In Brandeaux (Advisers) UK Limited & Ors v Chadwick [2010], the High Court considered whether an employee’s conduct in transferring confidential information to her personal email account in anticipation of a dispute with her employer was sufficiently serious to justify summary dismissal. The employer sought the return of the confidential information and damages in respect of salary paid to the employee.

Ms Chadwick was employed in a senior role in compliance for one of the Brandeaux group companies and held several directorships within the group. Following a perceived breakdown in relations with her employer, which she believed signalled the likelihood of an employment dispute arising, Ms Chadwick began transferring vast amounts of confidential information relating to the business to her personal email account. Ms Chadwick had no intention of using the information for competitive purposes. Her case was simply that she had a legitimate interest in retaining any information that might assist her in defending herself in a dispute with her employer, or with a regulator.

The employer had discovered the transfers after Ms Chadwick was made redundant and given three months notice. Whilst Ms Chadwick was on garden leave, the employer’s IT team examined her computer and revealed the misconduct. A disciplinary hearing was held shortly afterwards and Ms Chadwick was dismissed without notice.

The High Court concluded that the Brandeaux companies were entitled to the return of the confidential information. It was said to be incontrovertible that, subject to special circumstances, where an employee takes confidential information, the employer is entitled to its return and to any further orders required to protect its position.

On the question of whether Ms Chadwick was wrongfully dismissed, the judge considered that she had breached her express contractual duties of confidentiality and the implied duty of fidelity to her employer. Noting that there was no actual or potential regulatory dispute in existence, the judge considered it doubtful if the possibility of litigation with an employer could ever justify an employee acting as Ms Chadwick did. In the event of an employment dispute, the employee must rely on the court’s disclosure process like any other litigant. The breach was held to be sufficiently serious to justify summary dismissal. Following Tullett Prebon plc v BGC Brokers LP [2010] EWHC 484 (QB), it was held to be irrelevant whether, as Ms Chadwick claimed, the employer had already committed a fundamental breach of the contract. If the employment relationship is continuing, an employer is not prevented from summarily dismissing an employee by reason of an earlier breach by the employer.

The employer was unsuccessful in its claim for damages against Ms Chadwick. The case rested on the premise that Ms Chadwick was under a duty to notify her employer of her wrongdoing – had she reported such wrongdoing after it occurred, she would have been dismissed in February, meaning that her employer would not have paid her salary between February and the date of her actual dismissal in June. Following Item Software (UK) Ltd v Fassihi [2005] ICR 450, the High Court found that, as a director, she was indeed under a fiduciary obligation to inform the company of a breach of her fiduciary duty. However, the judge considered that no loss had actually been suffered by the employer. In return for salary paid between February and June, the employer received the benefit of Ms Chadwick’s work.

This case highlights the difficulties an employer will face in any action to recover salary paid to an employee however grave the employee’s misconduct. It also confirms that an employee is unlikely to be able to justify the misuse of confidential information by reference to an actual or potential dispute with their employer.