Jerroms Trafalgars Limited & Anor v John Barry Tilson & Ors

An employee’s implied duty of fidelity depends on the nature of the employment and the employee’s activities. Seniority increases the expected degree of loyalty, but does not itself make an employee a fiduciary. During employment, an employee must not solicit clients or misuse confidential client information. Solicitation requires an active element and a positive intention to encourage the transfer of business; the client’s initiation of contact is not determinative.

For unlawful means conspiracy, the claimant must prove unlawful action pursuant to a combination, the requisite intention or knowledge, and loss caused by that action. Unlawful conduct may be the occasion of a loss rather than its effective or dominant cause. Suspicion and surmise cannot establish causation. Where substantial loss is unproved, only nominal damages may be awarded.

The claim arose after three employees of an accountancy practice left and joined a competing firm. A substantial number of clients subsequently transferred their work. The claimants alleged breaches of the employees’ duties of fidelity, misuse of confidential information, solicitation of clients, infringement of database rights, and an unlawful means conspiracy involving the competing firm.

The trial concerned liability and damages. The court considered whether client lists were confidential, whether one employee was a fiduciary, whether particular conduct amounted to solicitation, whether the competing firm knowingly participated in unlawful means, and whether the proven conduct caused recoverable loss.

1. Duty of fidelity and fiduciary status. The first three defendants owed contractual duties of good faith and fidelity. The scope depended on the facts, including the nature of the role and its effect on the employee’s ability to serve the employer faithfully. Mr Tilson’s senior role and client responsibility did not make him a fiduciary. He was not a director, partner or overall office manager, had limited managerial responsibility and lacked other features indicating an undertaking to act solely in the employer’s interests.
2. Confidential information. Client lists containing compiled client information, contact details and fee information could constitute confidential information. Mr Tilson breached his duty by taking and using an annotated client list and an Excel spreadsheet containing Jerroms’ information. Adding fee information shortly before departure showed preparation to compete using confidential information.
3. Solicitation. Solicitation is fact-sensitive. It is immaterial who initiates contact. The question is whether, in substance, the employee encourages or induces the client to deal with him or the competitor. Mr Tilson solicited MKG and Plastics Plus and was likely to have solicited other clients. Ms Roche assisted by securing the relevant payroll files. Mr Qureshi did not solicit clients.
4. Conspiracy. The evidence established unlawful conduct by Mr Tilson and Ms Roche, but did not prove that Hayward Wright or Mr Hayward-Wright knowingly participated in an agreement to use unlawful means. The circumstances were insufficient to establish actual or blind-eye knowledge.
5. Causation and remedy. Although solicitation and misuse of confidential information were proved, the claimants failed to establish substantial loss caused by that conduct. The principal clients had longstanding personal relationships with Mr Tilson and would probably have followed him even without the unlawful approaches. The loss was therefore assessed as nominal.
6. The claims against Mr Tilson and Ms Roche for breach of contract and breach of confidence succeeded to the extent stated, with judgment for nominal damages. The claims against Mr Qureshi and Hayward Wright were dismissed. Costs and any permission to appeal were reserved for a later hearing.