Fox Williams LLP has successfully represented the claimants in the recent case of Brandeaux Advisers (UK) Ltd and others v Chadwick [2010] in which the High Court has held a senior employee to be in repudiatory breach of contract and breach of trust by transferring a vast array of the claimant companies’ confidential information to her personal email address during the course of her employment. The defendant apparently planned to use the information for self-protection should a regulatory or employment dispute arise against her in the future.
There were three claimants in the case: the 1st claimant was the defendant’s employer; and the 2nd and 3rd claimants were companies of which the defendant was a director. The claimants discovered the defendant had carried out the transfer of their confidential information during the course of redundancy consultations, approximately four months after the transfer had taken place. The clear breach of the 1st claimant’s confidentiality policies, although held by the Court not to be for a “nefarious purpose”, led to the 1st claimant dismissing the defendant summarily on the grounds of gross misconduct. The Court held the 1st claimant was entitled to do so, and doubted that the possibility of a future dispute with an employer or a possible future regulatory investigation could ever justify an employee transferring or copying confidential documents to protect his/her own position.
The Court rejected the 1st claimant’s claim for damages equating to the salary paid to the defendant after the date on which it would have dismissed her had it known of the breaches. Despite finding that the defendant had been bound to inform the 2nd and 3rd claimants of her wrongdoing, and that the 1st claimant would then have dismissed her, the Court nevertheless rejected the 1st claimant’s attempt to recover the salary it had continued to pay to the defendant, on the basis that the 1st claimant had continued to receive the benefit of her work. The Court has, however, given the 1st claimant permission to appeal on this issue.
What should employers take from this case?
- The case highlights the measures employees may be tempted to take to try and protect themselves in the event of an actual or potential dispute with their employer, or potential regulatory investigation (should they occupy a regulated or compliance related position whilst in employment).
- In this recent case the Court has ruled that possible litigation with an employer or regulatory investigations are unlikely ever to justify employees copying or transferring their employer’s confidential documents. Instead, the employee must rely on the court’s or tribunal’s disclosure process (including, where applicable, the ability to ensure that a reluctant employer complies with its disclosure obligations).
- Should you be concerned about employees copying or transferring your company’s confidential information for their personal purposes, it is advisable to review your contracts of employment or staff handbooks to ensure that such activities are clearly prohibited, rather than relying on implied terms.
- A review of your company’s IT user policies and the systems in place to monitor compliance with those policies would also be a prudent step to take.
Tom Custance, partner and specialist at Fox Williams LLP, successfully acted for the claimants in this case. For more information, contact Tom (TCustance@foxwilliams.com).
