Broker prevents commercial lender from approaching its clients

A financial broker has succeeded in preventing a commercial lender from approaching its clients.

The case involved Medenta Finance Ltd, which specialised in financial products in the medical and dental market.

It had acted exclusively for Hitachi Capital UK Ltd. Under a 2011 agreement, Hitachi provided finance for the sale of products through suppliers introduced by Medenta.

Under cl.15 of the agreement, Hitachi acknowledged that suppliers and any customers introduced to it by Medenta would remain Medenta’s customers and that it would not market any third-party products to them.

The agreement was terminable by either party following a six-month notice period.

Hitachi, having learned of Medenta’s intention to promote another company’s products, gave notice of termination.

Medenta was concerned that Hitachi would approach its major suppliers to offer them contracts directly. It successfully applied for a temporary injunction, pending a full trial, prohibiting Hitachi from soliciting any of its suppliers during the notice period, as stated in cl.15.

Hitachi returned to court asking for a quick, summary judgment instead of having to wait for a full trial on whether cl.15 included Hitachi’s products.

It submitted that the court should determine restraint of trade issues on an interim application where it was able to do so, and that there was no need wait for a full trial.

The court ruled in favour of Medenta. It held that the court could not make a summary judgment because questions of fact might come to light in due course at a full hearing which would help determine the issue.

Medenta’s business was heavily, possibly entirely, dependent on its customer list. Once that list was compromised it could suffer irreparable harm and its entire business might be put at risk.

That would not be easily compensated by an award of damages. It was therefore fairer and more appropriate to continue the injunction until a full trial or a further order.

Please contact Holly Baker or Sarah Liddiard if you would like more information about contracts and protecting your business through litigation.