Case No. HC07C02914

2LL Before : MR JUSTICE PETER SMITH Between : Antony White QC (instructed by Gaby Hardwicke) for the ClaimantBen Quiney (instructed by Stephen Rimmer & Co) for the DefendantsHearing dates: 2nd 7th 8th and 9th November 2007 Judgment Peter Smith J : INTRODUCTION 1. This action came before me on 2nd November 2007 being the hearing of an application (released by the Interim Applications Judge) issued by the Claimant dated 26th October 2007 seeking to restrain the Defendants from using confidential information pending trial and requiring them to deliver up copies of documents containing confidential information and to provide information about the use made by them of such confidential information. The estimate for the hearing exceeded the 2 hours provided by the Chancery Guide with the result that the case was released to me. 2. On that date I suggested to the parties that there should be a speedy trial of liability only in this matter. The parties agreed. I directed that the trial should start the following Wednesday i.e. 7th November 2007 and be heard over the next 3 days. 3. Obviously that put a tremendous strain on the parties and their lawyers. Nevertheless they responded with a commendable zeal and the trial duly took place (serving of the Defence, disclosure and witness statements having taken place on the Monday and the Tuesday.) The parties lawyers provided me with comprehensive skeleton arguments.4. I was greatly assisted therefore by the way in which the parties and their lawyers addressed this task and I am grateful for that. Given the shortness of time allowances necessarily had to be made for errors and delays but I am satisfied that there was no injustice caused and all parties had a full opportunity to deploy their respective cases. 5. Unsurprisingly the evidence time table was tight and it was only finished by my sitting until 8pm on Friday 9th November. I am grateful to the Court staff and my Clerk Miss Supriya Saleem for sitting outside normal hours to enable this hearing to be concluded by that date.6. Thereafter the parties served comprehensive closing written submissions and supplemental responses thereto. EVIDENCE 7. The Claimant called two witnesses Christopher Worrall its Managing Director and Paul Maynard a solicitor and partner in the firm of Gaby Hardwicke the solicitors who represent the Claimant in the proceedings. 8. The Defendants called the First Defendant (Mr Rider) and the Second Defendant (Mr Stimson). The Third Defendant is a company which was incorporated in England and Wales in May 2007. Its sole directors are Mr Rider and Mr Stimson and they are the majority shareholders. It is alleged by the Claimant (not disputed by the Defendants) that any knowledge on the part of Mr Rider and Mr Stimson in relation to the allegations against them is attributed vicariously to it by reason of their office of directors.9. I will make more detailed observations on the witnesses further in this judgment. THE CLAIM 10. The First and Second Defendants are former employees of the Claimant they having left its employ on 8th June 2007. 11. The Claimant is a company engaged in the design, production and supply of fabrics for home and commercial furnishing and decoration. It has a world wide customer base. When its transactions are effected in Europe they are often through commercial agents. Its commercial agents for Spain and Netherlands respectively at all material times were one Jose Basso and one Niels Groot.12. The Claimant was founded in 1978 by its Chairman and sole shareholder Derek Crowson. Under his control it enjoyed substantial growth making it one of the worlds leading producers, designers and suppliers of home furnishings. It is asserted that it is very much a design led company boasting its own design studios producing the finest range of furnishing fabrics and complimentary products including wall coverings made to measure and ready made curtains, trimmings and accessories. 13. Its turnover peaked at £40,000,000 per year a few years ago and employing 200 people. Thereafter the turnover has declined in the past decade with turnover now of £10,000,000 approximately and the number of employees being around 65. Mr Crowson’s expertise lies primarily in purchasing design development of fabric products. The Claimant is a wholesaler of fabrics to a large client base of retailers and distributers. Primarily it buys off the shelf but also works with manufacturers to modify or adapt bespoke orders. It also produces curtains and other fabric products to order and develops and designs fabrics in-house.14. Mr Crowson had a serious illness a number of years ago and thereafter did not attend full time to the business of the Claimant. He now spends a considerable amount of time in the Caribbean and on his yacht. Nevertheless it is clear he maintains a hands on control by proxy. It was said in evidence that he was a strong willed and forceful individual and in effect made all the important decisions about Crowson albeit from afar. 15. Mr Crowson was not called to give evidence. That was the subject matter of criticism by the Defendants in their closing submissions. It was submitted that he had a central role in respect of the allegations and that I should draw a negative inference from his absence. This was based on the decisions of Karis v Lewis [2005] EWCA Civ 1637 para 33 and Baigent v The Random House Group Ltd [2006] EWHC 719 (Ch) paras 213-217. In both of those decisions I drew an adverse inference from the fact that a key witness was not called and no explanation was given for that witness’ absence.16. I have no doubt that Mr Crowson is a strong willed and powerful individual. Self made businessman usually are. Equally I have no doubt that whilst he is absent abroad for significant periods of time he maintains a tight control over the Claimant and very few decisions are made without his approval. I do not see that this is relevant to any of the subject matters of the dispute before me. What is important is to examine the role that Mr Rider and Mr Stimson respectively had and the conclusions to be arrived at in the light of that role and what duties they owed to the Claimant. In the light of those duties it is then necessary to examine what they did and whether their actions once examined are a breach of any of those duties. 17. I do not therefore see that Mr Crowson has any input in that analysis. I therefore reject the Defendants’ submission that I should draw an adverse inference from his absence. 18. Equally I reject the Claimant’s contention that there was anything as structured as the organisation described in the action as the “Senior Management Team” (“SMT”). In my view it was a creation for the purpose of this litigation. There was in my view no such formalised structure and decisions were made on an ad-hoc basis as regards the Claimant’s operation. I have already commented that Mr Crowson undoubtedly had the ultimate decision making process but equally depending on the nature of the topics discussed Mr Worrall, Mr Rider and Mr Stimson would participate in that decision making process but ultimately any final decision would be that of Mr Crowson. MR RIDER 19. Mr Rider was first employed by Crowson as a purchasing assistant on 15th February 1988 on a salary of £13,500 p.a. His written Statement of Terms of Employment are brief. They refer to various appendices. None of those appendices was actually produced during the trial and the Claimant accepts that there are no provisions which are relevant to the dispute before me. Thus there are no provisions in those appendices which deal with Mr Rider’s duties generally and as regards the use of information and his obligations upon termination of employment. Equally there are no restrictive covenants applying post termination. 20. By the time of his termination of employment Mr Rider was obliged to give 12 weeks notice.21. By a memo dated 8th November 2004 Mr Rider was appointed Product and Distribution Director with an increase of salary of £5,000 p.a. but whilst he was appointed a Director it was stated somewhat unusually that it “[had] no legal responsibilities”. He never became an officer of the Claimant (unlike Mr Worrall). His duties were summarised as being applicable to commercial activities, purchasing support, studio, warehouse and distribution and quality control. By the time of his termination he was earning a salary of £50,000 p.a. He received various bonuses over the years but none was particularly large. Mr Worrall by contrast received a salary of £60,000 p.a. MR STIMSON 22. The only evidence of the Terms of Employment of Mr Stimson was a letter of offer dated 4th April 2005. By that letter he was offered a salary of £50,000 p.a. for an appointment as UK and Export Sales Manager. In cross examination Mr Stimson said his high relative salary was due to his successful negotiating at the time of employment. That letter also referred to appendices A-6. Thus he was required to give 4 weeks notice on termination of employment. THE COMPANY HANDBOOK 23. The Claimant contends that both Mr Rider and Mr Stimson were bound by the terms of a Company Handbook. This document had been in preparation from 2006. Both Mr Rider and Mr Stimson were aware it was being prepared for issue. This contains some express restrictions not to be found in the earlier documentation (Mr Stimson had none of those of course). Thus paragraph 1.14 stated that an employee could not be involved directly in any other business or other work without the Claimant’s consent. Mr Rider acknowledged in cross examination that that was common sense but I do not regard that acknowledgment as being an acknowledgment by him that he agreed this provision. 24. Section 4 (paragraph 4.1) provided that no confidential information belonging to the company should be disclosed during and after the period of employment and that the provision continued after termination of the employment until the information came into the public domain. Clause 4.2 obligated the employee upon termination to return all equipment, correspondence, records etc which were in their possession, power custody or control.25. The Handbook was not issued until 1st June 2007 when Mr Rider and Mr Stimson had left 7 days of their notice to run. They were not given a copy. Indeed the evidence was when copies of the Handbook were handed out they were expressly told there was not one for them. 26. I find it a fact that the Terms of Employment between the Claimant and Mr Rider and Mr Stimson did not include the Company Handbook. There is in my view no evidence to show that the parties agreed the Handbook would bind them in the future and I do not see that the Claimant can unilaterally vary the terms of the contract of employment for these employees when they were working out their notice. They gave notice in accordance with the then terms. Suppose for example the Handbook imposed a restrictive covenant which operated for (say) 12 months. I do not see that it could be argued that the issue of the Handbook 7 days before the termination of the employment could in effect unilaterally impose a new and onerous obligation on the employee working out his notice. Taking all of those into account I do not accept therefore that the Handbook has any relevance to the issues before me. THE CLAIM 27. The Claimant contends that Mr Rider (ignoring the claims in respect of the Handbook) as an employee owed a duty of good faith and fidelity, was subject to an implied obligation not to copy, remove or misuse any of the Claimant’s confidential business information with a view to use in a competing business. In addition the Claimant contends by reason of the seniority of his employment he owed a fiduciary duty to act in good faith, not to act so as to place himself in a position of conflict between his personal interests and those of the Claimant, a duty not to use or cause to be used any information or opportunity available to him by reason of his employment and his position as a fiduciary for any purpose other than furthering the interests of the Claimant, a duty to account to the Claimant for any personal gain or profit made using information or an opportunity that became available to him by reason of his employment and position of fiduciary and a duty to disclose to the Claimant any misconduct or breach of contract or duty by himself or Mr Stimson.28. The Claimant contends that Mr Stimson was subject to the same employee obligations and fiduciary duties and similarly was in breach of those duties.29. In voluntary further information served 2nd November 2007 the Claimant identified the references to confidential information contained in the Particulars of Claim. The list is as follows:- (i) Names, addresses, contact names, telephone numbers or email addresses or the Claimant’s customers; (ii) Sales figures for the Claimant’s customers; (iii) Profit margins for the Claimant’s customers; (iv) Details of goods ordered by the Claimant’s customers or priced paid by said customers; (v) Names, addresses and contact details of the Claimant’s suppliers; (vi) The Claimant’s suppliers‘, agents’ names, addresses and contact details; (vii) The Claimant’s suppliers’ carriage costs, lead times, types of products available, trade shows visited, or the cost negotiated with such suppliers ALLEGATIONS AGAINST DEFENDANTS 30. The Claimant contends that in January 2007 Mr Rider and Mr Stimson had decided to set up a competing business. In February 2007 a document was prepared by them using the Claimant’s computer called “Critical Path Concept Fabrics”. This, the Claimant contends is a document showing the various steps the Defendants intended to take to set up a rival business. Although the Third Defendant (“Concept”) was not incorporated until May 2007 the Claimant contends that email facilities were operational by March 2007.31. Mr Rider gave notice on 4th March 2007 which was accepted on 5th March 2007 expiring on 8th June 2007. He plainly lied about what he intended to do. It is quite clear on the evidence (and Mr Rider acknowledged this ultimately in cross examination) that he told Mr Worrall falsely that he wanted to spend more time with his family and was taking up a new career change in the Housing Sector. He acknowledged also in his evidence that the reason for the lie was that if he had told them the truth the Claimant would have sent him home on garden leave. He did not reveal his true intentions until April when he told Mr Worrall falsely that he was going to join a competitor. What he did not say was that he and Mr Stimson were setting up the competitor. He thus lied to continue his employment actively whilst simultaneously taking steps to set up a rival business. When he revealed an apparent change of plan in April the Claimant did not send him on garden leave. Instead they gave him a task of setting up a Supplier Bible. This is one of the documents which the Claimant contends contained vital confidential information as it sets out all the details of the Claimant’s sources of products. It may be surprising that it entrusted the task to Mr Rider given his notice but at the end of the day the Claimant can say with some force that it trusted Mr Rider to continue with his duties, comply with his obligations and behave honourably. The Claimant’s attitude might have been different had Mr Rider told the truth (which he failed to do again) namely that he intended with Mr Stimson to set up a rival business from scratch.32. The Claimant contends that between February and June 2007 Mr Rider and Mr Stimson set about organising this competing business and that in so acting they were in breach of their fiduciary duties and their duties of good faith as employees. It is contended that during that period they ordered sample fabrics (for example) from Beaulieu which produced Crowson’s “Penshurst” range and that the use of the targeting of this material was as a result of Mr Rider using confidential information belonging to the Claimant.33. It is also alleged that Mr Rider used Crowson’s confidential and computer system on 20th April 2007 (shortly before he informed the Claimant on 26th April 2007 of his changed future plans) to produce a spreadsheet entitled “Concept forecast sales by customer”. This spreadsheet listed 3,500 of the Claimant’s customers ranked by level of 2007 sales with figures for each customer from 2006 and 2007 year to date. It also included an estimate for year 1 and year 2 sales by Concept to approximately 400 of the top ranked customers selected on the basis that those customers in question ordered Alaska and/or Penshurst fabrics from Crowson. Alaska is the Claimant’s most popular selling product. The final page estimated that Concept would make sales of £748,000 in year 1 and £1,182,500 in year 2 using the selected Claimant’s customers. Thus the projection contemplates sales based mostly on Concept successfully targeting the Claimant’s largest customers in its most popular lines.34. On 8th May 2007 Mr Stimson resigned with effect from 8th June 2007 stating that he was going to accept a position elsewhere with a direct competitor. The Claimant contends that he falsely told Mr Crowson that he intended to join a French company called Casamance as its Sales Manager. The Claimant contends that as Casamance was not seen to be a serious competitor they did not place Mr Stimson on garden leave either. I accept this evidence.35. Whilst working out the notice Mr Rider and Mr Stimson incorporated the Third Defendant and identified and acquired a substantial lease hold premises from which to operate a new business. Similarly a computer and email system for the Third Defendant including an email account [email protected] was set up. 36. Mr Stimson using the Claimant’s computer system emailed customers such as John Lewis on 31st May 2007. That email was copied to the Concept-sales hotmail address. The email said (in part):-“Crowson’s have requested for me not to inform you that I will be leaving Crowson on 8th June but I feel that you need to be informed before I actually leave out of courtesy. I am setting up a new fabric company with a colleague which will operate in a new format within the trade. We already have a few exclusive deals that have been agreed with a number of high profile suppliers and have a number of products that I think you may be interested in. We have the flexibility of being able to sell under our own brand at great prices due to our structure. We have secured private investors to support the company so we can give quality service to our customers from the beginning” 37. In my view this was a flagrant breach of Mr Stimson’s duties of fidelity. It is not for him to communicate to Customers behind the Claimant’s back when he is told not to do so. The only possible reason for this was to tell the customer that he was going to set up a rival. Thus he solicited the custom of such customers. Mr Stimson in his evidence said it and the other solicitations discovered by the Claimant were unsuccessful. There are 2 ripostes to that. First it is his conduct that is relevant not whether it was successful and second there may have been other attempts which have not yet been discovered. I do not criticise the Claimant for not contacting customers and saying in effect “Has Mr Stimson solicited your custom?” That would be commercial suicide. Further customers rarely like to become involved in turf war disputes.38. On 6th June 2007 Mr Stimson using Crowson’s computer system sent to the Concept hotmail address a list of more than 70 email addresses stored on Crowson’s computer system outlook address book. The next day he arranged for a junior employee in Crowson’s IT department to organise a telephone system for Concept and the production of a letterhead for it. Both of these actions again are flagrant breaches of his duty of fidelity as an employee in my view although the latter item is probably of little significance beyond showing that Mr Stimson simply looks to his own needs and saw nothing wrong in helping himself to the Claimant’s resources if it suited his needs.39. The Claimant alleges that Mr Rider and Mr Stimson left its employment on 8th June 2007 and without its knowledge or consent they had already provided to Concept and or took with them or retained the spreadsheet and email addresses referred to above and the documents identified in schedule 1 to the Particulars of Claim. The Schedule lists a large number of documents which are plainly in my view Crowson documents. They were all delivered up by Mr Rider/Mr Stimson between 10th and 12th October 2007.40. By amendments to the Particulars of Claim (paragraphs 26A and 37A) the Claimant introduced new allegations. First was the allegation that Mr Rider and Mr Stimson solicited 2 of Crowson’s European Sales Agents namely Mr Groot and Mr Basso with a view to obtaining customers business introduced through those agents for Concept. 41. The second allegation is that whilst still employed by the Claimant Mr Rider and Mr Stimson diverted enquiries about new business and new orders received by them at the Claimant’s office to Concept. Express reference is made to an email enquiry sent by Mr Rider to his home email account on 8th June 2007 relating to an enquiry about new business from Geert Van Brussel of BRU textiles NV and an email sent by Mr Stimson on 5th June relating to an enquiry from Mustafa at Rodesma and a further email sent by him to his email account relating to an enquiry about a new account from Dean Worsley a sole trader in the Algarve.42. I will deal with these allegations in more detail when I analyse the evidence but for present purposes I observe that the general thrust of the Claimant’s allegations is not disputed by the Defendants. Their case is that what they did was not actionable. 43. Included in the large amount of documentation handed over by the Defendants to the Claimant set out above were items 1-4 and 6 of a list of 6 items which the Claimant contended contained confidential material these were included in what was called the confidential exhibit as follows:- (1) Customer listing – 8th August 2005 (2) Crowson’s worldwide customer sales database (3) Sales by customer by class 2006-7 (4) Supplier Bible (5) Concept forecast sales by customer. This document was found on Mr Rider’s old Crowson computer by the Claimant. He admitted in cross examination that he had printed off a copy but denied that he had retained a copy. I do not accept that evidence. He never explained what happened to the copy and I can see no reason why he would not having created the document not utilise it and very good reasons for doing so. It is of course no use to Crowson. (6) Express costing44. Item 4 is a significant document. It was the Supplier Bible created in April by Mr Rider and the electronic version delivered up by the Defendants was created on 12th May 2007. This was a document which Mr Rider was asked to work on in the last few weeks of his notice period. It contains each supplier’s name, address, full contact details, agents details, the individually negotiated carriage costs, lead times, type of product, what trade show they visited and the specifically negotiated costs for each of the transactions. Mr Worrall in his witness statement (paragraph 62) contended that this document was the combination of years of work and the value of the information to a competitor was literally priceless. He could not emphasise how much an advantage any competitor would have by receiving this information. I can see no legitimate reason for the copy to be created and retained by Mr Rider. The reality is that by retaining these documents the Defendants have saved themselves the trouble and time they would need to transform what they retained in their heads and what they could find by research on the internet or other sources or by contacting suppliers and customers. In other words in my view they have mounted a classic springboard operation using the Claimant’s documents to provide themselves with a ready made source of everything they need for their fledgling business without themselves putting in the effort to put the material together.45. Item 5 was a sales forecast for Concept. It was based entirely on taking the Claimant’s sales for 2007 and 2006 applying those to Concept and assuming that it would be able to obtain turnover of that amount. The Claimant found this on Mr Rider’s desktop computer at the Claimants. It was not hidden in the sense that it was not deleted from the Claimant’s computer. Other items were then discovered as set out in paragraph 5 of Mr Maynard’s first witness statement.46. The Claimant initially asked that the hearing take place in Private when the details of those documents were considered. Sitting like that causes logistical difficulties and does not cover the difficulty that might ensue if documents are inadvertently referred to whilst the court is in open sitting. I accordingly heard the entirety of the case in Private. I will not refer to any of the confidential material in detail in this judgment as it is not necessary so to do in my opinion but will maintain the privacy as regards the hearing after the judgment is delivered. DEFENDANTS’ STANCE 47. As I said above most of the detail of the Claimant’s complaints against them is not disputed. The Defendants’ stance is that none of the material that they created or used or retained at the end of their employment contains any confidential information. Their case is that all of the material is available in the public domain.48. Further the Defendants contend that all of the material is part of their own gathered knowledge acquired over the course of their employment which they are free to use (it being their own expertise and knowledge) after the termination and that the Claimant cannot prevent an ex-employee (absent a restrictive covenant) from using his own gathered knowledge and experience when he leaves the employment.49. As regards the acts done during the course of their employment whilst they were working out their notice the Defendants contend that none of the acts were wrongful. All of the acts were done in anticipation of setting up a business and operating that business after expiry of their notice. The Defendants contend they are perfectly entitled to organise a state of affairs whilst working out their notice so as to set up a business which will compete with the employers business but only do so after the termination.50. Although they have admitted retaining a large amount of documents that belonged to the Claimant and returned them they contend that they had no obligation to return them and have not used the information contained in the documents in any substantial way. EVIDENCE 51. The Claimant’s main witness Mr Worrall was shown to be inaccurate in his evidence. First he wrongly maintained that the Claimant had a number of exclusive deals with suppliers and agents when plainly it did not. Second he repeatedly asserted that the Claimant’s main product Alaska had been copied by the Defendants when selling another product manufactured by the same manufacturer known as Typhon. His statement that Typhon was a direct copy overstates the case. 52. In relation to the Alaska product he alleged it was the Claimant’s top seller and identified the sales as variously as £3,000,000, £2,000,000, and £500,000. It became clear that the second witness statement (paragraph 36) was misleading as regards Alaska’s sales. In the body of the witness statement he referred to a schedule of sales over the last few years. The paragraph stressed that the figures were trade prices and the actual retail prices were significantly higher. The actual exhibit (page 672) suggested purchases of Alaska at £2,106,417 and onward sales of £2,851,835. In paragraph 7 of his first witness statement he suggested that Alaska made sales of approximately £3,000,000 of the Claimant’s turnover. The significance of Alaska will appear later in this judgment. Not only is it the Claimant’s largest product it is supplied by an Italian company named Para. When cross examined on this paragraph he admitted that the figure of £3,000,000 was wrong and agreed with the Defendants’ put figure of £542,000. He confessed therefore to an overstatement of the amount by a factor of 6. The figures exhibited at paragraph 36 of his witness statement suggest a turnover of £2,800,000. His recollection as to how that exhibit came to be formulated was plainly defective. In cross examination he thought that the schedule was based on volume and not price. Mr Maynard in his second witness statement dated 7th November 2007 explained how this document came to be created. It is plain that the text of the witness statement as drafted by Mr Maynard for Mr Worrall does not reflect what the exhibit shows. This is casual behaviour but I do not think it deceptive. 53. There is no doubt that Alaska is the Claimant’s leading product and that is the issue. As set out above the Defendants prepared a Sales Forecast for Concept based on the Claimant’s Alaska sales. Thus whilst Mr Worrall plainly was the subject of justified criticism for his inaccurate evidence there is no doubt that Alaska is a key product for the Claimant and that the Defendants not only knew that but also expected it to be used as the basis for Concept’s business in its first years of trading. Typhon was not identical but it was similar and the Defendants saw it as a rival to Alaska.54. The Defendants were critical of this shambles and rightly so. However I do not think it takes the matter any further in the sense that I do not believe an attempt was made to mislead. It shows that Mr Worrall can be casual both in his substantive evidence and the evidence he gave in cross examination. He was plainly wrong when he explained how the exhibit to his second witness statement came to be created and he was plainly wrong in my view to accept without question the figure of £542,000 put to him in cross examination. The significance is not really of the description that Mr Worrall gives to it; it is on what the Defendants attribute to it. Confidential document number 5 was created by the Defendant using the Claimant’s Alaska and Penshurst sales (Mr Worrall paragraph 24). The evidence shows Mr Rider created this on the Claimant’s computer at 8.06 hours on 20th April 2007. Its purpose is plain to me. It is a projection of the likely sales that Concept can make by reference to the Claimant’s lead products by reference to the sales of those products by customer that the Claimant makes. This was created whilst Mr Rider was working out his notice and at a time when the Claimant believed he was still going into the Housing Sector. He changed his story 6 days after this document was prepared. CONSIDERATION OF DEFENDANT GENERATED DOCUMENTS 55. The first of the Defendants’ documents was the Critical Path for Concept Fabrics prepared by Mr Stimson but provided to Mr Rider. Mr Worrall found it on Mr Rider’s Crowson computer in the “Prider” file which had been created on the T drive. It is dated 5th February 2007 and sets out a chronology of future events leading to the creation of Concept, Mr Stimson taking samples for an initial feed back, presentations to the bank, arranging supplier meetings by the end of February, placing fabric orders in March, Mr Rider taking a week off in April (which he did), delivery and distribution of initial hanger orders and moving in to basic warehouse premises. All of that was to take place before the end of April and before Mr Stimson was to give notice. It proposed also that initial stock orders would be delivered by the end of April.56. It is also clear that Mr Stimson had meetings with Mr Groot (an agent he had introduced to the Claimant the year before) and Mr Basso about them providing orders to Concept. Such meetings probably took place as early as February 2007 as the emails obtained from the Defendants show.57. The next document of significance was a Power Point presentation prepared in February 2007. Most of this is innocuous although the Sales Channels suggest that the Defendants intended to target 500 retailers reflecting in my view the targeting of Crowson’s key retailers in the Concept forecast sales by customer document referred to in paragraph 54 above. The Sales Channel objectives also makes reference to European business and I have no doubt that the reference to Holland/France/Spain is a reference to Messrs Groot and Basso. 58. The Critical Path document identified events happening as early as February 2007 with meetings with bankers, investors, nominated suppliers and the selection of products. In March 2007 the timetable moves on (for example) to placing production orders. April 2007 has initial product deliveries and the sending out of samples to retailers. All of these activities therefore start if they actually took place before even Mr Rider had given notice and continue whilst he was still working his notice out.59. On 11th March 2007 Mr Rider prepared projected Concept Accounts for the next 3 years and copied them in to Mr Stimson. Those are plainly based in my view on sales (for example) $748,500 (sic) which is clearly based on targeting of Crowson’s main retailers in respect of its leading products.60. Finally in this review of documentation I refer to the Defendants’ revised Power Point presentation of May 2007. This contains a number of changes from the February Power Point presentation. Under the heading “Partnerships-Suppliers” it suggests that Concept has allied itself with a number of the best suppliers that have signed up to its business, strong relationships have been built and full support is being offered from their nominated partners. Under the heading “Supplier Agreements” it is suggested that 4 suppliers are already on board, 2 suppliers have agreed to subsidise sampling costs by 50% - 90%.61. It is also clear that shareholder investors were sought and those potential investors are identified in various emails sent by Mr Rider from his private email address to the Concept email address (see for example his email dated 6/5/2007). Mr Stimson was copied in to those emails. 62. On 6th June 2007 Mr Stimson copied the emails addresses of 70 of the Claimant’s customer contacts to the Concept email address. I could see no legitimate reason for this exercise taking place 2 days before his employment was due to terminate and Mr Stimson was unable to give any legitimate reason for it when giving evidence. THE DEFENDANTS’ EXPLANATIONS 63. The Defendants having received letters before action from the Claimant’s solicitors in early September 2007 returned a large amount of documentation including 5 of the 6 Confidential Documents in the Confidential Bundle. Their solicitors on 15th October 2007 referring to the delivery up stated that it had been full and frank and that the Defendants had no intention to damage the Claimant by unlawful means or by gaining an unfair competitive advantage. It suggested that the nature of the Claimant’s business means that there was no information which was really confidential and that the best that could be said was “it saved our clients a few hours in getting names and addresses from the competitor web sites and internet in general”. The letter also stated that the Defendants were “emphatic no orders were placed, deliveries taken or premises contracted for prior to 8th June. Any activities carried out in the notice period which related to Concept were no more that merely preparatory” the letter then went on to say that the Claimant was well aware that Messrs Rider and Stimson had a detailed knowledge of the Claimant’s client base, product range, pricing and suppliers legitimately acquired in the course of their employment and that they did not need any of the information delivered up. The letter also suggested that the Claimant was attempting to use the threat of litigation and its financial strength to stifle legitimate competition either through a Court Order or attrition by costs and time.64. That latter point seems at least partially a fair observation. Initially the Claimant’s solicitor in their letter before action required written undertakings to be provided by the Defendants. Those undertakings included restrictive covenants for a period of 18 months. They were plainly designed to try and write in the contract by an allegation of breach of contract protective provisions which were not there. In cases like this there is always a need for the Court to consider all the competing priorities of the parties. The Claimant if it has legitimate right to protect is perfectly entitled to pursue its protection vigorously in the Courts. That is of itself not oppression. Equally however the Court has to be astute to ensure that the litigation (adopting the Defendants’ solicitors phrase) by Court application or attrition as to costs is not used as an illegitimate trade protection exercise to stifle legitimate competition. In that context it is important to appreciate that former employees are entitled to go about their business in competition with their former employers (absent restrictive covenants) using such expertise and information that they have acquired during the course of their employment. They cannot be barred out from using their own accumulated skills and knowledge. Equally however the Court has to be satisfied that ex-employees do not go beyond using their own accumulated personal skills but instead decide to help themselves illegitimately to the ex-employer’s material as a short cut. 65. The Defendants attempted to bolster their stance by their solicitors’ detailed letter dated 19th October 2007. In that they asserted that they did not actually adopt the Critical Path for Concept Fabrics. The letter further set out 13 express denials. These were referred to in the Defendants’ witness statements as well. The witness statements were also verified at the start of their evidence thus confirming on oath the truth of the denials without reservation. 66. They were forced to admit in cross examination that some of them were untrue. For example they were forced to admit they had supplier meetings in May (denial (iii)). They were forced to admit that fabric orders had been placed on behalf of Concept before 11th June (denial (v)) although this related to samples only. That however in my view is not significant. Finally they were forced to admit that denial (viiii) that there was no sourcing before 11th June 2007 was also a lie. 67. Mr Rider and Mr Stimson were unable to explain the specific changes in the May Power Point presentation to which I have referred to above. Either they were preparing a dishonest presentation or their evidence before me was untrue.68. In addition although the Defendants made much of their full disclosure the Claimant showed that full disclosure had not taken place. An examination of Mr Rider’s old Crowson computer revealed a number of emails identified on snapshots of the Concept inbox. The Defendants have disclosed Concept’s emails (see item 2 of the electronic disclosure in the Defendants’ standard disclosure dated 5th November 2007). The Claimant however recovered from Mr Rider’s Crowson computer a list of emails which had been sent to the Concept email account. There were discrepancies in the periods of April – May 2007 between the electronic documents disclosed by the Defendants and those shown on the snapshots recovered by the Claimant. The ones which appeared to be “missing” related to the Claimant’s major supplier Para which supplied the Alaska fabric and the Defendants’ dealings with Mr Groot. The Defendants were unable to explain why these emails were missing from the Concept disclosure. Initially they suggested it was because of the operation of the Hotmail Account which automatically deleted emails after 30 days. 69. That argument appears to be fallacious for 2 reasons. First it does not explain why all contemporary emails for the same period were not also deleted. Second as I understand it the Hotmail automatic deletion procedure only applies to unopened emails; all these emails in question were shown to have been opened. I put it to Mr Rider that if there was no other explanation the only conclusion I could draw was that someone had filleted the list. Mr Rider said he could not give any other explanation. This in my view is serious because it shows the Defendants have not been truthful about their allegedly open disclosure. Absent any other explanation I can only conclude that they removed the Para and Mr Groot emails from the Concept list of emails before they disclosed it. 70. I ask myself why this should happen? The only conclusion I can draw is that they wanted to conceal from the Claimant and thus the Court the fact that they had had discussions with its major supplier Para whilst they were still in the Claimants employ and working out their notice. They perpetuated this in my view by attempting to deceive the Court. First their solicitor’s letter of 19th October suggested falsely that there had been no dealings. That letter was verified as I have already observed in their witness statements and their witness statements were verified before they were cross examined in the usual way. 71. Mr Stimson was forced to acknowledge that these lies would not have been discovered had not the Claimant’s computer expert found the snapshots of these emails on Mr Rider’s computer. I do not accept that the fact that they were on his old computer shows openness on his part; they had to be found and plainly the Defendants did not realise that they could be recovered from Mr Rider’s old Crowson computer. 72. This leads me to conclude that the Defendants have lied about a significant part of their pre 8th June 2007 activities. I remind myself of the need to analyse why people lie in the witness box see EPI Environmental Technologies Inc & Anr v Symphony Plastic [2004] EWHC 2945 (Ch) paragraph 66-76 (paragraph 74 in particular). I conclude that the Defendants lied to conceal the true extent of their activities before 8th June 2007. To that extent their evidence is unsatisfactory. I conclude that in the light of those lies and their inability (for example) properly to explain the changes to the May Power Point presentation that they were far more active than their disclosed documents suggest. They have attempted to deceive the Court but have failed. I take the May Power point presentation at face value. I am of the opinion that it accurately reflects the state of their preparations for their new business by that time. By that time also they had had discussions with suppliers, agents and as the emails show contacted various customers with a view to attempting to obtain business from them. They had also diverted very late in the day some small business opportunities for themselves as they admitted.73. Thus I find the allegations referred to in paragraphs 40 and 41 above (solicitation of the 2 agents and attempted diversion of the business opportunities) established. As regards the opportunities it does not matter that the Claimant would not have been interested; the issue is the opportunities coming to the Defendants’ attention whilst employees and the taking of them for their own benefit see IDC v Cooley [1972] 1 WLR 443.74. They did all this against a backcloth of deception as to their future intentions. 75. Finally they had retained and helped themselves to a vast amount of documentation which belonged to the Claimant and had used it for their own business projections in part.76. All of this took place whilst they were still in employment and obliged at the very least to work faithfully for the Claimant. In fact it shows that they were working to undermine the Claimant when they should have been working for its benefit. DEFENDANTS’ DUTIES 77. There is no disagreement between the parties as to the duties Mr Rider and Mr Stimson owed as employees. The dispute between them is whether or not they also owed fiduciary duties to the Claimant. It is not suggested as I have said that Mr Rider despite the unusual terms of his appointment was actually a Director of the Claimant; its case is that by virtue of the senior position he and Mr Stimson had in the management structure of the Claimant they both owed it a fiduciary duty.78. I have already rejected the suggestion that there was actually anything as structured as a Senior Management Team. Nevertheless Mr Rider was given a nominal title of director. In cross examination he acknowledged he was completely trusted, was one of the inner-circle and was trusted to behave honourably because of his seniority. He was as he also accepted number 3 and thus part of the senior management of the Claimant. He accepted that he with Mr Worrall was invited to strategy discussions at Mr Crowson’s yacht and at Mr Crowson’s home this was in Barbados and this was not something ordinary employees were invited to do. He acknowledged in his first witness statement (paragraph 20) that as Mr Crowson spent more time in Barbados “he came to rely on me to remember and know the operational details of the business”. He acknowledged this further in cross examination. He also acknowledged that he was the person asked to compile the “Supplier Bible” because he alone had the information at his fingertips and he was trusted to behave honourably. His remuneration was comparable with that of Mr Worrall and he received bonuses outside the staff bonus scheme although I do not think the level of bonuses was particularly significant.79. A senior management employee just below board level was in a fiduciary position in the decision of Tesco Stores Ltd v Pook [2004] IRLR 618. An employee does not generally owe fiduciary duties see Hanco ATM Systems Ltd v Cashbox [2007] EWHC 1599 (Ch). Some special role or status is required for him to be held to be a fiduciary.80. Where an employee is not a director it is essential to look at the role of that employee and determine whether or not the nature of that role is sufficiently senior for the Court to conclude that in addition to his normal duties as an employee he owed fiduciary duties. 81. The clearest indication as to whether or not an employee was also a fiduciary is to be found in University of Nottingham v Fishel [2000] IRLR 471 approved by Moses LJ in Helmut Intgrated Systems Ltd v Tunnard [2007] IRLR 126 at paragraph 37 as follows:-“….in determining whether a fiduciary relationship arises in the context of an employment relationship, it is necessary to identify with care the particular duties undertaken by the employee, and to ask whether in all the circumstances he has placed himself in a position where he must act solely in the interests of his employer. It is only once those duties have been identified that it is possible to determine whether the fiduciary duty has been breached. “82. The difference between the duty of fidelity and the fiduciary duty is that the latter must act solely or exclusively in the interest of his employer and that it is easier for an employer to establish that activities in preparation for competition were themselves in breach of a fiduciary obligation (Helmut paragraph 33).83. Analysing the status of Mr Rider as set out above I conclude that he was a fiduciary. He clearly had a senior role beyond that of a mere employee and was entrusted with senior tasks because he could be trusted. MR STIMSON 84. He had only been employed by the Claimant for a short period of time. He was its UK and Export Sales Manager and the most senior employee on the sales side. He reported to the senior management Mr Worrall and Mr Rider but given his seniority he was not merely involved in sales but also was required to implement sales strategies. His remuneration was comparable to that of Mr Worrall and Mr Rider but I accept his observation that he had been successful in his negotiations.85. Applying the Nottingham University case above I do not see that Mr Stimson is a fiduciary. In my view he was a senior and experienced salesman but his duties were no more than that. 86. I doubt whether in fact there is any significance as to whether or not Mr Rider and Mr Stimson were employees or whether they owed in addition fiduciary duties save that it can be said that Mr Rider had an obligation to disclose his own breaches and those of Mr Stimson and he was in breach of that duty. 87. I have already observed that the copying and retention of the Claimant’s documents was done with the intention of benefiting themselves when they set up in their new business. That in my view is a plain breach of fidelity as an employee and would clearly be a breach of any fiduciary duty owed by Mr Rider.88. The Defendants made much play again on the fact that Mr Crowson had the final say in matters and the power lay ultimately with him. I do not see that this is an answer to what the Defendants did. Merely because Mr Crowson made the final decision does not mean that their activities in providing him with material to enable him to make that final decision were of a sufficiently senior nature as to justify imposing a fiduciary duty on them. Whether he had an autocratic style and whether there was no actual senior management team as alleged is also in my view irrelevant. Mr Crowson was the chairman and the 100% shareholder. However it is clear as Mr Rider acknowledged that he relied on Mr Rider and Mr Rider had senior duties devolved upon him which reflected in his status as a director (albeit without legal responsibility). ACTS DONE BY THE DEFENDANTS 89. The Defendants have admitted that they did a number of activities with a view to setting up their new business both before they had given notice and whilst they were working out their notice. I have already rejected their limited statement as to what they did. Further as I have set out above they plainly did more than they originally acknowledged as they were forced to concede in their evidence. The question to be considered is whether or not those activities are a breach of their duty of fidelity and Mr Rider’s fiduciary duty or whether they are legitimate actions taken with a view to setting up a legitimate business post termination of the contracts of employment.90. It is often said that the test is whether or not the actions done were preparatory for the future activity or went beyond that.91. This is an over simplification as the Helmut case underlines in paragraphs 28 – 32 inclusive as follows:- “The Legitimacy of Preparatory Activity” 28. The battle between employer and former employee, who has entered into competition with his former employer, is often concerned with where the line is to be drawn between legitimate preparation for future competition and competitive activity undertaken before the employee has left. This case has proved no exception. But in deciding on which side of the line Mr Tunnard's activities fall, it is important not to be beguiled into thinking that the mere fact that activities are preparatory to future competition will conclude the issue in a former employee's favour. The authorities establish that no such clear line can be drawn between that which is legitimate and that which breaches an employee's obligations. 29. Mr Tunnard relied on the dicta of Hawkins J in Robb (q.v.supra ). In Balston Ltd & Anr v Headline Filters Ltd & Anr