Glenea Contracts Limited v Philip Joseph Friel
[2024] EWHC 1243 (Ch)
Gap Group North East Limited v Paul Palmer
1 December 2023
[2023] EWHC 3061 (KB)
High Court
A disgruntled ex-employee leaked company secrets and made false accusations, causing his former employer significant problems. The court said he had to pay for the wasted time the company spent dealing with the mess he created, but the company didn't get all the money it wanted because it couldn't prove all of its losses.
Key Facts
- •Paul Palmer, a former employee of Gap Group North East Limited (GAP), breached his contract and confidentiality obligations by disclosing confidential information and making false allegations of bribery against GAP and its associates.
- •Palmer's actions were motivated by his anger over the shareholding arrangement in GAP, which he believed to be less favorable than promised.
- •GAP sued Palmer for breach of contract, breach of confidence, and associated causes of action.
- •Palmer admitted liability, leaving only causation and remedy to be determined.
- •GAP claimed damages for loss of business, loss of a potential contract with Valpak for Scottish fridge work, wasted management time, and other losses.
Legal Principles
Recovery of wasted staff time spent investigating and mitigating a tort is possible, even without demonstrating additional expenditure, loss of revenue, or loss of profit. It must be shown with sufficient certainty that the wasted time was directly attributable to the tort, and that there was significant business disruption.
Aerospace Publishing v Thames Water Utilities [2007] Bus LR 726, Bridge UK -v- Abbey Pynford [2007] EWHC 728 (TCC)
In assessing damages for wasted management time, a retrospective assessment of time spent is a valid method, but a discount should be applied to account for uncertainty.
Bridge UK -v- Abbey Pynford [2007] EWHC 728 (TCC)
Outcomes
GAP's claim for loss of profit from the Valpak Scottish fridge work contract was rejected.
Insufficient evidence existed to show GAP submitted a bid for the 2022/23 contract before Palmer's actions, and subsequent communications indicated that the lost opportunity was unrelated to Palmer's breach.
GAP's claim for wasted management time was partially successful.
The court accepted that significant senior management time was diverted due to Palmer's actions. However, a 10% discount was applied to the claimed amount to account for uncertainties in the retrospective calculation.
Damages of £18,000 were awarded to GAP for wasted management time, with interest at 4% from 25 January 2022 to 31 July 2022 and 8% thereafter.
This reflects the court's finding that a substantial portion of the claimed management time was directly attributable to Palmer's actions, while acknowledging the need for a discount due to the retrospective nature of the calculation.
A permanent injunction was granted against Palmer, preventing further disclosure of confidential information.
This was in response to Palmer's admitted breach of confidence.