(1) Willis Limited (2) Willis Group Limited v (1) Jardine Lloyd Thompson Group plc (2) JLT Speciality Limited (3) David Gordon [2015] AC 9301548
English Court of Appeal, 22 April 2015
The Court of Appeal was asked to review a refusal to grant interim injunctive relief to a broker who had lost a large number of senior employees to a competitor.
Background
The proceedings arose following the departure of almost all of Willis' senior management team within its fine art, jewellery and special risk division London, who had all left to join JLT Speciality Limited (referred to collectively as "JLT" in this note). Willis considered JLT to be a direct competitor in the sector, and lost 30 of its senior employees over a short period to JLT, including its former divisional global manager.
JLT denied any wrongdoing and claimed that it had individually recruited all of Willis' senior employees without inducing anyone else to breach any obligations owed to Willis.
Following the departure of Willis' senior employees, Willis was left with 30 junior employees in its fine art, jewellery and special risk division. Given the sudden departure of a significant proportion of its staff, Willis considered that there was serious risk that it would also lose its junior employees to JLT. Willis applied to the court for an interim injunction preventing JLT taking steps to recruit any more of its staff.
Refusal to grant interim injunction at first instance
At first instance, it was held that there was a serious issue to be tried (based on prima facie evidence) as to whether there had been a relevant breach of contract. However, the first instance Court concluded that, pending full determination of the issues at trial, there was no point in granting an interim injunction in the meantime. The Judge's reasoning centred on the fact that he had concluded that "the heart had been torn out of [Willis'] business", or, in other words, the damage had already been done and an interim injunction could not remedy this. It was also considered that there was no obvious attraction of the remaining junior employees to JLT. Finally, as Willis' US employees were employed by other subsidiaries of Willis (rather than the Willis UK companies involved in the proceedings) that those subsidiaries would have to seek protection in their own right.
It is notable that the Judge does not appear to have considered the balance of convenience in determining the initial application. The balance of convenience test is relevant to all restrictive covenants cases in which interim injunctive relief is sought. The balance of convenience test involves the court considering which party would be most prejudiced if the court decided to grant an interim injunction order (or decided not to grant one) pending the determination of the issues at trial, having regard to all the circumstances of the case. This generally involves weighing the potential damage to the party who considers there has been a breach of contract of such alleged breaches being permitted to continue until trial (i.e. the potential damage to Willis of JLT taking steps to seek to recruit its remaining employees) against the prejudice to the other party who claims there has been no unlawful action being prevented from taking certain actions pending outcome of the trial (i.e. the prejudice to JLT of not being able to recruit Willis employees in the meantime).
Court of Appeal
A Judge determining an interim injunction application at first instance has a generous ambit of discretion in deciding whether or not to grant the application and successful appeals against the decision are therefore relatively unusual, as the Court of Appeal should only interfere where the Judge has exceeded the wide ambit of this discretion.
However, in this case the Court of Appeal concluded that the inference that had been drawn by the Judge that there was no real risk to Willis of not granting the injunction was incorrect. As Willis had argued, it was important from its viewpoint that it retained its remaining staff in order to allow it an opportunity to repair its business, given the damage and destruction caused by the departure of its senior staff. There had in fact been a pattern of some of its remaining junior staff leaving to follow the senior employees and that there was therefore a realistic risk of this happening again.
The first instance Judge had also been incorrect to conclude that Willis' US employees were not of interest to JLT, as there was evidence that both employees in London and in the US were of interest to JLT and should be protected. The Court had also failed to deal with the question of whether or not JLT would continue to receive a benefit from any alleged wrongdoing pending the final outcome at trial (i.e. whether or not if they were allowed to continue to recruit Willis' employees, whether they would continue to receive a commercial advantage from their alleged wrongdoing in the meantime).
The Court of Appeal agreed with JLT's position that there should generally be evidence of serious wrongdoing to justify imposing an interim injunction which could have a prejudicial impact on a respondent party who maintained that there had been no breach of any obligation. However, this would be a more crucial point for a respondent party if a long period of injunction had been requested, whereas in this case the period of injunction was relatively short and would only be in place until the return date for the next stage of proceedings.
Overall, the Court of Appeal was satisfied that the balance of convenience decisively favoured Willis and that an interim injunction should be granted. The case is a useful example of the protection that may be available to former employers who have been the victim of team moves, even prior to final determination as to whether there has been any wrongdoing on the part of the new employer.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
