Proactive Group Holdings Inc & Anor v HJ 2024 Limited & Ors
[2024] EWHC 2821 (KB)
City Site Solutions Limited v Liam Baker & Ors
9 August 2023
[2023] EWHC 2064 (KB)
High Court
A company's ex-employees started a competing business using stolen information. The court stopped them from working in the same area or contacting the company's clients for a while, ordered them to reveal what they'd done, and made them give back their computers to check for more stolen information.
Key Facts
- •City Site Solutions Ltd (CSSL) sought injunctive relief and damages against four defendants for misappropriation of confidential information and breach of contract.
- •The First, Second, and Third Defendants were CSSL employees who resigned and joined Cornerstone Project Source Ltd (the Fourth Defendant), a rival business established by the First Defendant.
- •CSSL alleged the defendants misappropriated confidential information and documents to set up the rival business.
- •The First Defendant's employment contract contained post-termination restrictions (PTRs).
- •There was a dispute over the terms of the First Defendant's contract, including whether he was constructively dismissed.
- •CSSL's IT investigation revealed evidence of the First Defendant transferring confidential information to his personal email and then to the Fourth Defendant.
- •The First Defendant disputed the Claimant's account of how they accessed his Hotmail account, alleging unlawful access.
Legal Principles
American Cyanamid principles for interim relief: serious issue to be tried, inadequacy of damages, balance of convenience.
American Cyanimid Co v Ethicon Ltd [1975] AC 396
Principles for mandatory injunctions: least risk of injustice, greater risk if refused, high degree of assurance of success at trial.
Nottingham Building Society v Eurodynamic Systems [1993] FSR 468
Employer's claim for protection must be based on identifying an advantage or asset inherent in the business which it would be unjust to allow the employee to appropriate.
Stenhouse Australia Ltd v Phillips [1974] 1 All ER 117
Adequacy of damages in breach of employment contract cases: difficulties in assessing loss, intangible losses to reputation.
Sunrise Brokers LLP v Rodgers [2015] IRLR 57
Balance of convenience: identifying the lesser evil.
Lansing Linde Ltd v Kerr [1991] 1 WLR 251
Test for enforcing PTRs: meaning of covenant, legitimate interests, reasonableness, discretion.
QBE Management Services (UK) Ltd v Dymoke [2012] IRLR 458
Springboard relief principles: unlawful use of confidential information, unfair competitive advantage, advantage still existing.
QBE Management Services (UK) Ltd v Dymoke [2012] IRLR 458
Clean hands doctrine: serious immoral and deliberate misconduct.
CF Partners (UK) LLP v Barclays Bank Plc [2014] EWHC 3049 (Ch)
Outcomes
Interim injunctive relief granted against the First and Fourth Defendants.
The Claimant established a high degree of assurance of success at trial, inadequacy of damages, and that the balance of convenience favored granting relief.
Order for affidavit evidence granted (partially).
Necessary to assist in giving effect to injunctive relief and undoing harm, but some requests were considered too broad.
PTRs enforced against the First Defendant.
Claimant likely to succeed in establishing the contract terms, constructive dismissal claim weak, PTRs reasonably necessary.
Device and account imaging order granted.
Necessary to secure the return, protection, and security of confidential information.
Springboard relief granted (modified).
Unlawful use of confidential information resulting in unfair competitive advantage; relief limited to one month.