Faccenda Chicken Ltd v Fowler

JurisdictionEngland & Wales
Date1984
Year1984
CourtChancery Division
[CHANCERY DIVISION] FACCENDA CHICKEN LTD. v. FOWLER And Others FOWLER v. FACCENDA CHICKEN LTD. 1983 June 27, 28, 29, 30, July 1, 4, 5, 6, 7, 8, 11, 12, 13, 14, 15, 18, 19, 20, 21, 22, 26, 27, 28, 29, Oct. 4, 5, 6, 7, 10, 11, 12, 13, 14, 17, 18, 19, 20, 21, 24; Nov. 8 Goulding J.

Confidential Information - Breach of confidence - Employment - Salesmen acquiring skill and knowledge during course of employment - Salesmen leaving and forming company in competition with employer's business - Whether knowledge of employer's customers confidential - Whether use of knowledge in breach of implied term of contract - Whether actionable conspiracy

F. was one of nine former employees of the plaintiff, a company in the business of breeding, rearing, killing and preparation of chickens for sale. F. as sales manager built up for the company a large van sales operation whereby fresh chickens in itinerant refrigerated vehicles were daily offered to traders such as butchers, supermarkets and catering establishments. Each of 10 van salesmen operating the refrigerated vehicles covered a different sector in the company's business area and, after a few week's employment, knew well the names and addresses of customers in their particular sector, the general limits of the sector and the detailed routes taken day by day for the supplying of customers. Each salesman also knew the customers' usual requirements both as to quantity and quality, the times of deliveries and the prices they respectively paid, which varied in individual circumstances. This sales information was alleged to be confidential information in a later action by the company caused by the resignation of F. as sales manager and the setting up on his own of a new business in the sale from refrigerated vehicles of fresh chicken bought by him in bulk. F.'s advertisement under a box number in a local newspaper for employees, with an offer of profit-sharing bonuses, was answered by several vansmen and others in the company's employ, who later gave notice to the company and started working for F. The company's writ in the action against the nine and a tenth defendant (a company formed by F.) alleged breach of their contracts of employment by use to the company's detriment of confidential sales information, and secondly a conspiracy by the former employees and the tenth defendant to injure the company's goodwill and connection by abuse of the confidential information they had gained, also by inducing breaches of contract by the company's customers. In none of the contracts of employment with the company had there been an express term against the use to the company's detriment of confidential information and/or trade secrets gained by them in the company's employment whether during the currency of the employment or afterwards: —

Held, (1) that the sales information relied on as being confidential fell into a class of master and servant cases which forbade so long as the employment continued the use or disclosure, otherwise than in his master's employment, of information acquired by the servant and remembered by him, even though becoming part of his own skill and knowledge, but on leaving his master's service, he was free to use for his won benefit such skill and knowledge in competition with his former master; that on that basis, the employees, having left the company's service, and there being no express stipulation restraining them from competing with the company, they were free to use elsewhere the skill and knowledge they had acquired; and that, accordingly the claim for breach of contract failed (post pp. 599C–D, 600D–E, 601D).

(2) That for a combination of persons to become an actionable conspiracy in circumstances where the act would not be actionable if done by one person, the sole or predominant purpose of the combination had to be to injure the plaintiff, but the evidence adduced by the company in support of its case had failed to show other than that the combinations' predominant purpose was to promote its own interests; that accordingly, the action failed and would be dismissed (post, pp. 595G–596A, 602D–F).

United Indigo Chemical Co. Ltd. v. Robinson (1931) 49 R.P.C. 178 and Wessex Dairies Ltd. v. Smith [1935] 2 K.B. 80, C.A. applied.

Printers & Finishers Ltd. v. Holloway [1965] 1 W.L.R. 1 considered.

The following cases are referred to in the judgment:

Amber Size & Chemical Co. Ltd. v. Menzel [1913] 2 Ch. 239

Cranleigh Precision Engineering Ltd. v. Bryant [1965] 1 W.L.R. 1293; [1964] 3 All E.R. 289

Leng (Sir W. C.) & Co. Ltd. v. Andrews [1909] 1 Ch. 763, C.A.

Lonrho Ltd. v. Shell Petroleum Co. Ltd. (No. 2) [1982] A.C. 173; [1981] 3 W.L.R. 33; [1981] 2 All E.R. 456, H.L.(E.)

Printers & Finishers Ltd. v. Holloway [1965] 1 W.L.R. 1; (Note) [1964] 3 All E.R. 54; [1964] 3 All E.R. 731

Reg. v. Ardalan [1972] 1 W.L.R. 463; [1972] 2 All E.R. 257, C.A.

Saltman Engineering Co. Ltd. v. Campbell Engineering Co. Ltd. (1948) 65 R.P.C. 203, C.A.

Terrapin Ltd. v. Builders' Supply Co. (Hayes) Ltd. [1960] R.P.C. 128

United Indigo Chemical Co. Ltd. v. Robinson (1931) 49 R.P.C. 178

Wessex Dairies Ltd. v. Smith [1935] 2 K.B. 80, C.A.

Worsley (E.) & Co. Ltd. v. Cooper [1939] 1 All E.R. 290

The following additional cases were cited in argument:

Baker v. Gibbons [1972] 1 W.L.R. 693; [1972] 2 All E.R. 759; (Note) [1972] 1 W.L.R. 703; [1972] 2 All E.R. 767, C.A.

Coco v. Clark (A. N.) (Engineers) Ltd. [1969] R.P.C. 41

Crofter Hand Woven Harris Tweed Co. Ltd. v. Veitch [1942] A.C. 435; [1942] 1 All E.R. 142, H.L.(Sc.)

Drane v. Evangelou [1978] 1 W.L.R. 455; [1978] 2 All E.R. 437, C.A.

Irish, In re (1888) 40 Ch.D. 49

Littlewoods Organisation Ltd. v. Harris [1977] 1 W.L.R. 1472; [1978] 1 All E.R. 1026, C.A.

Louis v. Smellie (1895) 73 L.T.R. 226, C.A.

Marshall (Thomas) (Exports) Ltd. v. Guinle [1979] Ch. 227; [1978] 3 W.L.R. 116; [1978] 3 All E.R. 193

Mogul Steamship Co. Ltd. v. McGregor Gow & Co. (1889) 23 Q.B.D. 598; [1892] A.C. 25, H.L.(E.)

Morris (Herbert) Ltd. v. Saxelby [1916] 1 A.C. 688, H.L.(E.)

Reid & Sigrist Ltd. v. Moss and Mechanism Ltd. (1932) 49 R.P.C. 461

Reuter's Telegram Co. v. Byron (1874) 43 L.J.Ch. 661

Reg. v. Griffiths [1966] 1 Q.B. 589; [1965] 3 W.L.R. 405; [1965] 2 All E.R. 135448. C.C.A.

Robb v. Green [1895] 2 Q.B. 1 and 315, C.A.

Seager v. Copydex Ltd. [1967] 1 W.L.R. 923; [1967] 2 All E.R. 415, C.A.

Vandervell's Trusts (No. 2), In re [1974] Ch. 269; [1974] 3 W.L.R. 256; [1974] 3 All E.R. 205, C.A.

Yates Circuit Foil Co. v. Electrofoils Ltd. [1976] 2 F.S.R. 345

Actions

By writ dated 10 September 1981 in the first action (in the Chancery Division) the plaintiff, Faccenda Chicken Ltd., claimed against the defendants (the first nine being individuals formerly in the employment of the plaintiff but being subsequently employed by the tenth defendant, Fowler Quality Poultry Products Ltd.) (1) an order that the nine named defendants be restrained from using and disclosing confidential trade secrets and other confidential material on and appertaining to the plaintiff's business and obtained by them whilst they were severally in the employment of the plaintiff; (2) an order that the tenth defendant be restrained from using and disclosing any and all of the aforesaid confidential trade secrets and other confidential material of and appertaining to the plaintiff's business and communicated to it or to any of its servants or agents on its behalf by any of them the other defendants to the action, their servants or agents; (3) damages against all the defendants for breaches of their several contracts of employment with the plaintiff and/or for breaches of confidence and/or for conspiracy to use and disclose confidential material obtained by them of the plaintiff's business affairs and arising out of the activities of the tenth defendant in the business as wholesalers and/or retailers of poultry products and those of the first nine defendants in permitting and/or assisting in the operation of such business to the detriment of the plaintiff's business goodwill and connection; (4) further and other relief; (5) costs.

By writ dated 16 September 1982 in the second action (in the Queen's Bench Division and transferred to the Chancery Division on 15 March 1983) the plaintiff, Barry Fowler (the first defendant in the Chancery action) claimed against Faccenda Chicken Ltd. £22,975 for outstanding commission said to be due to him and interest on that sum. In a counterclaim Faccenda Chicken Ltd. sought damages under three heads: (1) breach of contract by abuse of confidential information; (2) alleged wrongful disposals or conversion of chickens in November 1980; (3) alleged conspiracy between Barry Fowler and two of the defendants to obtain the disclosure to him of certain weekly costings of Faccenda Chicken Ltd.

The facts are stated in the judgment.

John Trench and William Hunter for the plaintiff company.

Peter Crawford Q.C. and James Gibbons for the defendants.

Cur. adv. vult.

8 November. Goulding J. read the following judgment, I have to deliver judgment in two actions arising out of the same events. The first (“the Chancery action,”) was begun on 10 September 1981. The plaintiff is a company called Faccenda Chicken Ltd., and there are 10 defendants. Nine of them are individuals. They were formerly in the employment of Faccenda Chicken Ltd. but subsequently became employed by the tenth defendant, a company called Fowler Quality Poultry Products Ltd. (“the Fowler company”). The other action (“the Queen's Bench action”) was commenced in the Queen's Bench Division on 16 September 1982, and was transferred on 15 March 1983 to the Chancery Division. It is an action by Barry Fowler, who is the first-named defendant in the Chancery action, against Faccenda Chicken Ltd. Faccenda Chicken Ltd. has pleaded a counterclaim in the Queen's Bench action which I must also deal with in my judgment. When hereafter I speak of “the defendants” without...

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