On two occasions recently where Claimants have successfully obtained interim injunctive relief against departing employees allegedly in breach of post termination restrictive covenants, settlement by mediation has been achieved within a fortnight.
And well before any return date or commencement of the directions for speedy trial had kicked in.
It may be observed that such cases rarely go to trial anyway. True, but the legal costs both in seeking as well in complying with orders made or undertakings given together with later timetable directions can be significant and often out of all proportion with the issues and quantum at stake.
In each case both started in the High Court the prospects of the Defendants in defeating the interim applications, to be decided on American Cyanamid principles, were limited to say the least and the costs of going to trial both legal and in terms of opportunity would be significant.
The first case involved a single employee defendant with access to his employer’s confidential information seeking to commence employment with a competitor in breach of covenant. The first hearing was held on the 13th day of the month with a return date of a month later but with a direction that the parties in the meantime engage in mediation within just 7 days, by the 20th of the same month. The mediation produced a resolution of the whole action to the satisfaction of both parties.
The second case involved 5 employees within the same team giving contractual notice on the same day to their employer. The employer with due cause suspected that at least one of the employees had used confidential information by contacting clients during the notice period with a view to the team dealing with those clients post termination both in breach of the employee’s continuing duty of fidelity whilst still employed and in breach of post termination restrictive covenants thereafter.
The first hearing was held on the 19th day of the month with undertakings given and a directions timetable for a speedy trial but again with a direction that the parties in the meantime engage in mediation within just 14 days by the 3rd day of the next month. The mediation once more produced a resolution of the whole action to the satisfaction of both parties.
The CA’s November 2023 decision in Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416 that the Court had power stay proceedings for, or order, the parties to engage in a non-court-based dispute resolution process is likely to increase the opportunity for early settlement by mediation to the benefit of parties in terms of costs both legal and in terms of commercial opportunity.