The recent High Court case of QBE Management Services (UK) Ltd v Dymoke and Others provides a useful reminder of the legal issues relevant to team moves.  In particular it is significant due to the granting of a Springboard injunction as final relief.  A Springboard injunction is an equitable remedy which effectively imposes a restraint of trade on a defendant in circumstances where there is no express restraint of trade provision, e.g. non-compete or non-solicitation/ dealing clause.  The aim of the injunction is to prevent the defendant from benefiting from an unfair advantage obtained as a result of a breach of duty. 

The facts of the case relate to three employees of QBE's marine insurance business who planned to set up a venture in direct competition with QBE and to move across QBE's underwriting and claims team, together with their books and clients and data.  The court held that both during their employment and whilst on garden leave following their resignations from QBE, the employees had solicited QBE's employees, misused QBE's materials and confidential information, solicited QBE's marine broker customers and failed to disclose any of these activities to relevant members of QBE's management thereby also involving a breach of fiduciary duty.   It also held that PRO, the new venture, played a full and active role in supporting these unlawful activities, both logistically and financially.

Despite the former employees denying any 'significant head start' and arguing there was no causation for any of the breaches, QBE was granted a Springboard injunction to prevent the former employees from gaining an unfair competitive advantage over QBE as a result of their unlawful activities. QBE was also awarded over £300,000 in compensation for loss and damage.

The non-compete covenants were however held to be unenforceable against the other employees who had left QBE and gone to work for the defendants, as QBE had "not discharged its burden of proof and justified their enforcement." 

This case is interesting in that a Springboard injunction was granted as final remedy rather than interim relief. It also useful due to the summary it provides of the legal principles relevant to team moves, including good faith and fidelity, fiduciary duty, inducing breach of contract, conspiracy to injure, duty of confidence, non-compete covenants and Springboard injunctions. 

Organisations for which team moves are an issue should ensure that they are aware of the legal issues/ risks involved.  The employment team at CMS Cameron McKenna has created the following flyer (please click here) to highlight the key considerations relevant to this area.  If you would like to discuss any of the issues relating to this case or what your organisation should do to prevent a competitor poaching a team, or if it is thinking about acquiring a team from a competitor, please contact a member of the team whose contact details are set out below.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 13/02/2012.