Esl Fuels Ltd v Stephen Fletcher and Another
| Jurisdiction | England & Wales |
| Judge | His Honour Judge Hodge |
| Judgment Date | 27 November 2013 |
| Neutral Citation | [2013] EWHC 3726 (Ch) |
| Docket Number | Case No: 3MA30779 |
| Court | Chancery Division |
| Date | 27 November 2013 |
[2013] EWHC 3726 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
MANCHESTER DISTRICT REGISTRY
Manchester Civil Justice Centre
1 Bridge Street West
Manchester
M60 9DJ
His Honour Judge Hodge QC
(sitting as a Judge of the High Court)
Case No: 3MA30779
Mr Adam Solomon (instructed by DWF LLP) appeared on behalf of the Claimant
Miss Naomi Ellenbogen QC (instructed by BBS Zatman LLP) appeared on behalf of the Defendants
Judgment
His Honour Judge Hodge QC: This is the effective return date of an application for interim injunctive relief pending the speedy trial of a claim issued in the Chancery Division of the High Court in London on 7 th November 2013 under claim number HC13E04834.
The subject matter of the claim is what is said to be confidential information in the nature of trade secrets, although that characterisation is disputed by the defendants; and it is that dispute which lies at the heart of this case.
In view of the nature of the claimant's case, at the outset of the hearing before me I directed that it should take place in private pursuant to CPR 39.2 (3) (c). However, subject to representations from counsel, my provisional view is that there is no reason why this judgment (apart from its confidential schedule) should not be released for publication. [Having now received such representations, I have made certain minor redactions to this judgment in order to retain the confidentiality of the matters set out in the schedule. They are minimal and do not affect in any way the substance of this judgment.]
The application first came on for hearing before Mr Justice Norris in London on Thursday 14 th November 2013. Because the parties, their businesses, their witnesses, and their respective solicitors were all located in the North-West, the judge transferred the case to the Manchester District Registry (where it has now been allocated claim number 3MA30779); and, having accepted undertakings from the parties in the meantime, he gave various case management directions leading to an effective hearing before me in Manchester last Thursday, the 21 st November 2013.
By the time of that hearing, the claimant had filed no fewer than three witness statements from Mr Stephen David Whittaker, dated 6 th, 18 th and 21 st November 2013. Mr Whittaker is a director of the claimant company (which was previously called 'Ebony Solutions Limited', and to which I shall refer as ' ESL') and (with his wife, Janet) was one of its two founding shareholders.
The defendants relied upon two witness statements from the first defendant, Mr Stephen Alan Fletcher, dated 15 th and 20 th November 2013, together with a witness statement from Mr Graham Jenkins, an industrial chemist and formerly (for some three years up to March 2013) the operations and production manager of ESL, dated 14 th November 2013. Although Mr Justice Norris's order made provision for only one round of evidence, at the hearing no objection was taken to the admission in evidence of the later witness statements. An approved, but unsigned, copy of the particulars of claim (settled by counsel) was supplied to the court at about 9:20 on the morning of the hearing.
At the hearing Mr Adam Solomon (of counsel) appeared for the claimant and the defendants were represented by Miss Naomi Ellenbogen QC. Both counsel had submitted detailed written skeleton arguments dated (in each case) 20 th November 2013. I had the advantage of pre-reading the witness statements and skeleton arguments before the hearing began. In his skeleton argument Mr Solomon had proposed that submissions from each party should be completed in the morning, leaving the afternoon for judgment and consequential matters. Unsurprisingly, given that three lever-arch files of authorities were placed before me, that timetable proved somewhat optimistic: Mr Solomon addressed me for about two hours, Miss Ellenbogen then responded for a little over two and half hours (interrupted by the luncheon adjournment), and Mr Solomon replied for about forty minutes. The hearing concluded at about ten past five that afternoon. Although I could have delivered an extemporary judgment at ten o'clock the following morning, neither counsel were available at that time. I therefore adjourned for judgment until ten o'clock today, Wednesday 27 th November. By the time the court adjourned, I had been able to fix Monday 3 rd February 2014 as the date for a speedy five-day trial of this claim in Manchester. I emphasise that five days has been allowed for this trial (to include pre-reading and delivery of judgment), and the parties will need to devise a trial timetable to accommodate this listing. As my list presently stands, the next dates I will have available after Friday 7 th February are not until Tuesday 6 th and Wednesday 7 th May.
The background to this application can be summarised as follows: ESL carries on the business of blending and supplying what it describes as "innovative fuel products", specifically for the road, heating, heavy duty haulage and marine markets. Mr Whittaker, who is forty nine years of age, describes himself as an "inventor and innovator". One of the products he claims to have developed, over a period of some three years prior to its launch in 2005, is a heating fuel called 'Ultra 35' (also known as 'Greenflame'), which is said to enjoy significant competitive advantages over other regular heating fuels in terms of the excise duties which apply to it. Mr Whittaker asserts that the process for manufacturing Ultra 35 is a trade secret and highly confidential, and he has always been careful to treat it as such. Mr Whittaker has never written down precisely how Ultra 35 is made; but in paragraphs 20 and 21 of his second witness statement he acknowledges (in response to points made by Mr Fletcher) that Ultra 35 is not always made from precisely the same components, or number of components, blended in precisely the same ratios.
One of the components used to make Ultra 35 is a particular product (which I shall refer to in this judgment as ' the Product'), which is sourced from a particular supplier (which I shall refer to as ' the Supplier') and is produced to a chemical specification provided by Mr Whittaker. That too is said to be a trade secret. These trade secrets originally belonged to their alleged creator, Mr Whittaker; but on 21 st June 2013 he sold the intellectual property rights in these trade secrets to the claimant for £5.66 million (in accordance with a valuation provided by BDO LLP). It is those trade secrets (as described in Schedule 1 to the Particulars of Claim, and reproduced in the confidential schedule to this judgment) and their description which ESL seeks to protect by this litigation. It claims that Ultra 35 is ESL's most successful product in terms both of sales and margins because it is sold by ESL to Certas Ltd (formerly GB Oils Ltd) at a rate that is more competitive than regular heating oils, thereby enabling Certas to sell it on at competitive rates.
Under the terms of its rolling distribution agreement with ESL, Certas has the sole right to distribute Ultra 35 for resale. ESL is currently said to supply some 140 million litres of Ultra 35 to Certas each year (although Mr Fletcher puts the figure at nearer 85 million litres); and that company is said by ESL to be its single most important business partner and generator of revenue. The hearing before me proceeded on the footing that the exclusivity agreement operated one way only (with ESL obliged to supply Ultra 35 only to Certas, but with Certas not obliged to purchase the equivalent product only from ESL), with no reference being made to clause D (under the heading 'Confidentiality and Product Development Strategy') of the Agreement (at page 171 of exhibit SW1).
Until about the middle of 2009 ESL is said to have been a small family company, with the majority of the most significant tasks being undertaken by Mr Whittaker himself. However, he wished to concentrate upon his role as an innovator and developer of products. Therefore when, in early 2009, Mr Fletcher made an unsolicited approach to him, Mr Whittaker took him on to be his 'right-hand man'; and he started working for ESL in May 2009. Mr Fletcher, who is now aged forty-one, is a qualified chemical engineer who was already recognised as a respected oil company manager. Until he resigned, on 23 rd February 2009, he had been working for Nynas, a supplier of bitumen and related products. Initially, Mr Fletcher was recruited to a sales position at ESL, at an annual salary of £80,000; but this soon increased. In 2011, Mr Fletcher's title was changed to 'General Manager' (the description which appears below Mr Fletcher's name on the company's Code of Conduct); and by the time he left ESL's employment, on 20 th September 2013, his salary had risen to £150,000 per annum.
It is ESL's case that Mr Fletcher effectively became the company's managing director (although that formal title remained with Mr Whittaker, and Mr Fletcher was never formally appointed a statutory director of ESL). At no time did Mr Fletcher ever have any formal written contract of employment, although he was responsible (in May 2011) for arranging for written contracts of employment to be drawn up for ESL's other employees. An email dated 25 th May 2011 (at pages 101 to 103 of exhibit SW1) shows that Mr Fletcher considered whether confidentiality clauses would be required for particular employees: he considered that these would be appropriate for the operations manager and the transport coordinator, but not for the accounts manager, the site coordinator/driver or the drivers. Mr...
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Sze to Gin Nam v Yuen Philp
...814 at 831, Lord Diplock in Garden Cottage Foods Ltd v Milk Marketing Board [1984] AC 130 and Hodge J in ESL Fuels Ltd v Fletcher [2013] EWHC 3726 (Ch). On the case presently before the court I determine the status quo as the circumstances which prevailed before the dilution of the shareho......
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Between: (1) Sze to Gin Nam (2) Lo Shuk Yee Plaintiffs v (1) Yuen Philp (2) Kwok Lai Yi (3) Aurabeat Technology International Defendants
...814 at 831, Lord Diplock in Garden Cottage Foods Ltd v Milk Marketing Board [1984] AC 130 and Hodge J in ESL Fuels Ltd v Fletcher [2013] EWHC 3726 (Ch). On the case presently before the court I determine the status quo as the circumstances which prevailed before the dilution of the shareho......
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BETWEEN: (1) Kuwait Ports Authority (on its own behalf and on behalf of The Port Fund L.P) (2) The Public Institution for Social Security (on its own behalf and on behalf of The Port Fund L.P) (3) The Port Fund L.P. Plaintiffs v (1) Port Link GP Ltd (in Voluntary Liquidation) (2) Mark Eric Williams (3) Wellspring Capital Group, Inc. (4) KGL Investment Company Asia (5) Golden Shahin General Trading & Contracting Company (6) Apache Asia Ltd (a Hong Kong Company) (7) Ronald Henry Ayliffe (8) KGL Investment Company KSCC (9) Apache Asia Limitada (a Macao Company) Defendants (10) Christopher Kennedy (11) Barry Lynch Proposed Defendants
...the status quo”. The status quo means “the state of affairs before the most significant recent … change”: ESL Fuels v Fletcher [2013] EWHC 3726 (Ch) at [17] or “the position as it stands immediately before the claim is issued, or if there has been an unreasonable delay before the applicati......
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Between: (1) Kuwait Ports Authority (on its own behalf and on behalf of The Port Fund L.P) (2) The Public Institution for Social Security (on its own behalf and on behalf of The Port Fund L.P) (3) The Port Fund L.P. Plaintiffs v (1) Port Link GP Ltd (in Voluntary Liquidation) (2) Mark Eric Williams (3) Wellspring Capital Group, Inc. (4) KGL Investment Company Asia (5) Golden Shahin General Trading & Contracting Company (6) Apache Asia Ltd (A Hong Kong Company) (7) Ronald Henry Ayliffe (8) KGL Investment Company KSCC (9) Apache Asia Limitada (A Macao Company) Defendants (10) Christopher Kennedy (11) Barry Lynch Proposed Defendants
...preserve the status quo”. The status quo means “the state of affairs before the most significant recent…change”: ESL Fuels v Fletcher [2013] EWHC 3726 (Ch) at [17] or “the position as it stands immediately before the claim is issued, or if there has been an unreasonable delay before the ap......