When considering the substantive law the court referred to the decision of Lady Justice Gloster in the English case of Brake Brothers Ltd v Ungless and another. In that case, the court made it clear that the starting point is that covenants in restraint of trade are prima facie unlawful because they are contrary to public policy. As Lord Justice Laddie explained in Countrywide Assured Financial Services Ltd v Smart [2004] EHWC 1213 they are "to be treated with suspicion". For that reason, it is for the party relying on the restraint to establish why the restriction should be upheld.
In order to do that the party relying on it will have to show two things: first, that it has a legitimate business interest to protect; and, secondly, that the contractual provision relied upon, properly construed, extends the restraint no further than is reasonably necessary to protect that interest. In questions between and employer and former employee a simple attempt to prevent competition will never be upheld. Indeed, at one point, there were no examples of the English courts having been willing to enforce a non-compete restriction.
One of the best examples of the approach of the courts is found in Office Angels Ltd v Rainer-Thomas and O'Connor [1991] IRLR 214 where Sir Christopher Slade said "The employer's claim for protection must be based upon the identification of some advantage or asset inherent in the business which can properly be regarded as, in a general sense, his property, and which it would be unjust to allow the employee to appropriate for his own purposes, even though he, the employee, may have contributed to its creation". In practice, examples of legitimate interests which require protection include trade connections, trade secrets, confidential information and staff stability.
The hurdles do not stop there, however, for the employer. Even where an employer can point to such a legitimate interest which is capable of protection by way of contractual restriction, for such a restriction to be enforced it must not go beyond what is reasonably necessary to protect the interest and the employer will only be allowed to enforce the contract as it stands. He will not be able to read it down in such a way as to soften it or restrict its effects in order to try and make it enforceable.
Accordingly, on the basis of that test, although the Inner House were not willing to interfere with the Lord Ordinary's discretion and grant the reclaiming motion the court very clearly indicated that, had it been up to them, they would have considered the restriction as having been drawn too widely both in respect of its industry-wide extent and its 12 month duration which would make for a very weak case for enforceability. They indicated that they would have seen the balance of convenience as having favoured the defender and would have recalled the interim orders.
