Union Gain Limited v. Chu Wilton Lucas (DCCJ 2383/2013)

In brief:

The District Court held that a restriction restraining a former employee from engaging in the provision of hair services for a period of one year, within the radius of half a mile of the former employer’s salon, was unreasonably wide and therefore unenforceable.

Chu Wilton Lucas (“Defendant”) commenced employment with Hip Hair Culture, a salon operated by Union Gain Limited (“Plaintiff”) in September 2009 and left on 31 March 2013 to join ‘i Hair Nails’. The Plaintiff applied for an interlocutory injunction restraining the Defendant from providing hair services, as the location of the new employer placed the Defendant in breach of the restriction in his employment contract.

The District Court found that the restriction extended beyond dealing with existing customers whom the Defendant had served whilst working for the Plaintiff and was therefore too broad. As it stood, the Defendant would have been prohibited from serving new customers within the half-mile radius, even though the Plaintiff had no connection with such customers.

The other fatal flaw in the Plaintiff’s application was its failure to provide justification for the restriction in either the Statement of Claim or in evidence. The Plaintiff made very general and non-specific references to trade connections, goodwill and confidential information but these were found to be inadequate. District Judge Chan held that the Plaintiff did not have good prospects in upholding the validity of the restriction at trial and therefore dismissed the application.

Take away points:

This decision is consistent with the case law in this area and highlights that post termination restrictions must be tightly tailored and reasonable.