Rancom Security Limited v Helen Girling & Ors.

On a civil claim alleging dishonesty, confidentiality breaches and misuse of database information, the applicable standard remains the balance of probabilities. The seriousness of an allegation does not alter that standard, although the inherent probabilities and quality of the evidence remain relevant.

A court may assess circumstantial evidence cumulatively and draw adverse inferences from unexplained failures to preserve or disclose documents and from the failure to call material witnesses. Confidential customer information may include contract details, renewal dates and passwords, not merely names and contact details. Deliberate extraction and use of such information to target customers may establish contractual confidentiality breaches, database-right infringement, procurement of contractual breaches and conspiracy to injure by unlawful means.

Rancom Security Limited operated a domestic security-alarm business. The first and second defendants were former senior employees who established Connect 4 Security Limited in competition with it.

Rancom alleged that the defendants had extracted and used confidential customer information from its Alarm Master Database to target its customers. It also alleged that customers had been induced to move by maliciously false statements about Rancom’s financial position.

The defendants denied accessing the database and relied on legitimate marketing, including purchased data, leaflet campaigns, referrals and online advertising. The trial concerned liability only. The central factual issue was how Connect 4 had contacted so many of Rancom’s customers, including customers registered with the Telephone Preference Service.

1. Findings on the evidence. The court found that the first and second defendants had access to Rancom’s Alarm Master Database while employed by Rancom. Their evidence about legitimate marketing was inconsistent and unreliable. The unexplained absence or destruction of lead sheets and other documents, together with the failure to call material witnesses, justified adverse inferences. The court concluded that the defendants had extracted and used Rancom’s customer information.
2. Standard of proof. Rancom bore the burden of proving its allegations on the balance of probabilities. The civil standard did not vary with the seriousness of the alleged misconduct. Fraud and dishonesty might be inherently improbable, but the ultimate question remained whether the facts were more probable than not. The court was required to assess the circumstantial evidence in the round rather than piecemeal.
3. Confidentiality and database rights. The information in the database, taken as a whole, was highly commercially sensitive and confidential. It included equipment, add-on products, warranty cover, prices, renewal dates and system passwords. The first and second defendants knowingly extracted and used it to target Rancom’s customers for Connect 4’s benefit. Their conduct breached contractual obligations of confidentiality. The database had also involved substantial investment in collecting, organising and processing customer data, and the defendants infringed Rancom’s database rights by extracting and reutilising its contents.
4. Inducing breaches and conspiracy. Connect 4 and the individual defendants induced or procured breaches of the confidentiality obligations. The defendants also conspired to injure Rancom by unlawful means. The court did not determine whether a civil conspiracy between a one-person company and its sole controller was legally impossible, because the conspiracy found was between the first defendant and the second defendant, and between the second defendant and Connect 4.
5. Malicious falsehood. The court found that Connect 4’s employee had made false statements that Rancom was in serious financial difficulty. However, the claim for malicious falsehood failed because the pleaded case depended on the defendants’ knowledge and approval of those statements, which the court did not find. Similar conduct by Rancom’s employee made it unfair and perverse to accept the defendants’ employee had acted with the defendants’ authority.
6. Disposition. The claims for breach of contractual confidentiality, inducing or procuring breaches of contract, database-right infringement and conspiracy to injure by unlawful means succeeded. The claims for breach of fiduciary duty, dishonest assistance in breach of trust and malicious falsehood were dismissed.