Richmond v Selecta Systems Ltd

A binding contract arises only where the parties objectively intended to be bound on agreed terms, including any terms they regarded as conditions of formation. Parties may intend negotiations to remain subject to contract, particularly where a formal written agreement and statutory requirements are contemplated.

An employer may protect its own confidential information on company equipment, but must take reasonable care when accessing an employee’s personal accounts. Altering security details without adequate technical understanding may breach that duty. Damages may be awarded for resulting loss of access, while aggravated damages are unavailable for negligence.

The claimant, a former employee, alleged that he had reached a severance agreement with the defendant company concerning compensation, benefits, restrictions and the transfer of a vehicle. He also alleged that the defendant interfered with his personal AOL, Apple, LinkedIn and WhatsApp accounts.

The defendant denied any concluded agreement and counterclaimed for delivery of, or the value of, a Mercedes motor car retained by the claimant. The issues were whether a binding severance agreement existed, whether the account interference gave rise to liability and damages, and whether ownership of the Mercedes had passed to the claimant.

1. Severance agreement. The claimant’s contract claim was dismissed. Applying the objective approach in RTS Flexible Systems Ltd v Molkerei Alois Muller GmbH [2010] 1 WLR 753 and Pagnan SpA v Feed Products Ltd [1987] 2 Lloyd’s Rep 601, the parties had reached only broad outlines. They had not agreed the compensation, the confidentiality and non-disparagement provisions, or the precise restriction on working in the industry.

2. The surrounding circumstances also showed that any offer was objectively intended to be subject to contract. A written agreement was to be prepared and considered before signature. The requirements of section 203 of the Employment Rights Act 1996, including writing, identification of the particular complaint and independent legal advice, reinforced that conclusion. No binding severance agreement was ever made.

3. Internet accounts. The proposed claim for deliberate or malicious interference, or knowing misdealing with intangible property, was not established. The reasoning in Armstrong GmbH v Winnington Networks Ltd [2013] Ch 156 did not establish such a cause of action on these facts. The defendant’s intention had been to remove its own information, not to injure the claimant.

4. The defendant nevertheless owed the claimant a duty of care in relation to the personal accounts. Applying the recognised negligence considerations of foreseeability, proximity, and whether it was fair, just and reasonable to impose a duty, all three were satisfied. The defendant was entitled to search company equipment and remove its own information, but was not entitled to alter the security details of the claimant’s personal accounts merely to protect company interests.

5. By changing those details without obtaining appropriate advice or ensuring that access could be restored, the defendant breached its duty. The claimant’s failure to remember an old postcode did not break the chain of causation. Damages of £1,000 were appropriate. A mandatory injunction would be futile and damages were adequate.

6. Aggravated damages were unavailable for negligence, and in any event the facts would not justify them. The counterclaim succeeded because ownership of the Mercedes had not passed to the claimant. He was ordered to pay its value at the date of refusal, assessed at £20,140.