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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Whitmar Publications Ltd v Gamage & Ors [2013] EWHC 1881 (Ch) (04 July 2013) URL: https://www.bailii.org/ew/cases/EWHC/Ch/2013/1881.html Cite as: [2013] EWHC 1881 (Ch) |
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CHANCERY
DIVISION
Strand, London, WC2A 2LL |
||
![]() |
B e f o r e :
(sitting as a Deputy Judge of the High Court)
____________________
![]() ![]() ![]() ![]() |
Claimant |
|
- and - |
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(1) DAVID ![]() (2) ![]() (3) STEVE CRAWLEY (4) EARTH ISLAND PUBLISHING LIMITED |
Defendants |
____________________
Mr Gordon Menzies (instructed by Heringtons Solicitors) for the Defendants
Hearing date: 12th June 2013
Date of Judgment: 4th July
2013
____________________
2013
DATE OF HTML
VERSION
OF JUDGMENT: 4TH JULY
2013
HTML
VERSION
OF JUDGMENT
Crown Copyright ©
Mr Peter Leaver QC:
INTRODUCTION
THE PARTIES
WHITMAR'S
APPLICATION
(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.
"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 widerview
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. "
BREACH OF EMPLOYMENT CONTRACTS
"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 Limitedv.
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.
"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. "
"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. "
WHITMAR'S
CASE AGAINST THE DEFENDANTS
(a) the taking of impermissible preparatory steps to compete withWhitmar.
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 Linked-In 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.
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 toWhitmar
and boasts circulation figures corresponding to
Whitmar's
Circulation Database.
(ii) Earth Island is going to produce and market ''extra specials" which mirror one ofWhitmar's
products and a guide to digital presses which mirrors
Whitmar's
"Printers Guide".
(iii) Ms. Wright has not returned toWhitmar
confidential information for
Whitmar's
Printers Guide.
(iv) Ms. Wright has refused to provideWhitmar
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.
"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 thepublication
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."
"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 theview
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."
"They consistently expressed their determination and seriousness about doing so."
(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.
"So how do we do that without blowing our cover? D"
"Who else is worth taking?"
"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.
LINKED-IN GROUPS
OTHER CONFIDENTIAL INFORMATION
THE DEFENDANTS' SUBMISSIONS
"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."
"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 Robbv.
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."
"SPRINGBOARD" RELIEF
"For reasons which I have already explained, there is no room for doubt that the defendants have made unlawful use of material in which SunValley/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 SunValley/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."
CONCLUSION