Personal Management Solutions Ltd & Anor v Brake Bros. Ltd & Ors

A damages assessment after judgment on liability is not confined to the narrowest formulation of the claim. The question is whether the allegedly expanded claim was pleaded, or is merely an additional way of putting the claim already determined on liability.

Loss of the advantage of contractual exclusivity may be a compensable loss caused by misuse of confidential information. Where quantum has been adjourned without defined terms of reference, a later challenge based on abuse of process requires a broad, merits-based assessment of the public and private interests and all the circumstances. A scope decision is not ordinarily tested by the prospects of the damages claim unless there is a decisive point demonstrating that it must fail.

The claimants obtained judgment on liability and an injunction after alleging that the defendants had misused confidential information concerning employee benefit arrangements. The assessment of damages was adjourned because disclosure was incomplete.

The claimants’ pleadings and Schedule of Loss claimed loss arising from individual employees changing provider and also loss of the exclusive contractual advantage under which the claimants had supplied benefits to Brakes employees. Master Davison confined the assessment to the narrower claim. Whipple J set that decision aside and held that the wider claim could be considered. The defendants appealed, arguing that the wider claim was new, too late, abusive and bound to fail, and that the Master’s decision attracted appellate restraint. The central issue was whether the claim for loss of exclusivity had been pleaded and could be pursued at the damages hearing.

The Court of Appeal unanimously dismissed the appeal and upheld Whipple J’s order.

1. The wider claim was pleaded. The original Particulars of Claim and Schedule of Loss advanced a claim for loss of projected income on the assumption that the exclusive Brakes contract would have continued. The later Points of Claim clarified that case; they did not introduce a new claim on liability.
2. Loss of exclusivity was capable of valuation. Although the defendants’ replacement contract was non-exclusive and the claimants could still canvass Brakes employees, the loss of the incumbent’s contractual protection against competing providers was an advantage capable of valuation in damages.
3. There was no abuse of process. The issue had been before HHJ Curran QC, who adjourned all questions of quantum and gave no indication that the assessment would be confined to the narrow claim. The principles associated with Henderson v Henderson (1843) 3 Hare 100 had to be approached through the broad, merits-based analysis identified in Johnson v Gore Wood & Co [2002] 2 AC 1. That required consideration of the public and private interests and all the circumstances, focusing on whether the later step misused or abused the court process. On that approach, the defendants were not being vexed twice over the wider claim; they were seeking not to be vexed at all.
4. Prospects of success were not determinative. The court would not ordinarily decide the merits of a particular damages argument when determining the scope of the hearing unless there was a decisive point showing that the claim must fail. The alleged absence of causation was not such a point, given the finding that the May 2013 list formed part of a continuing dialogue and was expected in the course of the defendants’ negotiations with Brakes.
5. Appellate review. A decision defining the scope of a damages hearing went to the heart of the claim and was not merely routine case management. In any event, the Master’s decision had been reached under substantial misapprehensions. Whipple J was therefore entitled, and required, to set it aside and make her own broad, merits-based evaluation.

The second and third defendants were ordered to pay the claimants’ appeal costs, including £65,000 on account. The case was listed for a case management conference, with procedural steps stayed until then.

• Court of Appeal (Civil Division). In [2018] EWCA Civ 1635, the appeal by the second and third defendants was dismissed and Whipple J’s order was upheld.
• High Court, Queen’s Bench Division. Whipple J set aside Master Davison’s order confining the assessment of damages to the narrower claim and held that the wider claim could be pursued: [2017] EWHC 383 (QB).
• High Court liability hearing. HHJ Curran QC found misuse of confidential information, granted an injunction and adjourned the assessment of damages without finally determining quantum.