One Step (Support) Ltd v Morris -Garner & Anor
2014
QUEEN’S BENCH DIVISION
UK
CORAM
- MR JUSTICE PHILLIPS
Areas of Law
- Contract Law
- Employment Law
- Corporate Law
- Evidence Law
2014
QUEEN’S BENCH DIVISION
UK
CORAM
AI Generated Summary
The case involved One Step seeking remedies for breaches of restrictive covenants by its former directors, who had established a competing business, Positive Living. The court held that the defendants breached both non-compete and non-solicitation covenants, and that the second defendant’s restrictive covenants were enforceable. The court found that the defendants’ services competed with One Step’s. Ordinary compensatory damages were deemed unsatisfactory, leading to the consideration of Wrotham Park damages.
Judgment
Mr Justice Phillips :
Introduction
Until 20 December 2006 the first defendant was a director and the owner of one-half of the issued share capital of the claimant (“One Step”), a company in the business of providing “supported living” services to children leaving care and vulnerable adults. One Step supported service users referred from local authorities mainly in the West London and the Thames Valley areas. It had at least considered expansion into the Midlands.
On 20 December 2006 the first defendant sold her shareholding in One Step for £3,150,000, resigned as a director and entered into a deed with (amongst others) One Step whereby she agreed not to compete with or solicit clients or customers of One Step for a period of three years from the date of the Deed. The second defendant, the first defendant’s civil partner, agreed to the termination of her employment by One Step and entered into a similar agreement not to compete with or solicit clients or customers of the claimant for the same three year period.
Unknown to One Step, the first and second defendants had already, the previous July, incorporated a company named Positive Living Limited (“Positive Living”), the first defendant owning 51% of its issued share capital, the second defendant owning the balance of 49%. In August 2007 Positive Living commenced trading. Part of its business was running a residential care home for six residents, but the main part involved providing rented accommodation to vulnerable adults and associated support and care services, trading in West London, the Thames Valley and the West Midlands. In relation to the former two areas, Positive Living dealt with several of the local authorities who had provided business to One Step. Positive Living’s business was successful. The company was sold by the defendants in September 2010 for £12,823,205.
In these proceedings One Step seeks remedies for what it alleges were blatant breaches by the defendants of their restrictive covenants. One Step contends that Positive Living was clearly set up to and did compete with One Step and solicited One Step’s local authority clients for business. One Step further alleges that the defendants used confidential information belonging to One Step, induced each other to breach the covenants and conspired with each other to injure One Step by unlawful means.
The defendants contend that the similarities between the two businesses were merely superficial and that, properly analysed, P