Travel Counsellors Ltd v Trailfinders Ltd
| Jurisdiction | England & Wales |
| Judge | Asplin LJ,Lord Justice Arnold,Lewison LJ |
| Judgment Date | 19 January 2021 |
| Neutral Citation | [2021] EWCA Civ 38 |
| Date | 19 January 2021 |
| Docket Number | Case No: A3/2020/0886 |
| Court | Court of Appeal (Civil Division) |
[2021] EWCA Civ 38
Lord Justice Lewison
Lady Justice Asplin
and
Lord Justice Arnold
Case No: A3/2020/0886
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE, BUSINESS AND PROPERTY
COURTS, INTELLECTUAL PROPERTY ENTERPRISE COURT
His Honour Judge Hacon
Royal Courts of Justice
Strand, London, WC2A 2LL
Ian Mill QC and Tom Cleaver (instructed by Pinsent Masons LLP) for the Appellant
Gavin Mansfield QC and Alexander Robson (instructed by Lewis Silkin LLP) for the Respondent
Hearing date: 13 January 2021
Approved Judgment
Introduction
The Claimant (“Trailfinders”) is a travel agent with 37 branches in the UK and Ireland, employing over 700 sales consultants. The Second, Third, Fourth and Fifth Defendants (“the Individual Defendants”) are former sales consultants at Trailfinders. In 2016 they left to join the First Defendant (“TCL”), as did about 40 others by the date of the Particulars of Claim. TCL is a competitor to Trailfinders which trades using a franchise model. It has around 1,250 franchisee travel consultants.
In these proceedings Trailfinders alleges that, when the Individual Defendants left, they took with them names, contact details and other information about their clients which was stored in a Trailfinders computer system called Superfacts. It also alleges that, after they left, they accessed a Trailfinders computer system called Viewtrail to obtain further client information. Trailfinders contends that the Individual Defendants thereby acted in breach of implied terms in their contracts of employment and in breach of equitable obligations of confidence owed to Trailfinders. It also contends that TCL acted in breach of an equitable obligation of confidence.
For reasons of economy and to ensure that a trial on liability could be completed in two days, in accordance with normal procedure in the Intellectual Property Enterprise Court, Trailfinders selected two of the Individual Defendants against whom to pursue its case to trial, namely the Second Defendant (“Mr La Gette”) and the Fifth Defendant (“Mr Bishop”). The claim was stayed as against the other two Individual Defendants.
His Honour Judge Hacon concluded, for the reasons given in his judgment dated 12 March 2020 [2020] EWHC 591 (IPEC), [2020] IRLR 448, that Mr La Gette and Mr Bishop had both acted in breach of their contracts of employment and in breach of equitable obligations of confidence to Trailfinders and that TCL had acted in breach of an equitable obligation of confidence.
TCL now appeals. There is no appeal by Mr La Gette or Mr Bishop. Although formally the Individual Defendants are parties to the appeal, they have not participated in it.
Although the judge referred in his judgment to European Parliament and Council Directive 2016/943/EU of 8 June 2016 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure, it is common ground that the Directive did not apply to the events in question because they occurred in 2016.
Summary of the judge's main findings and conclusions
It is convenient to begin by summarising the judge's main findings and conclusions, although I shall have to consider some of the facts in more detail later in this judgment.
Superfacts records a wide range of information about clients. Superfacts is of particular value when a client calls a sales consultant. The software recognises the telephone number of the client and causes other information relating to that client to appear on the consultant's screen. Sales consultants access Superfacts using an identification unique to them and a password.
Viewtrail is accessible by clients. At the relevant time, a client could access their details online by using their booking reference number and surname or by using a hyperlink sent by a Trailfinders sales representative.
The judge held that Mr La Gette and Mr Bishop had acted in breach of their respective duties to Trailfinders in the following respects:
i) Mr La Gette had, on his last day of work at Trailfinders, copied client information about five to eight clients from Superfacts onto an A4 sheet of paper for the purposes of his new role with TCL. Mr La Gette combined this information with client information obtained from other sources (such as his personal accounts and devices and publicly available sources) in order to compile a client list which he subsequently sent by email to TCL (“the List”).
ii) Mr La Gette had, before leaving Trailfinders, printed two hard copies of client information relating to an individual referred to in the proceedings as “Client A”. Client A was a long-standing and high-value client of the Trailfinders' Nottingham office. When Mr La Gette left Trailfinders he was in the process of booking two large trips for Client A. Mr La Gette wanted the information about those trips so that he could complete the bookings for Client A after he left Trailfinders.
iii) Mr Bishop had, in the last six months of his employment with Trailfinders, assembled a “contact book”. This contained the names, contact details and other information (including booking reference numbers that could be used to access those customers' Viewtrail accounts) about clients he had dealt with. The majority of this information was taken from Superfacts. Mr Bishop took the contact book with him when he left. Mr Bishop supplied the information contained in the contact book to TCL.
iv) Mr Bishop had, after the termination of his employment with Trailfinders, accessed the records of 32 of Trailfinders' clients stored on Viewtrail.
The judge's principal findings and conclusions with respect to TCL were as follows:
i) TCL did not supply new franchisees with potential customers; they were expected to bring their own. In the case of travel consultants coming from the travel business, they were expected by TCL, and positively encouraged, to bring their customer contact list with them. They were not warned by TCL about any risk of breach of confidence in doing so.
ii) TCL added the client information brought by Mr La Gette and Mr Bishop from Trailfinders to TCL's computer system for use by Mr La Gette and Mr Bishop.
iii) A reasonable person in the position of TCL's CEO, Stephen Byrne, and other persons of significance within TCL's operations would have been aware that at least part of the contact information brought to TCL by Mr La Gette and Mr Bishop was likely to have been copied from Trailfinders' customer data. Such persons at TCL knew or ought to have known that Trailfinders reasonably regarded the information as confidential.
iv) Accordingly, TCL received such information subject to an equitable obligation of confidence.
v) TCL was in breach of that obligation because it used the information for the benefit of its business.
TCL's grounds of appeal
TCL appeals on three grounds:
i) Ground 1 is that the judge applied the wrong legal test in holding that TCL owed an obligation of confidence to Trailfinders in respect of confidential information received by TCL from Mr La Gette and Mr Bishop.
ii) Ground 2 is that the judge's approach to the question of what TCL ought to have understood about the information provided to it by Mr La Gette and Mr Bishop was wrong and inconsistent with his own conclusions on other issues.
iii) Ground 3 is that the judge erred in holding TCL liable for breach of confidence despite making no findings that TCL had misused any confidential information.
It should be noted before proceeding further that there is no challenge to the judge's conclusion that some of the information disclosed by Mr La Gette and Mr Bishop to TCL was information confidential to Trailfinders. Nor is any issue raised concerning the distinction between confidential information which forms part of an ex-employee's own skill, experience and knowledge and confidential information which amounts to a trade secret of the former employer.
Ground 1
In order for an equitable obligation of confidence to arise, confidential information must have been communicated in circumstances importing such an obligation. It is common ground that the correct test is the test that I derived from earlier authorities in Primary Group (UK) Ltd v Royal Bank of Scotland plc [2014] EWHC 1082 (Ch), [2014] RPC 26 at [223], which was approved by this Court in Matalia v Warwickshire County Council [2017] EWCA Civ 991, [2017] ECC 25 at [46]:
“It follows from the statements of principle I have quoted above that an equitable obligation of confidence will arise not only where confidential information is disclosed in breach of an obligation of confidence (which may itself be contractual or equitable) and the recipient knows, or has notice, that that is the case, but also where confidential information is acquired or received without having been disclosed in breach of confidence and the acquirer or recipient knows, or has notice, that the information is confidential. Either way, whether a person has notice is to be objectively assessed by reference to a reasonable person standing in the position of the recipient.”
Given that this is essentially the same test as that articulated by the judge at [42] and [124] and applied by him at [131]–[132], at first blush ground 1 appears distinctly unpromising. Counsel for TCL submitted, however, that the judge had not correctly applied this test to the facts. In order to put this submission in...
To continue reading
Request your trial
-
Kieran Corrigan & Company Ltd v Onee Group Ltd
...no one else knew of or had access to the information.” 182 Reference was made in submission to the decision of HHJ Hacon in Trailfinders Ltd v Travel Counsellors Ltd [2020] EWHC 591. The Judge explained that in his view the best guide to the distinction between information that is confident......