Customer Systems Plc v Ranson

Permission to appeal should be granted where the grounds merit further argument and have realistically arguable prospects of success, even though their ultimate correctness remains unresolved. Material differences between the present case and an authority relied on below, including differences in the wording of an employment contract, may support that conclusion. The grant of permission does not determine the substantive issues concerning contractual loyalty or fiduciary duties.

Ranson appealed from a decision of the High Court of Justice, Queen’s Bench Division, given by Mr Justice Jack. The judge held that Ranson was not a de facto director, that his original contract of employment had not been varied, and that he could lawfully prepare for his activities after leaving employment. The judge nevertheless considered that his conduct breached contractual duties of loyalty and any fiduciary duties that arose.

At the permission hearing, the Court of Appeal considered whether the proposed grounds, including the reliance on Helmet Integrated Systems Limited v Tunnard, raised issues deserving further argument and having realistic prospects of success. A proposed ground concerning a customer list and its subsequent use no longer arose because damages were not being pursued on that basis.

Permission to appeal granted. The Court did not decide the ultimate merits of the proposed grounds.

1. Lord Justice Davis recognised that the lower-court judge was highly experienced, including in the relevant field. Nevertheless, the proposed grounds merited further argument and had at least realistically arguable prospects of success. Whether they were ultimately correct was left open.
2. The lower court’s findings required closer examination. Ranson had reached a senior position, but the judgment under appeal held that he was not a de facto director. His original employment contract had never been varied, and its express obligations could be regarded as weak. The judge had also held that Ranson could lawfully prepare for what he might do after leaving employment.
3. There was relatively little analysis of why Ranson’s conduct amounted to a breach of contractual loyalty or fiduciary duties. To the extent that the reasoning relied on Helmet Integrated Systems Limited v Tunnard [2006] EWCA Civ 1735, there were clear distinctions between that decision and the present case, particularly in the wording of the employment contracts. Those distinctions made the proposed grounds suitable for further appellate argument.
4. Although the customer-list ground no longer arose because damages were not pursued in that respect, permission would also have been granted on that issue had it remained live. The order was permission to appeal, with costs in the appeal.

• Court of Appeal (Civil Division): In [2012] EWCA Civ 491, Lord Justice Davis granted permission to appeal and ordered costs in the appeal.
• High Court of Justice, Queen’s Bench Division: Mr Justice Jack gave the decision under challenge, including findings that Ranson was not a de facto director, that his employment contract was unvaried, and that his conduct breached contractual loyalty and any applicable fiduciary duties.