Caterpillar Logistics Services (UK) Ltd v Paula Huesca De Crean

JurisdictionEngland & Wales
JudgeMr Justice Tugendhat
Judgment Date02 December 2011
Neutral Citation[2011] EWHC 3154 (QB)
Docket NumberCase No: HQ11/X03383
CourtQueen's Bench Division
Date02 December 2011

[2011] EWHC 3154 (QB)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

The Honourable Mr Justice Tugendhat

Case No: HQ11/X03383

Between:
Caterpillar Logistics Services (Uk) Ltd
Claimant
and
Paula Huesca De Crean
Defendant

Selwyn Bloch QC & Gavin Mansfield (Instructed by Walker Morris) for the Claimant

Edward Pepperall (Instructed by Keelys) for the Defendant

Hearing dates: 9 and 10 November 2011

Mr Justice Tugendhat
1

The Claimant ("CLS") is a company formed in the UK. It is a part of the Caterpillar group of companies, best known for the manufacture of heavy earth moving equipment. CLS provides logistics services to other divisions or companies in the same group, and to third parties. It is by itself a very substantial business. The financial statements exhibited for the year ending 31 December 2009 record that it employed over 1300 employees (507 of them salaried) and had a turnover of just under £170m.

2

By an application notice issued on 12 September CLS seeks an injunction to restrain the Defendant from using or disclosing information which it claims to be confidential ("the Confidential Information"), for an order restraining her from carrying out certain work ("the Prohibited Tasks"), and for delivery up of certain documents. Undertakings were given by the Defendant on 16 September 2011 to Eder J sitting in the vacation, in proceedings commenced on 12 September, the undertakings to run until the return date. This judgment is delivered on the application made at the return date.

3

The Defendant ("Mrs Huesca de Crean") was one of CLS's 507 salaried employees until the expiry of the one month's notice she gave to CLS on 10 August 2011.

4

There is no restrictive covenant in Mrs Huesca de Crean's contract of employment. The only term of that contract relating to confidential information is a document headed "Confidentiality Agreement" which was signed by her on 31 May 2005. By it she agreed to the following:

"As a result of my employment by [CLS], I may develop obtain or learn about trade secrets or confidential information which is the property of [CLS] or others that [CLS] has contact with. I will not use any of such trade secrets of [sic] confidential information for myself or others, or divulge them to others, either during or after my employment. The terms 'trade secrets' and 'confidential information' include processes, methods, techniques, systems, formulae, drawings, photographs, machine readable records, patterns, models, devices, compilations, customer and dealer data, internal financial information or any information of whatever nature which gives [CLS] an opportunity to gain an advantage over its competitors who do not know or use it; but I understand the terms do not include knowledge, skills, or information common to my trade or profession".

5

Mrs Huesca de Crean last attended for work on 10 August 2011. She left for a holiday in Malta that night. She had started work for CLS in 2005. In about late April or early May 2011 she was promoted to the position of Logistics Centre Manager ("LCM") at the site in Hinckley, Leicestershire operated by CLS. The terms of her employment were set out in a letter dated 15 July 2011. She had been paid just over £50,000 in her previous position, and was due to receive a pay rise of about 10% in her new position with CLS. Her counsel has referred to her as a middle manager.

6

Mrs Huesca de Crean is in her mid 30s, married and the mother of two young children. She is the primary provider of income for her family. She is an accountant by her profession and it was in that capacity that she was employed in 2005 to work with the then Business Manager of CLS. She then became the Account Manager in CLS's Land Rover commercial team, and from that position was promoted to Logistics Centre Manager for the Hinckley site. In that capacity Ms Brown states that she was responsible for the management of all aspects of operations to ensure service levels and financial targets were achieved; for all employee related activities at the facility; preparation of budget and maintenance objectives and developing the facility in accordance with CLS's objectives. In practice this was all operational aspects of the LSA. This involved day to day management of 124 employees engaged in providing services to Quinton Hazell Automotive Limited ("QH"). The inventory has a value of some $15m and there were over 1.6m outbound lines for QH by the time she made the witness statement in September. The manager to whom she reported was Dean Ellis, the General Operations Manager. In addition to her usual operational role, Ms Brown states that Mrs Huesca de Crean was involved with strategic commercial issues relating to the LSA.

7

Mrs Huesca de Crean sets out in her witness statement, and it is not disputed, that her competency assessments throughout her employment with CLS had been at the highest level, such that only about 5% of the employees of Caterpillar Inc achieve the rating she achieved. Her manager's assessment while she was a commercial Manager included that she "interacts openly and honestly in challenging situations. [She] consistently acts as a role model for Caterpillar Values in Action based on Integrity, Teamwork, Excellence and Commitment… [she] models openness and honesty, generates trust by showing personal humility". She states that her integrity is a matter of great importance to her. She states that Ms Brown never came to the Hinckley site in the time when she was LCM, and that Ms Brown was not her line manager, and had little insight into her role at Hinckley.

8

She also states that the knowledge of the automotive and afterparts trade she has gained over 16 years is part of her set of skills and know how which she uses to earn her living.

9

By the letter dated 10 August 2011 in which she gave notice of her resignation, she offered to work out her period of one month's notice in accordance with her contract. She was not required to work out her notice. On 4 August 2011 she had been interviewed for a new job which had been publicly advertised. She was interviewed again on 9 August and late in the evening of 10 August she was offered the job. Ms Brown exhibited a copy of QH's advertisement for the job from The Sunday Times placed by QH.

10

The new job was as General Manager Hinckley for QH. QH is a supplier of automotive parts and an important customer of CLS, in particular at the Hinckley site. There is a ten year agreement in writing between CLS and QH dated 5 May 2006. It is known as the Logistics Services Agreement ("the LSA"). It is for the provision by CLS to QH of logistics services at the Hinckley site. QH has premises of its own at the same site. Its parent company is Klarius Group Ltd ("Klarius"), which also carries on business in the supply of automotive parts.

11

On 30 August 2011, CLS's solicitors wrote to Mrs Huesca de Crean a seven page letter notifying her of its intention to commence legal proceedings against her. They contended that:

"14 As you must realise, your appointment by Klarius appears to be an attempt by it to secure the same confidential information which CLS has refused to grant Klarius voluntarily…21 … In effect you will be carrying out a 'mirror image' role in relation to the LSA and or Klarius/CLS relationship and will have put yourself on the opposite side of many of the issues you have previously been dealing with for CLS, presumably even in relation to commercial negotiations…

2

By accepting this role you have already put yourself in a position which directly conflicts with your fiduciary duties to CLS, in that there is an extremely strong likelihood (if not an inevitability) that you will use (even if not disclose) CLS's confidential information to Klarius/[QH]".

12

The letter thus contains serious allegations of wrongdoing amounting to dishonesty against Klarius/QH (who are not a party to these proceedings). The witness statements served for CLS contain similar allegations, both against Klarius/QH and against Mrs Huesca de Crean herself.

13

In that letter the Confidential Information is set out in five paragraphs. There is no reference to any document or other source in which it is said the information is set out. Instead, there are descriptions of the information, including:

"19.1 full and detailed understanding of all current and historic costs for CLS under the LSA including details of revenue and margin, warehouse lease/utilities rates, indirect material rates, transport rates, salary headcount information / systems information…

19.3

privileged legal advice received from CLS' in house legal team and external legal counsel in relation to the LSA and disputes arising out of it, having attended a legal review meeting as recently as June 2011…".

14

The solicitors asked Mrs Huesca de Crean to give, by 7 September, undertakings in the form of a draft order enclosed with the letter. On 7 September Mrs Huesca de Crean wrote a five page letter in response. The letter starts with a complaint of inexcusable, and extremely distressing behaviour on the part of the process server. He had served CLS's letter upon her personally at her own home in the presence of her two children (aged 8 and 11). He had said: "you could be sent to prison if the order was disobeyed". This was false: there was no order at that stage. Mrs Huesca de Crean's letter then sets out in detail points on which she agrees with CLS and other points which she does not accept.

15

Mrs Huesca de Crean wrote:

"I absolutely refute the suggestion that my appointment with [QH] is an attempt to obtain confidential information and my appointment has followed a competitive selection process and I have been appointed on the merits of my experience and capability. As I have said, the role of General Manager is much wider than the Logistics...

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