S2 Equitable Remedies - Lecture notes 2 PDF

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Equity and Trusts law seminar notes...

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10th February 2020 Equity and Trusts

Seminar 2 – Equitable Remedies Preparation: Pearce and Stevens – Chapters 33-35 L Collins ‘The territorial reach of the Mareva injunction’ (1989) Questions: Seminar questions for discussion 1. Leo owned and managed a company producing computers. Ben worked for the company for 6 years and in that time was responsible for developing new computer technology. His contract contained clauses in which he agreed not to work for any competitor for the time he was working for Leo, not to compete with Leo anywhere in the world for a period of 12 months after ceasing to work for Leo and to keep in confidence any information that could reasonably be considered as confidential to the company. Leo and Ben had an argument about the implementation of a new invention which Ben had developed. Ben walked out of the meeting saying that he had resigned. Several days later, on inspection of the company computer system it became apparent that Ben had been working in secret for a competitor, the Sonya Corporation (“Sonya”) based in the Channel Islands, for some time. He had been offered and had accepted a job with Sonya and had given them the plans to his new invention. He also had given it a list of Leo’s customers and Sonya was actively marketing the invention to them. Sonya has bank accounts in the Cayman Islands and the Channel Islands. Advise Leo as to any equitable remedies he might have. NOTE: It is not necessary to discuss the principles of contract law in your answer – assume that a valid contract of employment was entered into by Leo and Ben. In order to answer the question, you must deal with the following: - Identify the remedy - Set out the relevant legal test - Apply the test to the facts - Comment on the prospects of success of an application Employer and employee relationship (employment contract that is valid) Different jurisdiction Breach of employment contract and confidence Working in secret for Sonya - Breach of contract - What remedy? Prohibitory injunction to prevent him from working - Interim injunction – Ben will have to sue Ben and Sonya for breach – takes a while – interim injunction until then (case law not needed just explanation)

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Guidance – American Cyanimid – 1) serious issue to be tried, yes 2) are damages adequate, no can’t work out how much it will cost them 3) would the defendant be adequately compensated by the claimant giving a crossundertaking in costs? What will Ben get from working for Sonya – money – employment contract – can work out how much he will be paid – Ben can be protected 4) balance of convenience – who will be harmed more? Granting/ not granting – Leo will lose more so balance lies with Leo Prohibitory injunction granted

Plans for new invention - Breach of confidence - Remedy? Prohibitory interim injunction to stop them using plans - American Cyanimid - Serious matter – yes - Damages not adequate - Cross undertaking in damages – can still release the product even if its delayed – probably can - Balance of convenience – Leo - Other remedies? - Prove they have the information – search order - Requirements for search order - Strong prima facie case - Booker McConnell v Plascow [1985] o The inspection will usually be supervised by an independent solicitor o Office hours o Seek legal advice o Compile list of documents removed for copying Customers to Sonya - Prohibitory injunction against Sonya - American - Serious issue to be tried? Yes - Breach of confidentiality - Damages adequate? No – lose business and clients – people don’t want to buy from imitators – irreparable harm - Cross undertaking in damages – could look at how many people, how many are likely buyers – round figure on this - Balance – with Leo - Prohibitory injunction Sonya bank account Cayman Islands and the Channel Islands - Freezing order - Based in the Channel Islands - No evidence of assets in the UK – only Channel Islands

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Problematic to do this but should try Factors courts will consider Ninemia Maritime Corp v Trave Schiffahrts [1983] o Does the claimant have a cause of action justiciable in England and Wales o Yes o Does the claimant have a good arguable case? o Yes o Does the defendant have assets in the jurisdiction against which a freezing order can take effect? o Potentially o Is there real risk that the defendant will dissipate his assets and will not comply with an order to pay damages? o Yes? Freezing injunction likely to be granted Is Sonya going to be there? No – likely they will get rid of the assets if they get notice

Ex parte freezing and search order...