Severe consequences for breaching court order

People often take the view that they can be quite blasé about their contractual obligations, mainly because employers often take the view that suing them is more trouble than it is worth. However, a recent High Court judgment shows that this is a risky course of action and the consequences for serious breaches can be very severe.

OCS Group UK Limited provides services in the aviation industry. It had a contract to provide cleaning and other services to British Airways at Heathrow Airport. In February 2017 it lost the contract which was awarded to a competing firm, Omni Serv Limited. Mr Jagdeep Dadi worked for OCS providing services under the contract until 28 February 2017, when his employment was TUPE transferred to Omni Serv. On 27 February OCS issued proceedings against Mr Dadi and others, seeking declaratory relief (an order determining the rights of the parties without awarding damages or directing anything to be done), an injunction against the defendants and damages for breach of contract, breach of fiduciary duty and/or breach of confidence. It was alleged that they had transmitted confidential documents and information to their home email addresses or external storage devices and that they had made unlawful use of them and/or transmitted them to third parties.

In Mr Dadi’s case, it was claimed that, between 2014 and February 2017, he had sent confidential documents to his personal web-based email account, including information about the logistics and costs of providing aircraft cleaning and other services to British Airways.

The matter came before Mr Justice Marcus Smith on 27 February, without prior notice to Mr Dadi. He granted an interim injunction against Mr Dadi (and others), prohibiting him from disclosing confidential information belonging to OCS and requiring him to provide information about prior disclosures to third parties. He was ordered to retain hard copy and electronic documents, pending a further hearing. He was also ordered not to disclose the existence of the proceedings and the possibility of proceedings against others to anyone other than his legal advisers.

He decided not to defend the underlying proceedings and a default judgment was entered against him.

As is usual in such cases the order of Mr Justice Marcus Smith included a penal notice which warned him that disobedience of the order rendered him liable to be imprisoned or fined or to have his assets seized. He was served with the order at Heathrow by in-house counsel for OCS at 3.10 p.m. on 27 February. While doing so she drew his attention to the penal notice on the front page of the order and read it to him. She also advised him to obtain legal advice as a matter of urgency.

Team poaching and springboard injunctions

Springboard injunctions are often granted in circumstances in which senior or key sales employees leave to work for a competitor. The name derives from the case of Bullivant v Ellis (1987) in which Mr Justice Falconer stated that the purpose of the injunction was “to prevent the defendants from taking unfair advantage of the springboard which…they must have built up by their misuse of the information in the card index”.

Most such injunctions are sought with a view to preventing misuse of confidential information (such as customer connections and contacts), serious breaches of contract or other unlawful conduct. Unsurprisingly, in the vast majority of cases the application for an injunction will be based on alleged breaches of post-termination covenants, such as those which are stipulated by non-compete and similar clauses.

However, there are limited instances in which an injunction may be obtained, even in the event that there are no such contractual provisions. In Willis v Jardine Lloyd Thompson, in a refreshingly brief judgment, the Court of Appeal disagreed with the decision of His Honour Judge Seymour to refuse to grant an interim injunction. He took the view that there was no point in granting an injunction because, in effect, the horse had bolted with the defection of a large number of employees to a competitor.

Willis is a major international insurance broker. It has a highly respected Fine Art, Jewellery and Specie Gifts Division and is the world leader in this sector with sales amounting to tens of millions of dollars each year. In a witness statement made by Willis’ CEO of Market Services, David Thomas, on 13 April 2015 he stated that some 30 employees from the department had left in the last 10 days. 22 left on Maundy Thursday, four left on 9 April, three on 10 April and two on the 13th. Those leaving included almost all the senior management team and key sales staff. Some 30 more junior staff were left. It turned out that they had all left to join a direct competitor, Jardine Lloyd Thompson (JLT). Mr Thomas thought that there would be a second wave of resignations and that this was as part of a coordinated attack. It was suspected that the underlying strategy was to weaken the department by the mass defections, thereby enabling JLT to acquire the whole department at a discounted price. 

data protection versus data access

It never ceases to surprise me that employees can be so horrified when action is taken against them following the misappropriation and/or misuse of information belonging to an employer. All employment contracts incorporate an implied duty to keep confidential  information belonging to the employer and not in the public domain. Confidential information in the nature of a trade secret, such as financial information, customer lists, production processes and sales strategies is protected. Further, any decently drawn contract of employment will include express protection of confidential information, both during and after employment.

If an employer has good reason to believe that confidential information has been misused, for example by disclosure to a competitor or by a former employee diverting business away from the company, there is a clear risk that serious damage could quickly follow. Consequently, it is often thought appropriate to apply for an injunction requiring the current or former employee (and any of his or her associates) to stop using the information and to deliver up the information in whatever form it has been taken. In order to prevent action being taken to thwart the employer’s efforts (e.g. by hiding away the information) injunctions are often granted without notice to the party to be served.

I recall some years ago making a home visit to a suburban address early one morning. The purpose of the visit was to carry out the terms of an injunction order requiring the delivery up of property belonging to the employer. A supervising solicitor from another firm was in attendance to ensure that correct procedures were followed. The recipient of the order was shocked to find out that the order covered delivery up of all physical documents at the house and, in addition, all electronic devices that could hold information belonging to the company including PCs, mobile phones and even the children’s laptops. Technological advances have served to widen even further the scope of disclosure to include, for example, documents stored in the cloud through Google, OneDrive, Dropbox or any number of other providers. It has also come to the attention of many employers that, particularly in the online world we nearly all inhabit, relevant data is one of their most important assets.

The recent High Court case of Warm Zones v Thurley and Buckley includes a useful summary of the relevant factors to be taken into consideration when considering such an application and confirms the willingness of the court to make an order in appropriate cases.

Warm Zones is a not-for-profit company that provides energy efficiency and related advice for domestic users, targeting principally low income and vulnerable households throughout the UK. Ms Thurley was a zone director from January 2007 until she was dismissed in March 2013. She covered addresses in North Staffordshire and Cheshire West. Mr Buckley worked as an IT and project manager, also based in North Staffordshire. Both had access to the employer’s database for the region containing, according to Warm Zones, “important, unique confidential information and property belonging to it”.

“keep music live” – unless you’re producing War Horse

In Ashworth and Others v The Royal National Theatre the question for Mr Justice Cranston (sitting in the High Court) was whether to grant an injunction pending trial requiring the Theatre to continue employing musicians, notwithstanding that part of the music for the show has always been recorded and the Theatre wanted to move to fully recorded music with a view to saving costs.

Injunctions are an emergency remedy and, as such, they need to be applied for promptly and with good cause. While a temporary injunction can be granted on the basis that a claim is made out with a real prospect of success, even though there has not been a full trial of the issues, the court must consider the balance of convenience between the parties and the risk of irremediable prejudice to a party if it turns out that the injunction should not have been granted.

In general injunctions which require someone to do something (mandatory) rather than not do something (prohibitive) are less readily granted particularly when, as in this case, there are financial implications for the party required to act in the manner directed by the Court.

War Horse is a very well known and celebrated National Theatre production which opened in the Olivier Theatre in 2007 and transferred to the New London Theatre in the West End in 2009, where it remains. It has been a great money spinner for the National Theatre but income has dwindled in the last few years. It is an expensive play to stage with its cast of 36 plus five musicians (the Claimants) and their deputies (who cover in their absence).

The composer of the musical score described it as an orchestral epic. Nonetheless, from the outset most of the music has been recorded. The live musicians have added to the recordings, including an opening trumpet solo and briefly appearing on stage during one scene. Productions in other parts of the world have not included live musicians, instead relying wholly on recorded music. In December 2012 the musicians used for the London production were told that it would go the same way and that, as a result, they would be made redundant in March 2013. Following conciliation involving the Musicians’ Union they remained employed but their participation was significantly reduced.

On 4 March 2014 they were sent letters providing notice of termination of employment on 15 March. They were told that they were being made redundant in order to bring the London production into line with other productions. However, on 15 March they turned up for work as usual but they were turned away, hence the application for injunctive relief.

Having considered the contractual terms Mr Justice Cranston concluded that there was a serious issue concerning whether the National Theatre was entitled to terminate the contracts in the way that it did. However he was much more concerned about the question of any resulting remedy and this was also a relevant consideration when determining whether an injunction should be granted.