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Restrictive covenant enforced despite drafting error

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Thanks to Paul Smith of Broadway House Chambers for preparing this case summary

Can an ill-drafted restrictive covenant be enforced even if the court would need to add words in order to give it effect?

Yes, holds the High Court in Prophet plc v Huggett.

The employee was subject to a restrictive covenant that prevented him from competing with, or working for a competitor of, Prophet plc. An additional sentence in the contract qualified this restriction by defining what competition would mean, in that it related to the provision of computer software systems for the fresh produce industry, produced by Prophet. The employee left and moved to a competitor company and his original employer, Prophet, sought to enforce the covenant.

On a literal reading of the restrictive covenant, Prophet accepted that the competitor company would never provide software systems produced by them and therefore the covenant would not afford them protection. David Donaldson QC (sitting as a Deputy High Court Judge) rejected the employee's assertion that the covenant meant to say what it said. Instead, he concluded that the addition of three words to the covenant reflected its true meaning, as that would include software systems produced by Prophet "or similar thereto". In line with the well-known case law, the Judge proceeded to consider Prophet's injunction application on the basis of the covenant's new formulation.

Practitioners will be familiar with situations where the removal of certain words, or 'blue pencilling', is required before the court can give effect to a restrictive covenant that would otherwise be unenforceable. This case demonstrates the flexibility the courts have in the opposite situation, where words have to be added to give effect to what the parties had agreed at the time. Whilst this is a first-instance decision, it would appear that the court has a broad discretion in this type of scenario.