In Health & Care Management Ltd v The Physiotherapy Network Ltd, the High Court held that a company that used another company’s data to set up a rival was in breach of a contractual duty of good faith.
HCML and TPN had entered into a referral agreement, under which HCML promised (among other things) to “act in good faith to TPN at all times”. HCML subsequently set up a rival business, used TPN’s database (which included contacts and pricing structures), diverted referrals away from TPN and misled TPN about the market for the rival business.
The judge found that HCML had breached the contractual duty of good faith. Indeed, it said that the act of covertly setting up a rival business was probably itself enough to amount to a breach.