Space Airconditioning Plc v Guy Smith Brothers Stores Ltd

Claims for misuse of confidential information require proof of extraction, retention or use, assessed on the balance of probabilities. Suspicion, speculation, or the fact that a competitor offered lower prices does not establish misuse. Where an employee’s knowledge derives from experience, the claimant must identify evidence showing that confidential information, rather than general skill and market knowledge, was used. In pricing cases, the court should consider the employee’s actual knowledge, the operation of any discount structure, the extent of discretion in applying discounts, and other market factors. A claimant must establish a coherent evidential case on both the alleged confidential material and its use.

Space Airconditioning Plc claimed that its former sales manager, Mr Guy, had extracted and used confidential customer and pricing information after moving to Guy Smith Brothers Stores Limited, a competitor. The claimant alleged that customer documents printed during Mr Guy’s employment were taken or disclosed, and that discount information was used to prepare competing quotations.

The principal issues were whether the printings were made for an improper purpose and whether Mr Guy or the defendants had unlawfully used the claimant’s discount structure or trade secrets.

1. Claim dismissed on the principal liability issues. The claimant failed to prove that the documents printed on 24 June and 26 July 2010 were taken, shown to SBS, or used for a competitive purpose. The surrounding circumstances supported suspicion but did not establish the alleged inference on the balance of probabilities.
2. The documents printed on 24 June were customer summaries principally containing credit-limit information. The explanation that they were printed in connection with a dispute concerning a customer’s credit arrangements was plausible. The documents printed on 26 July were mainly customer contact sheets and lacked the discount, budget, quotation and trading information expected if a wholesale customer raid had been intended.
3. In relation to discount information, the claimant needed to establish that Mr Guy had detailed knowledge of the relevant price list, knowledge of how the discount structure operated in individual cases, and that no other significant factors explained the quotations. The evidence did not establish those matters. The price list was incomplete, there was no persuasive evidence that Mr Guy had taken or memorised the relevant material, and the claimant’s discounts were discretionary, varied by product and customer, and regularly reviewed.
4. The evidence also demonstrated substantial independent market factors, including competing distributors, lower overheads and alternative manufacturers. SBS’s ability to undercut the claimant therefore did not itself prove unlawful use of confidential information. Several quotations were explained by information supplied by customers, alternative suppliers, differing specifications, or timing that made reliance on the claimant’s quotation impossible.
5. The court consequently did not need to examine the categories discussed in Faccenda Chicken v Fowler [1987] Ch 117. The claims against SBS necessarily failed. An injunction previously granted in the same litigation had already been discharged; consequential matters, including costs and permission to appeal, were adjourned.