Employment interdicts - a cautionary tale

Employment interdicts - a cautionary tale

Published:

Author: Graham Reid

Applies to: Scotland

If in the course of an action the pursuer applies for and obtains an interim interdict preventing the defender from carrying out a particular activity, it is said that the pursuer obtains that order at their own risk.

The pursuer is exposed to liability in damages if it is ultimately established that as a result of the interim order, the defender has had their rights invaded.

In a recent case in the Court of Session, Edinburgh (Aird Geomatics Ltd v Richard Stevenson and another [2015] CSOH 57) the former employers of an individual raised an action against him alleging breach of confidentiality and solicitation restrictions.

Facts

At an early stage of the proceedings the former employers obtained an interim order (interdict) preventing the individual from continuing in new employment with what had been a longstanding client. That order was granted without the former employee being present or represented. Then, after a period of 8 months, the former employee successfully lodged an application to have the interim order recalled. He also lodged a counter claim seeking payment of damages of £60,000 from his former employers on the grounds that the interim order had been wrongfully obtained and that as a result of it, he had suffered (and continued to suffer) loss of income due to the fact that his new employment contract had been terminated. He also claimed that as a result of the order, his reputation had been damaged and that he had suffered anxiety, stress and inconvenience.

After some further court procedure, the former employers abandoned their action. This left only the defender's counterclaim for damages still standing.

In the course of a legal debate in the counterclaim, the ex-employee argued that the fact that the original order had been recalled by the court was sufficient, of itself, to establish that the interim order had been wrongfully obtained and in that event the ex-employee was entitled to summary judgment, with only the level of damages needing to be established by evidence. The judge agreed and granted a summary decree on the merits of the case against the former employer thus leaving only the value of the counterclaim to be assessed.

Warning to disgruntled employers

While there may be some very limited exceptions to the general principle relied upon by the ex-employee, this case should serve as a warning to any disgruntled employer who is considering attempting to enforce restrictive covenants or to otherwise limit an ex-employees immediate employment prospects on leaving their payroll.

Any application for an interim interdict during the course of the action carries with it the risk of being found liable in damages in the event that the order is withdrawn by the court at a later stage. The damages could be substantial and would apply even if the pursuer has acted in good faith throughout, so the interim order should be sought only after full and careful consideration of the prospects of ultimately succeeding in the case.

If you would like further information about this topic, please get in touch with Graham Reid in our Edinburgh office on 03700 86 8061.

Disclaimer

This document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.