In Prophet plc v Huggett, the Court of Appeal held that a poorly drafted restrictive covenant which offered the employer no protection should not be rewritten to make it commercially effective and enforceable.
Mr Huggett was employed as a sales manager at Prophet, a software developer to the fresh food industry. His employment contract contained restrictive covenants which included a non-compete clause. Mr Huggett joined a competitor, K3 Business Solutions, who also sold software to the fresh produce industry. Prophet sought an injunction to prevent him from working for K3 for one year.
The High Court held that read literally, the non-compete restriction only prohibited Mr Huggett from working for companies which dealt in the same products as he had been involved with at Prophet. Only Prophet sold the products he worked with, so he was not prevented from working for anyone. The High Court considered that the clause did not give effect to the parties’ intentions and something had gone wrong with the drafting. It therefore amended the clause to refer also to products which were similar to Prophet’s products and granted the injunction. Mr Huggett appealed.
The Court of Appeal upheld the appeal. It considered that the clause was unambiguously clear. The clause was expressed in general terms because Prophet did not know when it drafted the clause which products Mr Huggett would be working on by the time he came to leave Prophet and go elsewhere.
This case sends a strong message to employers to consider carefully the meaning of a restrictive covenant and ensure that it is commercially viable. If the clause is clear, but meaningless or absurd, employers cannot rely on a court to rectify their mistake. While the court may delete elements of an unenforceable restriction to make it enforceable, it will only do so in limited circumstances (the “blue pencil test”). Where a clause gives rise to an apparent absurdity, the court can favour an interpretation that achieves a commercially sensible solution, but only if the clause is truly ambiguous.