The High Court declined to restrain former Pulse chief executive Ciaran O’Reilly and Brando from contacting Pulse’s suppliers, contractors, distributors or employees, or from using information relating to its business. It ordered the defendants to deliver up Pulse data, documents and other property in their possession or control.
The ruling was made at the interlocutory stage of proceedings brought by The Pulse Group Limited and Pulse Marketing Services Limited. Mr Justice Clarke’s judgment, delivered on 17 February 2006, explains his reasons for a decision communicated to the parties on 10 February. An interim order had been made on 2 February and remained in force while the hearing was adjourned.
Pulse alleged that Mr O’Reilly breached his employment contract and fiduciary duties through his involvement in establishing Brando while he remained Pulse’s chief executive. The judge found a fair issue to be tried over whether Mr O’Reilly breached duties of fidelity and good faith while employed and a director of Pulse Marketing Services.
The evidence before the court indicated that Brando began trading in September 2005, with four equal shareholders, including Mr O’Reilly. Brando operated for much of its history from the same premises as Pulse under a subletting agreement made on Pulse’s behalf by Mr O’Reilly. The judge said he appeared not to have told fellow directors that the tenant company was one in which he had an interest, calling this imprudent and arguably unlawful. Evidence that Brando had sometimes used Pulse resources was disputed; the judge found a fair issue to be tried on that question.
A small number of Pulse clients, including The Money Show, had also become Brando clients. But the evidence conflicted over the extent of competition between the companies and Pulse’s own internet advertising work. The judge was not satisfied there was an issue to be tried that Brando competed, or intended to compete, outside internet advertising.
The court found no arguable basis for an implied post-employment restriction on soliciting Pulse clients, and no evidence that Mr O’Reilly possessed or used a trade secret. The judgment said his enduring post-employment obligation was limited to trade secrets. Any claim that might succeed was therefore confined to historic conduct while he remained connected to Pulse, including any inappropriate head start for Brando. On the evidence then available, any loss appeared reasonably calculable, making damages an adequate remedy; a broad restraint would effectively impose a non-solicitation clause absent from the contract.
The judgment did not decide whether the alleged breaches occurred. It refused the notice-of-motion relief except for delivery of Pulse materials, which Mr O’Reilly was not entitled to retain after leaving the company.