...by using client information brought to their attention by ex-employees of their competitor, Trailfinders Limited.
Following the departure of a number of Trailfinders employees to join TCL, Trailfinders alleged that those employees took with them names, contact details and other information about their clients which was stored in a Trailfinders computer system. In addition to pursuing claims against the employees, Trailfinders also argued that TCL had acted in breach of an equitable obligation of confidence. The High Court had held that:
TCL appealed, arguing amongst other things that an equitable obligation of confidence would only arise if the recipient of information knew, or had notice that the information was confidential, and whether the recipient had notice was to be objectively assessed by reference to a reasonable person standing in the position of the recipient. The Court of Appeal considered whether a reasonable person in the recipient's position would have made enquiries to determine whether the information, or some of it, may be confidential to another. The Court also noted that if a reasonable person would have made enquiries about the confidential information (considering the facts and context) then an obligation of confidentiality arises. In light of all this, the Court of Appeal upheld the decision that TCL acted in breach of the equitable obligation of confidence.
When dealing with information provided by new employees, it is important for employers to find out the source of such information and to make the relevant enquiries in order to avoid a potential breach of confidence claim. To mitigate this risk, employers should consider including appropriate wording such as indemnities, in relevant employees' contracts, to manage the risk of a breach of confidence claim being made.