Key Facts
- •Ensign House Ltd (EHL) claimed against Ensign House (FEC) Ltd (EHFL), FEC Development Management Ltd, John Connolly, and Terence Alford for breach of contract, breach of confidence, breach of fiduciary duty, procuring breach of contract, and conspiracy.
- •Alford, a property agent, initially acted for EHL in negotiations to acquire Ensign House, a complex multi-owner property.
- •EHL and FEC UK entered into a non-disclosure agreement (NDA).
- •Alford secretly agreed with Connolly to share fees for introducing EHL to FEC.
- •Alford's retainer with EHL ended with the sale of the adjacent Quay House (but the court determined it did not end for Ensign House negotiations).
- •FEC UK then directly engaged Alford, who used confidential information from EHL to purchase Ensign House.
- •The court assessed the market value of Ensign House.
- •The court determined damages owed to EHL for the breach of contract, breach of confidence and conspiracy.
- •The court ordered Alford to account for profits received in breach of his fiduciary duty.
Legal Principles
Three essential elements of a claim for breach of confidence: (1) information has the necessary quality of confidence; (2) information was imparted in circumstances importing an obligation of confidence; (3) unauthorised use of information to the detriment of the party communicating it.
Coco v A N Clark (Engineers) Ltd [1968] FSR 415
Where parties to a contract have negotiated and agreed terms governing confidential information, their rights and obligations are governed by the contract, and in the ordinary case there is no wider set of obligations imposed by the general law of confidence.
Vercoe v Rutland Fund Management Ltd [2010] EWHC 424 (Ch)
A fiduciary is someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence. The distinguishing obligation of a fiduciary is the obligation of loyalty.
Bristol & West BS v Mothew [1998] Ch 1
Ingredients of liability in dishonest assistance: (1) trust or fiduciary obligation owed; (2) breach by trustee/fiduciary; (3) third party assisted in breach; (4) third party acted dishonestly.
FM Capital Partners Ltd v Marino [2018] EWHC 1768 (Comm)
Elements of unlawful means conspiracy: (1) combination; (2) intention to injure; (3) unlawful means; (4) causation of loss.
Kuwait Oil Tanker v Al Bader [2000] 2 All ER (Comm) 271
Damages for breach of contract are compensatory; a hypothetical release fee is a tool for valuing loss, not a substitute for proving actual loss.
One Step (Support) Ltd v Morris-Garner [2019] AC 649
Where a fiduciary has made an unauthorised profit within the scope of their duty, they are bound to account for it to their principal.
Novoship (UK) Ltd v Mikhaylyuk [2015] QB 499
Outcomes
The NDA was found to be valid and imposed a duty of confidence on FEC UK.
The court interpreted "our interest in the Property" to include any commercial interest EHL had, including its right to sell its negotiating position or confidential information.
FEC UK breached the NDA by using confidential information to acquire Ensign House.
FEC UK used pricing, soft, and title information, and Mr. McGarry's contact details, for the purpose of acquiring Ensign House, exceeding the permitted purpose of due diligence.
Alford owed fiduciary duties to EHL.
Although his retainer wasn't explicit about exclusivity, the court implied a term requiring him to act solely in EHL's interests regarding Ensign House; he acted as a buying agent, not just an introducer.
Alford breached his fiduciary duties by acting for FEC.
He used confidential information and actively negotiated with the Suiteholders on behalf of FEC, representing a conflict of interest.
Connolly did not dishonestly assist Alford's breaches.
The court found that Connolly genuinely believed Alford was a free agent and did not turn a blind eye to any conflict of interest.
The claim for procuring breach of contract was dismissed.
While Connolly induced Alford's breaches, the court didn't find the necessary intent (knowledge or willful blindness) for this tort.
All four defendants were liable for unlawful means conspiracy.
They intentionally injured EHL by using unlawful means (breaches of the NDA and misusing confidential information) to acquire Ensign House.
EHL was awarded £2 million in damages.
This represents 50% of the marriage value of Ensign House, representing what EHL would have reasonably negotiated for the release from the NDA and Alford's retainer.
Alford was ordered to account for profits received from FEC in breach of fiduciary duty (£803,009).
He made unauthorised profit within the scope of his duty to EHL.