Background
EMJ Plastics designs and makes permanent glass-reinforced-plastic formwork panels for bridge construction. Its former Operations Manager, Ian Baggaley, and former Technical/Production Manager, Mark Johnson, later became 25% shareholders in Mekina Industries, a competing formwork business backed by Dura Group.
EMJ alleged that Baggaley copied 11,579 company files to a Toshiba drive while working his notice, intending to use them for a competing business. It also alleged misuse of EMJ’s confidential sales “Hot List”, CAD material, calculation-sheet material and customer information. The defendants denied wrongdoing, including Baggaley’s assertion that an EMJ director had authorised the copying and received the drive.
The Court’s Holding
Recorder Douglas Campbell KC found that Baggaley had lied about the Toshiba drive. The court held that he copied the files without authority, for use in a competing business, and failed to return them. That conduct breached his employment contract, duties of confidence, and implied duty of good faith and fidelity. Given his senior operational role, his failure to disclose his own conduct also breached a fiduciary duty.
The court found that EMJ confidential material was used in Mekina’s CAD drawings, calculation-sheet summary material and business plan. Johnson was found to have knowingly used EMJ’s confidential Hot List, including for Mekina’s business planning and customer targeting, and both individuals were liable in relation to the February 2024 marketing mailshot. The court also upheld breach-of-confidence and contractual claims, joint liability findings, and unlawful means conspiracy. It rejected EMJ’s copyright claim because EMJ had not pleaded or proved copyright subsistence or ownership, and rejected the allegation that Johnson had removed EMJ material while still employed.
Key Takeaways
- Copying a large body of employer files for a future competitor can amount to contractual breach, breach of confidence and breach of fidelity even before the competing business begins trading.
- A senior employee may owe fiduciary reporting duties despite not being a company director, depending on their role and place in the organisation.
- Using confidential customer-prospect information for business planning or marketing can found liability even where the full extent of misuse is not disclosed.
Why It Matters
The decision illustrates the evidential importance of contemporaneous documents and disclosure in departing-employee disputes. The court drew strong conclusions from the copying evidence, inconsistencies in the defendants’ accounts, and missing native marketing-email records.
Relief was not determined in this judgment. The court held that the action succeeded to the stated extent and directed that counsel be heard on the form of relief.