Faccenda Chicken Ltd v Fowler
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE NEILL |
| Judgment Date | 05 December 1985 |
| Judgment citation (vLex) | [1985] EWCA Civ J1205-3 |
| Docket Number | 85/0816 |
| Court | Court of Appeal (Civil Division) |
| Date | 05 December 1985 |
[1985] EWCA Civ J1205-3
Lord Justice Kerr
Lord Justice Neill
Lord Justice Nourse
85/0816
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM AN ORDER OF MR JUSTICE GOULDING
Royal Courts of Justice
MR C.F. DEHN Q.C. and MR JOHN TRENCH, instructed by Messrs Penningtons (Agents for Shoosmiths & Harrison of Banbury), appeared for the Appellants (Plaintiffs in the first action and Defendants in the second action).
MR P.J. CRAWFORD Q.C. and MR J.F. GIBBONS, instructed by Messrs Johnson & Gaunt (Banbury), appeared for the Respondents (Defendants in the first action and Plaintiff in the second action).
This is the judgment of the court.
In these two appeals it will be necessary to consider the interaction of three separate legal concepts:
(1) The duty of an employee during the period of his employment to act with good faith towards his employer: this duty is sometimes called the duty of fidelity.
(2) The duty of an employee not to use or disclose after his employment has ceased any confidential information which he has obtained during his employment about his employer's affairs.
(3) The prima facie right of any person to use and to exploit for the purpose of earning his living all the skill, experience and knowledge which he has at his disposal, including skill experience and knowledge which he has acquired in the course of previous periods of employment.
The two appeals are against the orders of Mr Justice Goulding dated 8th November 1983, whereby he rejected the claims by Faccenda Chicken Ltd. ("Faccenda") that the respondents to the appeals had improperly used confidential information obtained during their employment by Faccenda and had conspired together to injure Faccenda.
The events which gave rise to the claims which are the subject-matter of these appeals are set out with admirable clarity in the judgment of Mr Justice Goulding (reported in [1984] I.C.R. 589; [1985] 1 All E.R. 724).
We propose therefore from time to time in the course of this judgment to adopt passages from the judge's recital of the facts. In this case such a course is particularly appropriate because we were not referred to any transcript of the evidence, and both sides accepted before us that, for the purpose of ascertaining any matter of fact, we should not look beyond the judge's judgment.
Faccenda carry on the business of breeding, rearing, slaughtering and selling chickens. Faccenda's premises are at Brackley in the county of Northampton. The chickens are sold as fresh chickens which means that, though after being slaughtered they are chilled in refrigerators until sale, they are not actually frozen.
At all material times Mr Robin Michael Faccenda has been the chairman and managing director of Faccenda. In about 1973 Faccenda engaged Mr Barry Fowler (the first respondent) as sales manager.
The judge described the subsequent development of the business of Facenda in these terms:
"At that time [1973], and for some time afterwards, the company sold its chickens to wholesalers, and did not approach retailers directly. Mr Fowler, who is agreed to be a businessman of considerable ability, proposed to Mr Faccenda the establishment of what he called a van sales operation, whereby itinerant refrigerated vehicles would daily offer fresh chickens to such traders as butchers, supermarkets and catering establishments. Starting at first in a small way, Mr Fowler built up this branch of the business until it came to represent a substantial part, though always the smaller part, of the company's trade. There were in all ten refrigerated vehicles, each driven by a salesman and travelling in a particular sector of the Midlands. The sectors radiated in different directions from Brackley in Northamptonshire, where Faccenda Chicken Ltd has its factory. Each salesman followed a different round within his sector on each of the five working days of the week, some customers receiving a call once a week and others twice a week, according to their requirements and the possibilities of the van sales organisation. Thus, the whole operation was based on fifty journeys or rounds, one for each vehicle on each working day of the week. The journeys were, of course, not rigidly fixed, but variable from time to time as particular customers were gained or lost or their requirements changed. It is clear from the evidence that the weekly standing orders of customers were not contractually binding upon them. The evidence shows in my judgment that each customer was freely permitted to take less than his standing order when the salesman called, or to increase, or vary the composition of, his order if the goods he wanted on the particular day were available in the van when it called. Firm orders were placed on special occasions or by large customers by telephoning to the office of Faccenda Chicken Ltd. at Brackley, but the van salesman played no part in their negotiation."
It seems clear that by 1980 the van sales operation was prospering. The average weekly profit for the period which covered approximately the second half of 1980 was about £2,500.
On 11th December 1980, however, Mr Fowler was arrested, together with another man, on a charge of stealing some of Faccenda's chickens. Mr Fowler resigned immediately as sales manager, and, though at his trial in September 1981, he was acquitted of the charge of theft, his work at Faccenda was at an end.
During the early part of 1981 Mr Fowler considered the purchase of an hotel in Cornwall, but the project fell through. Shortly afterwards he decided to set up his own business of selling fresh chickens from refrigerated vehicles.
This business was to be carried on in the Brackley area.
Though he had no source of supply under his own control, there was no shortage of fresh chickens available for bulk purchase.
In about May 1981 Mr Fowler advertised for employees under a box number in a local newspaper. As a result of this advertisement eight employees of Faccenda applied to join Mr Fowler's new organisation. This was not surprising, because, although a box number was used, the eight employees knew of Mr Fowler's intentions before the advertisement appeared.
The applications were successful; Mr Fowler was pleased to be able to obtain staff whom he knew to be experienced and competent and who had worked with him before. In the course of the next few weeks the eight employees, consisting of a supervisor (Mr Finch), five van salesmen (that is, half the van salesmen then employed by Faccenda) and two ladies who had been employed in the offices of Faccenda, gave notice and joined Mr Fowler.
The new business started its operations on 6th July 1981, although Mr Fowler's company (Fowler Quality Poultry Products Ltd.) was not incorporated until August.
The loss of such a high proportion of their experienced staff had a serious effect on Faccenda. Indeed, ever since Mr Fowler had left at the end of 1980, the operations of the van sales division of Faccenda had been much less profitable, and after July 1981 the position deteriorated further.
Mr Faccenda, not surprisingly, was dismayed by what had happened, and on 10th September 1981, the date (it seems) of Mr Fowler's acquittal, an action was started by Faccenda in the Chancery Division against Mr Fowler and his company and the eight former employees of Faccenda.
In these proceedings two alleged causes of action were relied upon:
(a) Breaches of implied terms of the contracts of employment that the nine employees would faithfully serve Faccenda and "would not use confidential information and/or trade secrets gained by them and each of them whilst in [Faccenda's] employment to the disadvantage or detriment of [Faccenda], whether during the currency of such employment or after its cessation."
(b) An unlawful conspiracy "together to injure [Faccenda's] goodwill and connection by unlawfully making use of the said confidential information and/or trade secrets of [Faccenda] gained by the individual defendants whilst in [Faccenda's] employment".
A year later, on 16th September 1982, Mr Fowler issued a writ in the Queen's Bench Division claiming nearly £23,000 in respect of commission which he said was due to him. In these proceedings Faccenda served a counterclaim which in effect repeated the allegations of breaches of contract and conspiracy and also included a claim for £435 in respect of the chickens which it was said Mr Fowler had wrongly converted in 1980 and which had been the subject-matter of the criminal proceedings in which Mr Fowler had been acquitted.
The Queen's Bench action was transferred to the Chancery Division in March 1983.
On 27th June 1983 the two actions came on for hearing together before Mr Justice Goulding. After a hearing lasting 39 days, the learned judge, in a reserved judgment delivered on 8th November 1983, dismissed the claims by Faccenda for damages for breach of contract and for conspiracy. At the same time he gave judgment for Mr Fowler for £15,316 in respect of his claim for commission and interest after making a deduction in respect of the amount claimed by Faccenda in conversion, where a sum was conceded by way of set-off without an admission of liability.
At the trial the claims for injunctions which had been included in the writ in the Chancery action were not...
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