Travel Counsellors Ltd v Trailfinders Ltd

An equitable obligation of confidence may arise where a recipient obtains information without participating in the original breach, if a reasonable person in the recipient’s position would have notice that all or part of it may be confidential. The objective assessment includes whether the circumstances would lead a reasonable person to make enquiries about the information’s source or the owner’s consent. A recipient who would make enquiries but does not do so may be bound by the obligation. The obligation is limited to information that is in fact confidential. Actual or blind-eye knowledge is unnecessary for primary liability, although accessory liability may require a different approach. The quantity and structure of copied client data may support notice.

Trailfinders alleged that former sales consultants copied client information from its computer systems when moving to a competing travel business. It claimed contractual and equitable breaches against the former employees and an equitable breach against Travel Counsellors Ltd.

His Honour Judge Hacon found liability against the selected employees and Travel Counsellors: [2020] EWHC 591 (IPEC), also reported at [2020] IRLR 448. Travel Counsellors appealed on the test for notice, the factual findings concerning its knowledge, and misuse of confidential information. The central issue was whether the circumstances required Travel Counsellors to make enquiries before using the information.

Disposition. Arnold LJ gave the leading judgment, with Asplin and Lewison LJJ agreeing. The appeal was dismissed.

1. An equitable obligation of confidence may arise where confidential information is disclosed in breach of an obligation of confidence and the recipient knows or has notice of that breach. It may also arise where information is acquired or received without such a breach, provided the recipient knows or has notice that it is confidential. Notice is assessed objectively by reference to a reasonable person in the recipient’s position. This was the test stated in Primary Group (UK) Ltd v Royal Bank of Scotland plc [2014] EWHC 1082 (Ch) and approved in Matalia v Warwickshire County Council [2017] EWCA Civ 991.
2. Where the circumstances bring it to the notice of a reasonable recipient that information, or some of it, may be confidential, the reasonable response may be to make enquiries. Whether enquiries should be made, and their scope, is context- and fact-dependent. If a reasonable person would make enquiries and the recipient abstains, an obligation of confidence arises. The Court of Appeal applied the reasoning in Primary Group and The Racing Partnership Ltd v Done Brothers (Cash Betting) Ltd [2020] EWCA Civ 1300.
3. The recipient need not be on notice that every item received is confidential. The obligation is limited to information which is in fact confidential. Blind-eye knowledge is not required for primary liability, although the Court noted that accessory liability may require actual or blind-eye knowledge, referring to Vestergaard Frandsen A/S v Bestnet Europe Ltd [2013] UKSC 31.
4. Travel Counsellors knew that the individuals were moving from Trailfinders and positively encouraged them to bring customer contact lists. The quantity and structure of the information, together with the surrounding circumstances, gave reasonable notice that at least some of it was likely to have been copied from Trailfinders’ database. Travel Counsellors neither warned the individuals against bringing confidential information nor made appropriate enquiries. The judge’s findings were therefore legally sustainable.
5. The overlap data did not create an inconsistency. By itself, it proved nothing and was produced years after the relevant events. Travel Counsellors accepted that it had used the information by storing it in its system and sending marketing emails. The extent of use, and whether use in concluding contracts was use by Travel Counsellors, were matters for the inquiry as to damages.

• Court of Appeal (Civil Division): Travel Counsellors’ appeal was dismissed in [2021] EWCA Civ 38.
• High Court, Intellectual Property Enterprise Court: His Honour Judge Hacon found that the former employees and Travel Counsellors had breached contractual or equitable obligations of confidence: [2020] EWHC 591 (IPEC), reported at [2020] IRLR 448.