Case details

Morris-Garner and another (Appellants) v One Step (Support) Ltd (Respondent)

Case ID: UKSC 2016/0086

Case summary

Issue

Where a defendant is found to be have breached a restrictive covenant, the circumstances in which it is permissible to award damages measured as a percentage of the defendant’s profits resulting from the breach.

Facts

The first appellant ("KMG") set up what became One Step Support Limited ("One Step") in May 1999 as a business providing support for young people leaving care, employing the second appellant ("AMG") in 2001. KMG sold 50% of One Step to Mr and Mrs Costelloe in 2002.

In 2004, relations deteriorated between KMG and the Costelloe family. By late 2006, as a result of the operation of deadlock provisions in the shareholders' agreement, KMG sold her shareholding to the Costelloes for £3.15m. As part of the sale agreement, AMG and KMG entered into restrictive covenants not to compete with One Step or knowingly solicit any significant clients of One Step for 36 months, and AMG covenanted not to disclose information concerning One Step’s business transactions or clients for the same period.

Subsequently, Positive Living Limited ("PL"), a company incorporated by the appellants in 2004, began to compete with One Step. In 2010, the appellants sold their shares in PL for £12.8m. One Step issued proceedings on 11 July 2012. The judge at first instance held that the appellants had breached the covenants and that One Step were permitted to obtain Wrotham Park damages, by a measure of a percentage of the sale proceeds of PL. The Court of Appeal upheld the judge on both counts. The appellants now appeal to the Supreme Court only on the question of whether it was correct to find that One Step were entitled to Wrotham Park damages.

Judgment appealed

[2016] EWCA CIV 180

Parties

Appellants
  1. Karen Morris-Garner
  2. Andrea Morris-Garner
Respondent

One Step (Support) Ltd

Appeal

Justices

Lady Hale, Lord Wilson, Lord Sumption, Lord Reed, Lord Carnwath

Hearing start date

11 Oct 2017

Hearing finish date

12 Oct 2017

Watch hearing
11 Oct 2017 Morning session Afternoon session
12 Oct 2017 Morning session