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 JUSTICE PETER SMITH
- INTRODUCTION
- EVIDENCE
- THE CLAIM
- MR RIDER
- MR STIMSON
- THE COMPANY HANDBOOK
- ALLEGATIONS AGAINST DEFENDANTS
- [email protected]
- DEFENDANTS’ STANCE
- CONSIDERATION OF DEFENDANT GENERATED DOCUMENTS
- THE DEFENDANTS’ EXPLANATIONS
- “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”
- EPI Environmental Technologies Inc & Anr v Symphony Plastic [2004] EWHC 2945 (Ch)
- IDC v Cooley [1972] 1 WLR 443.
- DEFENDANTS’ DUTIES
- “he came to rely on me to remember and know the operational details of the business”
- “Supplier Bible”
- Tesco Stores Ltd v Pook [2004] IRLR 618.
- Hanco ATM Systems Ltd v Cashbox [2007] EWHC 1599 (Ch).
- University of Nottingham v Fishel [2000] IRLR 471
- Helmut Intgrated Systems Ltd v Tunnard [2007] IRLR 126
- Helmut
- Nottingham University
- what the Defendants did.
- ACTS DONE BY THE DEFENDANTS
- “The Legitimacy of Preparatory Activity”
- ). In
- Balston Ltd & Anr v Headline Filters Ltd & Anr
- [1990] FSR 385 a former director who set up a rival factory and had taken a lease on future business premises and formed a company for his activity was held by Falconer J (at 412 ) neither to have breached his duty of good faith nor his fiduciary duty; he had merely taken preliminary steps to investigate the viability of his plan and to advance his intention.
- [2003] 2 BCLC decided that a director who has irrevocably formed an intention to engage in a competing business and has taken preparatory steps cannot rely upon the public interest in favouring competitive business as an answer to allegations of breach of fiduciary duty. He can only put an end to his fiduciary obligation by resigning his directorship. Until he has done so, preparatory steps taken in pursuance of an irrevocable intention to compete would generally amount to a breach of his fiduciary obligations as director (see para 89).
- Shepherd Investments Limited and Anr v Walters & Anr
- ]2006] EWHC 836 (Ch). He held that when former directors and employee set up a competing business, diverting business opportunities and misusing confidential information, they had acted in breach not only of their fiduciary obligations but their implied obligation of fidelity the moment that they procured the services of attorneys in the Cayman Islands to set up the rival business. On the facts of that case, he held that a former employee was also in breach of obligations as a fiduciary, whether or not he was to be regarded as a director, and that he was in breach of his duty of fidelity. The case affords an example, on its facts, of work of preparation which constituted breaches of both the implied duty of fidelity and fiduciary duties.
- USE OF INFORMATION
- Market Maker Beijing Co Ltd & Ors v CMC Group PLC & Ors [2004] EWHC 2208
- provided
- Seager v Copydex (No1) [1967] RPC 349.
- This is the collision between the first part of the Saltman judgment referred to above and the second part.
- It is well illustrated by the decision cited by Mr Prescott QC of O. Mustad & Son-v- Dosen (note) [1964] 1 WLR 109 (H.L.). Junior counsel for Symphony usefully also obtained the Court of Appeal decision from the Lincoln’s Inn Law Library.
- “The learned Judge discussed with the Jury what constitutes a trade secret, but of course it is no good discussing what constitutes a trade secret if the person who is the owner of the particular thing which is claimed to be a trade secret has never made a secret of it. For instance, it is no use suggesting that Thoring’s machine was a trade secret if as a matter of fact Thorings had allowed people to inspect the machine during construction or had exhibited it at a trade exhibition or something of that kind. It is no use saying it is very valuable; it is no use saying it might have been a trade secret if I had locked it up and allowed nobody to have access to it, and allowed nobody except a particular man to know how it was constructed, and so forth. No evidence seems to have been given about it – well, I will not say no evidence seems to have been given about it but it seems to have been treated at the trial as though the machine was a trade secret of Thoring’s, and a question was put to the Jury, and the only question put to the Jury was on the footing apparently that it was a trade secret, and that in spite of the fact that the only man who knew anything really about it (Dosen) did say, and said more than once in his evidence, that it never was a secret, and that Thorings never treated it as a secret, and that it was quite open to everybody in the works to know exactly what it was and how it had been made, and the progress it was making and all the rest of it. It does seem to me, when one is considering what ought to be done in this case, one cannot overlook the fact that there was before the learned Judge, and there was before Counsel, evidence that this machine really – if the point had been properly investigated – turned out not to be a trade secret at all. However, that point apparently has never been decided.”
- Faccenda
- Thomas Marshall (Exports) Ltd V Guinle [1979] 1 Ch 227
- LEGITIMATE USE
- Robb v Green [1895] 2 QB 1
- peculiarly valuable. He would be saved the expense and delay of searches, such as would be necessary to enable him to compile such a list for himself. Practically, to bring all those names together, even though singly each may appear in some directory or other, would be almost impossible; and it would obviously be much more difficult to ascertain whether they would be likely customers for pheasants' eggs. By making a copy of the order-book defendant was able to canvass at once each of his master's customers without trouble or expense; and the conversation with Mr. Barclay shows that he looked upon the list in that light. The collection together of these names and addresses in his order-book was the property of the plaintiff. It is the compilation which made the book and the list so valuable to the defendant, and facilitated his endeavours to entice his master's customers to the detriment of the latter.”
- copying or extracting such names and addresses.
- Roger Bullivant Ltd v Ellis [1987] ICR 464 C.A.
- Robb
- [1895] 2 Q.B. 315, affirming the very elaborate and illuminating judgment of Hawkins J. [1895] 2 Q.B. 1, as Greer L.J. described it in
- [1935] 2 K.B. 80, 85. Mr. Fitzgerald sought to avoid the application of the rule to the present case by relying on the evidence already quoted from paragraph 16 of the first defendant's second affidavit, which is to the effect that he only used the card index for the purpose of looking up the addresses, freely available elsewhere, of people who were already known to him personally. I will only say that that evidence falls short of convincing me that that would be found at trial to have been the first defendant's only use of material which, on his own evidence, was prepared at his request nearly five years after he joined the plaintiffs and only some two months before he gave in his notice. Be that as it may, and even allowing for some differences of fact between the two cases, I think that Mr. Fitzgerald's submission is effectively disposed of by a passage in the judgment of Hawkins J. in
- The value of the card index to the defendants was that it contained a ready and finite compilation of the names and addresses of those who had brought or might bring business to the plaintiffs and who might bring business to them. Most of the cards carried the name or names of particular individuals to be contacted. While I recognise that it would have been possible for the first defendant to contact some, perhaps many, of the people concerned without using the card index, I am far from convinced that he would have been able to contact anywhere near all of those whom he did contact between February and April 1985. Having made deliberate and unlawful use of the plaintiffs' property, he cannot complain if he finds that the eye of the law is unable to distinguish between those whom, had he so chosen, he could have contacted lawfully and those whom he could not. In my judgment it is of the highest importance that the principle of
- Bullivant
- “fully armed as it were”
- INTELLECTUAL PROPERTY CLAIMS
- Employee Competition"
- the Copyright and Rights in Database Regulations 1997
- Acts infringing Database right
- whether of financial, human or technical resources.
- Bullivant
- “Confidentiality”
- Crown Dilmun v Sutton [2004] EWHC 52 (Ch).
- World Wide Fund for Nature v World Wrestling Federation Entertainment Inc [2006] EWHC 184 (Ch).