Whitmar Publications Ltd v David Gamage and Others
| Jurisdiction | England & Wales |
| Judge | Mr Peter Leaver QC |
| Judgment Date | 04 July 2013 |
| Neutral Citation | [2013] EWHC 1881 (Ch) |
| Court | Chancery Division |
| Date | 04 July 2013 |
| Docket Number | Case No: HC13B01938 |
[2013] EWHC 1881 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Peter Leaver QC
(sitting as a Deputy Judge of the High Court)
Case No: HC13B01938
Ms Lucy Bone (instructed by Gaby Hardwicke Solicitors) for the Claimant
Mr Gordon Menzies (instructed by Heringtons Solicitors) for the Defendants
Hearing date: 12 th June 2013 Date of Judgment: 4 th July 2013
INTRODUCTION
On the 7 th January 2013, the First, Second and Third Defendants (to whom I shall refer respectively as Mr. Gamage, Ms. Wright and Mr. Crawley or collectively as "the Defendants") resigned from their employment with the Claimant, to whom I shall refer as "Whitmar". It was subsequently agreed that Mr. Gamage could each go on "garden leave", and that the employment of all of them would terminate at the end of January. Mr. Gamage told Mr. Rob Mulligan ("Mr. Mulligan"), Whitmar's Managing Director, that he, Ms Wright and Mr Crawley were going to set up a new company. The Fourth Defendant, to whom I shall refer as "Earth Island", is that new company.
No sooner had the Defendants left Whitmar's employment, than it was discovered that they had set up a company, which Whitmar contends was, and had been prior to the termination of their employment, in competition with Whitmar.
On the 14 th May 2013 Whitmar commenced proceedings against the Defendants. In summary, Whitmar claimed damages for breach of contract; an account of profits; damages for breach of fiduciary duty and/or for infringement of its Database Rights under the Copyright and Rights in Database Regulations 1997; and for a permanent injunction restraining the Defendants from using and disclosing its confidential information obtained during their employment by Whitmar.
Whitmar also applied for interim relief, and on the 21 st May 2013, Newey J. made an Order by Consent restraining the Defendants from using or exploiting or divulging to any third party, save with the express written consent of Whitmar, or save where required by law to do so, any information from three named and identified sources. Newey J. also ordered that Whitmar's application was to be heard over a day within the listing window of the 10 th to 13 th June 2013.
On the 12 th June 2013, I heard the application. I was informed that it was a matter of "life and death" for the Defendants that I made a decision that day, and, with the parties' agreement, I gave my decision at the end of the hearing, granting Whitmar the relief which it sought. That relief is embodied in an Order, which was subsequently agreed between the parties.
At the conclusion of the hearing, I said that I would give my reasons at a later date. These are the reasons for my decision.
THE PARTIES
Whitmar was established in 1988. It is a publications company specialising in magazines for the printing industry. It publishes a range of different magazines in printed formats and electronically, and also produces a range of information handbooks. In addition, Whitmar also holds three industry award ceremonies each year. Its income is derived predominantly from advertisers.
Mr. Gamage was employed by Whitmar from the 16th January 1995. At the date of his resignation he was employed as Whitmar's Sales Manager. The titles for which Mr. Gamage was responsible represented a large proportion of Whitmar's turnover, and Mr. Gamage had direct contact with customers in relation to the titles.
Ms. Wright was employed by Whitmar from the 29 th June 1998, and was the Managing Editor of all of Whitmar's titles, and its most senior employee.
Mr. Crawley was employed by Whitmar from the 26th April 2004 as a Production Editor.
Each of the first three Defendants was employed by Whitmar on the terms set out in a letter of engagement. Mr. Gamage's letter of engagement is dated the 20 th December 1994. It contained details of his role and salary, holiday entitlement, and was expressed to be "subject to … the Company's Terms of Employment". I was informed that no Terms of Employment were ever agreed.
Ms. Wright's and Mr. Crawley's letters of engagement were in similar terms, although in Mr. Crawley's case, there was no reference to Whitmar's Terms of Employment. Thus, the terms of the Defendants' contracts of employment are to be found in the letters to which I have referred.
Earth Island, the company formed by the First to Third Defendants, was registered on the 31 st August 2012, that is just over four months before Mr. Gamage, Ms. Wright and Mr. Crawley resigned from Whitmar.
WHITMAR'S APPLICATION
In this Application, Whitmar seeks:
(i) an injunction to restrain the use of its confidential information.
(ii) delivery up of its confidential information.
(iii) a limited forensic inspection of the Defendants' computer systems.
(iv) protection of its database rights.
(v) affidavits giving particulars of the wrongful activities of the Defendants.
(vi) "springboard" relief until trial.
Before identifying Whitmar's complaints against the Defendants and the Defendants' answers to those complaints, it is necessary to say a few words about the Court's approach to the application and the evidence. The application is for injunctive relief, and the Court will apply the principles established in American Cyanamid v. Ethicon Limited [1975] AC 396, HL. In Lawrence David Limited v. Ashton [1989] IRLR 22, the Court of Appeal held that the American Cyanamid principles apply in cases of interlocutory injunctions in restraint of trade just as they do in other cases.
Thus, the Court's approach is first to decide whether or not there is a serious issue to be tried, and, if there is, whether damages would be an adequate remedy, or whether the balance of convenience is in favour of granting the injunction sought.
As I have stated earlier, I was informed that the outcome of the application was a matter of "life or death" for the Defendants. Accordingly, as it seemed likely that the injunctive relief sought would, if granted, be likely to dispose of the action, I was urged to adopt the approach of the Court of Appeal in Lansing Linde Limited v. Kerr [1991] 1 WLR 251. In his judgment in that case, Staughton L.J. said, at page 268(a) to (d):
"If it will not be possible to hold a trial before the period for which the plaintiff claims to be entitled to an injunction has expired, or substantially expired, it seems to me that justice requires some consideration as to whether the plaintiff would be likely to succeed at a trial. In those circumstances, it is not enough to decide merely that there is a serious issue to be tried. The assertion of such an issue should not operate as a lettre de cachet, by which the defendants is prevented from doing that which, as it later turns out, he has a perfect right to do, for the whole or substantially the whole of the period in question. On a wider view of the balance of convenience it may still be right to impose such a restraint, but not unless there has been some assessment of the plaintiff's prospects of success. I would emphasise "some assessment", because the courts constantly seek to discourage prolonged interlocutory battles on affidavit evidence. I do not doubt that Lord Diplock, in enunciating the American Cyanamid doctrine, had in mind what its effect would be in that respect. Where an assessment of the prospects of success is required, it is for the judge to control its extent."
One other preliminary matter that should be mentioned is that, on this application (as on almost all interlocutory applications) the prospects of success have to be assessed on the basis of the written statements filed by the parties, and the documents. Clearly, where there has been no testing of the evidence, I can do no more than make a preliminary assessment of the weight of the evidence, but can come to no concluded view on it.
BREACH OF EMPLOYMENT CONTRACTS
It is convenient to deal first with Whitmar's submission that there is a good arguable case that Mr. Gamage, Ms. Wright and Mr. Crawley acted in breach of their contracts of employment and of their obligations as employees. Ms. Bone submitted that each of those Defendants was under an implied duty of good faith and fidelity, which continued until the end of his or her employment, notwithstanding that each was placed on garden leave immediately upon giving notice of their resignation.
In particular, Ms. Bone submitted that Mr. Gamage and Ms. Wright, as senior employees, each owed fiduciary duties to Whitmar notwithstanding the absence of any specific term in their letter of engagement.
In Ranson v. Customer Systems plc [2012] IRLR 769, Lewison L.J., in giving a judgment with which Lloyd L.J. and Pill L.J. agreed, considered the contractual duty of fidelity. He said:
"It is not disputed that an employee has an obligation of fidelity towards his employer. If the obligation is not expressed, it will invariably be implied. In Wessex Dairies Limited v. Smith [1935] 2 KB 80 , Greer L.J. formulated the implied term thus:
"… during the continuance of his employment he will act in his employer's interests and not use the time for which he is paid by the employers in furthering his own interests.
Later in his judgment, Lewison L.J. quoted a passage from the judgment of Neill L.J. in Faccenda Chicken Limited v. Fowler [1986] IRLR 69, and summarised the position in the following way:
"What is clear, however, is that in an analysis of the employee's contractual obligations (including his job description) is an essential foundation for determining the scope of the obligation of fidelity."
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