Harbro Supplies Ltd v Hampton & Ors

A former director’s fiduciary obligations do not inevitably end when the directorship ends. The court must examine the circumstances, including whether company property, business opportunities or information obtained through the directorship is later misused for a competing business.

Information may be non-confidential yet remain embodied in company property, such as a database or compiled documentation. Deliberate use of that property to obtain a springboard or head start may constitute a breach of fiduciary duty, even where the underlying information is publicly available.

A junior employee without fiduciary duties may nevertheless be liable for assisting the breach where he knows that company property is being used unlawfully. A company may be liable through the knowledge and conduct of its directing mind.

Harbro Supplies Limited claimed that its former director, Gordon Hampton, former employee Stephen Haines and Jeremiah Strongarm Limited had misused Harbro’s customer, supplier and product database after Hampton and Haines left Harbro and JSL began competing in the same market.

The claims included breach of fiduciary duty, misuse of confidential or non-confidential information, dishonest assistance, and related claims concerning expenses, stock, a balance sheet and company property. The trial was limited principally to liability. The central issue was whether the defendants had used Harbro’s database, and whether that use was actionable despite the information not being confidential and Hampton’s relationship with Harbro having ended.

1. Database liability. The claim based on use of the database was established against Hampton, Haines and JSL. The similarities between Harbro’s and JSL’s customer codes, product codes, invoice formats, addresses and purchase orders, together with the timing of changes made to JSL’s system, demonstrated that Hampton had used the Harbro database. Haines had assisted in compiling customer lists and knew that the database belonged to Harbro and should not be used by others. JSL was liable because Hampton represented its corporate mind.
2. Confidentiality. Applying the classes of information identified in Faccenda Chicken v Fowler 1987 Ch 117, the information itself was not confidential. That did not dispose of the claim. The database and its compiled documentation were Harbro’s property, and their use could provide an unlawful springboard even where the underlying information was publicly available.
3. Post-termination fiduciary duty. A fiduciary obligation does not inevitably cease when a director ceases to be a director. The question is fact-sensitive. It may continue to govern the misuse of company property obtained during the relationship, particularly where the former director uses it for purposes adverse to the company. Hampton’s use of the database was a blatant misuse of Harbro’s property and breached his fiduciary obligations.
4. Other claims and counterclaims. Harbro established its claim for unauthorised expenses. The stock-theft claim was not proved. The balance-sheet allegations disclosed no actionable loss. Hampton’s claims concerning the van and £10,000 loan failed. His hardware was lent and had to be returned, but no award was made for the software. Haines’s claims for further holiday pay and commission were not established.
5. The parties were encouraged to consider resolving the remaining issues without a further hearing, given the disproportion between costs and value.