England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
(HIS HONOUR JUDGE CURRAN QC)

		Royal Courts of Justice Strand London, WC2A 2LL
		15 July 2015

1. LORD JUSTICE LEWISON: This is an application for permission to appeal against a decision of Judge Curran QC sitting as a Deputy High Court Judge. The case concerned the alleged misuse of confidential information in the shape of what was effectively a customer list.
2. Permission to appeal was refused by Floyd LJ on the papers, giving his reasons for about a page and a half. Where permission to appeal has been refused on the papers, the Applicant is required by Practice Direction 52C paragraph 16 to prepare a statement giving reasons why permission should be granted "notwithstanding the reasons" given for the refusal of permission.
3. That requires the advocates' statement to deal one by one with the reasons why the Lord Justice or Lady Justice considering the paper application has refused permission. It is really not enough simply to rehash the original skeleton argument for the application for permission to appeal. Nonetheless, I have carefully read Mr Khan's renewal statement.
4. He takes four points, essentially. The first is that he says a legal undertaking signed by Mr Eaton is unenforceable as being in unlawful restraint of trade. The undertaking was entered into by Mr Eaton on 7 October 2011 and its entire contents relate to confidential information.
5. I do not accept that this undertaking prevents Mr Eaton from competing with the Personal Group provided that he does not use confidential information. Since the Personal Group has a proprietary interest in its confidential information, there can be no question of that being unenforceable for being in unlawful restraint of trade.
6. Mr Khan makes the point that Mr Eaton is unable to deploy what he calls his common stock of knowledge acquired in the course of business, but the confidential information does not cease to be confidential simply because somebody can remember it without having to have the confidential information directly to hand.
7. In addition, Floyd LJ said in his reasons for refusal that it was not clear where the point went given that the equitable duty of confidence bit on the acts which were complained of in the action even if the restraint and the undertaking were home and void. That point has not, so far as I can see, been answered at all.
8. Mr Khan's second point relates to the allegation that the Claimants ought to have been denied equitable relief on the grounds that they themselves had unclean hands. The judge's findings on this point relate to a Mr Wilson, who was employed by one or other of the two corporate Defendants. He supplied the confidential information to the Claimants. In effect, he was a whistle blower.
9. The judge's relevant findings are at paragraph 61 of his judgment in which he found that Mr Wilson had become dissatisfied with his situation and in particular the amount of money he was being paid. He had contact with the Personal Group and discussed the possibility of rejoining them and "provided them with a copy of the list". He then gave his notice giving an untruthful reason.
10. The judge returned to the subject at paragraphs 81 and 82. In paragraph 81 he recounted that Mr Wilson was playing squash with a Mr Jones, who is a Senior Regional Manager of Personal Group, and then at 82 he finds that Mr Wilson was cooperative when asked about Gee 7's activities, which were, as the judge says, "obviously matters of acute and understandable suspicion".
11. The judge goes on to say:

"However, I accept Mr Wilson's evidence as to how he came to offer the List, unprompted, to Mr Jones and to Mr Andrew Lothian, the managing director of the second claimant company whom he met in February 2014."

12. The fact that the list was offered unprompted to the Personal Group means, in my judgment, that it is quite impossible to suggest that Personal Group were guilty of the tort of inducing, that is encouraging, a breach of contract. It was Mr Wilson's idea to give them the list and he did so, on the judge's findings, unprompted.
13. Thus, the judge concluded at paragraph 209, having referred to RBS v Highland Financial Partners, that:

"That principle requires Gee 7 to prove that Mr Wilson was asked by Personal Group to obtain and remove the List, and that he did so in breach of the terms of his contract of employment. There was simply no evidence of that. Mr Wilson denied the allegation under cross-examination, and Gee 7 had produced no witnesses to support its case on the point."

14. That is clearly a finding of fact that on the basis of the law as laid down in RBS v Highland Financial Partners, there was no question of unclean hands.
15. Mr Khan has referred to the judge's reference to dishonesty in paragraph 215 of the judgment, but as Floyd LJ pointed out, that was simply shorthand for the more extensive formulation in paragraph 210 taken from the judgment of this court in the RBS case.
16. Moreover, the consequence of Mr Khan's submission, if correct, would be surprising. It would mean, as he accepted, that somebody whose confidential information had been purloined where the purloining had been revealed by a whistle blower would not be entitled to restrain any further use of that confidential information. That is a most surprising submission and, in my judgment, it is wrong. The judge's findings of fact are, in any event, quite conclusive on that point.
17. The third point relates to the attribution of Mr Eaton's knowledge to the Gee 7 companies. The point here is that the compliance officer said that there should be no misuse of the confidential information and if there were to be confidential information misused with the knowledge of Mr Pardoe and Mr Eaton, that knowledge should not be attributed to the company.
18. The question of attribution of knowledge to a company is dependent on the purpose for which the attribution is sought. Mr Khan relies on Jetivia v Bilta [2015] UKSC 23 in which Lord Neuberger said:

"It is certainly unjust and absurd to suggest that the answer to a claim for breach of a director's (or any employee's) duty could lie in attributing to the company the very misconduct by which the director or employee has damaged it."

19. That is, of course, true in a claim as between the company and the director or employee, but where the claim is brought by a third party against the company, there is no injustice in attributing to the company the knowledge of its senior employees. Otherwise, it would be impossible, for instance, to bring a claim in negligence against a company where the negligent conduct is that of an employee who in breach of his own contract to act with reasonable care and skill has failed to do so. The actions of the human are attributed to the company depending on the purpose for which the attribution is required.
20. The judge came to the conclusion on the facts that the misuse of the confidential information came about with the knowledge of Mr Eaton and Mr Pardoe. Those were facts he was entitled to find. In particular, there is no inconsistency between his finding at paragraph 58 of his judgment and his conclusion in paragraph 155(4). There is no reasonable prospect of success in that part of the appeal.
21. The last matter is the question of costs. Mr Khan argued that the Claimants had only asked for 60 per cent of their costs, but in fact that turned out to be a misreading of a transcript of the costs hearing. The normal rule, of course, is that the successful party recovers his costs from the unsuccessful party. Here the Respondents were the successful party to the prima facie position applied. No submissions were made to the judge to dissuade him from following the normal rule. That appears partly because of some professional difficulty on the part of counsel who had represented the Defendants, or some of them, during the trial, but there seems to have been no written submission from any of the Defendants trying to dissuade the judge from making the order which he did.
22. The judge's discretion was a broad one. This court would only interfere with a discretionary exercise in deciding on the matter of costs if the judge had plainly gone wrong in principle or failed to take into account relevant matters or took into account irrelevant matters. While some judges might not have made the order that the judge did because there had been an amendment of the pleadings and the Respondents were not successful on every single issue, I am not persuaded that there is any appealable error in the judge's exercise of his discretion.
23. For those reasons, I refuse permission to appeal.