Case Comment: Boydell v NZP Ltd & Anor [2023] EWCA Civ 373

• Published date: 18 July 2023
• Subject Matter: Employment and HR, Litigation, Mediation & Arbitration, Contract of Employment, Trials & Appeals & Compensation
• Law Firm: Gatehouse Chambers
• Author: Lauren Godfrey and Amy Held

The Court of Appeal recently handed down judgment in the case of Boydell v NZP Ltd & Anor [2023] EWCA Civ 373, in which an employee challenged the High Court's decision to sever parts of a restrictive covenant, and then grant an interim injunction enforcing the amended terms.

The judgment provides an interesting development to the case law on enforcement of post-employment restrictive covenants and will be of interest to employers and employees, whose main area of dispute is not the employee's actions, but rather the covenant's enforceability. The approval of the High Court's decision demonstrates flexibility at the interlocutory stage to ensure a level of protection over employers' interests pending a full trial, avoiding an all-or-nothing approach to the enforceability of restrictive covenants. The judgment also provides insight into what case merits the parties may be required to show in particular circumstances, including the nature, extent and complexity of the issues in dispute between the parties.

Read our case comment to read more about the Court's approach to this issue, and the extent to which the American Cyanamid principles may or may not be strictly followed.

Construction and severance at the interlocutory stage in restrictive covenant disputes

The Court of Appeal recently handed down judgment in the case of Boydell v NZP Ltd & Anor [2023] EWCA Civ 373, in which an employee challenged the High Court's decision to sever parts of a restrictive covenant, and then grant an interim injunction enforcing the amended terms.

The judgment makes clear that the task of construction and severance was enabled by the case having little factual dispute with bearing on the construction of the covenant. It appears the High Court would be reluctant to undertake these tasks in cases where a trial is needed to resolve factual disputes that go to the core of a contract's construction.

The case will be of interest to practitioners, providing an additional consideration when deciding how to approach making or resisting an interim injunction application, and the impact the decision may have on the relative bargaining positions of the parties in the substantive case.

It remains to be seen what impact this decision will have on the litigation surrounding restrictive covenant disputes. However, following the Court of Appeal's approval of the High Court's approach, in disputes between parties over the meaning and/or enforceability of restrictive covenants (where little material factual dispute exists on those issues), there now appears to be a means of killing two birds with one stone; dealing with the matter of interim injunctive relief and dealing with the issue of strike out. So that if the High Court can form a view of a covenant's enforceability and consider severance, then with no material facts in issue capable of changing that view if decided at trial, it would seem to follow that there is little left of substance to litigate.

It is important to highlight that in its judgment, the Court of Appeal did not refer to its judgment in Forse v Secarma [2019] IRLR 587. In Secarma (at [28]-[31]), it makes clear that when employers apply for an interim injunction to enforce restrictive covenants, and the duration of the restriction is...