Ensign House Limited v Ensign House (FEC) Limited & Ors

A contractual confidentiality obligation may protect a valuable commercial interest in property even where the claimant has no proprietary interest in the property and holds only an uncompleted negotiating position. The court must construe the agreement in its commercial context and identify the permitted purpose for which information was disclosed.

Using pricing, negotiating, title and expert information to approach counterparties directly for the purpose of acquiring the property was outside the permitted due-diligence purpose and constituted breach. A property agent who undertakes to negotiate a unique opportunity exclusively for a principal may be a fiduciary, owing duties of loyalty, no conflict and no unauthorised profit.

Negotiating damages may compensate the lost opportunity to bargain for release from confidentiality and agency obligations. An account of profits remains discretionary.

Ensign House Ltd had negotiated for several years to obtain options over the interests comprising Ensign House. It later entered into a non-disclosure agreement with FEC Development Management Ltd while proposing to sell its commercial interest in the opportunity.

FEC received pricing information, information about the suiteholders and negotiations, title information, information concerning the SFO restraint affecting Suite 14, and legal advice. From 31 May 2019 FEC changed from investigating a possible acquisition of EHL’s position to pursuing direct purchases from the suiteholders. It subsequently acquired the interests in Ensign House through Ensign House (FEC) Ltd.

EHL alleged breach of contract, breach of confidence, breach of fiduciary duty, dishonest assistance, procuring breach of contract and conspiracy. The central issues were the meaning and scope of the NDA, Mr Alford’s status, the liability of the defendants, causation and the appropriate remedy.

1. Contract and confidentiality. The expression “our interest in the Property” in the NDA included any existing or future contractual, commercial or proprietary interest which EHL had or might acquire. It was not confined to legal title. The NDA protected information relating to the property and EHL’s plans, intentions and market opportunities. The King Order was publicly available, but the other relevant material retained the necessary quality of confidence.
2. Until 31 May 2019 FEC used the information for the permitted due-diligence purpose, or with EHL’s consent. Thereafter it used the Pricing Information, Soft Information and Title Information to acquire the interests directly from the suiteholders. It also misused Mr McGarry’s contact details and counsel’s advice. These uses breached clause 1.4. FEC also breached clause 5.2 by contacting the suiteholders without EHL’s consent. Certain disclosures to DLA breached clauses 2.1.2 and 2.1.3, and disclosures to EHFL breached clause 1.3 in relation to Soft Information and Title Information.
3. Breach of confidence. Mr Connolly was personally liable in equity because he had notice that the information was confidential. Mr Alford and EHFL were also primarily liable for the misuse identified by the court.
4. Fiduciary duty. Mr Alford was a buying agent, not merely an introducer. He negotiated with the suiteholders, advised EHL on strategy, possessed confidential information and exercised considerable influence over the negotiations. It was an implied term of his retainer that he would act loyally and exclusively for EHL in relation to Ensign House. His duties included good faith, no conflict and no unauthorised profit. The retainer continued after the sale of Quay House.
5. Mr Alford breached his fiduciary duties by preferring FEC’s interests from April 2019 onwards, assisting FEC with the acquisition of Suite 14 and then negotiating directly with the other suiteholders without EHL’s informed consent. He was liable to account for £803,009 received from FEC for introducing it to Ensign House and acting as its agent.
6. Dishonest assistance and procuring breach. Mr Connolly materially assisted the relevant breaches, but EHL did not prove that he knew or deliberately turned a blind eye to Mr Alford’s continuing fiduciary obligations. The claims for dishonest assistance and procuring breach of contract therefore failed.
7. Conspiracy. From 20 June 2019 Mr Connolly and Mr Alford combined, later joined by EHFL. They used breaches of the NDA, breaches of confidence and breaches of fiduciary duty to obtain Ensign House. Although their predominant purpose was self-interest rather than harming EHL, they intended to injure EHL because the unlawful use of EHL’s valuable contractual and confidential rights was the means by which they sought their gain. The conspiracy claim succeeded.
8. Causation and remedy. EHL failed to establish that it would have continued negotiations to obtain options itself. It established that, absent the breaches, FEC would have sought a release and EHL would have negotiated one. The appropriate award was £2 million, representing 50% of the marriage value. The same sum was recoverable on the alternative bases of breach of the NDA, misuse of confidential information, breach of fiduciary duty and conspiracy. If the wider release-fee analysis was legally unavailable, £600,000 would have been awarded for the confidential information alone.
9. The claims for dishonest assistance and procuring breach were dismissed. FEC UK, EHFL, Mr Connolly and Mr Alford were jointly and severally liable for £2 million. Mr Alford was additionally liable to account for £803,009. Further consequential matters, including interest, costs and permission to appeal, were adjourned.

First-instance judgment of the High Court. No appellate history was stated in the judgment.