Trailfinders Ltd v Travel Counsellors Ltd & Ors

An employee’s implied duty of fidelity includes an obligation not to misuse confidential employer information during employment. That duty ends when employment ends, but liability remains for copying or deliberately memorising information during employment for later use. Highly confidential “class 3” information remains protected after employment; class 2 information generally does not, unless it was improperly retained or deliberately memorised. An equitable duty of confidence is assessed objectively and may bind a recipient who ought to have appreciated that information was confidential. Information is not deprived of confidentiality merely because it could have been obtained from public sources. A business receiving customer information from departing employees may itself be liable where it ought reasonably to have known that the information was confidential.

Trailfinders alleged that former employees, who joined Travel Counsellors Ltd as franchisees, copied and used customer information obtained during their employment. It also alleged that Travel Counsellors was liable in equity for receiving and using that information, and alternatively was vicariously liable or liable as principal.

The trial concerned the claims pursued against Andrew La Gette and David Bishop. The central issues were whether the customer information was confidential, whether the former employees’ conduct breached contractual and equitable obligations, whether Travel Counsellors knew or ought to have known that the information was confidential, and whether the franchisees were employees or agents of Travel Counsellors.

1. Confidential information. The customer information was confidential. It had the characteristics identified in art.2(1) of Directive (EU) 2016/943 and fell within class 2 of the classification in Faccenda Chicken Ltd v Fowler [1985] FSR 105. The fact that parts could have been obtained from public sources did not provide a defence where the information was in fact taken from confidential employer records.
2. Former employees. The implied contractual obligation restrained use or disclosure during employment. It ended on termination, but liability continued for acts committed during employment, including copying or deliberately memorising information for later use. The equitable obligation continued after termination, subject to the exception for information forming part of experience and skills honestly acquired and held in mind in the normal course of employment. Deliberately memorised information and class 3 information were outside that exception.
3. Objective appreciation of confidentiality. An equitable duty arose where the recipient knew or ought reasonably to have appreciated that the information was confidential. Actual knowledge was unnecessary. This approach was supported by Vestergaard Frandsen A/S v Bestnet Europe Ltd [2013] UKSC 31 and Campbell v MGN Ltd [2004] UKHL 22. The same objective approach applied to the implied contractual obligation owed by employees.
4. Application to the individual defendants. Mr La Gette breached his contractual and equitable obligations by copying information from Superfacts, copying information concerning Client A, disclosing it to Travel Counsellors and using it after joining that business. His post-employment Viewtrail access was not actionable where, on the evidence accepted, he had obtained client permission. Mr Bishop breached both obligations by compiling his contact book from Superfacts and by accessing and using Viewtrail information without client permission.
5. Travel Counsellors. Travel Counsellors ought reasonably to have known that at least part of the information supplied by departing Trailfinders employees had been copied from Trailfinders’ customer records. Equity therefore imposed an obligation of confidence, which Travel Counsellors breached by using the information for its business. The franchisees were neither agents nor employees of Travel Counsellors.
6. Disposition. Mr La Gette and Mr Bishop were each in breach of contractual and equitable obligations of confidence. Travel Counsellors was in breach of its equitable obligation of confidence.