Flogas Britain Ltd v Calor Gas Ltd

JurisdictionEngland & Wales
CourtChancery Division
JudgeThe Hon. Mrs Justice Proudman, Dbe,Mrs Justice Proudman
Judgment Date16 October 2013
Neutral Citation[2013] EWHC 3060 (Ch)
Date16 October 2013
Docket NumberCase No: HC 11C02280

[2013] EWHC 3060 (Ch)



Royal Courts of Justice

Strand, London, WC2A 2LL


Mrs Justice Proudman

Case No: HC 11C02280

Flogas Britain Limited
Calor Gas Limited

Christopher Lundie (instructed by Freeth Cartwright LLP) for the Claimant

Douglas Campbell (instructed by Shoosmiths LLP) for the Defendant

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

The Hon. Mrs Justice Proudman, Dbe Mrs Justice Proudman

In this action Flogas Britain Limited ("Flogas") seeks damages from the Defendant, Calor Gas Limited ("Calor") for misuse of a copy of part of Flogas's customer database. Flogas has elected to receive damages rather than an account of profits. The claim originally had two components: the first arises from the use of Flogas's domestic customer details extracted from Flogas's database for the purposes of a direct mail shot in mid-October 2010. The second arose from the use of a list of commercial customer details but there is now no issue between the parties on this part of the claim.


In relation to breach of confidence this is a trial of quantum only since liability is admitted. Calor admits that it used customer details obtained from the Flogas database. There is a significant difference between the experts in their evidence largely because of the differences in the methodology they have respectively adopted. The expert instructed by Flogas, Mr Sat Praha of BDO LLP, values the claim in the range of £6.5m-£8.1m, the expert instructed by Calor, Mr Nicholas Good of KPMG LLP, values the claim in the range £125,823—£224,255 only.


Both experts are Fellows of the Institute of Chartered Accountants in England and Wales, both are partners in firms of high repute and both have extensive experience as expert witnesses in the field of forensic accounting. I should make it clear that they have a genuine difference of opinion and that they both faced considerable difficulties because certain matters necessary to their assessments have to be resolved by the court. Both gave the required Expert's Declaration pursuant to CPR Part 35. I take such a declaration very seriously. Both experts are aware of their duties to the court and have striven to fulfil those duties properly. Such an observation is necessary, partly because of the tone of part of the cross-examination and partly because ultimately I have to favour one methodology over the other.



I heard oral evidence over eight days from personnel at Flogas and Calor; Directors, Managers, IT specialists, Customer Service representatives including a Telesales representative, a senior in-house lawyer and the two expert witnesses. It seemed to me that all the witnesses were open and honest but there is no doubt on the one hand that Flogas is suspicious of Calor and on the other that Calor believes that Flogas's claim is inflated.


The market for Liquid Propane Gas ("LPG")


The LPG market is relatively small with around 150,000 consumers nationwide. Mr Gannon, Flogas's Managing Director, said that identifying new customers is like trying to find a needle in a haystack. Calor has more than 50% of the market; Flogas about 19%. That means that Calor has over 75,000 customers and Flogas some 28,500. In April 2009 a Competition Commission ruling came into force intended to increase competition in the market, including measures prescribing a two-year maximum for exclusive contracts, a requirement to inform customers of upcoming expiry of contracts through the medium of a "wake-up letter" and the option for a new supplier to purchase the tank in situ from the old supplier. However the churn rates relating to change of suppliers still remain below the energy sector average of 15% since switching within the LPG market is the exception rather than the norm. Prior to the Competition Commission ruling churn rates were less than 1% but thereafter increased to 4.1% across the industry. The low rate is largely owing to so-called "sticky customers", defined by Mr Plyte, Flogas's Finance Director, to mean customers who will stay with their supplier as they come out of contract regardless of changes of price and opportunities to switch provided they do not have any serious issues over service or value.

Flogas's Database


Flogas maintains a database with information on its customers which it has compiled over a number of years. This database holds information such as name, address and contact details of customers, contract dates, pricing and other information. In December 2006 a Mr David Hughes, a Flogas Sales Director, had resigned from Flogas. On 1 March 2007, Mr Matthew Finch, an employee of Flogas, imported into an Excel spreadsheet information on Flogas's bulk customers (that is, customers who receive delivery of LPG to a storage tank on their premises) from Flogas's database. Mr Finch subsequently copied the information onto his personal computer. In April 2007, Mr Finch's employment with Flogas was terminated but he retained the information from the Flogas database. Mr Finch gave a copy of the information from Flogas to Mr Hughes when they were dealing with the sale of a website business. In January 2010 Mr Hughes joined Calor as an Area Sales Manager and provided a copy of the information to Ms Sarah Haythornthwaite, then the Calor Head of Marketing responsible for mail shots, who had budget authority for mail shots up to £50,000.


In spring 2010 Mr Hughes created two computer files on Calor's system containing this information. On 7 June he saved a form of file which it is believed was a cut down version of the first of these two files.


It is common ground between the parties that in June 2010 Mr Hughes copied some of the information in this file (to which I will refer as "the Flogas Database") on to a memory stick provided to him for the purpose by Ms Haythornthwaite.



In or about September 2010 Flogas told its existing customers of a price increase which was to be implemented on 1 October 2010. Calor wanted to use the opportunity to try and win some of the disaffected customers. On 11 October 2010 Calor sent a legitimate mail shot to the Flogas customers who were listed on its own Flogas Prospects database. This comprised only some 1,754 people.


Then, only a week or so later, Ms Haythornthwaite used the Flogas Database to send a further mail shot. The plan was to send the mail shot in three tranches. The first two were sent on 18 October: 9,600 by first class post and 9,600 by second class post. They contained an invitation to switch to Calor as the customers' LPG supplier and they offered £100 of free LPG to those who made the switch. It is clear from the evidence of Mr Roberts and of Mrs Stanley, a Calor Marketing Executive, that the usual process for obtaining and cleansing data for these mail shots (in particular the use of Calor's Strategic Planning Department) was bypassed by Ms Haythornthwaite. The plan was to send a third tranche of 12,537 mail shots on 25 October 2010 but, in circumstances to which I shall return, this third tranche of mail shots was cancelled.


On 19 October 2010 Flogas received a surge of telephone calls from its customers about Calor's mail shot requiring Flogas to meet the Calor offer. Mr Cubbon, then Flogas's Managing Director, immediately raised his concern that this may have been as a result of unlawful use of a customer database with Mr Rennie, Calor's Managing Director.


On 21 October 2010 Mr Cubbon called again. Mr Rennie realised that something was wrong and inquiries revealed that the data for the mail shots had come from Ms Haythornthwaite, and that she had received it from Mr Hughes.

Disciplinary proceedings


On 25 and 26 October Mr Hughes and Ms Haythornthwaite respectively were subjected to a disciplinary hearing by Calor. They were both then summarily dismissed from Calor. I was taken through the transcript of Ms Haythornthwaite's hearing in some detail as she alleged that she was simply a scapegoat and that others at Calor were also involved in the misuse of the Flogas Database. The person at Calor named by Ms Haythornthwaite at her disciplinary hearing, Mr Stephen Sulley (a member of Calor's Business Management team), gave evidence to this court strenuously denying any wrongdoing and indeed denying knowledge at the time of the existence of the Flogas Database. Mr Lundie cross-examined him to no avail although he pressed on me in closing that, "It is likely that he was involved but is in no position now to admit to his involvement." No evidence was given at this trial by Ms Haythornthwaite (whose interview notes are in any event confusing and in some cases incomprehensible), Mr Hughes or Mr Finch and in my judgment Mr Sulley's evidence must prevail.


Again, much doubt was thrown at the evidence of Calor's in-house lawyer, Mrs Marshall-Rowan. At her disciplinary hearing Ms Haythornthwaite said that Mrs Marshall-Rowan had led her to believe that use of the Flogas Database was "okay". Mrs Marshall-Rowan's evidence was very different. She said that Ms Haythornthwaite was vague and asked about competition law in a hypothetical way. As soon as Mrs Marshall-Rowan found out about the mail shot, about a month after the conversation with Ms Haythornthwaite, she made an attendance note of the conversation they had had. Mrs Marshall-Rowan insisted that she did not know that Ms Haythornthwaite had the Flogas Database, adding "If I had thought that I would have gone straight to Stephen Rennie." She said,

"…I didn't think for a minute the conversation had any particular significance. Sarah wafted in, wafted out again, and I thought she was probably...

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