Extec Screens & Crushers Ltd v David Rice [2007] EWHC 1043 (QB)

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
[2007] EWHC 1043 (QB)Case No CaseNo:HO07X00704Venue Royal Courts of Justice, Strand, London. WC2A 2LL
Between
Extec Screens & Crushers LtdClaimantDavid RiceDefendant
Before
Mr Justice TugendhatMiss Jane Mulcahy (instructed by DLA Piper UK LLP) for the ClaimantMr Rupert Butler (instructed by Brindley Twist Tafft and James) for the DefendantHearing dates: 18,19,20,23 April 2007
[1]Mr Justice Tugendhat : The Defendant ("Mr Rice") first started work with the Claimant ("Extec") in 2002 as a production manager. In October 2004 he took up a position with the title "After Sales Manager". Extec is a substantial company. It carries on business in Derbyshire in the manufacture of equipment used for crushing and screening, and in the manufacture and supply of spare parts for such equipment. During the period 25 th January to 14 th February 2007 there occurred a number of events which it will be necessary for me to consider in more detail. But on 14 th February 2007 Mr Rice finally ceased working for Extec. On 19 th February 2007 he started work for Spares UK Plc. On 2 nd March 2007 Extec commenced these proceedings by an application made without notice for an injunction. This was granted by Walker J. On the same date Mr Rice stopped working for Spares UK. A speedy trial was ordered and commenced on 18* April 2007.[2]Mr Rice's contract of employment with Extec is a lengthy document containing detailed provisions relating to its termination. It contains post termination restrictive covenants. It will be necessary to consider these in some detail. In brief, Extec claim that Mr Rice is still bound by his contractual obligations as an employee until the contract expires according to its terms, and that he will thereafter be bound by the post termination restrictive covenants. They seek to enforce both these obligations in these proceedings. Whilst Extec contend that Mr Rice was bound by a three month contractual notice period commencing 14 February and ending 13* May 2007, Mr Rice contends that he was free to work for Spares UK from 15 th February 2007.[3]Mr Rice contends that he was constructively dismissed. If that is right, he is no longer employed by Extec and any restrictive covenants have ceased to bind him. In the alternative, Mr Rice contends that the restrictive covenants which Extec seek to enforce either do not according to their terms (properly construed) apply so as to prevent him working for Spares UK after the termination of his employment with Extec (whenever that might be), or that they are unlawful restraints of trade and so not binding for that reason. The question whether the restrictive covenants purport to prevent Mr Rice working for Spares UK, and if they do, whether they are lawful, raises a number of sub issues. One of these is whether Spares UK is a competitor of Extec, and another is whether Mr Rice knew confidential information belonging to Extec.[4]Extec machines and equipment are used in demolition, quarrying, waste disposal and other such industries throughout the world. These machines include a number of parts which wear on normal contact with stone and other materials, such as mesh and jaws, and other parts such as valves, engines and gearboxes. Extec had not in the past concentrated on the supply of spare parts for its machines, but had decided to do so. With Mr Rice's management, it built up. that part of the business to some 7% of turnover.[5]There are a number of other manufacturers of screeners and crushers. Amongst these manufacturers are Doppstadt, Powerscreen and Terrex-Pegson. These companies have arrangements for the distribution of their products with British distributors. These distributors are companies whose names include the words Blue Machinery, and which are associated, each having a territorial share of the British Market. The Blue Machinery companies do not supply parts for the machines they distribute. That business is conducted by Spares UK, which is associated with the Blue Machinery companies through common shareholders and directors. Mr McGeary is the majority shareholder in the Blue Machinery company operating in the Midlands, and he is a leading figure in the management of Spares UK. Spares UK is described as a sister company of the Blue Machinery companies. It has premises at Warrington in Cheshire. CONSTRUCTIVE DISMISSAL[6]It is common ground that the law on constructive dismissal is to be found in Western Excavating (ECC) Limited v. Sharp [1978] ICR 221 . Lord Denning MR set out the test as follows at p226:
"If the employer is guilty of conduct which is a significant breach going to the root of the contract of employment, or which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract, then the employee is entitled to treat himself as discharged from any further performance. If he does so, then he terminates the contract by reason of the employer's conduct. He is constructively dismissed. The employee is entitled in those circumstances to leave at the instant without giving any notice at all or, alternatively, he may give notice and say he is leaving at the end of the notice. But the conduct must in either case be sufficiently serious to entitle him to leave at once. Moreover, he must make up his mind soon after the conduct of which he complains: for, if he continues for any length of time without leaving, he will lose his right to treat himself as discharged. He will be regarded as having elected to affirm the contract."
[7]The effect of constructive dismissal which is significant for the present case was expressed by Lawton LJ (at p229B): "... it confers a right on an employee to be released from his contract and extinguishes the right of the employer to hold the employee to it".[8]It is therefore necessary to look at the terms of the contract which it is alleged the employer has broken. For Mr Rice it is contended that there existed in the contract of employment the following implied terms:
"a. Extec would allow Mr Rice to resign his employment whenever Mr Rice wished to leave; b. Extec would not do anything that would undermine the mutual trust and confidence between the parties; c. Extec would not exert undue influence over Mr Rice; d. Extec would not demote or discriminate against Mr Rice; e. Extec would provide to Mr Rice all necessary equipment and computers to carry out his job"
[9]A term may be implied into a contract when it is by law an incident of a contract of the kind in question, or when it is necessary to do so. There are implied terms which are incidents of contracts of employment. These are discussed in the context of constructive dismissal in Chitty on Contracts 29 th ed para 39-145. One of these is a general implied duty to preserve the trust and confidence that an employee should have in his employer. The test is objective and is not met by the subjective understanding of the employee alone. I accept that Extec was in principle under an obligation to provide Mr Rice with the computers and other equipment necessary for him to carry out his job, but the obligation would, in another case, require more detailed analysis than that simple statement. For the other suggested implied terms, in part the subject matter is provided for by statute or by the express terms of the contract, and to that extent implied terms are unnecessary and, in so far as they conflict with the contract or the general law, impossible to imply. It is unnecessary to consider these propositions in further detail in the light of the facts in this case.[10]The factual allegations said by Mr Rice to support his case that he was constructively dismissed are as follows:a. On the 23 rd , 25 th and 29 th January 2007, Mr Rice tried to resign, but he was not allowed to.b. On the 31 st January 2007, Mr Rice lost the use of his laptop and mobile phone as Extec set out trying to break his customer connections and the laptop was never returned.c. On the 31 st January 2007, Mr Rice was demoted to data-inputting tasks for his notice period.d. Between the 2 nd February and 5 th February 2007, Mr Rice was subjected to extreme pressure and strong-arm tactics by Extec to make him stay - including the threat of legal action. In the course of these discussions a non-specific allegation (the specifics of which were known and believed by Extec) that Mr Rice had made unauthorised disclosures to a customer were put to him. According to Extec his version was not believed.e. The Defendant was unable to exercise an informed judgment as to his options because of the influence his employer held over him who preferred its own interests.f. The withdrawal of his resignation was not a voluntary act by Mr Rice but one coerced out of him by Extec in circumstances where Extec had lost confidence in Mr Rice.[11]It is said on Mr Rice's behalf that as from 24 th January 2007 Extec believed that Mr Rice had given away trade secrets in the form of photocopies of a document called the Mesh Book to a trade competitor, as a result of which Extec lost trust and confidence in-Mr-Rice. It is said that all the subsequent actions taken by Extec were-taken. with a view to preventing Mr Rice from disclosing any further trade secrets. In addition it is said that there was at the relevant time a proposal for the sale of Extec or its business, and Extec wished to keep Mr Rice at least nominally in his job for cosmetic purposes. So it is said that, even where Extec's words or actions after 24* January 2007 might appear to be for the benefit of Mr Rice, that conduct is not to be interpreted at face value, but was instead part of a devious scheme to tie him to Extec while not providing him with suitable work to do. THE FACTS RELATING TO MR RICE'S LEAVING EXTEC[12]After joining Extec in early 2002, Mr Rice gave notice in July 2004 to work for another company, leaving in August. He quickly regretted this decision and asked to return to Extec. On 18 th October 2004 he was re-employed as After Sales Manager on the terms of the written contract which continued to govern his employment thereafter. This includes a three months period of notice. The remuneration was a basic salary of £25,000 plus a performance related bonus.[13]On 30 th June 2006 Extec offered to increase Mr Rice's basic salary by 2.5% to £26,394, but he was not happy about this and an increase to £28,000 was agreed.[14]Mr Rice occupied a position of considerable responsibility within Extec. He was head of a department consisting of 22 or more staff.[15]By November 2006 Mr Rice was thinking of moving again. He heard of a job becoming available as Managing Director of Spares UK, and made known his interest. He was invited for interview on 10 November 2006 by an e-mail sent by the Marketing Manager of Blue Machinery Plc. Another applicant for the job was Rod Savage, and it was Mr Savage who got it.[16]Nevertheless, Mr Rice impressed Mr McGeary, and Mr McGeary kept in touch with Mr Rice by phone and e-mail. The e-mails were sent from and to Mr McGeary's e-mail address at bluemachinerycentral.com and the private e-mail address of Mr Rice's wife.[17]On Friday 19 th January 2007 Mr Savage and Mr McGeary met Mr Rice and offered him a job. The terms were confirmed in a letter dated 23 rd January (sent by e-mail), which Mr Rice signed on 25 th January. The remuneration offered was a basic salary of £37,000 plus commission of 1% on sales of crusher spares up to £2.5m turnover and 1.5% up to a further £3.5m turnover in the financial year to 31 st January 2008. The job was to start as soon as possible, but no later than 1 st May 2007 (that is just over three months from the date of the letter). The Job Title is:
"Spares & Crushing - Development Manager reporting to Rod Savage Managing Director. You will be responsible for developing the purchasing and establishing a customer database for Crusher Spares Parts aimed at all well known brands"
[18]By this time other staff in Mr Rice's department had gained the impression that he might be looking for another job. In particular some thought that he was associating more than was usual with a man called Nick, who was. an employee of a competitor company.[19]On Friday 23 rd January 2007 a young employee in the department called Richard, saw Mr Rice with Nick. The offices have glass panels in the windows and doors. Richard saw Mr Rice photocopying the Mesh Book and hand something to Nick. Richard spoke to a lady called Pat, a supervisor in the department, and then to Steve Powell, Extec's Head of Human Resources.[20]Ian English is the Operations Director and Company Solicitor of Extec. He made a witness statement dated 1 st March 2007 in support of the application that was successfully made for the interim injunction in this case. He had heard about the matters Richard reported to Mr Powell. In that witness statement Mr English stated that he believed Richard's version of events and was therefore concerned that Mr Rice may have distributed to third parties confidential information belonging to Extec. Mr English's evidence in chief before me was in the form of a witness statement dated 4 th April 2007. It is largely similar to the earlier witness statement but does not include the statement just referred to. No allegation was made in the Particulars of Claim, or at trial, that Mr Rice had disclosed confidential information to any third party, whether on 23 rd January or at all. Mr Rice was not therefore asked about it in cross-examination. When Richard gave evidence he was cross-examined, but it was not suggested to him that he had lied or was lying as to what he said he saw. Mr English was asked about it in cross-examination and said he did not think Richard had lied, and did not know what to believe had happened.[21]Richard and Mr Powell both gave evidence before me. Their evidence is very similar in its description of what Richard told Mr Powell. No contemporaneous note of what Richard said to Mr Powell was disclosed on disclosure, and Mr Butler remarked on that at the trial. On the second day of the trial Extec disclosed a one page undated document which Mr Powell said he had written on 24 th January. It apparently records what Richard told Mr Powell, some investigations Mr Powell then made into telephone calls from Mr Rice to Nick during December, and the amount of business done with Nick's employer during December (£5000 worth). There are some observations on Mr Rice's employment contract and a note that on 24 th January Mr Rice had cleared his desk and shredded a lot of papers. The explanation given by Extec for the late disclosure of this document was that it was typed by Mr Powell into his laptop, and erroneously thought to have been for the purposes of the litigation, and so privileged.[22]In cross-examination Mr Butler put to Mr Powell that the document was a recent fabrication by him. If so, it was not helpful to Extec, because, as Mr Butler pointed out, the details of what Richard is recorded as having said to Mr Powell differ from the accounts given by Mr Powell and Richard in their witness statements (which are the same). Following this allegation, the IT expert of Extec, Mr Cook, who happened to be a witness on another aspect of the case, was asked to interrogate the properties of the file. He produced a print out which apparently shows that the document was last accessed on 24 January 2007, which is consistent with what Mr Powell had said. Mr Butler did not accept that the information as to that date was conclusive of the authenticity of the document. He carried out an exercise of his own by which he demonstrated that false dates can be generated for the properties of a file in Microsoft Word, such as this document is.[23]I wholly reject the allegation of late fabrication. There is nothing to support it.[24]Mr Butler noted that the document recorded that some enquiries had apparently been made in relation to Richard's allegations.[25]On 24 fh January 2007 Mr Holmes Taylor, the General Manager of Extec, spoke to Mr Rice. In January he thought that Mr Rice was not behaving normally, and he had heard rumours, so he asked Mr Rice whether he intended to leave Extec. Mr Rice told him that he had written out his notice in the last few days and that he had "one or two irons in the fire". Asked why, Mr Rice explained that he was frustrated at the slow development of the parts business and had to think about his future. Mr Holmes Taylor understood that there were matters that Extec needed to address, but he thought Extec were addressing them in its current business plan, and tried to reassure Mr Rice that his concerns would be addressed. Mr Rice did not tell Mr Taylor which company he would be joining on leaving Extec.[26]On 25 th January 2007 (the same day that he signed the offer letter from Spares UK) Mr Rice handed to Mr Holmes Taylor his letter giving three months' notice to terminate his employment. It is a short letter containing only one other paragraph, which extends Mr Rice's good wishes to Extec and Mr Taylor. There neither is, nor could be, any possible case of constructive dismissal arising up to this point.[27]There followed a meeting between Mr English, Mr Taylor and Mr Rice. In his written evidence in chief Mr Rice states that he was put under immense pressure to stay. There is no doubt that Mr English asked him to wait until the end of February, and told him that, if he did that, then he could then leave on six weeks notice if he still wished to. On 29 th January Mr Powell wrote to Mr Rice confirming this, and returninghisresignation letter, saying it was not accepted.[28]Meanwhile, over the weekend of 27 and 28 January (although Extec did not know this) Mr Rice and his family spent the weekend with Mr McGeary and Mr Savage as their guests making preparations for the move that would be required for Mr Rice to work for Spares UK in Warrington.[29]Also on Monday 29 January Mr Rice sent an e-mail to Mr Powell. He acknowledged receipt of Mr Powell's letter of that day, confirmed his wish to terminate his contract and stated he would like to honour his contractual requirements by working out his notice period from 25* January. He asked that his wish to leave be respected and informed Mr Powell that he had signed with his new employer, who he did not identify. On 30 th January Mr Powell replied accepting Mr Rice's resignation.[30]Mr Rice's contract of employment includes in clause 3A a provision relating to any period of notice. There can be no term implied into the contract which is inconsistent with this express clause. It provides that Extec: "shall be under no obligation to assign any duties to [Mr Rice] and ... may require [Mr Rice] to carry out specified projects, provided that this shall not affect [Mr Rice]'s entitlement to receive the salary and other contractual benefits".[31]Pursuant to that clause, Mr Rice was required to stop working in the Parts Department (his duties were assigned to Mr Swale). Mr Rice gave up his mobile phone, which was used by customers to order spare parts (and this-was given to Mr Swale).[32]Mr Rice's computer was also removed. At trial there was no dispute that the computer had in fact developed a fault that day, as Mr Cook explained in his evidence. Until the trial Mr Rice did not believe that the occurrence of the fault on that day was a coincidence.[33]At that time Extec had a project known as Syspro. There was a meeting at about 5pm that evening between Mr Rice and Mr Powell. Mr Powell told Mr Rice that he would be working on this project.[34]On the same day Mr Rice's wife wrote an e-mail timed as sent at 17.51 and bearing Mr Rice's signature. Mr Rice said it was written by her after his meeting with Mr Powell, while he was on his way home, following a conversation they had together. The e-mail mistakenly states that there is no provision in Mr Rice's contract which states that he can be moved to alternative duties. It states that he will seek legal advice and continues: "I am being victimised because I have handed in my notice, had my computer removed, thus making it impossible to carry out my duties".[35]This e-mail did not have any entry in the Subject box, and its delivery to Mr Powell was prevented by Extec's firewall. It was not seen by anyone at Extec at the time.[36]On Thursday 1 st February 2007 Mr Rice, unusually for him, was off work. He explained to Extec in the morning that he had fallen sick in the night.[37]Mr English arranged to meet Mr Rice at a nearby restaurant early on Friday 2 nd February to try to persuade him not to leave Extec. He made a proposal which he handed to Mr Rice on a piece of paper, and which he confirmed in writing in a letter of 5 th February. With effect from 1 st February Mr Rice's salary would be increased to £38,000, and he would receive BUPA and other new benefits including a pension contribution.[38]Mr English had also arranged for Extec's solicitors to write a letter addressed to Mr Rice asserting their legal position. It was dated 2 nd February 2007. Mr English handed this to Mr Rice. The letter stated that Spares UK is a direct sales competitor of Extec and a sister company of Blue Machinery which is also a direct sales competitor. The letter also stated that Mr Rice had had access to significant highly sensitive and confidential information belonging to Extec. It set out at length the covenants in Mr Rice's contract of employment and ended with a request for undertakings, failing which, the letter said, further action might be taken against Mr Rice, including an application for an injunction. The letter is firmly worded, but no criticism is made of the terms of the letter by Mr Butler. Mr Rice understood the effect of the letter was that he might be unable to work for eight months, which caused him to worry as to how he was to live.[39]Extec's solicitors also wrote on that date to Spares UK explaining the terms of the restrictive covenants in Mr Rice's contract. Mr McGeary was unable to say when that letter was-received. But when it was received it was the first tha the or Spares UK knew that there were restrictive covenants. Mr. Rice had, at ech of the interviews in November and January, told Mr McGeary that he was not bound by any restrictive covenants. Mr Rice's explanation for this is that although he knew that there were restrictive covenants in his contract, in his view they did not apply to prevent him working for Spares UK.[40]As arranged, Mr English and Mr Rice met again at a pub that evening. Mr Rice agreed to withdraw his resignation and stay with Extec on the new terms. Mr English said that Mr Swale would remain in Mr Rice's department as additional support for Mr Rice. During that meeting Mr English asked Mr Rice if he had supplied confidential information to any third party. Mr Rice said he had not and the matter was not pursued.[41]On Sunday 4 th February Mr English and Mr Rice met again at a restaurant and Mr Rice showed Mr English Spares UK's offer letter. It was agreed that Mr Rice would come back to work in his old position on Monday morning, but a little later than normal, to allow time for Mr English to explain the position to the staff in the department.[42]This is what happened. The mobile phone was returned to Mr Rice. But in other respects, the position on Mr Rice's return was less than satisfactory. Mr Rice did not have a computer or a desk of his own. Mr Swale was occupying Mr Rice's old desk, and the two of them had to share not only the desk, but also Mr Swale's desktop computer, pending the delivery of the new laptop that was ordered for Mr Rice on 6 February.[43]On Tuesday 6 th February Mr Rice signed a letter addressed to Mr Powell confirming the formal withdrawal of his resignation and authorising Extec to contact Spares UK Plc in respect of his not taking up their offer of employment.[44]Mr Rice's return to work did not last any longer than these two days. On Wednesday 7 th February he was ill with flu (as his GP noted) and could not work for the rest of the week. On 8 th February 2007 Extec prepared a letter for Mr Rice to sign addressed to Spares UK in which he declined their offer of employment. He signed it on 12 th February. Also on 8th February, Mr English wrote to Mr Savage stating that Mr Rice had decided to remain with Extec. He set out the terms of Mr Rice's employment and stated that Extec intended to protect its commercial interests, by legal action if necessary. He referred to another former employee of Extec who had gone to work for Spares UK and to the legal action that Extec had threatened against Blue Machinery on that occasion.[45]At the trial Extec learnt for the first time that during that week Mr Rice was in contact with Spares UK and their solicitors. It is these solicitors who have represented Mr Rice throughout these proceedings. The only evidence on this came from Mr Rice himself. Mr McGeary did not mention it, and Mr Savage did not give evidence. It may have been prompted by the receipt by Spares UK of the letter from Extec's solicitors, but there is no evidence that that was so and I do not need to make any finding as to what prompted the renewed contact between Mr Rice and Spares UK.[46]On the morning-of Saturday 10 th February there were e-mail exchanges between Mr Rice and Mr McGeary. At09.58 Mr McGeary wrote:
"Been-thinking-during the-night of the best way to carry out your exit"
. At 09.58 Mr Rice sent an e-mail to Mr McGeary and to Mr Savage. The subject is given as "Planning exit", there is an attachment and the text is "Sorry, forgot to send the attachment". I infer that Mr Rice had previously sent an e-mail from which the same attachment had been accidentally omitted, but that e-mail does not survive. Mr McGeary's e-mail response is timed at 10.26. He made a reference to an earlier conversation (which I infer was in the interval), and he suggested taking advice from a lady who has been identified as a corporate lawyer advising Spares UK. He adds: "I will call her first thing and get to call you and let her draft you reply. Have a chill out weekend and the gloves are now off.[47]A later e-mail (12 th February) also makes clear that Mr Savage had a telephone call with Mr Rice on that Saturday morning. The timing is not given. In the e-mail Mr Rice says that further to that call "I couldn't waiting to take my mobile and leaving letter to Extec"[48]The lawyer did subsequently draft a letter that Mr Rice sent to Extec. But in the meantime Mr Rice had himself prepared a draft (the attachment sent at 09.58) and Mr Savage also put his hand to a draft which he e-mailed to Mr Rice at 10.30, apparently unaware of Mr McGeary's view that that should be done by the lawyer. The drafts, which were not sent, are revealing.[49]Mr Rice's draft, dated 10 th February and addressed to Mr English, includes the following:
"I am writing to advise you that with immediate effect, I have decided to tender my resignation with Extec ... After our discussions last week, I have thought long and hard on where my future lies and unfortunately, I feel my future does not lie with Extec. I would like to thank you for the time you took last week and indeed for the additional benefits you offered which I received confirmation of on Thursday 8 February 2007. The last six months for me have not been enjoyable and on reflection of this, feel the time is right to move on. I would respectfully request that I am not contacted either by telephone or email and would hope that you understand my reasons for this decision.. This last week as been really difficult for me and I feel that this is a contributory factor to my current state of health"
[50]The draft contains nothing else about the events of the previous two weeks. It is the first occasion on which the possibility of Mr Rice leaving without notice is referred to.[51]Mr Savage's draft includes the following proposed additions and amendments to this text:
"Further to me serving my notice on xx Januaiy 2007 I_am writing to advise you that due to the events and actions that have happened since me giving notice, including but not limited to the legal letter presented to me, I feel that my trust and confidence in you and Extec as my employer has been completely destroyed by these actions and events. Therefore with immediate effect, I have decided to leave Extec Screens & Crushers.... I would like to thank you for the time you took last week, which while appreciated, left me confused. On the one hand you were offering me additional benefits, yet on the other hand you were serving me unnecessary and contradictory legal letters. This has contributed to the breakdown of trust and confidence..."
[52]Absent any other evidence I infer from this that the first suggestion that there had been a breakdown of trust and confidence on the part of Mr Rice came from Mr Savage. Mr Savage has not given any evidence. Mr Rice has not explained the difference between the drafts, or given any other evidence, which I can accept, as an explanation for the suggestion coming from himself. In cross-examination Mr Rice said his own draft of the letter represented his intentions and feelings on 10 th February. In re-examination he said of Mr Savage's draft that these were Mr Savage's words, that everyone has a different way of expressing themselves, but he did not disagree with what Mr Savage had written.[53]But on the evening of Sunday 11 th February Mr Rice changed his mind again. He did not want to leave Extec or join Spares UK. He wrote a letter to Mr Savage. He said he was not willing to enter Spares UK's employment "with the knowledge of what cost you will incur on my behalf. He added:
"I don't honestly feel comfortable with the whole situation. I had anticipated working my notice and starting with UK Spares on a fresh footing ... please accept my sincere apologies for appearing to have strung you along ... As for my future with Extec, if there is one, only time will tell!! You are all really lovely people ..."
[54]On the morning of 12 th February 2007 Mr Savage sent Mr Rice an e-mail letter addressed to his wife's e-mail address. Mr Savage said the sudden change of mind from Saturday to Sunday had left himself and Mr McGeary confused. He said if the issue was not giving notice to Extec, that was minor, and suggested that they discuss it. The letter also includes passages which are relevant to other-issues in the action, discussed below.[55]Meanwhile, that morning, Mr Rice had returned to work at Extec and signed the letter dated 8 th February referred to above in which he notified Spares UK that he would not accept their offer.[56]When he was back at home, at 21.22 on 12 th February Mr Rice sent his e-mail referred - to in para 47 above. He referred to "the shit Extec will issue UK Spares" and explained his change of mind as that not being the way he wanted to start his new career. But he ended saying:
"if possible could we meet tomorrow face to face to discuss. I don't want to loose this once i a life time position but i don't like the thought of bring all this shit to your door step"
[57]Mr Savage replied early on Tuesday 13 th February, suggesting a meeting at 5pm that day. The meeting took place with Mr McGeary with the solicitors now advising Mr Rice. The solicitors drafted a letter to be sent to Extec. Mr Rice did not return to work at Extec. During the morning of 14 th February he sent the letter to Mr English by e-mail. A few minutes later he sent a copy to Mr Savage by e-mail. The letter reads as follows:
"Grievance and resignation As you are aware, I tendered my resignation on the 25th January to join Spares UK Plc in order to advance my career. Following my resignation, you bought to my attention a number of restrictive covenants in my contract which effectively prevented me from working anywhere in the UK for a period of eight months for any Company which had a common interest with yours. Since my resignation, my Company computer was confiscated without my knowledge on the grounds that they are 'faulty'. My mobile phone was also later taken from me. I was informed that I would be working the duration of my 3 months notice period on data entry duties. Due to the Company's unreasonable behaviour, I did not attend work on the 1 st or 2 nd February. On the 1 st February, I was contacted by the Company and asked to meet them the following day, off site at a local Little Chef Upon arrival I was presented with two envelopes. One contained a salary increase of £10,000, BUPA family medical insurance, a 5% payment into a private pension and a Company vehicle. I was told that I could walk away with that and it would be the end of the matter. I was then threatened that the other envelope contained a solicitor's letter detailing that the Company would ensure that I could not work at all for a period of 8 months. I was also asked if I was supplying confidential information and drawings to one of the company's competitors. I returned to work on the Monday and was told to continue in my previous role but it was impossible to do so without the use of my computer. I was also made aware that my role as Parts and Services Manager had already been replaced. The Company have put me under immense pressure and have essentially tried to back me into a corner and manufacture a situation where I have felt afraid to leave the Company by able to work or pay my mortgage for 8 months and that I had no other choice but to continue working for them. The Company's actions have caused me to stop eating and I was absent from work with stress on the 7 th , 8 9 th February. You will be aware that in the five years I have worked for you, I have never taken a day off sick. I returned to work on Monday the 12th February where I was presented with a pre-prepared letter to my prospective employer confirming that I would not be accepting their offer of employment. I signed this under duress. I perceive the company's behaviour to be completely unnecessary and unreasonable for what I considered previously to be a professional organisation. The Company are actually going out of their way to make life difficult for me and I am not prepared to put my health at risk. As a result of the above, I feel that the relationship of mutual trust and confidence has broken down and I do not feel that I can continue to work for the Company for the remainder of my notice period. Please accept this letter as formal notice that I am terminating my employment with immediate effect due to the recent conduct and behaviour of the Company. I confirm that I will return my fuel card and company mobile to the gatehouse. Could you please also insure my passport is handed . in to the Gate House for my collection. Please treat this letter as a formal grievance."
[58]Mr Rice asked-for his passport because he had left it with Extec for the preparation of a visa application he was to make for the purpose of his going to India on business for Extec.[59]On 19 th February Mr English wrote to Mr Rice a letter disputing the version of events set out in his letter of resignation. In that letter Mr English wrote that Extec was prepared to accept Mr Rice's letter of 14 th February as constituting three months notice of termination, so that the employment would end on 13 th May 2007. He required Mr Rice to be available for work in accordance with clause 3.4 of the contract, and to give undertakings that he would honour the other terms of the contract, including the provision that, during the period of employment he would not accept employment with any other third party, and that he would not accept any position with Spares UK for a period of 8 months starting with 13 th May, that is until 13 January 2008. He said that if Mr Rice failed to respond Extec reserved the right to take proceedings, including for an injunction.[60]On Monday 19 February Mr Rice had started work at Spares UK, although Extec did not know that until 9 th March. Correspondence followed and on 2 nd March Walker J granted an interim injunction at a hearing which Mr Rice did not attend: He said he had not reeeived the notice sent by e-mail to his wife's e-mail address the night before. On 12 th March he offered undertakings.[61]The letter of 14 th February is substantially the case advanced by Mr Rice at trial. I reject it entirely.[62]The mobile phone was taken away from Mr Rice when he resigned, quite properly, and given back to him when he started work again on 5 th February.[63]In the interval, Extec were entitled, by clause 3.4, to put Mr Rice on to Project Syspro. As Mr Rice accepted in evidence, his duties on that project included data entry but were not confined to it. The project was an important one for which Mr Rice's knowledge of parts was required, and the work was appropriate for him to be asked to do.[64]The reason for Mr Rice's absence from work on 1 st February was genuinely flu.[65]The letter from Extec's solicitors reminding him of his contractual obligations was necessary and appropriate in its terms, however unwelcome Mr Rice found the letter to be. Extec did not say that Mr Rice could not work at all for 8 months, but that he had to abide by the restrictive covenant, which (if valid) was binding for 8 months in relation to work of the kind specified in the contract. Sending such a letter is not duress or undue influence, and nothing else has been identified by Mr Rice as being a source of pressure from Extec. Extec are entitled to enforce their contracts and Mr Rice is bound to comply with his.[66]When Mr Rice returned to work on the Monday 5 th February it was not impossible for him to continue in his previous role. There were difficulties during the two days he attended for work, due to Mr Swale having moved into his office, and due to there being only one desktop computer. Extec could not have foreseen the changes of mind that led to Mr Rice first leaving and then returning to this job in so short a space of time. The unsatisfactory conditions to which he returned did not constitute a breach of contract by Extec. Mr Rice was not made aware that his role had been replaced. He was told that he was returning to his old role, but it took time for adjustments to be made, in particular for Mr Swale to cease describing himself as Parts and Services Manager.[67]Mr Rice was off work on 7 to 9 February because he genuinely fell ill. He signed the letter dated 8 th February addressed to Spares UK when he returned on 12 th February because he wished to, as he had. confirmed to Spares. UK the previous evening. There was no duress or pressure of any kind at all for him to sign that letter, nor any improper pressure from Extec at any time.[68]The relationship of trust and confidence had not broken down. Extec had decided to trust him. They were then prepared to send him on a business visit to India for them. Throughout the events recited above, Extec genuinely wanted Mr Rice to stay working for them in his former role, and at the times when Mr Rice said that he wanted to do that, he was expressing freely his own views. Extec's conduct after 23 January was proper and reasonable. Extec were certainly not in breach of any contractual terms, whether express or implied.[69]Extec was not bound to say that it accepted Mr Rice's resignation when first tendered. Extec's initial refusal to accept Mr Rice's resignation gave him an opportunity to withdraw it if he wished. If he had not chosen to withdraw it, as he did, then it would have taken effect in accordance with its terms at the expiry of the contractual three month period. Mr Rice did not need Extec's acceptance of his resignation for it to take effect. There is no need or possibility for the implication of a term such as is suggested (see para at 8 a above). It would make no sense.[70]The case in constructive dismissal fails. Mr Rice resigned on 14 th February and the period of three months runs from then, expiring on 13 l May. During that period the employment continues, and clause 3.4 applies.[71]I have reached these findings of fact set out above because they seem to me to be very probable in the light of the contemporaneous documents. But I have also heard the witnesses. I find that the witnesses called by Extec were truthful and reliable. Much of the evidence of Mr Rice was also truthful and reliable. But where Mr Rice's evidence conflicts with that of the evidence of Extec's witnesses, I cannot accept it. Mr Rice has shown a capacity for what can at best be described as wishful thinking. A clear example is his answers to Spares UK's questions on the two occasions when he told them that there were no restrictive covenants. He omitted from his written witness statement important information about his contacts with Spares UK. He is unable to explain the difference between his own draft resignation letter, the draft prepared by Mr Savage and the draft finally sent dated 14 February 2007. He was clearly moved by the incentive of getting what he called a 'once in a lifetime position'. I do not doubt that he felt under pressure and stressed. He changed his mind more than once. But I find that wherever the pressure came from, no improper or undue pressure came from Extec. AN ISSUE RAISED AFTER THE TRIAL[72]On 25 th April 2007 Mr Butler sent to me an e-mail. In it he referred to the announcement the previous day that a Swedish company Sandvik AB had reached agreement with the owners of Extec to acquire their shares. The announcement stated that the acquisition was expected to be completed during the second quarter of 2007.[73]Mr Butler applied for the delivery of this judgment to be adjourned, for directions to be made for specific discovery relating to the Sandvik offer, for witness statements about it to be served, and for the case to be re-listed for a day's hearing on the first open day after 21 st May 2007 for the taking of further evidence and for submissions.[74]The grounds for the application are in substance that the disclosure by Sandvik suggests that the Court has been misled by Mr English. In his witness statement of 12 th March 2007 Mr Rice stated that Mr English and Mr Holmes Taylor had said to him that they wished him to stay with Extec until the end of February, at which point they envisaged that a take-over of Extec would be completed. In his Defence at para 11 Mr Rice pleads that they told him that after the completion of the take-over he would see improvements in the After Sales Department. In para 12b and c of his Defence Mr Rice pleads that the offer of employment that Extec made to him on 5 February 2007 was not a genuine offer, and that Extec had no intention of honouring the contract of employment, but "was merely using the opportunity as a device to tie [Mr Rice] to [Extec] for as long as possible". The Particulars given in support fo this plea are the allegations which I have already considered, namely asking him if he had divulged confidential information, taking away his computer and mobile phone, refusing to accept his resignation, demoting him during the period of his notice while promoting Mr Swale, and in summary making it clear that he was no longer a trusted employee who was allowed to have access to confidential information and customers so that it was pointless to tie him to the terms of this contract.[75]I have already held that this version of what happened cannot be reconciled with the contemporaneous documents and other evidence and that I do not accept it. In fact, as I have found, Extec did trust Mr Rice and took him back, returned the mobile phone used by customers and gave him access to confidential information through Mr Swale's desktop, and were intending to give him access to it through a new laptop. He was not demoted when working on Syspro and he was re-instated when he agreed to stay with Extec.[76]The relevance of the take-over is said to be that it provides a motive for the making of the offer which it is said Extec had no intention of honouring. In evidence Mr English spoke of a management buyout and did not mention Sandvik's interest. Mr English is a shareholder of a company which holds shares in Extec. Mr Butler writes that: "The court will be invited to draw the inference that there is a prima facie case for [Extec] and Mr English to answer as to the timing of the sale and of their knowledge of it.... His evidence was either untruthful or incomplete - either way, it was actively misleading [Mr Rice]".[77]Mr Butler submits that the issue goes to credibility and to the "underlying motives and genuineness of the offer of continued employment made to [Mr Rice] on 25 January and again on 2 nd /3 rd and 4 th February 2007 ... the manner of his continued employment from 5 th February 2007 onwards".[78]In my judgment this application is misconceived. The case advanced by Mr Rice is one of constructive dismissal. He cannot succeed in this case without establishing a breach of contract. Even if Mr English was motivated to offer Mr Rice terms to persuade him to stay with Extec in order to assist in a take-over, that would not tend to show that the offer was not a genuine offer. I have found, for the reasons given above, that it was a genuine offer which Extec performed for the two days that Mr Rice remained at work. There is no substance in Mr Rice's allegations that his computer and mobile phone were taken away to prevent him doing his job, and not returned to him. So there is no relevance to establishing a motive based on a prospective sale to Sandvik. In any event the dates no longer provide any basis for supposing that the theory might be true. The attempt was to keep Mr Rice from January until the end of February. The announcement by Sandvik was made on 24 th April, for an acquisition to be completed some time in the second quarter of 2007. It would have to be supposed that Extec were attempting to keep Mr Rice tied to Extec with no suitable work for a period extending well beyond the end of February. It is not a plausible theory. The suggestion that the evidence of Mr English was untrue or misleading is wholly speculative. I reject it.[79]I record that an explanation has been forwarded to me by Miss Mulcahy in writing, rejecting the allegations that Mr English misled the court. In relation to this issue I am not conducting a trial on paper. I have rejected Mr Butler's submission, and it is right that I should record that, had I accepted that there might be further investigation, then Mr English's position would have been that he denied misleading the court. EMPLOYMENT DURING THE PERIOD OF NOTICE[80]Clause 10.1 is also relevant. It was not suggested that it should not apply during the period of employment. It is referred to in the letters the solicitors wrote to Mr Rice. It reads:
"10.1 During the Employment [Mr Rice] shall not directly or indirectly: (a) be employed, engaged, concerned or interested in any other business or undertaking which competes with any business being carried on by [Extec] or by any Group Company; or (b) engage in any activity which [Extec] reasonably considers may be, or become, harmful to the interests of the [Extec] or of any Group Company or which might reasonably be considered to interfere with the performance of [Mr Rice]'s duties under this agreement"
. THE RESTRICTIVE CONVENANTS[81]The contract of employment includes the following terms:
"1. Definitions... "
Group Company" means together [Extec], its holding company if any, and every company which is for the time being a subsidiary of [Extec] or such holding company and expressions "subsidiary" and "holding company" bear the same meanings as they respectively bear in the Companies Act 1985; "Restricted Area" means England, Scotland, Wales and any other country in which [Extec] or any Group Company carries on or intends to carry on any Restricted Business as at the termination of [Mr Rice]'s employment; "Restricted Business" means the design, production, sale and distribution of mobile screening and crushing equipment and all or any other commercial activities carried on or to be carried on by [Extec] or any Group Company in which [Mr Rice] worked or about which [Mr Rice] knew Confidential Information to a material extent at any time during the final two years of [Mr Rice]'s'employment with the group; "Confidential Information" means all and any information (whether or not recorded in documentary form or on computer disk or tape) of [Extec], any company within [Extecl's group or any of its or their customers, suppliers or agents which [Extec] or the relevant group company regards as confidential and which may include but is not limited to technical, financial and business information or in respect of which it owes an obligation of confidentiality to a third party which is not of [Mr Rice] 's own stock in trade and which is not readily ascertainable to persons not connected with [Extec] either at all or without significant expenditure of labour, skill or money... 11.1 [Mr Rice] shall neither during the Employment (except in the proper performance of his duties) nor at any time (without limit) after the termination of the Employment except in compliance with an order of a competent court: (a) divulge or communicate to any person, company, business, entity or other organisation any Confidential Information; (b) use any Confidential Information for his own purposes or for any purposes other than those of [Extec] or any Group Company; or (c) through any failure to exercise due care and diligence, permit or cause any unauthorised disclosure of any Confidential Information. These restrictions shall cease to apply to any information which shall become available to the public generally otherwise than through any breach by [Mr Rice] of the provisions of this agreement or other default of [Mr Rice]... 14.1 [Mr Rice] will not for a period of 8 months after the termination of the Employment whether as principal or agent, and whether alone or jointly with, or as a director, manager, partner, shareholder, employee or consultant of any other person, directly or indirectly: (a) carry on, or be engaged, concerned or interested in or serve as a director, employee or consultant of any business carried out :within the Restricted Area wholly or partly in competition with any Restricted Business (b) interfere with, tender for, canvass, solicit or endeavour to entice away from [Extec] or from any Group Company the business of any person who at the date of termination of the Employment or during the period of 1 year prior to that date (or if earlier, prior to the date on which [Mr Rice] last carried out duties assigned to him by [Extec]) was, to his knowledge, a customer, client or agent of or who had dealings with [Extec] or with any Group Company and with whom he had personal dealings-in the normal course of his employment at that date or during that, period; (c) interfere with or endeavour to interfere with the continuance of supplies to [Extec] or to any Group Company (or the terms relating to those supplies) by any person, firm or company who at the date of termination of the Employment or during the period of 1 year prior to that date was, to his knowledge, a supplier of any goods or services to [Extec] or to any Group Company and with whom he had personal dealings in the normal course of his employment at that date or during that period; (d) supply any product, carry out or undertake or provide any service similar to those with which he was concerned to a material extent during the period of 1 year prior to the termination of the Employment to or for any person who, at the date of termination of the Employment or during the period of 1 year prior to that date was a customer, client or agent of or was in the habit of dealing with [Extec] or with any Group Company and with whom [Mr Rice] had personal dealings in the normal course of his employment during that period of 1 year; (e) be employed by, or enter into partnership with, employ or attempt to employ or negotiate or arrange the employment or engagement by any other person, of any person who to his knowledge was, at the date of the termination of the Employment, or within 1 year prior to that date had been, an employee employed in a skilled or managerial capacity of [Extec] or any Group Company and with whom he had personal dealings during that period; (f) solicit, interfere with, tender for or endeavour to eritice away from [Extec] or from any Group Company any contract, project or business, or the renewal of any of them, carried on by [Extec] or by any Group Company which is currently in progress at the date of the termination of the Employment or which was in the process of negotiation at that date and in respect of which [Mr Rice] had contact with - any customer, client or agent of or supplier to [Extec] or any Group Company at any time during the period of 1 year prior to the date of termination of the Employment. 14.2 None of the restrictions contained in clause 14.1 shall prohibit any activities by [Mr Rice] which are not in direct or indirect competition with any business being carried on by [Extec] or by any Group Company at the date of the termination of the Employment. 14.3 At no time after the termination of the Employment shall [Mr Rice] directly or indirectly represent himself as being interested in or employed by or in any way connected with [Extec] or any Group Company, other than as a former employee of [Extec]. 14.4 [Mr Rice] agrees that, having regard to all the circumstances and having taken independent legal advice, the restrictions contained in this clause 14 are reasonable and necessary for the protection of [Extec] and the Group Companies and that they do not bear harshly upon him and the parties agree that: (a) each restriction shall be read and construed independently of the other restrictions so that if one or more are found to be void or unenforceable as an unreasonable restraint of trade or for any other reason the remaining restrictions shall not be affected; and (b) if any restriction is found to be void but would be valid and enforceable if some part of it were deleted, that restriction shall apply with such deletion as may be necessary to make it valid and enforceable". CONFIDENTIAL INFORMATION[82]In Thomas v Farr Plc [2007] EWCA Civ 118 Toulson LJ summarised the law as follows:
"27. In Faccenda Chicken Neill LJ, delivering the judgment of the Court of Appeal, said (at 137D) that information can only be protected after the employment has ceased if it can properly be classed as a trade secret or is material which, while not properly to be described as a trade secret, is in all the circumstances of such a highly confidential nature as to require the same protection as a trade secret eo nomine. In that case the court identified four factors that were relevant: the nature of the employment, the nature of the information, the extent to which the employer impressed the information's confidentiality on the employee and the ease with which the information could be isolated from other information that the ex-employee was free to use. But there is no universal formula for determining what is a trade secret or item of equivalent confidentiality. In PSM International PLC v Whitehouse [1992] IRLR 279, 282, Lloyd LJ described it as a question of degree. In Lansing Linde Limited v Kerr Staughton LJ (at 260 A-B) considered that "trade secrets" embrace information used in a trade, restricted in its dissemination, and the disclosure of which would be liable to cause real or significant harm to the party claiming confidentiality. In FSS Travel and Leisure Systems Limited v Johnson Mummery LJ came back to the approach of Cross J in Printers & Finishers v Holloway, observing that later decisions had not improved upon it. In Lancashire Fires Ltd v SA Lyons & Co Ltd Bingham MR (at 18) described the distinction as one which may often on the facts be very hard to draw. 41. In order to establish that the inclusion of a non-competition clause in an employment contract was reasonably necessary for the protection of the employer's interest in confidential information, the first matter which the employer obviously needs to establish is that at the time of the contract the nature of the proposed employment was such as would expose the employee to information of the kind capable of protection beyond the term of the contract (i.e. trade secrets or other information of equivalent confidentiality). The degree of the particularity of the evidence required to establish that matter must inevitably depend on the facts of the case. To say this is to say nothing new. Aldous LJ stated the principle in Scully UK Limited v Lee [1998] IRLR263 at 23: In cases where a restrictive covenant is sought to be enforced, the confidential information must be particularised sufficiently to enable the court to be satisfied that the plaintiff has a legitimate interest to protect. That requires an enquiry as to whether the plaintiff is in possession of confidential information which it is entitled to protect. (See Littlewoods Organisation v Harris [1977] 1 WLR 1472 at 1479F). Sufficient detail must be given to enable that to be decided but no more is necessary. 42. Provided that the employer overcomes that hurdle, it is no argument against a restrictive covenant that it may be very difficult for either the employer or the employee to know where exactly the line may lie between information which remains confidential after the end of the employment and the information which does not. The fact that the distinction can be very hard to draw may support the reasonableness of a non-competition clause. As was observed by Lord Denning MR in Littlewoods Organisation v Harris at 1479 and by Waller LJ in Turner v Commonwealth and British Minerals Limited [2000] IRLR 114 at para 18, it is because there may be serious difficulties in identifying precisely what is or what is not confidential information that a non-competition clause may be the most satisfactory form of restraint, provided that it is reasonable in time and space."
[83]There is no dispute that Mr Rice had confidential information of Extec. Given the importance of his position with Extec, it was inevitable that he should have. It was part of Mr Rice's case that the very limited investigation made of what Richard said he had seen was a matter for comment. Mr Butler's primary submission was that in spite of that, the incident, and the use made of it in the application for interim relief showed that Extec had lost confidence in Mr Rice, and that thereafter they were tying Mr Rice to Extec with a view to protecting Extec's position, not because they wanted him as an employee. I have rejected that case. Mr Butler also submitted that the . incident showed Extec was careless of information that others might have regarded as confidential. It was his case that such an alleged disclosure should have been a serious matter which should have been thoroughly investigated.[84]It is also accepted by Mr Rice that he had extensive customer contact, but his case is that this contact was with customers who had already bought Extec equipment, whether from Extec or from some other source. His dealings were mainly with maintenance engineers.[85]The confidential information of Extec known to Mr Rice included information in the following categories, or contained in the following documents: i) The strategic plan; ii) The Mesh Book; iii) Parts manuals; iv) Machine sales and future plans of customers; v) Sales volumes and activities of customers and dealers; vi) Service schedules and requirements for Extec's machines (Although Mr Rice denied this in his second witness statement); vii) Key customer details and requirements; viii) Key dealer details and requirements; ix) Manufacturing costs; x) Some information on the cost of procuring spare parts; xi) Suppliers and procurement arrangements and terms; xii) Information arising from ongoing relationships with many of Extec's client base, and access to Extec's customer database; xiii) Extec's product development and general strategic direction; xiv) Warranty claims, warranty history and records; xv) Global sales figures, prices, internal costings, sales prices, margin and payments.[86]I accept that much of the information to which Mr Rice had access was of little concern to the work he was responsible for carrying out, and that when he wanted information he would often look for it in his laptop or a document, and so not need to carry it all in his head. He did not know all the information to which he had access. But I find that he did know significant information of these kinds.[87]Mr Butler submits that these descriptions or categories are too vague. But that is the point to which the observations of Toulson U in para 42 of his judgment apply. The difficulty of ascertaining what confidential information an employee has that he is not entitled to use after the termination of his employment is one reason why restrictive covenants and non-competition clauses are reasonably required.[88]Mr Butler submits that the definition of Confidential Information in the contract is subjective, and that an employee cannot know what he is not to disclose. He points to the words "which [Extec] ... regard as confidential". In my judgment the purpose of those words is to exclude from the scope of the clause information which would otherwise be confidential, but which Extec has made clear, expressly or impliedly, that it does not regard as confidential. There was information in the classes which Mr Rice knew which Extec did not in fact regard as confidential. Another point was that the enquiries Extec made following Richard's allegations were so limited as to show that Extec were not concerned to protect their confidential information. DOES ANY BUSINESS OF SPARES UK COMPETE WITH ANY BUSINESS BEING CARRIED ON BY EXTEC?[89]This question is critical to the scope of the restrictions in clause 14.1, because clause 14.2 provides that none of those prohibit any activities which are not in direct or indirect competition with any business being carried on by Extec at the date of the termination of the employment.[90]Mr Butler submits that Spares UK is not in direct or indirect competition with Extec. Mr Rice's case is that Spares UK does not make its own plant and machinery, or supply any, that can be used with Extec's equipment, except in rare cases. There were only two instances in the evidence in which Spares UK supplied equipment for Extec machines, being parts which they bought from Extec. Mr Rice's case is that Spares UK's business is supplying parts for Terex-Pegson and other makes for which Blue Machinery holds distributorship agreements, and that therefore there is no competition.[91]Extec has two answers to that case. First Extec submits that Doppstadt Powerscreen, Pegson and the other manufacturers for which Spares UK distribute are all in competition, and this would be so even if none of their parts were compatible or could be sourced otherwise than from the manufacturer. But Extec go on to say that as a matter of fact Spares UK were employing Mr Rice to sell parts for all brands, including Extec, and not just parts for equipment manufactured by the manufacturers with which it had distributorship agreements.[92]First Miss Mulcahy points to the job description in the offer to Mr Rice dated 23 January 2007 which is set out in para 17 above, which refers to "a customer database for Crusher Spares Parts aimed at all well known brands".[93]Next Miss Mulcahy points to the words at the end of the covering e-mail. Under Mr Savage's signature there is written the following:
"Spares UK PLC - Authorised supplier of genuine spares and parts for Powerscreen - Pegson Crushers - Doppstadt -Backhus - Blue Machinery Spares UK PLC - Leading supplier and manufacturer of spares and parts for plant and equipment used in Waste - Recycling -Construction.... Spares UK PLC - Screens - Mesh - Punch Plate - Finger Decks - Crusher Parts - Rollers - Bearing - Engines -..."
[94]The first paragraph names the companies for whose equipment Spares UK Plc supply genuine spares and parts. The other two paragraphs refer to spares and parts without the word 'genuine' and without limiting the supply by reference to any manufacturers' names.[95]Third Miss Mulcahy points to the letter sent under cover of the e-mail dated 12 February, and erroneously dated 16 February. Part of this is referred to in para 54 above. The letter also includes the following:
"Looking back over the past three weeks, we all had a fantastic weekend, both personally, and, discussing the market opportunities for our products along with the knowledge and information about other crushing and screening products and markets you were bringing to the business "
Everybody is still excited about the role offered to you; Pat and I discussed and agreed that there is a possibility for you to be appointed Sales Director within 12-18 months".[96]Miss Mulcahy submits that what Mr Savage is describing are discussions about the opportunities for Spares UK products and Mr Rice's knowledge and information about other crushing and screening products markets, which includes Extec's. Absent any explanation, that is the natural meaning of the letter. There is no explanation. Mr Savage did not come to tell me what he recalled about the discussions, and Mr Rice . claimed not to recall the discussions. I accept Miss Mulcahy's interpretation.[97]The only material evidence on this point was that of Mr McGeary. He said there was no intention on the part of Spares UK to sell parts for Extec equipment. He referred to the distributorship agreements with other suppliers. But he could offer no explanation for what Mr Savage had written. Spares UK is not a party to these proceedings.[98]I find that the job that was being offered to Mr Rice by the letter of 23 January was a job in which he was to develope the purchasing and establish a customer database for parts for Extec equipment, and that the knowledge and information that he was bringing was knowledge and information about Extec's products and markets. That is the knowledge and information that Mr Rice has. He did not deal on behalf of Extec with products and markets for equipment other than for Extec.[99]These activities would have been in direct competition with the business of Extec which it carried on at the date the termination of Mr Rice's employment. I find that Spares UK was competing with Extec.[100]I would in any event have reached the same conclusion even if I had found that Spares UK were not dealing or proposing to deal in any parts to be supplied for Extec machines. In the publicity material of Spares UK which was shown to me the name of the company is followed by the words "committed to minimising downtime". With equipment of this nature it is obvious that a customer will be influenced in his decision as to which brand to buy, not just by its technical specification and quality, but also by the downtime that he may expect while waiting for spares. Knowledge of the strengths and weaknesses of Extec's spares business would clearly be useful to a distributor of another brand. ARE THE RESTRICTIVE COVENANTS VOID?[101]Mr Butler put the law as follows, and it is not in dispute. Restrictive covenants may be upheld so long as they are designed to protect a legitimate interest and extend no further than is reasonably necessary to protect those interests ('it must afford no more than adequate protection to the benefit of the party in whose favour it is imposed' -Lord Parker in Herbert Morris v. Saxelby [1916] AC 688 @ 707). The ex-employee must be left with the means to earn a living. The policy grounds for such an approach were stated by Irwin J in BCM Group Plc v. Visualmark Limited & Another [2006] EWHC 1831 @ para 39:
'.... If the clause can be shown to be reasonable then such a clause is enforceable. But, of course, any court will approach the question with care. There are 2 relevant policy considerations. Firstly, the fundamental policy that the law should not act in restraint of trade unless that is plainly justified. Secondly ... that these clauses can represent a temptation to employers to include very wide powers of restricting services or restricting activities by employees, agents, former employees or former agents and then use their financial and legal muscle to fight the issue out afterwards, hoping to retain most possible from such a clause. So clearly, any court will approach these clauses with great care.'
[102]Therefore, covenants are only lawful if they genuinely protect against unfair exploitation of the ex-employer's trade secrets or trade connection. It is for the court to decide as a matter of law whether a contract is in restraint of trade and, if so, whether it is reasonable. The test of reasonableness is one of impression (per Glidewell LJ in Rex Stewart Jeffries Parker Ginsberg Limited v. Parker [1988] IRLR 483 @ 486).[103]Much also turns on the meaning of "Restricted Business". Miss Mulcahy points to the fact that that definition is crucial to the restrictions in clause 14.1 (a).[104]Miss Mulcahy submits that the words in the definition "in which [Mr Rice] worked or about which [Mr Rice] knew Confidential Information" govern the whole of the preceding part of the sentence, that is activities carried on, or to be carried on whether by Extec or by any Group Company.[105]Mr Butler submits that the words in the definition "in which [Mr Rice] worked or about which [Mr Rice] knew Confidential Information" govern only activities carried on, or to be carried by any Group Company. The activities of any Group Company are not material in this action, since it is the activities of Extec itself in which Mr Rice participated and about which he knew Confidential Information. If Mr Butler is right, then the Restricted Business extends to business in which Mr Rice did not work and about which he knew no Confidential Information.[106]I have no hesitation in preferring Miss Mulcahy's construction. I see no ambiguity. That is the plain meaning of the definition. Moreover, I can see no reason why a draftsman would have included words of limitation that related only to a Group Company and not to Extec itself.[107]It follows that the restrictions in clause 14.1(a) are to be read as preventing Mr Rice from carrying out the work for which Spares UK offered to employ him. In my judgment, so construed, clause 14(l)(a) genuinely protects against unfair exploitation of Extec's trade secrets and trade connection, and so it is valid and enforceable. CREDIT FOR GARDEN LEAVE[108]Mr Rice does not challenge the validity of clause 3, which requires him to give three months notice and for garden leave. But he does submit that the period of three months should count as the initial period of the restriction of eight months under clause 14.1. That is not what clause 14.1 says. It refers to a period of "8 months after the termination of the employment", and the effect of clause 3 is that the employment terminates at the expiry of the three months notice. So Mr Butler submits that a total period of 8 months, rather than 11 months, is the maximum that the court should allow as reasonable.[109]I do not accept this submission. A total of 11 months is not in my judgment an excessive period. Any period is to some extent arbitrary, and periods of up to 12 months are commonly upheld by the courts.[110]No separate points are taken in relation to the other clauses. In my judgment the restrictive covenants are valid and enforceable.[111]It follows that Extec's claim succeeds, and this is a case where an injunction is appropriate.

Cited in 1 later judgment