#6638 - Universal Thermosensors V. Hibben - Commercial Remedies BCL

Universal Thermosensors v. Hibben

Facts

A group of employees left their employment to set up a competing business on their own. Dishonestly, they took away with them copies of documents of their erstwhile employer, containing information about customers. The employer found out what had happened and was justifiably angry. So the company launched proceedings, seeking an injunction and damages. An Anton Piller “search and seize” order was obtained on 3 April 1990 and was executed early in the morning at the homes of three of the defendants, and at the trading premises of two companies in the absence of any representatives of the companies. Documents and components were seized and taken away. An interlocutory injunction was granted on 9 July 1990. Unfortunately, serious mistakes were made in the execution of the Anton Piller order. It was now the turn for the defendants to be upset and angry. The new business collapsed. So the defendants brought a claim for damages, including exemplary damages, under the plaintiff's undertaking in the Anton Piller order of 3 April. They claimed that the interlocutory injunction of 9 July was too wide, and claimed damages under that head also.

Setting up of the new company: There was some unease about the future of the company under Mr. James' control, and Mrs. Hibben did not wish to continue to work there once Mr. Baylis had gone. She told Mr. James this on the day Mr. Baylis left, and she also left the company at that time. Over the years some members of the plaintiff's staff found that Mr. James was not always the easiest person to work for. From time to time there had been casual conversations between Mrs. Hibben and the second and third defendants, among many others, about the possibility of their setting up their own business.

Neither Mr. Baldock nor Mrs. Lawrence was happy about the plaintiff's future. The three of them talked about the possibility of starting up a thermocouple business of their own. A few weeks later they met again, and decided to look into the viability of such a business. The upshot was that the fourth defendant, Thermo Probes Ltd. (“T.P.L.”), was acquired by them in mid-January 1989. The shareholders were Mrs. Hibben (50 per cent.), Mr. Baldock (25 per cent.) and Mrs. Lawrence (10 per cent.). They were also the directors. The remaining 15 per cent. of the shares were held by nominees on behalf of Mr. Michael Powell and Mr. Barry Johnson, who were employed by the plaintiff as assembly workers.

Documents stolen from the plaintiff: During the same period of nine months documents belonging to the plaintiff and containing information which the three individual defendants thought might be useful for the purposes of the new business, were dishonestly taken away from the plaintiff's premises by Mr. Baldock and Mrs. Lawrence. Mr. Baldock had in his desk a bundle of spent “Mike's copies,” and he took these to help him, by identifying the most popular types of thermocouples, to work out which items T.P.L., the new company, should stock from the outset. About a month later Mr. Baldock stole from the plaintiff's office a document referred to at the trial as “the updated Dawn Cole list” of the plaintiff's customers.

For her part Mrs. Lawrence dishonestly removed from the plaintiff's premises over a period of months up to September 1989 many documents belonging to the plaintiff: drawings of assemblies of components, on which she had written the plaintiff's prices; one of “Mike's copies;” and some “packing” cards, sent to customers with their order, on which appeared or on which she wrote the plaintiff's code reference to the component and the price. The list as produced by the plaintiff following execution of the Anton Piller order extends to 47 pages. This list was referred to at the trial as “the item three list.” The remaining 33 pages comprised a typed list of the names, addresses and telephone numbers, and internal contacts of over 200 companies which can be called customers of the plaintiff if this expression is used as embracing, in some instances, persons who had not placed an order with the plaintiff for some years.

Sometime after removing “Mike's copies” and the updated Dawn Cole list, Mr. Baldock became anxious over what he had done. He and Mrs. Hibben went for advice to a firm of solicitors, Argles & Court, probably in June 1989, but possibly in August. They were advised, in the course of a brief interview, that they were entitled to use information about the plaintiff's customers which they carried in their heads but not information derived from the plaintiff's customer list or from the plaintiff's pricing matrix of which they also had a copy dated January 1989.

Ex parte injunction and Anton Piller Order: Early in October Mr. James learned that the three individual defendants had set up the new company and were sending out advertising literature. The upshot was an ex parte application to Millett J. on 3 April.

The order made by Millett J. covered much ground, and was therefore long and complicated. For present purposes all I need mention is that the first four defendants were restrained for one week from copying or destroying any documents containing information confidential to the plaintiff, and from soliciting or entering into or fulfilling any contract with any customer of the plaintiff whose name was contained in any confidential document. An Anton Piller order was made, in respect of the home addresses of the three individual defendants and the business premises of T.P.L., with regard to all confidential documents of the plaintiff and certain other classes of documents and items. The order was executed on the following day, when visits were made to each of the addresses at about 7.30 a.m.

Admittedly, there were several serious irregularities when the order was executed. All I should mention is that at Mrs. Hibben's home, where she used a small area off the kitchen as an office, the documents found and seized included the item three list, the item four list, seven pages of the updated Dawn Cole list, the plaintiff's January 1989 pricing matrix, and a computer printout of the plaintiff's general stock list.

The effect of this order was, in short, to close down T.P.L. With minimal exceptions the injunction precluded T.P.L. from doing business, for an indefinite time, with almost all its existing customers and with many others. And the legal fees which the defendants had to find were crippling. The sums involved were quite beyond their reach. So, in practice, there turned out to be the only one course open to T.P.L.: stop trading. Save for fulfilling one contract excepted from the injunction, this is what happened.

Defendant’s claim for damages: I turn now to the defendants' claim for the payment of damages pursuant to the plaintiff's undertaking to the court, contained in the order of 9 July 1990, to obey any order the court might make as to damages if it should consider that the defendants had sustained any damages by reason of the order which the plaintiff ought to pay. The defendants contend that the restrictions on their trading activities were too widely expressed. The order restrained the defendants, until trial or further order, from soliciting or entering into or fulfilling any contract for the manufacture or supply of thermocouples or platinum resistance thermometers or accessories with any person whose name was set out in the schedule (being the persons named in the item three list and the item four list) with whom the defendants or any of them had contact while those lists or the Kompass list were in their possession.

Holding

The Injunction put the plaintiff in a better position than it would have been otherwise

In those circumstances, to grant an injunction to restrain T.P.L. from dealing after July 1990 with...