Beckett Investment Management Group v Hall (Court
of Appeal 28th June) is a significant case for all
employers/employees who may have, or want, restrictive covenants.
It is particularly relevant to the Financial Services sector.
The Court of Appeal Judgment contains 4 key
1. Clauses should be construed with reference to their
A narrow interpretation of the drafting of a
covenant which deprives the covenant of all practical utility in
circumstances where all the parties are familiar with the
background to and the aim of the clause is not sensible
construction and covenants should be construed without a purist
approach to corporate personality.
2. A restriction of 12 months may be enforceable.
The Court of Appeal did not consider that a 12
month restriction was arbitrary. It concluded that with specific
regard to the employees' seniority and importance, to the evidence
about business patterns, to the logistics of replacing them and to
the uncontradicted evidence of an industry standard of 12 months,
12 months was a reasonable period for a non dealing clause both
between the parties and in the interests of the public.
3. Be precise about definitions and try not to complicate them with
In this case an extended definition was deemed
unclear and to some extent otiose.
4. The severance of unreasonable provisions in restrictive
covenants is possible provided the test applied in Sadler v
Imperial Life Assurance Company of Canada Ltd  IRLR 388 is
This states that a contract which contains an
unenforceable provision nevertheless remains effective after the
removal or severance of that provision if the following conditions
(1) the unenforceable provision is capable of being
removed without the necessity of adding to or modifying the wording
of what remains;
(2) the remaining terms continue to be supported by
(3) the removal of the unenforceable provision does
not so change the character of the contract that it becomes
‘not the sort of contract that the parties entered into at