Teal blue header image

Springboard Injunctions: Can you stop former employees competing against you?

In Aquinas Education Ltd v Miller & Ors [2018] EWHC 404 (QB), the Court held that a springboard injunction that prevented two former employees from setting up a competing business should be lifted. 

The two had enjoyed a head start in launching their business using confidential information and the effects of that head start were no longer felt.

Facts of the case

Miller and Pembleton (the Defendants) were employees of Aquinas Education Ltd (Aquinas), a recruitment agency specialising in placing teachers in schools. In December 2017 the Defendants gave notice to terminate their employment.

Prior to their resignation, the Defendants set up a competing business, Link3, and obtained information from Aquinas’ IT systems, including candidates' CVs and contact details for both candidates and schools for Link3’s use. The Defendants, trading as Link3, then approached candidates and tried (with some success) to place them in schools.

When Aquinas discovered this activity, it started proceedings against the Defendants alleging, amongst other things, that they had wrongfully diverted business from Aquinas to Link3. A temporary injunction was granted pending further consideration by the Court at a later date.  At the later hearing, the Court was asked to decide whether it should allow either or both of the two types of injunction to continue:

  1. a prohibitory injunction to prevent the Defendants from using Aquinas’ confidential information; and
  2. a “springboard” injunction to prevent the Defendants from unlawfully benefiting from the head start they had gained by using that confidential information.

The Defendants agreed to the prohibitory injunction but challenged the Claimant's entitlement to the continuation of the springboard injunction.

Springboard injunctions

The purpose of a springboard injunction is to restore the parties to the competitive position in which the parties would have been, had the misconduct had not occurred (QBE Management Services (UK) Ltd v Dymoke [2012] EWHC 80 (QB)). A springboard injunction is therefore limited in duration. 

In the Aquinas case, the Court was asked to consider whether the existing springboard injunction in place, preventing the Defendants from doing business with teachers and schools listed on Aquinas' contacts should come to an end.

In considering this, the Court referred to the principles summarised in QBE v Dymoke. These include the following:

  • Where a person has used confidential information to their own advantage as a result of unlawful acts, an injunction may be granted which would restrain the unlawful acts and prevent the wrongdoer from gaining an unfair advantage or head start.
  • A springboard injunction is not confined to cases of breach of confidence and may extend to cases of breach of contractual and fiduciary duties.
  • A springboard injunction must be sought and obtained at a time when the unlawful advantage is still being enjoyed by the wrongdoer.
  • The Claimant will need to provide evidence on the nature and period of the competitive advantage.

Decision

It was clear to the Court that the Defendants had breached the confidentiality clause in their employment contracts, which meant that some form of springboard injunction was appropriate. However, the Court held that the Defendants’ head start had come to an end already, for the following reasons:

  • It considered that the head start was minimal (approximately six weeks), given that the Defendants had only made a profit of £8,806.
  • Aquinas’ did not provide factual evidence or examples of how long it would take to set up a competing business.
  • Furthermore, the injunction currently in place had put an immediate halt to the Defendants’ activities and so they had lost all momentum in generating any further business.
  • Finally, there was nothing in the Defendants’ employment contracts that prevented them from competing once their notice period had expired.

Practice Points

Two key principles arise from the case:

  • Employee Contracts: This scenario could have been avoided if the employees’ contracts had included restrictive covenants, preventing them from competing for a certain period of time post-termination. 

    You should ensure that contracts for key employees cover this point.  In the absence of such provisions, a springboard injunction is a useful tool to prevent competition, but this case demonstrates that it can be difficult to obtain. 

  • Information Security: The case also serves as a useful reminder that businesses should keep a firm control on information security.

    Consider putting restrictions on access to reduce the opportunity for data theft or breaches (bearing also in mind the new General Data Protection Regulation). It is also noted that some of the information was acquired through requests to a third party IT provider.  Such providers should refer requests for access or unusual requests to an appropriate level of management for approval.

Contributor: Jake Campbell

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at May 2018. Specific advice should be sought for specific cases. For more information see our terms & conditions.




Insights & events View all