Brandeaux Advisers (UK) Ltd & Ors v Chadwick

An employee who removes confidential business information for possible use in future disputes is ordinarily in breach of the duty of good faith and any contractual obligation to surrender company documents. The employee must generally rely on the court’s disclosure procedures for documents relevant to litigation. A possible future regulatory issue does not justify wholesale copying or retention of confidential material, although a genuine whistleblowing disclosure may engage different considerations. The seriousness of the breach is assessed objectively and in context. An employer’s unaccepted breach of the implied duty of trust and confidence does not prevent summary dismissal for the employee’s repudiatory misconduct, but relevant employer conduct may affect the seriousness of that misconduct. Salary paid before dismissal is not recoverable as damages merely because the employee would have been dismissed earlier, where the employer received the benefit of the employee’s work.

The claimant companies sought delivery up and protective orders concerning confidential information copied by Ruth Chadwick, a former employee, from her work systems to her private email account. The material occupied 49 box files and had not been disclosed or used, apart from being provided to her solicitor. Ms Chadwick contended that she was entitled to retain material relevant to possible employment claims, future regulatory concerns and her defence against the companies.

The court had granted interim injunctive relief after an urgent without-notice application. The judgment determined whether the copying breached her employment contract, whether the companies were entitled to delivery-up relief, whether the breach justified summary dismissal, and whether the first claimant could recover salary paid between the date on which it alleged she should have reported the breach and her actual dismissal.

1. Confidential information. The documents remained confidential to the companies and, subject to any defence, they were entitled to their return. Copying the material for personal purposes was outside the proper course of employment and breached the duty of good faith. Refusal to surrender the material also breached clause 21.3 of the employment contract.
2. The authorities concerning disclosure in the interests of a bank or an arbitrating party did not establish any general right for an employee to copy and retain wholesale confidential files for possible litigation or a possible regulatory dispute. In ordinary litigation the employee must rely on the court’s disclosure processes. A genuine regulatory disclosure might be permissible, but no such issue had arisen and it did not justify the copying carried out here.
3. The companies’ failures to present the fullest information on the urgent without-notice application did not deprive them of their substantive property or confidentiality rights. Appropriate electronic delivery-up relief could require transfer of personal material to a new hard drive and destruction of the old drive, together with cooperation concerning material on the email server.
4. Summary dismissal. The proper question was whether the misconduct objectively demonstrated repudiation of the contract or so undermined the relationship of trust and confidence that the employer should no longer be required to retain the employee. An unaccepted repudiatory breach by the employer did not bar dismissal for good cause. Relevant employer conduct could form part of the context, but an employee could not trawl through the whole employment relationship for unrelated criticisms.
5. The wholesale, secret and un limited transfer of highly confidential information, undertaken to arm the employee for possible future disputes, was a serious breach of an important contractual duty. The companies were entitled to dismiss summarily. The claim for recovery of salary failed: although earlier disclosure would have led to earlier dismissal, the company had received the benefit of the work performed before the actual dismissal. Ms Chadwick’s wrongful-dismissal claim also failed.