Ranson v Customer Systems plc [2012] EWCA Civ 841

The Court of Appeal in this case found that the High Court was wrong in holding that Mr Ranson had fiduciary duties towards his employer. The Court of Appeal found that Mr Ranson had only the ordinary duty of loyalty owed by employees, which was not to be confused with the distinct and greater duty of loyalty that is peculiar to directors.

Mr Ranson was not a director and therefore his implied duty of loyalty required him only to have regard to the interests of his employer. He was not obliged to sacrifice his own interests to further those of his employer or to act with the “single-minded or exclusive loyalty” required of a director.

The Court of Appeal made repeated reference to the earlier case of Wessex Dairies Ltd v Smith, in which it was held that an employee can “be as agreeable, attentive and skilful as it is in his power to be to others, with the ultimate view of obtaining the benefit of the customers’ friendly feelings when he calls upon them if and when he sets up business for himself".

The only way in which Mr Ranson’s duties to the company might have be modified was by the express terms of his contract. The Court of Appeal found that there was no evidence to show any relevant modification.

Implications

This decision reflects the more traditional and accepted law in relation to the distinct duties of employees and directors. Subject to any further appeal, it closes down the window temporarily opened up by the High Court’s original decision for employer’s to pursue claims against employees on the basis of them having fiduciary duties equivalent to directors.