Simon Crookenden QC:
- The Claimant ("Premier") is a model agency which handles the affairs of and arranges employment for fashion and photographic models. Premier employs a team of bookers to promote and arrange assignments for the models represented. The First Defendant ("Mr Bruce") was employed as a booker by Premier from July 2007 until July 2012.
- On 1 May 2012, Mr Bruce gave notice of his intention to resign from Premier. By his contract of employment, he was required to give three months notice of termination. In fact, Mr Bruce was off work sick for much of his notice period during which Premier became aware that Mr Bruce might be involved in the setting up of a competitive agency. Mr Bruce's company e-mail account was investigated and, as a result, Premier formed the view that Mr Bruce had misused confidential information by disclosing information to the Second Defendant ("Mr Ribeiro"). Premier also discovered that Mr Bruce was or had been a director of the Third Defendant ("PRM"). Mr Bruce was summarily dismissed by Premier on 23 July 2012.
- Mr Ribeiro is the relationship partner of Mr Bruce. The two have lived together since at least October 2011. Mr Ribeiro is a director and 50% shareholder of PRM which he set up in January 2012. When setting up the company Mr Ribeiro arranged for Mr Bruce to become a director of PRM and to own 50% of the shares in the company. The evidence of Mr Bruce is that this was done without his knowledge.
- On 24 July 2012, the Defendants were served with notice of an application for an injunction. The application was heard by the court on 27 July 2012 and injunctions were granted by Michael Kent QC, sitting as a Deputy Judge. On 10 August 2012, the interim injunctions were continued by consent by the Honourable Mrs Justice Slade. Directions were given for an expedited hearing which came on before the court and was heard between the 13 and 16 November 2012.
- By its Particulars of Claim Premier sought against all three Defendants:
i) Continuation of the injunctions until 1 August 2013.
ii) An order for delivery up of Premier's property.
iii) The taking of an account or an inquiry as to damages.
iv) Alternatively, damages.
- By order of Master Cook dated 11 October 2012, Premier was given leave to amend its Particulars of Claim to allege fraud against Mr Bruce in respect of false travel claims in the total sum of £21,020.
- By his Defence, Mr Bruce denies any breach of his contract of employment and denies any false travel claims save in respect of one claim for £835 the amount of which was repaid by Mr Bruce to Premier's solicitors in the course of these proceedings. Mr Ribeiro and PRM, who are sued as accessories to the breach by Mr Bruce of his contract of employment, deny any liability.
- At the hearing, Premier was represented by Rupert Butler of counsel. Mr Bruce represented himself. Mr Ribeiro also represented himself, though submissions were made on his behalf by Mr Bruce. PRM was represented by its director, Mr Ribeiro. Again submissions were made on behalf of PRM by Mr Bruce.
- The court heard oral evidence on behalf of Premier from Carole White, the founder and managing director of Premier; Michael Owen, the brother of Carole White, who acted as a consultant to Premier and was employed by Premier to investigate Mr Bruce's e-mails; Caroline Stringer, the sales director of Maria's (Travels and Tours) Ltd ("Maria's Travels"), and Jagdip Singh Litt (known as "Jack Singh"), the financial controller of Premier. On behalf of the Defendants both Mr Bruce and Mr Ribeiro gave evidence as did Kim Thompson, the mother of Mr Bruce, who has been a director of PRM since March 2012.
- The court also received in evidence a witness statement of Maria Nicola, the founder and managing director of Maria's Travels, who was abroad at the time of the court hearing and unable to attend to give evidence in person.
The employment of Mr Bruce
- Mr Bruce commenced employment as a booker with Premier on 4 July 2007. His contract of employment was contained in a Statement of Main Terms of Employment signed by Mr Bruce on 29 August 2008. An acknowledgement that the Staff Handbook formed part of his contract of employment was signed by Mr Bruce on 3 December 2007 and a Confidentiality Agreement was signed by Mr Bruce on 20 May 2008.
- Although Mr Bruce stated that he had not been supplied with a copy of the Staff Handbook, I am satisfied that a copy was made available for him and that the Main Terms document, the Confidentiality Agreement and the Staff Handbook formed part of the terms of his employment. The terms of the Staff Handbook are, in any event, the sort of terms an employee in this type of employment might reasonably expect to form part of his contract of employment.
- The Statement of Main Terms of Employment provided:
During your employment you shall not either alone or jointly with or on behalf of any person:-
(a) be directly or indirectly engaged, concerned or interested in any other business which is wholly or partly in competition with the business carried on by Premier; or
(b) solicit, canvass or entice away or endeavour to solicit, canvass or entice away the business of any client or customer of Premier or the business or representation of any model or other person represented by Premier.
You hereby covenant with Premier that neither you nor any company or business in which you are directly or indirectly engaged, concerned or interested in shall, alone or jointly, whether on your own account or for any other person, firm or company and whether as principal, shareholder, partner, employee, agent, adviser or otherwise directly or indirectly:
(a) for a period of twelve (12) months after the expiry or termination of your employment canvass, solicit, approach or interfere with or employ or engage (in any capacity) or endeavour to entice away from Premier, any person with whom you have had material contact or dealings in performing the duties of your employment and who is at the date of such termination or who was at any time during the twelve (12) months preceding the date of such termination an executive or an employee of Premier; [12 month non-solicitation of employees]
(b) for a period of twelve (12) months after the expiry of termination of your employment canvass, solicit, approach or entice away or endeavour to solicit, canvass or entice away the business of any model or other person represented by Premier who has at such date of termination or at any time during the period of twelve months prior to that date done business with or been represented by Premier and with whom you have had dealings either directly or indirectly (including for whom you have made bookings and/or negotiated fees and/or negotiated contracts) during this period; [12 month non-solicitation of models]
(c) at any time after the expiry or termination of your employment represent yourself as being in any way connected with or interested in the business of Premier;"
- The Staff Handbook provided:
You must not at any time (other than in the proper performance of your duties or with the prior written consent of Premier or unless ordered by a court or other authority of competent jurisdiction) during the continuance of your employment with Premier or afterwards disclose or communicate to any person or use for your own benefit or the benefit of any person other than Premier or through any failure to exercise all due care and diligence cause, enable, authorise, assist or permit any unauthorised use or disclosure of any information which you know or ought reasonably to know concerns the business of Premier or any of its suppliers, agents, distributors, clients, or any models represented by Premier which shall have been acquired, received or made by you during the course of your employment (whether or not expressly designated "confidential" and whether or not in legible or tangible format) (together "Confidential Information") or attempt or purport to do any of the foregoing. The provisions of this sub-clause will not apply to any confidential information which is in the public domain, other than by breach of this contract of employment by you, or is obtained from any third party who is lawfully authorised to disclose such information.
You are to exercise reasonable care to keep safe all documentary or other material containing Confidential Information, and shall at the time of termination of your employment with us, or at any other time upon demand, return to us any such material in your possession.
All written material, whether held on paper, electronically or magnetically which was made or acquired by you during the course of your employment with us, is our property and our copyright. At the time of termination of your employment with us, or at any other time upon demand, you shall return to us any such material in your possession.
G) USE OF COMPUTER EQUIPMENT
In order to control the use of the company's computer equipment and reduce the risk of contamination the following will apply:-
e. No software may be brought onto or taken from the company's premises without prior authorisation.
g. Unauthorised copying and/or removal of computer equipment/software will result in disciplinary action, such actions could lead to dismissal.
H) E-MAIL AND INTERNET POLICY
c. The company will not tolerate the use of the E-Mail system for unofficial or inappropriate purposes, including:-
i) Any messages that could constitute bullying, harassment or other detriment.
v) Transmitting copyright information and/or any software available to the user.
vi) Posting confidential information about other employees, the company or its customers or suppliers.
DISCIPLINARY RULES AND PROCEDURES
E) RULES COVERING GROSS MISCONDUCT
(The following are illustrative examples and do not constitute an exhaustive list.)
You will be liable to summary dismissal if you are found to have acted in any of the following ways:-
v. Deliberate falsification of any records (including time sheets, absence records and so on, in respect of yourself or any fellow employee).
w. Undertaking private work on the premises and/or in working hours without express permission.
x. Working in competition with us.
y. Taking part in activities which result in adverse publicity to ourselves, or which cause us to lose faith in your integrity.
z. Theft or unauthorised possession of money or property, whether belonging to us another employee or a third party."
- The Confidentiality Agreement provided:-
"I as a separate and additional obligation also agree that:-
(i) any lists or contact details of personal information concerning all or any of Premier Model Management Limited clients and of any other actual or prospective clients, customers, models, photographers, stylists, make up artists, agencies or contact"
(ii)all correspondence, records and documents including any computer files or data relating to the affairs and business of Premier Model Management Limited or Premier Model Management Limited clients or customers which may come in to the my possession or control during the period of this placement or discussions;"
Are the property of Premier Model Management Limited and that on the termination of this placement or discussion I will deliver up to Premier Model Management Limited all such lists, correspondence, records and documents including any computer files or data or any other property of Premier Model Management Limited within my possession or under the my control whether the same were originally supplied or produced by Premier Model Management Limited, myself, or any other person.
- By his Defence, Mr Bruce did not dispute the validity of his contract of employment as alleged by Premier in its Particulars of Claim. By Outline Submissions of the Defendants provided to the court and dated 8 November 2012, however, Mr Bruce sought to dispute whether his contract of employment was legal and enforceable by Premier. The grounds on which Mr Bruce sought to dispute the validity of his contract of employment were as follows:
i) That he was not given a copy of the Staff Handbook at the time that he signed the acknowledgement dated 3 December 2007.
ii) That, throughout the period of his employment, Premier made payments to him in cash and by way of benefits in kind amounting to a fraud on the Revenue.
iii) That, throughout the period of his employment, Mr Bruce was not aware of any fraud on the Revenue as Premier did not provide him with any wage slips or P60 forms.
- The court refused Mr Bruce leave to rely on the issue of the validity and enforceability of his contract of employment primarily because the issue was first raised such a short time before the hearing before the court that it would not have been fair to Premier to allow this issue to have been relied on. In any event, the grounds sought to be relied on by Mr Bruce as set out above did not, in my judgement, amount to matters that would invalidate or render unenforceable Mr Bruce's contract of employment. The failure to provide the Staff Handbook would only go to the incorporation of the terms of the Handbook into the contract of employment. Irregularities as to payment of remuneration, even if amounting to a fraud on the Revenue, would not invalidate or render unenforceable the contract of employment unless it was the intention of one or both of the parties to perform the contract in an illegal manner or if the contract was for an illegal purpose. No such illegal intention or purpose was alleged. Mere illegality in the performance of a contract does not invalidate a contract or render it unenforceable1.
- Before joining Premier in 2007, Mr Bruce had worked for other model agencies and as a model. He was clearly good at his job. I was shown a table of the value of billings achieved by the bookers employed by Premier which showed Mr Bruce as having achieved the greatest value of bookings in 2011 by a substantial margin.
- Mr Bruce's starting salary was £36,000 per annum. This basic salary never changed, but he was awarded an additional bonus each year. This started at £4,000 and, at the time of his resignation from Premier, had risen to £24,000 per annum. These bonuses were paid either in cash, by way of benefits in kind or by the personal expenses of Mr Bruce being met by Premier.
- From October 2011, the majority of the bonus was utilised in funding a flat for Mr Bruce. Since Mr Bruce had not previously rented a flat, he found it difficult to produce the references required to enable him to take the lease of a flat in his own name. To assist him, Premier agreed to take the lease of a flat in the company name and to contribute to the rent. In exchange, Mr Bruce was expected to allow models requiring temporary accommodation to have the use of one of the bedrooms in the flat from time to time.
The facts relating to the alleged breach by Mr Bruce of his contract of employment.
- Mr Bruce met Mr Ribeiro at a fashion event in early 2011. They became relationship partners and started living together from about October 2011 at the flat leased by Premier for the use of Mr Bruce.
- From about October 2011, Mr Bruce started forwarding to Mr Ribeiro or to personal e-mail accounts that he had set up, information about Premier, its model clients and its customers. Some of this information, such as contact details of customers, was in the public domain, but much of it was not. Examples of the kind of information forwarded include the following:
i) Details of models available for booking. Agencies representing models would send to Premier details, including high-quality photographs, of models that they were seeking to promote so that Premier could consider them for any assignment for which their customers were seeking models. Mr Bruce forwarded such details to Mr Ribeiro on a large number of occasions. Generally there would be no e-mail response from Mr Ribeiro but on occasion there was. For instance, on 17 October 2011, Mr Bruce forwarded to Mr Ribeiro details of a Latvian model called Ieva Laguna adding a comment: "Can you research?". Mr Ribeiro replied: "Can only find address/location", to which Mr Bruce responded "In your notebook!"
ii) Details of business available for models and customers seeking models. Those seeking to employ models for fashion events or photographic shoots would send to Premier details of a casting brief setting out the type and number of models that were sought. This enabled Premier to propose models that they considered were suitable for the assignment. Again there were many examples of Mr Bruce passing on such business opportunities to Mr Ribeiro. One example is an email dated 14 November 2011 from a Korean agency, Ever International Model Management, that was seeking models able to travel to Korea for an assignment. This was circulated to the bookers at Premier and forwarded by Mr Bruce to Mr Ribeiro. There was no response from Mr Ribeiro evident from the email record on this occasion but there was on other occasions. An e-mail to Mr Bruce at Premier dated 14 February 2012 from Raina Bamber of Shop Direct following up a meeting between Ms Bamber and Mr Bruce discussed the possible future requirements of Shop Direct for models. In responding, Mr Bruce stated: "Also, my Partner is a personal manager and I forgot to mention on Friday that he has some Woman that I feel would be good for Mature. I have copied him into the e-mail so he can be in touch." Mr Ribeiro responded on receipt of this e-mail by e-mailing Shop Direct stating: "I will e-mail you shortly a couple of gorgeous ladies I think could be good for you."
iii) Copies of documentation used by Premier in its business. Much of Premier's business involved booking models who were primarily managed by other agencies known in the trade as mother agencies. It is normal in the trade for the commission earned on a booking to be shared between the mother agency and the agency that secured the booking. Premier had a standard mother agency agreement that they preferred to use in these situations. On 6 December 2011, Mr Bruce asked Stephanie Arber, a Premier Accounts Assistant, to e-mail him a form of mother agency agreement. Mr Bruce then forwarded the form to Mr Ribeiro in two different electronic formats.
iv) Details of the terms on which Premier carried on its business. By way of example, on 6 February 2012, Mr Bruce forwarded to his personal e-mail address an e-mail circulated by Premier to all its bookers relating to the credit terms that Premier sought to insist on in agreements with its customers. On the same day Mr Bruce forwarded to Mr Ribeiro a copy of a Premier invoice for a modelling assignment.
v) Information about Premier's software licenses.
vi) Information about the state of accounts between Premier and its business counterparts. For instance, on 14 February 2012, Mr Bruce forwarded to Mr Ribeiro an account showing mother agency commissions due.
vii) Premier's images of its model clients. For instance, on 11 January 2012, Mr Bruce sent to Mr Ribeiro Premier's own images of a model represented by Premier, James Dow, and on 13 January 2012 images of another model, Jamie Gunns, that Mr Bruce had received from another agent.
- Mr Bruce was not willing to accept that, in passing the above information to Mr Ribeiro or forwarding it to his personal e-mail accounts, he was doing anything wrong or contrary to the terms of his employment contract. As regards the material forwarded to his personal e-mail accounts he stated that this was for his ease of reference in carrying on his work as an employee of Premier so that he had access to information when away from the office. As regards the matters forwarded to Mr Ribeiro, he gave various reasons, but in general stated that this was what was done in the ordinary course of correspondence between partners who were in a relationship. Mr Bruce also pointed out that much of the information forwarded was in any event in the public domain. Mr Ribeiro in giving evidence, was more willing to accept that there was no reasonable justification for Mr Bruce to disclose much of the information relating to the business of Premier that was forwarded to him by Mr Bruce.
- In the autumn of 2011, Mr Bruce and Mr Ribeiro were planning to take a holiday in Brazil over Christmas and the New Year. A series of meetings were set up in early January 2012 for Mr Bruce and Mr Ribeiro to meet various model agencies in Brazil. Some of these meetings were arranged by Mr Bruce in his capacity as an employee of Premier. One such meeting arranged by Mr Bruce was with Way Model Management of S o Paulo. Mr Bruce told Way: "I'm coming with my partner Paulo who is Brazilian and dealing with Production". Other meetings were arranged by Mr Ribeiro. Mr Ribeiro, styling himself as "Director, PR Management Group", sought a meeting with the Francois model agency stating (in translation from the Portuguese): "I will be travelling with John Bruce of Premier Model Management. We would like to see models to be represented in London." Some meetings were arranged by others at Premier such as a meeting with Talento, another S o Paulo agency, which was arranged by Chris Owen, a director of Premier.
- Premier submits that the Brazil trip was planned by Mr Bruce and Mr Ribeiro to be and was a scouting trip seeking to find business for an intended rival model agency. The Defendants deny this and say that Mr Bruce attended the meetings on behalf of Premier to obtain business for Premier whereas Mr Ribeiro attended the meetings partly to assist Mr Bruce to communicate with Portuguese speakers (Mr Ribiero being a fluent Portuguese speaker) and partly to find models that could be used by his uncle's lingerie business that was based in Brazil.
- On 25 January 2012 PRM was incorporated with both Mr Bruce and Mr Ribeiro as founding directors and 50% shareholders. Mr Bruce denies that he had any knowledge that Mr Ribeiro had made him a director or shareholder of PRM. He states that, when he found out in March 2012, he resigned as a director. Mr Ribeiro states that he did not tell Mr Bruce that he had made him a director and shareholder of PRM. He explained that he made Mr Mr Bruce a director out of feelings of affection for him. Following Mr Bruce's resignation as a director of PRM, his mother, Kim Thompson, was appointed a director of PRM. On 1 May 2012, Mr Bruce resigned his employment at Premier. Premier required Mr Bruce to work for the three month period of his notice which would accordingly expire on 31 July 2012.
- During his notice period news of Mr Bruce's resignation became public knowledge. Following this, on 13 June 2012, Mr Bruce posted the following message on his Facebook page: "So the Cat is out of the bag ... I have officially resigned from Premier ... News about a New Super Agency and new home of Super Booker coming very soon!" Super Booker was a name by which Mr Bruce referred to himself and was the name under which he had opened one of his personal e-mail accounts.
- From 15 June 2012, Mr Bruce ceased attending at the offices of Premier stating that his doctor had advised him to rest as he was overstressed. A doctor's certificate dated 20 June 2012 was provided stating that Mr Bruce required to be off work until 27 July 2012.
- The message on Mr Bruce's Facebook page referred to above led to concerns at Premier that Mr Bruce might be acting against the interests of Premier. This prompted an investigation of the e-mail traffic to and from Mr Bruce's e-mail address at Premier. Following this investigation, Mr Bruce was invited by Premier to attend Premier's offices to discuss what had been found but he declined citing his doctor's certificate.
- Premier relies on incidents involving three particular models to show that Mr Ribeiro and PRM benefited from information and assistance provided to them by Mr Bruce during his employment at Premier.
- The first of these incidents involved a Brazilian model, Talita Correa. Ms Correa's mother agent was a Brazilian agency known as L'Equipe. L'Equipe was one of the agencies visited by Mr Bruce and Mr Ribeiro in the course of their trip to Brazil in January 2012. On 14 March 2012, L'Equipe contacted Premier seeking work for Ms Correa and advising that she was visiting the UK for a booking in Manchester. This information was passed on to Mr Bruce who indicated no interest in her responding to his colleagues by e-mail. "She is lovely but too commercial". In fact as Mr Bruce well knew, Ms Correa had been booked for the Manchester job by Shop Direct through PRM. PRM did not, however, have UK Border Agency authority to arrange a visa for Ms Correa's working visit to the UK. Premier did have such authority. Mr Ribeiro asked Mr Bruce if he could arrange a visa for Ms Correa through Premier. Mr Bruce asked the staff at Premier to arrange such a visa as though Ms Correa was travelling to an assignment arranged by Premier. Mr Bruce states that his intention was that the cost of this visa would be charged to his personal account by Premier. However, no such charge was ever made.
- Mr Bruce also assisted Mr Ribeiro by arranging travel facilities for Ms Correa. He did this by requesting staff at Maria's Travels to arrange a flight for Ms Correa as though Ms Correa was travelling to fulfil an assignment arranged by Premier. Maria's Travels made the requested travel arrangements. They advised Mr Bruce by e-mail dated 20 March 2012 that Ms Correa's flight cost was £735 and requested a purchase order to cover the cost for the purpose of invoicing Premier. Mr Bruce forwarded this e-mail to Stephanie Arber who had responsibility on behalf of Premier for the issue of purchase order numbers. Before doing so, however, Mr Bruce altered the e-mail from Maria's Travels by changing: "Talita Correa – 13/03 - £735" to "Jamie Gunns - 13/03 - £835 - added to Littlewoods in April." As a result of this change, Maria's Travels raised an invoice on Premier in respect of the travel costs of Ms Gunns for an assignment for Littlewoods at a cost of £835. This cost was then recharged by Premier to Littlewoods (or Ms Gunns).
- Mr Bruce accepted by his affidavit dated 3 August 2012 that he made a false travel expenses claim in respect of the sum of £835 falsely stated to be for the travel expenses of Ms Gunns. This sum has been repaid by Mr Bruce to Premier's solicitors. The court was informed that the ultimate loser as a consequence of this false claim was the model, Ms Gunns, rather than Littlewoods and that Premier has paid £835 to her to compensate her for her loss. In evidence Mr Bruce stated that he asked for the cost of Ms Correa's flight to be recharged to his own personal expenses account at Premier. This is not accepted by Premier.
- Shop Direct was invoiced by PRM for the services of Ms Correa, including for flights costing £616. The fees charged to Shop Direct by PRM for Ms Correa's services were 4 shooting days at £2,400 per day and one fitting day at half rate of £1,200. In evidence Mr Ribeiro accepted that he told Ms Correa and her mother agency that the daily rate that he had agreed with Shop Direct for her services was $1,500 per shooting day. The amount actually remitted by PRM to Ms Correa via her mother agency was, however, at the rate of €1,500 per day. In evidence Mr Ribeiro stated that he considered that he was entitled to agree different day rates with his customer and with his model client since he was acting as a middleman. Although it is not of direct relevance to my decision in this case there being no claim by Ms Correa or her mother agency against PRM, Mr Ribeiro's understanding of his obligations as an agent acting on behalf of a model client to arrange work appears to be sadly deficient. My understanding of the way in which model agents generally operate is that the agent is a true agent acting on behalf of a client with a duty to act in that client's best interests and to disclose to the client any profit that he makes from acting as the client's agent. It is usual in the trade, as I understand, for the agent to charge a commission to the model client (that will be shared with the mother agency if the model is represented by another agency) and to charge a commission to the customer engaging the services of the model. Any such commission charged to the customer must, however, be disclosed to the model client. Mr Ribeiro stated in evidence that his commission on Ms Correa's work for Shop Direct was 20% so, as far as Shop Direct was concerned, Ms Correa's daily rate was £2,000. The difference between this rate of £2,000 and the rate advised to and paid to Ms Correa and her mother agency was retained by PRM or Mr Ribeiro.
- The second incident relied on by Premier involved the model Matthew Holbrook. Mr Holbrook had been a model represented by Premier in the past but had not been regularly represented by them since 2009. Mr Bruce on behalf of Premier did, however, arrange a booking from Mr Holbrook in November 2011 and another in February 2012 for an assignment for Boo-Hoo UK. This second booking, arranged by Mr Bruce acting on behalf of Premier, was invoiced to the customer, Boo-Hoo UK, by PRM. No one at Premier apart from Mr Bruce was made aware that this assignment for Mr Holbrook, although arranged by Mr Bruce on behalf of Premier, had been charged for by PRM.
- The third incident involved the model Tom Neate. By an e-mail dated 8 February 2012, Mr Neate forwarded to Mr Bruce at Premier various photographs of himself. Mr Bruce forwarded these images to his personal e-mail address as the Super Booker. From about May 2012, PRM has represented Mr Neate and has earned commissions from bookings arranged for him. Mr Ribeiro accepts that he met Mr Neate through Mr Bruce. Mr Bruce gave evidence that Mr Neate was a personal friend that he introduced to Mr Ribeiro and PRM in order to assist Mr Neate.
Facts relating to the inflated travel claims
- Including the admitted false travel claim for Ms Correa, Premier asserts that Mr Bruce has defrauded Premier, its clients and customers by making false travel claims on some 90 separate occasions in the aggregate sum of £21,020. Mr Bruce does not dispute the fact that he submitted false travel claims but states that he was instructed and authorised to do so by Premier. The normal way in which travel claims were falsified was by inflation of the cost of a model's travel expenses. For instance, on 6 December 2011, Mr Bruce asked Maria's Travels to arrange a train ticket for the model Ganna Rudenko from Manchester to London. Maria's Travels responded to Mr Bruce by e-mail confirming that the booking had been made and that the fare was £99. On 7 December 2011 Maria's Travels e-mailed Mr Bruce asking for a purchase order number for the cost of the ticket. Mr Bruce forwarded that e-mail to Stephanie Arber of Premier for her to issue the purchase order number. Before doing so, however, he amended the wording of the e-mail that he had received from Maria's Travels from "Ms Ganna Rudenko 06/12 £99" to "Ms Ganna Rudenko 06/12 £199 - Littlewoods." The addition of the word "Littlewoods" identified (correctly) the customer who was to be billed for the model's travelling expenses but the change to the ticket price resulted in Maria's Travels raising an invoice to Premier and Premier raising an invoice to its customer, Littlewoods (or to the model concerned, depending on which party was responsible for travel costs), that falsely stated that the model's train fare had cost £199 rather than £99. The false invoices resulted in Maria's Travels receiving more than the cost of the travel that they had arranged. Maria's Travels kept an account of these excess amounts and made them available to Mr Bruce to use for his personal travel expenses. Schedules of the false travel claims and of the personal travel expenses of Mr Bruce on which the excess receipts held by Maria's Travels were expended were prepared for the purposes of the trial. These schedules listed 4 inflated travel claims in 2010, 62 in 2011 and 24 in 2012. The total of the excess amounts added to the travel claims was £21,020. Against this, Mr Bruce had incurred £21,042 in personal travel expenses with Maria's Travels. Mr Bruce did not dispute that the schedules correctly set out the inflated travel claims and his personal travel expenses that had been financed by the inflation of the travel claims.
- Clearly Maria's Travels had assisted Mr Bruce in giving effect to the false travel claims. I was provided with a written statement of Maria Nicola, the founder and managing director Maria's Travels and I heard the evidence of Caroline Stringer, a sales director of Maria's Travels. The evidence Ms Nicola and Ms Stringer was to the effect that, although they were uneasy about the process of inflating travel claims, they were persuaded by Mr Bruce that he had the approval of Premier's accounts department to inflate the travel claims.
- Mr Bruce's evidence was that this process of inflating travel claims was normal practice at Premier and that he was instructed and authorised to inflate travel claims by Jack Singh. Jack Singh denied in evidence that he had so instructed or authorised Mr Bruce and denied having any knowledge of Mr Bruce's inflation of travel claims until this was discovered by Premier following the resignation of Mr Bruce.
Alleged breach of restrictive covenants
- Before considering whether Premier has established that Mr Bruce has breached his contract of employment, I need to consider whether the terms of the contract set out above are enforceable. Covenants that are in restraint of trade are enforceable only if they are reasonable in the interests of the parties concerned and of the public (Chitty on Contracts 30th Ed. Vol.1, para 16-075). However, the law recognises that certain restrictive covenants entered into between an employer and his employee are reasonable and enforceable. In particular, it is recognised that it can be reasonable for an employer and an employee to agree that the employee should be restricted whilst his employment continues from:
i) Setting up to act or acting in competition to the employer2.
ii) Disclosing or misusing confidential information otherwise than for the purposes of the business. What is a reasonable restriction will depend upon the nature of the business and of the employment3.
iii) Soliciting clients of the employer for the benefit of a rival business4 or using confidential information to facilitate such soliciting even if the information is publicly available5.
iv) Diverting business opportunities to himself or others6.
- The law entitles Premier to seek an injunction to prevent an employee from making use of confidential information as a springboard for activities detrimental to the employer7.
- I am satisfied that information relating to the model clients and customers of Premier is commercially valuable information that Premier is entitled to protect by restrictive covenants with its employees of the status of Mr Bruce. The Defendants sought to argue that much of the information forwarded by Mr Bruce to Mr Ribeiro or to Mr Bruce's personal e-mail accounts was publicly available. While some of it may well have been, the majority of the material such as high-quality images of models and details of casting opportunities was not. Despite the authority of Robb v. Green cited above, I do not consider that Premier is entitled to protection in respect of such information as was publicly available, such as address and contact details of model agencies in the light of the express exclusion of "confidential information that is in the public domain" in clause B of the Safeguards section of the Staff Handbook set out above.
- The terms of Mr Bruce's contract of employment did not prohibit him from acting in competition with Premier following the termination of his employment but did impose restrictions on his actions while his employment continued. I consider that the terms of Mr Bruce's contract of employment insofar as they related to restrictions on his activities during the period of his employment were reasonable in the context of his employment by Premier and therefore enforceable.
- Premier also seeks to enforce the 12 month non-solicitation of employees and model clients contained in the Main Terms of Mr Bruce's contract of employment. Mr Bruce did not dispute that 12 months was a reasonable period for such a restriction. Indeed 12 months seems to be a standard period in the industry for such restrictions as evidenced by an e-mail to Mr Bruce from Paul Swaby, creative director of a fashion production company, in which he stated that he thought it was fair for his company not to work with PRM until 12 months after Mr Bruce's departure from Premier "as contracts normally have a 12 months working with existing clients clause". I am satisfied that a 12 month restriction on Mr Bruce's solicitation of employees and model clients of Premier is reasonable and therefore enforceable.
- Premier's case is that Mr Bruce was in breach of the restrictive covenants in his contract of employment in that:
i) He took steps to set up in competition with Premier during his employment.
ii) He acted in competition with Premier during his employment.
iii) He misused confidential information.
iv) He solicited models and customers.
v) He diverted business opportunities.
- Mr Bruce denies any breach of the restrictive covenants in his contract of employment. In particular:
i) He denies having any knowledge of his appointment as director or allocation of 50% shareholding in PRM.
ii) He denies having acted in competition with Premier during his employment.
iii) He denies misusing confidential information.
iv) He denies soliciting models or customers or diverting business opportunities.
- I consider the evidence to be overwhelming that Mr Bruce was in substantial breach of his contract of employment over a prolonged period from about October 2011 until the termination of his employment in July 2012. As to his knowledge of his involvement in PRM, I am unable to accept the evidence of Mr Bruce and Mr Ribeiro that Mr Ribeiro never told Mr Bruce of this involvement. Mr Bruce and Mr Ribeiro have been in a relationship and have been living together since at least October 2011. They clearly discuss matters relating to the model agency business extensively. Indeed, it was Mr Bruce's explanation for much of the material that he forwarded to Mr Ribeiro that it was relevant to matters that were discussed between them. Mr Ribeiro when challenged in cross-examination was unable to put forward any reason why he did not tell Mr Bruce about his shareholding in PRM or his appointment as a director. While a shareholding may not impose a liability on the holder, a directorship certainly does. For this reason, no person can become a director of an English company either on original foundation or by subsequent appointment without consenting to that appointment. S.12(3) of the Companies Act 2006 so provides in relation to founding directors and s. 167(2) for replacement directors. Mr Ribeiro told the court that he set up the company online. The steps that he had to go through in setting up the company were not before the court, but, in view of the terms of the Companies Act referred to above, some confirmation of the willingness of the proposed directors to accept appointment must have been required. By accepting his appointment a director becomes subject to important duties. It is inconceivable, in my judgement, given the close relationship between Mr Ribeiro and Mr Bruce that Mr Ribeiro would have sought to impose such obligations on Mr Bruce without informing him.
- The evidence is, in my judgement, clear that Mr Bruce breached his contract of employment in the various respects alleged by Premier. Mr Bruce in his evidence and submissions stated that he had no intention of harming Premier. That may be, but his actions did, in my judgement, have that effect. For the last nine months of his employment by Premier much of Mr Bruce's attention was on assisting Mr Ribeiro to start up a model agency business. Whether both Mr Bruce and Mr Ribeiro had an intention from the start for Mr Bruce to play a part in that business is not clear; but the timing of the start-up of the business, the incorporation of PRM and the resignation of Mr Bruce lead me to conclude that, by at the latest the date of the incorporation of PRM, it was the joint intention of both Mr Bruce and Mr Ribeiro that Mr Bruce should play a part in the business of PRM.
- I am satisfied that Mr Bruce took steps during the course of his employment with Premier to set up in competition with Premier by accepting a directorship and shareholding in PRM and by assisting Mr Ribeiro and subsequently PRM to promote the new business.
- I'm also satisfied that Mr Bruce misused Premier's confidential information. I do not accept Mr Bruce's evidence that the e-mails copied to his private e-mail addresses were for the purposes of his employment by Premier. Neither do I accept his evidence that the information forwarded to Mr Ribeiro was merely for reasons unconnected with the setting up of a rival model agency.
- There is no suggestion that Mr Bruce has sought to solicit any other employee of Premier. I am however satisfied that Mr Bruce has sought to solicit clients and customers of Premier. Examples of this are mentioned above.
- Mr Bruce's explanation for his conduct in relation to the inflated travel expenses is that this was a common practice at Premier and that he was instructed or authorised to do this by Jack Singh. Apart from the evidence of Mr Bruce himself, there is no evidence to support the suggestion that such inflation of travel expenses was common practice at Premier or that Jack Singh instructed or authorised such a practice. The inflation of travel expenses was of no benefit either to Premier or to Jack Singh. The only person that benefited was Mr Bruce. Indeed, since the practice resulted in Premier's clients or customers being overcharged for travel expenses, it had the potential to cause serious damage to Premier's business. Mr Bruce's explanation for the practice was that it was all part of a personal expenses allowance with which he was provided by Premier to supplement his basic salary which remained at £36,000 throughout his employment at Premier. It was accepted by the witnesses who gave evidence on behalf of Premier that part of Mr Bruce's remuneration was in the form of a bonus declared at the end of each year. This bonus was paid either in cash or in kind. An example of a payment in kind is the contribution made by Premier to the rent for the flat leased in the name of Premier but for the use and occupation of Mr Bruce from October 2011. I do not accept that inflation of invoices for travel expenses was in any way linked to any allowances paid to Mr Bruce by Premier by way of bonus. If Mr Bruce was entitled to have his personal travel expenses paid by Premier as part of his remuneration package then there was no need for customers' invoices to be inflated by false travel claims.
- I therefore reject Mr Bruce's evidence that he was instructed or authorised by anyone at Premier to inflate invoices for travel expenses and to use the proceeds to fund his own personal travel expenses. This being a civil claim, the standard of proof required for Premier to succeed on its claim in fraud is the normal standard of the balance of probabilities. In view, however, of the seriousness of an allegation of fraud and the inherent improbability that a trusted employee will defraud his employer, a court will require cogent evidence to satisfy it on a balance of probabilities that a fraud has been committed. Adopting that standard of proof, I am satisfied that Mr Bruce fraudulently inflated travel costs and has benefited from that conduct to the extent of £21,020.
- I was concerned as to whether Premier is the party who has suffered loss as a consequence of the fraudulent inflation of travel costs. The primary loser in each case is either the customer who booked the services of the model or the model him or herself depending on which party was responsible for the travel costs. However, it was pointed out to me on behalf of Premier that, by reason of the fraud having been carried out by Mr Bruce whilst an employee of Premier, Premier has incurred a liability to reimburse its clients or customers for the sums overcharged. Premier has not yet reimbursed such overcharged travel expenses (save for the sum of £835 referred to above) on the basis that it was not appropriate to do so given Mr Bruce's denial of any fraud until the court had determined whether any fraud had taken place. Premier has, however, undertaken to reimburse the losers in the event that Mr Bruce is held to have committed fraud. In these circumstances I am satisfied that Premier has suffered a loss as a consequence of Mr Bruce's fraud in that it has incurred a liability to its clients and customers and that Premier is therefore entitled to judgement for the amount of the liability incurred which is £21,020 less the £835 already repaid or a net sum of £20,185.
Liability of the Second and Third defendants
- Premier seeks judgement also against Mr Ribeiro and PRM as accessories to the breach by Mr Bruce of his contract of employment. It is not alleged that Mr Ribeiro or PRM had any involvement in Mr Bruce's fraud. A pleaded claim against all three Defendants for conspiracy to defraud in relation to the travel expenses of Ms Correa was not pursued in view of the repayment to the Claimant's solicitors of the sum of £835.
- .Premier submits that Mr Ribeiro and (since its incorporation) PRM have knowingly and intentionally assisted Mr Bruce by inducing and procuring his breach of contract at a time when it is reasonable to infer that they knew of its terms and that Mr Bruce's actions put him in breach of its terms. Reliance is placed by Premier on the case of OBG Ltd v. Alan8. It was held by the House of Lords in that case that there is a difference between the tort of inducing breach of contract and that of causing loss by unlawful means. The first is dependent upon it being established that there is a primary liability for breach of contract, whereas the second is not. Premier seeks to rely on both torts but accepted that it is not necessary for it to rely on the second unless the court was to hold that Mr Bruce was not in breach of his contract of employment. Since I have held him to be in breach, I only need to consider whether Mr Ribeiro and PRM are liable for inducing that breach.
- Much of the information forwarded to Mr Ribeiro was received by him without any response being evident from the e-mail record. I was concerned as to whether such silent receipt could amount to inducing a breach of contract. However, I have been satisfied that it can in the appropriate circumstances. In the case of Lonmar Global Risk Ltd v. Barrie West, it was held9:
"As a matter of law, I am sure that even silence in certain circumstances can be persuasive in encouraging a breach of contract and can intend to do so."
Taking all the circumstances into account, I am satisfied that Mr Ribeiro's receipt of the confidential information belonging to Premier that was forwarded to him by Mr Bruce was such that it is proper to infer that such receipt, even if silent, amounted to an encouragement of the breach of his contract by Mr Bruce and was intended to do so. The particular relevant circumstances are the very close relationship between Mr Bruce and Mr Ribeiro, the period of time for which and the volume of the confidential information that was forwarded and the steps being taken by Mr Ribeiro during this period to set up a model agency business.
- I am further satisfied that Premier's confidential information was not received by Mr Ribeiro in silence. Given the fact of their close relationship and the fact that they shared a flat it is, in my judgement, inevitable that there was discussion between Mr Bruce and Mr Ribeiro about the information disclosed by Mr Bruce to Mr Ribeiro. Further, positive responses are also evident on some occasions from the e-mail record as noted above. By his responses and failure to tell Mr Bruce to stop supplying him with confidential information, I am satisfied that Mr Ribiero encouraged Mr Bruce in his breach of contract.
- Although Mr Ribeiro would not have been aware of the precise terms of Mr Bruce's contract of employment, I am satisfied that he would have been aware that the conduct of Mr Bruce would amount to a breach of either the restrictive covenants in his contact of employment or the implied terms of fidelity to an employer that the law implies into contracts of employment. I conclude, therefore, that Mr Ribeiro wrongfully induced Mr Bruce's breach of the restrictive covenants in his contract of employment with Premier.
- The directing mind of PRM at all material times was either Mr Ribeiro or Mr Ribeiro together with Mr Bruce. It does not matter which. PRM was the vehicle by which Mr Ribeiro intended to build up a model agency business. Following the incorporation of PRM, the company must be equally liable to Premier for inducing Mr Bruce's breach of contract.
- Premier submitted that Kim Thompson from her appointment as a director of PRM in March 2012 has been a shadow director on behalf of Mr Bruce. Premier points to the fact that Ms Thompson had no experience in the model agency business having previously worked in mental health. Ms Thompson assured me in the course of her evidence, however, that she has previously been involved in running businesses in South Africa and is a full working director of PRM commuting daily to offices in London for this purpose.
- I do not consider it necessary for me to decide whether Miss Thompson in accepting a directorship of PRM was acting as a proxy for Mr Bruce. The reasons for Ms. Thompson's appointment as a director of PRM no doubt included her relationship to Mr Bruce but that does not necessarily mean that she was merely keeping a seat on the board of PRM warm until her son decided to accept reappointment or was his proxy.
- Premier seeks an injunction restraining all three Defendants until 23 July 2013 (12 months after the termination of Mr Bruce's employment by Premier) from:
i) Canvassing, soliciting, approaching or interfering with or employing or engaging (in any capacity) any member of Premier's staff.
ii) Canvassing, soliciting, approaching or enticing away or endeavouring to solicit, canvas or entice away the business of any model or other person represented by Premier who has been represented by Premier at any time since 1 August 2011.
iii) Disclosing to any person or persons any information in relation to the affairs of Premier or any client of Premier or any model engaged by Premier of which Mr Bruce has come into possession whilst in the service of Premier.
iv) Using any confidential information or property belonging to Premier.
- Although there is no evidence of any attempt to solicit the remaining staff of Premier, I consider that Premier is entitled to an injunction in the terms of both the first and second subclause above. The attitude of the Defendants and in particular of Mr Bruce to the rights of Premier to protect its clients, customers and confidential information has demonstrated little appreciation of the rights and duties as between employers and their employees either under express contracts such as are normal in the trade or under the obligations of loyalty and fidelity implied into such contracts by the general law.
- As regards the injunction sought to restrain further disclosure or use of Premier's confidential information, although I consider that Premier is entitled to an injunction of some form to protect its confidential information, I am not persuaded that it is appropriate to grant an injunction unlimited as to time. Premier's confidential information has, in general, a relatively short shelf life. Details of models and of work available for such models change constantly. Casting briefs have little value following completion of the planned assignment. Images of models that are not recent are of limited value. I will hear the parties following delivery of this judgement as to the proper terms of any injunction.
- Premier also seeks an order for the delivery up of all confidential information and property belonging to Premier. Although Mr Bruce and Mr Ribeiro have provided affidavits in response to the interlocutory injunction stating that all such material has been delivered up, Premier is concerned that it has not been. One example is the list of bookings achieved by Mr Bruce and Premier's other bookers referred to above. Mr Bruce asserted that he was entitled to retain this document as it was relevant to his defence. A further problem arises in that much of the confidential information that Premier has identified as having been forwarded by Mr Bruce to Mr Ribeiro is in the trial bundles of which the Defendants have copies and of which they may need to retain possession in case they wish to pursue any appeal. Again, I consider that Premier is entitled to some continuing protection against retention by the Defendants of confidential information, but I will hear the parties following delivery of this judgement as to the proper terms of any order.
- Premier by its pleading seeks an account of the profits of the defendant and an inquiry as to damages suffered. So far the disclosure by the Defendants has been limited to documents relating to events that took place up to the cessation of Mr Bruce's employment by Premier in July 2012. Any taking of an account would involve disclosure of PRM's subsequent business activities. The evidence of the Defendants' witnesses was that business has not been good due in particular to a circular put out by Premier regarding the termination of Mr Bruce's employment. It may be that the taking of such an account will be a waste of both parties' time and cost. I consider that Premier is in principle entitled to an account of the profits made by the Defendants by reason of the misuse of Premier's confidential information and an inquiry into any damages suffered, but whether it is worthwhile ordering an account or an inquiry may be open to doubt. Counsel for Premier has indicated that Premier wishes to reserve its position on whether to seek an account or an inquiry as to damages. This is a matter best sorted out between the parties. Again, I will hear the parties on the appropriate order to be made.
- Premier claims damages both for the fraud committed by Mr Bruce and for specific business which can be shown on the evidence currently before the court to have been diverted by the Defendants.
- As to the fraud, for the reasons set out above, I am satisfied that Premier has been caused loss by reason of Mr Bruce's fraud to the extent of £20,185 and Premier is, therefore, entitled to judgement for damages in such a sum. Premier also submits that the evidence establishes that Premier has suffered damage in respect of the employment of three models and that the court can assess and award damages in respect of those three models now.
- The first of these models is Ms Correa. The facts of her initial employment with Shop Direct are set out above. I am satisfied that Mr Ribeiro and PRM were able to act as Ms Correa's agent for the work that she carried out for Shop Direct by reason of introductions provided to both the model and to Shop Direct by Mr Bruce. It was the evidence of Mr Ribeiro that the introduction effected by Mr Bruce between Mr Ribeiro and Ms Bamber of Shop Direct was not the effective cause of the work obtained for Ms Correa but that it came through a different contact. As found above, Mr Bruce arranged Ms Correa's visa and her travel. Had Mr Bruce performed his contract faithfully then I am satisfied that this business should have come to Premier. PRM earned commission subsequently for further assignments arranged for Ms Correa with Shop Direct and with Next Directory. I am satisfied that this work also would have come to Premier but for the failure of Mr Bruce properly to perform his contract. Premier's calculation of its loss is that it has lost commission of £7,320. This calculation is not disputed by the Defendants. Whether Premier is also entitled to recover VAT at 20% on this sum is not clear and I will hear the parties on this point.
- Premier also seek mother agency commission in respect of Ms Correa in the sum of $2,500, equivalent to £1,575. The Defendants dispute this part of the claim and I will hear the parties on this issue.
- The second model is Matthew Holbrook. As set out above, a booking for Mr Holbrook was arranged by Mr Bruce as an employee of Premier but invoiced by PRM. I am satisfied that Premier has lost commission of £525 by reason of the diversion of this business by Mr Bruce from Premier to PRM. An issue on VAT arises of this claim also. Premier also claims in respect of a subsequent booking of Mr Holbrook for Next Directory that was charged for by PRM. The evidence available does not establish to my satisfaction that this work would have gone to Premier but for Mr Bruce's breach of contract. It remains open to Premier on any subsequent taking of an account or inquiry as to damages to argue that it is entitled to the commission earned on this assignment.
- The third model is Tom Neate. Premier claims commission of £262.50 and mother agent commission of $670 (equivalent to £422). I am not satisfied on the evidence before me that this commission was earned by PRM as a consequence of any misuse of confidential information or diversion of business by Mr Bruce. I do not therefore award any damages in respect of Tom Neate. It will, however, be open to Premier on any taking of an account or inquiry as to damages to seek to recover this commission.
- Given the short periods involved, the current low rates of interest and the fact that the fraud losses have not as yet been suffered by Premier I do not award any interest up to the date of judgement. Any sums awarded will however carry judgement interest.