Merlin Financial Consultants Ltd v Cooper [2014] EWHC 1196 (QB) (16 April 2014)

Merlin Financial Consultants Ltd v Cooper [2014] EWHC 1196 (QB) (16 April 2014)

Clause 7 of the Goodwill Agreement was a reasonable and enforceable restraint, negotiated between parties of equal bargaining power in the context of a business sale of goodwill. There was no fraudulent misrepresentation, the absence of Schedule 1 did not render the agreement unenforceable, and there was valid consideration. Merlin had a legitimate interest to protect, and the restrictions imposed for one year post-employment were reasonable. Damages were awarded on a reduced basis to reflect the likelihood that not all clients would have remained with Merlin even if Mr Cooper had complied.

Citation
[2014] EWHC 1196
Parties
Claimant: Merlin Financial Consultants Limited; Defendant/part 20 Claimant: Jonathan Cooper
Jurisdiction
England and Wales
Judgment Date
16 April 2014
Procedural Posture
Civil (contract/employment) / High Court Trial, Final Judgment
Outcome
Judgment for the Claimant, with damages reduced as per court's findings; Defendant's counterclaim allowed in part and set off against damages.
Legal Topics
Enforceability of Restrictive Covenants, Restraint of Trade, Misrepresentation, Goodwill Agreements, Calculation of Damages, Mitigation of Loss
Contract Law Employment Law Restrictive Covenants Enforceability of Restrictive Covenants Restraint of Trade Misrepresentation Goodwill Agreements Calculation of Damages +1 more

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Parties

Merlin Financial Consultants Limited

Claimant

Jonathan Cooper

Defendant/part 20 Claimant

Procedural Posture

Civil (contract/employment) / High Court Trial, Final Judgment

Legal Issues

  1. 1 Whether clause 7 of the Goodwill Agreement is vitiated by fraudulent misrepresentation
  2. 2 Whether the Goodwill Agreement is unenforceable due to absence of Schedule 1 or lack of consideration
  3. 3 Whether clause 7 is an unreasonable restraint of trade

Ratio Decidendi

Clause 7 of the Goodwill Agreement was a reasonable and enforceable restraint, negotiated between parties of equal bargaining power in the context of a business sale of goodwill. There was no fraudulent misrepresentation, the absence of Schedule 1 did not render the agreement unenforceable, and there was valid consideration. Merlin had a legitimate interest to protect, and the restrictions imposed for one year post-employment were reasonable. Damages were awarded on a reduced basis to reflect the likelihood that not all clients would have remained with Merlin even if Mr Cooper had complied.

Court Disposition

Judgment for the Claimant, with damages reduced as per court's findings; Defendant's counterclaim allowed in part and set off against damages.

Orders

  • Parties to recalculate damages based on 70% client retention in year 1 and 40% in year 2, starting from £204,849.00 recurring income less specified deductions.
  • Set-off of £19,788.22 due to Defendant against Claimant's damages award.