High Court should not have read words into badly drafted restrictive covenant

Catherine Taylor

In Prophet plc v Huggett the Court of Appeal decided that the High Court should not have read words into and then enforced a post-termination restrictive covenant which, as originally drafted, offered the former employer no protection.

The High Court granted an injunction enforcing a non-compete post-termination restrictive covenant which stopped Huggett from joining a direct competitor of his former employer, Prophet, for a period of twelve months. As drafted, the restrictive covenant prevented Huggett from being employed by a competitor in connection with any products with which he had been involved whilst employed by Prophet. As when he was employed by Prophet, Huggett had been involved with products which only Prophet sold, in practice the restrictive covenant imposed no practical limitation on his future activities.

In a somewhat surprising decision, the High Court considered that the restrictive covenant should be corrected to give effect to what was originally intended by Prophet, specifically that following termination of employment, Huggett should be prevented from being involved with any products similar to those with which he had been involved whilst employed by Prophet.

The Court of Appeal allowed the appeal against the injunction. Whilst a court should interpret a restrictive covenant to give any ambiguity a commercial, sensible meaning, in this case there was no ambiguity in the original wording – the drafting of the restrictive covenant simply failed to give effect to Prophet’s intention – it was not the court’s job to fix Prophet’s failure to ensure the drafting of the restrictive covenant gave it the intended protection.

This case highlights the need for careful drafting in post-termination restrictive covenants – as usual, the old adage of “say what you mean and mean what you say” applies.

Prophet plc v Huggett [2014] EWCA Civ 1013

Post By Catherine Taylor (3 Posts)

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