The High Court has dismissed an application for an interim business protection injunction that would have prevented a sub-contractor from carrying out work for any former client of the main contractor.
Oliver Lawrence successfully represented the defendant grounds maintenance contractor in the Technology and Construction Court, resisting an application brought by a national provider of grounds maintenance services.
The claimant sought to enforce a restrictive covenant following the termination of the parties’ commercial relationship. If granted, the injunction would have prevented the defendant from providing services to any of the claimant’s clients, placing almost £1 million of business at risk.
The application raised a number of issues commonly encountered in business protection litigation, including the enforceability of restrictive covenants in a business-to-business context, the adequacy of damages as a remedy, and the effect of delay in seeking injunctive relief.
The Court found that the restrictive covenant was likely to be unenforceable. In reaching that conclusion, the Court attached significance to the marked disparity in bargaining power between the parties, finding that their relationship bore similarities to an employer-employee relationship, where the courts are more willing to scrutinise restrictive covenants as restraints of trade.
The Court also found that the claimant had delayed unreasonably in seeking injunctive relief. The case provides a timely reminder for those involved in business protection disputes that applications for interim injunctions require real urgency. Delay in commencing proceedings, even where accompanied by extensive pre-action correspondence, is often fatal to attempts to restrain competitive activity.
