Prescott v Dunwoody Sports Marketing

Prescott v Dunwoody Sports Marketing

The company could not enforce the restrictive covenant against solicitation of business (clause 5.1.1) after the partnership ceased to exist, as the covenant was limited to relationships with the partnership's customers, which ended upon dissolution. The company was entitled to enforce the covenant against enticement of employees (clause 5.1.2) and to claim damages for loss caused by enticement of Ms Rutter prior to the transfer. Damages for the period after the transfer required further enquiry as to entitlement and quantum.

Parties
Appellant/defendant: Mr Nicholas Prescott; Respondent/claimant: Dunwoody Sports Marketing
Jurisdiction
England and Wales
Judgment Date
17 May 2007
Procedural Posture
Civil Appeal / Appeal From High Court Judgment
Outcome
Appeal allowed in part
Legal Topics
Restrictive Covenants, Assignment of Contractual Rights, Substitution of Parties, Damages for Breach of Covenant
Contract Law Partnership Law Restrictive Covenants Assignment of Contractual Rights Substitution of Parties Damages for Breach of Covenant

Case Brief

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Parties

Mr Nicholas Prescott

Appellant/defendant

Dunwoody Sports Marketing

Respondent/claimant

Procedural Posture

Civil Appeal / Appeal From High Court Judgment

Legal Issues

  1. 1 Whether the benefit of restrictive covenants in a partnership agreement passed to a company upon transfer of the partnership business and assets
  2. 2 Whether the company could enforce restrictive covenants against a former partner after dissolution of the partnership
  3. 3 Whether damages for enticement of an employee post-transfer were properly awarded to the company

Ratio Decidendi

The company could not enforce the restrictive covenant against solicitation of business (clause 5.1.1) after the partnership ceased to exist, as the covenant was limited to relationships with the partnership's customers, which ended upon dissolution. The company was entitled to enforce the covenant against enticement of employees (clause 5.1.2) and to claim damages for loss caused by enticement of Ms Rutter prior to the transfer. Damages for the period after the transfer required further enquiry as to entitlement and quantum.

Court Disposition

Appeal allowed in part

Orders

  • Injunction enforcing clause 5.1.1 discharged
  • Judgment for damages after August 1, 2005 (£27,160) discharged