Extract
Employee Competition: Recent Cases.
INTRODUCTION
1. The topics covered in this paper are considered in detail in the book Employee Competition: Covenants, Confidentiality, and Garden Leave.1 The book examines the law and practice relating to competition by employees, directors, partners and others. This paper examines recent key cases in this area. DUTIES2 2. Two recent cases consider the nature and extent of an employee's contractual and fiduciary duties of loyalty. Cook v MSHK Ltd [2009] IRLR 838 3. What can an employee legitimately do to prepare for future competition whilst remaining in his current employment? This question has been considered in a number of cases over the years, some of the more important of which include: Balston Ltd v Headline Filters Ltd [1990] FSR 385 (Falconer J); Lancashire Fires Ltd v S A Lyons & Co Ltd [1997] IRLR 113 (CA); CMS Dolphin v Simonet [2001] 2 BCLC 84 (Lawrence Collins J); British Midland Tool Ltd v Midland International Tooling Ltd [2003] 2 BCLC 523 (Hart J); Item Software (UK) Ltd v Fassihi [2005] ICR 450, [2004] IRLR 928 (CA); Shepherds Investments Ltd v Walters[2007] IRLR 110 (Etherton J); Helmet Integrated Systems Ltd v Tunnard [2007] IRLR 126 (CA); Kynixa Ltd v Hynes [2008] EWHC 1495 (QB) (Wyn Williams J); Foster Bryant Surveying Ltd v Bryant [2007] IRLR 425 (CA). These recent cases demonstrate, in the words of the editor of the IRLR, "that this has become a fluid area of the law". 4. The issue arose in Cook v MSHK, although the Court of Appeal was not required to consider it in any depth on a summary judgment application. 5. Mr Cook resigned from his senior position at the Ministry of Sound in order to join another record label, Warner Music UK Ltd. In proceedings commenced by MSHK, it was alleged, amongst other things, that Mr Cook failed to inform the claimants that he had a settled intention to compete with them. 6. For Mr Cook, it was argued (para 66) that such a duty was non-existent, reliance being placed on Searle v Celltech [1982] FSR 92; Framlington Group v Anderson [1995] 1 BCLC 475; Saatchi & Saatchi v Saatchi 13 Feb 1995, unrep; and Helmet v Tunnard (above). 7. For MSHK, it was submitted (para 69) that, as a fiduciary, Mr Cook was obliged to ensure that his self-interest and duty to MSHK did not come into conflict; that he was faced with such a conflict as soon as he formed a settled intention to compete with them at Warner; and that he could only resolve it by a prompt resignation: British Midland Tool (above); and Shepherds Investments v Walter...See the full content of this document
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