Judge not entitled to rewrite restrictive covenant
Thursday 24th July 2014
The Court of Appeal has overturned the High Court’s decision in Prophet plc v Huggett.
Prophet develops computer software. Mr Huggett was employed as UK sales manager. His contract contained various post-termination restrictions, including a 12 month non-compete clause. Mr Huggett left and started work at a competitor, following which Prophet sought an injunction.
However, the non-compete clause was defective because, as drafted, it only prevented Mr Huggett from selling Prophet’s products. The High Court Judge added the words “or similar thereto” to the end of the covenant, finding that the clause did not reflect the intention of the parties. As amended by the additional words, the covenant was enforceable and the Judge granted Prophet an injunction.
Mr Huggett appealed. The CA agreed that the literal meaning of the clause gave Prophet no protection, but held that the clause was not ambiguous, it was merely badly drafted, with a failure to consider if the restriction would achieve any practical benefit. In those circumstances, the CA held that the Judge was not entitled to re-write the clause and discharged the injunction.
All information in this update is intended for general guidance only and is not intended to be comprehensive, or to provide legal advice.