Ex-director poached customers
Posted: 15th October 2013
A company director who lured away a string of his ex-employer’s prime customers within days of being made redundant and in breach of his contract has been ordered to pay £50,000 in damages.
Leonard Coppage’s employment contract contained a restrictive covenant which prevented him from soliciting Safetynet Security’s customers for six months after his departure. He had been instrumental in setting up a competing venture which was incorporated the day after he left and which swiftly succeeded in poaching five key customers.
Although he denied breaching the covenant, a judge had described Coppage as a ‘deeply unsatisfactory witness’ who had ‘deliberately sought to mislead the court’. The evidence against him included 135 phone calls and 175 texts passing between him and the relevant customers in the period immediately before and after his departure.
At the Court of Appeal, his lawyers, whilst not challenging the judge’s factual findings, argued that the restrictive covenant was too broadly drafted, amounted to an unreasonable restraint of trade and was thus unenforceable.
Dismissing the appeal, the Court noted Coppage’s own evidence that he had acted as the public face of the company and that at least a fifth of its client base had been built up through his ‘pizzazz’. His senior role had involved much contact with clients and there was nothing unreasonable in Safetynet seeking to protect its position for a relatively brief period following his redundancy.
Also rejecting arguments that the £50,000 award was arbitrary and unjustified, the Court upheld the judge’s ruling that this was ‘the minimum’ financial loss that the company had suffered due to its former director’s breach of covenant.
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