Enforceability of Non-Solicitation Restrictive Covenants

The Mercantile Court has held that a six month non-solicitation post-termination restrictive covenant was enforceable, despite it not being limited to customers with whom a director had contact in the 12 months preceding termination (Safetynet Security Ltd v Coppage and another [2012] EWHC B11 (Mercantile)).

Mr Coppage was a director of Safetynet Security Limited and ‘the face' of the company.  His employment contract contained a 6 month post-termination covenant preventing him from soliciting any individual or organisation who had been a customer of Safetynet during his employment.  Mr Coppage resigned and on the following day, Freedom Security Solutions Limited was incorporated as a new company by an apprentice electrician.  Five of Safetynet's clients moved their business to Freedom Security Solutions and Safetynet claimed that Mr Coppage was the brains behind Freedom Security Solutions and that he had breached his post-termination restrictive covenant by poaching its clients.  Mr Coppage claimed that the restrictive covenant was unenforceable because it was too widely drafted.

The Mercantile Court held that the restrictive covenant was enforceable and awarded damages of £50,000 to Safetynet.  A post-termination restrictive covenant will be void for restraint of trade if the protection sought goes further than is reasonably necessary to protect a legitimate business interest.  Ordinarily, a non-solicitation covenant should be limited to those customers with whom an employee or director had contact for a specific period before termination.  In this case, however, Mr Coppage was such a key figure in the Safetynet business, and the business was sufficiently small, that any such limitation would not have afforded the company with sufficient protection.  This case serves as a reminder that the enforceability of post-termination covenants depends not only on careful drafting but on a thorough analysis of the context in which they operate.