Thomson Ecology Ltd and Another v Apem Ltd and Others
| Jurisdiction | England & Wales |
| Judge | Mr John Martin |
| Judgment Date | 24 September 2013 |
| Neutral Citation | [2013] EWHC 2875 (Ch) |
| Docket Number | Case No: HC13A00219 |
| Court | Chancery Division |
| Date | 24 September 2013 |
[2013] EWHC 2875 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
The Rolls Building
7 Rolls Buildings
Fetter Lane
London EC4A 1NL
Mr John Martin QC
(Sitting as a Deputy Judge of the High Court)
Case No: HC13A00219
Chris Quinn (instructed by Goodyear Blackie Herrington LLP) for the Claimants
Simon Devonshire QC (instructed by Eversheds LLP) for the Defendants
Hearing dates: 22, 23 July 2013
Mr John Martin QC:
This is the claimants' application for summary judgment on part of their claim, and for interim relief. The claim against the first defendant ("APEM") is based on passing off; that against the third defendant ("Mr Hall") is based on breaches of duties arising out of his position as a senior employee.
Background
The second claimant ("Unicomarine") is a wholly owned subsidiary of the first claimant ("TEL"), which is itself an independent commercial ecology specialist. TEL acquired all the shares in Unicomarine on 15 October 2010. The price it paid was £600,000. Unicomarine is a marine biology laboratory that analyses samples from the bottom of the ocean, mainly for government departments and agencies. It owns the domain name www.unicomarine. com.
The third defendant ("Mr Hall") is a biologist. Until the winter of 2012 he was employed by Unicomarine as its operations manager. He was the most senior employee at Unicomarine's premises at Unit 7, The Diamond Centre, Letchworth, and was responsible for Unicomarine's operations there. He was not a director of Unicomarine.
APEM is a specialist environmental aquatic consultancy. It is a competitor of Unicomarine. On 27 November 2012 Mr Hall gave notice of termination of his employment by Unicomarine: there is an issue between the parties as to whether his employment terminated on about that date, or a month later when the notice period prescribed by his contract of employment expired. Some three weeks previously, on 6 November 2012, Mr Hall had signed a contract of employment with APEM which provided for his employment to commence in February 2013. In the event he started work for APEM on 2 January 2013. Another 17 biologists left Unicomarine and all or some of them started working for APEM shortly thereafter.
The claimants' case is that Mr Hall and APEM acted together to effect a wholesale transplantation of Unicomarine's business to APEM. The plan, so the claimants say, included taking over Unicomarine's premises at Letchworth (which Unicomarine vacated on 12 November 2012); the incorporation of the second defendant; the registration of the domain names www.unicomarine.co.uk and www.unicomarineltd.co.uk; and the transfer to APEM of a substantial section of Unicomarine's workforce. The registration of the domain names and incorporation of the second defendant form the basis of the claim against APEM in passing off; and Mr Hall's participation in the enterprise at a time when he was still employed by Unicomarine forms the basis of the claims against him (and further claims against APEM, although they are not the subject of the summary judgment application).
The summary judgment application is based upon admissions made in the joint defence of APEM and Mr Hall. The claimants assert that the admissions show that APEM has no real prospect of successfully defending the passing off claim, and Mr Hall has no real prospect of successfully defending the claim against him based upon breaches of his contract of employment. The claimants accept that success on the summary judgment application will not avoid the need for a trial; but they say that CPR rule 24.2 entitles them to seek summary judgment on particular issues, and that there is no compelling reason why those issues should be disposed of at trial.
I deal first with the case against Mr Hall. So far as relevant to this application, it is pleaded as follows in the amended particulars of claim.
Summary judgment against Mr Hall
"8. Implied into the contract of employment between Unicomarine and Mr Hall was the term that he would serve Unicomarine with good faith and fidelity.
9. Further or in the alternative, the terms of Mr Hall's contract whereby he agreed to act as Unicomarine's most senior employee at Letchworth were such that he owed Unicomarine a fiduciary duty of loyalty to it whilst he remained employed by it.
10 As incidents of this duty of good faith and fidelity and/or the said fiduciary duty Mr Hall owed Unicomarine the following duties whilst still employed by it:
10.1 Not to compete with Unicomarine;
10.2 Not to solicit Unicomarine's customers;
10.3 Not to solicit any of Unicomarine's employees to leave
Unicomarine;
10.4 Given his place in the hierarchy as Unicomarine's most senior employee at Letchworth, when he knew of planned poaching raids upon Unicomarine's existing staff or client bases a duty to immediately reveal the same to Unicomarine;
10.5 Not to allow any of Unicomarine's competitors such as APEM to have access to Unicomarine's premises and/or to take any step on behalf of a competitor to secure for it the use of Unicomarine's premises and/or to seek to save for that competitor the expense of having to fit out the same.
11. Further to be implied into the contract of employment was the term that Mr Hall would not use any of Unicomarine's confidential information to compete with it.
12. Alternatively Mr Hall owed a freestanding duty of confidence to Unicomarine."
As paragraphs 8 and 9 of the pleading make clear, the claim against Mr Hall is put on the basis that he owed a contractual duty of good faith and fidelity, and a non-contractual fiduciary duty of loyalty. In paragraph 12 of his defence, Mr Hall denied that he owed any fiduciary duties; and in the witness statement supporting this application the claimants' solicitor made clear that they were content for that issue to await trial. That means that if the claimants are to obtain summary judgment against Mr Hall on this aspect of the case, they must show that he has broken his contractual duty of fidelity. Moreover, if they succeed in obtaining summary judgment on that basis, the claimants will apparently seek to persuade the trial judge that the same facts give rise to a breach of fiduciary duty.
As I have said, the summary judgment claim against Mr Hall is based on admissions. The application notice sets out these admissions by reference to the relevant paragraphs of the defence. In quoting the relevant parts of the application notice, I omit those references. Paragraph 2 of the application notice asks for an order that there be judgment for the claimants in respect of the claim that Mr Hall acted in breach of his duties as an employee by —
2.1 Failing to inform the claimants that APEM were looking for a Marine leader and that they had ambitions to grow their Marine team;
2.2 On or about 1/10/12 informing Mr Worsfold (then a principal biologist employed by Unicomarine) that he had applied to join APEM;
2.3 Failing to inform the claimants that Mr Worsfold was interested in joining APEM and that he had attended an interview with Mr Worsfold;
2.4 On or about 1/11/12, discussing with APEM (i) the possibility that Unicomarine's staff would be interested in moving with him to APEM; (ii) how he and APEM might go about recruiting such staff; and (iii) the compatibility of the salaries and grades of Unicomarine and APEM;
2.5 On or about 1/11/12 informing Marta Kazubek (another principal biologist) of his decision to join APEM before he had so informed the claimants; 2.6 On or about 6/11/12 informing Chris Ashelby, Jessica Taylor (also principal biologists) and Mr Worsfold of his decision to join APEM before he had so informed the claimants;
2.7 Arranging a meeting at his home on 3/12/12 between Ms Kazubek, Mr Ashelby, Ms Taylor and Mr Worsfold with representatives of APEM to discuss details of offers of employment that each had received from APEM;
2.8 Failing to inform the claimants that each of Ms Kazubek, Mr Ashelby, Ms Taylor and Mr Worsfold had received the said offers of employment from APEM;
2.9 On 6/12/12 informing Soren Pears (principal biologist) that APEM was looking to recruit;
2.10 On 13/12/12 informing Georgina Brackenread-Johnston (senior biologist) that APEM was looking to recruit;
2.11 Failing to inform the claimants that on 10/12/12 Nicola Pennisi (senior biologist) telephoned him to ask about employment opportunities with APEM;
2.12 On 10/12/12 sending an e-mail to APEM identifying employees of Unicomarine (all below principal biologist level) supposedly likely to contact APEM before Christmas and setting out details of their current salaries to expedite the making of offers to them; 2.13 Failing to inform the claimants that the said employees were likely to contact APEM;
2.14 On 24/12/12 sending Rebecca Phillips (senior biologist) a draft APEM contract;
2.15 Failing to inform the claimants that Ms Phillips had contacted him to ask about employment opportunities at APEM.
The e-mail of 10 December 2012 referred to in paragraph 2.12 of the application notice is also said to involve a breach of Unicomarine's confidence.
I do not set out the relevant paragraphs of the defence, but I am satisfied that they do amount to the admissions asserted by the claimants.
The nature and extent of the duties owed to his employer by an employee who is not also a director have recently been considered by the Court of Appeal in Ranson v Computer Systems plc [2012] IRLR 769. That case concerned the steps taken by way of preparation for the establishment of a competing business by an employee before and during his notice period. The employee (who was not also a director) was employed as a divisional manager, a post that was essentially a sales function...
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