Woolf and employment litigation

We are fast approaching the first anniversary of the introduction of the new civil procedure rules, more commonly known as the Woolf reforms. These saw a radical re-writing of the rules which apply to High Court and County Court litigation. The only thing unchanged is the colour of the fat almanac which contains them, but I haven’t heard anybody refer to the new volume as “The White Book” which was the time-honoured description of the old, and distinguished it from the County Court “Green Book” which has been abolished.

The changes are all about procedure and not substantive law. How have they impacted, if at all, on employment cases?

The short answer is not a great deal, but that is not the whole story. I think there has been a significant impact on actions brought to enforce restrictive covenants against employees who jump ship and join a competitor. They come about in these ways:

One of the stated overriding objectives of the new procedures is to ensure that every case is dealt with expeditiously and fairly, with the allocation of an appropriate share of the court’s resources. Nearly every action to enforce a restrictive covenant begins with an application for what used to be called an interlocutory injunction, now an interim restraining order. The court determines the application on a summary basis using witness statements but no live evidence; there is no scope for expert evidence concerning the particular industry. Nor is there the opportunity for full argument. The normal hurdle which the company has to overcome is persuading the court that it has an arguable case that the covenant will be upheld at trial. However, where it is not possible to get the trial heard before the covenant has expired, or substantively expired, the court will ask if the covenant is likely to be enforced at trial (see the Court of Appeal decisions in Lawrence David Limited v Ashton [1989] IRLR 22 and Lansing Linde Limited v Kerr [1991] IRLR 80). The difference between the two tests was brought home to me dramatically in one case some years ago when the judge hearing the application for an interim injunction commented that it was unlikely that the covenant would be enforced at trial, but as he couldn’t go so far as to say that the contrary was unarguable, he would grant the injunction. I always thought that approach could give rise to an unsatisfactory outcome, given that only a minority of these cases actually proceed to trial.

Pre-Woolf, even a speedy trial would typically take some months and possibly as much as a year to come on. That has all changed. We had one case last summer where the trial was fixed for a date three months after the proceedings were commenced. In another recently reported restrictive covenant case, SBJ Stephenson Ltd v Mandy, judgment was given exactly four months after the date of the interlocutory injunction. I heard of one case where the gap was only three weeks. The practical consequence of this will be that the arguable case test, rather than likely to succeed, will pretty invariably apply. This will benefit the party seeking to enforce the covenant, operating on a playing field which some think already slopes in his favour.

Part 18 of the new rules empowers the court at any time to order a party to clarify any matter which is in dispute in the proceedings, or give additional information in relation to any such matter. One of the difficulties for the claimant in a restrictive covenant case is finding out what the former employee defendant has actually done. We have seen quite wide ranging orders for further information which, on one view, have required the defendant to give to the claimant the information necessary to prove its case.

Part 31 permits the court to make an order for disclosure of documents against a third party. The power is again far reaching and extends to classes of documents. In other words, it is not necessary for the applicant to specify the actual document sought, which in many cases will not be possible. Whilst it is commonplace for an employer enforcing a restrictive covenant to join the new employer as second defendant, and one benefit is that the new employer will have to give disclosure of relevant documents, by means of Part 31 it may be possible to get hold of the same evidence without the additional exposure on the cross-undertaking in damages and costs entailed in actually suing the new employer.

As I have said, these are all points of procedure rather than substantive law, but taken together I think their effect is to help and give extra options to the employer who goes after a former employee who has chosen to disregard restrictive covenants.