In 2016, over 40 sales consultants left the employment of Trailfinders Ltd, a travel agent with 37 branches in the UK and Ireland, to join Travel Counsellors Ltd (TCL), a competitor of Trailfinders.

Trailfinders issued proceedings against two individuals, Mr La Gette and Mr Bishop, alleging that when they left, they took with them names, contact details and other information about Trailfinders’ clients in breach of implied terms in their employment contracts and in breach of equitable obligations of confidence owed to Trailfinders. Trailfinders also sued TCL for breach of an equitable obligation of confidence. At first instance, His Honour Judge Hacon found in favour of Trailfinders.

In relation to TCL, HHJ Hacon found that:

1. i) in the case of travel consultants joining TCL, TCL expected and encouraged them to bring their customer contact list with them; TCL did not warn them about any risk of breach of confidence in doing so;
2. ii) TCL added the client information brought by Mr La Gette and Mr Bishop from Trailfinders to TCL’s computer system for use by Mr La Gette and Mr Bishop;

• iii) a reasonable person in senior positions at TCL would have been aware that at least part of the contact information brought to TCL by Mr La Gette and Mr Bishop was likely to have been copied from Trailfinders’ customer data; such persons at TCL knew or ought to have known that Trailfinders reasonably regarded the information as confidential;

1. iv) accordingly, TCL received such information subject to an equitable obligation of confidence; and
2. v) TCL was in breach of that obligation because it used the information for the benefit of its business.

TCL appealed, but Mr La Gette and Mr Bishop did not.

Decision

In terms of whether TCL owed an equitable obligation of confidence to Trailfinders in respect of confidential information brought to it, TCL argued that HHJ Hacon had not correctly applied the legal test to the facts.

TCL submitted that an equitable obligation of confidence would only arise if the recipient of information knew or had notice that the information was confidential, and whether the recipient had notice was to be assessed objectively by reference to a reasonable person standing in the position of the recipient. It was not enough, it submitted, to say that a reasonable person would make enquiries as to whether the information received by him, or some of it, was confidential.

Referring to The Racing Partnership Ltd v Done Brothers (Cash Betting) Ltd [2020] EWCA Civ 1300, in which it was implied that it was relevant to consider what, if any, enquiries a reasonable person would make, Lord Justice Arnold found that if the circumstances were such as to bring it to the notice of a reasonable person in the position of the recipient that the information, or some of it, might be confidential to another, then the reasonable person’s response might be to make enquiries. Whether the reasonable person would make enquiries, and if so what enquiries, was inevitably context- and fact-dependent. If the reasonable person would make enquiries, but the recipient did not, then an obligation of confidentiality would arise.

Arnold LJ understood TCL’s argument to be that nothing less than blind-eye knowledge that the information was confidential would suffice. Arnold LJ disagreed. He said that blind-eye knowledge was equated with actual knowledge, and was subjective. Whether a person had notice was an objective question to be assessed by reference to the standards of the reasonable person.

Arnold LJ also disagreed with TCL’s submission that it was not sufficient that a reasonable person in the position of TCL would have been aware that, as the judge had found, “at least part of” the information received from Mr La Gette and Mr Bishop was (likely to be) confidential. There was no reason why an obligation of confidence should only arise if the recipient was on notice that all the information received was likely to be confidential, Arnold LJ said. The obligation would be limited to the information that was confidential, but that was a different point.

Arnold LJ also rejected TCL’s submission that it was not sufficient that a reasonable person in the position of TCL would have been aware that (some of) the information received from Mr La Gette and Mr Bishop was “likely” to be confidential. If someone was so aware, Arnold LJ said, a reasonable person in TCL’s position would make enquiries. TCL did not do so. If it had done so, and Mr La Gette and Mr Bishop had told TCL the truth about the sources of the information, TCL would have discovered that some of the information had come from Trailfinders’ client database and was therefore confidential to Trailfinders.

TCL also challenged the judge’s finding that TCL would have been aware that at least part of the contact information brought to TCL was likely to have been copied from Trailfinder’s customer data because there was too much client information for it to have been carried in their heads. Arnold LJ rejected this argument, not only because it was a question of fact that TCL did not have permission to appeal, but also because he agreed with HHJ Hacon that there was indeed too much information to be held in the employees’ heads. For example, one of the lists supplied consisted of the titles, first names, surnames, addresses, email addresses and telephone numbers of 313 individuals. TCL must have appreciated that this could not have been carried in one person’s head, which made it probable that at least some of it had been copied from Trailfinders’ client database (as was in fact the case). Yet, TCL neither warned Mr La Gette not to bring any of Trailfinders’ confidential information, nor asked him whether he had done so or even what the source or sources of the list was or were.

The appeal was dismissed. (Travel Counsellors Ltd v Trailfinders Ltd [2021] EWCA Civ 38 (19 January 2021) — to read the judgment in full, click here).