Dowson & Mason Ltd v Potter

JurisdictionEngland & Wales
JudgeLORD JUSTICE SLADE,SIR EDWARD EVELEIGH,LORD JUSTICE STOCKER
Judgment Date18 February 1986
Judgment citation (vLex)[1986] EWCA Civ J0218-5
Docket Number86/0152
CourtCourt of Appeal (Civil Division)
Date18 February 1986
Between:
Dowson & Mason Limited
Plaintiffs (Respondents)
and
William Potter
First Defendant

and

Cirtemetric Limited
Second Defendant (Appellants)

[1986] EWCA Civ J0218-5

Before:

Lord Justice Slade

Lord Justice Stocker

and

Sir Edward Eveleigh

86/0152

1972 D 69

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

MANCHESTER DISTRICT REGISTRY

(HIS HONOUR JUDGE BLACKETT-ORD,

SITTING AS A JUDGE OF THE HIGH COURT OF JUSTICE)

Royal Courts of Justice

MR. CHARLES SPARROW QC and MR. D.B. MALLARD (instructed by Messrs. Gorna & Co, Solicitors, Manchester M2 4NB) appeared on behalf of the Second Defendants (Appellants)

MR. SIMON THORLEY (instructed by Messrs. Addleshaw Sons & Latham, Solicitors, Manchester M2 1JD) appeared on behalf of the Plaintiffs (Respondents)

LORD JUSTICE SLADE
1

I have asked Sir Edward Eveleigh to give the first judgment in this case.

SIR EDWARD EVELEIGH
2

Early in 1967 the plaintiff company, the respondents in this court, who are manufacturing engineers, developed a new type of landing leg; a landing leg is the prop which is placed at the front of the back part of an articulated lorry when it is not joined to the front half. Between March of 1967 and September of 1968 they spent money in developing such legs. The novel feature of this leg was that it was constructed in a number of parts, so that if the leg suffered damage to one part, that part could be removed and replaced without the necessity of replacing the whole structure.

3

A Mr. Potter, who was employed by the plaintiffs, in breach of his duty to his employers gave information to the second defendants, the appellants in this case, which resulted in their becoming competitors of the plaintiffs in the particular market for these legs. The information consisted of the names and addresses of the suppliers of the various components and also the price which the plaintiffs had paid for such components. With that information the second defendants called a meeting of suppliers and discussed the possibility of placing orders with them. It would seem, therefore, that they were able, prima facie at any rate, to gain an advantage in developing these legs which they would not have had had they had to do all the work themselves to discover possible suppliers and the prices of the material.

4

The plaintiffs issued a writ as long ago as 1972. Eventually, on 21st November of 1978, a consent order was made, which was in these terms:

"..…that the respective names and addresses of the manufacturers or suppliers of each of the component parts of the Plaintiffs' Nugear Landing Legs and the price paid by the Plaintiffs for each such component, which came into the possession of the Defendant William Potter during the course of his employment with the Plaintiffs as is alleged in paragraph 4 of the Statement of Claim constituted confidential information the property of the Plaintiffs AND IT IS ORDERED that the following inquiry be taken and made that is to say: -

  • (1) An inquiry what damages (if any) the Plaintiffs have sustained by reason of

  • (i) the disclosure by the First Defendant"—that was Mr. Potter, who has now dropped out of these proceedings—"to the Second Defendants of any such confidential information as aforesaid:

  • (ii) the use by the First Defendant or the Second Defendants or their respective servants or agents of such confidential information as aforesaid:

  • (iii) the Second Defendants offering for sale selling or supplying any landing legs or any parts thereof made with the assistance of the Plaintiffs' said confidential information or any part thereof".

5

Subsequently the defendants issued a summons, in which they sought the determination of the court of the proper basis for the assessment of damages. The matter came before the District Registrar, who made the following order on 20th November 1984:

"..…the affidavits filed on 19th November 1984 on behalf of the Defendants sworn by George William Starkey and Michael Willis be not admitted as evidence on the inquiry".

6

That was an order made because, in the hearing before the registrar, he came to the conclusion that affidavits from those two persons, which were directed towards the assessment of damages, should not be admitted on the inquiry for a number of reasons, but particularly because there had been enormous delay in producing those affidavits. Whether or not the registrar was asked for leave to appeal or not, I am not quite sure but there has been no appeal as to that matter before this court, and if, leave having been asked for, it was refused, for myself I am not at all surprised.

7

Then we come to the part of the order with which we are concerned here:

"3. The proper basis for the assessment of damages the subject of this inquiry is the loss suffered by the Plaintiffs which falls to be assessed according to their loss of profits resulting from the wrongful disclosure and use of the confidential information referred to in the Order of 21st November 1978".

8

It is against that order as to the basis of the assessment of damages, that the second defendants appeal.

9

Mr. Sparrow has contended that the proper basis for the assessment of damages in a case like this should be the value of that which was taken, to be assessed as between a willing seller and a willing buyer. In support of that contention he has referred us to the case of Seager v. Copydex Ltd.(No. 2), which is reported in [1969] 1 Weekly Law Reports, 809.

10

In that case an inventor had approached Copydex to sell an invention of his; in the course of conversation he had spoken of a special method of producing and designing a carpet grip for securing carpets, and later, as it happened innocently, Copydex, the defendants, made use of that information and produced a carpet grip themselves. The inventor did himself produce a form of carpet grip which was different from that which Copydex evolved, and in his claim for damages the plaintiff included among other heads of claim a claim for loss of profits in his established business for the sale of his particular brand of carpet grip. The Master of the Rolls, Lord Denning, said this in his judgment at p.813:

"Now a question has arisen as to the principles which the damages are to be assessed. They are to be assessed, as we said, at the value of the information which the defendants took. If I may use an analogy, it is like damages for conversion. Damages for conversion are the value of the goods. Once the damages are paid, the goods become the property of the defendant. A satisfied judgment in Trover transfers the property in goods. So here, once the damages are assessed and paid, the confidential information belongs to the defendants".

11

Then the Master of the Rolls went on to say:

"The difficulty is to assess the value of the information taken by the defendants. We have had a most helpful discussion about it. The value of the confidentail information depends on the nature of it. If there was nothing very special about it, that is, if it involved no particular inventive step, but was the sort of information which could be obtained by employing any competent consultant, then the value of it was the fee which a consultant would charge for it: Because in that case the defendants, by taking the information, would only have saved themselves the time and trouble of employing a consultant. But, on the other hand, if the information was something special, as, for instance, if it involved an inventive step or something so unusual that it could not be obtained by just going to a consultant, then the value of it is much higher".

12

Mr Sparrow has relied upon that passage for the following argument. He says that there are at least two kinds óf breach of confidentiality. In one case that which is obtained is something which is within the complete control of the plaintiff and is not obtainable other than through him. The other kind of case relates to something which is obtainable elsewhere, and in such a case the plaintiff has no power to stop the defendant from discovering it of his own accord elsewhere and manufacturing whatever article it is that he is seeking to make. In such a case, says Mr. Sparrow, there is nothing special about it, and if there is nothing special about it the passage from Seager v. Copydex indicates that the damages should simply be the value of the article. He emphasised that part of Lord Denning's judgment which said that if it was the sort of information which could be obtained by employing any competent consultant, then the value of it was the fee which a consultant would charge for it.

13

In reply to that argument Mr. Thorley, on behalf of the plaintiff, has referred the court to the case of General Tire and Rubber Co Ltd. v. Firestone Tyre & Rubber Co Ltd., reported—in [1976] Reports of Patent Cases, 197. There, at p.212, Lord Wilberforce says this:

"As in the case of any other tort (leaving aside cases where exemplary damages can be given) the object of damages is to compensate for loss or injury. The general rule at any rate in relation to 'economic' torts is that the measure of damages is to be, so far as possible, that sum of money which will put the injured party in the same position as he would have been if he had not sustained the wrong".

14

Then he quotes the case of Livingstone v. Rawyards Coal Co, Volume 5 Appeal Cases, 25, at p.39, per Lord Blackburn.

15

That principle, enunciated by Lord Wilberforce, is one which has been stated time and time again by judges in assessing damages; we apply it right across the board. In an ordinary accident case, in which the plaintiff claims for loss of wages, the...

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