TAKÉ LIMITED v BSM MARKETING LIMITED

An agent owes continuing loyalty to the principal throughout the agency. The duty includes acting in good faith, avoiding conflicts, and disclosing matters which good faith requires the agent to disclose. After the agency ends, confidentiality protects genuine trade secrets, but not the agent’s general skill, knowledge or professional experience.

Confidentiality depends on the nature of the information, the circumstances of communication, and unauthorised use causing detriment. Customer lists may cease to require protection where the industry and customers are widely known. Individual customer prices, supplier costs and written customer preferences may remain protected. Relief must not become an unenforceable restraint on competition.

Také Limited claimed against BSM Marketing Limited and Barrie Morley, its former agent, for breaches of loyalty and misuse of confidential information. Mr Morley admitted disloyal conduct during the agency, but disputed causation, loss and the confidential character of the information.

The court determined whether the agency continued after 31 March 2005, whether Mr Morley’s conduct caused loss concerning Dreams, Benson and Argos, what information remained confidential after termination, and whether interim undertakings should become permanent injunctions. The court also considered the defendants’ counterclaims, which were abandoned.

1. Agency and loyalty. The relationship was one of principal and agent. The agency continued on the existing enforceable terms until 19 October 2005. During that period Mr Morley owed Také a fiduciary duty of loyalty. He could not act for his own benefit or for a third party against Také’s interests and had to disclose matters which good faith required him to disclose. His participation in a competing supply arrangement and solicitation of Také’s customers breached that duty.
2. Causation and loss. Mr Morley’s disloyal conduct materially contributed to Dreams ceasing to order through Také, and Také succeeded on that claim. Také also proved that the conduct caused it to lose some Argos orders; the precise loss required a further hearing. Although Mr Morley solicited Benson’s orders in conflict with his duty, the reduction in Benson’s margins was attributed to Benson’s new management and was not proved to have been caused by him.
3. Confidential information. The equitable duty of confidence continued after termination. It covered genuine trade secrets, not information forming part of the agent’s general skill and knowledge. The court applied the approach in Faccenda Chicken v Fowler [1987] 1 Ch 117, including the nature of the employment, the nature of the information, whether confidentiality was impressed upon the agent, and whether the information could be isolated from information the agent was free to use. The information must also have been known, or ought to have been known, to be confidential.
4. The customer list no longer required protection because the industry was small and the major customers were generally known. Individual customer prices and supplier manufacturing costs were confidential. Written customer preferences were confidential, but general knowledge of customer likes and dislikes formed part of Mr Morley’s stock in trade. The court imposed injunctions limited to the protected information, required return of relevant documents and allowed reasonable access to relevant computers. No time limit was imposed, but liberty to apply was granted.
5. The restrictive covenant and claims concerning product designs were not pursued or were unsupported. The injunction therefore did not restrain lawful competition or servicing retailers. The counterclaims were abandoned.

First-instance decision. No prior appellate decision is stated in the judgment.