Thu 04 Jul 2019

Breach of duty, privacy and half a million pounds

The case of Argus Media Ltd v Halim has it all, and all in favour of the employing business.

Mr Mounir Halim set up a company, Afiqom FZ LLC, in the latter days of his employment with Argus Media Ltd.  Both companies were Price Reporting Agencies, reporting on the same kind of products in the same market.  Mr Halim had become unhappy and frustrated in his work for Argus and took preparatory steps to set up his business prior to resigning from his employment.  This included the transfer of a large amount of Argus documents to his iCloud account and seeking to consolidate his relationship with key Argus clients and contacts.  While on garden leave Mr Halim undertook work for Afiqom.

In the High Court, Argus sought to enforce post termination restrictions in Mr Halim's employment contract, sought to prevent him from misusing its confidential information and sought to deprive him of the "unlawful head-start" he obtained prior  to the termination of his employment, and which he continued to develop while acting in breach of his restrictions.   

Mr Halim denied his business was in competition with Argus, argued the restrictions were too wide in scope and duration to be enforceable, that his steps to set up Afriqom were no more than legitimate preparatory steps and he had, in any event, been discharged from the restrictions because Argus repudiated his contract by reading personal emails in his work inbox - something that Mr Halim argued was a breach of the implied term of trust and confidence.   

The Court was of the view that Mr Halim's actions were in breach of his duty of fidelity and confidence and that he had breached his post termination restrictions.   

Of interest was that Mr Halim was not discharged from further performance of the restrictions by virtue of Argus alleged repudiatory breach of contract in examining his "private" emails.  Mr Halim had signed up to an Electronic Information and Communications Policy which gave Argus the right to access and inspect without notice to the employee any materials created, sent, received or accessed using Argus's IT systems.  Argus was also entitled to monitor or review the use of Argus IT systems to investigate breaches of contract.  The Court found that the actions of Argus in reviewing the emails to be in line with their authority under the policy, and not an illegitimate interference with the Article 8 ECHR right to family and private life.  The emails considered by Argus, although between him and his wife, were not personal conversations but related to his work.  Even if there had been a breach of privacy, the Court held that in these circumstances that such a breach was not one that was calculated or likely to destroy the relationship of trust and confidence. 

Injunctions were ordered in respect of post termination restrictions covering non solicitation of the business of restricted clients, provision of services to or business dealings with restricted clients and provision of services in competition with the business or Argus as per the terms of Mr Halim's contract of employment.  Although not decided at the same time Mr Halim was subsequently ordered to pay 90% of his employer's legal bill. Argus had filed a costs budget of just over £688,000 meaning that Mr Halim may well be facing a bill of over half a million, not including his own legal fees.   

This case will be welcomed by employers. Cases assessing the enforceability of post termination restrictions will always turn on their own merits. This case does though underline the importance of good drafting of employment documentation not only in terms of the restrictive covenants in the contract but also the terms of the Electronic Information and Communications Policy.  It is also a stark warning to employees of the risks of breaching duties owed to employers and ending up in court. 

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