Fiduciary Duties & Confidentiality

[Thanks to Simon Hale of Hardwicke for preparing this case summary]

The decision of the High Court in Customer Systems Plc v Ranson, Atherton, Edmond and Offland [2011] EWHC 3304 is authority for the proposition that an employee who learns of confidential matters relating to competition from a potential new employer is not bound to pass the information to his existing employer, as he would then be in breach of confidence to the new employer.

The Claimant, an I.T. consultancy, brought claims against a number of former employees who had left to set up or work for a rival business, alleging variously that they were in breach of fiduciary duty, in breach of their restrictive covenants and in breach of the duty of fidelity.

Sir Raymond Jack followed Tullett Prebon Plc v BGC Brokers [2011] IRLR 420 (per Maurice Kay LJ at [42]) and held that a duty of fidelity to one's current employer would not necessarily defeat the duty of confidence to a new employer.

An unusual feature of the decision was that Mr Edmond was awarded indemnity costs, in part due to the Claimant's conduct of the litigation, having brought high value claims of little merit in order to intimidate a young man of limited means.