In Freshasia Foods Ltd v Jing Lu the High Court considered whether to award interim injunctions in relation to non-solicitation and non-compete covenants entered into by a former employee. The decision illustrates the principle that where a preliminary injunction is likely to be final in effect, the merits of the case have to be taken into account in a way that is proportionate to the impact of the relief sought.
Mr Lu worked for Freshasia as a Marketing Advertising Manager. His contract of employment contained non-solicitation and non-compete covenants. When he left his employment and went to work for one of Freshasia's competitors, Freshasia took action to enforce the covenants. The Court was prepared to grant an injunction to enforce aspects of the non-solicitation covenant but declined to enforce the non-compete.
Some aspects of the non-solicitation covenant went further than reasonably necessary to protect Freshasia's confidential information, such as an attempt to prevent Mr Lu from approaching "potential customers". The Court also found that applying the clause to any customers "with whom you had any business dealings or knowledge" was unlikely to survive scrutiny at trial. However, the elements of the clause that went beyond what was reasonably necessary to protect confidential information could be severed, so an interim injunction in a limited form was granted. This balanced the risk of Freshasia suffering uncompensatable loss if the injunction were not granted against the more limited impact on Mr Lu, given that he would continue to be able to work for his new employer.
In contrast, it was much less likely that the non-compete clause would be upheld at trial. This was a case in which the non-solicitation covenant was likely to be sufficient to protect Freshasia's legitimate interests. The non-compete tried to prevent Mr Lu from being engaged by a competitor in any capacity at all, and it applied across Europe, making its geographic scope too wide. Against that background, the impact on Mr Lu of granting an injunction was significant. He would not be paid if he was prevented from working, giving rise to difficulties with his mortgage, and there were likely to be problems with his visa status. The unquantifiable loss he was likely to suffer outweighed any loss that would be suffered by Freshasia and in those circumstances it would be clearly wrong to grant an injunction to uphold the non-compete.