Waste Managed Limited v Stephen Wilce & Ors.

The claimant (WML) sought interim prohibitory and mandatory relief to restrain alleged misuse of confidential information and a confidential business model by former employees and associated entities, relying on causes of action including breach of contract, breach of fiduciary duty, misuse of confidential information and unlawful means conspiracy. The court applied the usual American Cyanamid principles for prohibitory relief and the Nottingham/ Zockoll guidance for mandatory relief, focusing on whether there was a serious issue to be tried and the balance of convenience.

The judge held there was a serious issue to be tried as to whether the Confidential Business Model, viewed as a "sum of the parts", is confidential, but concluded that WML had not established a serious issue to be tried that the defendants had in fact misused that model. Even if a serious issue were shown, the balance of convenience and WML's unexplained delay weighed against granting the interim relief. The mandatory relief was refused for want of a high degree of assurance of success. The claimant's strike-out application against one defendant was also refused because triable issues of fact remained.

Background and parties:

• WML purchased the business and assets of CheaperWaste Limited (CWL) and brought claims against six defendants: former CWL employees and related companies, alleging they set up a competing business (BWSL) using CWL/WML confidential information and a confidential business model.
• The main defendants were the former IT/director of CWL (Mr Wilce), his company (MPL), a marketing employee (Mr Fee), a former CWL employee who joined BWSL (Ms Drake), the initial director/shareholder of BWSL (Mr Green), and BWSL itself.

(i) Nature of the application: WML applied for an interim injunction pending trial (prohibitory and mandatory) to restrain use or disclosure of defined "Confidential Information" and the "Confidential Business Model", to preserve and deliver up specified documents/data ("Listed Items"), and to require witness statements identifying use/disclosure of confidential material. Separately, Mr Green applied to strike out the claim against him for disclosing no reasonable cause of action.

(ii) Issues for determination:

• Whether there was a serious issue to be tried as to confidentiality of the Confidential Business Model and misuse of Confidential Information by the defendants.
• If so, whether interim relief should be granted applying the American Cyanamid principles (serious issue; adequacy of damages; balance of convenience) and the additional tests for mandatory relief (high degree of assurance as to success).
• Whether the claimant's delay in seeking relief and the undertakings offered by defendants affected the balance of convenience.
• Whether the claim against Mr Green should be struck out for lack of reasonable prospects.

(iii) Court’s reasoning and conclusions:

• The court accepted there was a serious issue to be tried that the Confidential Business Model could be confidential when viewed as the aggregate "sum of the parts", but the individual elements were largely public or ordinary industry practice. The claimant had not shown, on the evidence presented, a sufficiently particularised or non-inferential case that the defendants had replicated or misused the Confidential Business Model in operating BWSL; the case relied on inferences and correlations and had evidential gaps to be addressed at trial.
• On the balance of convenience the judge was not persuaded by the claimant’s financial modelling that failure to grant the injunction would cause irremediable harm; the modelling lacked clear assumptions and causal proof. The claimant’s delay in pursuing the injunction (at least from 24 September 2021) significantly weighed against relief and increased the risk of injustice to the defendants, particularly BWSL, who would be forced to change business model after operating under the allegedly competing model for some time. The defendants had offered undertakings covering many categories of confidential information and preservation of Listed Items, which also reduced the case for injunctive relief.
• Mandatory relief was refused because the court did not have the high degree of assurance of claimant success required for an interlocutory mandatory order.
• The strike-out application against Mr Green was refused because there were triable issues as to his role in concealing Mr Wilce’s involvement in BWSL and in any alleged unlawful means conspiracy.

Practical outcome: the interim injunction application was refused and the strike-out application was refused; the parties were invited to agree a confidentiality order, record undertakings offered, and agree case management directions.

The court refused the interim injunction application and refused the strike-out application. The judge found that although the Confidential Business Model may be confidential as an aggregate, WML had not shown a serious issue to be tried that the defendants had misused that model; further, the balance of convenience and WML’s unexplained delay weighed against interim relief. Mandatory relief was refused for lack of a high degree of assurance of success. The claim against Mr Green was not struck out because triable issues remained about his role in the alleged conspiracy.