Rancom Security Ltd v Ms Helen Girling
| Jurisdiction | England & Wales |
| Judge | Richard Williams |
| Judgment Date | 28 April 2023 |
| Neutral Citation | [2023] EWHC 1115 (Ch) |
| Docket Number | Case No: BL-2021-BHM-000017 |
| Court | Chancery Division |
[2023] EWHC 1115 (Ch)
HHJ Richard Williams
(sitting as a judge of the High Court)
Case No: BL-2021-BHM-000017
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS SITTING IN BIRMINGHAM
BUSINESS LIST (Ch. D.)
Birmingham Civil Justice Centre
Bull Street, Birmingham B4 6DS
Hugh Jory KC (instructed by UK Law Solicitors) for the Claimant
Tony Watkin (instructed by Lodders Solicitors) for the Defendants
Hearing dates: 28, 29, 30 November, 1, 2, 5, 6 December 2022
Introduction
Rancom Security Limited (“ C”) is in the business of home security.
Ms Helen Girling (“ D1”) and Mr Jay Rose (“ D2”) are former employees of C and have set up in competition to C operating through Connect 4 Security Limited (“ D3”).
Business competition of and in itself is a good thing by driving improvements in products and services. However, C claims that it has lost customers to D3 as a result of the alleged wrongful actions of the defendants, who:
i) Misused confidential information contained on C's database in order to target C's customers; and then
ii) Sought to persuade those customers of C to transfer to D3 by making maliciously false statements that –
a) C was not financially stable,
b) C was going bankrupt,
c) C would be out of business by the end of the year,
d) C escorted its customers to cashpoint machines to take cash out to pay it,
e) C's customer alarm system was not covered if it went off.
The defendants do not dispute that the majority of D3's customers are former customers of C, but it is the defendants' case that:
i) D1 and D2 were not given access to and never did access C's database;
ii) They identified and made contact with C's customers solely as a consequence of the defendants' own legitimate marketing activities, which included –
a) legitimate data purchases from third parties such as telemarketing information,
b) direct marketing by leaflet and doorstep marketing,
c) advertising opportunities in consumer directories and magazines,
d) online marketing,
e) referrals from the Security Systems Alarm Inspection Board (“ the SSAIB”); and
iii) It is denied that the defendants made any of the alleged false statements. Rather the customers were motivated to transfer from C to D3 as a result of C having ceased to be regulated such that C was no longer able to offer a police response as part of its service, whereas D3 was able to offer a police response.
This is my judgment following the trial of the preliminary issue of liability.
Background
C was incorporated in 2003. Its directors were Messrs Lee Hosking (“ LH”) and Ranjit Dhillon (“ RD”).
In 2006, D2 commenced working for C in sales before being promoted to area manager in 2008 and then national sales manager in 2011.
In 2011, D1 commenced working for C initially in telesales before being promoted to national marketing manager in 2013.
C was originally named Direct Response Security Systems Limited, although there was a change to its present name on 18 June 2014 following the reputational damage caused by the broadcast in 2010 of a BBC Watchdog programme that was heavily critical of the company's sales practices.
In 2015, the National Police Chiefs' Council issued Guidelines on Police Requirements & Response to Security Systems, which provided, inter alia,:
“………..
1. PREFACE
…….
1.2 To enable a security system to be recognised within the Requirements for Security Systems it must comply with the Policy on Police Response to Security Systems and a recognised standard or code of practice controlling manufacture, installation, maintenance and operation. Such standards must be in the public domain and not be product based.
1.3 The installation and services provided by the installing company and an Alarm Receiving Centre (ARC) / monitoring / tracking centre (e.g. RVRC, SOC), shall be certified by a United Kingdom Accreditation Service (UKAS) accredited certification body in accordance with the provisions of the Requirements for Security Systems.
……
2. GUIDANCE, ADVICE AND PROCEDURES
2.1 Type A — Remote Signalling Systems.
2.1.1 Systems terminating at a recognised ARC, Remote Video Response Centre (RVRC) for CCTV and System Operating Centre (SOC) for vehicle tracking. All centres must conform to BS 5979 (Cat II) or BSEN 50518.
2.1.2 Unique reference numbers (URNs) will be issued to systems at these recognised centres. In the case of stolen vehicle tracking systems the URN will be issued by police forces to the operating company or monitoring centre, not to each vehicle.
…….
2.3. LIST OF COMPLIANT COMPANIES INSTALLING TYPE A SECURITY SYSTEMS
2.3.1 To identify companies conforming to this Policy it is necessary for each Police Force to hold a list of policy compliant companies. Inclusion on the list does not amount to confirmation that the company or its work has been inspected by the Police. Only companies so listed may install, maintain and/or monitor Type A Systems in the particular Police area. Where a company loses police recognition under this policy, its existing customers will have 90 days in which to make alternative maintenance/monitoring arrangements.
……..
3 OPERATIONAL TACTICS
3.1 POLICE ATTENDANCE — Type A Security Systems
3.1.1 For Type A security systems there are two levels of police response.
LEVEL 1 – Immediate
It should be noted that police response is ultimately determined by the nature of demand, priorities and resources which exist at the time a request for police response is received.
LEVEL 3 – Withdrawn
No Police attendance, keyholder response only.
3.1.2 The police service has adopted the use of confirmed alarm technology as part of the effort to reduce false calls.
3.1.3 All new Intruder and Hold up Alarms (HUA) applications will only qualify for a URN and police response if installed to the current required standards…
…….
3.2 INTRUDER ALARM SYSTEMS
3.2.1 Intruder alarm systems (IAS) issued with a URN will receive LEVEL 1 response until three false calls have been received in a rolling 12 month period.
3.2.2 Following two false calls in a rolling 12 month period the customer will be advised, in writing, with a copy being forwarded to the maintaining alarm company informing them of the situation and recommending urgent remedial action.
3.2.3 Following three false calls in a rolling 12 month period LEVEL 3 will apply and police response will be withdrawn, not less than 14 days from the date of the Withdrawal letter. The customer will be advised in writing with a copy to the maintaining company, who will be required to instruct the ARC/RVRC not to pass alarm messages to the police.
……..”
C was approved and accredited by the SSAIB to provide security systems with monitoring and maintenance services.
C offered its customers fixed term contracts for:
i) The installation and maintenance of domestic security alarm systems, which included an alarm box control, a bell box and passive infrared sensors;
ii) The 24-hour monitoring of the system through an ARC;
iii) Registration of the system with the Police to obtain a URN such that, on activation of the alarm, the ARC would notify the Police for a “LEVEL 1 – Immediate” response.
C also provided optional (i) add-on products such as fire, smoke, carbon monoxide, flood and/or perimeter detectors and (ii) warranty cover in respect of the installed equipment.
C acquired/licensed an industry wide generic software package to enable C to record on a database (“ the Alarm Master Database”) customer information, which included:
i) The names and contact details of each customer;
ii) The password for the customer's home security system; and
iii) The dates when the contract commenced and was due for renewal. Renewals were a vitally important source of revenue, since they did not attract the associated cost of supplying/installing equipment.
As a result of the sensitive nature of the customer information stored on the Alarm Master Database, only a limited number of employees, who needed that information to perform their duties, were given their own unique log in details to access the database.
It was the evidence of LH that:
i) D1 had access to the Alarm Master Database because she was in charge of the marketing team and needed such access to allow her and her team to contact (a) existing customers for various marketing opportunities including in relation to add-on products and upgrades, and (b) previous customers to attempt to win back their custom; and
ii) D2 had access to the Alarm Master Database because it was part of his job to ensure that the sales team entered the details of all new customers onto the database.
It was the evidence of D1 and D2 that:
i) It was the role of D1 and her team to generate new leads, which were then passed to the sales team;
ii) It was the role of D2 and his team to convert those leads into new sales;
iii) When a sales representative sold a contract, the new customer details would be emailed to the admin & accounts team for them to enter those details on the Alarm Master Database;
iv) As neither D1 nor D2 were involved in renewals (only in generating new leads/sales), they had no reason and were not given access to the Alarm Master Database. Without a password, it was not possible for them to access and extract the customer information contained upon the Alarm Master Database; and
v) When D3 subsequently acquired/licensed its own Alarm Master Database package, D1 and D2 had to request and undergo basic training from the supplier, since they had no prior experience or knowledge of how to use the software.
In 2016, C's accountants gave advice about the tax advantages of staff providing their services to C through a limited company. A number of staff...
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