Customer Systems Plc v Ranson and Others
| Jurisdiction | England & Wales |
| Judge | Lord Justice Davis,Lord Justice Lewison,Lord Justice Lloyd,Lord Justice Pill |
| Judgment Date | 27 June 2012 |
| Neutral Citation | [2012] EWCA Civ 491,[2012] EWCA Civ 841 |
| Docket Number | Case No: A2/2012/0094,Case No: A2/2011/0094 |
| Court | Court of Appeal (Civil Division) |
| Date | 27 June 2012 |
[2012] EWCA Civ 491
Lord Justice Davis
Case No: A2/2012/0094
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
(MR JUSTICE JACK)
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Stafford QC and Mr Bacon (instructed by Sintons) appeared on behalf of the Appellant.
The Respondent did not appear and was not represented.
The applicant in this case had clearly through the passage of time and through his own abilities reached a senior position in the company. But one has to remind oneself throughout, I think, of two points. First, as I read the judgment the judge held in terms that he was not a de facto director; and secondly, his original contract of employment was never varied or altered. What he is accused of having done in this case in the ordinary way would fall comfortably within the kinds of covenants and restrictions one would often expect to see in a case of a contract of employment relating to a senior employee. But there is no such contract as Mr Stafford has stressed. The express obligations under this particular contract of employment can indeed be described as "weak".
Furthermore, as I read the judgment the judge held, perhaps unsurprisingly given the terms of the contract of employment, that Mr Ranson was in a position whilst he was employed lawfully to prepare himself for what he might be doing when he left his employment.
In those circumstances one might perhaps look for some purchase as to the judge's reasoning, and in particular in paragraphs 74 and 77 of his judgment, as to why it was said that Mr Ranson was by his actions in breach of the duty of loyalty arising under the contract and indeed of any fiduciary duties if they arose as the judge seems to have thought. With all respect to the judge, there is relatively little analysis of this point; and to the extent that as part of his reasoning in paragraph 74 he relied upon part of the decision in the case of Helmet Integrated Systems Limited v Tunnard [2006] EWCA Civ 1735, there are clear distinctions between that case and the present case, not least because of the distinctions in the wording of the contract of employment in question.
I have considered the written arguments and also the helpful oral arguments of Mr Stafford. I take the view (and I do of course acknowledge that this was a decision not only of a very experienced judge but also of a judge very experienced in this particular field) but nevertheless I do take the view that all the points raised in the grounds of appeal do merit further argument and have at least realistically arguable prospects of success. Whether they turn out indeed to be correct is another matter altogether; but my view is that the points do deserve the grant of permission to appeal.
I would only add this: that on the third ground of appeal as proposed, relating to the list of customers and subsequent use, Mr Stafford has told me that that no longer arises because the claimants are not pursuing damages in that regard and one can see why they are not, having regard to the way in which the judge expressed himself. But in case there is any confusion on their point I would simply indicate that I would have been prepared to grant permission to appeal on that issue as well.
Order: Permission to appeal granted. Court comprising three Lords Justices on the appeal. Costs in appeal.
[2012] EWCA civ 841
Lord Justice Pill
Lord Justice Lloyd
and
Lord Justice Lewison
Case No: A2/2011/0094
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
SIR RAYMOND JACK
HQ10X01669
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr a Stafford QC & Mr J Bacon (instructed by Sintons LLP) for the Appellant
Mr M Griffiths QC & Ms a Sander (instructed by Pinsent Masons) for the Respondent
Hearing dates: 14 & 15 June 2012
Introduction
In April 2001 Mr Jeremy Ranson was recruited by Customer Systems plc ("CS") straight from university, when he was 23 years old. He started work in October of that year. He was issued with a written contract, to which I will return in due course. In January 2009 Mr Ranson resigned from his employment, and left work on 27 February 2009. Before and during his notice period, Mr Ranson made preparations for the establishment of a competing business, through a company called Praesto Consulting (UK) Ltd ("Praesto"). These preparations included conversations with potential clients for Praesto.
Sir Raymond Jack, sitting as a judge of the Queen's Bench Division, had to deal with a host of issues and a number of other defendants. None of these parts of his judgment have given rise to any criticism. But in the respects mentioned he held that Mr Ranson was in breach of both a contractual obligation of fidelity, and also a fiduciary duty of loyalty. With the permission of Davis LJ, Mr Ranson appeals against that part of the judgment.
The background facts
General background
I take the relevant background facts from the judge's judgment, for the most part verbatim. CS is the holding company of a group providing a specialist information technology consultancy. It specialises in customer relationship management ("CRM") software provided by the American software company, Siebel Systems Inc. It was founded by Mr Stephen Austen in 1998. There are between 30 to 40 employees at any one time. Immediately before Mr Ranson left there were 29, including Mr Austen. CS has offices in Chertsey, but much of its work is done on site, that is, at the premises of its customers. A CS employee may spend a week working on site. He may also be in effect dedicated to a customer and work at the customer's premises for a year or more, tuning the software to the customer's needs on an on-going basis and solving particular problems.
There are four grades of technical employee; that is those who actually work on the software. The lowest is application consultant, then senior consultant, then principal consultant, and finally managing consultant. The highest technical grade, managing consultant, may lead on to promotion to consultancy manager. That is a sales position with supervision responsibilities. A consultancy manager may become a divisional manager. That remains essentially a sales function but has wider responsibilities.
When Mr Ranson was first employed by CS he was an applications consultant. In 2003 he was promoted to managing consultant. By the time he left in 2009 he was the only divisional manager within CS. In the last year of his employment he was responsible directly or indirectly for 59 per cent of the group's total revenue. CS had a board of directors, but Mr Ranson was not among them. Despite Mr Ranson's promotions within CS his contract of employment was unchanged from that which he signed when he first started working for CS. It contained the following relevant provisions:
" Confidentiality
In the course of your work you may be exposed to information of a confidential nature belonging to Customer Systems Ltd, its customers and its business partners. You agree to keep this information confidential. Should you cease to be employed by Customer Systems Ltd, you agree to maintain this confidentiality thereafter.
Business Hours
…normal business hours are 9am to 5.30 pm….….you may sometimes be required to work additional hours for which overtime will not be paid.
Other employment
You may not undertake any other employment whilst employed by Customer Systems Ltd without the prior written consent of Customer Systems Ltd.
Entire Agreement
This Offer Letter and Terms of employment together constitute the entire agreement between you and Customer Systems Ltd. Any prior arrangements and understandings are superseded by this agreement."
The contract was to run until determined by notice. Mr Ranson was required to give notice of termination of one month. CS had to give notice of between one month and 12 weeks depending on the length of service. There were no covenants restricting what Mr Ranson did after he had ceased to be employed by CS, except that for a period of one year he was forbidden from transferring his employment to important customers designated as "business partners".
By early 2009 Mr Ranson was dissatisfied with his potential career path at CS. He wanted a more managerial role. Discussions between him and CS did not achieve a satisfactory resolution; and it was in consequence of this that on 12 January 2009 he gave one month's notice. However, at the time when he gave notice he was working on securing a £1.7 million contract between CS and Reckitt Benckiser. On 13 January he agreed to stay on until 27 February to see this through.
In fact Mr Ranson's dissatisfaction had begun a couple of years earlier. He had already begun to consider his options, which included seeking work elsewhere. He discussed his options with Mr Atherton, another employee of CS. In September 2007 Mr Atherton registered the name "PRAESTOCONSULTING. COM" as an internet domain. In the same month Mr Ranson had Praesto incorporated. The directors were Mr Atherton and himself and they split the shareholding. By 26 September Mr Atherton had opened two bank accounts for Praesto through his wife who worked for a bank. They were never used, and Mr Ranson set up a new account for Praesto after he left CS. In the following month Mr Ranson prepared a business plan for Praesto and also received logos which he had ordered. However, nothing came of this at...
To continue reading
Request your trial
-
Maranello Rosso Ltd v Lohomij BV
...authorities on the question of fiduciary relationships, such as Glenn v Watson [2018] EWHC 2016 (Ch) and Ranson v Customer Systems [2012] EWCA Civ 841, they did not seem to me to add anything material. I note that this court in Ranson at [25] – [26] also stressed the importance of the ter......
-
Fahim Imam-sadeque v Bluebay Asset Management (services) Ltd
...of fidelity: see Malik v Bank of Credit & Commerce International SA [1998] AC 20 per Lord Steyn at 46C, Ranson v Customer Systems PLC [2012] IRLR 769 per Lewison LJ at [38]. 123 The duty of fidelity, sometimes referred to in more everyday language as the duty of loyalty, is owed by all empl......
-
The Northampton Regional Livestock Centre Company Ltd v Richard Andrew Cowling and Another
...of the contract so that it is consistent with, and conforms to, them". That observation was cited by approval by Lewison LJ in Ranson v Customer Systems Plc [2012] IRLR 769 paragraphs 25–29. Both of those judgments were cited with approval by Lord Neuberger MR in Rosetti (ibid) at [21]. c) ......
-
Alesco Risk Management Services Ltd v Bishopsgate Insurance Brokers Ltd
...obligation to serve the employer with ‘ good faith and fidelity’: Robb v Green [1895] 2 QB 315 at p. 320; Ranson v Customer Systems Plc [2012] IRLR 769 (CA) (“ Ranson”) at para. 328 The general principles relating to employees' duties of good faith and fidelity are summarised by Haddon-Cav......
-
Team Moves Snaring The Poachers
...are not required to treat their own interests as subordinate to the employer's (unlike fiduciary duties) (Ranson v. Customer Systems plc [2012] IRLR 769). Writing to the employer's supplier to ask for price lists before setting up in competition is unlikely to amount to a breach (Laughton a......
-
Duties Of Employees: Court Of Appeal Finds High Court Was Wrong To Conclude That Employee Had Fiduciary Duties Towards Employer
...v Customer Systems plc [2012] EWCA Civ 841 The Court of Appeal in this case found that the High Court was wrong in holding that Mr Ranson had fiduciary duties towards his employer. The Court of Appeal found that Mr Ranson had only the ordinary duty of loyalty owed by employees, which was no......
-
UK Employment Alert No 203: Employee Duties/Employer Protections
...and practical management of the employment relationship from beginning to end. The Decisions In Ranson v Customer Systems Plc [2012] EWCA Civ 841, which was decided last month by the Court of Appeal, Mr Ranson had taken steps to set up a new business while still working for Customer Systems......