Etta Healthcare v Steven Aimson & Ors

Unlawful means conspiracy was established where individuals combined to divert a company’s business, confidential information and key employees to a competing company. The unlawful acts need not be committed by every conspirator, and conspirators need not know that the means were unlawful. A claim for conspiracy is assessed by reference to the loss caused by the tort. Where the conspiracy destroys a young business with a limited trading history, valuation of the lost business may be more reliable than a speculative assessment of lost future profits. Short post-termination restrictions limited to contacts with whom an employee had personal dealings may be enforceable for a six-month period.

The claimant operated a healthcare recruitment business. It alleged that the first to fourth defendants combined to establish a competing company, Hive Resourcing Group Ltd, and to divert its database, clients, candidates and employees to Hive.

The claims included unlawful means conspiracy, procuring breach of contract, breach of fiduciary duty, breach of confidence, infringement of database right, breach of employment contracts and repayment of unlawful dividends. The defences of the first and fourth defendants had been struck out, but findings concerning their conduct were required when determining the conspiracy claim against the second and third defendants.

The central issues were whether the alleged unlawful acts and combination were proved, whether the second and third defendants were parties to the conspiracy, whether post-termination restrictions and database protections were enforceable, and how any loss should be assessed.

1. Liability. The court found that the first, second and fourth defendants had combined to divert the claimant’s business to Hive. The first defendant downloaded the claimant’s database and provided its contents to Hive. He thereby breached the Shareholders’ Agreement, fiduciary duties, duties of confidence and database rights. The fourth defendant participated in establishing Hive and procuring the second defendant to work for it while still employed by the claimant.
2. The tort required an unlawful act, an intention to injure the claimant, an agreement or combination, and actual injury. It was unnecessary for every conspirator to use unlawful means or to know that the means were unlawful. The first, second and fourth defendants shared the relevant object, and the claimant was substantially deprived of its business and ceased trading.
3. The second defendant breached the implied duty of good faith and fidelity by working for Hive before termination of her employment. She also breached confidentiality obligations and database rights by using information derived from the claimant’s database. The six-month post-termination restrictions were generally enforceable because they protected legitimate interests and were confined largely to contacts with whom she had personal dealings. The court considered that any waiver or estoppel could not assist her because she was a conspirator.
4. The third defendant was not party to the conspiracy. She reasonably believed that the claimant was closing down for legitimate reasons and was not involved in the earlier establishment of Hive. Although the post-termination restrictions were generally enforceable, the claimant was estopped from enforcing them against her because the managing director had ostensibly released her from them. She also established the statutory defence to database-right infringement under regulation 97(1) of the Copyright and Rights in Databases Regulations 1997.
5. Damages for conspiracy were at large once pecuniary loss was shown, but the claimant’s projected future profits were too speculative. Given the limited trading history, lack of profits, limited investment and dependence on particular individuals, the appropriate approach was to value the lost business. Damages of £275,000 were awarded jointly and severally against the first, second and fourth defendants. The first defendant was additionally liable to repay £58,909.25 in unlawful dividends. The claim against the third defendant was dismissed.

First instance judgment. No appeal against the earlier orders striking out the defences of the first and fourth defendants was stated.