Personal Management Solutions Ltd and Another v Brakes Bros. Ltd and Others
| Jurisdiction | England & Wales |
| Judge | Judge Curran QC |
| Judgment Date | 24 October 2014 |
| Neutral Citation | [2014] EWHC 3495 (QB) |
| Docket Number | Case No: HQ14X01581 |
| Court | Queen's Bench Division |
| Date | 24 October 2014 |
His Hon Judge Curran QC
sitting as a judge of the High Court
Case No: HQ14X01581
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Andrew Stafford QC and Simon Goldberg instructed by McDaniel & Co. for the claimants
Michael Lee instructed by Wragge Lawrence Graham & Co LLP for the second, third and fourth defendants
Hearing dates: 15, 16, 17 & 18 July 2014
Introduction
| Subject | Paragraphs |
| The nature of the case and introductory observations | 1–2 |
| The need for care in balancing confidentiality & competition | 3–5 |
| Burden and standard of proof and other general points | 6–9 |
Background and chronology
| The principal parties | |
| The fourth defendant | |
| The first defendant company | |
| Personal Group's investigation into Mr Eaton's activities | |
| The disciplinary hearing and the undertaking | |
| Mr Eaton's move to Gee 7 | |
| Transmission of the PG contract by Brakes to Gee 7 | 41 |
| Brakes' contract with Gee 7 | 44 |
| Brakes' transmission of the List to Gee 7 | 45 |
| Brakes' invitation to PG to re-tender | |
| Mark Wilson | |
| Brakes' letter to employees of 21 st of January 2014 | 57 |
| The alphabetically re-arranged version of the List | 58 |
Agreed Issues
| The list of agreed issues | 62 |
The witnesses
| Guidance on appraisal of the evidence of the witnesses | |
| The rival contentions as to the witnesses | |
| Mr Rooney | 77 |
| Mr Scanlon | |
| Mr Wilson | |
| Mr Eaton | |
| Mr Pardoe | 103–105 |
| Ms Atkins | 106 |
Issues of fact and findings of fact
| The importance of background | 107 |
| When and why Mr Pardoe and Mr Eaton met in 2011 | 108–113 |
| Conclusions on the Pardoe-Eaton meeting in July 2011 | 114–119 |
| The reason for Mr Eaton's resignation from Personal Group | 120–121 |
| Summary of the circumstances in respect of the resignation | 122–123 |
| Brakes' provision of the PG contract to Gee 7 | 124–132 |
| The evidence on the provision of the List by Brakes to Gee 7 | 133–137 |
| Conclusions on the reason for the sending of the List | 138–147 |
| Actual use of the List | 148–156 |
| Provision of the re-arranged List to Mr Eaton and Ms Atkins | 157–160 |
The law
| 161 | |
| 162 | |
| 163 | |
| ' Spycatcher' | 164–169 |
| 170–171 | |
| 172 | |
| 173 | |
| 174 | |
| Vestergaard | 175 |
| 176–177 | |
| Authorities on unenforceability for restraint of trade | 178–185 |
| The Kanchenjunga , and estoppel or waiver | 186–188 |
| Specific performance | 189 |
| Principles applicable to this case | 190 |
Conclusions on the main issues in the case
| Whether the List was the claimants' information | 191–193 |
| Conclusions on the List as the claimants' information | 194–195 |
| Whether the List was information of a confidential character | 196 |
| Gee 7's 'conscience' in respect of the List | 197–200 |
| Gee 7's use of the List to target the claimants' policyholders | 201 |
| No countervailing public interest | 202 |
| The claimants' entitlement to an injunction or other relief | 203–204 |
| Damages | 205–206 |
| 'Clean hands' | 207–215 |
| Enforceability of Mr Eaton's undertaking | 216–225 |
| Waiver, equitable estoppel, and related issues | 226–235 |
| Further or other relief against the Fourth Defendant | 236 |
| Postponement of the assessment of damages | 237 |
Introduction
This is an action by two associated claimant companies (together "Personal Group") for damages and for other relief. The claims have been consolidated as each is concerned with the alleged misuse of Personal Group's confidential information by the second and third defendant companies, through the agency of the first and fourth defendants, by receiving, disseminating and making use of a list of customers of the claimants ("the List") who were employees of the first Defendant company.
The second and third defendant companies (together "Gee 7") are associated entities which their managing director, Mr Jon Pardoe, described as being a small but increasingly successful competitor to Personal Group. They competed in particular for the 'employee benefits' insurance business of the first Defendant company. Mr Pardoe said that by this litigation and other means Personal Group were attempting to crush Gee 7 at an early stage in its development.
That suggestion raises at the outset the need for a cautious approach by the court. This was a point which Arnold J considered in Vestergaard Frandsen A/S & Ors v Bestnet Europe Ltd & Ors [2009] EWHC 657 (Ch) at first instance. He said, at paragraph 104,
'I entirely accept that, as Laddie J said in Ocular Sciences Ltd v Aspect Vision Care Ltd & Ors [1997] RPC 289, at 359,
"… it is well recognised that breach of confidence actions can be used to oppress and harass competitors and ex-employees."
'It follows that the courts must scrutinise such claims with care to see if they are well-founded or not, which is what I intend to do in the present case. It does not follow that all such claims are unfounded and harassing claims.'
Moreover, in the Supreme Court in Vestergaard Frandsen A/S & Ors v Bestnet Europe Ltd & Ors [2013] 1 WLR 1556 Lord Neuberger, with whom all the other members of the court agreed, said at paragraph 44:
'… in a modern economy, the law has to maintain a realistic and fair balance between (i) effectively protecting trade secrets (and other intellectual property rights) and (ii) not unreasonably inhibiting competition in the market place. The importance to the economic prosperity of the country of research and development in the commercial world is self-evident, and the protection of intellectual property, including trade secrets, is one of the vital contributions of the law to that end. On the other hand, the law should not discourage former employees from benefiting society and advancing themselves by imposing unfair potential difficulties on their honest attempts to compete with their former employers.'
In approaching the issues I bear those observations firmly in mind, in particular as Mr Pardoe of the second and third defendant companies, and the Fourth Defendant, Mr Eaton, are ex-employees of Personal Group, now in competition with them.
I also bear in mind throughout that the burden of proof lies upon Personal Group of the facts relied upon by them. The standard of proof they must achieve is to satisfy the court on the balance of probabilities.
This judgment is unavoidably lengthy. Whilst the hearing occupied only four days, the case involved several thousand pages of documents, in many lever-arch files. At my request these were reduced, through the industry of all counsel, to a Core Bundle of some 600 pages, in two volumes, which are together referred to as " CB". Helpful opening and closing skeleton arguments were submitted, totalling almost 100 pages. In addition, a lever-arch file of authorities was produced, containing 25 reported cases. I was also grateful to be provided with four volumes of daily transcripts of evidence and argument. There are very many issues of fact and law which require resolution, and as counsel repeatedly stressed on both sides, it is impossible to define the issues without detailed examination of the background which provides the context within which those issues arose.
The general background and sequence of events set out in the next Part consists mainly of matters which are common ground: indeed, much of it is indisputable. Also included, however, are facts asserted by one party which do not appear to be contested by another, and vice versa. In addition, reference is made to the documentary evidence: in some instances, when a document may not have been specifically referred to in the oral evidence, for example, the page reference in the Core Bundle used at trial is given. Where possible, however, the full terms of any important piece of such documentary evidence are set out below, and reference to the bundles should be unnecessary.
I shall deal with such disputed matters of fact as are relevant to the issues in the case in a separate section of this judgment.
Background and Chronology
Personal Group Holdings is the holding company for a number of subsidiary companies, including the two claimant companies, which are active in the employee benefits and financial services industry. The business was founded some 25 years ago as a general insurance company but, as Mr Kenneth Rooney its deputy chairman said, in recent times it has concentrated on the provision of employee benefits insurance packages ("EBPs") to the employees of client companies and other businesses. Personal Group Holdings floated on the Alternative Investment Market in 2000.
Mr Pardoe, now of Gee 7, began work in the financial services industry in 1986. In June 1991 he set up his own company, called Berkeley Morgan. Berkeley Morgan expanded and, Mr Pardoe said, had a turnover in excess of £16m at its peak. A cash offer for the business was received from Personal Group in December 2004. Mr Pardoe had been Chairman and Managing Director of what had become Berkeley Morgan Group Plc. After Personal Group bought the business he carried on as the managing director of Berkeley Morgan and he also became a main board director of Personal Group, until July 2006 when he left.
Mr Pardoe...
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