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Posts Tagged ‘good practice’

Following a dispute about Keiron Fallon’s decision to switch horses for the Epsom Derby last weekend, the Court of Appeal considered a racehorse owner’s appeal against the refusal to grant him an injunction in order to prevent Fallon riding a favourite from another stable. The Court of Appeal was not impressed by what it referred to as Fallon’s “cynical disregard of a contract'” that he recently signed to prevent him doing that very thing.

The earlier decision in the High Court to allow the race to go ahead rather than issue an injunction was overruled and the owner Mr Araci was successful. In the final analysis, neither horse won on the day… but that may have been different if the injunction had not been granted! Isn’t this the whole point of restrictive covenants?

Argument before the Court of Appeal centred on whether or not it would be “oppressive to the defendant or cause him particular hardship” if the injunction were granted.  The High Court, in its discretion, had found in favour of Kieron Fallon and had also found that damages would be an adequate remedy. The Court of Appeal did not agreen and decided that it would be a complex matter to settle the damages if Fallon were allowed to ride a competitor’s horse and that where there is a clear breach of a covenant which is designed to prevent a person from doing something he or she has promised not to do, there must be special circumstances such as restraint of trade contrary to public policy, before the court will exercise its discretion to refuse an injunction.

The Court of Appeal decision seems completely logical and may leave some commentators wondering how it could ever have been decided otherwise. It is worth noting that the legal costs are likely to be considerable in these cases and although employers often incorporate restrictive covenants in their employment contracts as a ‘cover-all’ they may not be worth the paper they are written on if the terms are unclear, the employee has casually or unwillingly agreed to be bound by the terms and the effect of the restriction would in practice cause the employee hardship.

For those reasons it is good practice to make such covenants as specific as possible to the individual and the circumstances concerned, as was the case here, and to review them regularly to ensure they remain relevant. General statements, casually dished out to all and sundry are less easily enforced.

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