INTRODUCTION

In JN Dairies Ltd v Johal Dairies Ltd [2009] EWHC 1331 (Ch) HHJ David Cooke held that information contained in invoices stolen from the Claimant’s warehouse had the necessary quality of confidence for the Claimant to bring an action against its competitor.

C was a wholesale dairy supplying small shops; D1 was in the same business; D2 was an ex-delivery driver of C. It was alleged that D2 had stolen invoices from C’s warehouse and passed them on to D1, who then used this information to try to undercut C’s prices and take C’s customers. D1 denied the allegations and denied liability as the information was not in itself confidential in a commercial sense, or of any value; and/or the prices charged to any particular customer could be easily ascertained simply by asking the customer.

D1 further relied upon Faccenda Chicken v Fowler [1987] 1 Ch 117 and the proposition that information that an employee must treat as confidential while employed, but which once learned remains in the employee’s head because of his own skill and knowledge, is information that he cannot be restrained from using after his employment ends. D2 did not contest the proceedings.

DECISION

The judge was satisfied that D2 had stolen the invoices and passed them to D1, who then made use of the information to approach and negotiate with C’s customers. He was also satisfied that the information in the invoices was of considerable commercial value and possessed the necessary degree of confidentiality. It was not in the public domain, and was ascertainable only from C’s records, the knowledge of its employees, or from the customers themselves. Insofar as it was known to C’s employees, it was information that it would be in breach of their duty of good faith to their employer to disclose.

The relative ease by which the information could be obtained by legitimate means might be relevant for springboard cases, but it was not in itself a reason for concluding that the information was not at all confidential to begin with.

It was clear that D2 knew that it was C’s commercially valuable information when he stole it and that he had no right to obtain it or to pass it on to anyone without C’s authority. That was sufficient to impose a duty of confidentiality on D1. When D2 gave D1 the invoices, D1 knew its confidential nature and the circumstances in which it had been obtained. This was sufficient to impose the same duty of confidentiality on D1.

There was no defence under Faccenda Chicken; there was no suggestion that D2 had memorised the information contained in the invoices.

COMMENT

The case is a classic example of its kind and demonstrates the potential limitations of arguments based on information retained in an employee’s head as part of his skill and knowledge.