PAT Systems v Neilly [2012] EWHC 2609 (QB) (21 June 2012)

PAT Systems v Neilly [2012] EWHC 2609 (QB) (21 June 2012)

Clause 8.1 was unenforceable because it was an unreasonable restraint of trade at the time of the original contract in 2000, and the 2005 variation did not amount to an explicit re-agreement of the covenant. Therefore, the claimant could not enforce the non-compete clause, and its summary dismissal of the defendant was wrongful.

Citation
[2012] EWHC 2609 (QB)
Parties
Claimant: PAT SYSTEMS; Defendant: Graeme Neilly
Jurisdiction
England and Wales
Judgment Date
21 June 2012
Procedural Posture
Employment Contract Dispute (restrictive Covenant Enforcement and Counterclaim) / Trial of Liability Issues
Outcome
Claim dismissed; counterclaim allowed
Legal Topics
Restrictive Covenants, Restraint of Trade, Wrongful Dismissal, Non Compete Clauses, Variation of Contract, Summary Dismissal
Employment Law Contract Law Restrictive Covenants Restraint of Trade Wrongful Dismissal Non Compete Clauses Variation of Contract Summary Dismissal

Case Brief

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Parties

PAT SYSTEMS

Claimant

Graeme Neilly

Defendant

Procedural Posture

Employment Contract Dispute (restrictive Covenant Enforcement and Counterclaim) / Trial of Liability Issues

Legal Issues

  1. 1 Whether clause 8.1 (non-compete) of the employment contract is enforceable against the defendant
  2. 2 Whether the reasonableness of the restrictive covenant is assessed at the date of original contract or variation
  3. 3 Whether the claimant's summary dismissal of the defendant was wrongful

Ratio Decidendi

Clause 8.1 was unenforceable because it was an unreasonable restraint of trade at the time of the original contract in 2000, and the 2005 variation did not amount to an explicit re-agreement of the covenant. Therefore, the claimant could not enforce the non-compete clause, and its summary dismissal of the defendant was wrongful.

Court Disposition

Claim dismissed; counterclaim allowed

Orders

  • Assessment of damages on the counterclaim referred to a Master if not agreed
  • Undertaking as to non-disclosure of confidential information to be recorded in the order