The Court of Appeal has handed down a decision confirming that a (new) employer who fails to give suitably swift undertakings not to use confidential information which an employee brings over from his (old) employer should pay the costs of any injunction application.
The (old) employer, on discovering that the employee had gone to work for a competitor, asked for undertakings that the (new) employer would not encourage the employee to breach an express term of his contract relating to confidential information. The (new) employer ignored the first letter and, in response to a second letter, simply wrote back and said it was investigating the position (without giving any undertaking). The (old) employer then issued an application for an injunction, following which the (new) employer gave an appropriate undertaking.
The Court of Appeal, overturning the judge, held that the (old) employer should be entitled to the costs of the injunction application in these circumstances. The (old) employer had effectively won the case by obtaining the undertakings. The judge's refusal to award costs was erroneous as a matter of principle.
The case provides comfort to those advising employers of departing employees, demonstrating that they can act swiftly and be confident that they will not be penalised in costs.
[Thanks to Neil Russell of BD Laddie, who acted for the successful Appellant, for telling me about this decision]
Fox Gregory v Spinks