Court of Appeal maintains interim springboard injunction in team moves case
15 March 2019
Lewis Silkin has been successful in the Court of Appeal in resisting a challenge to the appropriateness of a springboard injunction secured in the High Court late last year. The injunction relates to ongoing legal proceedings concerning a team move and prevents a number of our client Secarma’s former employees and their new employers from competing and otherwise acting unlawfully.
The Court of Appeal judgment is a helpful reminder of the applicable legal tests in securing an interim injunction. It also identifies a number of practical factors that may influence the granting of discretionary remedies in the context of a team move.
In late 2018, Secarma, a cyber-security company, started legal proceedings against former employees and their new employer (Xcina) claiming that the defendants had conspired unlawfully to orchestrate a team move by poaching Secarma’s employees for the purposes of setting up a competing business.
Secarma applied to the High Court for an interim springboard injunction. “Springboard” relief is a discretionary remedy intended to cancel out the unfair advantage which a party may have gained as a result of its unlawful activity; for example, by misusing confidential information or breaching restrictive covenants. You can read more about these issues in our guide here.
Springboard injunction granted at first instance
In November 2018, Lewis Silkin was successful in obtaining an interim springboard injunction before the High Court on Secarma’s behalf, to remain in place until the start of a trial (due to begin in April 2019). Broadly, the injunction prevents the defendants from poaching Secarma employees, providing certain cyber-security services and from engaging with certain clients of Secarma.
Legal principles on appeal
In considering the appropriateness of the injunction, the Court of Appeal adopted the stringent test set out in the case of Lansing Linde v Kerr and took account of the perceived strength of each party’s case and the length of time for which any unfair advantage derived from the defendants’ activities would be likely to continue.
Merits assessment on appeal
The Court of Appeal noted that there was some lack of clarity in the original High Court judgment as to whether or not the correct legal tests had been applied at first instance. However, with the Master of the Rolls giving the leading judgment, the Court of Appeal decided that it was nonetheless clear from all the evidence that there is strong case against the defendants. Notably, the evening before the start of the appeal hearing, the defendants’ solicitors explained that certain matters had come to light. According to the Court of Appeal, this made Secarma’s claim “even stronger” and demonstrated that in some respects the defendants’ witness statements had been “seriously misleading”.
Success for Secarma
The Court of Appeal rejected the defendants’ argument that the interim injunction was merely punitive. Instead, the Court of Appeal found that the interim injunction was necessary to hold the position between the parties so that the defendants could not gain any further unfair competitive advantage before detailed consideration of the matter at trial.
On that basis the Court of Appeal reached a unanimous decision to maintain the interim springboard injunction, subject to minor modifications.
This decision demonstrates that the court may consider it appropriate to grant a springboard injunction to neutralise an unfair advantage secured by employees as a result of unlawful activity - even where employees are not subject to post-termination restrictions.
However, the case also serves to remind employers facing an injunction application of the risk that the ‘truth will out’ if they (or their new recruits) present misleading evidence to the court. In this case, the Court of Appeal ordered the defendants to pay Secarma’s costs of the appeal on an indemnity basis.
You can read the full judgment here.