Countrywide Estate Agents Limited, trading as John D Wood & Co. (“John D Wood & Co.”), secured a victory in the High Court in a claim against two former employees and a rival estate agency they went on to establish. Mrs Justice Farbey granted John D Wood & Co. an interim injunction to enforce the former employees’ restrictive covenants and protect confidential information. Barney Laurence, commercial litigation lawyer at Excello, acted for John D Wood & Co. In this article he summarises the case as an example of how restrictive covenants can afford real-world protection to employers in the right circumstances.
John D Wood & Co.’s claim
Jack Marchant and Jessica Hampton worked for John D Wood & Co. in London until December 2024 and March 2025 respectively. Both had been issued restrictive covenants as part of their employment contracts, which were intended to restrict competitive activity for a period of time after they left. The covenants of most relevance in this case were those that operated to prevent Mr Marchant and Mrs Hampton from soliciting existing clients of John D Wood & Co. for one year after termination of employment.
The defendants denied planning a new venture prior to resigning, despite Mrs Hampton accepting that they discussed going into business together in January and February 2025. In any case they had, within days of Mrs Hampton’s leaving the company, incorporated With Us Property Limited (“With Us”), a new estate agency business set up to compete with John D Wood & Co. and in respect of which Mr Marchant and Mrs Hampton were the shareholders and statutory directors.
In the months that followed, Rightmove listings for properties owned by multiple clients of John D Wood & Co. were listed by With Us, evidencing (so John D Wood & Co. claimed) that Mr Marchant and Mrs Hampton had been dealing with clients in breach of the restrictive covenants.
John D & Wood & Co. also argued that by virtue of the fact that they’d been able to entice clients away from John D Wood & Co., Mr Marchant and Mrs Hampton must have misused its confidential information.
John D Wood & Co. therefore sought an interim injunction to protect its commercial interests and brought an associated damages claim for £21,000 (reflecting the losses it was able at the time to estimate).
The defendants’ arguments
Jack Marchant and Jessica Hampton argued that the interim injunction, if granted, would cause significant financial hardship and potentially ruin their new business by preventing them from soliciting certain landlords. They contended that the post-termination obligations were not part of their employment contracts and were overly-restrictive, with the 12-month restraint period being
excessive compared to the original six-month period that appeared in previous contracts. Mrs Hampton further argued that she had been on maternity leave for most of the 12 months before her resignation and had no contact with restricted clients during that time.
Mr Marchant and Mrs Hampton also offered limited contractual undertakings to John D Wood & Co., in the hope of limiting restrictions to the SW7 area and excluding certain landlords, but refused to provide undertakings to the Court. Additionally, they argued that John D Wood & Co.’s large size meant that solicitation of its clients would not significantly harm its business.
The judge’s findings
The judge rejected these arguments resoundingly, finding that John D Wood & Co. had demonstrated a serious issue to be tried regarding the enforceability of the post-termination obligations and the defendants’ alleged breaches. The judge determined that John D Wood & Co.’s business interests, including its longstanding relationships with landlords, were legitimate and deserving of protection, regardless of the company’s size. The judge also found that damages would not be an adequate remedy for John D Wood & Co., as the loss of clients and reputational damage would be difficult to quantify. Furthermore, the judge noted that the defendants’ refusal to offer undertakings to the Court, despite being willing to provide contractual undertakings, suggested a lack of commitment to adhering to the restrictions. Ultimately, the balance of convenience favoured John D Wood & Co., and the interim injunction was granted.
As to the defendants’ lack of commitment to providing undertakings to the court (as opposed to just promises to John D Wood & Co. on a contractual basis), the judge observed that this suggested “a lack of commitment”, which raised doubts about their willingness to comply with restrictions. The judge reasoned “that the balance of convenience lies in imposing on Mr Marchant and Mrs Hampton what they have expressed themselves as willing to do in the undertakings.”
Mrs Justice Farbey was clearly concerned at what she perceived to be a possible conspiracy between Mrs Hampton and Mr Marchant given their joint actions in establishing a competing business and soliciting clients, noting that “John D Wood & Co.’s case is that Mrs Hampton at the least conspired with Mr Marchant to breach his post-termination obligations. It cannot realistically be suggested that she is not at present a proper defendant in a claim that concerns an alleged conspiracy.”
The judge also dismissed Mr Marchant and Mrs Hampton’s argument that damages would be an adequate remedy for John D Wood & Co., calling their submission unrealistic and failing to account for the broader implications of client loss and reputational damage.
As to their claim that they would suffer financial hardship if an injunction were to be granted, the judge criticized that assertion and commented: “There is no proper evidence that, without soliciting John D Wood & Co.’s clients, their business will fail. There is no proper evidence that, without soliciting John D Wood & Co.’s clients, they will be unable to manage daily life through lack of money.”
Conclusions
The judge concluded that John D Wood & Co. had successfully demonstrated a serious issue to be tried regarding the enforceability of the post-termination restrictive covenants and the defendants’ alleged breaches of these obligations. John D Wood & Co.’s evidence showed that the defendants had solicited its longstanding clients, which posed a significant risk to its business interests. Mrs Justice Farbey rejected the defendants’ arguments that damages would be an adequate remedy, emphasizing the difficulty of quantifying John D Wood & Co.’s losses and the importance of enforcing contractual agreements.
The balance of convenience favoured John D Wood & Co., as the defendants failed to provide sufficient evidence that the injunction would cause them financial hardship or lead to the failure of their business. Consequently, the judge granted the interim injunction in the terms sought, giving John D Wood & Co. the much-needed protection it required in respect of its business interests while ordering a speedy trial to resolve the matter.
In concluding, Mrs Justice Farbey said this:
“The claimant is entitled to protect its business with its client base and with longstanding landlords such as those solicited by the defendants. Its efforts and success at building its business should not be belittled or underestimated because it is big. It is entitled to come to court to enforce bargains struck with its employees, whether it is large or whether it is small. That is what it seeks to do: no more or no less.”
What does this mean for employers and employees?
This case does not represent any sort of change in the law. It is a paradigm example of how protective provisions in contracts of employment can and do afford employers real-world value, where they are used appropriately. It also demonstrates that the court can and does grant injunctions to protect employers where the factual circumstances warrant it. It should give employers confidence that all is not lost when trusted employees leave and embark on a campaign to solicit away clients and customers.
It also serves as a stark warning to departing employees of the risks they face if they choose to disregard their post-termination obligations, and that running ambitious arguments in the hope of defeating an injunction application can be a very risky strategy.
This also puts to bed the common misconception that restrictive covenants are “not worth the paper they’re written on”. Providing they are well-drafted, the court will – as Mr Marchant and Mrs Hampton found out to their cost –not hesitate in appropriate circumstances to grant injunctive relief to enforce contractual promises that employees have made to their employer.
