Borax Europe Ltd v Cave

Confidentiality and restraint of trade are distinct. A restriction protecting confidential information is not a restraint of trade merely because it may affect competition. Where an employer shows that confidential information is in the employee’s hands and that its use is liable to cause damage, the court may restrict its use, potentially in perpetuity. The restriction lasts only while the information remains confidential and outside the public domain. The relevant damage need be significant to the claimant; it need not be proportionally significant in the claimant’s business as a whole. An appellate court will not disturb factual conclusions reached by the trial judge on evidence absent misdirection or legal error.

Borax Europe Ltd obtained an order from His Honour Judge Peter Clark on 15 February 2002 requiring Mr Cave to deliver up documents and recorded information allegedly removed from his former employment. The order also imposed a perpetual injunction restraining use or disclosure of specified confidential information.

Mr Cave sought permission to appeal and permission to rely on further evidence. He argued that the information was not confidential, that its use would not cause Borax material damage, and that the injunction was an impermissible restraint of trade because his employment contract contained no post-termination non-competition covenant. The central issue was whether the injunction was justified as protection of confidential information.

Application refused. Lord Justice Buxton held that there was no basis for intervention in the judge’s order.

1. Confidential information and restraint of trade. The two doctrines operate in different categories. A restraint-of-trade covenant prevents competition generally and is therefore subject to special legal restrictions. Protection of confidential information restrains only misuse of information that the employer is entitled to protect. The absence of an express anti-competition clause did not prevent an injunction protecting confidentiality.
2. Conditions for protection. Once the employer demonstrates that confidential information is in the employee’s hands and that its use is liable to cause damage, the employer may restrict the use made of it. In an appropriate case the restriction may be perpetual, but it remains effective only for so long as the information retains its confidential character and is not otherwise in the public domain.
3. Damage. The relevant question is whether misuse will have a significant effect on the claimant. It is unnecessary to show that the effect will be proportionally significant when measured against the claimant’s business as a whole. The trial judge was entitled to find that information such as customer identities and contact details, operating profit per employee, business-development targets and cost-control mechanisms was confidential and that misuse would cause real commercial harm.
4. Appellate restraint. The judge had considered the necessity of continuing the injunction, including Mr Cave’s conduct after leaving Borax and the risk that he would retain and misuse the information. His conclusion was open on the evidence. The Court of Appeal would not go behind it.
5. Mr Cave’s further complaints did not justify permission. A transcript commissioned and paid for by Borax was not a court transcript, and Borax could impose conditions on access to it. The costs complaint was also insufficient, since the provisions concerning assisted persons did not apply before an order for legal aid had been obtained.

1. Court of Appeal (Civil Division): On 26 April 2002, the application for permission to appeal and to rely on further evidence was refused. [2002] EWCA Civ 741
2. Lower court: His Honour Judge Peter Clark made the underlying order on 15 February 2002, requiring delivery up of documents and imposing a perpetual confidentiality injunction.