Injunctions: A matter of [equitable] principle

1st June 2015

In a case that will be of interest to employers, the Court of Appeal has held that a global insurance broker was entitled to interim injunctive relief to prevent a competitor from taking steps to attract its staff. Willis v Jardine Lloyd Thompson [1] highlights the factors a court will weigh when deciding whether to grant an injunction.

Injunctions: Equitable Principles

An injunction is an equitable remedy. It is a remedy that is underpinned by fundamental fairness and awarded by the court at its discretion, as opposed to a legal remedy that is available as of right to a successful claimant.

When exercising its discretion, the court will apply certain key principles of equity, including:

• the equitable maxim of clean hands. That is, anyone looking to equity for a remedy must be free of wrong doing him/herself;
• equity will not suffer a wrong to be without a remedy. Where fairness requires, a remedy will be provided even if one does not exist by right at law; and
• the doctrine of ‘laches’ (delay). Delay can cause unfairness in itself and so an equitable claim may be barred if it is not brought within a timely manner.

The American Cyanamid [2] guidelines are also used by the courts when deciding whether to exercise discretion to grant an injunction. The guidelines consider:

• whether there is a serious, arguable case to be tried;
• whether damages would be adequate as a remedy;
• the “balance of convenience” (i.e. which party would suffer the greatest prejudice were an injunction to be granted or not to be granted); and
• whether the status quo should be maintained.

The court’s wide discretion in relation to the application of the American Cyanamid guidelines and the award of any injunction means that appeals are not frequent. In this case, however, the Court of Appeal stepped in to grant an injunction where the lower court refused.

Employment/Commercial Context

The Court of Appeal held that Willis, a firm of global insurance brokers, was entitled to interim injunctive relief to prevent a competitor (JLT) from poaching its remaining staff after more than 20 employees (including almost all senior staff) within a department had left to work with JLT.

At first instance, although the judge recognised that there was a serious question to be tried, he went on to assume that the loss of so many senior staff meant that the damage had already been done to Willis and that there was therefore no point in granting the injunction. The judge did not consider the balance of convenience, nor the equitable question of whether JLT would receive any commercial advantage from the alleged wrong-doing if an injunction were not granted.

The Court of Appeal fully applied the American Cyanamid guidelines and general equitable maxims and decided that an injunction should be granted. No proper inference could be drawn that there was no real risk of further attempts by JLT to recruit Willis staff, particularly as there was a pattern of junior staff leaving to follow senior employees. Regardless of damage done to date, it was important for Willis to have an opportunity to retain staff to rebuild its business. The global nature of the business was, to a certain extent, irrelevant: Willis staff in London and the US needed to be protected. Although evidence of serious wrong doing would be important to justify imposition of an injunction over a long period, here the injunction sought was only pending a return date. Overall, the balance of convenience decisively favoured Willis.

WM Comment

As well as being a useful example of a protective tactic that may be available to an employer wishing to mitigate the damage that can be caused by team moves, this case serves as a good reminder of the principles and guidelines that underpin all applications for injunctions and other equitable remedies.

Remember: act fast, come clean and equity should ensure fundamental fairness.

___________________

[1] Willis Limited (1) and Willis Group Limited (2) v Jardine Lloyd Thompson Group plc (1), JLT Speciality Limited (2) and David Gordon (3) [2015] AC 9301548, 22 April 2015
[2] American Cyanamid Co (No 1) v Ethicon Ltd [1975] UKHL 1