Whitmar Publications Ltd v Gamage & Ors

On an application for interim injunctive relief, the court must first identify a serious issue to be tried and then assess adequacy of damages and the balance of convenience. Where the injunction may effectively determine the dispute before trial, the court should also make a preliminary assessment of the claimant’s prospects of success.

An employee owes continuing duties of fidelity and good faith until employment ends, but is not thereby a fiduciary. Preparatory activity for post-termination competition may be legitimate, but active secret steps taken to compete during employment may breach those duties. Springboard relief requires an unfair competitive advantage which continues to operate and can properly be restrained.

Whitmar Publications Limited sought interim relief against three former employees and a company they had established. The claims concerned breach of employment contracts and duties, misuse of confidential information, database rights, delivery up, forensic inspection, affidavits and springboard relief.

The employees had resigned, served garden leave and formed Earth Island Publishing Limited. Whitmar alleged that, while still employed, they had taken secret and active steps to establish a competing publishing business, solicited staff and customers, and misused confidential databases, Linked-In groups and business cards. An earlier consent order restrained use of specified information. The central issues were whether there was a serious issue to be tried, whether the defendants’ conduct was legitimate preparation or competition during employment, and whether interim and springboard relief should be granted.

1. Applicable interim-injunction approach. The court applied the principles in American Cyanamid v Ethicon Limited [1975] AC 396. It considered whether there was a serious issue to be tried, whether damages were adequate, and where the balance of convenience lay. Because the relief was likely to dispose of the action before trial, the court also made the limited prospects assessment described in Lansing Linde Limited v Kerr [1991] 1 WLR 251.
2. Employment obligations. The contractual duty of fidelity and good faith continued until the end of employment, including during garden leave. The court followed the analysis in Ranson v Customer Systems plc [2012] IRLR 769. Employees were not fiduciaries merely because they were senior employees. Their obligations were narrower than the single-minded loyalty owed by a fiduciary, such as a director.
3. Competition before termination. The evidence disclosed a strong case that the defendants had undertaken active, secret competitive steps for more than a year before termination. Incorporating the rival company, securing premises and domain names, planning titles and marketing, approaching customers and seeking employees went beyond legitimate preparation.
4. Confidential information and springboard relief. There was a strong case that the circulation and customer databases were confidential and that the business cards gave a competitive advantage. The court accepted that the advantage was sufficiently continuing to justify springboard relief. The relief sought was therefore granted and embodied in the approved order.