Summary:
A permanent injunction was granted against an independent consultant who worked for the claimant to restrain threatened breaches of confidence by using, publishing or disclosing confidential materials acquired by the defendant in the course of working for the claimant and wrongfully retained by him after termination of his services.
Court:
QBD (James Goudie QC) 14/6/2002
Text:
Trial of an action by the claimant company ('McKenna') against the defendant ('J') for breach of confidentiality. J was an independent contractor working for McKenna under an oral contract for services as an information technology consultant. McKenna was in the business of providing personal and professional development in the area of communication skills, hypnosis and neurolinguistic programming. Whilst working for McKenna, J had access to McKenna's customer database and to some recordings of seminars given by McKenna. The parties accepted that both were confidential and were communicated to J in circumstances importing an obligation of confidence and that when J's contract ended he was obliged to return the materials to McKenna.
The parties had entered into a confidentiality agreement, with obligations continuing after the end of J's contract for services, although it added nothing to the implied duty of confidence in relation to trade secrets.
An interlocutory injunction had been granted to McKenna restraining J from using, publishing or disclosing the confidential materials, except insofar as any of the materials were in the public domain other than through a breach of confidence by J. No part of the materials had since fallen into the public domain.
McKenna sought a permanent continuance of the injunction and the court had to consider whether on the evidence there was any threatened use of the materials by J. McKenna put forward evidence that J had attempted to sell the database and had actually supplied some names from it to a third party. J had given affidavit evidence that any copies of the database had been destroyed. J argued that the restrictive covenants in the confidentiality agreement were unenforceable as they were too wide and that the injunction should be refused as it was not protecting a legitimate interest of McKenna.
HELD:
(1) J's contention that the restrictive covenants were unenforceable was misconceived as this was not a claim to enforce those covenants and no restraint of trade issues arose.
(2) The conflicts in evidence could only be overcome by assessing the credibility of witnesses, and J's evidence was largely incredible. He had clearly taken property belonging to McKenna when his contract had ended and was still in possession of the database and the tapes. On balance, McKenna's evidence was to be believed. On the evidence J was in breach of confidence and there was a continuing threat to disseminate the confidential information.
(3) McKenna had been protecting its legitimate commercial interests and accordingly the injunction would be granted permanently. Nominal damages of £5 would be awarded.
Claim allowed.
Source: Lawtel http://www.lawtel.co.uk , copyright acknowledged.
Comment
This case relates to a Client’s requirement for the return of the client’s documents (including documents prepared by the Defendant Consultant for the Client), once the contract had ended.
This case is a clear illustration of the application of the law of confidentiality and trade secrets. Issues raised by the Defendant of restraint of trade (which might have been relevant to contractual restrictions) were not relevant to confidentiality. Apart from anything else, the Defendant lost the case because the Judge considered that his evidence was not credible.
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