Cartlidge Morland (A Firm) v Thomas in the High Court concerned the scope and enforceability of restrictive covenants where the claimant was seeking to prevent a former employee from dealing with clients he had originally brought to the business.
As is often the case with restrictive covenant claims, the result was highly dependent on the facts. But it is a useful illustration of the point that the particular business involved may have a substantial bearing on the permitted scope of covenants.
The employee, a financial consultant, had been employed by the claimant (a wealth management partnership) from 2004 until he resigned in 2011. He admitted he was subject to a restrictive covenant but claimed that he had negotiated a variation which set out the clients he brought with him who would not form part of the covenant and, in addition, that he should be able to deal with any clients who had been introduced to him by those on his original client list.
The Judge agreed that the contract did include an agreement to exclude the employee's original clients and also that industry practice was that a leaving wealth management consultant would be subject to a restraint of trade covenant but that there would typically be an understanding that that covenant would not be enforced against the leaving consultant's clients. The traditional tension between the interest of the employer (restricting customer solicitation) and that of the employee (retaining the benefit of a personally developed client base) is especially acute in wealth management consultants because they have a particularly close and confidential relationship with their clients. It was very relevant in this case that there was a widespread acceptance that a consultant would take their clientele with them when they moved firms and it was not unusual for a consultant to move between consultancies with their clients, unhindered by restrictive covenants.