Towry EJ Ltd v Bennett and others involved a group of seven financial advisors who left Towry to join a competitor. The financial advisers were subject to non-solicitation covenants. In a four-month period, 429 of Towry's clients asked to transfer their investments to the financial advisors' new employer. Towry brought proceedings against the financial advisors for breach of contract alleging that the seven financial advisors had solicited these clients.
The High Court dismissed Towry's claims – there had been no solicitation. Towry failed to establish, on the balance of probabilities, that communications between the financial advisors and their customers contained a material element of persuasion with a view to gaining the business of those customers. The volume of business lost over a short space of time to a competitor led Towry to assume that there must have been solicitation but this was not supported by the evidence.
Comment: This case highlights the importance of evidence in cases of alleged breach of restrictive covenants. A belief that the circumstances in any case show that there "must" have been a breach of restrictive covenants by former employees may be dispelled on investigation. It also highlights that it is useful to include non-dealing covenants as well as non-solicitation covenants, where appropriate, so that there is no need to prove persuasion/enticement.
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