31 MAY 2016
High Court finds 'high degree of subterfuge' and orders destruction of confidential information
Senior Associate, Veale Wasbrough Vizards
In Arthur J Gallagher Services (UK) Ltd and Ors v Alexandre Skriptchenko and Ors, the High Court made an order for the destruction of confidential information belonging to a former employer.
Mr Skriptchenko worked for Arthur J Gallagher Services (UK) Limited (Gallagher), an insurance brokerage company. After his employment with Gallagher terminated, he began working for Portsoken Limited (Portsoken), a rival company.
Gallagher suspected that Mr Skriptchenko had taken confidential information to Portsoken and was using it to contact their clients. It brought a claim against him and Portsoken for misuse of confidential information.
Mr Skriptchenko admitted to having taken a list of clients from Gallagher, which Portsoken had used to approach over 300 of Gallagher's clients. Mr Skriptchenko and Portsoken disclosed over 4,000 documents at an early stage in the early proceedings.
Gallagher applied to the High Court for mandatory interim relief in the form of:
Mr Skriptchenko and Portsoken argued that the search of devices and destruction of material before a final hearing was 'invasive, unprecedented and unnecessary', especially given the extent of their admissions and disclosure.
- a search of the defendant's electronic devices and databases;
- the imaging of them; and
- the destruction of the claimants' confidential material found on the devices.
However, the High Court found that the documents showed that Portsoken had been using Gallagher's confidential information to set Portsoken pricing. One email from the chairman of Portsoken, thanking one of its directors for statistical information, said:
'... I don't think you can formally put these in any presentation as we would obviouslu be breaching confidentiality but would suggest that we keep in our back pocket to show on a nudge nudge wink wink basis to interested parties.'
High Court's decision
The High Court considered whether the protection of Gallagher's confidential information could be secured on an interim basis by lesser orders, such as requiring the defendants themselves to search for and destroy the claimants' confidential information.
However, it concluded that, due to the high degree of subterfuge demonstrated by the defendants, they could not be trusted to find out and delete the confidential information themselves. It also considered that the Order sought by Gallagher contained appropriate safeguarding to resolve disputes between the parties about whether material contained Gallagher's confidential information and to prevent inadvertent disclosure of Portsoken's confidential information. It therefore granted the interim relief.
Prevention is always better than cure. Employers should ensure that they have well-drafted confidentiality obligations in their employment contracts.
If you do find yourself in the unfortunate situation of discovering that ex-employees are unfairly competing using your confidential information, there are a wide range of remedies available from the court. It is important to act swiftly in such situations to prevent further damage being done.