Caterpillar Logistics Services (UK) Ltd v Huesca De Crean [2011] EWHC 3154 (QB) (02 December 2011)

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England and Wales High Court (Queen's Bench Division) Decisions

You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Caterpillar Logistics Services (UK) Ltd v Huesca De Crean [2011] EWHC 3154 (QB) (02 December 2011)
URL: http://www.bailii.org/ew/cases/EWHC/QB/2011/3154.html
Cite as: [2011] EWHC 3154 (QB)

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		Neutral Citation Number: [2011] EWHC 3154 (QB)
		Case No: HQ11/X03383

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

02/12/2011

B e f o r e :

THE HONOURABLE MR JUSTICE TUGENDHAT
____________________

Between:

	Caterpillar Logistics Services (UK) Ltd	Claimant
	- and -
	Paula Huesca de Crean	Defendant

____________________

Selwyn Bloch QC & Gavin Mansfield (instructed by Walker Morris) for the Claimant
Edward Pepperall (instructed by Keelys) for the Defendant
Hearing dates: 9 and10 November 2011
____________________

HTML VERSION OF JUDGMENT
____________________

Mr Justice Tugendhat :

The Claimant ("CLS") is a company formed in the UK. It is a part of the Caterpillar group of companies, best known for the manufacture of heavy earth moving equipment. CLS provides logistics services to other divisions or companies in the same group, and to third parties. It is by itself a very substantial business. The financial statements exhibited for the year ending 31 December 2009 record that it employed over 1300 employees (507 of them salaried) and had a turnover of just under £170m.

By an application notice issued on 12 September CLS seeks an injunction to restrain the Defendant from using or disclosing information which it claims to be confidential ("the Confidential Information"), for an order restraining her from carrying out certain work ("the Prohibited Tasks"), and for delivery up of certain documents. Undertakings were given by the Defendant on 16 September 2011 to Eder J sitting in the vacation, in proceedings commenced on 12 September, the undertakings to run until the return date. This judgment is delivered on the application made at the return date.

The Defendant ("Mrs Huesca de Crean") was one of CLS's 507 salaried employees until the expiry of the one month's notice she gave to CLS on 10 August 2011.

There is no restrictive covenant in Mrs Huesca de Crean's contract of employment. The only term of that contract relating to confidential information is a document headed "Confidentiality Agreement" which was signed by her on 31 May 2005. By it she agreed to the following:

"As a result of my employment by [CLS], I may develop obtain or learn about trade secrets or confidential information which is the property of [CLS] or others that [CLS] has contact with. I will not use any of such trade secrets of [sic] confidential information for myself or others, or divulge them to others, either during or after my employment. The terms 'trade secrets' and 'confidential information' include processes, methods, techniques, systems, formulae, drawings, photographs, machine readable records, patterns, models, devices, compilations, customer and dealer data, internal financial information or any information of whatever nature which gives [CLS] an opportunity to gain an advantage over its competitors who do not know or use it; but I understand the terms do not include knowledge, skills, or information common to my trade or profession".

Mrs Huesca de Crean last attended for work on 10 August 2011. She left for a holiday in Malta that night. She had started work for CLS in 2005. In about late April or early May 2011 she was promoted to the position of Logistics Centre Manager ("LCM") at the site in Hinckley, Leicestershire operated by CLS. The terms of her employment were set out in a letter dated 15 July 2011. She had been paid just over £50,000 in her previous position, and was due to receive a pay rise of about 10% in her new position with CLS. Her counsel has referred to her as a middle manager.

Mrs Huesca de Crean is in her mid 30s, married and the mother of two young children. She is the primary provider of income for her family. She is an accountant by her profession and it was in that capacity that she was employed in 2005 to work with the then Business Manager of CLS. She then became the Account Manager in CLS's Land Rover commercial team, and from that position was promoted to Logistics Centre Manager for the Hinckley site. In that capacity Ms Brown states that she was responsible for the management of all aspects of operations to ensure service levels and financial targets were achieved; for all employee related activities at the facility; preparation of budget and maintenance objectives and developing the facility in accordance with CLS's objectives. In practice this was all operational aspects of the LSA. This involved day to day management of 124 employees engaged in providing services to Quinton Hazell Automotive Limited ("QH"). The inventory has a value of some $15m and there were over 1.6m outbound lines for QH by the time she made the witness statement in September. The manager to whom she reported was Dean Ellis, the General Operations Manager. In addition to her usual operational role, Ms Brown states that Mrs Huesca de Crean was involved with strategic commercial issues relating to the LSA.

Mrs Huesca de Crean sets out in her witness statement, and it is not disputed, that her competency assessments throughout her employment with CLS had been at the highest level, such that only about 5% of the employees of Caterpillar Inc achieve the rating she achieved. Her manager's assessment while she was a commercial Manager included that she "interacts openly and honestly in challenging situations. [She] consistently acts as a role model for Caterpillar Values in Action based on Integrity, Teamwork, Excellence and Commitment… [she] models openness and honesty, generates trust by showing personal humility". She states that her integrity is a matter of great importance to her. She states that Ms Brown never came to the Hinckley site in the time when she was LCM, and that Ms Brown was not her line manager, and had little insight into her role at Hinckley.

She also states that the knowledge of the automotive and afterparts trade she has gained over 16 years is part of her set of skills and know how which she uses to earn her living.

By the letter dated 10 August 2011 in which she gave notice of her resignation, she offered to work out her period of one month's notice in accordance with her contract. She was not required to work out her notice. On 4 August 2011 she had been interviewed for a new job which had been publicly advertised. She was interviewed again on 9 August and late in the evening of 10 August she was offered the job. Ms Brown exhibited a copy of QH's advertisement for the job from The Sunday Times placed by QH.

The new job was as General Manager Hinckley for QH. QH is a supplier of automotive parts and an important customer of CLS, in particular at the Hinckley site. There is a ten year agreement in writing between CLS and QH dated 5 May 2006. It is known as the Logistics Services Agreement ("the LSA"). It is for the provision by CLS to QH of logistics services at the Hinckley site. QH has premises of its own at the same site. Its parent company is Klarius Group Ltd ("Klarius"), which also carries on business in the supply of automotive parts.

On 30 August 2011, CLS's solicitors wrote to Mrs Huesca de Crean a seven page letter notifying her of its intention to commence legal proceedings against her. They contended that:

"14 As you must realise, your appointment by Klarius appears to be an attempt by it to secure the same confidential information which CLS has refused to grant Klarius voluntarily…21 … In effect you will be carrying out a 'mirror image' role in relation to the LSA and or Klarius/CLS relationship and will have put yourself on the opposite side of many of the issues you have previously been dealing with for CLS, presumably even in relation to commercial negotiations…

22 By accepting this role you have already put yourself in a position which directly conflicts with your fiduciary duties to CLS, in that there is an extremely strong likelihood (if not an inevitability) that you will use (even if not disclose) CLS's confidential information to Klarius/[QH]".

The letter thus contains serious allegations of wrongdoing amounting to dishonesty against Klarius/QH (who are not a party to these proceedings). The witness statements served for CLS contain similar allegations, both against Klarius/QH and against Mrs Huesca de Crean herself.

In that letter the Confidential Information is set out in five paragraphs. There is no reference to any document or other source in which it is said the information is set out. Instead, there are descriptions of the information, including:

"19.1 full and detailed understanding of all current and historic costs for CLS under the LSA including details of revenue and margin, warehouse lease/utilities rates, indirect material rates, transport rates, salary headcount information / systems information…
19.3 privileged legal advice received from CLS' in house legal team and external legal counsel in relation to the LSA and disputes arising out of it, having attended a legal review meeting as recently as June 2011…".

The solicitors asked Mrs Huesca de Crean to give, by 7 September, undertakings in the form of a draft order enclosed with the letter. On 7 September Mrs Huesca de Crean wrote a five page letter in response. The letter starts with a complaint of inexcusable, and extremely distressing behaviour on the part of the process server. He had served CLS's letter upon her personally at her own home in the presence of her two children (aged 8 and 11). He had said: "you could be sent to prison if the order was disobeyed". This was false: there was no order at that stage. Mrs Huesca de Crean's letter then sets out in detail points on which she agrees with CLS and other points which she does not accept.

Mrs Huesca de Crean wrote:

"I absolutely refute the suggestion that my appointment with [QH] is an attempt to obtain confidential information and my appointment has followed a competitive selection process and I have been appointed on the merits of my experience and capability. As I have said, the role of General Manager is much wider than the Logistics Centre Manager and represents a real promotion for me. The idea that I took the job to enable [QH]/Klarius to obtain financial information is utterly ludicrous".

She accepted that some information may be confidential to CLS, "including the contents of internal and external legal advice". She accepted that she had been exposed to "some of the details referred to in paras 19.1 to 19.5". She wrote that she had no intention of disclosing such information and undertook not to do so. She did not agree that that much of the data referred to by CLS would be easily or unavoidably retained (that is memorised) by her, particularly given her very limited time in the role with CLS. She added:

"The General Manager role I will be undertaking with [QH] is wide ranging and includes the management of customers and over 200 suppliers, CLS being just one of these. I entirely refute that even if I had any fiduciary duty to CLS, I have breached such duty … my role … will not involve me carrying out a 'mirror image' role. Dealing with the LSA is something that is only a minor part of the role and there is not a strong likelihood, never mind an inevitability, that I will use or disclose confidential information in the role".

Mrs Huesca de Crean remarked on the aggressive tone of CLS's letter, and that it had been written nearly three weeks after she had handed in her notice, and without any discussion before hand. She referred to the uncertainty of her position while she was with CLS "in the light of the pending sale of the company to owners as yet unknown". She wrote that the undertakings sought were so wide ranging that they would prejudice the job she had accepted with QH and that "the consequences for my career and more so the financial interests of my family are unthinkable". She wrote that she did not agree that court proceedings were necessary, because she is "a wholly trustworthy person and … CLS should accept my written undertakings". She set these out as follows:

"1. I will not breach the terms of the Confidentiality Agreement.
2. I will not be involved (directly or indirectly) on behalf of Klarius or [QH] with agreeing the current ongoing assumptions review pursuant to the LSA; and
3. I will not be involved within the next 12 months (directly or indirectly) in any formal dispute resolution (including any litigation or arbitration) on behalf of Klarius or [QH] against CLS".

It is to be noted that neither in the Confidentiality Agreement nor in the letter of 30 August (nor at any time since) has CLS specified any period during which any restriction is to be limited, whether by contract, by undertaking or injunction. The orders it seeks are unlimited in time.

On 12 September CLS issued and served the claim form, together with an Application Notice, and two witness statements, one from Marianne Brown, and one from William Reynolds (the latter relevant only to the ability of CLS to meet any cross undertaking in damages). Ms Brown describes herself as the "Commercial Director EAME" of CLS, with responsibility for the commercial activities of over 15 of CLS EAME clients, including four UK clients. The covering letter referred to another "Confidential Witness Statement" of Ms Brown, to be made available to Mrs Huesca de Crean on terms to be agreed.

By the Application Notice CLS sought relief in four parts, until trial further order: (1) an injunction restraining Mrs Huesca de Crean from using or disclosing confidential information; (2) an order that Mrs Huesca de Crean be prohibited, during the course of her employment with QH from undertaking any task or having any dealing in relation to the LSA or the commercial relationship between CLS, on the one hand, and QH and Klarius, on the other; (3) delivery up of all documents in whatever form in Mrs Huesca de Crean's possession which belong to CLS or contain confidential information belonging to CLS; (4) ancillary relief, most notably in the form of an affidavit verifying compliance with the delivery up order and requiring Mrs Huesca de Crean to give certain information as to any use or disclosure of the Confidential Information which she had made, and as to any documents belonging to CLS which she retained.

On 16 September 2011 when the matter came before Eder J he made a consent order on paper, that is without hearing argument. That Order contains undertakings by Mrs Huesca de Crean to run until the return date, at a date to be fixed with the court in the week commencing 10 October. There are directions for the exchange of evidence by Mrs Huesca de Crean by 26 September and a reply by CLS by 3 October. It also contained a provision that the time for service of the Particulars of Claim by CLS be extended by 28 days. The undertaking in relation to the Confidential Information is subject to provisos, including that it shall not prevent the use or disclosure of "any information which has ceased to be confidential otherwise than as a result of breach by" Mrs Huesca de Crean of her obligations of confidence. She also undertook:

"not in the course of her employment with Klarius/[QH] undertake any tasks or have any dealings (or supervise others in carrying out such task or dealings) on behalf of Klarius/[QH] in relation to the [LSA] or the commercial relationship between Klarius/[QH] including but not limited to the Prohibited Tasks".

The undertakings (and the draft of the order sought before me) contain a definition of Confidential Information in generic terms, but no list of documents or other sources which can be consulted to ascertain precisely what is or is not included – not even the list in para 19 of the letter of 30 August 2011. The definition of Confidential Information in the order of 16 September and in the order which I am asked to make reads:

"Confidential information means (without limitation) all and any confidential information required by the Respondent during her employment with [CLS] in whatever format (whether hard copy or digital) and including but not limited to processes, methods, techniques, systems, formulae, drawings, photographs, machine readable records, patterns, models, devices, compilations, customer and dealer data, internal financial information, legal opinions or advice, performance data, financial information regarding [CLS]'s costs or profit and loss, strategic corporate date, management reports or any information of whatever nature which gives [CLS] an opportunity to obtain an advantage over its competitors who do not know or use it".

The definition of Prohibited Tasks is:

"Prohibited Tasks – means any tasks carried out by the Defendant for or on behalf of Klarius or Quinton Hazell whether as employee, consultant, agent or otherwise howsoever relating to the management of the [LSA] or the commercial relationship between Klarius/Quinton Hazell and the Claimant and including (but not limited to) dealing with matters relating to the performance of the Claimant under the [LSA], the legal position in relation to any dispute between the Claimant and Klarius/Quinton Hazell regarding the [LSA], any negotiation relating to an assumptions review between the Applicant and Klarius/Quinton Hazell pursuant to the [LSA], any claim for breach of contract by Klarius/ Quinton Hazell against the Clamant, the review and/or approval of any invoices submitted by CLS pursuant to the [LSA]and any negotiations regarding he payment of CLS's charges, the negotiation of revised commercial terms between the parties and/or the commercial strategy for Klarius/Quinton Hazell in relation to its dealings with the Claimant."

It is a notable feature about the form of order which CLS is seeking that it does not specify what information is alleged to be confidential. It is a second notable feature that it seeks an order preventing Mrs Huesca de Crean from carrying out work for her new employer referred to as the Prohibited Tasks (what Mr Bloch has referred to as a "barring order") in circumstances where there is no contractual basis for doing so. A third notable feature is that there is no time limit specified for either prohibition.

The legal basis for making such a barring order is said to be Prince Jefri Bolkiah v. KPMG [1999] 2 AC 222, although it is accepted that no such order has ever been made on the application of an employer in proceedings against an employee such as Mrs Huesca de Crean. The requirement that confidential information be specified will be discussed below. But that requirement is relevant both to the form of any injunction prohibiting misuse or disclosure of confidential information, as well as to any barring order. It will be necessary to return to consider the Bolkiah case in more detail, but the relationship between the two points appears from the speech of Lord Millett at page 235D where he said, in relation to the barring order sought and made in that case against KPMG:

"… It is incumbent on a plaintiff who seeks to restrain his former solicitor from acting in a matter for another client to establish (1) that the solicitor is in possession of information which is confidential to him and to the disclosure of which he has not consented and (2) that the information is or maybe relevant to the new matter in which the interests of the other client is or may be adverse to his own".

So in order to invoke the jurisdiction recognised in Bolkiah, it is necessary for CLS in this case to establish that Mrs Huesca de Crean is in possession of information which is confidential to it, and to the disclosure of which it had not consented, and that that information is sufficiently relevant to the Prohibited Tasks.

As can be seen both the form of the injunction and the form of the Confidentiality Agreement refer to "competitors" and not to customers. QH is not a competitor of LCS, it is a customer. The Draft Order could be amended to refer to QH in addition to or in substitution for competitors. It could also be amended to specify the confidential information.

I raised this point with Mr Bloch at the start of the hearing and the next day he produced the particulars of the Confidential Information, as follows (subject to corrections to the numbering):

"1. Information concerning the current and historic costs for the CLS under the LSA including, details of, a) warehouse/lease utilities rates and space costs; b) indirect material rates; c) transport rates; d) salary headcount information\systems information.

2. Information concerning CLS's current and historic revenue, pricing and profit margins the LSA.

3. Information regarding the financial and operational performance of CLS under the LSA.

4. Privileged legal advice received from CLS in house legal team and external legal counsel in relation to the LSA and disputes arrising out of it .

5. Details of CLS's position in commercial and legal strategy in relation to the Assumptions review carried out in 2011.

6. Details of costs revenue and margin for CLS in relation to the ongoing additional or strategic projects posed by CLS to Klarius in relation to its logistics services including in relation to the proposal for integration of Klarius\QH's European network and the potential combination of Cheadle\Hinckley under the LSA.

7. Information concerning inventory density detail.

8. Information as to operational impact of inventory changes and the impact of inventory changes on CLS's profit margin.

9. The contents of the following documents belonging to CLS:

a) the Defendant's Smart Goals document;

b) Multi BERTQH LSA ASSUMP 20110725;

c) BERTROM Klarius B3 (Cheadle to Desford NBV (V1);

d) PIA QUINTON HAZELL 2011 0511;

e) Soft Close acct JUL 11 day 3- DE;

f) Klarius Delivery Data Costed file (exhaust);

g) All board packs of CLS;

h) All documents which were saved onto the Defendant's laptop and\or Hard Disk Drive and are listed in Project Tiger Final Appendix 1".

The document containing these particulars also gave references to passages in the evidence where this information is identified. But this was the first occasion on which those diverse references were collected into one place. Mr Pepperall saw this document for the first time at the end of his submissions. After a momentary look at the document he stated that Mrs Huesca de Crean objected to items 7 and 8 but accepted that the other items referred to information which she still recognises, and that she accepts they include confidential information.

THE LAW ON RESTRAINTS ON FORMER EMPLOYEES

The general law relating to breach of confidence binds an employee as much as it binds any other person. But ascertaining what is or is not confidential information presents particular difficulties in the law of employment. Similarly, the general law of freedom of contract applies to employment contracts, but in the case of employment contracts provisions may be void as in restraint of trade and contrary to public policy.

In the law of confidentiality, as in the law of employment contracts, there are issues of public policy at stake. The doctrine of restraint of trade reflects a number of public interests. These include freedom of competition, and freedom of expression of ideas and information of economic value to the public (subject to the laws relating to intellectual property and confidentiality). There is a public policy in the "right of any person to use and to exploit for the purpose of earning his living all the skill, experience and knowledge which he has at his disposal, including skill, experience and knowledge which he has acquired in the course of previous periods of employment" (Faccenda Chicken Ltd v Fowler [1987] 1 Ch 117, 128D). Further, as Simon Brown LJ said in Mont v Mills [1993] IRLR 173 at p 177:

"I cannot accept that the law's only concern underlying the doctrine of restraint of trade is to ensure that employees can earn their living …. If this were so, such restraints could always be purchased outright and yet the cases clearly show that they cannot be. And in any event, public policy clearly has regard too to the public interest in competition and in the proper use of an employee's skills."

In the light of these public policies, there are restrictions as to what an employer can protect, whether by the general law of confidence or by the law of contract. These restrictions are most comprehensively set out by the Court of Appeal in Faccenda Chicken Ltd v Fowler [1987] 1 Ch 117. In that case, (as appears from p130D) the cause of action relied on was breaches of implied terms of the contracts of employment that the nine defendants (former employees of the plaintiff) would faithfully serve the plaintiffs and

"would not use confidential information and/or trade secrets gained by them and each of them whilst in the plaintiffs' employment to the disadvantage or detriment of the plaintiffs, whether during the currency of such employment or after its cessation."

In that case the information claimed to be confidential was listed under five headings: (1) the names and addresses of customers; (2) the most convenient routes to be taken to reach the individual customers; (3) the usual requirements of individual customers, both as to quantity and quality; (4) the days of the week and the time of day when deliveries were usually made to individual customers; (5) the prices charged to individual customers. It was submitted on behalf of the plaintiffs that this sales information could be regarded as a package which, taken as a whole, constituted "confidential information" which could not be used to the detriment of the plaintiffs. In addition, however, particular attention was directed to the prices charged to individual customers, because, it was submitted, information as to prices was itself "confidential information," quite apart from the fact that such information formed a constituent element of the package of sales information. The plaintiff failed both at first instance and on appeal.

The Court set out principles of law (1) to (5) at p135F ff of Faccenda:

[Principle] (1) Where the parties are, or have been, linked by a contract of employment, the obligations of the employee are to be determined by the contract between him and his employer: …

[Principle] (2) In the absence of any express term, the obligations of the employee in respect of the use and disclosure of information are the subject of implied terms.

[Principle] (3) While the employee remains in the employment of the employer the obligations are included in the implied term which imposes a duty of good faith or fidelity on the employee… it may be noted: (a) that the extent of the duty of good faith will vary according to the nature of the contract; (b) that the duty of good faith will be broken if an employee makes or copies a list of the customers of the employer for use after his employment ends or deliberately memorises such a list, even though, except in special circumstances, there is no general restriction on an ex-employee canvassing or doing business with customers of his former employer… .

[Principle] (4) The implied term which imposes an obligation on the employee as to his conduct after the determination of the employment is more restricted in its scope than that which imposes a general duty of good faith. It is clear that the obligation not to use or disclose information may cover secret processes of manufacture such as chemical formulae.., or designs or special methods of construction…, and other information which is of a sufficiently high degree of confidentiality as to amount to a trade secret. The obligation does not extend, however, to cover all information which is given to or acquired by the employee while in his employment, and in particular may not cover information which is only "confidential" in the sense that an unauthorised disclosure of such information to a third party while the employment subsisted would be a clear breach of the duty of good faith. This distinction is clearly set out in the judgment of Cross J. in Printers & Finishers Ltd. v. Holloway [1965] 1 WLR 1; [1965] RPC 239 where he had to consider whether an ex-employee should be restrained by injunction from making use of his recollection of the contents of certain written printing instructions which had been made available to him when he was working in his former employers' flock printing factory. In his judgment, delivered on 29 April 1964 (not reported on this point in [1965] 1 WLR. 1), he said [1965] RPC 239, 253:

"In this connection one must bear in mind that not all information which is given to a servant in confidence and which it would be a breach of his duty for him to disclose to another person during his employment is a trade secret which he can be prevented from using for his own advantage after the employment is over, even though he has entered into no express covenant with regard to the matter in hand. For example, the printing instructions were handed to Holloway to be used by him during his employment exclusively for the plaintiffs' benefit. It would have been a breach of duty on his part to divulge any of the contents to a stranger while he was employed, but many of these instructions are not really 'trade secrets' at all. Holloway was not, indeed, entitled to take a copy of the instructions away with him; but in so far as the instructions cannot be called 'trade secrets' and he carried them in his head, he is entitled to use them for his own benefit or the benefit of any future employer."…

[Principle] (5) In order to determine whether any particular item of information falls within the implied term so as to prevent its use or disclosure by an employee after his employment has ceased, it is necessary to consider all the circumstances of the case. We are satisfied that the following matters are among those to which attention must be paid:

(a) The nature of the employment. Thus employment in a capacity where "confidential" material is habitually handled may impose a high obligation of confidentiality because the employee can be expected to realise its sensitive nature to a greater extent than if he were employed in a capacity where such material reaches him only occasionally or incidentally.

(b) The nature of the information itself. In our judgment the information will only be protected if it can properly be classed as a trade secret or as material which, while not properly to be described as a trade secret, is in all the circumstances of such a highly confidential nature as to require the same protection as a trade secret eo nomine. The restrictive covenant cases demonstrate that a covenant will not be upheld on the basis of the status of the information which might be disclosed by the former employee if he is not restrained, unless it can be regarded as a trade secret or the equivalent of a trade secret:…

We must therefore express our respectful disagreement with the passage in Goulding J's judgment at [1984] ICR 589, 599E, where he suggested that an employer can protect the use of information in his second category ['information which the servant must treat as confidential … but which once learnt necessarily remains in the servant's head and becomes part of his own skill and knowledge': [1987] Ch p133G], even though it does not include either a trade secret or its equivalent, by means of a restrictive covenant. As Lord Parker of Waddington made clear in Herbert Morris Ltd. v. Saxelby [1916] 1 AC 688, 709, …, a restrictive covenant will not be enforced unless the protection sought is reasonably necessary to protect a trade secret or to prevent some personal influence over customers being abused in order to entice them away.

In our view the circumstances in which a restrictive covenant would be appropriate and could be successfully invoked emerge very clearly from the words used by Cross J. in Printers & Finishers Ltd. v. Holloway [1965] 1 WLR 1, 6 …:

"If the managing director is right in thinking that there are features in the plaintiffs' process which can fairly be regarded as trade secrets and which their employees will inevitably carry away with them in their heads, then the proper way for the plaintiffs to protect themselves would be by exacting covenants from their employees restricting their field of activity after they have left their employment, not by asking the court to extend the general equitable doctrine to prevent breaking confidence beyond all reasonable bounds."

It is clearly impossible to provide a list of matters which will qualify as trade secrets or their equivalent. Secret processes of manufacture provide obvious examples, but innumerable other pieces of information are capable of being trade secrets, though the secrecy of some information may be only short-lived. In addition, the fact that the circulation of certain information is restricted to a limited number of individuals may throw light on the status of the information and its degree of confidentiality.

(c) Whether the employer impressed on the employee the confidentiality of the information. Thus, though an employer cannot prevent the use or disclosure merely by telling the employee that certain information is confidential, the attitude of the employer towards the information provides evidence which may assist in determining whether or not the information can properly be regarded as a trade secret….

(d) Whether the relevant information can be easily isolated from other information which the employee is free to use or disclose. In Printers & Finishers Ltd. v. Holloway [1965] RPC 239, Cross J considered the protection which might be afforded to information which had been memorised by an ex-employee. He put on one side the memorising of a formula or a list of customers or what had been said (obviously in confidence) at a particular meeting, and continued, at p. 256:

"The employee might well not realise that the feature or expedient in question was in fact peculiar to his late employer's process and factory; but even if he did, such knowledge is not readily separable from his general knowledge of the flock printing process and his acquired skill in manipulating a flock printing plant, and I do not think that any man of average intelligence and honesty would think that there was anything improper in his putting his memory of particular features of his late employer's plant at the disposal of his new employer."

For our part we would not regard the separability of the information in question as being conclusive, but the fact that the alleged "confidential" information is part of a package and that the remainder of the package is not confidential is likely to throw light on whether the information in question is really a trade secret".

The court's account of principle (5)(b) has been the subject of criticism. In Chitty on Contracts 30^th ed para 16-109 it is stated that "as a matter of public policy it is difficult to see why an employer should not be free by agreement to restrain the disclosure of confidential information". It is not clear which of the relevant public policies the editors of Chitty are referring to here. The footnotes cite Balston v Headline Filters Ltd [1987] FSR 330, at pp 347-8 where Scott J said:

"An express restrictive covenant would not be needed to protect third category trade secrets; the implied term would do that. Neill LJ must, therefore, in my view, have been contemplating the protection by an express restrictive covenant of confidential information in respect of which an obligation against use or disclosure after the determination of the employment could not be implied. Moreover, the criteria that determine whether or not an express covenant in a contract of employment restricting the use or disclosure of particular information after the determination of the employment is enforceable are very different from the criteria that determine whether or not an obligation restricting the use or disclosure of that information can be implied into the contract. The implied obligation will always, I think, be unlimited in time and probably in area as well. It is difficult to construct a case in which an obligation could be implied that restrained disclosure for, say, one year only or restrained use in, say the Home Counties. If the information sought to be protected is not fit for protection, unlimited by time or area, it is very difficult to see how protection can be supplied by an implied term. On the other hand, an express covenant against use or disclosure is very likely to be limited both as to time and as to area. In short, express restricted covenant and implied term raise to my mind quite different considerations and I decline to read the Faccenda judgment as holding that confidential information that could not be protected by an implied term ipso facto could not be protected by a suitably limited express covenant.

The importance of the Faccenda decision for the purposes of the present case is, in my opinion, first, that it lays the obligations against use or disclosure of confidential information that can be placed on the shoulders of an employee after the determination of his employment firmly in contract. If there is an express covenant in the contract of employment, the enforceability of the covenant will depend on well known restraint of trade considerations. In the absence of an express covenant, the obligations can, in appropriate cases be implied into the contract of employment. But if there is no enforceable express covenant and the alleged covenant cannot be implied into the contract, there is an end of it."

In Lansing Linde Ltd v Kerr [1991] 1 WLR 251 at p259E-G and at 260B-D Staughton LJ said:

"One starts with Herbert Morris Ltd v Saxelby [1916] 1 AC 688 and the well known passage in the speech of Lord Parker of Waddington, at page 709:

'Wherever such covenants have been upheld it has been on the ground, not that the servant or apprentice would, by reason of his employment or training, obtain the skill and knowledge necessary to equip him as a possible competitor in the trade, but that he might obtain such personal knowledge of and influence over the customers of his employer, or such an acquaintance with his employer's trade secrets as would enable him, if competition were allowed, to take advantage of his employer's trade connection or utilise information confidentially obtained.'

That passage draws a distinction between general skill and knowledge which every employee can take with him when he leaves, and secret or confidential information (possibly coupled with influence) which he may be restrained from using.

… what are trade secrets, and how do they differ (if at all) from confidential information? Mr. Poulton suggested that a trade secret is information which, if disclosed to a competitor, would be liable to cause real (or significant) harm to the owner of the secret. I would add first, that it must be information used in a trade or business, and secondly that the owner must limit the dissemination of it or at least not encourage or permit widespread publication.

That is my preferred view of the meaning of trade secret in this context. It can thus include not only secret formulae for the manufacture of products but also, in an appropriate case, the names of customers and the goods which they buy. But some may say that not all such information is a trade secret in ordinary parlance. If that view be adopted, the class of information which can justify a restriction is wider, and extends to some confidential information which would not ordinarily be called a trade secret."

The debate about what is or is not a trade secret, or what is or is not confidential information which an employer may protect, is not a debate about the meaning of words (as would be the case if the words were in a statute). It is a debate as to what words to use in order to give effect to the competing public interests that are relevant where a former employer is asking for an injunction to restrain a former employee from working for a new employer, or for himself.

Principle (5)(c) is supported by remarks made in Campbell v Frisbee [2002] EWCA 1374; [2003] ICR 141 where Lord Phillips MR said at para 22:

"…it is arguable that a duty of confidentiality that has been expressly assumed under contract carries more weight, when balanced against the restriction of the right of freedom of expression, than a duty of confidentiality that is not buttressed by express agreement-contrast the observations of Walker LJ in London Regional Transport v Mayor of London [2001] EWCA Civ 1491 at [46] with those of Lord Donaldson of Lymington MR in Attorney General v Barker [1990] 3 All ER 257, 260."

In A-G v Barker [1990] 3 All ER 257 the claim was for an injunction to enforce an express covenant in a contract of employment by a member of the Royal Household by which he undertook (amongst other things) not to publish any information concerning a member of the family which came to his knowledge during his employment. Lord Donaldson MR said at p259b:

"It is, in my judgment, very important to notice that this is not a case such as Spycatcher (see eg A-G v Guardian Newspapers Ltd (No 2) …, [1990] 1 AC 109), where the Attorney General is relying on a duty of confidentiality. His claim is based on a breach of contract, the consideration for the covenant by Mr Barker (that he would not publish matter true or false concerning his experiences in the royal household) being the agreement by those concerned to take him on the staff of the royal household and to pay him wages or a salary. It is not in principle in any way different from the case of someone who enters into a contract with a newspaper whereby the person concerned undertakes, in consideration of a money payment, not to give their story to anyone else for publication. The newspaper in those circumstances would be likely to publish, but they would not be obliged to publish. That is an exact analogy here: the royal household would be entitled to authorise publication if they wished but equally are fully entitled under the contract to refuse to allow it. …Exactly the same considerations would apply if the employer had been an ordinary citizen. It is a simple case of someone who has entered into a negative covenant for a consideration where the covenant is not limited territorially and is not limited in time. As Nourse LJ pointed out in argument, in such circumstances the courts habitually enforce the covenant provided only that the covenant itself cannot be attacked for obscurity, illegality or on public policy grounds such as that it is in restraint of trade." (emphasis added)

In my judgment I am bound by the decisions of the Court of Appeal in Faccenda and Barker. But if it is open to me to express a view, I would say that the extent to which an employer is free by agreement to restrain the use or disclosure by a former employee of confidential information will depend upon the nature of the information in question (in addition, of course, to matters such as the period and territory in which the restraint is to apply).

There is a further principle relevant to the present case, not mentioned in Faccenda, but which is referred to by Lord Donaldson MR in Barker as 'obscurity'. Principle (6) is that where employers are seeking to protect confidential information by an injunction it is "essential that they should make it absolutely clear what it is that they are seeking to protect": Thomas v Mold [1968] 2 QB 913, 922F. This principle is referred to in numerous other cases. In the cases cited to me it appears in United Pan-Europe v Deutsche Bank [2000] 2 BCLC 461, 479h, at para 31 where Morritt LJ refers to it citing Ocular Sciences Ltd v Aspect Vision Care Ltd [1997] RPC 289 at p360.

In United Pan-Europe the detail with which the statement of case is pleaded is fully set out at para 29 of the judgment of Morritt LJ. The information claimed to be confidential was identified by reference to specific documents in which it was said to be recorded. Morritt LJ held at para 33 that that was a sufficient description because the defendant in that case had "each of the documents in its possession and can see for itself what [the claimant] is referring to and could, if it had wished to do so, itself have put the documents in evidence on a confidential basis".

In Lock International Plc v Beswick [1989] 1 WLR 1268 at p 1281A-C Hoffmann J said:

"Some employers seem to regard competition from former employees as presumptive evidence of dishonesty. Many have great difficulty in understanding the distinction between genuine trade secrets and skill and knowledge which the employee may take away with him. In cases in which the plaintiff alleges misuse of trade secrets or confidential information concerning a manufacturing process, a lack of particularity about the precise nature of the trade secrets is usually a symptom of an attempt to prevent the employee from making legitimate use of the knowledge and skills gained in the plaintiff's service. That symptom is particularly evident in this case. Judges dealing with ex parte applications are usually also at a disadvantage in dealing with alleged confidential knowledge of technical processes described in technical language, such as the electric circuitry in this case. It may look like magic but turn out merely to embody a principle discovered by Faraday or Ampere."

There is a further relevant principle (7), that any injunction should not normally extend beyond the period during which the employer's information remains confidential, or, which may be the same thing, beyond the period for which any unfair advantage may be expected to continue (that is an unfair advantage either to the employee, or, indirectly, to the new employer). See Roger Bullivant Ltd v Ellis [1987] ICR 464 at p 477G. However, for reasons given by Scott J in the passage from Balston cited above, a limit to a restraint, whether by time or by territory, cannot be the subject of an implied term. Such a limit can in practice only be imposed with the certainty required by principle (6) if the limit is specified in an express term.

Finally there is the principle (8) of proportionality, namely that any relief granted by the court must be no more than is proportionate to the threat to the legitimate interests of the former employer. This was explained by Hoffmann J in Lock at p 1281C-D as follows:

"Even in cases in which the plaintiff has strong evidence that an employee has taken what is undoubtedly specific confidential information, such as a list of customers, the court must employ a graduated response. To borrow a useful concept from the jurisprudence of the European Community, there must be proportionality between the perceived threat to the plaintiff's rights and the remedy granted. … People whose commercial morality allows them to take a list of the customers with whom they were in contact while employed will not necessarily disobey an order of the court requiring them to deliver it up..."

The above principles have been recognised in the law of employment for many decades. So too has their effect, namely that in practice the only way for an employer to protect the information which he wishes to protect is, in many cases, by including a restrictive covenant in the contract of employment. As Lord Denning MR explained in Littlewoods Organisation Limited v Harris [1977] 1 WLR 1472 at page 1479:

"It is thus established that an employer can stipulate for protection against having his confidential information passed on to a rival in trade but experience has shown that it is not satisfactory to have simply a covenant against disclosing confidential information. The reason is because it is so difficult to draw the line between information which is confidential and information which is not and it is very difficult to prove a breach when the information is of such a character that a servant can carry it away in his head. The difficulties are such that the only practicable solution is to take a covenant from the servant by which he is not to go to work for a rival in trade. Such a covenant may well be held to be reasonable if limited to a short period. That appears from the judgment of Mr Justice Cross in Printers & Finishers Limited v Holloway [1965] 1 WLR 1 at page 6:

"Although the law will not enforce a covenant directed against competition by an ex-employee, it will enforce a covenant reasonably necessary to protect trade secrets. If the managing director is right in thinking that there are features in the plaintiffs process which can fairly be regarded as trade secrets and which their employees will inevitably carry away with them in their heads, then the proper way for the plaintiffs to protect themselves would be by exacting covenants from their employees restricting their field of activity after they have left their employment, not by asking the court to extend the general equitable doctrine to prevent breaking confidence beyond all reasonable bounds."

Mr Bloch in his skeleton argument referred to Faccenda and Roger Bullivant. The principles they lay down are not controversial. He also referred to Dyson v Strutt [2005] EWHC 2814, which includes citation of a number of similar authorities. But he did not attempt to reconcile these well known cases with the very different principles applied in Bolkiah, which is the main basis of this application. He referred to Dyson for the description at para 63 of the difficulties of an employee in maintaining confidential information of his former employer when working for a new employer. Mr Bloch submitted that principles applied in Bolkiah provide to employers a solution to their problem. But it is a solution which has not been mentioned in any decided employment case.

Mr Bloch submits that, notwithstanding the line of cases referred to above, the court nevertheless has power to intervene against former employees on the basis that they become fiduciaries in respect of the former employer's confidential information. He submits that Bolkiah is authority that the court may make a barring injunction against a former employee, that is an injunction barring an employee from carrying out specified work for a new employer unless the employee can satisfy the court that, by means of Chinese walls, or otherwise, all reasonable measures have been taken to ensure that no disclosure will occur (that is an injunction in the form of para 5 of the draft order in this case).

Mr Pepperall submits that it is clear from the authorities (and from all the well known text books on the subject) that no barring order has been, or can be, made against the former employee of a business such as CLS. He submits that the ratio of Bolkiah is that it was concerned with an accountant acting in a role analogous to that of solicitors in the administration of justice: see p236G and Koch Shipping Inc v Richards Butler [2002] EWCA Civ 1280; [2003] PNLR 11 p 2555 at para 61 and Meat Corporation of Namibia Ltd v Dawn Meats (UK) Ltd [2011] EWHC 474 (Ch) para 31. He also noted in passing that in Koch the Court of Appeal had held that the undertaking given by the single individual solicitor who knew the confidential information in that case gave to the claimants in that case all the protection against inadvertent misuse of confidential information that they were entitled to: paras 48 and 62. The Court of Appeal accordingly discharged the injunction.

The principle in Bolkiah arises out of the fact that, after the retainer is ended, a solicitor nevertheless remains under a continuing duty to preserve the confidentiality of information imparted during the fiduciary relationship that existed during the existence of the retainer: p235C-D. The ratio of that decision can be taken from the speech of Lord Millett at p237F:

"Once the former client has established that the defendant firm is in possession of information which was imparted in confidence and that the firm is proposing to act for another party with an interest adverse to his in a matter to which the information is or may be relevant, the evidential burden shifts to the defendant firm to show that even so there is no risk that the information will come into the possession of those now acting for the other party. There is no rule of law that Chinese Walls or other arrangements of a similar kind are insufficient to eliminate the risk. But the starting point must be that, unless special measures are taken, information moves within a firm. In MacDonald Estates v. Martin 77 DLR (4th) 249, Sopinka J said at p269 that the court should restrain the firm from acting for the second client "unless satisfied on the basis of clear and convincing evidence that all reasonable measures have been taken to ensure that no disclosure will occur." With the substitution of the word "effective" for the words "all reasonable" I would respectfully adopt that formulation."

Mr Bloch makes the submission that this case provides the answer to the difficulties of employers notwithstanding that the House of Lords made no reference to any of the employment law cases, and notwithstanding that Bolkiah was concerned with conflicts of duty that had arisen in the context of litigation, where the defendant firm of accountants had performed litigation support services such that the House of Lords considered that there should be applied to them the principles developed to apply to solicitors.

Mr Bloch also relies on the statement of the principle in United Pan-Europe. This is not an employment case either: the defendant was a multinational bank. But the case is one step less far removed from employment law in that it at least did not involve the critical feature in Bolkiah, namely the public policy to protect the administration of justice. It is apparent from United Pan-Europe at para 34 that the principle applied in that case is the principle commonly supported by citation from Erlanger v The New Sombrero Phosphate Company (1877-78) LR 3 App Cas 1218 at p1229-1230 where Lord Penzance said:

"The principles of equity to which I refer have been illustrated in a variety of relations, none of them perhaps precisely similar to that of the present parties, but all resting on the same basis, and one which is strictly applicable to the present case. The relations of principal and agent, trustee and cestui que trust, parent and child, guardian and ward, priest and penitent, all furnish instances in which the Courts of Equity have given protection and relief against the pressure of unfair advantage resulting from the relation and mutual position of the parties, whether in matters of contract or gift; and this relation and position of unfair advantage once made apparent, the Courts have always cast upon him who holds that position, the burden of shewing that he has not used it to his own benefit."

Who is or is not a fiduciary is a question discussed in cases such as those cited Snell's Equity 32^nd edn ch 7. For present purposes it is enough to say that I accept that an employee may be a fiduciary in respect of specific property or confidential information entrusted to her care, even if her level of responsibility in the business is at the most junior level. This step in the argument for CLS is a strong one. I would also accept that there may be cases where an employee is in a relationship with her employer which is analogous to that of a trustee to a beneficiary, a parent to a child, or a solicitor to her client. But that is not the normal relationship between an employee and employer in the business context which was under consideration in all the employment cases referred to above (except Barker which was a case of domestic employment). In the normal employment relationship the balance of power is the opposite of that referred to in the examples given in Erlanger: it is the employer which is the dominant party.

So if law relating to fiduciaries applies to former employees of companies such as CLS, the relevance of it has been overlooked in all the employment law cases cited above. It is not a new principle first recognised in Bolkiah.

EXTENSIONS OF TIME FOR SERVICE OF PARTICULARS OF CLAIM

It is necessary to start with the CPR. CPR Part 7.4 (1) provides that:

"Particulars of Claim must (a) be contained in or served with the claim forms; or (b)… be served on the defendant by the claimant within 14 days of the service of the claim form".

Since the service of the claim form in the present case had been effected on 12 September, the time for service of the Particulars of Claim would have been on 28 September (in accordance with the Part 7.4(1) and Part 6.14), and it was 26 October in accordance with the extension of time granted in the order of 16 September. No Particulars of Claim had been served by the time of the hearing. Following the circulation of this judgment in draft on 21 November 2011, Particulars of Claim were served on 23 November. I was told at the hearing that a second extension of time had been sought by CLS and agreed by Mrs Huesca de Crean, but not by the court. In a witness statement dated 28 November 2011 Mr Simpson exhibited an exchange of e-mails dated 29 September from CLS's side and 4 October from the Defendant's, in which CLS's proposal of an extension of time until 23 November was agreed in writing. Nevertheless, the draft of the order in the form in which it was at the hearing before me also sought an extension of time for service of the Particulars of Claim until 23 November 2011. The reason why these extensions of time have been sought was not explained in the evidence before me at the hearing and was not been explained to me orally at the hearing, save that Mr Bloch submitted that it was in accordance with professional practice in such cases.

By CPR Part 15.4 (1) the general rule is that the period for filing a defence is 14 days after the Particulars of Claim. By CPR Part 15.5 it is provided that:

"(1) The defendant and claimant may agree that the period for filing a defence specified in rule 15.4 shall be extended by up to 28 days (2) where the defendant and CLS agree to extend the period for filing defence, the defendant must notify the court in writing".

If the timetable provided by the CPR had been followed by CLS in this action these proceedings could have been ready for trial on the date which was ultimately fixed for the return date namely 9 November 2011, or so nearly ready that a speedy trial could have been ordered within the next few weeks.

If Particulars of Claim had been served, the attention of those representing CLS would have had to be directed to defining the Confidential Information in a list such as was provided to me on the second day of the hearing. Their attention would also have had to be directed to the precise allegations of impropriety that are being advanced against Mrs Huesca de Crean, and for that matter Klarius/QH. The allegations appear to me to amount to procuring a breach of confidence or contract on the part of Klarius/QH and (and as Edmund Davies LJ suggested in John Zink Co Ltd v Wilkinson [1973] FSR1 at p12) to criminal conspiracy on the part of Klarius/QH and Mrs Huesca de Crean, although these are not words actually used by CLS or Ms Brown.

It has long been established that it may be an oppression and harassment of the former employee, and an abuse of the process of the court, in a claim against a former employee, if an employer does not specify in a statement of claim allegations such as these, and do so as soon as possible upon the issue or proceedings: see John Zink Co Ltd v Wilkinson [1973] FSR1 pp10-12 and [1974] FSR 401, 409-410. I note that in United Pan-Europe the particulars of claim were served on 11 November 1999 and the defence in January 2000 (see para 2 of the judgments of Jacob J and Morritt LJ).

The position is much clearer under the CPR 7.4, because it is mandatory (see the word 'must' and para 55 above), although the CPR Part 3.1(2(a) permits the court to grant an extension of the time specified in Part 7.4(2). When I circulated this judgment in draft I invited Mr Bloch to make submissions as to when, in accordance with the CPR, it was permissible for there to be extensions of time for service of particulars of claim, since there had been no citation of authority on this point at the hearing (I referred in particular to see Price v Price [2003] EWCA Civ 888; [2003] 3 All ER 911 at para 27, which appeared to me to the relevant case on the facts as I then understood them). I noted that there is no evidence in any of the witness statements for CLS that could justify the grant of an extension of time in the present case, nor any mention in the witness statements of there being an application to extend time. Mrs Huesca de Crean has not complained of this: she consented to the later extension of time in October. It can be difficult for a defendant to take as stand on such an issue, because of the risk as to costs. But the court is obliged to give effect to the overriding objective regardless of the views of the parties: Part 1.2. At the hearing I had raised with counsel my concern at the extensions of time that had been given, and at the fact that there were no Particulars of Claim.

Mr Bloch took up the opportunity to make further submissions on this point. In a further written argument he relied to Robert v Momentum Services Ltd [2003] EWCA Civ 299 [2003] 1 WLR 1577. Dyson LJ (with whom all members of the court agreed) said at para 33 that when the application to the court for an extension of time was made before the expiry of the time there was no reason to import the Part 3.9(1) checklist, but that the discretion of the court

"should be exercised by simply having regard to the overriding objective of enabling the court to deal with cases justly including, so far as practicable, the matters set out in rule 1.1(1)".

Mr Simpson in his witness statement of 28 November 2011 stated, as Mr Bloch had submitted at the hearing, that in his experience it is a normal practice in claims for confidentiality injunctions for the service of Particulars of Claim to be deferred until after the application for an interim injunction has been dealt with. But no authority of any kind is cited in support of that submission, even in Mr Bloch's further written argument.

The reasons advanced by Mr Bloch as to why service of Particulars of Claim should be deferred until after the hearing of the application for the interim injunction are threefold. First it is said that the claim is usually well set out in the evidence and skeleton arguments. Second it is said that neither party welcomes the need to draft Particulars of Claim or a Defence at the same time as preparing for the application for the interim injunction. Thirdly it is said that the parties' cases may change, and thus require subsequent amendment.

I accept that in some cases there may be force in the third point. In some cases a claimant may not know particular matters that need to be pleaded until after the defendant has produced documents or statements pursuant to orders of the court: for example a claimant may not know to what confidential information a defendant has obtained access. But if that may be a good reason, it does not apply in all cases, and where it does apply, the court should be so informed in the evidence. There is no reference to that in the evidence in this case. As to the first and second reasons given, I do not accept them at all. On the contrary, the witness statements and the skeleton arguments are more likely to be focussed on, and confined to, relevant matters if the claimant has defined its case in a statement of case. And a claimant is less likely to overlook essential matters, such as the need to identify with sufficient precision the information claimed to be confidential. For reasons set out in this judgment, it is my view that that Particulars of Claim would have been of great assistance to the court in the present case if they had been available before the hearing. As will appear from this judgment, I did not find it easy to establish exactly what is the case of CLS in these proceedings. A claimant must, before applying for an interim injunction, direct attention to what he is claiming, and if he does so in Particulars of Claim, rather than in the witness statements and skeleton arguments, each of those other documents may refer to that, and so will be shorter. So there should be no additional work or costs incurred before the hearing of the application for the interim injunction. And if the matter is not resolved at the application stage, but there has been no service of particulars of claim, then the drafting of that document will be most likely to involve duplication of work that has already been put into the witness statements.

Further, Dyson LJ's reference in Robert to the overriding objective is not a formality, but a significant limitation on the discretion of the court, albeit not as significant as the criteria in Part 3.9. The overriding objective includes (Part 1.1(2)(d)) 'ensuring that [the case] is dealt with expeditiously and fairly'. And Part 1.2 requires the court to give effect to the overriding objective. Part 1.3 requires the parties to help the court to further the overriding objective. The court cannot fulfil its obligation under Part 1.2 if the parties do not provide evidence as to the need for departing from the mandatory requirements of part 7.4. As Dyson LJ pointed out at para 39, most extensions of time are for relatively short periods. The extension of time in question in the present case is from 28 September to 23 November, which in my view is not a short time for a case such as this, in circumstances where there is no explanation in the evidence. I accept that on 16 September it had not been expected that the return date would be 9 November, but unexpected delays in obtaining hearing dates are a feature of litigation.

Mr Bloch also submits that Part 2.11 provides that the parties may agree any extension, so long as they do so in writing, and that the notes to the White Book (2011) 7.6.8 support this, stating that:

"Having served the claim form the parties can agree in writing to extend the period for service of the particulars of claim (see r.2.11)".

Part 2.11 provides:

"Unless these Rules or a practice direction provides otherwise or the court orders otherwise, the time specified by a rule or by the court for a person to do any act may be varied by the written agreement of the parties".

In the note 2.11.1 there is a reference to Thomas v The Home Office [2006] EWCA Civ 1355 [2007] 1 WLR 230. In that case particulars of claim were served nearly five months late. The court held that an extension of time could be agreed between the parties in writing. The claim was struck out because there was no extension of time agreed between the parties in writing. So it is not surprising that there is no reference in the judgments to any limitation there may be on the rights of the parties to grant an extension of time in writing. But Part 1.3 plainly applies in such a case, as it does in all matters covered by the CPR.

One reason why in the case of confidentiality injunctions (or non-disclosure orders, as they are also known) the overriding objective commonly requires that the parties proceed expeditiously with the action is that such orders may have a direct effect on third parties. Mrs Huesca de Crean accepts that there is some information which she must keep confidential in any event (so I understand). But there is information which she claims to be entitled to use for the benefit of QH. And QH is entitled to her services under the contract of employment she has entered into with them, subject to what are ultimately found to be the rights of CLS. If an injunction or undertakings are in force that prohibit her from using information which, at trial, it may be found that she is entitled to use, or which prohibit her from using information for longer than the period during which the information remains confidential, then that would be a direct interference with the rights to QH, which is not a party. There are good reasons for QH not being joined (as explained below), but the court must have regard to the risk of interference with QH's rights by unnecessary prolongation of these proceedings.

I know of no practice such as Mr Bloch and Mr Simpson claim exists. And if such a practice were to grow up, it would be consistent neither with the overriding objective (which requires each case to be considered on its own facts), nor with authority, such as is referred to in para 60 above. In my judgment the course taken by CLS in not serving particulars of claim in the time laid down by Part 7.4(1), and in asking each of Eder J, Mrs Huesca de Crean, and then me to grant extensions of time for them to do so was an abuse of the process of the court in the absence of any evidence to justify these extensions of time.

The reasons I take this view are not confined to the disregard of the requirements of Part 7.4 and the overriding objective. In addition, I note that at no time has CLS specified a time limit for any of the restrictions it seeks.

I also infer that it was not the intention of CLS to bring this matter to trial, but to obtain (if it could) all the relief it seeks on an interim basis, knowing as it does how much more advantageous to claimants the law is in applications for interim relief, compared to the law relating to applications for final relief at trial. In the draft order submitted at the hearing there were no directions referring to any preparation for trial. It is true that at the hearing Mr Bloch did submit draft directions at the hearing. He describes them as directions for a speedy trial, but as I have noted, if the CPR had been observed, the case would have been nearly ready for trial by late November in any event. The proposed direction provided for a Defence by 28 November and disclosure and exchange of witness statements by 21 December. The submission of these proposed directions seemed to me to be an afterthought.

THE LAW APPLICABLE TO THE GRANT OF INTERIM INJUNCTIONS

The general principle to be applied in application for interim injunctions is to be found in the American Cyanamid case discussed in the White Book Vol 2 para 15-7 and following. There are three basic questions: (1) Is there a serious question to be tried? If the answer to that question is "Yes" then (2) Would damages be an adequate remedy for a party injured by the court's grant of, or its failure to grant, an injunction? (3) If not, where does the "balance of convenience" lie?

These guidelines are very favourable to claimants. They enable claimants to obtain injunctions without consideration of the merits of their claims. The guidelines are so favourable to claimants that defendants generally offer undertakings, as happened in this case. But because the guidelines are so favourable to claimants, there is an incentive upon claimants to abuse the process of the court, so as to avoid the need to prove their cases at trial.

The Cyanamid guidelines assume that there will be a trial. Moreover, the anticipated delay between the hearing of the application for an interim injunction and the trial is relevant to the second and third questions. In particular, the shorter the anticipated delay, the more likely it is that the balance of convenience (or balance of justice as it is better referred to) favours the preservation of the status quo.

It is recognised that there are cases where the application of the Cyanamid guidelines are inappropriate. In particular, cases exist in which, as a practical matter, the grant or refusal of an injunction at the interim stage will, in effect, dispose of the action finally in favour of whichever party was successful in the application, because there would be little or nothing left on which it would be in the unsuccessful party's interest to proceed to trial. Applications by employers against employees commonly fall into that category. Where employers are seeking to enforce a restrictive covenant which typically will run for only a matter of months, the period of the restraint under the covenant will very often have expired before the expected date upon which the trial would take place.

It follows that where the grant or refusal of an interlocutory injunction will effectively end the action, it is appropriate for the court in assessing the balance of convenience to investigate the degree of likelihood of the claimant succeeding at trial. However, that investigation need not, and generally should not, amount to a trial of the action. See Lansing Linde Ltd v Kerr [1991] 1 WLR 251 at page 258.

Mr Bloch approached this case on the footing that I should apply Cyanamid. Mr Pepperall did not address me to the contrary. However, in considering my judgment I came to the conclusion that the effect of CLS's failure to respect the time limits in the CPR (and whether or not that is an abuse of the process) is that any trial would not now take place until the New Year, even if I were to order a speedy trial. Mrs Huesca de Crean left CLS's employment on 10^th August. 10^th January 2012 would represent a period of five months since that date, and four months since she handed over CLS's laptop and her own hard drive on 9 September 2011. Any trial could well be six months after she left her employment. The degree to which information originally confidential maintains that character in a commercial context depends to a great extent on the passage of time. A court is much more likely to uphold a restraint upon an employee for a shorter rather than a longer period. In the context of contracts of employment with an employee such as Mrs Huesca de Crean, six months is a substantial period. In my judgment I must therefore have regard to the degree of likelihood of CLS succeeding at trial. If there had been a restrictive covenant for a period of 6 months in the contract of employment in this case, CLS would have had to seek to justify it by evidence. There is no evidence as to the need for any particular period of restraint in the witness statements for CLS.

In his written submission made after the circulation of this judgment in draft, Mr Bloch submitted that it would be wrong for the court to have regard to the strength of CLS's case because there is no basis for the court to conclude that the information would not remain a trade secret or confidential for longer than five months. He is correct that there is no evidence on that point. He also referred to undertakings to run for a period of 12 months offered by Mrs Huesca de Crean in September, but not accepted by CLS. In my judgment it is for a claimant to explain how long the commercial information alleged to be confidential will remain confidential. I can make no assumptions that that period will be longer than five months. And I decline to treat undertakings that have been offered but not accepted as nevertheless containing concessions by Mrs Huesca de Crean.

In the event (and if I am right in my findings as to there being triable issues) the case does not turn on whether or not I apply Cyanamid, or have regard to whether the strength of the case for CLS is higher than the triable issue required by Cyanamid. As explained below, there are points upon which in my judgment the application for CLS must fail even if it is Cyanamid principles that apply.

THE STRENGTH OF THE CASE FOR CLS

The factual matters relied upon by Ms Brown in support of the application are (1) the alleged improper conduct of Klarius/QH; (2) alleged improper conduct by Mrs Huesca de Crean; and (3) the risk of innocent misuse of confidential information by Mrs Huesca de Crean.

Before considering the allegations of improper conduct, I shall consider whether the claim can succeed under the third of these three alternatives, and in accordance with the principles set out above. Mrs Huesca de Crean accepts that she has knowledge of (unspecified) confidential information including trade secrets, and I shall assume in favour of CLS that there is a good arguable case that there is a risk that Mrs Huesca de Crean may innocently and inadvertently use that information to the detriment of CLS.

The express term in the Confidentiality Agreement is too wide in its terms to be capable of enforcement. It purports to include matters which cannot be included in the phrase 'trade secrets' as defined in the authorities, and it plainly includes matters which an employee will carry in her head after the termination of the employment, and which she is entitled to use for her own benefit in the future (principles (4) and (5)(b)). Unlike cases of domestic employment, such as Barker, the information of CLS which is not a trade secret is commercial information. CLS would fail at this stage on Cyanamid principles. Moreover, CLS is unlikely to persuade a court at trial that Mrs Huesca de Crean has information (other than trade secrets) of a kind which it would be possible for CLS to protect by a covenant (if there were one). Further, there is no suggestion that CLS impressed on Mrs Huesca de Crean the confidentiality of any specific information she acquired after she was promoted by CLS at the end of April (principle (5)(c)). A court at trial would be likely to find that information she acquired in that capacity was part of a package of information, some of which is not confidential. However, I accept (as implied in Mrs Huesca de Crean's admission) that CLS would be likely to succeed at a trial in demonstrating that some of it is a trade secret. There would certainly be a triable issue on that point.

In reaching this conclusion I have had regard to the two confidential witness statements of Ms Brown. These do not set out details of confidential information additional to those already listed and described in the open witness statements. What Ms Brown does in the first of these witness statements is to give what she says are examples of the harm that Mrs Huesca de Crean could do through her operational role to apply commercial pressure to CLS, and to 'manipulate CLS's UK profitability'. This is part of the allegation of threatened dishonesty. In her second confidential witness statement she exhibits in digital form what she describes as "an extremely complex and detailed spreadsheet", to the preparation of which Mrs Huesca de Crean contributed, and which is "highly confidential", and which is in a form which cannot be coherently printed. I assume that the information in this spreadsheet would be information sufficiently specific to the subject of an injunction. There is no evidence as to whether it is of a kind that an employee could memorise. Mrs Huesca de Crean did not see the Confidential Witness Statement until shortly before the hearing and has not commented upon it in detail.

Further, and independently, the form of the injunction sought to protect the Confidential Information is too wide, because no time limit has been specified by CLS, whether in the contract of employment or otherwise (principles (6) and (7)). Since there is no time limit in the Confidentiality Agreement, any time limit would have to be implied by law. But such an implication is impossible as explained by Scott J in Balston (para 35 above). This is a point of law upon which in my judgment CLS has no real prospect of succeeding at any trial. The point is the same whether Cyanamid applies or not. The proviso that the order is not to prevent the use or disclosure of any information which has ceased to be confidential otherwise than as a result of a breach by Mrs Huesca de Crean of her obligation of confidence is impossibly vague. Mrs Huesca de Crean cannot be expected, in her new employment, to know when information she received from CLS has ceased to be confidential. In her first witness statement Ms Brown stated (commenting upon a form of undertaking proposed by Mrs Huesca de Crean) that "the precise time at which a particular piece of confidential information will have lost its quality of confidence is likely to be highly debateable".

Further, and independently, the form of the injunction sought to protect the Confidential Information is too wide, because it does not make it absolutely clear what CLS is seeking to protect. Nor would this be remedied if the form of order sought were amended to include para 19 from the letter, or the list of particulars of Confidential Information provided to me on the second day of hearing. While I accept that some of the information so described is sufficiently precise, not all of it is. For example, the references to "historic" figures in items 1 and 2 do not specify how far back in time Mrs Huesca de Crean would have to go before she could decide that the information is no longer confidential. Item 5 does not identify what is meant by "CLS's position in commercial and legal strategy".

There is a particular issue with the information said to be subject to legal professional privilege, which is item 4 on the list and para 19.3 of the letter of 30 August 2011. Although it is not in dispute that Mrs Huesca de Crean did attend at least one meeting with solicitors, CLS have not produced in evidence (even in the Confidential Witness Statement) any record or summary of what advice was given. The reason given for this omission is that it would be a waiver of privilege. But that cannot be right. If Mrs Huesca de Crean did not already know, or was not at risk of remembering, the information, there would be no basis for seeking an injunction. And if she did once know it, telling it to her again cannot involve any waiver of privilege. Without my knowing what the information is, I cannot form any view as to the damage which CLS is at risk of suffering if it is misused, nor how long Mrs Huesca de Crean could be expected to remember it, nor what remedy is proportionate (principle (8)). I do not even know whether the solicitors gave any material advice at the meeting, or whether they were simply receiving instructions.

For each of these reasons independently, I would refuse any relief to CLS on this application.

The claim for a barring order must also fail. There is no issue in the present case as to the administration of justice. There are no pending legal proceedings between CLS and QH or Klarius. While I accept that CLS would be likely to succeed at a trial in establishing that Mrs Huesca de Crean is a fiduciary in respect of information which is within the definition of a trade secret, I do not consider that CLS would be likely to succeed at trial in establishing (or even that there is a triable issue) that the relationship between CLS and herself is one in which it would be equitable to cast upon Mrs Huesca de Crean the burden of showing that she and QH or Klarius have taken effective measures to ensure that no disclosure will occur. No court has ever made such a finding in a case of an employer against an employee.

And if I were wrong about that, then (subject to my findings in relation to the allegations of wrongdoing) I do not consider that CLS would be likely to succeed at trial in establishing (or even that there is a triable issue) that Mrs Huesca de Crean will fail to establish that she and QH or Klarius have taken effective measures to ensure that no disclosure will occur. Subject to the allegations of wrongdoing, she is an employee with a record of loyal service to CLS, who has proffered undertakings which she can be expected to fulfil, and the barring order sought is a remedy that would disproportionate to the perceived threat of inadvertent misuse. The balance of justice is against the grant of such relief.

In so far as I have applied the Cyanamid test, I have assumed that damages would not be an adequate remedy for either party in this case.

However, it is well recognised that if the employer has a case that an employee removed the property of the employer, including intellectual property (such as lists of prices and the like), or was otherwise in breach of her duties of loyalty during the period of her employment, the employer may be entitled to relief which it would not otherwise be entitled to. So I shall consider the allegations of impropriety that CLS has made.

CLS'S ALLEGATIONS AGAINST QH

The following account of the relationship between CLS and QH is taken from the witness statement of Ms Brown dated 12 Sept 2011. It is important to note that QH is not a party to these proceedings. There are good reasons for that. If QH were a party then it would be entitled to see all the evidence. This being a claim for the protection of confidential information, it would be difficult for CLS to put before the court the information which it needs to put before the court in order to obtain the relief without at the same time defeating the purpose of the proceedings by disclosing that information to the very party from whom it wishes to ensure that that information is withheld.

Mrs Huesca de Crean has informed the court (and verified by affidavit) that she has not disclosed the documents in these proceedings to QH and has no intention of doing so. She has obtained a witness statement from Mr Andrew Jones, the Managing Director for Klarius. But that relates mainly to the circumstances in which QH came to employ her, and to the difficulties there would be in her performing her contractual duties if the relief sought by CLS were granted. He also confirms that he has not been shown the evidence filed by CLS, but he makes some general observations on the risk which CLS claims to be exposed to. Although I am not making any findings of fact in this interim application, fairness requires that I should record his statement that he does not believe there is any confidential information which QH would wish to see which has not already been disclosed. He is not aware of and has not addressed the evidence of Ms Brown as to the relationship between CLS and QH and Klarius.

CLS has in the region of 50 external customers of its Third Party Logistics Services. These services include all aspects of supply chain management such as storage, packaging and assembly, distribution and inventory management. It also includes analysis, using CLS's bespoke software solutions. Services to clients are generally based on long term contracts similar to the LSA by which CLS agrees to manage the entire supply chain for a third party customer. Two other customers whose names appear in the evidence are Land Rover and Xpart.

Those responsible for the management of the Caterpillar Group have conducted a strategic review of their business, including that of CLS, and it is likely that the shares or the business of CLS will be sold (it will be recalled that this is one reason given by Mrs Huesca de Crean for applying to QH). Ms Brown's evidence includes a number of references to the concerns of the shareholders of CLS about the effect the actions of Mrs Huesca de Crean might have on the value of the company or of the business to be sold.

The LSA dated 5 May 2006 was made between CLS on the one hand and QH and Affinia Group Inc ("Affinia"). Affinia was at that time parent company of QH. The LSA as originally entered into consisted, together with all the exhibits, of some 168 pages. The exhibit to Ms Brown's witness statements includes another 110 pages of documentation relating to the contractual relationship between CLS and QH and Klarius. According to Ms Brown the key terms of the LSA include:

Clause 10.1 - An initial term expiring 8 May 2017;

Clause 10.1 and 10.2 - Detailed provisions restricting the circumstances in which the contract can be terminated;

Clause 14 - a dispute resolution clause, which includes provision for arbitration;

Clause 15.3 which provides restrictions on assignment;

Clause 15.9 – Assumptions', which states that CLS is providing the services on certain assumptions which are set out in Exhibit G. The clause includes:

"If at any time during the Term either party believes in good faith that one or more of the assumptions is or has become materially incorrect in the ordinary course of business and through no fault of either party it shall notify the other party in writing and [CLS] shall as soon as practicable thereafter make a formal written proposal to Affinia Group Inc and QH setting forth (1) the modifications to this Agreement… that [CLS] reasonably considers necessary in order to honour the spirit and intent of the parties…"

This is subject to the dispute resolution procedure in clause 14. Exhibit G is a single page table with four columns and four rows. Some of these give an indication of the large scale of the business. The chargeable storage space is 75000 sq ft, the office space 10000 sq ft, the number of finished parts to be stored is 25000 and the UK gross inventory value is set at £10.5 million. The assumptions are common knowledge between CLS and QH and Klarius.

There are Exhibits setting out the services that CLS agrees to provide to QH, the performance standards it must adhere to, and the resources and the responsibilities which QH undertakes.

Exhibit D is headed "Fees and Gain-Sharing Mechanism". I was referred in some detail to this. The bulk of the services, estimated at some 80%, are provided on the basis of fixed fees subject to annual indexation. But there is also what is called a gain-sharing mechanism, specifying that the parties should jointly undertake projects to improve the business processes and efficiency of services provided under the LSA. The value of the savings is to be set off against the indexation increase of the charges.

The Hinckley site is primarily dedicated to the services provided by CLS to QH. CLS receives parts from QH or its suppliers at the site and stores them at a warehouse. When an order is received from one of QH's customers, then CLS picks, packs and dispatches the relevant parts from the inventory to customers using its transport provider. The operation is maintained using a computer system operated on behalf of QH by CLS. The Claimant supplies inventory management services, forecasting demand for parts and managing a significant part of the supply chain in the UK for QH.

In 2010 CLS received revenue in excess of $16 million for these services. The LSA is a significant contract for CLS within its global third party logistic business. In February 2010 the entire share capital of QH was purchased from Affinia by Klarius which also trades in the automotive after parts sector. Affinia purported to assign all of its rights under the LSA to Klarius but CLS does not accept the validity of this purported assignment. Relations between CLS and QH had been difficult from the start and this is one of a number of issues which is unresolved between them.

Ms Brown was appointed to the role of Commercial Director in March 2010. By that point Affinia had already completed the sale of QH to Klarius. Ms Brown soon formed the view that management of the commercial relationship with Klarius would not be easy. Before buying QH Klarius had approached CLS to discuss the LSA. It had made clear that the LSA was too expensive and that Klarius wanted to re-negotiate the terms of it. The Claimant made it clear that it was unwilling to re-negotiate.

Ms Brown exhibits a note of a meeting on 24 November 2009 attended by representatives of Klarius and of CLS, but not including herself. Her predecessor was present. It is recorded that at that point the Chairman of Klarius stated that Klarius was close to a deal with Affinia. Although his company had not yet acquired QH, it is recorded that he put forward a number of options in the event that the purchase was completed. Since Ms Brown was not present at the meeting, and QH has not had an opportunity to comment on this note, I have decided not to set out its contents in this judgment. If it is an accurate note, then I would accept that it records QH adopting a very strong position, about which CLS could legitimately be concerned.

Ms Brown also exhibits minutes of a meeting held on 4 March 2010 which she did not attend. This refers to an earlier meeting on 15 January of which no record is exhibited. She exhibits it to show that Mr Jones requested CLS's Profit and Loss Account and that CLS responded that "it does not share P and L account with client". The reading of the Minutes of that meeting as a whole does not suggest to me that the parties were in a difficult relationship at that point.

The next document exhibited by Ms Brown is dated 15 June 2010. She describes it as a note of the meeting. However, it appears to be a word for word transcript of a recording of conversations first in a conference room and then in a car. Mr Wilson of Klarius is recorded as saying "you don't know how much we're losing?", and Ms Brown as replying "No how much? It hasn't exactly been the most profitable contract for us over the term". Then Mr Wilson is recorded as asking to see CLS's costs and data, and threatening to go to court in order to get it.

On 16 June Ms Brown sent an e-mail saying she had regretted the meeting had turned out to be shorter than planned. She added

"we note your comments that you may be taking legal action against [CLS] for not giving you all the information you would like to receive, that you may take deliberate measures to hurt [CLS] and worsen the financial situation of Cat Logistics under the LSA…".

Mr Wilson replied immediately saying that

"for the avoidance of doubt at no point did I say I would take legal action on the basis that [CLS] would not provide information. I did say that I expected that we would see you in a court to resolve an untenable and frustrated contract. At no point did I say I would take measures to "hurt [CLS]", ensuring [CLS] operate to the letter of the current contract will undoubtedly have a substantial impact on the current commercial value of the contract to [CLS]".

I can see nothing in the document of 15 June to support Ms Brown's claim that Mr Wilson had said that Klarius "may take deliberate measures to hurt [CLS]".

On 29 June 2010, Mr Swain, the Group Legal Counsel of Klarius wrote complaining that Ms Brown had copied her e-mail of 16 June to Affinia and requiring her to desist from sending information to Affinia.

On 1 July 2010 Mr Swain wrote a formal letter to CLS referring to a number of issues that had been under discussion. He states that Klarius had attempted, and will continue to attempt, to deal with these through operational channels in the spirit of the LSA, but that it was necessary to escalate certain matters in accordance with the dispute resolution procedure set out in LSA clause 14. One issue in dispute was the refusal by CLS to handle coiled springs of a range that had been introduced into the UK market. Mr Swain also referred to Exhibit G in clause 15.9 of the LSA, providing for modifications to the LSA if the assumptions are no longer valid.

Ms Brown refers to this "flurry of legal correspondence" as "clearly an attempt on Klarius's part to intimidate [CLS] into agreeing its demands for fee reductions through incorrect allegations of breach of contract and an entitlement to terminate and\or by making the contract unworkable or uneconomic for us". In addition to the letter of 1 July 2010 there is a letter of 8 July 2010 and another dated 13 July 2010. These are addressed to the Logistics Centre Manager and contain allegations of breach of contract. It is not clear if this correspondence is complete. If it is, there is no response in writing from CLS. If it is not complete, I have no information as to what the response from CLS was at this time.

From reading the documents I do not consider that CLS is likely to succeed at any trial in establishing that this was an attempt at intimidation on the part of Klarius, as suggested by Ms Brown.

The response for CLS that is in a letter dated 30 July 2010 from Mr Anderson, Senior Corporate Counsel for CLS. He records that CLS had agreed to over 9000 changes to the LSA in the past, but in relation to the coiled springs CLS had already explained that they were unsuitable for storage at Hinckley by reason of their size and weight. He states that CLS welcomed the review of the Assumptions under clause 15.9.

Documents dated between 23 August 2010 and 20 April 2011 record a firm exchange of views between the parties, but nothing which appears to me to be out of the ordinary in business communications. Ms Brown states that discussions took place between the parties in December 2010 on a without prejudice basis on the possibility of an agreed early termination of the LSA. She states that these came to no conclusion, but that it is an option which CLS would consider in the future.

On 4 May 2011 Mr Wilson for Klarius wrote a letter which does mark some escalation in his complaints. He set out a number of matters which he complains of as failures of CLS, and he refers to concessions which he claims Klarius had made. He then referred to the appointment of Mrs Huesca de Crean as the manager of QH account, and complains that this is the third such manager in twelve months. He referred to a presentation due to take place on 17 May. He wrote that, subject to a satisfactory outcome, Klarius would seek legal recourse "for material damages and the severance of our current contract".

On 12 May Mr Chambers of CLS responded expressing surprise at the threat of termination of the agreement which, it contended, would be a repudiatory breach if carried out by Klarius. CLS expressed its willingness to discuss the review of the assumptions which it had by then carried out.

Ms Brown exhibits a record of thirty meetings held on or between 4 May 2011 and 1 August 2011 all of them attended by Mrs Huesca de Crean. A number of them are said to relate as to how CLS should move forward with the Assumptions, and with relationships with Klarius on various projects and other matters. Ms Brown states that Mrs Huesca de Crean had, in the course of such meetings, had access to a full range of confidential current and historical costs information, including warehouse rates, and other matters referred to in the Particulars of Confidential Information.

One of these meetings was on 14 June at the offices in Manchester of Klarius. It was attended on behalf of Klarius, by, amongst others, Mr Jones (who has made a witness statement). The meeting lasted 1½ hours. The note records that on more than one occasion Mr Wilson of Klarius indicated that Klarius would like to terminate the agreement and that they expected to end in court. However, that ended with confirmation that CLS would send a proposal which Klarius would look at and that Klarius would invite CLS to their "supplier event" next week and that there would be a further meeting.

After meeting attended by Mrs Huesca de Crean in July and 1^st August, CLS decided to offer QH no changes to the arrangements between them. CLS contended that whilst the assumptions set out in the LSA had become materially incorrect, CLS was not prepared to accept that these changes had occurred "through no fault of either party" and in particular may have resulted from the fault of QH, and no fee reduction would be forthcoming. In addition Ms Brown describes a number of additional projects that were undertaken with QH, and in which Mrs Huesca de Crean was involved, in June and July 2011.

Having read the documents exhibited by Ms Brown, I do not consider that they make it likely that CLS will succeed at any trial in establishing the allegation in the letter of 30 August 2011, namely that the employment by QH of Mrs Huesca de Crean was an attempt by it to secure confidential information that CLS had refused to provide to Klarius voluntarily.

The allegation against QH and Klarius made in para 14 of the letter of 30 August (para 11 above) is one of dishonesty. If counsel had been instructed to formulate a plea to that effect in the Particulars of Claim, I think it unlikely that he would have felt able to do so on the basis of the information provided to the court by Ms Brown. If that is so, then a great deal of time and costs would have been saved by the service of Particulars of Claim which omitted such an allegation. The documentation before the court would have been a small fraction of what it is. I note that the Particulars of Claim as now served do not contain an allegation of dishonesty against QH.

In reaching this conclusion I have had in mind the conclusions I reach in relation to Mrs Huesca de Crean, in so far as they also involve QH or Klarius.

CLS'S ALLEGATIONS AGAINST Mrs HUESCA de CREAN

In her first witness statement Ms Brown states:

"59. The close relationship between Paula and the Klarius [QH] management team was further illustrated by an incident just prior to her resignation regarding rugby tickets for Twickenham. Caterpillar is a sponsor of Leicester Tigers and receives a limit set of corporate tickets each year for England games held at Twickenham. Given that the external business could be sold, the only likely tickets available for 2011 were for the England v Wales game held at Twickenham on 6 August 2011. I tried to book these tickets for another customer but to my surprise I found that Paula had arranged to take certain managers from Klarius [QH] (without any other employees from CLS UK).

60. I complained to Dean Ellis who said he would review it and that he was not aware that Paula had invited [QH] Klarius. On 3 August 2011 Doug Carr called me to discuss what to do and we concluded that it was too late to stop the event which she was reminded not to discuss commercial issues at the meetings".

Notwithstanding the opening words of paragraph 59, the witness statement had not previously specified any "close relationship" between Mrs Huesca de Crean and Klarius or [QH].

In response Mrs Huesca de Crean wrote in her statement of 7 October 2011 that she was astounded by this allegation. Mr Ellis was at the event with her. She had collected him in her car in Loughborough and driven him there. Before requesting the tickets she had contacted Mr Ellis and sought his views on inviting the Klarius [QH] team. He had agreed that it was a very good idea. She had also e-mailed Doug Carr, Vice President Operations. She had also spoken to Mr Ellis to say that personally she would rather not attend the rugby match. She was preparing for her holiday the following week. Moreover, by that time she had applied for the position with QH and the match was only two days after her first interview. She felt uncomfortable about attending the match against this background, although she did not disclose the interview to Mr Ellis. Mr Ellis had replied to her that under no circumstances was she not to come to the match and that he would invite Ms Brown to join them. Later that day he called her to confirm that Ms Brown had declined to participate in the event.

In her third witness statement dated 21 October 2011 Ms Brown wrote "I do not dispute that both Paula and Dean Ellis were in attendance at the match on 6 August 2011". She said that her view at the time was that the entertainment should not have been arranged and that Mrs Huesca de Crean should have kept Klarius QH at arms length during this period, and that that was the point she had been trying to make in her original statement. She gave no explanation as to the false account given in para 60 of the first statement. In any event, as to this allegation of impropriety, it is now common ground that it is false.

Ms Brown makes a number of other allegations which I find too vague, and so unnecessary for me to deal with.

There are, however, allegations of the use of the company laptop to which I must refer. Ms Brown states, as is not in dispute, that Mrs Huesca de Crean returned the company laptop on Friday 9 September when she attended for her exit interview with CLS's Human Resources team. At the same time she provided to CLS of her own volition a portable hard drive which she informed the HR team she had personally purchased and used to back up documents relating to CLS from her laptop from her employment. CLS arranged for the laptop to be inspected by a technology supervisor on 10 and 11 September. The laptop and the hard drive have subsequently been examined by KPMG, in the case of the hard drive with the express permission of Mrs Huesca de Crean.

Mrs Huesca de Crean states in her witness statement of 7 October 2011 that the process of her applying for the new position with QH was very sudden, in the space of only 7 days. Prior to her departure on holiday she states she conducted a clean up of her e-mail correspondence which would tidy up her files. She had retained many thousands of e-mails during her time at CLS. Some of these dated back to her time on the Land Rover account and even before.

In her second witness statement dated 7 November 2011 she commented on the KPMG report. It had noted the creation of files relating to Land Rover and Xpart data on 5 and 7 August. She states that CLS was undergoing a disengagement project in the light of a possible sale of divisions. All business units were asked to review the personnel with access to each of the various shared drives. She still had access to many of the shared drives in Land Rover and for Xpart data. CLS required deletion of access by personnel that might have moved on or had no further use for the information. This requirement was communicated at a date in late July by e-mail. She no longer has access to the emails, but CLS of course does. CLS has not disputed this evidence and has not produced the e-mail to which she refers that was sent in July.

She deleted the access of a number of staff. She was content that her own access to Land Rover and Xpart files was going to be barred. But she had some documents and templates (in particular performance and chairman's reviews), amongst those files which he had set up and used before, and which she would wish to adapt for her role with QH. She telephoned Land Rover (she identifies the person she called) to explain this and asked to be reconnected temporarily to the shared drive to allow her to do this. She obtained the authorisation but there was some delay before she carried out the task. All this was done on contemplation of her remaining at CLS. At that time it was by no means clear that she would be offered or take the position with QH. She also deleted e-mails she no longer needed and cleaned up files which were confidential and non-confidential.

She had not received an acceptable offer from QH until after she had left Hinckley on 10 August. When she left the office that day she did not know that it would be her last day at Hinckley with CLS. The reason that she had transferred files to her own external hard drive was because she considered that it was less likely to be lost or stolen whilst she was on holiday than the laptop itself. She carried them to Malta with her on holiday in separate bags.

Ms Brown is very sceptical about this account, but the investigations by CLS and by KPMG have disclosed nothing that is inconsistent with what Mrs Huesca de Crean told the HR team when she handed over the laptop and hard drive, or inconsistent with her two witness statements, the first of which was made before the investigation by KPMG.

Mr Bloch addresses the allegations of wrongdoing against Mrs Huesca de Crean in his skeleton argument as follows. At para 32(c) he wrote:

"It seems inevitable that carrying out tasks in a new role the defendant will misuse confidential information (whether deliberately or inadvertently) for the benefit of Klarius QH. Even if she does not deliberately misuse confidential information, the knowledge she has of the Claimant's confidential information and legal strategy will inevitably affect her actions and decisions even if only subconsciously, if she is carrying out her role for her new employer with diligence and in accordance with her duties to act in QH's interests….

(d) There were signs of the Claimant's [sic] starting to switch sides even before she had left the Claimant's employ:

i) [this is a reference to an allegation I found too vague to deal with]…

ii) Twickenham rugby tickets allocated to Klaruis\QH.

(e) There is evidence (set out below…) that the Defendant had attempted to take a large amount of the Claimant's data by copying it onto an external hard drive prior to leaving the Claimant. ….

53 Forensic evidence indicates a large scale copying of the Claimant's data by the Defendant onto the hard drive and deletion from her laptop at or about the time she was pursuing the opportunity with QH. The circumstances give rise to an inference that she copied data for the purposes of taking it with her when she left.

54 The Defendant advances an innocent explanation for her actions… There are substantial grounds to believe that the explanation is not true. [He refers to Ms Brown's third witness statement para 51-53 which contain argument or submission with no material factual statements]. The Claimant claims that she copied and deleted files as part of a clean up of data and that she removed files onto an external hard drive in order to take the files to work during a holiday in Malta…".

The following paragraphs of Mr Bloch's skeleton argument contain argument as to why the explanation given by Mrs Huesca de Crean is suspicious.

On 9 November 2011 Mrs Huesca de Crean made an affidavit in which she verified her witness statements and in which she said:

"Without prejudice to the generality of that, I do so with particular reference to the fact that (save in respects I described and explained in those two statements), I have not (1) copied any data or confidential information of the kind referred to in the draft order belonging to the Claimant in any format or medium, or supplied or otherwise disclosed it to any other person (save as necessary to my own solicitors and Counsel for the purposes of defending this action); (2) I do not possess or retain, and have not since 9 September 2011 retained or possessed any such data or confidential information of the kind referred to in paragraphs 6,7.1 and/or 8 of the Claimant's amended Application Notice. Accordingly I have and would have nothing whatsoever to deliver up, return and delete pursuant to those paragraphs, were they to be ordered by the court".

The upshot is that there is before the court no direct evidence that Mrs Huesca de Crean has acted with impropriety, whether consciously or otherwise. A case based only on suspicion does not raise a triable issue. If I am wrong about that in this, then on the evidence in the present case I do not consider that CLS is likely to succeed at trial in its case that Mrs Huesca de Crean has copied and retained any confidential information provided to her by CLS.

In the draft judgment I noted that the language used in CLS's skeleton argument is not language which has the clarity that would be required if an allegation of dishonesty (if such it be) were to be made against Mrs Huesca de Crean in Particulars of Claim. I questioned whether, if counsel had addressed their minds to whether or not to place such a plea on the record, they would have felt able to do so. If they had not considered it proper to plead dishonesty against her in the Particulars of Claim, it would follow that they could not have advanced such a case in support of an injunction. A great deal of time and expense would have been saved. I say nothing about any anxiety and distress that Mrs Huesca de Crean may have suffered from having to face such allegations in public.

Having now seen the Particulars of Claim, I note that they contain no reference to the allegations made by Ms Brown which I have described as too vague, and no reference to the Twickenham Rugby match. The allegations against Mrs Huesca de Crean of breach of her duties to CLS are based entirely upon the activities involving files on her company laptop and her own hard drive (which I understand to be common ground). The case for CLS is that it is to be inferred that those actions were not carried out for the purpose of Mrs Huesca de Crean's work on behalf of CLS, because of the timing, and because CLS submit that her explanations are not to be believed.

MATTERS ARISING WHEN THE JUDGMENT WAS CIRCULATED IN DRAFT

When this judgment was circulated in draft on 21 November 2011 I gave to CLS an opportunity to respond (if so advised) to the criticism raised by Mrs Huesca de Crean of the manner in which the letter of 30 August 2011 was served upon her (para 14 above). Mr Simpson made a witness statement dated 28 November 2011. He exhibits a letter of 9 September 2011 in which he wrote to Mrs Huesca de Crean: "We have spoken with our agent who does not accept your account of events". However, in his witness statement Mr Simpson accepted that the process server had indeed described the content of the Penal Notice to Mrs Huesca de Crean. Mr Simpson also accepted that it was wrong for him to have done so, and that this may have been due to a lack of clarity in the instructions given to the process server. He stated that this was a matter of genuine regret on his part, and he apologised for it.

I also gave an opportunity to Ms Brown to explain (again if so advised) how she came to give the false evidence in para 60 of her first witness statement (para 127 above). I had added to the draft of that paragraph: "I find this inaccuracy, together with the absence of any explanation for it, a matter of great concern." Ms Brown made a fifth witness statement dated 28 November 2011. She gave a further and detailed account of this matter. She stated that she had not intended to say that Mrs Huesca de Crean in fact attended the Twickenham event without another person from CLS, but in hindsight she could see that it could be read as meaning that. Her understanding had changed between the time referred to in para 59 and 3 August 2011 when she made the phone call referred to in para 60. She had not intended to mislead, and apologised to the court and to Mrs Huesca de Crean.

I noted that the case of Lansing Linde (paras 78 and 79 above) had been cited, but not to support a submission that I should take into account the likelihood of CLS succeeding at trial. I gave to CLS an opportunity, if so advised, to submit that I should not take into account the likelihood of CLS succeeding at trial. I also give to CLS an opportunity to renew, if so advised, the application for an extension of time for service of the Particulars of Claim, and to address me as to why the claim should not be struck out in default of service of Particulars of Claim within the time specified in the order of Eder J. Mr Bloch made submissions which I have set out and considered above. Since the Particulars of Claim have now been served, and served within the period which, as I am now told, had been agreed in writing between the parties, CLS does not pursue its application for an extension of time.

I shall also hear submissions on the form of order. The logical conclusion from the view that I have taken of the law and the facts is that the application for an injunction should be dismissed. That would leave CLS free to pursue the action for damages (if so advised, and subject to any further submissions to be made by Mr Pepperall on the handing down of this judgment). If the claim is pursued, and if it does not succeed, at the end of the trial the Court would have to consider whether or not to order an inquiry into the damages suffered by Mrs Huesca de Crean by reason of her undertakings remaining in force for the period of about two months from 16 September to the date on which this judgment is handed down.

However, it is always possible for parties to agree a form of relief by way of an undertaking in a form which the court would have no power to grant absent such agreement. It is on that basis that Mrs Huesca de Crean gave the undertakings she did give on 16 September: she did not thereby concede that the court could make any order in those terms. She has continued to offer undertakings throughout this hearing, but CLS has not accepted them. It has not been necessary for me to set out the undertakings that she offered, or the reasons why CLS did not accept them. But if she wishes to offer any undertakings with a view finally to disposing of this litigation, I would be willing to consider whether the court ought to accept them. Nothing in this paragraph should be taken as an indication by me that Mrs Huesca de Crean ought to offer undertakings. The effect of this judgment is that she is under no obligation whatsoever to do so.

CONCLUSION

For the reasons set out above, the application of CLS for an injunction is dismissed, and the undertakings of Mrs Huesca de Crean incorporated into the order of 16 September 2011 have lapsed and are no longer in force.

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You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Caterpillar Logistics Services (UK) Ltd v Huesca De Crean [2011] EWHC 3154 (QB) (02 December 2011) URL: http://www.bailii.org/ew/cases/EWHC/QB/2011/3154.html Cite as: [2011] EWHC 3154 (QB)