The Chancery Division has delivered us a useful reminder of the law around employee/employer fiduciary duty (but with only a partial victory for the employer).

‘The employer WHITMAR PUBLICATIONS LIMITED [applicant] was a publisher specialising in the print industry and the former employees [defendants] were the former sales manager, senior editor and a production editor. The defendants all resigned on the same day after which the applicant discovered that the former employees were setting up a rival business (EARTH ISLAND PUBLISHING LIMITED) and sought to take steps to stop them.  

In this judgment the deputy judge of the High Court, reviews the approach governing injunctive relief and the case law concerning the distinction between good faith owed by an employee and fiduciary duty: in this case he concluded that the defendants did not owe a fiduciary duty (noting the difference between the contractual use and the use of the same term in employment matters) but he found the former employees had breached their contracts with the employer.

He then looks at the evidence of the defendants’ activities prior to termination of employment and concludes that there was a ‘strong case’ that they were taking steps to compete with the applicant for over a year (contrary tot he assertions from the former staff).  He also notes that‘One of the badges of competition in cases such as this is the secrecy with which those who are competing go about their business’ and the defendants had shown clear signs of that secrecy in their emails.

As a matter of some emergency (described in court a a matter of life and death) the Judge granted the relief on the grounds that the applicant would have a very good chance of succeeding at trial.’

The case is well worth reading.  I thank “Littleton Chambers” for bringing this case to my attention.

_______________

Case No: HC13B01938

Neutral Citation Number: [2013] EWHC 1881 (Ch).

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Royal Courts of Justice, Date: 4th July 2013

Before :

MR PETER LEAVER QC

(sitting as a Deputy Judge of the High Court)

– – – – – – – – – – – – – – – – – –

Between :

WHITMAR PUBLICATIONS LIMITED (Claimant)

– and –

(1) DAVID GAMAGE; (2) SUSAN WRIGHT; (3) STEVE CRAWLEY; (4) EARTH ISLAND PUBLISHING LIMITED

Defendants

– – – – – – – – – – – – – – – – – –

 

Hearing date: 12th June 2013 Date of Judgment: 4th July 2013

– – – – – – – – – – – – – – – – – –

JUDGMENT

Mr Peter Leaver QC:

INTRODUCTION

1.  On the 7th January 2013, the First, Second and Third Defendants (to whom I shall refer respectively as Mr. Gamage, Ms. Wright and Mr. Crawley or collectively as “the Defendants”) resigned from their employment with the Claimant, to whom I shall refer as “Whitmar”. It was subsequently agreed that Mr. Gamage could each go on “garden leave”, and that the employment of all of them would terminate at the end of January. Mr. Gamage told Mr. Rob Mulligan (“Mr. Mulligan”), Whitmar’s Managing Director, that he, Ms Wright and Mr Crawley were going to set up a new company. The Fourth Defendant, to whom I shall refer as “Earth Island”, is that new company.

2. No sooner had the Defendants left Whitmar’s employment, than it was discovered that they had set up a company, which Whitmar contends was, and had been prior to the termination of their employment, in competition with Whitmar.

3. On the 14th May 2013 Whitmar commenced proceedings against the Defendants. In summary, Whitmar claimed damages for breach of contract; an account of profits; damages for breach of fiduciary duty and/or for infringement of its Database Rights under the Copyright and Rights in Database Regulations 1997; and for a permanent injunction restraining the Defendants from using and disclosing its confidential information obtained during their employment by Whitmar.

4. Whitmar also applied for interim relief, and on the 21st May 2013, Newey J. made an Order by Consent restraining the Defendants from using or exploiting or divulging to any third party, save with the express written consent of Whitmar, or save where required by law to do so, any information from three named and identified sources. Newey J. also ordered that Whitmar’s application was to be heard over a day within the listing window of the 10th to 13th June 2013.

5. On the 12th June 2013, I heard the application. I was informed that it was a matter of “life and death” for the Defendants that I made a decision that day, and, with the parties’ agreement, I gave my decision at the end of the hearing, granting Whitmar the relief which it sought. That relief is embodied in an Order, which was subsequently agreed between the parties.

6. At the conclusion of the hearing, I said that I would give my reasons at a later date. These are the reasons for my decision.

THE PARTIES

7. Whitmar was established in 1988. It is a publications company specialising in magazines for the printing industry. It publishes a range of different magazines in printed formats and electronically, and also produces a range of information handbooks. In addition, Whitmar also holds three industry award ceremonies each year. Its income is derived predominantly from advertisers.

8. Mr. Gamage was employed by Whitmar from the 16th January 1995. At the date of his resignation he was employed as Whitmar’s Sales Manager. The titles for which Mr. Gamage was responsible represented a large proportion of Whitmar’s turnover, and Mr. Gamage had direct contact with customers in relation to the titles.

9. Ms. Wright was employed by Whitmar from the 29th June 1998, and was the Managing Editor of all of Whitmar’s titles, and its most senior employee.

10. Mr. Crawley was employed by Whitmar from the 26th April 2004 as a Production Editor.

11. Each of the first three Defendants was employed by Whitmar on the terms set out in a letter of engagement. Mr. Gamage’s letter of engagement is dated the 20th December 1994. It contained details of his role and salary, holiday entitlement, and was expressed to be “subject to … the Company’s Terms of Employment”. I was informed that no Terms of Employment were ever agreed.

12. Ms. Wright’s and Mr. Crawley’s letters of engagement were in similar terms, although in Mr. Crawley’s case, there was no reference to Whitmar’s Terms of Employment. Thus, the terms of the Defendants’ contracts of employment are to be found in the letters to which I have referred.

13. Earth Island, the company formed by the First to Third Defendants, was registered on the 31st August 2012, that is just over four months before Mr. Gamage, Ms. Wright and Mr. Crawley resigned from Whitmar.

WHITMAR’S APPLICATION

14. In this Application, Whitmar seeks:

(i) an injunction to restrain the use of its confidential information.
(ii) delivery up of its confidential information.
(iii) a limited forensic inspection of the Defendants’ computer systems.
(iv) protection of its database rights.
(v) affidavits giving particulars of the wrongful activities of the Defendants.
(vi) “springboard” relief until trial.

15. Before identifying Whitmar’s complaints against the Defendants and the Defendants’ answers to those complaints, it is necessary to say a few words about the Court’s approach to the application and the evidence. The application is for injunctive relief, and the Court will apply the principles established in American Cyanamid v Ethicon Limited[1975] AC 396, HL. In Lawrence David Limited v Ashton [1989] IRLR 22, the Court of Appeal held that the American Cyanamid principles apply in cases of interlocutory injunctions in restraint of trade just as they do in other cases.

16. Thus, the Court’s approach is first to decide whether or not there is a serious issue to be tried, and, if there is, whether damages would be an adequate remedy, or whether the balance of convenience is in favour of granting the injunction sought.

17. As I have stated earlier, I was informed that the outcome of the application was a matter of “life or death” for the Defendants. Accordingly, as it seemed likely that the injunctive relief sought would, if granted, be likely to dispose of the action, I was urged to adopt the approach of the Court of Appeal in Lansing Linde Limited v Kerr [1991] 1 WLR 251. In his judgment in that case, Staughton L.J. said, at page 268(a) to (d):

“If it will not be possible to hold a trial before the period for which the plaintiff claims to be entitled to an injunction has expired, or substantially expired, it seems to me that justice requires some consideration as to whether the plaintiff would be likely to succeed at a trial. In those circumstances, it is not enough to decide merely that there is a serious issue to be tried. The assertion of such an issue should not operate as a lettre de cachet, by which the defendants is prevented from doing that which, as it later turns out, he has a perfect right to do, for the whole or substantially the whole of the period in question. On a wider view of the balance of convenience it may still be right to impose such a restraint, but not unless there has been some assessment of the plaintiff’s prospects of success. I would emphasise “some assessment”, because the courts constantly seek to discourage prolonged interlocutory battles on affidavit evidence. I do not doubt that Lord Diplock, in enunciating the American Cyanamid doctrine, had in mind what its effect would be in that respect. Where an assessment of the prospects of success is required, it is for the judge to control its extent. “

18. One other preliminary matter that should be mentioned is that, on this application (as on almost all interlocutory applications) the prospects of success have to be assessed on the basis of the written statements filed by the parties, and the documents. Clearly, where there has been no testing of the evidence, I can do no more than make a preliminary assessment of the weight of the evidence, but can come to no concluded view on it.

BREACH OF EMPLOYMENT CONTRACTS

19. It is convenient to deal first with Whitmar’s submission that there is a good arguable case that Mr. Gamage, Ms. Wright and Mr. Crawley acted in breach of their contracts of employment and of their obligations as employees. Ms. Bone submitted that each of those Defendants was under an implied duty of good faith and fidelity, which continued until the end of his or her employment, notwithstanding that each was placed on garden leave immediately upon giving notice of their resignation.

20. In particular, Ms. Bone submitted that Mr. Gamage and Ms. Wright, as senior employees, each owed fiduciary duties to Whitmar notwithstanding the absence of any specific term in their letter of engagement.

21. In Ranson v Customer Systems PLC [2012] IRLR 769, Lewison L.J., in giving a judgment with which Lloyd L.J. and Pill L.J. agreed, considered the contractual duty of fidelity. He said:

“It is not disputed that an employee has an obligation of fidelity towards his employer. If the obligation is not expressed, it will invariably be implied. In Wessex Dairies Limited v. Smith [1935] 2 KB 80, Greer L.J. formulated the implied term thus:

“… during the continuance of his employment he will act in his employer’s interests and not use the time for which he is paid by the employers in furthering his own interests.

22. Later in his judgment, Lewison L.J. quoted a passage from the judgment of Neill L.J. in Faccenda Chicken Limited v Fowler [1986] IRLR 69, and summarised the position in the following way:

“What is clear, however, is that in an analysis of the employee’s contractual obligations (including his job description) is an essential foundation for determining the scope of the obligation of fidelity. “

23. Lewison L.J. then went on to consider the difference between the contractual duty fidelity and the duties of a fiduciary:

“As Elias J. pointed out in Fishel the hallmark of a fiduciary is a single-minded duty of loyalty. The duty of loyalty in that context has a precise meaning: “namely the duty to act in the interests of another As mentioned, this is not a feature of an employment relationship. In the employment context, the duty of loyalty, although given the same label “is one where each party must have regard to the interests of the other, but not that either must subjugate his interests to those of the other. ” Again it is, perhaps unfortunate, that conceptually different things have been given the same label. “

24. In Ranson, as in the present case, one of the allegations made was that Mr. Gamage and Ms. Wright at least should have informed Whitmar when they were doing work for Earth Island during the course of their employment by Whitmar. Again quoting from the judgment of Elias J. in Fishel, Lewison L.J. rejected the submission that as a general principle an employee is bound to inform his employer if and when he is doing outside work in breach of his contract.

25. It seems to me that the critical distinction between the duty of good faith and fidelity owed by an employee and the fiduciary duties is that an employee is not in the position of a fiduciary, such as a director. It is trite law that a director owes fiduciary duties to the company of which he or she is a director, and is under a duty to act in good faith in what he or she considers to be the best interests of the company. An employee does not have such a wide- reaching obligation.

26. I, therefore, reject Ms. Bones’ submission that Mr. Gamage and Ms. Wright should be treated as fiduciaries. In my judgment, the submission that they were does not raise a serious issue. As employees they owed and continued to owe until the end of their employment duties of fidelity and good faith to Whitmar, but did not owe the duty owed by a fiduciary.

WHITMAR’S CASE AGAINST THE DEFENDANTS

27. In her Skeleton Argument both for the hearing before Newey J. and for the hearing before me, Ms. Bone helpfully identified the allegations of wrongdoing by the Defendants. It will be convenient for me to set out the manner in which Ms. Bone presented Whitmar’s case. The evidence of wrongdoing that she relied upon was:

(a) the taking of impermissible preparatory steps to compete with Whitmar. Mr. Gamage and Ms Wright established Earth Island on the 31st August 2012. They were each directors and shareholders of Earth Island, which was established with the intention of competing with Whitmar at a time when they were still employed by Whitmar. In addition, Mr. Gamage and Ms. Wright identified premises from which to trade in Tunbridge Wells, the very same town as Whitmar has its premises. Furthermore, Mr. Gamage registered an internet domain name on the 6th June 2012 for Earth Island’s use.

(b) Mr. Gamage sought to solicit at least one other member of Whitmar’s staff to Earth Island. He told Whitmar’s accounts manager, Jan Hindley, that he would be starting a rival business 18 months before his resignation, and encouraged her to join the new venture. Another of Whitmar’s employees, Andy Knaggs, was also solicited to join in 2012.

(c) Mr. Gamage, Ms. Wright and Mr. Crawley solicited business from Whitmar’s clients. In October or November 2012, Mr. Gamage and Ms. Wright approached one of Whitmar’s major customers, and informed him that they would be setting up in competition with Whitmar and sought his support.

(d) Mr. Gamage told Whitmar that he did not intend to publish a print- related title, when he in fact did have that intention.

(e) Mr. Gamage attempted to use the Linked-In groups maintained by Whitmar to further the interests of his new venture. When this was discovered by Whitmar, Mr. Gamage was not straightforward about his conduct and in fact continued to attempt to use the LinkedIn groups the very next day after his misconduct had been discovered.

(f) in September 2012, Mr. Gamage informed an industry colleague that he would be setting up a competitive business.

(g) neither Mr. Gamage nor Ms. Wright nor Mr. Crawley reported their wrongdoing to Whitmar. In particular, Mr. Gamage did not inform Whitmar of his intention to leave and form a competing business. As he had a role in Whitmar’s corporate decision-making, he was clearly in a position in which he had a conflict of interest. In December 2012, shortly before he resigned, Mr. Gamage took part in the decision by Whitmar to close one of its titles.

28. It is also contended on behalf of Whitmar that since Mr. Gamage, Ms. Wright and Mr. Crawley have left Whitmar’s employment, they have misappropriated and misused Whitmar’s confidential information:

(i) Earth Island has produced a media pack which presents Earth Island as a business with strikingly similar features to Whitmar and boasts circulation figures corresponding to Whitmar’s Circulation Database.

(ii) Earth Island is going to produce and market ”extra specials” which mirror one of Whitmar’s products and a guide to digital presses which mirrors Whitmar’s “Printers Guide”.

(iii) Ms. Wright has not returned to Whitmar confidential information for Whitmar’s Printers Guide.

(iv) Ms. Wright has refused to provide Whitmar with the user name, password and all other access details for four Linked-In groups managed by her on behalf of Whitmar as part of her employment by Whitmar. Although Ms. Wright claims that the Linked-In groups were personal to her and just a hobby, Ms. Bone submitted that I should reject that explanation as Ms. Wright does not have a computer at home.

(v) the Defendants were using the Linked-In groups as their own and for the benefit of Earth Island.

(vi) Mr. Gamage removed a large number of Business Cards which he had obtained and collated during the course of his employment by Whitmar.

(vii) Mr. Gamage agreed to return the Business Cards to Whitmar, but before doing so and surreptitiously he purchased a programme called “Card Munch” which permitted him to copy and organise the information on the Business Cards.

29. Mr. Gamage denies that he had plans to leave Whitmar as early as Mr. Mulligan suggests. He says:

“The position is that there were occasions when I did think about this as I have already mentioned but had formed no settled intention. I began to think about the matter seriously in December 2012 when the decision was taken to close down Print and Paper Monthly which was the publication that I was most involved in. Contrary to what the Claimant suggests, I actually vigorously opposed the decision to close it because I feared that my job would be vulnerable. This is what ultimately led to my decision to actually set up the new business.”

30. Ms. Wright says that she had a similar reaction to events in December 2012:

“Further the Claimant appears to suggest there was some longstanding plan between us to leave. This was not the case. My position was that I was becoming increasingly unhappy with the way I was being treated personally and also was becoming increasingly of the view that the company was not being run well. Matters came to a head in December 2012 when I found out that the two other existing editors in my department were being awarded substantial pay rises and I was not. These two members of staff had only been with the company for a short time whilst I had not had a pay rise for many years. That was when I decided to leave.”

31. Although, as I have said, I cannot come to any concluded view on the basis of witness statements upon which there has not been any cross-examination, it has to be said that the evidence points strongly against the accounts written by Mr. Gamage and Ms. Wright to which I have referred.

32. Earth Island was, as I have said, incorporated in August 2012, and Mr. Gamage and Ms. Wright were directors of that company. In addition, a domain name had been registered for Earth Island some months before. There is really no explanation from either Mr. Gamage or Ms. Wright as to the reason for the incorporation of Earth Island or the registering of a domain name unless it was intended that Earth Island would compete with Whitmar.

33. In addition, I had before me a witness statement of a Mr. David Gregory. That statement had only been made on the 11th June 2013, the day before the hearing before me. I asked Mr. Menzies whether he wished to have an adjournment in order to respond to Mr. Gregory’s witness statement. After taking instructions Mr. Menzies said that he did not wish to have an adjournment, and that he was prepared to proceed on the basis that Mr. Gregory’s statement was before me and was unanswered.

34. In his statement, Mr. Gregory records that in November 2011, he had a meeting with Mr. Gamage and Ms. Wright during which they told him that they intended to set up new titles on their own, including a general print title, an environmental print title and, possibly, a cruising magazine. He says that it was clear to him from the very outset that the publications would be competing directly against Whitmar, and that “the fact of and the contents of our discussions and communications were to remain secret from the Claimant, because of David Gamage’s concerns for his job

35. Mr. Gregory also stated that the discussions that he had with Mr. Gamage and Ms. Wright left him in no doubt that from November 2011 they had formed the intention to set up competing print titles. He said:

“They consistently expressed their determination and seriousness about doing so.

36. He added that the discussions involved a large number of activities which were designed solely for the purpose of competing with Whitmar’s business. They included:

(i) identifying an appropriate brand title.

(ii) establishing the availability of the URLs relating to preferred brands.

(iii) establishing the availability of certain print titles in terms of trade marks, copyright, etc.

(iv) exploring the design and layout of the titles.

(v) identifying the target audience.

(vi) identifying the company name.

(vii) structuring the new company in terms of shares and the subsequent issue of incentive shares.

(viii) discussing the identity and number of directors and employees of the new company.

(ix) discussing a marketing strategy and market research through the use of social media.

(x) identifying and securing private and/or institutional investment for the start-up.

37. In respect of identifying a name for the new print titles, Mr. Gregory made a suggestion about how to go about choosing a name on the 14th December 2011 to which he got the response from Mr. Gamage:

“So how do we do that without blowing our cover? D”

38. In early 2012, that is over a year before the First to Third Defendants tendered their resignations from Whitmar, Mr. Gregory asked Mr. Gamage and Ms. Wright:

“Who else is worth taking?”

39. In reply, Mr. Gamage said:

“As well as me and Susan, I am looking at Steve for design and production and Jan for admin and accounts. Maybe Andy too as another editor/travelling reporter.”

Jan was Jan Hindley and Andy was Andy Knaggs, both then employed by Whitmar.

40. In addition, Mr. Gamage showed to Mr. Gregory internal management accounts that he had taken from Whitmar.

41. Mr. Gregory’s involvement with the new venture ceased in February 2012, but it is plain from his evidence that there is a serious issue to be tried as to whether even at that stage Mr. Gamage and Ms. Wright were involved in competing with Whitmar’s publications.

LINKED-IN GROUPS

42. Ms. Wright was responsible for dealing with the Linked-In groups as part of her employment duties at Whitmar. Those groups operated for Whitmar’s benefit and promoted its business, and Ms. Wright used Whitmar’s computers to carry out her work on the Linked-In groups.

43. Mr. Gamage and Ms. Wright left Whitmar’s employment on the 1st February 2013 after completing their garden leave. On the 4th February 2013 Whitmar’s Linked-In groups appear to have been used as the source of e-mail addresses for Earth Island’s press release in which a large number of individuals were invited to attend “an informal event” at a bar in Leicester Square.

OTHER CONFIDENTIAL INFORMATION

44. In addition, Whitmar contends that Mr. Gamage and Ms. Wright took away with them Whitmar’s confidential information in the form of Whitmar’s Circulation Database and Customer Database. I have no doubt that (to put the matter at its very lowest) there is a serious issue to be tried as to whether those Databases contained Whitmar’s confidential information.

45. The Business Cards which Mr. Gamage had accumulated over many years, were taken by him, but subsequently returned to Whitmar, albeit some time after they had been promised. Although there is a dispute about the circumstances in which Mr. Gamage took the Business Cards, for the purposes of this judgment, I do not have to express a view as to which account I find more credible. Plainly, and again to put it at its lowest, there is a serious issue to be tried as to whether they were useful to Mr Gamage and Ms Wright in setting up a competing business.

46. Whitmar’s contention is that Mr. Gamage purchased a piece of equipment named “Card Munch” to copy those business cards. Mr. Gamage denies that, and I can make no finding on that on the state of the evidence at the present time.

THE DEFENDANTS’ SUBMISSIONS

47. Mr. Menzies, on behalf of the Defendants, denies that the Defendants have been acting in competition with Whitmar’s publications, and points out that Mr. Gamage has offered his iPhone for inspection in relation to the alleged misuse of the Business Cards. The burden of Mr. Menzies’ submissions was that the evidence submitted by Whitmar came nowhere near satisfying the Lansing Linde standard.

48. Mr. Menzies submitted that the allegations that were made of a sustained and serious misconduct and specifically included dishonesty and theft so that the evidence necessary to support the allegation would need to be particularly cogent: see Brutt Trade Marks [2007] RPC 462 and Re H (minors) [1996] AC 563.

49. Mr. Menzies further submitted that whatever the Defendants have done there was no competitive activity during the course of their employment. He relied upon a passage in the judgment of Popplewell J. in Fahim Imam-Sadeque vBluebay Asset Management (Services) Limited in which at paragraph 126, Popplewell J. said:

“In general terms, it can be said that the duty of fidelity requires an employee not to engage in competitive activity. Nevertheless, it is legitimate for him to undertake competitive activity as soon as he ceases the employment (in the absence of effective post-termination covenants), and not all preparation for such future competitive activity will be a breach of his duty of loyalty. Where the boundary is to be drawn, in any particular case, between legitimate preparatory activity and illegitimate competitive activity, is often a difficult question.

50. Popplewell J. also quoted from a judgment of Moses L.J. in Helmet Integrated Systems Limited v. Tunnard & Others [2007] IRLR 126 in which Moses L.J. said:

“27. This freedom to compete, once an employee has left, unrestrained by any enforceable covenant, carries with it a freedom to prepare for future activities, which the employee plans to undertake, once he has left. In Robb v. Green (q.v. supra) Hawkins J. concluded that a manager who had copied a list of customers was liable in damages for breach of an implied term not to use such information to the detriment of his employer. But he observed, in words echoed frequently thereafter, that each case would depend upon its own circumstances and there will be cases where an employee may legitimately canvas, issue circulars, have a place of business ready and hire employees (see page 15). The Court of Appeal made no observation suggesting disagreement when it affirmed Hawkins J.’s conclusion.

The legitimacy of preparatory activity

28. The battle between employer and former employee, who has entered into competition with his former employer, is often concerned with where the line is to be drawn between legitimate preparation for future competition and competitive activity undertaken before the employee has left. This case has proved no exception. But in deciding on which side of the line Mr. Tunnard’s activities fall, it is important not to be beguiled into thinking that the mere fact that activities are preparatory to future competition will conclude the issues in a former employee’s favour. The authorities establish that no such clear line can be drawn between that which is legitimate and that which breaches an employee’s obligations.”

51. Mr. Menzies points out that there is nothing in the Defendants’ contracts of employment to restrict them from competing after their employment finished and that they were not executive directors.

52. Mr. Menzies further submitted that there was no evidence of any competition prior to the termination of their employment, and referred to the judgment of Falconer J. in Balston Limited v Headline Filters Limited [1990] FSR 395.

“SPRINGBOARD” RELIEF

53. So far as Whitmar’s application for “springboard relief’ is concerned, Mr. Menzies drew my attention to the judgment of Jonathan Parker J. in Sun Valiev Foods Limited v. John Philip Vincent [2000] FSR 825 at page 834 and which Jonathan Parker J. said:

“For reasons which I have already explained, there is no room for doubt that the defendants have made unlawful use of material in which Sun Valley/Fields has a proprietary interest. But, as Nourse L.J. explained in Bullivant, that in itself is not enough to found a claim for “springboard” relief. Sun Valley also has to establish (a) that the defendants thereby gained unfair competitive advantage over Sun Valley “to use the words of Roxburgh J.” (an “unfair start”) and (b) as of today that advantage still exists and will continue to have effect unless the relief sought is granted.

It is, therefore, necessary to consider on the evidence as it stands (and, of necessity, without the benefit of cross-examination) the extent to which the unlawful copying of Fields’ material assisted the defendants in starting up Fusion’s business and in thereby shortening the start-up period.

In undertaking this task, I must bear in mind that there was nothing unlawful in the individual defendants making use of their own expertise and experience in setting up in competition with Sun Valley/Fields immediately following their resignations. In those respects, a “seamless transaction” from Fields to Fusion was a legitimate aim which cannot found an application for “springboard” relief.”

54. Mr. Menzies submits that although Whitmar says that the Defendants had over a year to prepare their strategy and position themselves, there is no evidence that time was taken out from Whitmar’s business was necessary to prepare that strategy. In other words, Mr. Menzies submitted, there was no more than an intention to set up another company.

55. There is common ground between Ms. Bone and Mr. Menzies as to the principles which I should apply when deciding whether or not to grant springboard relief. The relief sought by Whitmar is narrow in that it relates only to those customers whose names appear on the Business Cards which Mr. Gamage took, but later returned.

CONCLUSION

56. At the conclusion of the hearing before me, I was left in no doubt that, looking at the evidence as a whole, there was a strong case that the Defendants were taking steps to compete against Whitmar for over a year. The steps that they were taking were not just preparatory steps. They were steps taken with more than just the intention to set up another company. They were active steps to compete.

57. It seemed to me that the emails exhibited to Mr Gregory’s Witness Statement provided very clear evidence in support of Whitmar’s case that the Defendants were competing with Whitmar whilst they were still employed by Whitmar. One of the badges of competition in cases such as this is the secrecy with which those who are competing go about their business. The emails between Mr Gregory, Mr Gamage and Ms Wright are clear examples of the desire for secrecy. Perhaps the paradigm of that desire is to be found in the email that was sent to Ms Wright by Mr Gamage on the 27th January 2012: it was addressed to Ms Wright at her Whitmar email address although she had been using another email address for her communication with Mr Gregory and Mr Gamage. When Mr Gamage realised his error he wrote to Mr Gregory asking him not to reply, and added: “All traces destroyed here.”

58. Equally, I concluded that there was a strong case that the Circulation Database and the Customer Database were Whitmar’s confidential information.

59. Furthermore, it did seem to me that, on the basis of the evidence as it is at present, there was a strong case that those Business Cards did provide the Defendants with a competitive advantage, and that “springboard” relief should therefore be granted.

60. I, therefore, took the view that Whitmar had a very good chance of succeeding at trial. For these reasons, I granted the relief sought by Whitmar. That relief is now embodied in the Order that I have approved.

Citation: 2013] EWHC 1881 (Ch)

Link to caseWhitmar Publications Ltd v Gamage & Ors [2013] EWHC 1881 (Ch)

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