Merlin Financial Consultants Ltd v Cooper
2014
QUEEN’S BENCH DIVISION
United Kingdom
CORAM
- HIS HONOUR JUDGE PETER HUGHES QC
Areas of Law
- Contract Law
- Employment Law
2014
QUEEN’S BENCH DIVISION
United Kingdom
CORAM
AI Generated Summary
The case revolved around Jonathan Cooper's departure from Merlin Financial Consultants Ltd and the enforceability of restrictive covenants in two agreements he signed. Merlin claimed Cooper breached these covenants, seeking damages. Key legal issues included whether clause 7 was vitiated by fraudulent misrepresentation, if the agreements were incomplete or unenforceable, and whether the covenants were reasonable restraints. The court found in favor of Merlin, validating the covenants as reasonable and enforceable, and calculated the damages based on projected client retention.
Judgment
HHJ Peter Hughes QC :
Introduction
This litigation concerns the interpretation and enforceability of two agreements relating to the Defendant’s employment by the Claimant as a financial adviser. The first is described as “The Goodwill Agreement”, and the second as “The Contract of Employment”. Both contained clauses designed to place restrictions on the Defendant both during and after the termination of his employment.
A good financial adviser is likely to develop a close relationship of trust and confidence with the clients he advises. Both he and his employers depend for their income on the commissions and fees that he generates. If he sets up his own business or moves to a different firm, the clients may choose to follow him. Hence, the concern of an employer to seek to protect its financial interest against that eventuality.
Merlin Financial Consultants Ltd. (“Merlin”), as the name implies, carry on business providing financial and investment advice to the general public. Their services are regulated by the Financial Conduct Authority (formerly the Financial Services Authority). Jonathan Cooper was employed by them from April 2008 until November 2012, when he left to set up his own business with another of the Claimant’s former employees.
Mr Cooper has over 23 years experience in the financial services industry. Prior to joining Merlin, he had worked over the years for a number of similar companies and built up a significant client base. He is dyslexic. Merlin knew this in engaging him and was aware that he would need support in producing reports etc.
In this case, the Claimant claims damages, put at £211,460.13, for breach of the restrictions in the two agreements referred to. The Defendant denies liability and counterclaims for outstanding remuneration.
The making of the Goodwill Agreement
One of the attractions to Merlin of employing Mr Cooper was his client base. At a meeting on the 11 th December 2007, there was discussion about making him a capital payment as an incentive to join the firm. On the 18 th December 2007, Merlin’s managing director, Peter Biggin, wrote to him to say that in principle they were prepared to pay him a capital sum for the goodwill arising from the transfer of his clients’ funds.
Mr. Cooper e-mailed Mr Biggin on the 9 th January 2008 accepting Merlin’s offer of employment with a view to starting in April.
The Goodwill Agreement, in draft, was sent for Mr Cooper’s approval on the 14 th March. He signed a