7 Rolls Buildings,
London EC4A 1NL
B e f o r e :
| DEVON & CORNWALL AUTISTIC COMMUNITY TRUST
(a company limited by guarantee)
|- and -
|(1) JO PYRAH
(2) JO BURN
(3) PIER WEBSTER
(4) GREEN LIGHT PBS LIMITED
George Hamer (instructed by Jirehouse Capital) for the Defendants
Hearing date: 10th September 2012
Crown Copyright ©
Mr Recorder Douglas Campbell:
1. The Defendants may by 4:00pm on 24th August 2011 file and serve one further or amended Part 18 Request.
2. The Claimant shall by 21st September 2011 file and serve its best possible response to the request attaching all relevant copy documents.
"In breach of these agreements the First, Second and Third Defendant unlawfully used confidential information by disclosing it to Cornwall Council either individually or through the Fourth Defendant. This information that was provided allowed the Fourth Defendant to be able to unfairly compete with the Claimant in order to undercut the Claimant's costs of providing services to the Council and service users generally and thus obtain work from the Council and in relation to other service users that otherwise would have been made available to the Claimant."
In response to a straightforward request from the Defendants to identify the confidential information relied on by the Claimant with reference to the said paragraph 7, the Claimant gave a list of "examples of confidential information the first, second and third Defendant appears [sic] to have disclosed". Some of these examples, such as the "pricing tool" and employee's email addresses, had been mentioned in the Particulars of Claim. Others, such as "confidential senior team minutes", a "staff only confidential newsletter", and "standing order mandates", had not.
The Court's Approach
"i) The court must consider whether the claimant has a "realistic" as opposed to a "fanciful" prospect of success: Swain v Hillman  2 All ER 91;
ii) A "realistic" claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel  EWCA Civ 472 at 
iii) In reaching its conclusion the court must not conduct a "mini-trial": Swain v Hillman
iv) This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at 
v) However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5)  EWCA Civ 550 ;
vi) Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd  FSR 63;
vii) On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent's case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant's case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd  EWCA Civ 725."
"Pleadings in a breach of confidence action.
The rules relating to the particularity of pleadings apply to breach of confidence actions as they apply to all other proceedings. But it is well recognised that breach of confidence actions can be used to oppress and harass competitors and ex-employees. The courts are therefore careful to ensure that the plaintiff gives full and proper particulars of all the confidential information on which he intends to rely in the proceedings. If the plaintiff fails to do this the court may infer that the purpose of the litigation is harassment rather than the protection of the plaintiff's rights and may strike out the action as an abuse of process. Such a case was John Zink & Co. Ltd. v. Wilkinson  R.P.C. 717 in which the Court of Appeal ordered particulars before defence. The case returned to the High Court on a successful application to strike out. This is reported under the name John Zink & Co. Ltd. v. Lloyds Bank Ltd.  R.P.C. 385. As Edmund Davies L.J. put it in the Court of Appeal:
"But this appeal does not, in reality, turn upon when an order for particulars may properly be made in the present case, but, instead, whether such an order should ever be made, and, if so, what allegations it should relate to and under what safeguards it should be complied with. As to whether an order should be made at all, it is not unimportant to bear in mind that in these civil proceedings the plaintiffs have made allegations of a grave character against both defendants, charging the second with procuring a breach of confidence or contract by the first by improperly divulging trade secrets. Some would say that an assertion of criminal conspiracy is thereby made against both. They could cite in support of that proposition R. v. Willetts (1906) 70 J.P. 127, where, notwithstanding that it is not a criminal act for a person to infringe copyright nor larceny to pirate music (see R. v. Kidd (1907) 72 J.P. 104 ), it was held that an agreement to make pirated music for sale and so obtain profits out of that music to which the parties thereto had no right is indictable as a conspiracy to deprive the owner of the copyright of his property. If that decision is right (it is not without its critics) and if, as I think, the present case is analogous to it, it is pertinent to bear in mind that in Palamisto General Enterprises S.A. v. Ocean Marine Insurance Limited  2 W.L.R. 1425-a `scuttling' case-Buckley, L.J. said (at page 1440 F):
"where a party asserts his opponent's complicity in criminal misconduct, the case is pre-eminently one in which not only the R.S.C. (Order 18 rule 12(1) and Order 72 rule 7(2)) but also fair treatment require that, so far as practicable, the matter shall be pleaded with particularity, so that the party accused may know what case he has to meet."
But even if the allegations in the present statement of claim fall short of asserting criminal misconduct, they undoubtedly impute conduct of a gravely improper character which call for no less clear particularisation."
The requirement of particularity may impose a heavy burden on the plaintiff. In a case where the plaintiff has a large quantity of confidential information and much of it has been taken by the defendant, the obligation to identify all of it might involve a great deal of work and time. Whether in such a case the court would be receptive to a plaintiff who asks for leave to pursue the defendant on some items of confidential information only, the rest being left to another time, is a difficult question which does not arise in this case. The normal approach of the court is that if a plaintiff wishes to seek relief against a defendant for misuse of confidential information it is his duty to ensure that the defendant knows what information is in issue. This is not only for the reasons set out by Edmund Davies L.J.in John Zink but for at least two other reasons. First, the plaintiff usually seeks an injunction to restrain the defendant from using its confidential information. Unless the confidential information is properly identified, an injunction in such terms is of uncertain scope and may be difficult to enforce: See for example P.A. Thomas & Co. v. Mould  2 Q.B. 913 and Suhner & Co. AG v. Transradio Ltd.  R.P.C. 329 . Secondly, the defendant must know what he has to meet. He may wish to show that the items of information relied on by the plaintiff are matters of public knowledge. His ability to defend himself will be compromised if the plaintiff can rely on matters of which no proper warning was given. It is for all these reasons that failure to give proper particulars may be a particularly damaging abuse of process.
These principles do not apply only to the question of the content of the pleadings. Just as it may be an abuse of process to fail properly to identify the information on which the plaintiff relies, it can be an abuse to give proper particulars but of information which is not, in fact, confidential. A claim based even in part on wide and unsupportable claims of confidentiality can be used as an instrument of oppression or harassment against a defendant. It can be used to destroy an ex-employee's ability to obtain employment or a competitor's ability to compete. The wider the claims, the longer and more expensive the litigation. The defendant is likely to feel that he has no alternative but to challenge the confidentiality of everything, even though he believes that much or most of the technology pleaded cannot reasonably be thought of as secret. Furthermore a defendant faced with a narrow claim may decide that the commercial realities point towards a tactical withdrawal. He may be able to relinquish use of the contested information yet stay in business. The possibility of doing this reduces as the width of the plaintiff's claims increases. The defendant is left no alternative but to fight on in heavy litigation, spending money on lawyers which he would much prefer to spend on building up what may be a new business. The attractions of this to a plaintiff bent on harming a competitor's business are obvious."
"Part 16 applies with the modification that a statement of case must set out concisely all the facts and arguments upon which the party serving it relies".
The pleaded case
"At all material times as part of his employment at Spectrum, the First Defendant had access to the personal information (including their health information, service requirements and service provision) of Spectrum's existing and potential service users."
"During the course of their employment with Spectrum, each of the Personal Defendants had access to Spectrum's financial information ("the financial information").
From paragraph 35 of the pleading, this complaint only seems to refer to lease rental prices for two particular premises, namely Menna House and East Wheal Rose Farmhouse. I also note that no other type of financial information is specified anywhere in paragraphs 33-37.
"From time to time during the course of his employment with Spectrum, the Second Defendant would use the service user personal information of a service user and the financial information in order to populate the pricing tool, which would then yield an output ("the pricing tool output") including Spectrum's costs."
1. "The Personal Defendants deployed the Pricing Tool for the purpose of calculating Spectrum's likely price for service users.
2. The Personal Defendants deployed the Pricing Tool Output for the purpose of comparing the Fourth Defendant's price for service users with Spectrum's price for the same services.
3. Spectrum is unable to give further particulars of the Personal Defendants' breaches until after disclosure."
(a) Denial of all allegations made by the Claimant.
(b) An allegation that the Fourth Defendant's fees are calculated by adding up staff costs, variable costs, fixed costs, central costs, and profit margin in a conventional way.
(c) An allegation that the two employees who left the Claimant to join the Fourth Defendant (namely Ms Kirsty McLeod and Mr Charlie Cooper) contacted the Defendants, rather than the Defendants contacting them.
(d) An allegation that in relation to the two service users named in the original Particulars of Claim (Hugo Sherry and Michael Dillon), their parents had contacted the Defendants, rather than the Defendants contacting them.
(e) A specific denial that any financial information was taken, and in particular any rental information relating to any properties (including Menna House and East Wheel Rose Farmhouse).
(a) That he was given the rental information about the two properties "in around 2008, with the full knowledge and support of the CEO Mary Simpson, the other members of the management team, Donald Harvey Chairman of the Trustees and the Trustees by Mr Ken Pyrah, a member of Spectrum's senior management team at the time".
(b) That "There was no restriction on use of the information nor was there a non-disclosure agreement or confidentiality agreement between us nor was I told that the information could not be shared with others As I have stated above all information was provided to me freely by Spectrum with the full knowledge and consent of the senior management team, the CEO and trustees with no restriction as to use, disclosure or confidentiality".
i. First, the original Particulars of Claim, and the first Part 18 Response, were both unacceptably vague.
ii. Secondly, the 2nd Part 18 Response went to the opposite extreme. It was a kitchen sink approach: so verbose and diffuse that it failed to clarify what the claim was about. In addition it did not seem to me that the Claimant chose the 387 pages of documents supplied pursuant to the order of DJ Thomas with any particular care. With a very limited number of exceptions in fact, it turned out to be only 2 pages - this material had only peripheral relevance to the claim.
iii. I suspect that the 4000 documents were also of only peripheral relevance to the claim. I cannot be sure because I was never supplied with any of them, nor did the Claimant seek to draw my attention to any part of that material. It was wholly unreasonable of the Claimant to send the Defendants such a substantial volume of material without making any attempt to identify which (if any) documents were important or for what purpose.
iv. The Claimant also disregarded the order which I made on 18th May 2012 limiting the new pleading to its existing claims, which is why I struck out its Amended Particulars of Claim. Likewise the Re-Amended Particulars, quite apart from their other defects, are not within the scope of the similar order I made on 4th July 2012: see, for example, the claims relating to misuse of employee personal information (introduced without permission), and the claim relating to the "list of service users" (expanded into a different type of plea about complaints by parents of service users). This does not justify striking out the action under Part 3.4(2)(c), as the Defendants urged me to do, but it does form part of my reasoning on Part 3.4(2)(b).
v. No formal application was made for permission to add these new claims. The furthest the Claimant went was to include a couple of sentences in its skeleton argument for this hearing, stating that to the extent that the Re-Amended Particulars went beyond the "14 July order" [sic], "there is no good reason why the Claimant should not have that permission". There was no application notice, no evidence in support, nor any detailed argument. I infer that this was because the Claimant sought to minimise the significance of the expansion to its case.
vi. I reiterate that the nature of the complaints made by the Claimant has mutated on a more or less continuous basis throughout all of the documents it has served. For instance its explanation of the "pricing tool" was inconsistent, perhaps because (according to the Personal Defendants' unchallenged evidence) this term was never used by the Claimant during the period of the Personal Defendants' employment by the Claimant. The claim for misuse of employee personal information was originally raised on one basis, dropped, then raised on another basis entirely and still continues to develop. The complaint about misuse of minutes was buried in the 2nd Response to the Request for Further Information, and never featured in any of the pleadings, but counsel for the Claimant attempted to build a case on it during the course of his oral submissions to me. More examples could be given.
vii. As I explained above, the Claimant never even attempted to set out any facts or arguments in support of its case, as it was required to do under Part 63.20. The Defendants never knew what case they had to meet, and it was not surprising that they took the action they did.
viii. What was more surprising, to me at least, was that the Claimant made so little effort either to compel the Defendants to serve a defence or to move the action on generally. The Claimant shows no sign of wanting a trial soon, or indeed at all.
ix. All of this has had the effect on the Defendants which one would expect. I was told by counsel for the Defendants that, in addition to suffering the stresses of litigation, the Defendants had incurred over Ł30 000 in legal fees and still had no real idea of the case made against them.