A financial adviser who quit his £100,000 a year job with Ashcourt Rowan Financial Planning has won a high court challenge to anti-competition clauses in his contract that would have blocked him becoming a director at rival firm Fidelius.
Mr Justice Andrew Smith backed Carlton Hall’s claim that post-termination covenants in his contract with ARFP were an unreasonable restraint of trade.
The judge ruled that the covenants went too far, potentially blocking Mr Hall from working in parts of the financial services industry that would not even affect ARFP. He said: “I conclude that the non-competition covenant is in restraint of trade and not enforceable.”
He said that Mr Hall gave six months’ notice to ARFP, where he worked as financial planning director providing advice and key client contact to a wide base of private and corporate clients, for reasons apparently including dissatisfaction with his commission.
Mr Hall, who worked from his home address in Surrey, with his wife as a part-time clerk, and out of ARFP’s Chelmsford office, left the company on 28 March this year and, two weeks later, started to work for Fidelius, whose business includes the provision of retail financial advice as well as insurance broking and employee benefit services.
He became a director of Fidelius on 23 April.
ARFP launched proceedings seeking to enforce post-termination covenants against Mr Hall, and a court order to prevent him from working for Fidelius until 28 September this year.
However, the judge ruled that the application of the covenant was not confined to what was reasonably necessary to protect ARFP’s legitimate business interests.
He said that the words of the covenant would prohibit Mr Hall from being indirectly concerned in the business or activity of a direct competitor, whether or not his actual activity itself competes directly.
He said: “There is no obvious justification for preventing Mr Hall from working for a competing business in such roles. But that, as I interpret the non-competition covenant, is what its effect would be.
“In this case, to my mind, the additional restraints of the non-competition covenant would, if enforced, prohibit Mr Hall from work in many parts of the financial services industry where, and in ways in which, it could not reasonably be said that ARFP’s legitimate interests would or might be compromised.”
Before joining ARFP in 2008 Mr Hall was a director of Independent Financial Solutions Group Limited, a wealth management business acquired by the Ashcourt Rowan Group for £4.2m.
It is as yet not known whether ARFP intends to appeal the decision.
