Case details
Summary
Confidential information may arise from combining public legal and commercial materials where the combination requires specialist skill, effort and judgment and is not readily accessible to the relevant professional circle. A tax-planning structure may therefore be confidential even though it uses statutory reliefs and familiar legal entities.
Misuse includes using a fundamental confidential component in a derived commercial structure where the extent and importance of that use make continued exploitation equivalent to continued use of the information. Liability for breach of confidence is strict once the defendant ought to appreciate the confidential character of information actually used. Unlawful means conspiracy requires a combination, intention to injure, unlawful acts and loss caused by those acts.
Factual background
The claimant, an accountancy and tax-advisory company, alleged that the defendants misused confidential information concerning an LLP-based structure using research and development relief under the Corporation Tax Act 2009. It also alleged breach of a non-disclosure agreement, unlawful means conspiracy and procuring breach of contract.
The trial concerned liability only. The central issues were whether the claimant’s proposed tax structures and analysis were confidential, whether the defendants’ Nemaura structure misused that information, which defendants were liable, and whether the claims were time-barred.
Held
- Breach of confidence. The claimant established the three requirements identified in Coco v AN Clark (Engineers) Ltd: the information had the necessary quality of confidence, it was imparted in circumstances importing an obligation of confidence, and it was used without authorisation to the claimant’s detriment. The information comprised proposed LLP-based R&D structures, including the use of unconnected subcontractor relief and the associated interpretation of the Corporation Tax Act 2009 provisions.
- Confidentiality was not defeated because the structures used public legislation, LLPs or other familiar concepts. The relevant question was accessibility. The information was the product of specialist tax skill, sustained effort and analysis, and was not readily accessible to the relevant professional circle.
- The Nemaura structure was a derived product, but its use remained a misuse of the claimant’s confidential information because unconnected-subcontractor R&D relief was fundamental to the structure and generated the tax saving. The defendants could continue using components they had independently possessed, but could not use an LLP structure with that confidential R&D feature.
- The First, Third and Fourth Defendants were liable for breach of confidence. Mr Timol was not liable because he did not know, and ought not reasonably to have inferred, that the structure contained the claimant’s confidential information. His commercial sign-off did not itself amount to use of information imparted to others.
- Unlawful means conspiracy. The First, Third and Fourth Defendants shared a common design to develop and market the Nemaura structure for fees. They intended to injure the claimant in the relevant sense because the gain and the claimant’s loss were inseparably linked, and the unlawful use of confidential information caused loss. The claim was time-barred for acts before 5 October 2014 but remained available for later acts, including dissemination at the 7 October 2014 conference.
- Procuring breach of contract. Mr Slattery procured OneE Tax’s breach of the NDA by transferring the information to OneE Investments, but that claim was time-barred. The other defendants did not procure the original breach.
- Limitation. The statutory limitation regime in regulations 4–6 of the Trade Secrets (Enforcement, etc.) Regulations 2018 did not apply to pre-9 June 2018 breaches pursued through common-law remedies. Breach of confidence was equitable rather than tortious, and the six-year tort limitation period did not apply directly or by analogy.
- The application concerning the court fee was dismissed. Following Page v Hewetts Solicitors, Lifestyles Equities CV v Sportsdirect.com Retail Ltd and Lappet Manufacturing Company Ltd v Basil Ibrahim Rassam, a claim for an account of profits, coupled with payment of sums found due, was treated as a non-money claim where it was pleaded as an alternative to an inquiry as to damages or equitable compensation. The defendants were ordered to pay the claimant’s costs of the witness-statement application on the indemnity basis. An inquiry as to damages was directed; the question of an account of profits was reserved.
The court’s approach to earlier authorities
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Appellate history
First-instance liability judgment. No appellate history was stated in the judgment.
Appeal to higher court
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