr Strutt will not, until at least 23rd April 2006, whether directly or indirectly, take any part whatsoever in the research and development of vacuum cleaners or vacuum cleaner technology. "2. We have not induced and shall not induce Mr Strutt to breach clause 18 of the contract. In particular, we have not induced and shall not induce Mr Strutt to disclose any confidential, secret, professional, financial or trade information that belongs to the company, including, but not limited to, that which relates to the research and development of vacuum cleaners or vacuum cleaner technology."
[32]The undertakings were not given and on 8th June Hammonds, solicitors acting on behalf of both Mr Strutt and Black & Decker, wrote to Mr Briggs of Dyson stating that neither Mr Strutt nor Black & Decker would give the undertakings asked for. The letter said that Mr Strutt would abide by clause 18 of his former contract of employment but that clause 19.1 was, in the opinion of Hammonds and leading counsel, "unreasonable and unenforceable".[33]On 9th June Wragge & Co, solicitors on behalf of the claimant, wrote to Hammonds noting that Mr Strutt and Black & Decker were not prepared to give the undertakings sought and indicating the claimant's intention to start court proceedings. A large part of the letter contained argument about the enforceability of clause 19.1. That I need not refer to further. However, two paragraphs of the letter I should read. The second paragraph says this:
"Mr Strutt told our client that he would be working in your client's lawnmower and power tools division. He said he had no intention of working on vacuum cleaners for your client. However, he has not even replied to any of our client's requests that he give undertakings to that effect. He failed to tell your client of the restrictive covenants in his contract. We draw the obvious inference."
[34]The final paragraph of the letter is in the following terms:
"The undertakings our client has asked for are reasonable, necessary to protect its business and in accordance with Mr Strutt's contract of employment. We do not consider it possible both to reduce their scope and afford our client the meaningful protection to which they are entitled. If you have any proposals to make, please do so. However, in view of the length of time taken to try to resolve this matter, so far unsuccessfully, we are proceeding with our preparations in any event."
[35]This drew a response from Hammonds on 10th June, in which they:
" ... reiterated on behalf of Mr Strutt his confirmation to abide by clause 18 as it is correctly construed as a matter of law."
[36]And concluded in their final paragraph as follows:
"Our clients did offer to consider any sensible undertaking that deal with your client's concerns, which we again point out your client has not articulated at all, and which, if acceptable, will be given by Mr Strutt. You do not consider it is possible to reduce the scope of the undertakings you have offered. We disagree that they cannot be narrowed but, as your client feels that it is unable to do so, we are unable to take this offer any further."
[37]There is no evidence that Hammonds or anyone on behalf of Mr Strutt ever put to the claimant or its solicitors any proposed narrower form of undertaking which Mr Strutt would have been willing to give.[38]On 14th June the present action was started. By its particulars of claim the claimants sought:
"1. A declaration that clause 19.1 of Mr Strutt's service contract with Dyson Limited is valid and enforceable. "2. An injunction to restrain Mr Strutt from acting in breach of clause 19.1. "3. An injunction to restrain Mr Strutt from misusing the claimant's confidential information as defined in the particulars of claim. "4. Damages for breach of clause 19.1."
[39]Of these heads of relief, the only ones with which I am now concerned are the first and second, the declaration and injunction relating to clause 19.1. The claim for an injunction to restrain breach of clause 18 was discontinued by the claimant in the course of the trial and the claimant did not contend at the trial that it had suffered any damage as a result of any past breach of clause 19.1.[40]Having issued its proceedings, the claimant made an application to the court for interim relief, which came before Mr Justice Etherton on 21st June 2005. In a witness statement made the day before that hearing, Mr Strutt said that he confirmed that he would not work directly or indirectly on any projects which relate to cyclonic separation for vacuum cleaners in the domestic floor care field until trial of the action or further order.[41]As a result of negotiations outside the court, Mr Strutt expressed himself willing to widen the terms of this assurance to the following:
"I hereby confirm that I will not work directly or indirectly on any projects which relate to vacuum cleaners in the domestic floor care field, including any handheld vacuum cleaners sold under or by reference to the trademark Dustbuster until trial or further order in this action."
[42]The explanation for the reference to the trademark Dustbuster is that Black & Decker manufacture and sell a handheld vacuum cleaner under that trademark, and apparently some doubt was felt by one or both of the parties as to whether that product fell within the terms, "vacuum cleaners in the domestic floor care field."[43]Given that assurance, the claimant was content not to pursue any claim for an interim injunction and the application was disposed of by the court giving directions for a speedy trial of the action. Thus the only two issues I now have to determine are, one, whether clause 19.1 of the contract of employment between the claimant and Mr Strutt is valid and enforceable and, two, if it is valid and enforceable, whether it is appropriate that the court should now enforce it by injunction.[44]Is clause 19.1 valid and enforceable? Mr Supperstone, counsel for Mr Strutt, raised various arguments on the construction of clause 19.1. However it is common ground that since, on any possible construction, the provision is a covenant in restraint of trade, it is enforceable only to the extent that the covenantee, the claimant, can show that it was reasonable both in the interests of the parties and in the public interest that such covenant should have been included in Mr Strutt's contract of employment with the claimant. The relevant principle was embodied in the well-known dictum of Lord Parker of Waddington in Herbert Morris Limited v Saxelby [1916] AC 688 at pages 706 to 708. After referring to what had been said on the subject by Lord Macnaghten in Nordenfeld v Maxim Nordenfeld Company [1894] AC 535, Lord Parker of Waddington said this:
"As I read Lord Macnaghten's judgment, he was of opinion that all restraints on trade of themselves, if there is nothing more, are contrary to public policy and therefore void. It is not that such restraints must of themselves necessarily operate to the public injury but that it is against the policy of the common law to enforce them except in cases where there are special circumstances to justify them. The onus of proving such special circumstances must, of course, rest on the party alleging them. When once they are proved, it is a question of law for the decision of the judge whether they do or do not justify the restraint. There is no question of onus one way or another. It will be observed that in Lord Macnaghten's opinion two conditions must be fulfilled if the restraint is to be held valid: first, it is must be reasonable in the interests of the contracting parties and, secondly, it must be reasonable in the interests of the public. "
In the case of each condition he lays down a test of reasonableness. To be reasonable in the interests of the parties the restraint must afford adequate protection to the party in whose favour it is imposed. To be reasonable in the interests of public, it must be in no way injurious to the public. With regard to the former test, I think it is clear that what is meant is that for a restraint to be reasonable in the interests of the parties it must afford no more than adequate protection to the party in whose favour it is imposed. So conceived, the test appears to me to be valid both as regards the covenantor and the covenantee. "Although in one sense no doubt it is contrary to the interests of the covenantor to subject himself to any restraint, still it may be for his advantage to be able so to subject himself in cases where, if he could not do so, he would lose other advantages such as the possibility of obtaining the best terms on the sale of a existing business or the possibility of obtaining employment or training under competent employers. As long as the restraint to which he subjects himself is no wider than is required for the adequate protection of the person in whose favour it is created, it is in his interest to be able to bind himself for the sake of the indirect advantages he may obtain by so doing. "It was at one time thought that, in order to ascertain whether a restraint were reasonable in the interests of the covenantor, the court ought to weigh the advantages accruing to the covenantor under the contract against the disadvantages imposed upon him by the restraint, but any such process has long since being rejected as impracticable. The court no longer considers the adequacy of the consideration in any particular case. If it be reasonable that a covenantee should, for his own protection, ask for a restraint, it is in my opinion equally reasonable that the covenantor should be able to subject himself to this restraint. The test of reasonableness is the same in both cases. "It was suggested in argument that the interests of the public ought to be considered and weighed in determining whether a restraint is reasonable in the interests of the parties. I dissent from this view. It would indeed entirely destroy the value of Lord Macnaghten's test of reasonableness. The first question in every case is whether the restraint is reasonable in the interests of the parties. If it is not, the restraint is bad. If it is, it may still be shown that it is injurious to the public, though, as I pointed out in the case referred to, the onus of so showing would show lie on the party alleging it. "My Lords, it appears to me that Lord Macnaghten's statement of the law requires amplification in another respect. If the restraint is to secure no more than adequate protection to the party in whose favour it is imposed, it becomes necessary to consider in each particular case what it is for which and what it is against which protection is required. Otherwise, it would be impossible to pass any opinion on the adequacy of the protection."[45]At page 710 of the report Lord Parker said this:
"In fact the reason, and the only reason, for upholding such a restraint on the part of an employee is that the employer has some proprietary right, whether in the nature of trade connection or in the nature of trade secrets, for the protection of which such a restraint is, having regard to the duties of the employee, reasonably necessary. Such a restraint has, so far as I know, never been upheld if directed only to the prevention of competition or against the use of personal skill and knowledge acquired by the employee in his employer's business."
[46]These principles were applied recently by Mrs Justice Cox in a case relied upon by counsel for Mr Strutt, TFS Derivatives Limited v Morgan [2005] IRLR 246. In that case the court had to consider the validity of a covenant in a contract of employment not to:
" ... undertake, carry on or be employed, engaged or interested in any capacity in either any business which is competitive with or similar to a relevant business within the territory or any business an objective or anticipated result of which is to compete with a relevant business within the territory."
[47]A relevant business was defined as:
"The business of any business (sic) of the company, ie the employer, or any associated company in which, pursuant to your duties, you were materially involved at any time during the relevant period."
[48]The definition of the territory and the relevant period do not matter for present purposes.[49]At paragraphs 36 and following of her judgment Mr

Justice Cox expressed the relevant principles thus:

"Thus clause 12(1)(a) will be unlawful unless it is justified by TFS as being reasonable in the interests both of the parties and of the public. In assessing reasonableness, there is essentially a three-stage process to be undertaken. Firstly, the court must decide what the covenant means when properly construed. Secondly, the court will consider whether the former employers have shown on the evidence that they have legitimate business interests requiring protection in relation to the employee's employment. In this case, it will be seen later on, the defendant concedes that TFS have demonstrated on the evidence legitimate business interests to protect in respect of its customer connection, confidential information and the integrity or stability of the workforce, although the extent of the confidential information is in dispute in relation to its shelf life and/or the extent to which it is either memorable or portable. Thirdly, once the existent of legitimate protectable interests has been established, the covenant must be shown to be no wider than is reasonably necessary for the protection of those interests. Reasonable necessity is to be assessed from the perspective of reasonable persons in the position of the parties as at the date of the contract, having regard to the contractual provisions as a whole and to the factual matrix to which the contract would then realistically have been expected to apply."
[50]I respectfully accept that this as expressing the correct approach to the consideration of a restrictive covenant such as that in clause 19.1 of Mr Strutt's contract with the claimant. I must first consider the proper construction of the covenant. Mr Supperstone for Mr Strutt made various submissions on the question of construction designed to show that the covenant is too uncertain in its import to constitute a reasonable restriction on Mr Strutt's future employment activities. His first point was that it was uncertain what was meant by the references to "business". Does it mean the whole of the business of a particular business entity or does it mean a particular business activity?[51]A similar argument was put to Mrs Justice Cox in TFS Derivatives v Morgan, which I have cited earlier. The learned judge found no difficulty in concluding on the facts of that case that business was a reference to a business activity rather than a business entity. Obviously, the words of clause 19.1 in the present case must be construed in the light of all the surrounding facts of this case. Construing them in that context, I have no doubt that the references to "any business" are references to a particular business activity such as the design of vacuum cleaners. I see no uncertainty in this.[52]Next, Mr Supperstone submitted that the words "similar to" in the phrase "which is similar to and competes with any business being carried on by the company" are so vague as to make the whole covenant unreasonably uncertain in its effect. I reject this submission. I do not consider that there is any uncertainty about the meaning of the phrase I have just quoted. To be within it a business has to be both similar in nature to and competing with the relevant business of the company. In my judgment this means quite clearly that the business concerned has to be one that competes with the relevant business of the company by reason of the similarity in nature of both businesses. I see nothing uncertain about this meaning.[53]Thirdly, Mr Supperstone contended that the word "involved" in the phrase "business with which you were involved at any time during the period of 12 months preceding the termination of the employment" was too uncertain to be enforceable. Again Mr Supperstone failed to persuade me that there is any real substance in his argument. The phrase I have just quoted clearly means, in my judgment, business of the company with which you were involved in the course of your employment by the company. On the facts of the present case this means the design of vacuum cleaners. As Mr Hillier for the claimant pointed out, the Court of Appeal found no difficulty in giving an enforceable meaning to very similar words, including the word "involved", in a restrictive covenant in Turner v Commonwealth & British Minerals Limited [2000] IRLR 114.[54]The fourth point raised by Mr Supperstone on the construction of clause 19.1 is not so much a question of what the covenant means as one of its application to the facts of the present case. As I have said earlier in this judgment, the company, as defined by clause 1 of Mr Strutt's employment contract, is Dyson Research Limited, but it is common ground that in the events which have happened the contract is to be construed and applied as if clause 1 had defined the company, not as Dyson Research Limited, but as the claimant.[55]Mr Supperstone submits that the part of Black & Decker's business which consists of the design of vacuum cleaners cannot be said to compete with the claimant's business, because the latter consists exclusively of designing and developing new product for other companies in the Dyson Group to manufacture and sell, whereas it is no part of Black & Decker's business to design products for any company in the Dyson Group. While expressed with Mr Supperstone's advocacy skill this argument may have some superficial semantic attraction, Mr Hillier has persuaded me that it is in fact unrealistic and should be rejected. I accept Mr Hillier's submission that the relevant business of the claimant for the purpose of clause 19.1 is the design and development of vacuum cleaners for sale to the public and that, on the evidence adduced in this case part of Black & Decker's business, albeit a comparatively small part, does consist similarly of the design and development of vacuum cleaners for sale to the public, and can realistically be said to compete with the claimant's similar business.[56]Thus in my judgment, if otherwise valid and enforceable, clause 19.1 does on its true construction prevent Mr Strutt being engaged by Black & Decker, or any other competing employer, in the design of vacuum cleaners within 12 months of the termination of his employment by the claimant; that is to say, before 23rd April 2006.[57]I should mention here a point raised on behalf of Mr Strutt to the effect that to restrain him being engaged in the design of vacuum cleaners might restrain him from continuing his work for Black & Decker on other power tools such as sanders produced by Black & Decker, because such machines can be said to incorporate vacuum cleaner technology for the purpose of collecting dust producing in the course of their operation. The design of such machines would clearly not compete with any business of the claimant. I think this point more theoretical than real. However, no doubt it could be laid to rest by appropriate wording of any injunction should I decide that clause 19.1 should be so enforced.[58]This leaves the important question whether the claimant has discharged the burden of showing that the provision satisfies the tests laid down for restrictive covenants in restraint of trade by the authorities I have cited earlier. It is accepted on behalf of Mr Strutt that in the course of his employment by the claimant he did acquire confidential information relating to the claimant's business which the claimant has a legitimate business interest in protecting. Mr Strutt's case is that clause 19.1 represents an unreasonable way of seeking to protect that interest. As appears from the passage in the judgment of Mrs Justice Cox in TFS Derivative Limited v Morgan [2005] IRLR 246, which I have earlier cited, the relevant question I have to answer is whether the claimant has shown that clause 19.1 was, at the date of Mr Strutt's contract of employment with the claimant, no wider than was reasonably necessary to protect the claimant's legitimate business interests. As Mrs Justice Cox said:
"Reasonable necessity is to be assessed from the perspective of reasonable persons in the position of the parties at the date of the contract, having regard to the contractual provisions as a whole and to the factual matrix to which the contract would then realistically have been expected to apply."
[59]Mr Supperstone, counsel for Mr Strutt, relied on various grounds for his case that the inclusion of clause 19.1 was not reasonably necessary for the claimant's protection. Firstly, he relied on the fact that Mr Strutt's contract of employment contains in clause 18 an express covenant against the misuse by Mr Strutt of confidential information relating to the claimant's business. That provision, argued Mr Supperstone, provided adequate protection to the legitimate interests of the claimant in such information.[60]I do not accept that submission. Similar ones have been rejected by the court in some of the reported cases on the validity of restrictive covenants such as clause 19.1. In Littlewoods Organisation Limited v Harris [1977] 1 WLR 1472 at page 1479 Lord Denning MR dealt with the point thus:
"It is thus established that an employer can stipulate for protection against having his confidential information passed on to a rival in trade but experience has shown that it is not satisfactory to have simply a covenant against disclosing confidential information. The reason is because it is so difficult to draw the line between information which is confidential and information which is not and it is very difficult to prove a breach when the information is of such a character that a servant can carry it away in his head. The difficulties are such that the only practicable solution is to take a covenant from the servant by which he is not to go to work for a rival in trade. Such a covenant may well be held to be reasonable if limited to a short period. That appears from the judgment of Mr Justice Cross in Printers & Finishers Limited v Holloway [1965] 1 WLR 1 at page 6: "
Although the law will not enforce a covenant directed against competition by an ex-employee, it will enforce a covenant reasonably necessary to protect trade secrets. If the managing director is right in thinking that there are features in the plaintiffs process which can fairly be regarded as trade secrets and which their employees will inevitably carry away with them in their heads, then the proper way for the plaintiffs to protect themselves would be by exacting covenants from their employees restricting their field of activity after they have left their employment, not by asking the court to extend the general equitable doctrine to prevent breaking confidence beyond all reasonable bounds."[61]More recently, in Turner v Commonwealth & British Minerals Limited [2000] IRLR 114 the Court of Appeal had to consider the reasonableness of a similar covenant in restraint of trade and at paragraph 18 of his judgment

Lord Justice Waller said this:

"Thus, to enforce the covenant at all, the company would have to establish proprietary rights in the nature of trade connection or in the nature of trade secrets. I should emphasise that, because those are the matters which they are legitimately entitled to protect, it does not follow that clause 5.6 must be unreasonable because covenants restraining the use of confidential information or the canvassing of trade connections could be, and indeed in this case were, imposed. It has been recognised in many cases that, because there are serious difficulties in identifying precisely what is or what is not confidential information and who may or may not have been a customer during the period of an employee's service, a restraint against competing which is reasonable in time and space will not only be enforceable but the most satisfactory form of restraint."
[62]Mr Supperstone, not surprisingly, sought to escape from the reasoning adopted by the Court of Appeal in the two cases I have just cited by submitting that on the evidence in the present case Mr Strutt would have no difficulty in distinguishing between confidential information, which he is not at liberty to use for his new employer, and information acquired by him while working for the claimant, which is not entitled to protection as confidential. Attractively though Mr Supperstone put the submission, he failed to satisfy me that the reasoning adopted by Lord Denning MR and Lord Justice Waller in the two cases I have cited is not equally applicable to the present case. In my judgment it is, and the inclusion in Mr Strutt's contract of employment of clause 18 is no objection to the reasonableness of clause 19.1.[63]I would add to this reasoning a further point, namely that, as was apparent from Mr Strutt's own evidence in this case, if he were left free to work on the design of vacuum cleaners for Black & Decker or any other employer, he would be placed in a position of extreme difficulty if his new employer required him to work on the design of a proposed new product which he realised would compete with a design of the claimants which might not have become public knowledge, and would therefore constitute confidential information within clause 18 of his contract with the claimant. Mr Strutt said that in that situation he would have to decline to comply with his new employer's instruction to work on the design in question, because to do so would involve a risk of his making use of the confidential information he had acquired in working on the claimant's design in breach of clause 18. I accept Mr Hillier's submission that such a refusal might well itself alert the new employer to the existence and nature of the confidential information concerned. This seems to me to constitute another good reason for the claimant to protect itself and Mr Strutt from just such a risk by limiting his freedom of employment for a reasonable period by just such a provision as clause 19.1.[64]Mr Strutt accepted in his evidence that he expected, when he entered his employment with the claimant, that he would acquire confidential information relating to the claimant's designs in the course of that employment and in my judgment it was reasonable in the interests of both parties that such information should be protected by a fetter on Mr Strutt's freedom to engage in a competing business for a period after leaving the claimant's employment.[65]Further objections raised by Mr Supperstone to the reasonableness of clause 19.1 were the length of its operation, namely 12 months, and the fact that there are no territorial limits to its operation. I do not consider that either of these objections has any substance. Having regard to the international nature of the business of the Dyson Group as a whole, it seems to me entirely reasonable that the effect of the restriction on Mr Strutt's future employment in competing businesses should have been worldwide.[66]As to its duration, 12 months was in my view reasonable in the context of the type of confidential information that was being protected, just as it was in the case of Turner v Commonwealth & British Minerals [2000] IRLR 114, to which I have earlier referred.[67]Thus, in my judgment the claimant has established that the restraint sought to be imposed by clause 19.1 is no wider than was, at the date of the contract, reasonably necessary to protect the claimant's legitimate commercial interest in the confidential information relating to its business, which both parties at the time anticipated that Mr Strutt would acquire in the course of his employment by the claimant. Its imposition was in the interests of both parties and not contrary to the public interest. It is, therefore, enforceable against Mr Strutt.[68]Should clause 19.1 be enforced now by injunction against Mr Strutt to restrain his being engaged in the design of vacuum cleaners by Black & Decker? Mr Supperstone submitted that the court has a discretion whether to grant such an injunction. It does, but that discretion must be exercised in accordance with established principles. In this connection Mr Hillier relied on a passage in the judgment of Mr Justice Colman in Insurance Company v Lloyd's Syndicate [1995] 1 Lloyd's Reports 272 at pages 276 to 277. In that case the learned judge found that the defendant would be in breach of an implied duty of confidence arising out of an arbitration agreement if he were to make certain disclosure relating to an arbitration award.[69]Mr Justice Colman then went on to deal with the question whether it was appropriate for the court to grant a final injunction against breach of the duty of confidence. He said this:
"The defendants contend that even if they would be in breach of their duty of confidence in respect of the award, it is not established on the evidence that the plaintiffs will suffer any damage as a result of the breach. Mr Broadbent says that where one finds a confidentiality covenant of this kind in favour of a corporate body which has no personal feelings, it is necessary to show that the body will suffer commercial detriment to its trading interests in order to obtain an injunction. I am unable to accept this submission. What one has in this kind of case is a implied negative covenant as to confidentiality of the award, the commercial purpose of which is the maintenance of the essentially unquantifiable benefit of secrecy for both parties. If it were the position that no breach of the covenant could be restrained by injunction unless specific loss and damage were proved, the covenant would in most cases be unenforceable like every other negative covenant which had the purpose of conferring an unquantifiable benefit on a contracting party. The courts have recognised this problem by consistently enforcing such unquantifiable negative covenants without proof of damage unless enforcement would impose severe hardship on the defendant. In Doherty v Allman [1878] 3 AC 709, a case concerned with an injunction to restrain conversion of leased buildings, said to be in breach of an implied negative covenant, Lord Cairns LC stated at page 720 in relation to the enforcement of negative covenants: "
'It is not then a question of balance of convenience or inconvenience or of the amount of damage or of injury; it is a specific performance by the court of that negative bargain which the parties have made with their eyes open between themselves.'. "However, Lord Cairns was not in this passage withdrawing injunctions in support of express negative covenants from the category of discretionary remedies, he was merely emphasising the point that the court would not be deterred from making such an order by absence of proof of loss or damage to the applicant. In other words, proof of damage is not a threshold prerequisite for the remedy. This was nothing new in relation to covenants relating to land, as is clear from Dickinson v Grand Junction Canal Company [1852] 15 Beav. 260 and from the judgment of Vice Chancellor Hall [1875] 1 ChD 673 at pages 679 to 680. "It is, however, clear that the courts do exercise a discretion to refuse such injunctions in cases where some particular hardship would be caused to the defendant by enforcement of the covenant, although no damage would be caused to the applicant if there were no enforcement. This is apparent from the judgment of Mr Justice Asprey in Sharpe v Harrison [1922] 1 CH 502, a case concerning breach of a negative covenant in a conveyance. At page 515 he observed:
"Prima facie, where a defendant commits a breach of a negative covenant with his eyes open and after notice, the court will grant a mandatory order but there is and must be some limitation to this practice. Supposing that this defendant had taken a brick out of her south wall and had put in an iron ventilator. That would have been a direct breach of this covenant so far as breach is concerned, as direct as the particular breach in the present case. But it is idle to suppose that any court would listen to an action claiming a mandatory injunction if those had been the facts. The reason is this, that if there is really no damage of any sort or kind suffered by a plaintiff by reason of the breach of a negative covenant of this character and if the granting of a mandatory order would inflict damage upon the defendant out of all proportion to the relief which the plaintiff ought to obtain, the court will, in my opinion, and ought, in my judgment, to refuse it."
[70]Earlier in his judgment Mr

Justice Asprey had referred to a passage from Kerr on Injunctions, 5th edition, in this these words:

"There may be cases in which it is so clear that the mischief to arise from a breach of covenant would be inappreciable that the court may decline to interfere on the ground that a mandatory injunction would be out of all proportion to the requirements of the case and would operate with extreme harshness on the defendant. But as a general rule the inconvenience to the defendant will not in such cases be taken into consideration, nor can the defendant be permitted to set up the inconvenience to the public which would arise from his being compelled to perform his agreement. Another example can be found in Shaw v Applegate [1977] 1 WLR 970. (See in particular Lord Justice Goff at pages 980 to 981). In the field of covenants in service contracts against working for a competitor there is also authority to the effect that the party seeking to enforce the covenant by injunction does not have to prove that damage would result from a breach. (See Marco Productions Limited v Pagola, [1944] 1 KB 111 per Mr Justice Hallett at pages 113 to 114). "
The effect of the authorities can be summarised as follows:
"1. Express or implied negative covenants will in general be enforced by injunction without proof of damage by the plaintiff; "2. The principle does not depend on whether the plaintiff is a person or a corporation. The ready availability of the remedy is not the consequence of equity's regard for the plaintiff's personal feelings but of equity's perception that it is unconscionable for the defendant to ignore his bargain. "3. 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."
[71]I respectfully adopt that as a very helpful and accurate statement of the approach the court adopts in considering the enforcement of negative covenants by injunction. In my judgment it is apt in the case of covenants of the nature of that in clause 19.1 in the present case.[72]Mr Supperstone, on the other hand, relied on what was said by Mrs

Justice Cox at paragraph 39 of her judgment in TFS Derivatives v Morgan [2005] IRLR 246:

"Even if the covenant is held to be reasonable, the court will then finally decide whether, as a matter of discretion, the injunctive relief sought should in all the circumstances be granted, having regard, amongst other things, to its reasonableness as at the time of trial."
[73]In my judgment this has to be applied subject to the well established principles set out in the passage from the judgment of Mr Justice Colman which I have just cited. Applying those principles to the facts of the present case, I have no doubt that this is not the sort of exceptional case envisaged under head 3 in the last paragraph of that citation and that, on the contrary, it is a case where there would be nothing at all unconscionable in holding Mr Strutt to his contract by injunction. There is no evidence that so to do would cause him any hardship whatever. The period of any injunction will last only until 22nd April next year, some five months, and the evidence does not suggest that Black & Decker are likely to wish to employ him on the design of vacuum cleaners in that period, although it remains a possibility, or that he is likely to wish in that period to seek such work from any other employer.[74]Mr Supperstone relied on various factors as militating against this conclusion. Most of them were restatements of the proposition that the covenant not to misuse confidential information contained in clause 18 of Mr Strutt's service contract provides adequate protection to the claimant, so that an injunction to enforce clause 19.1 is inappropriate.[75]I have dealt with the clause 18 argument already on the question of the validity of clause 19.1. Reliance on it on the present question of the exercise of the court's discretion to enforce clause 19.1 by injunction is, in my judgment, misconceived. So also is the reliance made by Mr Supperstone on the fact that vacuum cleaners are only a small part of Black & Decker's business and that its share of the vacuum cleaner market is very much smaller than that of the Dyson Group.[76]In my judgment, once, it has been established, as in my judgment it has been in this case, that a restrictive covenant of the nature of that in clause 19.1 is valid and enforceable, then, whether or not the covenantee has shown that it would suffer damage by its breach, the court should normally exercise its discretion in favour of enforcing the covenant by injunction. I say "normally" because, as envisaged by Mr Justice Colman in Insurance Company v Lloyd's Syndicate [1995] 1 Lloyds's Report 272, there might be an exceptional case in which the degree of hardship to be caused to the covenantor by such an injunction in the absence of proof of damage to the covenantee might be so extreme as to make the enforcement of the covenant by injunction unconscionable. I have no doubt this is not such an exceptional case and it seems to me right that Mr Strutt should be held to his bargain with the claimant by the grant of an injunction.[77]Finally, Mr Supperstone argued that the grant of an injunction would be inappropriate because there has been no threat by Mr Strutt of any breach of clause 19.1. I do not accept this submission. It seems to me that the grant of an injunction is entirely appropriate in the context of(a) the evidence of Mr Hewitt of Black & Decker that the possibility of that company wanting Mr Strutt to work on vacuum cleaners could not be ruled out and(b) Mr Strutt's refusal to give an undertaking to abide by the covenant and his argument that it was not enforceable against him.[78]Thus, for these reasons, I shall grant an injunction to enforce clause 19.1 against Mr Strutt in terms which I will now consider with counsel.

Cited in 7 later judgments