AFH Independent Financial Services Limited & Anor v Samantha Jayne Baker & Anor [2026] EWHC 1674 (Comm)

[2026] EWHC 1674 (Comm)Case No CC-2024-BHM-000014IN THE HIGH COURT OF JUSTICEVenue BUSINESS AND PROPERTY COURTS IN BIRMINGHAMCircuit Commercial Court (KBD)Date 3 July 2026
Before
HIS HONOUR JUDGE CHARMAN (Sitting as a Judge of the High Court)
Between
AFH INDEPENDENT FINANCIAL SERVICES LIMITEDClaimantsAFH GROUP LIMITEDClaimantSAMANTHA JAYNE BAKERDefendantsREGENTIA LIFESTYLE PLANNING LIMITEDDefendant
Mr Gerard McMeel KC (instructed by FS Litigation) for ClaimantsMr Martin Budworth (instructed by DTM Legal LLP) for DefendantsHearing Hearing dates: 23 – 26 March and 7 May 2026
JUDGMENT(Draft Judgment 22 June 2026)This judgment was handed down remotely by circulation to the parties’ representatives at 10.30 am on 3 July 2026 and by release to the National Archives
[1]The Claimants (together “AFH”) carry on business providing retail financial advice. AFH Group Limited (“AFHG”) is the parent company of AFH Financial Services Limited (“AFH FS”) and other companies in the AFH Group. The AFH Group is a substantial undertaking which provides financial advice on a large scale to hundreds of thousands of retail customers through various group companies. It was previously listed on AIM and manages client funds off about £10 billion.[2]On 30 November 2018, AFH FS acquired the shares in a company referred to in this judgment as PCWM. PCWM carried on the business of providing retail financial advice from premises in East Yorkshire. The First Defendant (“Ms Baker”) was at that time an employee of PCWM. At that date of the acquisition, she was employed as a tax adviser and trainee IFA. She was also in the process of obtaining the qualifications necessary to be able to work as an independent financial adviser (“IFA”) and her work included assisting an IFA and director of PCWM, Victoria Hicks (“Ms Hicks”).[3]Shortly after the acquisition, Ms Baker completed her examinations necessary to work as an IFA. In early 2019, it was agreed between Ms Hicks and AFH that she would leave PCWM. A little later in 2019, Ms Baker obtained all necessary regulatory approvals to work as an IFA. It was then agreed as between her and AFH that she cease her employment with PCWM and become a self-employed IFA under a self-employed contract (“SEC”) with AFH FS. It was also agreed that she would take on a number of the former PCWM customers of Ms Hicks. The precise chronology of these events is an important issue in the case.[4]As well as the SEC, Ms Baker entered into a Deed of Restrictive Covenant (“DRC”) and a Variation Letter (“VL”) with AFH FS. The parties agree that these three documents (together “the Contracts”) contain the terms upon which Ms Baker was engaged as a self-employed IFA by AFH FS.[5]Ms Baker gave notice to terminate her contract with AFH FS on 17 December 2019. She joined the Second Defendant, Regentia Lifestyle Planning Limited (“Regentia”) on the expiration of her notice period. Ms Baker later became, and remains, a director of Regentia.[6]Following her joining Regentia, Ms Baker dealt with customers who were former customers of Ms Hicks and with whom she had dealt while a self-employed IFA with AFH FS. AFH says that in doing so she acted in breach of restrictive covenants contained in the DRC and used AFH’s confidential information in breach of her contract with AFH FS. AFH also says that Regentia used AFH’s confidential information when dealing with the former AFH clients which Ms Baker brought to it. Each of Ms Baker and Regentia deny liability and further deny that they can be liable to AFH. Ms Baker also counterclaims in respect of sums she says remain due to her under the SEC. The Issues[7]A List of Issues and Common Ground was prepared in this case and considered by HHJ Worster at the CCMC when HHJ Worster ordered a split trial, with liability on the claim being determined first. The List of Issues includes allegations of breach of confidence. During closing submissions, I indicated that parts of the case advanced by AFH on breach of confidence were not open to it on the pleadings. As a result, AFH applied to amend its Particulars of Claim. At a subsequent hearing, I granted permission for some of its proposed amendments and gave directions for consequential amendments and the exchange of further evidence. As a result, allegations of breach of confidence will be the subject of a further trial. The exchange of evidence for this trial has led to some of the pleaded issues falling away. The remaining issues of liability on the claim are:(a) Did AFH FS contract for the benefit of all of the members of the AFH group, so that other AFH companies (including AFHG) are entitled to enforce the contractual obligations under the Contracts (Rights of Third Parties) Act 1999 (“the 1999 Act”) or by way of a trust of a promise?(b) As matter of contractual construction, do the covenants in the DRC apply to the former PCWM customers listed in the appendix to the Variation Letter?(c) Were all or some of the restrictions in the DRC unenforceable restraints of trade?(d) Did any or all of the former PCWM customers who transferred their business to Regentia do so as a result of solicitation by Ms Baker?[8]I have had the benefit of skeleton arguments from counsel, Mr McMeel KC for the Claimants and Mr Martin Budworth for the Defendants, each of which includes detailed submissions on the legal issues arising. I am grateful to them both for their written and oral submissions. The Evidence Generally and Approach to Fact Finding[9]I have considered and borne in mind all of the oral evidence and the evidence included in the trial bundle, including the evidence introduced during the trial. I cannot sensibly summarise everything I heard or read in evidence or determine each and every dispute of fact however tangential its relevance and I do not propose to do so. I have however considered and taken into account everything that was before me and I will refer to the evidence as necessary throughout this judgement. I have attempted to distil into this judgment only such material as is necessary for the parties to understand what I have decided and why. My not mentioning a particular matter should not therefore be treated as my having overlooked it.[10]When considering the evidence, I bear in mind the observations of Leggatt J in Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC 3560 Comm at paragraphs [15] - [22]. These include that:(a) Memory is especially unreliable when it comes to recalling past beliefs, which are revised to make them more consistent with present beliefs.(b) The process of civil litigation itself subjects the memories of witnesses to powerful biases because witnesses often have a stake in a particular version of events.(c) Considerable interference with memory is introduced into civil litigation by the procedure of preparing for trial; the effect of the process of preparing to give evidence is (1) to establish in the mind of the witness matters in his or her own statement (whether they be true or false) and (2) to cause the witness’s memory of evidence to be based increasingly on this material and later interpretations of it rather than on the original experience of events.[11]Leggatt J went on to state that in commercial cases, the best approach is to base findings of fact on inferences drawn from documentary evidence and known or probable facts, rather than the recollections of witnesses. As explained by Floyd LJ in Martin v Kogan [2020] FSR 3, a proper awareness of fallibility of memory is necessary but does not relieve judges of the task of making findings of fact based upon all of the evidence.[12]This approach applies to all cases and not just commercial ones, as explained by Mostyn J in Carmarthenshire County Council v. Y [2017] EWFC 36:
“In my opinion this approach applies equally to all fact-finding exercises, especially where the facts in issue are in the distant past. This approach does not dilute the importance that the law places on cross-examination as a vital component of due process, but it does place it in its correct context.”
[13]In addition, as was observed by Arden LJ in Wetton v Ahmed [2011] EWCA Civ 610 at [14], contemporaneous written documentation is also important in assessing credibility.[14]I have these observations in mind when considering the evidence, but my conclusions have been reached after consideration of all of the evidence advanced by the parties. The Contracts[15]The provisions of the SEC relevant to the issues which I have to decide are (parts of the following extracts and summaries are taken from Mr McMeel’s skeleton argument):(a) In the definitions section at clause 1.1; “Client” was defined as “any person…whom or on whose behalf the Company or the IFA have arranged investments, life assurance, pensions, financial products or Products or to whom the Company or the IFA or persons on their behalf have arranged investments, life assurance, pensions, Products or similar advisory and consulting services including when acting on behalf of the Former Companies.”(b) “Company Client” was defined as “any Client introduced to the IFA by the Company or the Former Companies and any client who has transacted a defined benefits pension transfer with any of the Former Companies.”(c) “IFA Client” was defined as “any Client introduced by the IFA to the Company after the date of this Agreement but excluding any Company Client.”(d) “Client” was defined as “any person…whom or on whose behalf the Company or the IFA have arranged investments, life assurance, pensions, financial products or Products or to whom the Company or the IFA or persons on their behalf have arranged investments, life assurance, pensions, Products or similar advisory and consulting services including when acting on behalf of the Former Companies.”(e) “Company Client” was defined as “any Client introduced to the IFA by the Company or the Former Companies and any client who has transacted a defined benefits pension transfer with any of the Former Companies.”(f) “IFA Client” was defined as “any Client introduced by the IFA to the Company after the date of this Agreement but excluding any Company Client.”(g) “Former Companies” were defined by reference to six identified financial advisory companies, including PCWM.(h) “Group Company” was defined as “the Company”, any company of which it is a Subsidiary (its holding company) and any Subsidiaries of the Company or any Subsidiaries of any such holding company.”(i) By clause 7.1:
“Details of Clients shall be regarded as the Company and the IFA’s Confidential Information….” (j) By clause 8.1 either party was entitled to terminate the Self-Employed Contract by giving one month’s written notice to the other party (subject to clause 8.2). (k) Clauses 9.1 and 9.3 made provision for Clients’ Confidential Information during the term of the Agreement. (l) Clauses 9.4, 9.5 and 9.6 made provision for Clients’ Confidential Information both during the term of the Agreement and following the Termination of the agreement. (m) By clause 10 in relation to “papers” provided to or made by the IFA relative to the Business were to be and remain the Company’s property (save as related wholly and exclusively to the IFA’s Clients), and the IFA was required to hand over all such papers and any copies in any event upon Termination of the agreement, and the IFA undertook not to keep any copies. (n) By clause 11.1: “The IFA shall be bound by restrictive covenants, details of which are to be found in the separate Restrictive Covenant document.” (o) By clause 11.2: “The restrictive covenants referred to in clause 11.1 shall not apply in respect of the IFA’s Clients.”
This clause is relevant to restraint of trade. (p) Clause 17 made further provision for the return of property (including “all files, documents, slides, computer discs…”) belonging to the Company upon Termination. (q) By clause 21.2 AFH made the Agreement for the benefit of each Group Company.[16]The provisions of the DRC relevant to the issues which I have to decide are the following (again, some of the extracts and summaries are taken from Mr McMeel’s skeleton argument):(a) By recital A that the Company was authorised by the FCA to provide regulated financial advice.(b) By recital B Ms Baker was a self-employed consultant to the Company providing financial advice to customers of the Company.(c) By recital C the Company provides details of its Customers to Ms Baker as Adviser to enable her to provide advice for which she was remunerated by the Company.(d) By recital D the details of the Customers including (but not limited to) name, address, and prior advice given to them is the property of the Company and belongs to the Company and the Adviser is only permitted to take copies (in any form) of any documents for the purposes of advising such Customers on behalf of the Business during the term of the agreement.(e) By recital F both during the Term and following the Termination Date the provisions of the Deed were to apply to the Consultant in respect of her dealings with Customers.(f) “Customers” was defined as including “customers or clients of the Company or Former Companies whose details have been provided to the Adviser directly or indirectly by the Company, or the Former Companies, their employees, officers and agents or whose details the Adviser became aware of during the term of the Deed and/or customers or clients of the Company or Former Companies at the date of the Deed with whom the Adviser had material dealings with for the provision of financial advice in the 12 months prior to the Termination Date which have not been generated or sourced by the Adviser.”(g) “Former Companies” was defined by reference to six identified financial advisory companies, including PCWM.(h) By Clause 2.1:
“The Adviser covenants with the Company (on its own behalf and as trustee for each member of its Group) that he shall not: 2.1.1 at any time during the Term: 2.1.1.1 deal with any Customer or Prospective Customer; where such dealing would amount to a form of competition with the Business; or 2.1.1.2 canvass, solicit or otherwise seek (other than by general advertising) the custom of any person who is a Customer or Prospective Customer; where such custom would be in competition with the Business;….” 2.1.2 at any time during the period of 12 months beginning with the Termination Date: 2.1.2.1 deal with any person who is at the Termination Date, or who has been any time during the period of 12 months immediately preceding that date, a Customer or Prospective Customer, where such dealing would amount to a form of competition with the Business; or 2.1.2.2 canvass, solicit or otherwise seek (other than by general advertising) the custom of any person who is at the Termination Date, or who has been at any time during the period of 12 months immediately preceding that date, a Customer or Prospective Customer, where such custom would be in competition with the Business;….” (i). Clause 2.2 provided: “For the avoidance of doubt the restrictions in this Clause 2 shall not apply to any client or customer referred to the Adviser prior to the date of this Deed by any of the Former Companies (save for DB Clients).” (j). Clause 2.3 provided: “The covenants in clause 2 are intended for the benefit of the Company and each member of the Company’s Group and apply to actions carried out by the Adviser in any capacity and whether directly or indirectly, on the Adviser’s own behalf, on behalf of any other person or jointly with any other person.” (k). By clause 8.2; “This Deed is also made for the benefit of each Group Company and shall be enforceable by each of them to the fullest extent permitted by law as if they were a party to this Deed.”
[17]The Variation Letter is dated 24 May 2019. Provisions of the Variation Letter relevant to the issues which I have to decide are the following (again, some of the extracts and summaries are taken from Mr McMeel’s skeleton argument) are:(a) At paragraph 1, “The clients set out in this Appendix were provided to you by PCWM Limited (‘Clients’).”(b) Paragraph 2 sets out the revised reduced basis of remuneration from 40% to 30% for those clients, which would cease to apply if a two-year target for all clients was hit.

(c) Paragraph 5 states:

“The clients set out in the Appendix will not be eligible for an AFH Practice Buy Out for the period of five (5) years from the date of this letter. All other terms of the AFH Practice Buy Out remain unchanged.”
The Regulatory Background 18. A further important part of the background to the claim is that the provision of financial advice to retail customers is regulated by the Financial Services and Markets Act 2000 (“FSMA”) and regulations made under it. In order to operate as an IFA someone in the position of Ms Baker or Ms Hicks was required both to have obtained the necessary formal qualifications and to be approved by a firm authorised under FSMA to carry on a financial services business providing advice to retail customers. In this case, at the relevant times, Ms Baker had the approval of AFH FS. Mr McMeel emphasises that unless and until she was given such approval, Ms Baker could not lawfully work as an IFA. The Witnesses 19. The Claimants called three witnesses; Stacey Costar who at the relevant time was Head of Operations at AFH, Christopher Handshaw who at the relevant time was first Head of Employed Advisors and then Head of Advisor Relations at AFH; and finally, Alan Hudson, who was at the relevant time and still is CEO of AFH. 20. All three gave their evidence in a straightforward manner and made appropriate concessions. Both Ms Costar and Mr Handshaw were open about what they did and did not know and as to matters, particularly matters of relatively fine detail, that they could not now recall. Mr Hudson’s response to questions included statements of his opinion at Ms Baker’s motives and modus operandi, including his belief that her departure from AFH FS, joining Regentia and then taking some customers to Regentia was pursuant to a pre-determined plan to advance hers and Regentia’s interests at the expense of AFH. Mr Hudson’s opinions are inadmissible. However, in my judgment, Mr Hudson’s evidence on matters of fact was generally considered and straightforward. His answers engaged directly with the questions he was asked and he mostly made appropriate concessions. I found him also to be an honest witness. 21. The Defendants called Ms Baker herself and five customers who were former PCWM customers and moved with Ms Baker to Regentia. Each of the customers, four of whom had travelled from Yorkshire or Humberside to give evidence on behalf of Ms Baker, was transparently honest and straight-forward and I accept all of their evidence. 22. Ms Baker herself was cross examined for notably longer than any other witness. Her answers were generally clear and straightforward, engaging with the question and making appropriate concessions. Unsurprisingly, her recollection was generally stronger on matters of detail than that of the other witnesses. I found her to be an honest witness. 23. I now turn to the issues arising from the list of issues. (a) Did AFH FS contract for the benefit of other members of the AFH group, so that other AFH companies (including AFHG) are entitled to enforce the contractual obligations under the Contracts (Rights of Third Parties) Act 1999 (“the 1999 Act”) or by way of a trust of a promise? 24. As Mr McMeel KC submits, this issue raises questions of law. The starting point is the principle of privity of contract, the general rule of law that only a party to a contract can take the benefit of or bound by a contract. 25. Mr McMeel KC says that the rights of other AFH companies are not limited by privity of contract here and relies upon the express provision of clause 21.2 of the SEC which provides:
“This agreement is also made for the benefit of each Group Company and shall be enforceable by each of them to the fullest extent permitted by law as if they were a party to this agreement.”
Mr McMeel KC also relies upon clause 8.2 of the DRC, which is in materially identical terms and clause 2.3 of the DRC which provides that:
“The covenants in clause 2 are intended for the benefit of the Company and each member of the Company’s Group and apply to actions carried out by the Adviser in any capacity and whether directly or indirectly, on the Adviser’s own behalf, on behalf of any other person or jointly with any other person.” 26. Mr McMeel KC says that each is clear provision that the relevant contract is entered into for the benefit of all members of the AFH group. He relies on section 1 of the 1999 Act and also on the much older common law principle of a trust of promise. He says that the effect of the clauses to which I have referred is that AFH FS contracted on terms that it received Ms Baker’s promise to comply with the restrictions in the SEC and DRC upon trust for itself and the other AFH group companies. 27. Mr Budworth accepts the clear meaning of the words of those clauses would fall within section 1 of the 1999 Act, but submits that although Ms Baker was self-employed, she was nonetheless a “Worker” within the definition of that term contained in section 230 (3) of the Employment Rights Act 1996, in particular because she undertook to do or perform personally work or services for another party to the Contracts, being AFH FS. 28. Mr McMeel KC initially resisted this analysis, but by the end of his submissions in reply either tacitly accepted it or at least did not strongly oppose it. In my judgment, he was correct to adopt that stance. In Pimlico Plumbers Ltd v Smith [2018] UKSC 29, the Supreme Court held that even though they are not an employee, an independent contractor who undertakes to perform services personally and is not entitled to subcontract them, and where the company he contracts with is not his client or customer is a “worker” within section 230 (3) of the Employment Rights Act 1996. Applying that decision to Ms Baker’s position, in my judgment, she is a “worker,” as Mr Budworth submits. 29. Mr Budworth then points to section 6(3) of the 1999 Act, which provides that section 1 of the 1999 Act confers no right on a third party to enforce “(b) any term of a worker’s contract against a worker (including a home worker).”
He says that this means that AFH cannot rely upon the 1999 Act. 30. On its face, section 6(3) appears fatal to Mr McMeel KC’s case. However, he drew my attention to section 7 (1) of the 1999 Act, which provides that section 1 does not affect any right or remedy of a third party that exists or is available apart from section 1 of the 1999 Act. As Mr McMeel KC submits, it follows that section 6(3) does not affect any right or remedy at common law or in equity either, but it does prevent reliance on section 1 of the 1999 Act by AFH. 31. Following his acknowledgment of Mr Budworth’s “worker” point, Mr McMeel KC’s submissions placed greater emphasis on his trust of a promise argument. He submits that the provisions of the Contracts to which I have referred give rise to a trust of a promise for the benefit of the other AFH group companies of the provisions of the Contracts, and in particular for current purposes, the restrictive covenants. 32. Mr Budworth submits that AFH companies other than AFH FS cannot rely upon a trust of a promise to enforce the restrictions contained in the SEC and DRC against Ms Baker. He relies on paragraphs 21-080 to 21-082 and 21-088 of Chitty on Contracts (36th ed). Those paragraphs advance the following propositions of law: (a) A promise will not be regarded as a trust of a chose in action for a third party unless they have the intention to create a trust when making the contract. (b) The intention to benefit the third party must be irrevocable, so that if the promise is entitled to deprive the third party of the benefit of the contract or divert the benefit to himself, no trust will arise. (c) The mere intention to benefit the third party alone is not sufficient, the court must be satisfied that there was an intention to create a trust. Where the promisee owes some contractual or fiduciary duty to the third party, the necessary intention is likely to be found. (d) As the courts have become stricter in requiring proof of an intention to create a trust generally, so they have become stricter in requiring proof of an intention to create a trust of a chose in action. (e) Intention may be negatived by statutory exception in that if the third party is entitled to enforce the contract under a statutory exception to the doctrine of privity, then any intention to create a trust may be absent by reason of the availability of the exception. (f) The courts have so far only applied the trust device to promises to pay money or transfer property to the third party. 33. I regard this as an accurate statement of the law. Applying those principles to this case, I am not satisfied that the clauses upon which Mr McMeel KC relies do create a trust of a promise. They face the obvious difficulty that the alleged trust is not of a promise to pay money or transfer property. Neither party has referred me to any authority where a trust of the benefit of pre- or post-termination restrictive covenants or of a duty of confidence has been upheld. As I have noted, the passages in Chitty relied upon by Mr Budworth indicate the opposite. A trust of a promise as advanced by Mr McMeel KC is a stark exception to the doctrine of privity of contract. The authorities indicate that the courts have in recent years been reluctant to widen its application because its effect would be to remove the rights of the parties to vary the contract by mutual consent. This case may be an illustration of that. If the purported trust of a promise in the DRC is effective to create rights for other AFH group companies, then questions could arise as to the status and effect of the Variation Letter. 34. In this case, the only potential evidence of an intention to create a trust of promise is the language of the clauses themselves. Whilst I can infer from the surrounding facts that AFH FS intended to contract for the promises in the SEC and the DRC for the benefit of other group companies as well as itself, the language of the clauses does not indicate an intention to create a trust. It is also notable that the definition of both “Customers” and “Prospective Customers” refers to customers of AFH FS and “Former Companies” which includes PCWM but not other members of the AFH group. Rather than indicate a clear intention to create a trust, the language rather expresses an intention to contract for the benefit of third parties in accordance with section 1 of the 1999 Act. It would have done so but for the “worker” point. 35. For these reasons, I find that AFHG and other AFH group companies are not entitled to enforce either the SEC or the DRC by relying on either clause 21.2 of the SEC or on a trust of a promise. (b). As a matter of contractual construction, do the covenants in the DRC apply to the former PCWM customers listed in the appendix to the Variation Letter? The Law[36]The question of the true construction of the DRC and Variation Letter is a question of law. The approach to be taken to questions of contractual construction is well-established, having been addressed in number of appellate decisions in recent years. A convenient, authoritative, and up to date summary of the applicable principles was set out by Lord Burrows in Providence Building Services Ltd v Hexagon Housing Association Ltd [2026] UKSC 1 at [21] to [23] as follows:
““[21] The modern approach in English law to contractual interpretation is to ascertain the meaning of the words used by applying an objective and contextual approach. As was said by Lord Hoffmann in his seminal speech in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 ("ICS"), at p 912, the aim of contractual interpretation is to ascertain "the meaning which [the contract] would convey to a reasonable person having all the [relevant] background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract." His Lordship also explained that business (or commercial) common sense may be relevant. In contrast, declarations of the subjective intentions of the parties and, for reasons of practical policy, previous negotiations cannot be used in determining what the contractual language means. [22] In Arnold v Britton [2015] UKSC 36; [2015] AC 1619, the Supreme Court clarified that the words used by the parties are of primary importance so that one must be careful to avoid placing too much weight on business common sense (or purpose) at the expense of the words used; and one must be astute not to rewrite the contract so as to protect one of the parties from having entered into a bad bargain. [23] In Wood v Capita Insurance Services Ltd [2017] UKSC 24; [2017] AC 1173, Lord Hodge, with whom the other Supreme Court Justices agreed, pointed out, at para 12, that contractual interpretation ‘involves an iterative process by which each suggested interpretation is checked against the provisions of the contract and its commercial consequences are investigated...’.”
[37]Mr Budworth emphasised the guidance in Arnold v Britton that commercial common sense is not to be invoked retrospectively, because the contractual arrangement has worked out badly for one of the parties and the court should not reject a natural meaning of a term simply because it seems imprudent for the parties to have agreed it. I accept his submission that such guidance is potentially relevant here and I have those points well in mind when considering the interrelationship between the actual words used and commercial common sense in this case.[38]Mr Budworth also drew my attention to the decision of the Court of Appeal in Prophet v Huggett [2014] IRLR 797. In my judgment, that case is simply an example of the established approach to contractual construction, which has been the subject of further elucidation by the Supreme Court since that decision. However, I note that it was also a case concerning restrictive covenants and that the importance of the court not re-making the bargain which was in fact struck by the parties was emphasised. Findings of Fact Forming Part of the Relevant Background to the Contract[39]It is long established that the facts forming the relevant background within which the contract is to be construed are limited to facts known by both parties at the time that the contract was made. With that in mind, I make the following factual findings which I take into account in construing the covenants in the DRC: (a). AFH is a substantial retail financial services business. Its business model is to be acquisitive of smaller businesses, and it has developed an expertise in acquiring such businesses with a team based at its head office which is dedicated to managing such acquisitions and the integration of acquired businesses. This was the evidence of Mr Hudson and Ms Costar and was not really challenged. (b). It logically follows from this and was the unchallenged evidence of Mr Hudson, that when making an acquisition, the asset which AFH wishes to buy is the client book of the target and the price paid for the target is based on the value of those client connections. Accordingly, AFH is very concerned to try to ensure that it retains the clients of the acquired business. (c). At the time of AFH’s acquisition of PCWM, Ms Baker was employed as a part time tax adviser. She was also training to become an IFA. She passed all necessary examinations to become an IFA in December 2018. (d). During 2018 Ms Hicks had introduced Ms Baker to a number of Ms Hicks’ clients and Ms Baker had dealt with administrative matters and other unregulated activities for those clients. This is Ms Baker’s evidence and was not challenged. (e). The provision of retail financial services is heavily regulated. Businesses such as AFH, PCWM and Regentia devote significant resources to regulatory compliance, and their modes of operation ensure compliance with relevant regulations and the monitoring of such compliance. This is agreed between the parties, was referred to by each of the witnesses for the Claimants and is accepted by Ms Baker. (f). In order to work as a compliant IFA, Ms Baker needed to be both authorised by the FCA and approved by an authorised firm. This is agreed between the parties and is a matter of law. (g). Ms Baker was authorised by the FCA regulator on 4 February 2019. At that point, in order to lawfully provide financial services advice and carry out other regulated activities she still needed to be approved by AFH. This is expressly addressed in the evidence of Mr Handshaw, which I accept. It is not disputed by Ms Baker. (h). There has been some disagreement as to the date when Ms Baker was approved and hence, met the regulatory requirements to work as an IFA. Ms Baker’s case is that she was approved from 5 April 2019. An email from AFH’s sales director, Barry Willis, dated 20 March 2019, states that the forms were to be submitted that day and a response from a subordinate of his confirms that. Both the original Particulars of Claim and the letter of claim from AFH dated 22 April 2022, stated or accepted that Ms Baker was approved by AFH and PCWM on 5 April 2019. Ms Baker says in unchallenged evidence that she attended AFH’s head office in Bromsgrove, Worcestershire, from 20 to 22 March for fast-track intensive compliance training, which was delivered to her on a one-to-one basis. That evidence is unchallenged. Ms Baker also says that after 2 May 2019, she attended client meetings unsupervised. For AFH, Ms Costar accepted in cross examination that the relevant forms for Ms Baker to be approved by AFH were submitted on or about 20 March and she was approved shortly after that, albeit that she did not have any clients at that point. Mr Handshaw’s evidence makes the point that when he met her in late April 2019, she continued to be employed by PCWM as a tax adviser and trainee IFA. I accept that evidence, but it does not go directly to the question of when Ms Baker was approved by AFH. In my judgment, the effect of all of this evidence is to establish on the balance of probabilities that Ms Baker was approved by AFH and as a matter of regulatory compliance, able to provide IFA services to clients from 5 April 2019. However, AFH regarded her as requiring supervision when attending meetings with clients until 2 May, so she was able to see clients on her own and therefore be allocated clients from that date. (i). Ms Baker and Ms Hicks had agreed that once Ms Baker was a fully qualified IFA, she would take over some of Ms Hicks’s clients and that both she and Ms Hicks would then work to expand PCWM’s client bank. This was Ms Baker’s evidence. There was no evidence to contradict it, and I accept that part of her evidence. However, this was not an agreement with contractual force and in any event, did not bind AFH. Indeed, there is no evidence that AFH was even aware of it, so I do not find that it is a fact of which both sides were aware when the SEC, DRC and Variation Letter were concluded. (j). When AFH acquired PCWM, it was anticipated that Ms Hicks would continue to work for it and to provide services to her clients. In February 2019, it was agreed that Ms Hicks would leave due to a perceived conflict of interest arising from her involvement in her husband’s business, the details of which are not material. This is agreed between the parties. As is common sense, the departure of Ms Hicks shortly after the acquisition created an issue for PCWM and AFH, as both wanted to ensure that Ms Hicks’ clients were retained by the business. This is also accepted by the parties. (k). Ms Baker took over a number of the former clients of Ms Hicks following the departure of the latter. That is common ground. Precisely when those clients became her clients is not. (l). The question of when clients were allocated to Ms Baker is an important one. The relevant communications between the parties took place mostly by email. The following analysis is based on the relevant emails:(i) Ms Costar and Mr Handshaw say that Ms Baker had no clients allocated to her so had no clients of her own until she signed the SEC, DRC and Variation Letter as until that point, she was employed by PCWM as a tax adviser and trainee IFA and could not have her own clients but only provide services to clients of PCWM.(ii) Ms Baker’s oral evidence is that in accordance with what had been agreed between her and Ms Hicks, Ms Hicks began handing over some of her clients to Ms Baker in January 2019. However, there is no evidence that AFH was aware of that. It is therefore not an admissible fact when construing the contracts.(iii) Ms Baker says that “from her point of view” agreement was reached with AFH as to the clients being allocated to her on 23 April, when a spreadsheet setting the allocation of clients was circulated by Karen Sparks and Paul Hodgson of PCWM. Ms Baker says that she had contacted each of the clients allocated to her on the list by the end of April. I accept that evidence and that at that date she believed that she would be getting all of those clients.(iv) However, Ms Baker accepts that AFH was not aware of that until later and that Mr Handshaw promptly intervened and reallocated some of those clients to another adviser, James Blake, and that a final list of her clients was included in a spreadsheet she sent to Mr Handshaw on 22 May and that she agreed that list.(v) Mr Hudson sent an internal email on 24 April 2019 blocking the allocation of all of Ms Hicks’s clients to Ms Baker and stating that Mr Handshaw should determine how Ms Hick’s former clients were distributed to among AFH advisers.(vi) On 25 April, Mr Handshaw met with Ms Baker to discuss and determine which clients would become her clients. That evening, Ms Baker sent an email referring to the meeting earlier that day and sending a list of Ms Hicks’ former clients for his review.(vii) On 30 April, Mr Handshaw sent an email to Ms Baker informing her that he now had client lists with all relevant details and would start reviewing them and revert to her.(viii) It is clear from both the oral evidence of Mr Hudson and Mr Handshaw and the email traffic that AFH was concerned that Ms Baker would be ‘given’ clients which would generate for her the income which Ms Hicks had received, which would be far in excess of the usual earnings for a new IFA.(ix) The same evidence indicates that AFH was concerned that Ms Baker starting with such a level of income risked both that she would not be motivated to find new clients and that the other AFH IFAs would resent that she was ‘given’ such a profitable client bank and the resulting earnings.(x) An email from Ms Baker to Mr Handshaw on 9 May indicates that they met the previous day and sends a marked-up client list indicating those with whom Ms Baker had already been in contact.(xi) Mr Handshaw forwarded the list internally and asked for the income that would be generated by the clients that Ms Baker had marked be calculated.(xii) Mr Handshaw also sent an email to Ms Costar the same day, indicating that once the calculation had been done decisions as to Ms Baker’s clients could be finalised.(xiii) Email traffic indicates that on 13 May, Mr Handshaw tried to arrange to speak to Ms Baker, but it is not clear whether he did so.(xiv) On 14 May, Ms Baker sent an email to Sarah Davies which included that “client allocation remains to be sorted.” Mr Handshaw then met with Ms Baker on 14 May and informed her of her intended client allocation, which she was at least initially unhappy with. This is clear from Mr Handshaw’s second email to Mr Hudson on 15 May. It also references a further telephone conversation between Mr Handshaw and Ms Baker that morning. Ms Baker also sent Mr Handshaw an email the same morning setting out how she saw the background and the discussions leading to her client allocation.(xv) As both Ms Baker’s notes of the meeting and Mr Handshaw’s first email to Mr Hudson on 15 May indicate, the main area of discussion was as to the commission split in respect of recurring income from identified clients. (xvi) It follows that by that point, AFH must have identified the clients it intended would be passed to Ms Baker and informed her who they were. (xvii) Mr Handshaw’s emails to Mr Hudson indicate that Ms Baker had in effect been informed of the clients that AFH intended to allocate to her and what it was proposing that her share of the recurring income from those clients would be, but Ms Baker had not agreed to it as she considered that she had been led to believe that her share of the income from recurring fees would be higher. (xviii) An email from Mr Handshaw to Mr Hudson at 09.25 on 17 May indicates that there is no final agreement with Ms Baker at that point. It also refers to Mr Handshaw discussing an employed adviser contract with Ms Baker, indicating that she had shown some interest in becoming an employed rather than a self-employed IFA. (xix) The email traffic indicates that there was a further conversation by telephone between Mr Handshaw and Ms Baker on the morning of 21 May. The same day, Ms Baker sent an email to AFH attaching a colour coded spreadsheet identifying clients that she believed were to be allocated to her. (xx) Then on 22 May, Ms Baker sent an email to Mr Handshaw at 10.39 responding to his earlier email setting out AFH’s proposed financial terms and stating that she confirmed that she wished to be self-employed and at least by implication, agreed to the terms that had been offered by AFH, which included that she be allocated the clients shown on the spreadsheet. (xxi) Ms Costar then sent an email to Ms Baker stating that she will prepare the necessary side letter and indicating what documentation was required for her to be engaged as a self-employed adviser, as well as stating that the contract would provide that she had been a self employed IFA from 1 May. This is broadly consistent with Mr Handshaw’s oral evidence, but his evidence does not include precise dates. (xxii) The client list included in the annex to the Variation Letter is the same as that shown in the spreadsheet sent by Ms Baker on 21 May (with an additional name referred to in the covering email). (xxiii) Ms Baker accepted in cross examination that although she had thought that it had been settled by 25 April who her clients were to be, it was only finally settled when she agreed the revised list. She accepted when put to her by Mr McMeel KC that this was on 23 May. In fact, it is clear from her emails to Mr Handshaw and to Ms Costar on 22 May that she agreed all the terms of her engagement as a self-employed IFA, including client allocation that day. In my judgment, this evidence indicates that whilst Ms Baker had believed that clients had been allocated to her much earlier, and she contacted those clients that she believed were hers during April 2019, there was no concluded agreement between her and AFH as to who her clients were to be until 22 May when the clients identified on the spreadsheet sent by Ms Baker’s email the previous day were agreed by both sides. A list of those clients was then included in the annex to the Variation Letter. That is later than Ms Baker believed at the time and contends for. It is prior to her signature of the contractual documents. (m). The SEC, DRC and Variation Letter were a suite of documents entered into at the same time. This apparent is from their terms and accepted by both parties. (n). The SEC and the DRC are standard form documents used by AFH for its self-employed IFAs (and possibly others too) but the Variation Letter was bespoke to Ms Baker due to the unusual circumstances in which she joined AFH. This was the effect of the evidence of Ms Costar, Mr Handshaw and Mr Hudson, which I accept. (o). They were signed by AFH FS on 24 May 2019 and sent to Ms Baker by email. She signed and returned them on 28 May 2019. This is her evidence and is supported by a copy of her covering email sent when she returned the signed documents. (p). The SEC and DRC are expressed to be dated 1 May 2019, and the Variation Letter bears the date 22 May 2019. (q). The parties agreed to treat the Contracts as governing their relationship from 1 May 2019. This is clear from the resignation letter which Ms Baker also signed when she signed the Contracts, and which was backdated to 30 April 2019. It was expressly agreed in email exchanges shortly before Ms Baker signed the Contracts that they would be treated as operating from 1 May and Ms Baker was, by agreement between the parties, paid on the basis that she ceased to be an employee on 30 April 2019 and was a self-employed IFA entitled to an agreed percentage of commission income from clients allocated to her with effect from 1 May.[40]It is against these facts the SEC, DRC and Variation Letter fall to be construed. Discussion and Conclusion[41]Ms Baker’s case is that the covenants in the DRC do not apply to any of the clients listed in the annex to the Variation Letter, which as I have noted, is all of the clients she took on at the commencement of her engagement as a self-employed IFA. Mr Budworth submits that the clear and ordinary meaning of the words used in the documents points inexorably to that conclusion.[42]Clause 2.2 of the DRC states that “For the avoidance of doubt the restrictions in this Clause 2 shall not apply to any client or customer referred to the Adviser prior to the date of this Deed by any of the Former Companies (save for DB Clients).”[43]The definition of the “Former Companies” includes PCWM. The “Adviser” is defined as Ms Baker.[44]Paragraph 1 of the Variation Letter then expressly states that all of the clients listed in the annex were provided to Ms Baker by PCWM.[45]Mr Budworth says that clause 2.2 of the DRC catches those clients and customers who have been referred to Ms Baker as at the time when she executes the DRC and the effect of paragraph 1 of the Variation Letter and the annex to it means that there is no doubt as to who those clients are.[46]Mr Budworth also says that unless clause 2.2 has the meaning for which he contends, it is otiose. He says that clause 2.2 either carves out all of the clients who had been referred to Ms Baker or it does not exclude any clients at all so has no effect.[47]Mr Budworth relies upon the passage in Lewison: The Interpretation of Contracts (8th ed) at paragraph 7.24 which states:
“The interpretation of a document as a whole necessarily involves giving effect to each part of it in relation to all other parts of it. Accordingly, as a corollary of the principle that a document must be interpreted as a whole, effect must be given to each part of the document. This in turn means that in general each part of the document is taken to have been deliberately inserted, having regard to all the other parts of the document, with the result that there is a presumption against redundant words (usually called “surplusage”).54 This principle is sometimes labelled the argument from redundancy. Although this principle was often given weight in earlier cases, its value is much reduced in more modern cases. As Patten LJ put it in Al-Hasawi v Nottingham Forest Football Club Ltd ,55 “arguments based on surplusage or redundancy are rarely reliable or sure ground on issues of construction”.56 In ABC Electrification Ltd v Network Rail Infrastructure Ltd,57 Carr LJ said: “Whilst the redundancy argument has a role to play in the exercise of contractual interpretation, it all depends on the construction issue in question, the effect of the alternative interpretation and the contractual context as a whole. The mere fact that a natural interpretation of a contract could render another term redundant is an insufficient basis for an unnatural construction, especially where a standard form is involved.”
Where, however, the rival interpretations each involved some surplusage, the court preferred the interpretation which gave rise to the lesser surplusage.”[48]Mr Budworth drew to my attention the very recent Privy Council decision in A v C [2026] UKPC at [72] where the joint judgment of Lords Briggs and Richards quotes from A Unified Approach to Contractual Interpretation (2020) by Ryan Catterwell at paragraph 4.41 as follows:
“The court can only infer the intent permitted by the words, taken in context. An alleged interpretation must be grounded by the choice of words in the contract; it must have a clear textual foothold.”
[49]Mr Budworth submits that there is no rival meaning for the words used. He says that whilst the construction contended for by AFH could be said to reflect commercial commonsense if the language used in the DRC could be so construed, such a construction would reflect what AFH wishes it had provided for in the contract but not what it in fact provided. He says that the construction advanced by Mr McMeel KC has no clear textual foothold.[50]In response to Mr Budworth’s surplusage point, Mr McMeel KC makes a number of points. He submits that if Mr Budworth is right then the effect would be that the DRC as a whole would not catch any clients at all, as all of Ms Baker’s clients would be within clause 2.2 and the whole scheme of the DRC would be undermined. In my judgment this is not correct. It would follow that at the time that the DRC was executed it would catch no clients, but that is not necessarily surprising as it is the beginning of the relationship between AFH and Ms Baker as a self-employed IFA. Come termination of the self-employed contract, the DRC would catch any new clients Ms Baker began dealing with during the period of the self-employed contract and her engagement by AFH. That would be the same as for any joining self-employed IFA who brought clients with her. Further, as Mr Hudson explained, the main purpose of the Variation Letter was to vary Ms Baker’s commission share for the clients which she had received from Ms Hicks upon terms which would incentivise her to go out and get new clients, as that was what AFH was particularly concerned to see that she did.[51]Mr McMeel KC drew to my attention some further passages from Lewison at paragraph 7.27:
“However, in Secretary of State for Defence v Turner Estate Solutions Ltd, [Coulson J] said that although a presumption against surplusage was of little weight in interpreting a standard form of contract it has a part to play in the case of “a bespoke contract carefully drafted by the parties to meet the exigencies of this particular and significant commercial arrangement”

And from paragraph 7.28:

“… In Spire Healthcare Ltd v Royal & Sun Alliance Insurance Plc, HH Judge Waksman QC referred to: “... the caution that is to be exercised before applying the so-called ‘argument from redundancy’ in the context of commercial contracts, particularly those containing standard terms.”
More generally, in Total Transport Corp v Arcadia Petroleum Ltd, Staughton LJ said:
“It is well-established that the presumption against surplusage is of little value in the interpretation of commercial contracts.”
Likewise, in Antigua Power Co Ltd v Attorney General of Antigua and Barbuda, Lord Neuberger said that:
“… on issues of interpretation, arguments based on surplusage are rarely of much force.”
Although the presumption against surplusage may be of little weight in interpreting a commercial contract, where each proposed interpretation involved some surplusage, the court preferred the interpretation which gave rise to the lesser surplusage.” And from paragraph 7.28: More generally, in Total Transport Corp v Arcadia Petroleum Ltd, Staughton LJ said:[52]Mr McMeel KC also helpfully referred me to a recent decision of HHJ Cawson KC (as he then was) in JAK Property Jersy Limited v Together Commercial Finance Limited [2025] EWHC 2442 (Ch) and the passage at paragraphs [36 to [41] where the judgment reviews many of the authorities on surplusage and redundancy to which I have been referred and concludes:
“Having regard to the authorities as a whole, I consider that I must exercise caution in applying any presumption against surplusage, and whether any such presumption is to be applied must depend upon a careful consideration of the particular provision, its wording and its context within the particular contract.”
[53]I respectfully agree. As I have found, the SEC and the DRC are both standard form contracts. In my judgment, the presumption against surplusage is of very limited weight when construing them. It is potentially of greater weight when construing the Variation Letter.[54]Mr McMeel KC submits that both the commercial context and the factual circumstances in which the Contracts were entered into mean that properly construed, the covenants do apply to all of the clients listed in the annex to the Variation Letter and clause 2.2 of the DRC does not have the effect that those clients are excluded from the covenants in the DRC. He says that Ms Baker’s case ignores the fact that until she signed the Contracts, including the DRC, Ms Baker was a part time employee of PCWM working as a tax adviser and trainee IFA. Therefore, the clients belonged to PCWM which in turn belonged to AFH. The reason for the Contracts was that Ms Baker was to become a self-employed IFA and become entitled to a share of the recurring income generated by the clients. Mr McMeel KC submits that it follows that Ms Baker had no entitlement to such income and can have had no clients prior to signing the Contracts. It was only when Ms Baker had the right to any of that income and therefore it was only then that the clients became in any sense her clients.[55]Mr McMeel KC says that the DRC is concerned with Ms Baker’s right to earn income from clients after she leaves and therefore it is her right to income from clients that is the point to have in mind when construing the DRC. He says that the relevant factual context when construing clause 2.2 of the DRC is that there were in fact no clients referred to Ms Baker prior to the date of the DRC as it was only as a result of her execution of the Contracts that clients were referred to her.[56]Mr McMeel KC also points out that no clients could be allocated to Ms Baker until AFH was satisfied that she was able to engage directly with clients without supervision. I have already found that AFH was so satisfied on 2 May.[57]Mr McMeel KC observes that the Particulars of Claim pleads at paragraph 32:
“By a letter dated 22 May 2019 headed “Variation to Self-Employed contract with AFH Independent Financial Services … dated 1 May 2019 (“Contract”) signed and dated by the parties AFH and Ms Baker agreed that the clients set out in the Appendix (numbering over 120 individuals and 11 “corporate” clients), who or which had been clients of PCWM Limited should be allocated to Ms Baker.”
[58]Paragraph 13 of the Defence and Counterclaim admits that paragraph. On the face of it, that is an admission that clients were allocated to Ms Baker when she entered into the Contracts although other parts of her pleaded case appear inconsistent with that. Mr McMeel KC submits that this must be correct as there was no legally enforceable contract that any clients were hers until the Contracts were signed. In my judgment, that is correct, not least because until she signed the Contracts, Ms Baker was an employee of PCWM and remunerated by a salary and PCWM could reallocate any and all clients to other advisers whenever it chose to while that remained her status.[59]The question for clause 2.2 of the DRC is whether they are clients or customers who have been “referred to” Ms Baker prior to the date of the DRC by AFH or by PCWM. because they are the operative words of clause 2.2. The purpose of the clause is to identify which clients and customers of the adviser fall outside the restrictions in clause 2.1.[60]Neither “clients” nor “customers” are defined terms in the DRC, although “Customers” is and it is used in clause 2.1. It is “Customers” and “Prospective Customer” within the defined terms to which clause 2.1 applies.[61]The draftsmen chose not to use the defined term in clause 2.2, even though that clause uses other defined terms. The defined term “Customers” is restricted to those with whom the adviser had material dealings in the 12 months prior to the termination date when the adviser ceases to be engaged by AFH. The “clients or customers” within clause 2.2 are not so narrowly defined, indeed are not defined at all. In my judgment, the clients and customers within clause 2.2 are all clients and customers of the adviser at the date of the DRC who became a client or customer of the adviser following their being referred to the adviser by one of the Former Companies.[62]In Ms Baker’s case, this means any clients that were clients of hers prior to date of the DRC and who became clients of hers following their being referred to her by PCWM.[63]The words “referred to” are ordinary English words. The context and relevant factual matrix are that AFH has recently purchased PCWM’s client book and has allocated or is allocating some of those clients to Ms Baker and is concerned to protect the connection with such clients should Ms Baker’s contract be terminated. Restrictions are applied to those clients to whom Ms Baker has provided financial advice in the 12 months prior to termination.[64]In my judgment, the actual words used and the factual context in which the DRC was made both lead to the conclusion that clause 2.2 extends to any client or customer who was at any time prior to the entering into of the DRC a client or customer of Ms Baker’s and had become so following being referred to her by PCWM.[65]Mr Budworth submits that all of the former clients of Ms Hicks who were allocated to Ms Baker are such clients.[66]I have found that clients were allocated to Ms Baker when it was agreed between her and AFH which of Ms Hicks’s former clients were to be her clients on 22 May 2019. No more PCWM clients were allocated to her after that date. It is not earlier than that because until then, Ms Baker did not have any clients. Up until then, there was no agreement that she was entitled to provide financial advice to and share in the income generated by any clients. In my judgment, the allocation of clients to Ms Baker and clients being “referred” to her amount to the same thing. For the purposes of clause 2.2 of the DRC, clients were referred to Ms Baker by PCWM on 22 May 2019.[67]AFH’s response to Ms Baker’s contention that the meaning of clause 2.2 is that the restrictive covenants do not apply to Ms Hicks’ former clients is described by Mr McMeel KC as a timing point. He submits that even though the Contracts were only signed by Ms Baker on 28 May, as the parties agreed that they were effective from 1 May, the question of whether clients were referred to Ms Baker prior to the date of the DRC is a question of whether such clients were referred to her prior to 1 May and not 28 May.[68]It is trite law that a contract falls to be construed at the time that it was made (see e.g. Lewison at para 5.21). As I have already noted, the Contracts were concluded when they were signed by both parties. Ms Baker was the second to sign them and did so on 28 May 2019. However, she did not date them.[69]Ms Baker raised the question by an email that day to Angharad Williams of AFH as to whether the Contracts should be dated that day or dated 30 April or 1 May. Angharad Williams checked with Ms Costar, who advised that they should be dated 1 May, and the parties agree that they were so dated and treated as operating from that day.[70]Underneath her signature to the Variation Letter, Ms Baker dated it “01/05/2019”. Immediately above the signatures to the SEC it provides “This Agreement was signed by the parties or their duty authorised representatives on the date set out at the beginning of the Agreement.” Immediately above the execution provisions of the DRC it states, “This Deed has been entered into on the date stated at the beginning of it.” It is agreed that the date added in manuscript at the beginning of both the SEC and the DRC is 1 May.[71]In my judgment, it follows that the “date of this Deed” as stated in clause 2.2 of the DRC means the date stated in the DRC as the date on which it was made. That is 1 May 2019. Therefore, clause 2.2 provides that the covenants in clause 2.1 do not apply in respect of those clients who had been referred to Ms Baker prior to 1 May 2019.[72]I have found that clients were referred to Ms Baker on 22 May 2019. Therefore, as at 1 May 2019, no clients had been referred to her. It follows that its true construction, clause 2.2 does not apply to exempt any of Ms Baker’s clients from the restrictions in clause 2.1 of the DRC. The restrictions contained in clause 2.1 apply to all of Ms Baker’s clients, to the extent that those restrictions are enforceable.[73]This accords with commercial commonsense. The arrangement is that AFH is giving clients it has recently purchased to Ms Baker so that she can receive an income from them including from investment products purchased by them when they were the clients of another adviser. AFH seeks to protect the client connection of its clients but exempts from protection those clients who were clients of Ms Baker’s before she contracted to be an AFH IFA. It would not make commercial sense for clients passed to Ms Baker after the acquisition at the time that she contracts to start work as a fully qualified IFA for the first time.[74]This does mean that clause 2.2 is, on the facts as I have found them, otiose in Ms Baker’s case. However, as I have already indicated, the presumption against surplusage is a weak one in the case of what is a standard form provision in a commercial contract. It is not enough to outweigh the meaning of the words used in their factual context and commercial commonsense. (c) Were all or some of the restrictions in the DRC unenforceable as restraints of trade?[75]The relevant restrictions are those set out in clause2.1.2.1 and2.1.2.2 of the DRC. They provide:
“The Adviser covenants with the Company … that he shall not … at any time during the period of 12 months beginning with the Termination Date: 2.1.2.1 deal with any person who is at the Termination Date, or has been at any time during the period of 12 months immediately preceding that date, a Customer or Prospective Customer, where such dealing would amount to a form of competition with the Business; or 2.1.2.2 canvass, solicit or otherwise seek (other than by general advertising) the custom of any person who is at the Termination Date, or has been at any time during the period of 12 months immediately preceding that date, a Customer or Prospective Customer, where such custom would be in competition with the Business.”
[76]The parties agree that as a matter of construction these restrictions apply to the customers with whom Ms Baker dealt while a self-employed IFA under the SEC. Further, Ms Baker accepts that she dealt with thirty-five such customers across twenty-three households in the 12 months following the termination of the SEC, which is the “Termination Date” for the purposes of the restrictions. However, Ms Baker contends that neither of these restrictions is enforceable as both are unlawful restraints of trade.[77]The law is well-established that any express covenant which operates to restrict the freedom of a former employee or other relevant contracting party is an unenforceable restraint of trade, save to the extent that the covenant is designed to protect legitimate business interests and extends no further than is reasonably necessary for the protection of the interests of the parties and the public interest. This statement of the law dates back to the decision of the House of Lords in Herbert Morris v Saxelby [1916] AC 688.[78]The relevant authorities were reviewed and the main principles set out by Carr LJ in Quantum Actuarial LLP v Quantum Advisory Ltd [2021] EWCA Civ 227. Carr LJ summarised the question for the court at [57] as follows:
“At the heart of the doctrine lies the tension between two freedoms, on the one hand freedom of contract, and on the other freedom of trade: see Herbert Morris Ltd v Saxelby [1916] 1 AC 688 ("Saxelby") (at 716 per Lord Shaw). How these freedoms are reconciled may depend on the type of contract in question. By way of example, between employer and employee, the court more jealously guards the freedom of an employee to earn a livelihood elsewhere; in other cases, more weight is given to the "policy of the law that contracts freely entered into should, prima facie, be enforced" (see Whitehill v Bradford [1952] Ch 236 (at 246 per Lord Evershed MR) ).”
[79]Carr LJ then drew together the principles which may be taken from the authorities as follows (with Carr LJ’s references to other authorities included):
“i) The doctrine is not confined to immutable boundaries or rigid categorisation, but there are certain categories of covenants to which the doctrine traditionally applies, in particular those by which an employee undertakes not to compete with his employer after leaving the employer's service and those by which a trader who has sold his business agrees not thereafter to compete with the purchaser of the business. The doctrine has been held to apply to franchise agreements, share-purchase agreements and the assignment of a patent; ii) There are no clear limits on the scope of the doctrine and no precise or exhaustive test can be stated. The doctrine is to be applied to factual situations with a broad and flexible rule of reason (see Esso (at 331G per Lord Wilberforce)). The question is whether or not in all the circumstances the contract should be excluded from the application of the doctrine or, as Lord Wilberforce put it in Esso (at 332G), whether it is appropriate to dispense the contract "from the necessity of justification under a public policy test of reasonableness"; iii) Contractual restraining provisions which are of a sort which have become part of the accepted machinery of a type of transaction which have generally been found acceptable and necessary – reflecting the accepted and normal currency of commercial or contractual conveyancing relations - will generally fall outside the scope of the doctrine (following the "trading society" test discussed above and approved in Peninsula Securities ); iv) Determining whether contractual restraints fall outside the range of a normal commercial contract imposing restrictions on a contracting party's ability to carry on a business activity is a question of evaluating all the relevant factors to be assessed cumulatively (see in particular PSM (at [99] per Arden LJ)); v) The assessment of application of the doctrine is to be carried out by reference to the position as at the time that the contract is made (not by reference to subsequent performance and events). How the contract turns out may be relevant only in so far as it furnishes evidence of the nature of the contract in question when made (see in particular Schroeder (at 1309 per Lord Reid); PSM (at [104] per Arden LJ and at [149] per Gross LJ)); vi) The application depends less on legal niceties or theoretical possibilities than on the practical effect of the restraint in hampering the freedom to trade (see in particular Esso (at 298A-B per Lord Reid)). It is a question of substance not form (see in particular Stenhouse (at 402G-H per Lord Wilberforce)); vii) The doctrine can apply to restraints operating during the currency of the contract, as well as post-contractually. However, the distinction between pre-and post-termination restraints is not without relevance. The fact that a restraint is limited to the period of the contract may be a factor in favour of excluding the doctrine (or a factor to be brought into account on the side of justification) (see in particular Esso (at 238 per Lord Pearce; Panayiotou (at 335 per Jonathan Parker J) and One Money Mail (at [5] per Longmore LJ)); viii) As already set out above, where the doctrine applies, the contractual restraints are prima facie unenforceable but all, whether partial or total, are enforceable if reasonable.”
[80]Carr LJ also stated at [61] that “The law recognises that if business contracts are fairly made by parties who are on equal terms such parties should know their business best.” Mr McMeel KC submits that Ms Baker was an experienced tax adviser and that the parties were on an equal footing in this case. I agree that this is not a case where there was a huge inequality in bargaining power and I find that AFH was concerned to keep Ms Hicks’ clients which it had purchased from PCWM some 6 months earlier, many of whom already knew Ms Baker. Further, Ms Baker was an experienced tax adviser and sophisticated in business. She gave evidence that she read and considered each of the Contracts before signing and did not rush into it but that nonetheless, she felt that there was no negotiation and AFH’s position was that she could take it or leave it. I accept that evidence. The email exchanges in the period leading up to her signing support this. The fact that she considered becoming an employed adviser indicates that she did not regard herself as having no choice but to enter into the DRC. In my judgment, the parties were of broadly equal bargaining power when the DRC was made.[81]Carr LJ then set out how the court is to approach the question of whether a particular restraint is reasonable, stating at [65]: “… drawing the relevant threads together by way of summary: i) The onus of establishing that a covenant is no more than is reasonable in the interests of the parties is on the person who seeks to rely on it (see in particular Attwood v Lamont [1920] 3 KB 571 (at 587-588 per Younger LJ). If he/she establishes that it is no more than reasonable in the interests of the parties, the onus of proving that it is contrary to the public interest lies on the party attacking it (see in particular Saxelby (at 716 per Lord Shaw)); ii) The time for considering reasonableness is again the time of the making of the contract (see in particular Gledhow Autoparts Ltd v Delaney [1965] 1 WLR 1366 (at 1377 per Diplock LJ) ; Shell v Lostock Garage Ltd [1976] 1 WLR 1187 (at 1197-1198 per Lord Denning MR) and Schroeder (at 1309H per Lord Reid)); iii) It is no answer on the question of reasonableness to say that there have been substantial financial rewards on all sides. The question of reasonableness has to be considered by reference to the terms of the contract (see in particular PSM (at [104] per Arden LJ)); iv) For a restraint to be reasonable between the parties it must be no more than what was reasonably required by the party in whose favour it was imposed to protect his legitimate interests (see in particular Saxelby (at 701 per Lord Atkinson) and Schroeder (at 1310B per Lord Reid and 1315H per Lord Diplock)); v) The court is entitled to consider whether or not a covenant of a narrower nature would have sufficed for the covenantee's protection (see in particular Office Angels Ltd v Rainer Thomas and O'Connor [1991] IRLR 214 (at 220 per Sir Christopher Slade)); vi) What is reasonable may alter with the changing nature of commerce and society (see in particular Nordenfelt (at 547 per Lord Herschell)); vii) Factors to be considered when assessing reasonableness between the parties include the character of the business (see in particular Nordenfelt (at 550 per Lord Herschell)) and also: a) The relevance of the consideration for the restraint; b) Inequality of bargaining power; c) Standard forms of contract; d) Whether the restraints operate during or post-contract; e) The surrounding circumstances, including the factual and contractual background; (see in particular Panayiotou (at 329-336 per Jonathan Parker J)); viii) The duration of an agreement in restraint of trade is a factor of great importance in determining whether the restrictions in an agreement can be justified (see in particular Schroeder (at 1312F-G per Lord Reid)); ix) The level of compensation may be relevant to the question of reasonableness (see Esso (at 300B-C per Lord Reid) and Panayiotou (at 329-330 per Jonathan Parker J)); x) The motives of the party challenging the contract are immaterial to the question of whether the terms of the contract are reasonable as between the parties (see in particular Schroeder (at 1309H per Lord Reid) and Panayiotou (at 336 per Jonathan Parker J)).[82]Counsel agree that a greater restriction is generally reasonable in the case of a vendor / purchaser business sale agreement where a purchaser includes restrictions to protect the goodwill it has purchased, than is reasonable in an employer / employee situation. However, Mr McMeel KC submits that as a self-employed IFA Ms Baker’s position is much closer to a business vendor / purchaser case while Mr Budworth submits that her situation is, for these purposes at least, one of an employee.[83]In my judgment, whilst I do not consider that Ms Baker’s position is the same as that of an employee, Mr Budworth is closer to the mark in that her situation as a self-employed IFA working under the SEC is closer to that of an employee than a vendor of a business, by reason of the same features as I referred to at paragraph 28 above when finding that she was a “worker” under the ERA 1996. Further, like an employee, she is entering into restrictions at the beginning of a relationship to govern the position when it ends, not at the end of a relationship consequential on a sale of goodwill. However, against that, it is relevant that on her entering into the Contracts, AFH gave her access to a significant number of clients and a share of the commission earned from those clients as a result of the business already placed with Ms Hicks which it had purchased.[84]As Mr McMeel KC accepts, it is for AFH as the party relying on the restrictions, to satisfy the court that they go no further than is reasonably necessary. He relies on the decision of Millett J in Allied Dunbar (Frank Weisinger) Ltd v Frank Weisinger [1988] IRLR 60. Whilst accepting that other cases in other commercial contexts are of limited assistance, Mr McMeel KC says that the Allied Dunbar case is a useful guide because it was concerned with a self-employed IFA and confirms that the personal goodwill of an individual adviser is bought and sold in the same way as business goodwill and that supports a business analogy. Further, in that case, a period of restriction of two years was found to be proportionate, whereas in this case, said to be analogous, AFH imposed restrictions of only twelve months.[85]In my judgment, Mr McMeel KC is correct that other cases in other commercial contexts are of very limited assistance. However, I do not agree that the Allied Dunbar case is a very useful guide in this case. That was a case which arose in a significantly different commercial context, albeit in the same industry. In that case, Allied Dunbar was not a business engaged in providing retail financial services by arranging for investments to be made by clients in products provided by third parties as AFH is here; it sold its own products through self-employed advisers. A more important point of departure is that in that case, the adviser contracted to sell his practice or business, including its goodwill, to Allied Dunbar for £384,000, which was a very substantial sum for such a business when the transaction took place in 1985. The restriction in issue was a general non-compete restriction with a duration of two years. This case is different in a number of important respects. The restrictions here are contained in a suite of documents entered into on the commencement of work by a self-employed individual leaving the security of employment, not on her selling of her practice on the basis that she is retiring. It is the entering into a working relationship, not a sale akin to a sale of a business, which includes the sale of goodwill.[86]Mr Budworth submits that as the burden is on AFH to establish that the restrictions are reasonably necessary, it is for AFH to call evidence to justify the scope and duration of the restrictions. He draws an analogy with what occurred in the case of Basic Solutions Ltd v Sands [2008] EWHC 1388. He says that the court is in a similar position to that of Eady J in that case in that as there, the party seeking to enforce the restriction has failed to call evidence justifying the extent of the restrictions and the need for them to continue for the specified period.[87]Similarly to Mr McMeel KC’s advancing of the Allied Dunbar case, I do not find Basic Solutions to be of much assistance either. It concerned an application for an interlocutory injunction by a chemical company particularly concerned to restrain a former employee from competing for a contract to supply a specialist chemical product for use on the railways. Eady J found the evidence in support of the application which consisted of general and speculative assertions rather than statements of fact to be inadequate to make out a serious question to be tried in order to satisfy the first limb of the American Cyanamid test. The facts of that case are far removed from this one and a good example of how the question of what a reasonable restriction is dependent on the particular facts of the case.[88]Although I do not find the authority he cites to be of assistance, Mr Budworth’s general point that the burden is on AFH to justify the restrictions, and that it is perhaps surprising that it does not advance particular factual evidence to seek to do so has merit. It is notable that the witnesses called by AFH do not expressly address the justification for the restrictions in their witness statements. Indeed, they do not include much factual evidence which is relevant to the question.[89]Mr Hudson does explain AFH’s approach to acquisitions, that it paid over £4 million for the companies including PCWM that it acquired in this case, with the purchase price potentially increasing by a further £6 million if the earn out provisions were met, that what is purchased is essentially the recurring fee income generated by the client bank and that AFH’s business would not be viable if it did not take steps to protect itself from advisers leaving and taking with them clients and their income streams. However, whilst this material goes to the need to provide for restrictions generally, it does not address why the particular restrictions are reasonably necessary. It does not address why a restriction on the dealing with as well as on the soliciting of clients is necessary, nor does it address why a period of 12 months is reasonably necessary and a 6-month period would be insufficient.[90]Although AFH did not advance factual evidence expressly directed at the issue, I can and should take into account the factual evidence generally in considering whether the restrictions are no more than is reasonable between the parties, before considering whether Ms Baker has established that the restrictions are contrary to the public interest.[91]I consider the following to be facts which are relevant to the question of the reasonableness of the restrictions as between the parties:(a) That when the DRC was entered into, AFH had recently paid a substantial sum to acquire a client bank and income stream of which the clients being allocated to Ms Baker formed a significant part.(b) As I have found, the parties were of broadly equal bargaining power.(c) The DRC is in AFH’s standard form for self-employed advisers.(d) The restraints operate post contract.(e) The restrictions do not apply to any clients introduced to AFH by Ms Baker after the date of the Contracts, by reason of clause 11.2 of the SEC and the definition of “Customers” in the DRC.(f) Ms Baker had some knowledge of and had been in contact with, and in some cases had met with the clients by the time she was engaged as an IFA and entered into the DRC.(g) AFH is always concerned that a departing adviser may take clients.(h) Ms Baker was entitled to give and to receive one month’s notice to terminate her relationship with AFH.(i) Following the acquisition, AFH intended to inform all clients of the transition from PCWM to AFH over a period of 3 months but by the time of the DRC it had already taken longer and was far from complete. This was the unchallenged evidence of Ms Costar.(j) Ms Baker’s evidence in cross examination was that the expectation of IFAs was that they would meet existing clients once a year to review their portfolio and would be available to meet them and provide ad hoc advice if their circumstances changed during the year. Accordingly, it was anticipated when the DRC was made that she would typically meet each client once a year but would be available to meet more often if the needs of a particular client required it.(k) Applicable conduct of business regulations at the time required regular client reviews and in practice that meant that advisers would usually meet clients about once a year.(l) Client inertia is a feature of the retail financial services industry. Typically, clients remain with the same intermediary firm for many years and do not change firms following a sale of the intermediary business or a change of adviser provided by the intermediary firm unless they are given a good reason to do so, such as a poor service from a new adviser or acquirer. This was Mr Hudson’s evidence from his 30 years in the industry and AFH’s 20 years of acquiring intermediary firms. It was not challenged and I accept it.(m) Post termination restrictions of some sort are usual in the industry and Ms Baker’s contract with Regentia includes similar restrictions to those in the DRC.[92]In my judgment, balancing these factors leads to the conclusion that some post termination restriction on Ms Baker was reasonably necessary when the Contracts were made.[93]The restriction on dealing and the restriction on solicitation must be considered separately. As Mr Budworth submits, where provision is made for two covenants, the question of why the second covenant is necessary must be considered, and as was stated by Lord Wilberforce in Stenhouse Australia Ltd v Phillips [1974] 1 All ER 117 at 124f, “The presence of one restraint diminishes the need for the others, or at least increases the burden of those who must justify the others.”[94]I consider first the lesser restriction here, the non-solicitation provision in clause 2.1.2.2, which prohibits solicitation of clients with whom Ms Baker dealt in the 12-month period prior to the termination of her contract and provides that the restriction continues for 12 months.[95]I consider that a non-solicitation provision in the form included at clause 2.1.2.2 of the DRC is reasonably necessary and reasonable as between the parties in the circumstances of this case. The particular circumstances which lead me to that conclusion are that:(a) The restriction does not apply to clients introduced by Ms Baker to AFH after the date of the Contracts.(b) It only applies to clients with whom Ms Baker had significant dealings in the 12 months preceding the termination of her contract with AFH.(c) AFH had recently paid a substantial sum for a client bank which included Ms Baker’s clients;(d) When the Contracts were made, the clients did not know and were not known to anyone at AFH and were already mostly known to and knew Ms Baker;(e) Client inertia means that generally clients do not initiate a change of adviser unless given a reason to do so, as explained by Mr Hudson; and(f) Post termination restrictions are usual in the industry, as is generally known by those in the industry and indicated by the presence of comparable restrictions in Ms Baker’s contract with Regentia.[96]For the same reasons, I also consider that in principle, the inclusion of the non-solicitation covenant is reasonable in the interests of the public. It is not contrary to the public interest that a firm in the position of AFH protects its interest in a client bank it has purchased by restricting for a reasonable period the right of a self-employed IFA to solicit the business of clients of the adviser while they worked for AFH. All the more so where, as here, those clients were ‘given’ to the adviser by AFH in the manner in which Ms Baker was allocated many of Ms Hicks’ former clients in this case.[97]Businesses would not be willing to purchase client books if they were unable to impose reasonable restrictions to protect them. The possibility of such acquisitions is in the public interest as it enables successful businesses which provide good service and/or low charges to grow by acquisition of less successful ones. It also enables a continuity of service and support to be provided to the public when advisers retire or otherwise leave the industry. However, such restrictions are only in the public interest to the extent that they are the minimum reasonably necessary to provide such protection.[98]Mr McMeel KC submits that a reasonable period for a non-solicitation clause in this case would be 18 months to 2 years, pointing to the Allied Dunbar case as an example where a period of 2 years was upheld, and therefore, he says, a restriction for 12 months as provided for in clause 2.1.2.2 is clearly reasonable. I have already indicated that I do not find the Allied Dunbar case to be of much assistance when considering this case and I do not consider that a period of as long as 2 years would be reasonable.[99]However, I do consider that a non-solicitation restriction for a period of 12 months is reasonable in this case. The number of clients and the fact that clients are ordinarily seen once every 12 months and expect to see their IFA once every 12 months, in my judgment, indicates that a 12 month non-solicitation restriction is reasonable and that a shorter period of restriction would not be sufficient to enable a new adviser engaged by AFH to have meaningful contact with the clients. Such contact would typically be via a meeting with each client to enable the new adviser to become known to the client and have the opportunity to provide some advice. Not only would it take a significant period of time for a new adviser to meet with all of Ms Baker’s clients, but the clients themselves will not necessarily be willing to meet their IFA more frequently than annually. It is very likely that at least some clients would not welcome a more frequent meeting.[100]AFH also seeks to enforce the wider restriction contained in clause 2.1.2.1 of the DRC; a prohibition on Ms Baker dealing with any client with whom she has had dealings in the previous 12 months. The DRC also provides that this restriction is to operate for a period of 12 months.[101]In my judgment, none of the features which I have identified as relevant to the question of whether post-contract restrictions are justified in this case justify a non-dealing restriction in addition to a non-solicitation provision. I do not consider it reasonably necessary as between the parties to restrain Ms Baker from dealing with her clients from AFH after she leaves in circumstances where she is already restrained from soliciting business from those clients. The non-solicitation restriction provides AFH with a 12-month period to introduce a new adviser and for that adviser to see all of the relevant clients while Ms Baker cannot actively seek their custom. Preventing her from dealing with clients who of their own volition take steps to follow her is not necessary and not in the public interest. Given the general client inertia described by Mr Hudson, I consider that a non-solicitation provision is sufficient to provide such protection as is reasonably necessary as between AFH and Ms Baker and is all that is reasonable in the interests of the public. AFH’s own evidence is that in the absence of being solicited by their former adviser, the overwhelming majority of clients remain with firm when an adviser leaves. This is a significant indication that a non-solicitation clause is reasonably necessary but that where solicitation is restrained, a non-dealing clause is not. Further, a restriction on dealing is a notably more onerous restriction on both the departing adviser and the client. On the evidence advanced in this case, such a more onerous restriction is not reasonably necessary.[102]Accordingly, on the evidence before me, the non-solicitation restriction for a period of 12 months provided for in clause 2.1.2.2 of the DRC is valid and enforceable, but the provision restraining Ms Baker from dealing with her clients for a period of 12 months after her departure from AFH is not. (d) Did any or all of the former PCWM customers who transferred their business to Regentia do so as a result of solicitation by Ms Baker?[103]The answer to this question requires consideration of the evidence as to how each client came to transfer their business from AFH to Regentia.[104]Mr Budworth relies upon the statement in Trego v Hunt [1897] AC 7 at 21, that a direct and specific appeal to clients is what amounts to solicitation. He also submits that the test was correctly stated in QBE Management Services Ltd v Dymock [2012] EWHC 80 (QB) in which Haddon-Cave J cited with approval the statement from Equico Equipment Finance Ltd v Enright 2009 AA 2412/09 5158060, that:
“In my view, “canvas” is synonymous with soliciting. Both words involve an approach to customers with a view to appropriating the customer's business or custom. I consider a degree of “influence” is required. There must be an active component and a positive intention.”
[105]Mr McMeel KC does not challenge that statement of the law, and I agree that it is an accurate statement of what amounts to the canvassing or soliciting of customers. Both the act and the intention must be present.[106]In his closing submissions, Mr Budworth submitted that no breach of any duty of fidelity owed by Ms Baker during the period of the SEC has been pleaded and a case that she owed such a duty and breached it is not one that she has been asked to meet. That is correct. However, clause 2.1.1 of the DRC is pleaded, which includes a covenant not to deal with customers or prospective customers in competition with AFHFS and not to solicit the custom of any customer or prospective customer where such custom would be in competition with AFH FS (the covenant purports to extend its protection to other AFH group companies but I have already determined that as non-parties they are unable to rely on the DRC).[107]AFH maintains that each of the 35 Customers who followed Ms Baker from AFH to Regentia did so as a result of their custom being solicited by Ms Baker within 12 months of the termination of the SEC. Ms Baker admits that she had contact with each of those customers during the 12-month period but with one exception, denies that she solicited their custom. I remind myself that it is for AFH to prove on the balance of probabilities that Ms Baker approached relevant customers with the intention of appropriating their business for Regentia.[108]Ms Baker admits that she solicited the former PCWM client Helen Wright as a client for Regentia.[109]Mr Hudson expressed the view that Ms Baker deliberately gave her notice to AFH on 17 December 2019, delaying it until shortly before the Christmas break, in order to cause maximum inconvenience to AFH and make it harder for AFH to contact all of her clients before she left a month later, as well as coinciding with periodic valuations being sent to all clients. He observed that his experience at AFH and of many acquisitions over more than 20 years is that clients do not in the ordinary course leave in the numbers that followed Ms Baker. Mr McMeel KC put this to Ms Baker, who denied it and explained the process by which she had come to her decision to give notice and liaised with Regentia about when she would start. I accept that Mr Hudson genuinely believes that there was an element of design in the notice date but having heard Ms Baker, I accept her evidence that there was not and that her giving notice shortly before Christmas was coincidental.[110]Ms Baker stated that she was informed by Karen Sparks, who ran the office out of which Ms Baker then worked, to continue to work and to see clients during her one-month notice period and she did so.[111]Ms Baker stated in cross examination that before she resigned from AFH, Regentia had obtained legal advice to the effect that the DRC did not operate to prevent her soliciting or dealing with former PCWM clients after she left AFH. Her evidence is that despite that, she did not herself initiate contact with AFH clients after she left but she did tell a number of clients that she would be leaving and if they expressed the wish to move with her, she told them that they could contact her after she left AFH. She also accepted that where clients who knew that she was leaving and had asked to follow her. She contacted those clients in the period between 20 January and about the end of March 2020. Ms Baker maintained that these clients had already told her that they wished to follow her and that she did not solicit their custom but responded to their requests.[112]When questioned by Mr McMeel KC about this her answer was:
“So, if I had a conversation with a client while I was still at AFH I was told to carry on working with those clients … If they expressed, you know “Would I be able to stay with you?” “What would be the option?”
I would say “I won’t be able to contact you. It will be up to you to contact me.” If they contacted me and asked me to, then I would contact them, and if we arranged a meeting as a result of that, I would take with me such as a blank fact find, a risk questionnaire, letters of authority, the agreement, all the usual stuff, so basically to start from scratch.”[113]Mr McMeel KC asked Ms Baker about her contact with clients in December 2019 and suggested that she told the clients that she was leaving and that there were no restrictions on her dealing with them in future. Ms Baker responded by referring to the fact that clients had received valuations in December and saying: “I did tell some clients, the ones I was in the middle of dealing … I knew I was not going to be able to follow up on and I had built a close relationship with them, as a professional courtesy I told them I was leaving. I didn’t say “Do you want to come with me?[114]Mr McMeel KC pressed Ms Baker and put to her that she knew that Regentia had been advised that the covenants did not apply and she was free to contact clients and seek to persuade them to follow her. Ms Baker responded:
“It was a new experience for me. I had not been in that situation before. I was not going around ringing all the clients. It was clients that had expressed to me that that is what they wanted to do that I had told whilst I was still at AFH and I was concerned about – regardless of any legal advice as to what I could and could not do about confidentiality. So I contacted them only if they contacted me. I may have been able to bring every single client but I didn’t.”
[115]I accept that Mr Hudson genuinely considers that the scale of the departure of clients following Ms Baker is suspicious. However, I note that there is no data or documentary evidence to indicate how unusual such a loss of thirty-five clients from twenty-three households out of a total of a hundred and twenty-one clients is. I also note that AFH advisers are subject to its standard non-solicitation and non-dealing provisions and that advisers may not typically challenge non-dealing covenant or be brave enough to defy it even if they believe it may be unenforceable.[116]I accept Ms Baker’s evidence that it was not suggested that she be placed on garden leave during her notice period and that Karen Sparks of PCMW / AFH told her to tell clients that she was leaving after she had given her notice. Simply informing clients that she was leaving was not solicitation.[117]Having heard Ms Baker’s evidence and that of some of her clients who are referred to below, and considered the documentary evidence as to what occurred with clients who followed Ms Baker and moved their business to Regentia, I find that Ms Baker did not make a deliberate decision or embark on a deliberate scheme or course of conduct to take as many clients as she could with her to Regentia. Nor did she decide once at Regentia to proactively seek to bring over as many clients as she could. Whilst Mr Hudson’s evidence raises grounds for suspicion that there was soliciting of clients and could support an inference of such conduct by Ms Baker, the absence of any real documentary evidence and with Ms Baker’s consistent and convincing oral evidence, in my judgment, the evidence as a whole does not establish that Ms Baker intentionally solicited her customers intending to persuade them to follow her to Regentia.[118]Whilst I find that Ms Baker did not set out to solicit custom in breach of clause 2.1.2.2 of the DRC, it is still necessary to consider whether she did in fact breach that provision in relation to those particular customers as to whom Mr McMeel KC submits that she did. This requires the consideration of such customers individually. It is for AHF to show, on the balance of probabilities that particular clients were contacted by Ms Baker in a manner that amounted to solicitation. Ms Baker gives evidence as to what occurred with each client in her witness statement. AFH needs to advance evidence that she solicited the custom of that client and to put to Ms Baker in cross examination that she did so.[119]As I have already noted, Ms Baker accepts that she solicited the custom of Helen Wright. I consider her case in more detail below. I consider each of the customers whom Mr McMeel KC indicated either in submission or cross examination was approached by Ms Baker with the intention of appropriating their custom.[120]The first customer who Mr McMeel KC put to Ms Baker was Carolyn Riley. Mr McMeel KC put to her an email dated 21 January 2020 from Simon Glazebrook, Carolyn Riley’s solicitor. In it, Mr Glazebrook reports to Ms Riley a conversation he had with Ms Baker and an email sent to him by Ms Baker the previous day. Mr Glazebrook reports Ms Baker’s move to Ms Riley and her son in law, Maston Daniel. He does so following Ms Baker's request that he do so in her email of 20 January. In her email, Ms Baker reports that she has left PCWM and joined Regentia. She refers to PCWM having been bought by AFH and states that having spent time learning how AFH operates and how that affects how she likes to work and provide her services to her clients, states that she has decided to find a new firm more aligned with her own principles. She then reports that she has joined Regentia and talks about how it shares her client values and approach to personal service and states that they are all round nice and talented people. She ends the email by asking Mr Glazebrook to let Ms Riley and Mr Daniel know that she would be happy to speak with them and answer any questions they may have.[121]Ms Baker called several of her clients to give evidence at trial, but they did not include either Ms Riley or Mr Daniel. Ms Baker sought to explain away the exchange but, in my judgment, her email to Mr Glazebrook constitutes soliciting within clause 2.1.2.2 of the DRC. That it was sent to Mr Glazebrook rather than Ms Riley direct does not alter that. Ms Baker explains in her witness statement that Ms Riley had recently lost her husband, and that Mr Glazebrook was her solicitor and already known to Ms Baker. I find that the email seeks to persuade Mr Glazebrook that Regentia is a superior firm to PCWM post the AFH acquisition and that following the acquisition by AFH, PCWM is less client-focussed than it was and less client focussed than Regentia is. The email asks Mr Glazebrook to pass on its contents to Ms Riley and Mr Daniel and to let them know that Ms Baker would be happy to speak with them. I find that the email was sent to Mr Glazebrook as Ms Riley’s solicitor with the intention of his passing on its contents and with a view to having Ms Riley and Mr Daniel make contact with Ms Baker and to discuss with her moving their business to Regentia.[122]Mr McMeel KC asked Ms Baker about Michael Hunter, who moved his business from AFH to Regentia in late January 2020. In her witness statement, Ms Baker explains that she had developed a good relationship with Mr Hunter in her role as a tax adviser as well as an IFA and that she told him that she was intending to leave AFH before she gave in her notice. Mr Hunter also gave evidence at trial for Ms Baker. He did so in a straightforward way and made appropriate concessions. I found him to be an honest witness who attended in order to assist the court. Mr Hunter’s evidence was that he informed Ms Baker that he would want to move his business with her if/when she left PCWM/AFH before she gave her notice and before he knew where she was moving to. He was also clear that Ms Baker did not denigrate AFH in her conversations with him before she moved. In my judgment, Ms Baker did not approach Mr Hunter with a view to appropriating his business. She did not need to as he had already informed her of his intention to move his business with her.[123]Mr McMeel KC asked Ms Baker about Nick Shaw and other members of his family who moved their business to Regentia between about late January and March 2020. He also took her to email exchanges between Ms Baker and Mr Shaw and between Ms Baker and his son, James Shaw. Ms Baker explains her dealings with the Shaw family in her witness statement. There is no evidence that Ms Baker contacted Mr Shaw or any of his family with a view to appropriating their business. There is nothing in the email exchanges which establishes that she did. Ms Baker reports that she had contact with Mr Shaw in late December and early January and that at a meeting on 10 January 2020 she informed him of her departure. The evidence is that Mr Shaw then contacted Ms Baker by email stating that he and his wife and mother wanted to move their business to follow Ms Baker. It was not really put to Ms Baker that she approached Mr Shaw with the intention of appropriating his custom and I find that she did not do so.[124]Mr McMeel KC did put to Ms Baker that she breached the DRC in respect of Richard Pratt. He did so by reference to an email dated 7 January 2020 in which Mr Pratt referred to a telephone conversation earlier the same day stating that he was disappointed that she was leaving PCWM but reassuring to know that they could retain their business relationship and suggesting that they keep in contact. Ms Baker then sent him an email on 24 January 2020 – so during her first week at Regentia - to arrange a meeting. In her witness statement, Ms Baker gives a factual description of the emails passing between them. In cross examination, when solicitation was put to her, she stated that Mr Pratt was a friend of her husband’s and was approaching retirement by reason of which they had met more often and that Mr Pratt had expressed the wish to move with her. Her evidence is that when informed that she was leaving PCWM, Mr Pratt indicated that he wished to move with her. There is no real evidence to the contrary and I accept that evidence. I find that Ms Baker did not contact Mr Pratt with the intention of appropriating his business.[125]Mr McMeel KC asked Ms Baker about Chris Blakemore. He sent Ms Baker an email on 17 January 2020 to provide his contact details and asking “out of interest” how much it would cost for him and his wife to move their business to Regentia. This email indicates that there had been prior contact between them and that Ms Baker had informed the Blakemores that she was moving to Regentia. However, the tone and content of the email indicate that she had not provided him with significant information about Regentia and therefore, on the balance of probabilities, had not spoken to him with the intention of appropriating their business. However, in her reply sent on 20 January, her first day at Regentia, Ms Baker states that there would be no cost to transfer and then says, “if you’re around today I can give you a call to discuss further?” More emails are exchanged and a meeting takes place following which Mr and Mrs Blakemore move their business to Regentia. In my judgment, Ms Baker’s email of 20 January was contact made with the intention of appropriating their business. That the Blakemores had already expressed an interest in transferring does not alter that. Ms Baker responded to the expression of interest in a way that was calculated to obtain their business and that response was in breach of clause 2.1.2.2 of the DRC.[126]Mr McMeel KC asked Ms Baker about Valerie Campbell. She sent Ms Baker a text message on 2 January 2020 asking to speak further with her about continuing to receive her services. Ms Baker replied the next day asking her when would be best for her. Ms Campbell’s text message refers to a conversation before Christmas and in her witness statement, Ms Baker says that she informed Ms Campbell of her resignation in a telephone call before Christmas. Ms Campbell proposed a call on January 7, 9 or 10 and Ms Baker’s evidence is that she called on 7 January and they subsequently met on 23 January. These communications do not establish that Ms Baker had made contact in December with the intention of appropriating Ms Campbell’s business. The evidence indicates that further contact is after Ms Campbell had decided that she wished to follow Ms Baker to Regentia. The communications were in response to that and not with the intention of seeking to appropriate Ms Campbell’s business because Ms Campbell had already informed Ms Baker that she wished to follow her. These communications do show Ms Baker was in contact with Ms Campbell with a view to signing her up at Regentia while she was still under contact to AFH, but that is a separate matter and, as Mr Budworth submits, breach of a duty of fidelity during her contract is not one of the pleaded claims against Ms Baker.[127]Finally, Mr McMeel KC asked Ms Baker about Jane Preston. She sent an email to Ms Baker on 9 January 2020. It is clear that she is aware that Ms Baker is leaving PCWM and she had met with Ms Baker on 11 December, before Ms Baker had in fact resigned. Ms Preston states that she has received the latest update on her investments but no other communications from PCWM and states that she would like Ms Baker to remain her financial adviser. Ms Baker replies stating that she will be starting her new role on 20 January and will be in touch. Ms Baker’s evidence is that she then met Ms Preston on 24 January.[128]Ms Preston also attended and was cross examined by Mr McMeel KC. Her answers were entirely consistent with what the emails indicate, and it was clear that she trusted Ms Baker and was keen to retain Ms Baker as her IFA. The effect of her evidence was that she regarded her relationship with Ms Baker as the important one and not her relationship with the firm who engaged Ms Baker. In my judgment, the emails and the oral evidence of Ms Baker and Ms Preston do not support a finding that Ms Baker contacted Ms Preston with the intention of appropriating her business as Ms Preston had already informed Ms Baker that she wished to follow her in the 9 January email. Ms Baker already knew that she was going to get that business when she responded to the email. However, it is another example of Ms Baker communicating with a client about the transfer of her business to Regentia during her notice period at AFH.[129]In addition to Mr Hunter, three other clients attended trial and gave evidence for Ms Baker. The first was Hugo Welsh. Nothing emerged from the cross examination of Mr Welsh to give any indication of solicitation of his business. Mr Welsh explained how he regarded his relationship with Ms Baker as one of trust and of importance and that it was that relationship rather than with the firm who engaged the IFA that he valued, having obtained advice from Ms Baker on several occasions during 2019 due to his need to arrange the financing of several family weddings at that time.[130]The cross-examination of his wife, Jean Welsh, was to the same effect.[131]Helen Wright attended via video link for cross examination on her witness statement. Ms Wright gave straightforward answers to the questions she was asked and made appropriate concessions. She was asked about exchanges of messages on Linked-In between her and Ms Baker. The messages show Ma Baker contacting Ms Wright on 20 January 2020 – her first day at Regentia – to inform her that she has left PCWM. Ms Wright replies saying that she is sorry to hear that and asking who will be looking after her finances. Ms Baker’s response is to say that she does not know but is happy to have a chat if Ms Wright can call her. Ms Wright did so.[132]In my judgment, Ms Baker is correct to concede that she solicited the custom of Ms Wright. The messages indicate that when she contacted Ms Baker, Ms Wright had not decided to move with Ms Baker. Her evidence during cross examination was consistent with this. Ms Baker than arranged for Ms Wright to call her. In my judgment, that can only have been to provide Ms Wright with details of Regentia with a view to obtaining her custom for Regentia.[133]I therefore find that Ms Baker did solicit in breach of clause 2.1.2.2 of the DRC the custom of Ms Wright, Ms Riley, and Mr and Mrs Blakemore.[134]Mr McMeel KC submits that I can infer from her contact with these clients and Ms Baker’s admission that she believed that there was no legal impediment to her contacting clients and seeking to obtain their business that she had similar communications with other clients. I do not agree. The evidence of Ms Baker’s contact with individual clients to which I have been taken combined with Ms Baker’s oral evidence and that of the clients who gave evidence at trial leads me to find that despite the advice which she reports that Regentia had received as to the failure of the DRC to cover her clients, Ms Baker was unsure as to what she was permitted to do and somewhat inconsistent in how she dealt with her move when in contact with clients. The evidence does not establish that Ms Baker solicited the custom of any other particular clients and no specific allegation that she did so was put to her. Conclusion[135]AFH FS is entitled to rely upon and enforce the Contracts as a contracting party. The other members of the AFH group are not. Clause 2.2 of the DRC does not have the effect of excluding from the restrictions in clause 2.1 all (or any) of the former clients of Ms Hicks who became clients of Ms Baker. The non-solicitation restriction in clause 2.1.2.2 of the DRC is valid and enforceable. The non-dealing covenant is not. The evidence establishes that Ms Baker did solicit in breach of clause 2.1.2.2 of the DRC the custom of Ms Wright, Ms Riley and Mr and Mrs Blakemore.[136]Following AFH obtaining permission to amend its Particulars of Claim, the next stage in this claim is for the parties to exchange evidence on the dispute as to whether Ms Baker and Regentia misused AFH’s confidential information, and for a trial on liability in respect of that part of the claim.[137]Following circulation of this judgment in draft to the parties, it will be handed down in their absence. If the parties are unable to agree an order consequential upon it, the matter will be listed for a short remote hearing for the form of order to be determined.