Case No: 3NE30025
Neutral Citation Number [2014] EWHC 1781 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
LEEDS DISTRICT REGISTRY

The Court House
Oxford Row
Leeds LS1 3BG

Date: 6 June 2014 

Before :

His Honour Judge Saffman sitting as a Judge of the High Court
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Between 

	HARBRO SUPPLIES LIMITED	Claimant	
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	(1) GORDON BERNARD HAMPTON
(2) JEREMIAH STRONGARM LIMITED
(3) STEPHEN HAINES	

Defendants	

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Mr D Bayne for the Claimant
Mr S Goldberg for the Defendants

Hearing date: 12,13,14,17,18,19,20 March 2014
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JUDGMENT
Introduction 

1.	The claimant, Harbro Supplies Limited (Harbro) for many years has traded as a supplier of tools and products for those working with stone, marble, granite and concrete.  Its managing director is Mr David Breden.  The first defendant, Mr Gordon Hampton was engaged by Harbro in the period February 2010 to December 2012.  He was appointed a director on 5 January 2012 and was removed from that office on 7 December 2012.  This followed his physical departure from Harbro’s premises in October 2012 when Mr Breden asked him to leave and he did so.

2.	The second defendant, Jeremiah Strongarm Limited (JSL) is a company incorporated on 22 January 2013.  Mr Hampton is, I believe, its sole director and he lives at Shincliffe Hall, Co Durham.  In his witness evidence he refers to JSL as "my company".  It is common ground that it trades in the same business as Harbro in that it supplies tools and products to same business sector as Harbro.  That sector is predominantly memorial masons.  

3.	The third defendant, Mr Stephen Haines was employed by Harbro as a van driver/salesman from about 4 August 2010 to 22 February 2013 on which date he resigned.  He was engaged by JSL from 25 February 2013, the next working day.  His evidence is that he commenced work for JSL on an unpaid, trial basis but since August 2013 he has worked full-time for JSL as the memorial sales manager and thus he has a more executive role than that he fulfilled at Harbro.  When working at Harbro he had a basic wage of about £16,000 a year supplemented by commissions which perhaps added a further £900 a month on average to his gross pay.  His annual gross pay including commissions was therefore about £27,000 to £28,000.

4.	Neither Mr Hampton nor Mr Haines are subject to any contractual restraints relating to the employment that they can undertake post termination of their relationship with Harbro.

5.	It is common ground that during the time that Mr Hampton and Mr Haines were engaged by Harbro it operated a database known as the Harbro Multipac Database which included;

(i)	The names and addresses of customers and details of their buying history and the price at which products were sold to them

(ii)	The names and addresses of suppliers and details of Harbro’s buying history and prices paid.

The claims and counter claims

6.	Harbro, represented by Mr Dominic Bayne of counsel, has a number of complaints about the conduct of the defendants for which it seeks redress.

Claims against Mr Hampton

(i)	Between March 2012 and September 2012, in breach of contract and his fiduciary duty to Harbro, Mr Hampton copied the Harbro Multipac database onto his own computer(s) and created a new database, called the Jeremiah Strongarm Database (the JS Database) which incorporated the customer and supplier information from the Harbro database.

(ii)	That since about 22 January 2012, in breach of his contractual and fiduciary duty, Mr Hampton has supplied confidential information from the Harbro database and the JS database and/or copies of such information (whether confidential or not) to JSL and Mr Haines and that, along with Mr Haines and JSL, he has used that information to compete with Harbro and target its most significant customers.  Harbro relies on 11 examples of such conduct.  Insofar as the information is not confidential, Harbro contends that its use provided JSL with a springboard which enabled JSL to get a head start in its competing business at the expense of Harbro.

(iii)	That on 3 occasions between 27 October 2010 and July 2011 without authority Mr Hampton used Harbro funds to pay personal expenses incurred in respect of building work at Shincliffe Hall and the cost of garage bills in respect of Mr Hampton’s own motorcars.  The expenses wrongfully claimed amount to £9006.26.

(iv)	Prior to about September 2012, wrongfully and in breach of his fiduciary duty, Mr Hampton converted to his own use, along with Mr Haines, items of Harbro’s stock amounting to £115.56

(v)	That between March and September 2012 he copied Harbro’s balance sheet to his own computer and altered it to show himself to be a 50% shareholder in, and a creditor of, Harbro.

Claims against JSL

7.	It is alleged that:

(i)	knowing the information to have been obtained unlawfully, JSL has used the confidential information contained in the Harbro and/or JS database to target and divert Harbro’s customers. 
 
(ii)	Alternatively it ought to have known that Mr Hampton was acting wrongfully in supplying it with copies of confidential information.

(iii)	Alternatively it has used information from the Harbro database to target Harbro’s most significant customers.

Claims against Mr Haines

8.	It is alleged;

(i)	That he has made false expenses claims while working for Harbro totalling £967.47.  Mr Haines no longer seeks to defend that allegation and recognises that this sum is due to Harbro subject to his counterclaim. 

(ii)	That, together with Mr Hampton, he converted to his own use stock to the value of £115.56 belonging to Harbro.

(iii)	That he used Harbro confidential information namely the Harbro database and/or the JS database to target and divert customers knowing that the database was confidential to the claimant and unlawfully obtained or turning a blind eye to it.

The Defendants’ position

9.	All 3 defendants are represented by Mr Simon Goldberg of counsel.  First, it should be said that Mr Hampton does not concede that he had any fiduciary duties to Harbro once he ceased to be a director.  In addition it is argued that any contractual duties he had terminated when he left Harbro in October 2012 and, if not then, in December when his relationship with Harbro was completely severed by his removal from office as a director.

10.	Secondly, Mr Hampton accepts that the Harbro database was on his personal computer and on a server at Shincliffe Hall but after he left Harbro he immediately sought to delete the database and in so far as that was apparently not successful, he has made no effort to access it in furtherance of the interests of JSL or indeed at all.  He does not deny that JSL has contacted customers and suppliers of Harbro since February 2013 but the details of those customers and suppliers was known to him and/or Mr Haines in any event because it was knowledge inevitably and innocently picked up by their association with Harbro over more than 2 years.

11.	Furthermore, all 3 defendants deny that the information that they are accused of using was confidential information in any event which can give rise to a claim for breach of confidence.

12.	It is further contended that any information on Mr Hampton's or indeed Mr Haines computers/servers did not get there improperly.  It was imported into the relevant computers/servers to enable daily use by Mr Hampton in the discharge of his duties to Harbro and as a remote backup so that data would not be irretrievably lost in the event of a catastrophic failure of the system at Harbro’s premises.

13.	Mr Goldberg contends that the reasons why the information ended up in the possession of Mr Hampton and Mr Haines is important.  He argues that even a springboard claim based on use of non-confidential information is not sustainable where the non-confidential information was legitimately obtained.

14.	As regards the claim against Mr Hampton for expenses relating to his home and his motor vehicles, his position is that he does not dispute that Harbro made the payments but that Harbro, through Mr Breden, agreed to pay them in consideration of his working initially for no remuneration and subsequently for modest remuneration.

15.	As regards the allegation that he converted the claimant’s stock to his own use, this is denied.  Mr Haines adopts the same position.

16.	As regards the allegation that he copied Harbro’s balance sheet and manipulated it, first he does not concede that he was not entitled to copy a balance sheet since he was a director.  Secondly, he makes no concession that he manipulated it and in any event he denies that any manipulated balance sheet was used in a manner that disadvantaged or caused loss to Harbro.

17.	As regards the allegation of wrongful use of Harbro’s information, the position of JSL accords with that of Mr Hampton.  It is not, as I understand it, suggested that Mr Haines was a fiduciary but that essentially he dishonestly assisted Mr Hampton in utilising Harbro’s information for the benefit of JSL.  This is denied by Mr Haines.

Counterclaims

18.	There are various counterclaims, some of which continue to be pursued whilst others do not.

Mr Hampton’s counterclaims

(i)	A 1/3 shareholding in Harbro.  This is no longer pursued.

(ii)	Monies for the use by Harbro of Mr Hampton's van.  Harbro does not dispute that it used the van but contends that Mr Hampton permitted its use in consideration of Harbro meeting Mrs Hampton's petrol costs.

(iii)	The proceeds of sale of items sold by Harbro but belonging to Mr Hampton.  This claim has been settled on the basis that Harbro acknowledges that it owes Mr Hampton £273.

(iv)	Delivery up of various items of computer hardware and the multipac programme software which Mr Hampton says belongs to him.  In his final submissions, Mr Goldberg did not formally abandon the claim for delivery up of the software but acknowledged that realistically that claim may be confined to £50 in lieu which was the amount that Mr Hampton paid to the author of the software for access codes to enable Harbro to use the programme.  The claimant accepts that a laptop left by Mr Hampton when he left the office at Mr Breden’s request in October should be returned.

(v)	£10,000 being money lent to Harbro (or Mr Breden on behalf of Harbro) to help fund the purchase of an aircraft for Harbro.  The claimant denies that it received any such loan and in so far as a loan was made, which is denied, it was not made to the claimant but to Mr Breden personally in whose name, it transpires, the aircraft is registered.

Counterclaims of JSL 

19.	JSL counterclaims for unlawful interference with its business.  This counterclaim is not being pursued.

Counterclaims by Mr Haines

20.	He claims for holiday pay and commission of £430.11 and £1564.76 respectively.  

21.	The issue in respect of holiday pay has been narrowed.  Harbro accepts that Mr Haines is entitled to the equivalent of 5 days holiday if I am satisfied that it was agreed with Mr Breden that all 10 days of bereavement leave that Mr Haines took in August 2012 would not count as holiday.  If, on the other hand, I determine, as Harbro contend, that only 5 days bereavement leave would not count against holiday and that the other 5 days would then Mr Haines accepts that no holiday pay is due because he has had all the holiday to which he was entitled in the relevant year.

22.	As for commissions, Harbro say that Mr Haines earned none in either January or February 2013 because his sales did not exceed the monthly threshold of £2000 beyond which an entitlement to commission arises.

Scope of this judgment

23.	By an order of 18 February 2014 this hearing is limited to liability subject to my otherwise ordering.  It is clear that there are at least some aspects of the claim and counterclaim that can be dealt with in their entirety at this hearing, to the extent that liability is established.

Nature of the Evidence

24.	I have heard 6 days of evidence in this matter most and which has been directed to issues surrounding the question of the use, if any, to which the defendants put the claimant's database.  However, in recognition of the fact that much about the outcome of this case is dependent upon the credibility of the main protagonists, the evidence has focussed to a large extent on issues of credibility.  Of course, the views formed as to the credibility of the main witnesses with regard to the database will inform views as to their reliability in respect of other areas of claim and counterclaim.

Background

25.	By February 2010 Harbro appears to have been struggling financially and had also experienced difficulties at board room level.  As a result, the majority shareholder, David Appleton had invited his son-in-law Mr David Breden to become involved in the company to guide it through its difficulties.  

26.	Mr Breden had commercial experience as the director of a successful electrical company, J Terry Electrical Ltd but he was unfamiliar with this particular market and recognised that he would benefit from some assistance from somebody with more relevant business acumen.  He and Mr Hampton had been friends for some time.  Mr Breden believed Mr Hampton had successfully run a company, Ashfield Ltd which, like Harbro specialised in trade supplies although to a different sector.  He had however recently retired and so Mr Breden felt that he may have the time and inclination to assist in steering Harbro through its difficulties.

27.	Mr Hampton therefore came on board as the company's chairman in about February 2010 with a view to undertaking various management and administrative tasks.  He was not however appointed a director until January 2012.  His evidence is that he was not actually aware of his appointment as director but nevertheless it appears that he accepts that his duties would have resulted in him being a de facto director even if he were not a de jure director.  

28.	There was no written contract of employment and no monetary remuneration was agreed.  Mr Breden and Mr Hampton both agree that Mr Hampton would be compensated for his time by the provision to him of certain benefits in kind related to his motor vehicles and Mr Hampton's refurbishment of Shincliffe Hall but the extent of the benefits in kind that Harbro would provide is very much in dispute.

29.	It appears to be common ground that as at February 2010, Harbro’s management systems with regard to stock, customers and suppliers and accounting were not efficient.  Mr Hampton saw it as his priority to improve this and suggested that Harbro adopt the multipac computer programme with which Mr Hampton was familiar since he had operated it at Ashfield.  

30.	Mr Breden could see the sense in this and so in about March 2010 (Harbro having purchased an access code from the author of the software) Mr Hampton and Mr Graham Barsby, an independent IT contractor and Mr Dean Robinson, Harbro’s in-house IT manager, migrated the information previously held by Harbro on their inferior system (the OPERA system) onto the multipac database.  Such information included the information to which I have referred above but did not include customers’ e-mail addresses.

31.	Mr Stuart Palmer, a co-director of Harbro from whom I heard evidence and whose witness statement start at 1/200A, said that the multipac database created by this exercise contained details of about 5000 customers and about 400 suppliers, details of prices paid to suppliers and prices paid by customers as well as considerable amount of other information.  All the information had been collated over many years. 

32.	The multipac database was available to Mr Hampton on a laptop and in fact ultimately he had access to it at Shincliffe Hall because at some point the database was backed up regularly to a server located there.  Mr Hampton contends that this was agreed with Mr Breden in order that data would be preserved if there was a catastrophic IT failure at Harbro premises. Mr Breden denies that.

33.	As I have mentioned, in October 2012 Mr Hampton was asked to leave the claimant's premises because issues had arisen causing Mr Breden to mistrust him.  He did so immediately indeed leaving his laptop at the premises.  As I have also mentioned, he ceased to be a director in December 2012.  JSL was incorporated in January 2013 and since then has operated in competition with Harbro.  Mr Haines joined JSL on Monday, 25 February 2013 (albeit he contends on a probationary basis) having resigned from Harbro with effect from the previous Friday, 22 February.

34.	Mr Hampton says that following his departure from Harbro he took great care to delete all Harbro information from computers/servers to which he had access.  As far as he knew he had no Harbro data on his systems after November 2012.

Evidence

35.	Mr David Breden and Mr Gordon Hampton were the witnesses most extensively examined in the witness box.  Mr Breden has made a number of statements in the course of these proceedings but perhaps the most relevant for my purposes is that of 28 November 2013 commencing at 1/201.  It is a lengthy statement running to 33 pages and 95 paragraphs.  Mr Hampton has also made 2 statements and sworn 2 affidavits.  Perhaps his most comprehensive evidence is from 2/358.  That runs to 23 pages and 93 paragraphs.  I believe that it will be helpful to use these as a basis for a consideration of the claims and counter claims and responses to each. I propose to address the claim concerning the use, if any, of the Harbro database after I have set out the respective positions in relation to the other claims/counterclaims. 

The claim in respect of recovery of costs in relation to Mr Hampton's motor vehicles and work at Shincliffe Hall.

36.	It was Mr Breden's evidence that the terms of Mr Hampton's engagement were orally agreed on the basis that initially, until the company was in a position to actually pay Mr Hampton, his remuneration would be confined to reimbursement of his travel expenses to and from Harbro premises, the cost of business internet access to his home and the use of Brian, an employee of Harbro, or possibly J Terry Electrical Ltd, to assist in the refurbishment project at Shincliffe Hall.

37.	As far as Mr Breden was concerned that remuneration did not extend to the cost of servicing or repair of any of Mr Hampton's extensive collection of cars nor did it include the cost of work done at, or materials supplied to, Shincliffe Hall by third parties. 

38.	Mr Breden contends that he has identified 3 invoices for work done on behalf of Mr Hampton and paid by Harbro which fell outside the agreement.  Those relating to JG Supplies were not identified by Mr Breden as unauthorised expenditure until after Mr Hampton’s departure from Harbro. 

39.	At page 2/516 is an invoice dated 29 September 2010 for £2738.71 from JG Supplies Ltd.  It is addressed to Mr Gordon Hampton at Harbro.  It transpires that it relates to work undertaken and materials supplied to Mr Hampton at Shincliffe Hall by Mr Barsby who I have already mentioned briefly in a different context.

40.	Mr Breden points out that payment was made by 2 separate cheques signed by Mr Hampton, one for £1410.61 and the other for £1328.10 and each was drawn on different dates in October 2010.  In addition they were debited to a nominal ledger rather than to a specific supplier ledger.  Moreover the ledger records the transaction is having taken place on different days namely 16 July 2010 and 11 August 2010, neither of which bears any relation to either the date of the invoice or the date of payment.  Mr Breden contends that this is evidence of an effort to conceal the payment and that that is not consistent with the suggestion that payments of this nature were agreed by Harbro.

41.	At 2/528 is a second invoice from JG Supplies dated 31 October 2010 for work done at Shincliffe Hall.  This was for £3122.18 and was also paid by 2 cheques which were not sequentially drawn (one cheque number is 705029 and the other is 704955).  This transaction was also debited to a nominal ledger in December 2010 albeit that on this occasion, there is only one entry in that ledger for £3122.18.  Despite the lack of the final twist of 2 separate postings in the nominal ledger Mr Breden argues that the trail is indicative once again of an intention to conceal.  It is right to say that Mr Barsby, from whom I heard, thought that he probably told Mr Breden at or around the time the work was done at Shincliffe Hall that he was working there because he and Mr Breden were good friends who saw each other socially.  At 3/865 is a copy of a letter that Mr Barsby wrote to Mr Breden on 11 April 2013 in which he tells Mr Breden that he had been paid with Harbro’s cheques.

42.	It is Mr Barsby’s evidence was that JG Supplies was not actually a trading firm.  Mr Barsby actually traded as J and G Computing.  His evidence at 1/197 paragraph 9 is that Mr Hampton told him to invoice this work in a name that did not include a reference to IT in its title since the work was really to do with the refurbishment of Shincliffe Hall.  JG Supplies was a name used solely to invoice for the work.  Mr Palmer gave evidence that these invoices included, amongst other things, the supply of chandeliers and decorative staircases to Shincliffe Hall.

43.	At 2/532 is an estimate dated 22 January 2011 for £414 for repairs to one of Mr Hampton's two Bentleys.  There is no dispute that the work was done in accordance with these estimates and was paid by Harbro.  At 2/533 and 534 is a further estimate of the same date for £2731.91 for the other Bentley owned by Mr Hampton.  Once again there is no dispute that an invoice for this same amount followed and was paid by Harbro.

44.	At 2/535 is the nominal ledger to which the payment was posted.  This time the cheque drawn and signed by Mr Hampton was for the aggregate figure of £3445.91.  It is posted to the ledger as a transaction dated 12 July 2011.  Whether there is anything sinister in that may depend not least on the dates of the invoices themselves.  Since I have not been apprised of that information, I am unable to assume that the date of posting has any adverse significance.  Nevertheless, Mr Breden points to the entry in a nominal ledger for the aggregate sum of two invoices as an effort to conceal, inconsistent with the proposition that such expenses were payable by Harbro in any event pursuant to an agreement.

45.	Mr Breden was taken to Mr Hampton's comments on these invoices in his witness statement at 2/302 paragraph 30.  Mr Hampton makes the point there that the invoices were openly passed by him to Mrs Eileen Grabinsky, Harbro’s financial controller.  His point is that if his intention had been to conceal it he would hardly have done that.  Mr Breden suggests that Mrs Grabinsky was not a financial controller, she did a bit of bookkeeping but she also did some invoicing and sales and made the tea and as such was hardly likely to look critically at invoices given to her by Mr Hampton for payment.

46.	In his oral evidence however it is right that Mr Breden admitted that he could not recall precisely what the terms were of the oral agreement in respect of those expenses.  To use his phrase "it just materialised".  His point however is that it most certainly did not extend to parts, repairs and servicing.  This was why, when he discovered that Harbro had paid these, he confronted Mr Hampton about them.  This is not disputed by Mr Hampton.  

47.	It is also right to say that Mr Breden did not ask for any money back.  He says not because he did not think that Harbro was not entitled to repayment but because he was unsure what to do bearing in mind that at that time Mr Hampton was not being paid any wages.  It was, he felt, an awkward situation and accordingly he let it pass.  

48.	Mr Hampton points out that 6 months later he became director of the company.  He suggests that this is hardly likely to have happened if Mr Breden believed he was capable of misappropriation of the company's funds.  In addition Mr Breden's own evidence is that he never asked for his money back even after Mr Hampton's departure from the business until he did so in the run up to these proceedings.  I must not overlook that in his oral evidence he spoke of not having asked earlier for the money back because he was not aware that the company had paid it.  That is not consistent with his earlier oral evidence that he actually confronted Mr Hampton about it.

49.	Mr Hampton's position is that he was permitted to put these invoices through Harbro.  That was the agreement is that he reached with Mr Breden when he accepted Mr Breden's invitation to work for a company bearing in mind that he was not initially remunerated with a conventional salary.

50.	Mr Hampton has a number of impressive cars as well as his 2 Bentleys.  He has a VW Phaeton and an AMG Mercedes as well as to other less glamorous cars.  In addition he has a van which figures further in this litigation.

51.	His evidence is that the initial agreement included an agreement that he could put all his motor expenses through Harbro.  His evidence therefore is more robust than that of Mr Breden who, as I have said, conceded in his oral evidence that he could not exactly recall what agreement was reached in respect of those expenses but that “it just materialised”.  It is worth recalling that Mr Hampton accepts that Mr Breden did express to him some anger about the invoices for the Bentleys.

52.	As for the JG Supplies invoices, Mr Hampton disputes that the agreement was confined to Brian’s labour.  His evidence is the agreement extended to reimbursement of costs in connection with labour provided by others and indeed materials supplied by others.  

53.	Mr Bayne drew attention to the apparent inconsistency in Mr Hampton's assertion that it was at the outset of his engagement with Harbro that Mr Breden agreed that all the costs of the general restoration of Shincliffe Hall would be met by Harbro and his evidence in his witness statements dated 6 December 2013, paragraph 16 in which he spoke of a specific arrangement having been made in relation to the work invoiced by JG Supplies.  In his witness statement he refers to that having been agreed during the course of a conversation in Leicester Square when he and his wife were on a weekend break with Mr Breden and his wife.  Mr Hampton's explanation was that this is a misunderstanding.  The conversation in Leicester Square simply arose because Mr Breden did not know who JG Supplies were and Mr Hampton enlighten him.

54.	Mr Hampton was less sure why the JG Supplies invoices had been paid by 4 separate cheques.  He also acknowledged that the fact that the transactions were posted to a nominal ledger would make it more difficult for the nature of the transaction to become apparent.  However he made the point that no VAT was recoverable in respect of these invoices and that may account for a posting to a nominal account but he accepted that even then that would be unusual -- as indeed was the disparity between the invoice dates and the transaction dates as recorded on the ledger.  He pointed out though that the postings to the ledger were not his responsibility and he did not make them.  He did however sign all cheques.

55.	Finally, he makes the point that Brian did not begin to work for Harbro until the end of 2010/early 2011.  Accordingly he argues it is difficult for the claimant to contend that in consideration for Mr Hampton services commencing in early 2010, Harbro offered him Brian’s labour.  I will be corrected if I am wrong but I do not believe that it is in issue that if Brian was not directly employed by Harbro in early 2010, he was employed by J Terry Electrical and so was available to carry out work if directed to do so by Mr Breden. 

Stock theft

56.	From paragraph 72 of his statement, Mr Breden sets out his basis for concluding that Mr Hampton and Mr Haines are responsible for the theft of stock to the value of £115.56.  He paints a picture of a fiendishly complicated arrangement but in his oral evidence he was unable to say that his research had actually established that the minimal stock to which he referred had in fact ceased to be in the possession of Harbro. Mr Palmer likewise was unable to confirm that the goods had actually left the warehouse and could not be accounted for.

57.	I do not intend to dwell on this issue or Mr Hampton’s and Mr Haines response to the allegation.  In light of the fact that the evidence has not established these items (worth only £115) are actually missing, I cannot be satisfied on balance that they have been stolen.  

Manipulation of the Harbro balance sheet.

58.	This is a pleaded as a cause of action but it does not appear from the evidence that any damage has been caused to Harbro.  Attention focused on this issue because Mr Baynes contends that it is indicative of the conduct of Mr Hampton and his propensity to act dishonestly.

59.	The balance sheet starts at 2/539 but the relevant entries are at pages 541/2.  It shows, as a liability of Harbro, a loan due to Mr Hampton and Mr Breden of £115,449.77.  It also cites Mr Hampton as the holder of half the issued share capital in the company.

60.	Mr Hampton does not deny being the author of this document, albeit he cannot remember actually generating it.  He deals with this in his witness statement of 6 December 2013 at 2/377 paragraph 76.  There he says that if he did produce this document he cannot think of any reason for it to provide that he is a 50% shareholder or a creditor.  He can only speculate that he may simply have been "playing around".  He acknowledges that he is not owed any money by Harbro and nor does he now contend that he owns any shares.  In his oral evidence he suggested that he had not tinkered with the balance sheet but again speculated it may have just been playing with the figures.

61.	It is interesting to note that the information in the balance sheet has also found its way into a statement by Mr Hampton of his assets and liabilities, apparently produced for the benefit of his bank as part of their annual review. In that it states that Harbro owed him £57,724.88 (exactly half of the admittedly fictitious amount in Harbro's balance sheet) and that his shareholding in the company was valued at £78,000.

62.	The suggestion is that Mr Hampton has made fictitious entries to beef up his asset position so far as his bank is concerned.  On the other hand, the effect is to add only about 3% to his net current assets (on the assumption that his asset valuations are accurate).

63.	Mr Hampton denies that a schedule of assets was so critical to his relationship with his bankers that he needed to manipulate figures.  He stated that his relationship with them was "relaxed" and they were comfortable with their security.  Nevertheless he is unable to explain why this document came into existence in this form save to suggest that he may just have been "playing around".

The counterclaims 

64.	As already mentioned, Mr Hampton does not pursue his contention that he is entitled to 1/3rd of the shares in Harbro.  His claim in respect of items belonging to him sold by Harbro has been compromised at £273.

Return of computer hardware and multipac programme

65.	With the exception of the laptop which I have refrred to in paragraph 18(iv) above, Mr Breden’s evidence is that the hardware that Mr Hampton supplied to Harbro was gifted to Harbro.  Moreover, it is contended that in any event these are not owned by Mr Hampton but were the property of Ashfield and thus vested in its liquidator on its liquidation.  It is important to note that Mr Breden accepts that other items of office hardware including a printer and a photocopier were introduced into the office by Mr Hampton but were subsequently removed by him without complaint.

66.	Mr Hampton contends that the hardware belonging to him at Harbro's premises consists of the server and a laptop plus another computer apparently used by a Mr Neil McDonald.  His evidence is that, albeit all this hardware may once have belonged to Ashfield it is now his.  It came out of Ashfield prior to its liquidation and the liquidator has never asserted that it is company property.

67.	I do not intend to dwell on the issue of the return of the multipac software bearing in mind that Mr Goldberg recognises that for all practical purposes this claim is confined to £50 representing the amount that Mr Hampton paid on behalf of Harbro to the owner of the software for the access codes.

The loan of £10,000

68.	This claim appears in paragraph 56 of Mr Hampton's defence and counterclaim and is dealt with in a witness statement at page 2/303 paragraph 32 and a further witness statement at page 2/368 paragraph 40.  He contends that he lent £10,000  to the company as part of the cost of an aeroplane on the basis that would enable Mr Breden to liaise with key foreign suppliers more efficiently, especially since he has a pilot’s licence.  It would also help in keeping a finger on the pulse with regard to the mobile sales force throughout the UK because Mr Breden could easily meet the company's representatives, however distant, and network with the company's customers.

69.	Mr Hampton's evidence was that Harbro did not have sufficient funds to buy the aircraft.  Mr Hampton lent £10,000, Mr Breden lent a further £10,000 and the company funded the balance of £10,000.  Mr Hampton now wants his money back.

70.	Harbro’s position is that it did not borrow £10,000 from Mr Hampton.  Mr Breden deals with this in his witness statement at 1/230 paragraph 83.  True it is that on 27 August 2010 Mr Hampton wrote a cheque for £10,000 but it was payable not to Harbro but to Mr Breden personally and Mr Breden says was in repayment of £5000 lent to Mr Hampton by Mr Breden in various tranches over time and £5000 paid in cash by Mr Breden to Mr Hampton there and then.  That was £5000 cash that Mr Breden had in the office that day which Mr Hampton saw and asked if he could have because he needed to pay some tradesmen who had been working at Shincliffe Hall and he wished to do so in cash.

71.	Mr Breden himself pointed out a discrepancy between his evidence in relation to this claim at 1/230 paragraph 83 and his evidence at page 1/175 paragraph 13.  This latter is a witness statement made on 4 April 2013 in connection with interlocutory proceedings.  That explanation which, for brevity I need not repeat, is apparently completely wrong.  He said that he failed to read that statement closely enough or indeed at all before he signed it.  It is inevitably troubling that anybody who is literate, much less any businessman would be disposed to sign a statement, especially one endorsed with a statement of truth, without going to the trouble of reading it to ensure that it is accurate.  It is right however to record that the account that Mr Breden says is accurate is not inconsistent with paragraph 19 of the Reply and Defence to Counterclaim. 

72.	Mr Breden questions in any event whether in fact Mr Hampton was able to afford to make a loan to the company on the basis of his asset position as revealed by the schedule of assets to which I have already referred.  Suffice it to say that he suggests that at best that reveals Mr Hampton to be asset rich but cash poor.  Mr Hampton's response is that he had available overdraft facilities of over £160,000 so to lend £10,000 to the claimant for a good cause was not a problem.

73.	Mr Bayne suggested that the schedule of assets is interesting for another reason.  It sets out in some detail Mr Hampton's assets even down to cash in hand of less than £2250 and bank accounts of less than £1000 but does not mention as an asset Harbro's debt of £10,000.  Additionally the company balance sheet to which I have referred makes no reference to this loan as a liability of the company.

74.	Both documents clearly post date the payment of £10,000 on 27 August 2010.  Mr Hampton's explanation for omitting the £10,000 as an asset in his schedule of assets is that he somehow included this in the £78,000 representing the value of his shareholding in Harbro.  This is an uncomfortable position to take because he recognises now that he has no shareholding in Harbro but even if he did, this is not a convincing explanation.

75.	Finally, I should record that Mr Hampton acknowledges that even though this loan was intended to be a short term loan, he never asked for it back at any time before these proceedings were commenced.

The van

76.	This claim is advanced in the counterclaim at page 1/49 paragraph 54.  The van was lent to Harbro in consideration of an agreement that Harbro would

 "pay a monthly sum to defray the costs of provision of the van and depreciation to its value accrued by Harbro's use of it"

77.	It is covered in Mr Hampton's witness statement at 2/376 paragraph 38 and is also touched upon in another witness statement at page 2/299 paragraph 16.  Mr Breden contends that Mr Hampton offered Harbro the use of this vehicle in consideration of Harbro agreeing to fund not only Mr Hampton's but also Mrs Hampton's petrol expenses. He denies any agreement to the effect that Harbro would pay a monthly sum to defray the cost of the van and depreciation.

78.	Mr Hampton suggested in his oral evidence that the monthly cost was to be a figure representing a standard hire charge for a vehicle such as this but discounted but no actual figure was agreed and nothing was paid from month to month, nor indeed chased.  That is so not only during the period when Mr Hampton was associated with the company but also afterwards.  In addition Mr Hampton could not in his oral evidence confirm or deny Mr Breden's evidence that the van had been in the possession of the company for about 9 months.  One might have thought that if Mr Hampton was expecting a monthly amount for use of this vehicle he may have a reasonable idea of how many months the vehicle was used for.

Mr Haines counterclaims for holiday pay and commission.

79.	As regards holiday pay, it is clear that Mr Haines was entitled to 20 days holiday per year.  If he took less he received pay equivalent to the rate at which his basic wage accrued on a daily basis.  In 2012 he suffered a bereavement and was off work for 10 days.  There is no issue that 5 of those days were allowed as compassionate leave and was in addition to his holiday entitlement.  He argues that Mr Breden agreed that the whole of his 10 day absence could be taken on that basis.  If that is so I would have thought that he is owed 5 days accruing at a rate of £61.53 (£307.65) but his claim is actually for £430.11.  If I find that there was no such agreement then he is owed nothing in respect of holiday pay.

80.	Mr Haines deals with this in his first witness statements at 2/315 paragraph 7 but he also deals with in a second witness statement at 2/349 paragraph 13.  It is difficult to fully reconcile the two accounts given.  In the first he says that when he asked for compassionate leave he thought that Mr Breden had consented.  In the second he says his request was turned down without any consideration.

81.	When he received his next wage slip after he had taken leave he noted that his pay had been calculated on the basis of 10 days holiday but he did not approach Mr Breden to object.  

82.	He also confirms that a colleague, Mr Sweeting had similarly suffered a bereavement in 2012 and he was allowed only one week compassionate leave and a second week was taken as holiday.  

83.	As regards commission, Mr Haines claims £1546.76 - based on average commissions previously earned.  Commission was 10% of "total van profit" over and above £2000.  The van referred to was the van that Mr Haines used for his rounds to customers.  The last commission earned by him was, I think, £487.70 in respect of sales in December 2012.  This was paid to him on 31 January 2013.  The claimant contends that insufficient sales were generated in January and February before Mr Haines’s departure from the company on 22 February with the result that no commissions became payable bearing in mind that commission was earned only if the van profit exceeded £2000 per month.

84.	Mr Haines’s evidence was that it was quite plausible that no commissions were owing because he worked less hours in January and February 2030 than usual because he had "other priorities" not least his wife who sadly had very recently lost her son.

85.	Mr Breden suggested that in any event in an employee's final month no commission is paid to avoid having to approach an ex-employee for overpayments of commission in the event that a clawback has to occur because credit notes have had to be issued.  No policy document or agreement with employees was produced to that effect.

The database

86.	The specific pleaded allegations are at paragraph 14(i) to (xi) and relate to contact that either Mr Hampton or Mr Haines has had on behalf of JSL with Harbro’s customers and/or suppliers, either by telephone or by e-mail.  

87.	As I have earlier made clear, it is suggested that such contact arose from the use of confidential information derived from the Harbro database or the JS database created by Mr Hampton when he was engaged by Harbro.  Alternatively, even if the information was not confidential Harbro contends that it was used unlawfully as a springboard to advance the interests of JSL at the expense of Harbro by targeting Harbro's most significant customers and suppliers.  The contention is that such conduct by Mr Hampton was in breach of his contractual and fiduciary obligations.  The contention as regards JSL and Mr Haines is that they used this information for the benefit of JSL and the detriment of Harbro knowing that it had been unlawfully obtained or alternatively, so far as Mr Haines is concerned,  he turned a blind eye to that.

88.	There is no dispute that contact was made with the customers and suppliers as alleged in paragraph 14 of the Particulars of Claim.  What is denied is that reference was had to be Harbro database to make such contact and further that, even if it was, the information was not confidential or of sufficient value to provide a springboard for JSL’s activities.  Furthermore, it is denied that any contact with suppliers could be characterised as amounting to competition on any basis. Finally, in so far as the claim is based on breaches of fiduciary duty and fidelity or other breaches arising out of their contract of engagement with Harbro, such duties ceased when the relationship with the Harbro was severed.

89.	Mr Hampton and Mr Haines say that they are not per se restrained either contractually or by any fiduciary duty or duty of fidelity from approaching Harbro's customers or suppliers.  They admit that they have done so but on the basis of knowledge that had simply come to them innocently as a result of their association with Harbro over some years.  In other words they utilised knowledge that remained in their heads and was therefore, at worst, class 2 information of the classes of information set out in the seminal case of Faccenda Chicken v Fowler 1987 Ch 117 to which I shall come later.

90.	Both deny that they were specifically told that information coming into their hands in the course of their employment was confidential or that its character made it obviously so.  In the circumstances they contend that there was no restriction on the use of that information after termination of their engagement with Harbro.

91.	Both are clear that they did not utilise any database belonging to Harbro not least because details of the database were deleted by Mr Hampton, or so he thought, from all his computer devices.  To fill in gaps in their memory details about Harbro's customers were acquired through brainstorming sessions by Mr Hampton and Mr Haines and standard research available to anybody in particular Google searches, Yell searches and through two websites specifically referable to memorial masons namely the British Register of Memorial Masons (BRAMM) and the National Association of Memorial Masons (NAMM).  The claimant's position is that the database was clearly used because it was not deleted in November 2012, as Mr Hampton suggests.

92.	I shall deal briefly the allegations set out in paragraph 14; 

(i)	The allegation is that Mr Haines contacted a customer of the claimant, D R Valance by telephone with a view to selling products.

At 3/609 is a transcript of a telephone call between somebody at D R Valance and Mr Palmer in which it is indicated by Mr Palmer's interlocutor that Mr Haines has been in touch to try and make some sales on behalf of JSL.

Mr Haines deals with this in his witness statement at paragraph 25 on 2/352.  He says that this company was personally known to him and so he had no need to access the Harbro database in order to appreciate that it might be worthwhile to get in touch.  He accepts that he may well not have recalled a telephone number but that he would have googled that.  He did not have recourse to the database in order to get it.

(ii)	This allegation of that Mr Haines contacted Jon H Memorials by telephone offering to sell to it at a 10% discount.  It is accepted that this firm was also a customer of the claimant.

At 3/613 is a transcript of a conversation between the claimant and a person from Jon H Memorials.  Mr Haines does not deny that he offered a 10% discount, as is reported in the transcript.  Once again however his position is that this firm was known to him and their telephone was obtained from an internet search.  A 10% discount was offered against Harbro’s published prices readily ascertainable from the internet.  That discount was not on the basis of any inside information known to Mr Haines by virtue of his appointment with Harbro.

(iii)	  This allegation is that Mr Haines contacted a supplier, NBT. 

 The transcript of a conversation between NBT and the claimant is at 3/627 but that suggests that it was actually Mr Hampton that made contact.  Mr Haines has no recollection of making contact with this firm.  In any event, the point is made that NBT is a supplier.  How, the defendants ask, can contact with a supplier with a view simply to obtaining supplies be construed as interfering with the claimant’s business?  Especially when the evidence is that JSL have not purchased supplies from them.

(iv) This allegation is of an approach by telephone by Mr Haines to a firm called Underwood, once again a client of the claimant.  

The transcript of the conversation between Underwood and the claimant is at 3/645.  Once again Mr Haines’s position is that the firm was known to him and the telephone number was obtained from the internet.

(v) This raises the same complaint but this time concerning Scott Memorials.

The transcript of the relevant conversation between the claimant and Scott       Memorials is at 3/640 and Mr Haines’s explanation is the same.  

(vi) This complaint relates to a telephone call to Nettlebank by Mr Haines. 

      This firm, like NBT, is a supplier.  It is not clear from Mr Haines statement at 2/353 paragraph 30 whether he admits to contacting them but in any event they were a company known to him.  He argues in his witness statement that JSL have not sold to Nettlebank.  This is a little disingenuous since they are a supplier.  They have certainly supplied JSL 

In fact, in his oral evidence Mr Hampton accepted that he may well have contacted this firm.  The transcript of the conversation between Nettlebank and Harbro is at 3/635 and it suggests that this might have been so.  Indeed it was put to Mr Hampton that he had intended to mislead the person to whom he spoke at this firm by suggesting that JSL only intended to trade in Scotland and Ireland when that was manifestly not the case.  Mr Hampton disputes that but says that he knew the firm from his time at Harbro and he did not refer to the database in order to think it appropriate to get in touch.

(vii)  The allegation is that Mr Haines contacted Zettex, a Dutch supplier of goods which were sold by Harbro as “own brand” goods.  

The relevant transcript of the conversation between Zettex and Harbro is at 3/649.  In his witness statement at paragraph 31 Mr Haines accepted that he contacted them after initial contact by Mr Hampton.  Mr Hampton accepts that he contacted this firm but he disputes that Zettex’s report of his conversation with them is entirely accurate.  As expected, Mr Hampton said that he was aware of the existence of Zettex without reference to the database and indeed Mr Palmer accepts that that would have been so.

(viii) The allegation is that JSL sent an e-mail to a large number of Harbro customers on 5 March 2013.  

The e-mail itself is at 3/754.  It is actually signed by Mr Haines but Mr Hampton recognises that he may well have sent it under Mr Haines’s name.  Be that as it may, Mr Haines was prepared to accept in his oral evidence that he will have had a hand in compiling the list of the recipients to whom this e-mail was sent and he did so by reference to the NAMM and BRAMM websites.  His evidence is that he went through these websites looking for familiar names.  He did so he says without reference to the database.

The copy of the email in the court bundle is a closed copy in the sense that it does not reveal the actual names of recipients.  However I believe it is accepted that it was sent to those who appear on a Harbro list of customers at 3/887 and it was the same recipients who received an e-mail dated 22 May at 3/891.  What is not disputed is that all except two of the recipients were customers of Harbro and the two who were not had connections with such customers.  As mentioned, it is not disputed that the Harbro database did not contain the e-mail addresses of its customers.

The e-mail offered gold leaf to its recipients.  This is a staple product in this sector but Mr Breden was unable to say whether the price at which JSL were selling it was more or less than the price at which Harbro were offering at the time.  What he does say however is that the extensive list of recipients realistically would have been put together by reference to the Harbro database -- even if only to provide the defendants with the information from which they could then search for e-mail addresses.

In fact, so far as e-mail addresses are concerned, it was Mr Hampton's evidence that before any e-mails were sent, the prospective customer was contacted by telephone to obtain permission to e-mail shot them and to confirm their e-mail address.  It is right to say that Mr Hampton makes no reference to this refinement in his affidavit at 2/434 paragraph 6 or his witness statement at 2/381 paragraph 90.

(ix)  This relates to an e-mail of 7 March 2013 to be found at 3/756.  

The position of both the claimant and the defendants in relation to this is identical to that in relation to allegation (viii) above.  Once again Mr Haines confirms that he may well have had a hand in compiling the list of businesses to which the e-mail was sent but once again that was done without reference to the Harbro database.

(x)This relates to an approach by Mr Hampton to a supplier, AS Handover.  

Once again it is not disputed by Mr Hampton but he contacted them.  He knew they existed from his time with Harbro and he knew that they were the sole importer of a particular that was popular in the memorial masons’ trade but this was not confidential information.

(xi) This is a further allegation that Mr Hampton sent a further e-mail on 11 March 2013 to the same customers of the claimant as the earlier e-mails.  

The position of both the claimant and the defendants is the same as it is in respect of the earlier e-mails.

93.	Much of the evidence about the issues surrounding the database did not actually centre on these 11 allegations but rather on other examples of cases where the database had allegedly been used.  Mr Baynes’s position was that if the Court was satisfied that those had occurred and the defendants’ evidence in respect of them was rejected then it was considerably more likely than not that the database had been used in the pleaded instances.  Mr Palmer perhaps gave the most extensive evidence about the matters actually pleaded at paragraph 14(i) to (ix).

Further details relating to the database

94.	In order to put in context the approach that the claimant has adopted in this case to establish that there has been a breach by the defendants as set out in paragraph 14 it is necessary to provide additional details surrounding the relevant database.

95.	There is no dispute that the Harbro database was born by the migration of information into the multipack programme from the original OPERA programme and it was consistently used from the date that it went live and that Mr Hampton’s use of it was legitimate.  I have already made the point however that Mr Breden does not accept that he agreed to the database being backed up to a remote server at Shincliffe Hall.  He says that he did not know that that had occurred.

96.	In early 2012 Mr Hampton said that he came to appreciate that Harbro could benefit by having a number of websites each serving a specific niche market.  He felt that it would be a good idea to create another database therefore simply as a modelling exercise which utilised information amalgamated from the current Harbro database and information from the Ashfield database which he had preserved when Ashfield had gone into liquidation.  An amalgamated database was subsequently created and became called the Jeremiah Strongarm (JS) database.  This was a name that Mr Hampton says he simply dreamt up but having done so had it in mind to use it for a website to operate alongside the Harbro website and for Harbro’s benefit.

97.	Mr Dean Robinson, the claimant's IT manager, was asked by Mr Hampton to assist in the amalgamation of the Harbro/Ashfield information.  Mr Robinson has signed a witness statement at 1/188 and he also gave oral evidence.  His evidence was that at no time was he aware that the new database was called the Jeremiah Strongarm database.   At the time he was not aware of the name “Jeremiah Strongarm” at all.  However the amalgamation of the two databases was done openly in Harbro’s open plan offices and at no time was Mr Robinson asked by Mr Hampton not to reveal the project to Mr Breden.

98.	Mr Robinson recognised that he may possibly have discussed aspects of this project with Mr Hampton when Mr Breden was present because Mr Hampton and Mr Breden shared an office.  The point is that Mr Robinson recognised that he was not given any cause to believe that the amalgamation of the two databases was in any way to be concealed from Mr Breden.

99.	In any case Mr Hampton says that, having created the amalgamated database as a modelling exercise, he then proceeded to input further data into it simply as an experiment just to establish that the model could actually work in practice.

100.	Having satisfied himself that the model worked, Mr Hampton says he then presented his ideas and the modelling to Mr Breden who rejected it.  So far as Mr Hampton was concerned that was that.  The relevant information, described in Mr Hampton's laptop as "Jeremiah Strongarm" was left to languish in his laptop which he left at Harbro's premises on his departure.

101.	Mr Breden denies that he was made aware of this modelling exercise or that he had ever heard of Jeremiah Strongarm until after Mr Hampton's departure from the company.  He says he learnt about this database when he was innocently interrogating Mr Hampton's laptop in search of some wholly different information to do with a Burns Night celebration to be held in January 2013.  Mr Hampton had a folder on his laptop called "Burns Night".  Within it Mr Breden found a file called "Jeremiah Strongarm".  Since he copied the Burns Night folder to a memory stick this Jeremiah Strongarm file was copied along with everything else.

102.	At that time Mr Breden says he was not aware of who or what Jeremiah Strongarm was or what the file contained and he never looked because there was no reason for his curiosity to be particularly exercised.  

103.	A few weeks later he did a credit check on Mr Hampton and the connection between him and Jeremiah Strongarm was revealed because the check made reference to JSL. He recalled the reference to that file in the Burns Night folder and he opened it to find that it contained all the information from the Harbro multipac database.  There is no dispute that the JS database is a separate application of the generic multipac software.  The Harbro multipac software used by Harbro remained intact and unadulterated.

104.	In order to create the JS database Mr Hampton had actually needed another access code from the programme's creator.  He himself paid the fee of £50 and did not seek reimbursement from the claimant.  One might have expected him to do so if the exercise was for Harbro's benefit.  The JS database is registered to Shincliffe Hall.

105.	Harbro contend that the JS database and the migration into it of Harbro data had nothing to do with an intention to benefit Harbro but was for wholly improper purposes associated with Mr Hampton's intention to take advantage of the information to benefit himself or companies in which he had, or may come to have, an interest at the expense of Harbro.

106.	In February 2013 JSL started trading using the same generic multipac database programme as had been used at Harbro.  Mr Hampton says that he started populating the database with data without any reference to the Harbro database or the JS database.  As I have said, Harbro's position is that this is nonsense and a great deal of the time that Mr Hampton spent under cross-examination in the witness box was designed to demonstrate that that was so.

107.	It is not disputed that the first 150 invoices issued by JSL were to customers of the claimant.  It was not until July 2013 that anybody who was not a customer of the claimant was ever invoiced.

108.	I now turn to the evidence submitted by the Claimants which it says, gives the lie to the contention that the defendants did not take advantage of the Harbro database or its variant, the JS database.

Similarities between Harbro and JSL documents

109.	At 3/671 and 6/1697 are copies of invoice number 7 issued by JSL.  The one at 6/1697 has been provided by JSL as part of the disclosure process.  The second, at 3/671, has been provided to Harbro by the recipient of that invoice, Ayreshire Memorials.  One would expect the invoices to be identical but they are not.

110.	Ayreshire Memorials was given the account code AYRSH1 in the invoice provided by JSL on disclosure.  The account code revealed on the invoice actually received by that company is AYRS01.  That alphanumeric code is the account code used by Harbro and is shown as such in their database.

111.	In addition the VAT code used by JSL in the invoice actually received by Ayreshire is designated as "c".  That is not discernible from the invoice JSL disclosed because the narrative in that has been redacted by them (albeit that there was apparently no order entitling them to do so).  Harbro used the "c" code to indicate that VAT was 20%.  They adopted that code when VAT rose to that rate from 17.5% which Harbro had designated as code "b".  Before that, when VAT was 15%, the relevant code had been "a".  JSL have never operated in a world where VAT was other than 20%.  It is suggested therefore that the use of "c" on their invoice is indicative of details having been lifted from the Harbro database.  Why else use "c" when "a" would do?

112.	At 6/1694 there is an invoice dated 28 February 2013 disclosed by JSL.  The customer is Parkin and Jackson and their account code is PARKIN.  The invoice actually received by this company (at 3/743) gives an account code of PARK03 which is the account code used by Harbro in their database.  Once again the VAT code on JSL's invoice is "c".

113.	In the same vein, an invoice at 3/731 is a copy of an invoice actually received by WB Everingham and Son Ltd from JSL and which Everingham has sent to Harbro at their request.  The code on that invoice is EVER01 which is the code that Harbro use for this customer.  Once again the VAT code used by JSL is "c".  The purportedly identical copy of this invoice produced by JSL is at 6/1705 and the customer code is EVERIN.

114.	An invoice at 3/734 received by OR Jones and Co and which they sent to Harbro at Harbro’s request shows their account code as JONE09 which is the claimant's code for this customer.  The same invoice produced by JSL at 6/1706 uses customer code JONES3.  Once again JSL use VAT code "c".

115.	The implication that Mr Bayne would have me draw is that the defendants have tried to cover their tracks and conceal this incriminating connection by attempting to distance themselves from information contained in the Harbro database.  They have been frustrated by the cooperation of Harbro’s customers who have sent them copies of the actual invoices they have received.  

116.	The explanation given by Mr Hampton in his oral evidence is that initially when he set up the JSL database he did indeed enter the same customer codes for each customer as had been used by Harbro but that was only because he remembered them and they were as good a code as any.  It has to be said this is not quite what he says in his written evidence at 2/435 paragraph 11.  There he says that he was the principal inputter of data both at Harbro and at JSL and that therefore it was likely that he would use the same coding structure when populating the JSL database as he did when populating the Harbro database. 

117.	He did not explain why he would, for example designate OR Jones as JONES3 when at that time there was no Jones 1 or 2. He merely slavishly adopted the Harbro codes because he remembered them.

118.	Mr Hampton says that on about 14 March 2013 the JSL multipac programme irretrievably crashed and he had to repopulate it from scratch.   This time he entered new codes for his customers on an alpha, rather than alpha numeric basis.  When the invoices were reproduced again for disclosure purposes the new code rather than the old code was automatically generated.  Mr Bayne drew Mr Hampton's attention to evidence which Mr Bayne contended made this explanation unlikely. 

119.	At 3/743 is the invoice to Parkin and Jackson sent to Harbro by that firm.  At 6/1694 is the purported copy of the same invoice.  The addresses are different and one is in lower case and the other in upper case.  Mr Baynes suggested that this is unlikely to have automatically changed.  If re- inputted manually for innocent reasons, why decide to change from lower case to upper case?

120.	The same has occurred in the invoices to Ayreshire Memorials at 3/671 and 6/1697 and indeed to Everingham at 3/731 and 6/1705.  The address here is the same but it also changes from lower case to upper case.

121.	Mr Hampson was unable to offer an explanation for these changes other than it was an effort to make things look more professional.  The claimant's suggest that the changes are made in the knowledge that proceedings are on foot to obscure the fact of reliance on the claimant's database.

122.	The date of 14 March coincides exactly with the date that Harbro launched their proceedings against the defendants.  It is also I believe the date immediately following that last date upon which Mr Hampton would have known that Harbro had taken legal advice.  Mr Hampton says the fact that the crash and the institution of proceedings occurred on the same day is no more than coincidence and the decision to change the customer code was unrelated to the prospect of proceedings.  Indeed, so far as he was concerned he had no knowledge of the possibility of legal proceedings when he undertook this task of repopulating the JSL database.  In fact, he contended at one point in his oral evidence that the decision to change customer codes was taken a few days before the crash, albeit in his statement at 2/435 paragraph 10 he suggests otherwise.

123.	At 3/665 is a JSL aged debt analysis for Stonecraft Fireplaces to whom JSL had obviously supplied materials.  It utilises the claimant's customer codes for Stonecraft, STON12.  The invoice produced by JSL as part of their disclosure obligations at 6/1688 bears a different code, STONEC.  Mr Hampton's explanation is that this code was also changed around 14 March when the JSL database was repopulated.

124.	At 6/1699 is an invoice to Graham Rattray dated 1 March 2013 produced by JSL during disclosure.  This bears the customer code RATTRA.  A JSL VAT analysis report at 9/2809 refers to this.  The code there is RATT02.  This is the Harbro code.

125.	At 6/1701 there is a JSL invoice disclosed by them to a firm by the name of Stephen Gay Memorials with customer code GAY.  In the VAT analysis at 9/2809 they appear to have been entered on the JSL system with the code GAYSO1, the Harbro code.

126.	At 6/1703 EB Memorials Ltd code on the purported copy invoice received from the defendants is EBMEMO.  On the JSL VAT analysis they are AST01.  This is the Harbro code.  Mr Bayne suggests that this is particularly suspicious because they are only ASTW01 on the Harbro database because sometime before they had been known as Astwood Memorials.  They changed their name to EB Memorials long before the incorporation of JSL but Harbro never bothered to change the code.  Why would JSL use a code that bears no reference to the customer's name if they were starting afresh?

127.	The use by JSL and Mr Hampton on its behalf of the Harbro customer codes until the date when legal proceedings came about is not the only matter on which Harbro relies to support their contention that the defendants were utilising the claimant's database at the very least as a springboard for JSL activities.

128.	Harbro also relies on the fact that the addresses of customers as they appear on JSL and Harbro invoices are not only similar but are identical even to the extent of including idiosyncrasies that would not be expected.  A few examples I think will suffice.  

129.	A comparison of the invoice sent by JSL to Ayreshire Memorials at 3/671 and by Harbro at 3/672 shows that both omit the final "s" from Memorials, both abbreviate “industrial estate” to "Ind. Estate", both have a double space between Barony Road and the following comma and both are in upper case.

130.	Mr Hampton says that he cut and pasted the address from an Internet search of the Ayreshire Memorials website.  My attention has not been drawn to any website which bears these same idiosyncrasies.  Two internet searches that have been produced at 6/1547 and 6/1548 do not reproduce the firm's address in that form.

131.	A comparison of the invoice sent by JSL to WP Everingham and Son Ltd at 3/731 and one sent by Harbro at 3/732 shows that in both the name of the firm is in lower case but the address is in upper case.  Mr Hampton suggests that this is either a coincidence or the result of cutting and pasting from some website.  That website was not produced.

132.	A comparison of an invoice sent to OR Jones and Co by Harbro and one sent by JSL at 3/735 and 734 respectively reveals that both have a double space between "OR" and "Jones" and both have both a full stop and a comma after the word "Co".  In addition both have the firm's name in upper case but the address in lower case except for the word "Holyhead" which in both cases is in upper case.  Once again Mr Hampton suggests that the address has been cut and pasted from a website.  On this occasion he actually cited the website in his witness statement at page 2/437 paragraph 20.  A screenshot of that website is at 4/917 and it is not identical to the address on the invoices.

133.	I have already referred to the VAT analysis ledger at 9/2809 dated 28 February 2013 but it relates to invoices dated in March.  Mr Hampton acknowledged that he had adjusted the calendar in the computer in order to produce this document.  His explanation that he did so to input February invoices was difficult to understand since all the invoices referred to in that analysis are March invoices.  Mr Bayne argues that it shows that the documents are wholly unreliable, as does the fact that there are errors in invoice dates in that the invoice dates in the VAT ledger and the invoices themselves do not always coincide.  He drew Mr Hampton's attention to some of these.

134.	For example, an Everingham invoice number 10011 is dated 5 March 2013 in the VAT ledger but the invoice itself is dated 15 March.  In addition the VAT ledger omits invoice 15 but there is one at 6/1709 dated 15 March.  In addition invoice 16 on the VAT analysis is an invoice to a firm called Welsby.  In fact invoice 16 is actually to a firm called HO Davies Ltd.  In addition the VAT analysis has invoice 21 as going to Stonecraft but in fact the invoice is addressed to George Hill and Son.  Invoice 19 is actually addressed to Stephen Gay Memorials but on the VAT analysis somebody else is entered as the recipient.

135.	Mr Bayne argues that this is all evidence of manual alterations with a view to concealing the truth by creating differences in the information because Mr Hampton realised that the claimant was onto him.  He argues that mistakes have been made by Mr Hampton that clearly demonstrate this.  Whilst Mr Hampton denies manipulation, he has no explanation for the disparity between invoice recipients as per the VAT analysis and the invoices themselves, save possibly that it has something to do with the order in which he inputted the information into the database after the crash.

136.	Mr Bayne argues that further evidence of attempts to distance the JSL database from the Harbro database after Mr Hampton became aware that the claimant was onto him is to be found in the fact that all invoices submitted by JSL before 14 March 2013 bear a field entitled "cus vat no." followed by the suffix "GB".  This is just like the Harbro invoices.  This disappears from the JSL invoices after 14 March 2013. 

137.	Mr Bayne argues that the suffix "GB" could not have been important per se to Mr Hampton, he had for example never used it when utilising the Ashfield multipac database and apparently he did not need it after 14 March.  Mr Hampton’s explanation is that when he populated the database after the crash, speed was of the essence so small refinements such as this were omitted to save time.  The fact is however that this suffix "GB" has never been subsequently included.  

138.	In any event, as regards his evidence that every effort was taken to repopulate the database after the crash as quickly as possible, it emerged during the evidence that cutting and pasting was not very efficient because it has to be done line by line and could not be done en bloc.  This gives rise to further concern as to the reliability of his evidence that he cut and pasted customer addresses from the internet because it was an efficient way of doing things.  In fact, Mr Hampton later changed his evidence to say that much data was not cut and pasted but was actually typed in.

139.	There is evidence that Mr Haines used the same product code for products as the numbers allocated to those products by Harbro.  At 3/731 is a JSL invoice which uses the same reference for a part as Harbro.  In fact JSL use a different code for this selfsame product after the crash.  Product codes are of course part of the narrative redacted without the court's authority from the copy of the same invoice produced by JSL as part of their disclosure obligations.  

140.	Mr Hampton says that the product codes were changed purely as a result of the crash.  Harbro product codes were used prior to the crash because either he or Mr Haines or both remembered them and that in any event they were not confidential because they could be obtained from Harbro's published catalogue or from their website.  Mr Hampton had no real explanation as to why they were changed post crash or why an invoice issued before the crash on 26 February 2013 does not have a Harbro product code. All he could offer was that the date on that invoice may be unreliable.  He suggests some support for that can be gained from the fact that, in the customer VAT number box, there is no suffix "GB"; the absence of GB is a characteristic of post crash invoices.

141.	At 3/711 to 717 is an e-mail trail starting with e-mails sent by Mr Hampton to a Chinese supplier while he was working at Harbro.  This trail however ends with an order from JSL.  Harbro contends that this is evidence of the improper use of their information and indeed the fact that information, at least in the shape of e-mails, belonging to Harbro, remained under Mr Hampton’s control after he left Harbro and was used by him for the benefit of JSL.  

142.	Mr Hampton's response is simply that he must have innocently undertaken an e-mail search for this Chinese company on his own computer at home and this e-mail trail was revealed because he usually sent copies of e-mails to himself.  He points out that the time that emails were sent when working for Harbro indicates that they must have been sent from home since many were written in the early hours.  That, he says, accounts for the fact that an email search of his computer at home would reveal it.

143.	At 3/721 is a JSL purchase order addressed to this Chinese company.  It is interesting when compared to a purchase order from Harbro at 3/722.  Not only do they share the same part codes but idiosyncrasies in the part descriptions apparent in the Harbro order are replicated in JSL’s purchase order. For example "G" on line 1 is not aligned with the "G" references that appear thereunder .  Furthermore, in item AFC5 the misalignment of the symbol "x" in the Harbro purchase order due to inadvertent double spacing is replicated in the JSL order, as is the absence of a full stop. 

144.	Mr Hampton's explanation is at 2/437 paragraph 21 and 22.  He says it is because both orders were created using a template designed using Ashfield software and was then sent to the Chinese supplier.  The idea was that it would avoid any misunderstanding caused by language difficulties.  He says that the template was followed exactly in the JSL's purchase order.  In fact, it was not because a full stop in the description of part AFC 5 appears in the template but not in either the Harbro purchase order or the JSL purchase order.  Mr Hampton’s explanation for this is that the relevant field would not permit enough characters to copy it fully and the full stop was expendable.  Of course the full stop could have been added if these space between 1/2” and the "x" symbol had been a single space rather than the inadvertent double space.  As to why the JSL invoices uses Hambro’s part codes, once again the explanation is because Mr Hampton says that he remembered them.  Indeed, he says that he invented the part codes for Harbro and so remembering them is less unlikely.

145.	At 03/77 is JSL’s purchase order to a company called Nettlebank.  The part code, FX 002, is a Harbro one.  On this occasion Mr Hampton does not say he remembered the code, he says he spoke to Nettlebank and they gave him the code and asked him to put it on a purchase order so they knew what they had to supply.  He did not explain why the very detailed description of the product as set out in the purchase order (350 x 25mm stainless steel solid anchor type A) was not enough for Nettlebank’s purposes.  

146.	At 3/740 is another JSL purchase order where the narrative does not differ at all from those used by Harbro.  In this case not only is the part code the same but "mm" (the abbreviation for millimetres) appears for the dimensions of some parts but not for others in exactly the same way on both orders.  The explanation by Mr Hampton is that "mm" is omitted because once again the field only allows a certain number of characters.  This however is not supported by the fact that later entries in the same field contain 2 more characters.

147.	I was referred to other documents where the part codes are the same and appear in the same way.  I do not intend to set them all out.  One final example I think will suffice.  An invoice at 3/743 to Parkin and  Jackson includes some safety glasses.  In the invoice they are described as “Horiz. glass lens safety spec BBO3024177.  That is exactly the same description as in the Harbro stocklist, even down to the absence of an “s” after “spec”.

Mr Haines evidence on the issue of the use of the database?

148.	In his witness statement at 2/350 paragraph 18 Mr Haines stated that he was not aware that Harbro had a database comprising a list of its customers albeit that he knew they had a stock database.

149.	In his oral evidence in answer to a question from me he said exactly the opposite namely that when working at Harbro he had been aware that Harbro ran the multipac database and that he appreciated what it contained and indeed that Mr Hampton had access to because it was backed up to a server at Shincliffe Hall.   

150.	His evidence was that Mr Hampton did not tell him that he had deleted that information when he parted company with Harbro but nevertheless he (Mr Haines) never asked to use the database after he left Harbro and, for the purpose of contacting customers, he relied on his memory, brainstorming with Mr Hampton and internet searches to fill in the gaps that he had forgotten.  

151.	That was inevitably a long and cumbersome process yet he says it simply never occurred to him to ask Mr Hampton about the database.  His position is that he did not do so because "his head was in bits".  He had lost a parent in mid-2012 and at the end of 2012 he lost a stepson.  He said he was not thinking straight.  In any event he said that he appreciated that the Harbro database was Harbro’s property and that it should not be used by anybody but Harbro and he was clear that he did not use it.

152.	The point is that his evidence is that Mr Hampton did not supply him with information from the Harbro database, so far as he knew.  Mr Hampton would say if he was minded to use the Harbro database he would have provided Mr Haines with information from it because to do so would have saved a great deal of time because it would have avoided the need to dredge up details from either memory or from other sources.

153.	Mr Haines was referred to evidence of his use of Harbro product and customer codes in respect of orders placed with JSL.  An order from OR Jones at 3/885 is an example because it bears both the Harbro customer code and their product codes.  His evidence was that he remembered these codes.  I accept that his job was to take orders for these products and so some codes for popular products would be ingrained in his memory.  Nevertheless, this does not explain why Mr Haines bothered to put these codes on JSL order forms unless they were useful to JSL.  It is not clear whether the order at 3/885 was dated before or after 14 March crash.

154.	Mr Haines does not deny telephoning some Harbro customers on behalf of JSL after he left the claimant.  The evidence that he did so is in the form of the transcripts of telephone calls that I have already referred to.  His evidence however is that phone numbers came from internet searches, not the database.  Where it is reveled in those conversations with customers that he offers a 10% discount from Harbro prices he says he was confidently able to do so because the Harbro prices are published online.  He appreciated that the Harbro published prices were sometimes further discounted but his evidence was that any reference to a 10% discount was merely from the Harbro published prices.

Conclusions as to the facts.  

155.	Before setting out conclusions it is right to give my impression as to the reliability of the main witnesses.

156.	It seems to me from the unsatisfactory nature of the explanations by Mr Hampton and the sheer number of examples where there is a coincidence between Harbro and JSL references, that the evidence that he was utilising the Harbro database after his departure from Harbro is overwhelming.  

157.	As to the apparent crash in the JSL system on 14 March 2013, I am conscious that I have not heard any independent evidence that the JSL database actually did crash then.  It is highly suspicious that it appears to have done so just at the time these proceedings were launched.  

158.	In my view one is led to the inevitable conclusion that customer codes and part codes were changed in mid-March in order to cover tracks and to conceal the use by Mr Hampton of the Harbro database.  This is especially so bearing in mind that it is not disputed that Mr Hampton actually had access to the Harbro database via his server at Shincliffe Hall.  Thus he had the opportunity to use the database and in my view it would be positively perverse in the light of all the evidence to conclude that he did not take advantage of that opportunity.

159.	The fact that over almost 2 days of cross examination he persisted in a version of events that, as the hours wore on, became increasingly unsustainable cast Mr Hampton in what can best be described as a very unfavourable light and causes me to conclude that no reliance can be placed upon what he has to say unless it is corroborated by other, reliable, sources.

160.	In my view no such corroboration came from the experts.  They were unable to conclude whether the Harbro database had or had not been accessed or viewed via the server at Shincliffe Hall after October 2012 or after Mr Hampton ceased to be a director in December.  Had the experts been able to conclude that it had then that would have made Mr Hampton's position all the more untenable.  The fact that they could not simply means that the court must look at the other evidence all of which, as I have said, inevitably and inexorably leads to the conclusion that the database was accessed.  

161.	As for Mr Haines,  I understand that his “head may be have been in bits” in early 2013 but the fact is that he admits to knowing of the Harbro database and what it contained and that it was on a server at Shincliffe Hall and that it had not been deleted, so far as he knew.  On the other hand his evidence is that he was prepared to spend hours collating information that could have been provided from that database at the touch of a button but it never occurred to him to ask Mr Hampton for that information.  I have to say, notwithstanding the personal problems with which Mr Haines was beset, I find that very difficult to accept.

162.	Furthermore, his credibility is not enhanced by the evidence he gave in his defence of Harbro’s claim for repayment of expenses improperly claimed.  The evidence to which he was referred by Mr Haines in this connection (which included signatures in fictitious names) would surely have been very uncomfortable for him and his efforts to explain it away were markedly unconvincing -- a fact subsequently clearly appreciated by him since his defence to that claim is now no longer be pursued.

163.	Additionally, I should add that the expert evidence seems to suggest that some information from the Harbro multipac appears to be copied in October and November 2013 to a laptop to which he had access.

164.	As for Mr Breden, it has to be said that he was not a wholly satisfactory witness either.  I have already commented on his apparent willingness to sign a written statement which he did not properly read.  In addition often he did not appear to have a full grasp of how things actually operated at Harbro.  He often indicated that Mr Palmer would be in a better position to throw light on things.

165.	Nevertheless the fact that he seemed to lack a recollection of some detail including those that went to the heart of some of the claims gave his evidence a ring of authenticity.  He did not seek to strengthen Harbro's case by making assertions that would have been easy to make.  I have in mind for example that he conceded without hesitation that he could not remember the specific terms of the agreement about Mr Hampton's cars and that "it just materialised".  He was aware however that Mr Hampton had an extensive car collection.

166.	It has to be said that his evidence that Mr Hampton was prepared to lend a van to Harbro which was obviously going to be used heavily and also give Harbro some office hardware without any payment was difficult to credit, not least in the light of his ready acceptance that some items belonging to Mr Hampton and used by Harbro for the company’s use were taken back and no complaint about that was made.  

167.	As for his evidence that he was unaware that the Harbro database was being backed up to Shincliffe Hall, Mr Barsby had put the remote access arrangements in place. He cannot recall specifically mentioning this to Mr Breden whom he saw regularly, because they were friends, but he acknowledged that he may well have done so.  Mr Barsby was also clear that he was not requested by Mr Hampton to keep silent about the installation of the remote backup facility at Shincliffe Hall.

168.	However, albeit that he did not give his evidence with the same panache or confidence as Mr Hampton I hesitatingly formed the view that his evidence was the more reliable notwithstanding that in parts it did give rise to some concerns.

169.	Mr Palmer’s evidence was given in a forthright and confident way.  He was not particularly involved with the terms of Mr Hampton’s engagement, his written evidence mostly centred on an analysis of the documents.

170.	Mr Barsby and Mr Robinson also came across as objective and honest and there is no reason to doubt that they endeavoured to assist the court where they could.

171.	Against this background I turn to my findings of fact in relation to the claims and counterclaims.  I intend to deal with the database last.

The claim in respect of recovery of costs in relation to Mr Hampton's motor vehicles and work at Shincliffe Hall.

172.	I find as a fact that the extent of the expenses that Harbro were prepared to underwrite in respect of Shincliffe Hall was limited to the use of Brian.  

173.	It is clear that the Shincliffe Hall refurbishment was a major project.  It is, in my view highly unlikely that Mr Breden would agree to give carte blanche to Mr Hampton in connection with work at Shincliffe Hall.  To do so could have committed Harbro to thousands of pounds of expense with little or no control.  It seems to me unlikely that Harbro, through Mr Breden, would have agreed to such an arrangement at any time much less when Harbro was suffering financial difficulties.  

174.	An arrangement whereby Harbro permitted Mr Hampton to use Brian in the refurbishment of Shincliffe Hall at least would have involved no additional cost to the company.  This seems much more likely.

175.	In addition it is clear from the evidence which I have set out that considerable effort appears to have been made to conceal the nature of this expenditure at Shincliffe Hall.  I need only refer to paragraphs 40 et seq above.  That would of course have been unnecessary if such expenditure was in any event authorised.

176.	I acknowledge that Mr Goldberg prays in aid the evidence of Mr Barsby to the effect that he may have told Mr Breden that he was undertaking refurbishment work at Shincliffe Hall and had been paid with Harbro cheques and that Mr Breden had given no indication to Mr Barsby that that was a problem.  However, it is not clear when and whether this conversation took place.  

177.	The same principles apply in relation to motor expenses bearing in mind that Mr Breden was aware of Mr Hampton’s extensive and expensive car collection.  It seems to me unlikely that Harbro would have agreed to underwrite all motor costs including repairs and servicing etc.  That too could have run to enormous amounts bearing in mind the nature and number of Mr Hampton's motor vehicles.  Indemnifying Mr Hampton in respect of his travel expenses is a much more likely agreement.

178.	My view therefore that the agreement did not extend to repairs, service etc is fortified also by the fact that the entry of these expenses in the company's books was not entirely straight forward.  Once again I need go no further than to refer to paragraph 44 above.  

179.	Finally, and for the reasons I have already set out at length, the fact is that unless there is some very convincing evidence to the contrary I prefer the evidence of Mr Breden to that of Mr Hampton.  

Stock Thefts

180.	I have already made it clear that I reject this claim.  That is not inconsistent with my analysis of the reliability of the witnesses.  I do so because I am not satisfied on balance that the loss of this stock has been established.

Manipulation of the Harbro balance sheet

181.	As I have said, it is not suggested by Harbro that any loss has been sustained by them.  In those circumstances it is difficult to see where a cause of action lies in respect of it.  Nevertheless I was wholly unconvinced by Mr Hampton's explanation that the matters to which I referred to from paragraph 59 above arose simply because he was "playing around".  The obvious correlation between the fictitious figures in the company's balance sheet, a document for which he was responsible and his own schedule of assets give a very clear indication of something much more subtle and nefarious.  All this gives added weight to the conclusion that generally his evidence must be treated with considerable reserve.

Counterclaim for return of computer hardware and multipac programme

182.	I must recognise that simply because I do not accept that Mr Hampton's evidence is reliable does not mean that his evidence on specific issues can be peremptorily dismissed.

183.	In this particular case the assertion that computer hardware was lent to the company rather than given sounds at first blush the more likely.  In addition I must not overlook the fact that even Mr Breden accepts that some items including a printer and a photocopier which were introduced into the office by Mr Hampton were subsequently removed by him and no complaint about that was made.  There seems no reason why a distinction should be drawn between some items of office hardware and others.

184.	In those circumstances I am satisfied that these items were only lent and were not given and that they should be returned.  I do not overlook that some expense has been incurred by Harbro in repairing some of the items but still it seems to me that is not inconsistent with them having been lent to Harbro rather than given.

185.	I have not overlooked Harbro’s defence to this claim to the effect that it is not accepted that Mr Hampton was actually the owner of the equipment but rather it was owned by Ashfield and thus is now property to which its liquidator is entitled. 

186.	There is no evidence emanating from Harbro to the effect that the liquidator of Ashfield lays claim to these items.  I apprehend it would not have been difficult to ascertain from the liquidator whether he still asserted that these items belonged to that company but that has not been done.  I note that the provenance of these items is not disputed in that Harbro physically received them from Mr Hampton and in paragraph 20 of the Defence to Counterclaim Harbro does not actually assert that this equipment did not belong to Mr Hampton at the time he supplied it to Harbro.

187.	Finally, as I recognised early on in this judgment, in his closing submissions Mr Bayne made it clear that Harbro accepted that the laptop left at the premises on Mr Hampton’s departure belongs to Mr Hampton and should be returned to him.

188.	In those circumstances, I do find that the relevant hardware was lent by Mr Hampton and should be returned.  This is not inconsistent with my view that the evidence of Mr Breden is generally to be preferred.  In this instance it may be that he simply got the wrong end of the stick and has made an erroneous assumption as to the status of this hardware.

189.	As for the multipac licence, other than Mr Hampton’s own assertion, I have seen no evidence to the effect that Mr Hampton is the owner of this software and is thus entitled to charge a licence fee for its use.  On the other hand I have been referred to a receipt for the payment by Harbro of £250.00 to the author of the programme. If Mr Hampton has the licence then he should have produced it.  Accordingly, albeit that the claim is in practice limited to £50, I do not intend to award it nor order the return of the programme.

The loan of £10,000

190.	Once again I have two diametrically opposed accounts in respect of this.  I have set out each party’s position from paragraph 68 above. Essentially Mr Hampton says that the money was lent to the company who were short of the funds needed to purchase an aeroplane.  

191.	As I have made clear, the £10,000 coming from Mr Hampton was in the form of a cheque made payable to Mr Breden.  One would have thought that if the loan was to the company then the cheque would have been made out to the company.  No explanation was forthcoming from Mr Hampton as to why he had written this cheque in favour of Mr Breden personally save that it was on behalf of the company.

192.	In addition, I repeat, the fact that he is made this loan to the company does not appear on either his schedule of assets or the company's balance sheet, as one would expect.  As Mr Bayne pointed out, the schedule of assets suggests that while Mr Hampton may be asset rich he appears to be cash poor.  Mr Hampton argues that he has significant overdraft facilities but one has to wonder why generally anybody would dip into overdraft facilities, secured on their properties, including I think their home, in order simply to make a commercial loan to a third party to buy an aircraft.  There is no suggestion that this loan was made at such a rate of interest that would make that course of action worthwhile, certainly such a contention has not been pleaded in the counterclaim.

193.	Furthermore albeit that was intended to be a short-term loan, no request had been made for repayment at any time before the proceedings commenced.

194.	Mr Goldberg suggests that Mr Breden’s explanation to the effect that he had lent Mr Hampton £5000 in tranches over time and gave him £5000 cash which, it has happened, he had on his desk that day is too bizarre to be true.  However, it accords with the undisputable fact that the cheque is made payable to him and the records of the company (for which Mr Hampton appears to have been responsible) do not mention this loan as a liability (and nor does it appear as an asset in his own schedule of assets).

195.	Once again, I must add to the mix the view that I have formed that Mr Hampton’s evidence must be considered generally with the utmost circumspection.

196.	On balance therefore I am not satisfied that Mr Hampton has established that this is a debt due from the company to him.

The Van

197.	It has to be said that Mr Breden's evidence that Mr Hampton lent his van to Harbro in consideration only of the company meeting his wife's petrol expenses would suggest an arrangement that was hugely beneficial to Harbro and equally detrimental to Mr Hampton, not least because of the particularly heavy use that this van could have been expected to receive. 

198.	The disparity in benefit derived from this agreement provides some evidence that Mr Hampton, as an experienced business man, would not have made it. And it adds credence to his contention that the arrangement was that the van would be lent to the company for a consideration based on the spot rate for hire for such vehicles but discounted because, objectively, that makes more sense.

199.	As against that however there is the fact that Mr Hampton was not sure how long the van was in Harbro’s possession, that there is no evidence that any effort was made to ascertain spot rates or the extent of discount from it and that Mr Hampton did not seek any payment during the relevant period or indeed thereafter until these proceedings were on foot.

200.	Additionally I have to factor in my concerns as to the reliability of Mr Hampton as a witness and the fact that the onus is upon him to establish his counterclaim.  On top of that I have already found that he was prepared to lend items of hardware to Harbro for nothing or at worst the cost of repairing them, indeed that was his evidence.  

201.	In all those circumstances I am led to the conclusion that despite this whole arrangement regarding the van being uncommercial, that Mr Hampton has failed to satisfy me that he actually hired it to Harbro.  

202.	I should say that even if the agreement did involve a hire arrangement there is no evidence of the terms of that hire because no thought appears to have been given to the discount from the spot hire rate that would apply. This would inevitably lead to the conclusion that there is a vagueness about the arrangement which is inconsistent with the formation of a contract.  In that event, at best, Mr Hampton would be thrown back on a quantum meruit claim but none has been specifically pleaded.

Mr Haines’s claim for holiday pay and commission.

203.	I am not satisfied that Mr Haines has established an entitlement to any further holiday pay.  I do not intend to repeat the matters which militate against this claim and to which I refer in paragraphs 80 to 82 above.  Equally important however is Mr Haines’s own evidence on this issue which was that he was not entirely sure what was agreed about this extra week.  All he could say was that, as far as he could recall, he was able to reach a different arrangement to the one reached by Mr Sweeting.  

204.	Mr Breden however was clear that the arrangement was for only 1 weeks bereavement leave, as was agreed with Mr Sweeting when he suffered his loss.

205.	In all the circumstances, including the fact that even Mr Haines is not entirety sure what was agreed, I am not satisfied that this holiday pay is due.

206.	As for commission, I refer to paragraphs 83 and 84 above.  There appears to be no dispute that commissions only became payable once the van had made a profit in excess of £2000 in the relevant month.  The fact is that even Mr Haines accepts that it is, and I use his words, “quite plausible” that no commissions were due to him in January and February because he worked fewer hours than usual because he had "other priorities".  There is insufficient for me to form a view on balance under the circumstances that there is any outstanding commission entitlement.

The database

207.	As I have said, the allegations upon which I must make findings for the purpose of a liability trial are at paragraph 14(i) to (xi).  As made clear to counsel, any consideration at a later date of the claimant's loss may involve consideration of other occasions on which the database was used.

208.	Since I am satisfied, for the reasons already given, that Mr Hampton has utilised the Harbro database for purposes other than those specifically set out in paragraph 14, in my judgment it is much more likely than not that he used the Harbro database for the purpose of the e-mail shots and personal contacts referred to in paragraph 14 and I so find.  I do not accept that Mr Hampton would have resisted the temptation to do so in this respect while succumbing to the temptation in those other respects.

209.	I do not overlook that the information he gleaned by so doing may well have been in the public domain but, as a fact, I find that since it would have been easier to consult the database in the first instance rather than trawl through websites, that is what Mr Hampton has done.

210.	Equally, I am satisfied that Mr Haines used the database at least to the extent that he had a hand in formulating the list of customers to receive e-mails.  He admits that the process of using NAMM, BRAMM and other Google searches was long and cumbersome and collation of information took many hours.  Other than the email addresses, this was information which was essentially available at the touch of a button from the Harbro database.  

211.	In my view it is much more likely than not that if, as I have found, Mr Hampton had access to, and took advantage of, the Harbro database that Mr Haines will also have used it in order to obviate the necessity for the laborious work that he contends that he had to undertake.  The fact that the Harbro database did not contain e-mail addresses in this connection does not actually assist because if Mr Hampton is to be believed and customers were telephoned in advance to ask if they were prepared to receive e-mail shots they could have been asked for their e-mail address at that point.  It is not likely that a customer would consent to receive e-mail shots but refuse to give his e-mail address.

212.	The fact is that so far as Mr Haines was concerned he knew Mr Hampton had the database at Shincliffe Hall because his evidence was that he had been aware that it was backed up to Shincliffe Hall and had not been told that it had been deleted.

213.	I am satisfied that if, as both Mr Hampton and Mr Haines contend there were brainstorming sessions to consider to whom to promote JSL’s services that those sessions will have involved reference to the Harbro database.

Ancillary findings relevant to the database

214.	I am satisfied that the JS database which consisted of the amalgamation of the Ashfield and Harbro database was prepared without Mr Breden’s authority or knowledge.  I come to that conclusion notwithstanding the matters raised by Mr Goldberg at paragraph 23 of his closing submissions which briefly are that 

(i)	Mr Robinson was openly involved in the exercise and no secret was made of it 
(ii)	That it took place in an open plan office 
(iii)	That it was not used for some considerable time 
(iv)	That it was made at a time when there is no evidence that Mr Hampton was preparing to leave Harbro.

215.	I come to that conclusion because I simply do not understand why it was appropriate to go to the trouble of amalgamating these two databases without first clearing it with Mr Breden.  It is not even Mr Hampton's evidence that he did so.  His evidence is that he merely wanted to provide Mr Breden with a working model.  Bearing in mind the work involved, it seems to me it is far more likely that if this was a genuine effort to promote the interests of Harbro there would have been some discussion before the work was undertaken.  

216.	I also find it odd that Mr Hampton would pay for the access code for an additional copy of the programme in order to migrate this amalgamated information without seeking to recover it from Harbro.  In addition, the exercise was undertaken because Mr Hampton felt that it would enable sales into niche markets but that has not even happened so far as JSL is concerned.  They still only supply the memorial mason market, just like Harbro.

217.	The fact that the office is open plan or that Mr Robinson was involved by Mr Hampton does not alter my view.  If Mr Breden had discovered what was going on then of course it would have been open to Mr Hampton at that stage to explain it away as a modelling exercise, in the same way indeed as he subsequently did.  

218.	Finally, as I have remarked, as a general principle I prefer the evidence of Mr Breden to that of Mr Hampton, for the reasons already set out.

219.	As regards the question as to whether Mr Breden was aware that the Harbro database was backed up to Shincliffe Hall, there is some evidence from Mr Barsby which throws light on this.  First, that he may have indicated to Mr Breden that he was providing a backup facility to Shincliffe Hall because they met regularly socially and the fact that he was working at Shincliffe Hall on the installation of the necessary IT may well have come up over a drink.  Secondly, that it is not disputed that Mr Breden was aware of the benefits of a remote backup because he operated one for J Terry Electrical.

220.	There is thus some independent basis for accepting Mr Hampton's contention that Mr Breden was aware of the remote backup.  Bearing in mind the obvious benefits of a remote backup facility I do accept that Mr Breden was probably aware of this backup to Shincliffe Hall.  This touches on the issue of the effect in law of the fact that Mr Hampton had legitimate possession of the database.  However, in so far as access was had to the JS database then the fact is that I have found that this was copied and held illegitimately if it existed at all on the server at Shincliffe Hall

221.	These findings however are not in themselves sufficient to establish liability in respect of the use of the database(s).  They must be applied to the law in this connection in order to establish whether the claim in respect of the database is made out.

The Law

222.	The first question to be addressed is whether the information on the Harbro database or indeed the JS database is confidential.  The starting point is Faccenda Chicken v Fowler to which I have already briefly referred.  That sets out the classes of information to which an employee is likely to have access.  They are:

Class 1:	Trivial or public information which is not confidential at all and which an employee is free to disclose or use.

Class 2:	Information which the employee must treat as confidential (either because he is expressly told it is confidential or because from its character it is obviously is so) but which once learned necessarily remains in the servant’s head and becomes part of his own skill and knowledge applied in the course of his master’s business. It might well be a breach of the employee’s duties if he were to disclose this information whilst employed, but there is generally no restriction on him using or disclosing such information after termination of the employment.

Class 3:	Specific trade secrets so confidential that, even though they may necessarily have been learned by heart and even though the employee may have left the service, they cannot lawfully be used for anyone’s benefit but the employer’s. 

223.	Mr Goldberg contends that the information in this case does not get anywhere near Class 3 and there is no evidence that either Mr Haines or Mr Hampton were expressly told that such information was confidential and its character is not such that it would obviously be confidential.  Accordingly his contention is that there is nothing in terms of confidentiality to preclude the defendant from using it after termination of their relationship with Harbro.

224.	The fact is that Mr Bayne recognises that Faccenda Chicken imposes a fairly high bar for the employer to negotiate and while he does not formally abandon a claim based upon confidentiality he does not push hard in seeking to contend that this information is protected as confidential information.  

225.	It seems to me that this is a realistic position to take, not least because the information about which I am concerned is almost identical to the information with which Peter Smith J was concerned in Crowson Fabrics V Rider 2008 IRLR 288.  In that case the judge concluded that the information was not confidential.  Indeed, in so far as the information in this case and that are not identical it may well be that the information in Crowson was more extensive.

226.	In so far as it may still be a live issue therefore I make it clear that I am satisfied that the information copied and used about which the claimant makes complaint in his Particulars of Claim was not confidential.

227.	It is clear from his oral and written submissions that his primary point is based upon the contention that Mr Hampton copied the data on the Harbro multipac database, retained it after the termination of his directorship and that he and Mr Haines have used it to compete with Harbro by contacting its customers and suppliers knowing that that was an improper course to take.  

228.	In short the claimant's primarily make a "springboard" claim viz that even if the information copied by Mr Hampton and used by him and Mr Haines was not confidential then Mr Hampton was in breach of his fiduciary duty to the company bearing in mind his directorship by using information so as to get a head start in his new company's business.  It is acknowledged that Mr Haines has no fiduciary duties but the claimant contends that he knew that Mr Hampton was unlawfully using the database and he himself did so knowing that he should not do so.

229.	In this connection it is of course relevant that Mr Haines recognises that the Harbro database was Harbro's property and that it should not be used by anybody but Harbro.  It is of course also appropriate not to overlook, with due respect to Mr Haines, that his position was a junior one in that he was a van driver/salesman earning a modest salary who needed to give minimum notice to leave his job and was not subject to any restraint clauses.

230.	I have received and heard erudite and very comprehensive arguments from both counsel on the extent of the duty of ex-directors and employees as regards the use to which, after termination of their employment, they can put even legitimately obtained information pertaining to their former employers business.

231.	Mr Goldberg contends that provided the information is not confidential and came into the hands of ex-director/employee legitimately before his relationship with the company terminated then he is free to use that information even if he were formerly a director because on the termination of his relationship with company, as a general rule, he ceases to be a fiduciary.

232.	The starting point for this contention is AG V Blake 1998 Ch 439 at 453-454.  In that case it was said;

"We do not recognise the concept of a fiduciary obligation which continues notwithstanding the determination of the particular relationship which gives rise to it.  Equity does not demand a duty of undivided loyalty from a former employee to his former employer.

These duties last only as long as the relationship which gives rise to their lasts.  A former employee owned no duty of loyalty to his former employer.  It is trite law that an employer who wishes to prevent his employee from damaging his legitimate commercial interests after he has left employment must obtain contractual undertakings from his employee to this effect.  You cannot achieve this object by invoking the fiduciary relationship which formerly subsisted between them.  Absent a valid and enforceable contractual restraint, a former employee is free to set up in a competing business in close proximity to his former employer to deal with his former clients.  Such conduct involves no breach of fiduciary duty"

233.	It should be pointed out however that Blake is an unusual case relating to the Crown's attempts to acquire copyright in a book written by a former spy.  Also, it is a case based on confidential information rather than use of non-confidential documentation post termination.

234.	Mr Goldberg however also cites an analysis of the law by Rix LJ in Foster Bryant Surveying Ltd v Bryant 2007 BCC 804 which itself draws on an analysis by Mr Livesey QC sitting as a Deputy Judge of the High Court in Hunter Kane Ltd v Watkins [2003] EWHC 186 (Ch) and Lawrence Collins J, as he then was, in CMS Dolphin Ltd v Simonet [2002] B.C.C. 600.

235.	Rix L.J said at paragraph 8:

 “At trial it was common ground between the parties that the synthesis of principles expounded by Mr Livesey Q.C., sitting as a deputy judge of the High Court, in Hunter Kane Ltd v Watkins which Mr Livesey had himself taken largely from the judgment of Lawrence Collins J. in CMS Dolphin Ltd v Simonet and the authorities there cited and discussed, accurately stated the law. In this court in In Plus Group Ltd v Pyke [2002] EWCA Civ 370; [2003] B.C.C. 332 Brooke L.J. described the Simonet analysis as “valuable” (at [71]). Mr Livesey said: 

1.	A director, while acting as such, has a fiduciary relationship with his company. That is he has an obligation to deal towards it with loyalty, good faith and avoidance of the conflict of duty and self-interest.

2.	A requirement to avoid a conflict of duty and self-interest means that a director is precluded from obtaining for himself, either secretly or without the informed approval of the company, any property or business advantage either belonging to the company or for which it has been negotiating, especially where the director or officer is a participant in the negotiations.

3.	A director's power to resign from office is not a fiduciary power. He is entitled to resign even if his resignation might have a disastrous effect on the business or reputation of the company.

4.	A fiduciary relationship does not continue after the determination of the relationship which gives rise to it. After the relationship is determined the director is in general not under the continuing obligations which are the feature of the fiduciary relationship.

5.	Acts done by the directors while the contract of employment subsists but which are preparatory to competition after it terminates are not necessarily in themselves a breach of the implied term as to loyalty and fidelity.

6.	Directors, no less than employees, acquire a general fund of skill, knowledge and expertise in the course of their work, which is plainly in the public interest that they should be free to exploit it in a new position. After ceasing the relationship by resignation or otherwise a director is in general (and subject of course to any terms of the contract of employment) not prohibited from using his general fund of skill and knowledge, the ‘stock in trade’ of the knowledge he has acquired while a director, even including such things as business contacts and personal connections made as a result of his directorship.

7.	A director is however precluded from acting in breach of the requirement at 2 above, even after his resignation where the resignation may fairly be said to have been prompted or influenced by a wish to acquire for himself any maturing business opportunities sought by the company and where it was his position with the company rather than a fresh initiative that led him to the opportunity which he later acquired.

8.	In considering whether an act of a director breaches the preceding principle the factors to take into account will include the factor of position or office held, the nature of the corporate opportunity, its ripeness, its specificness and the director's relation to it, the amount of knowledge possessed, the circumstances in which it was obtained and whether it was special or indeed even private, the factor of time in the continuation of the fiduciary duty where the alleged breach occurs after termination of the relationship with the company and the circumstances under which the breach was terminated, that is whether by retirement or resignation or discharge.

9.	The underlying basis of the liability of a director who exploits after his resignation a maturing business opportunity ‘of the company’ is that the opportunity is to be treated as if it were the property of the company in relation to which the director had fiduciary duties. By seeking the exploit the opportunity after resignation he is appropriating to himself that property. He is just as accountable as a trustee who retires without properly accounting for trust property.

10.	It follows that a director will not be in breach of the principle set out as point 7 above where either the company's hope of obtaining the contract was not a ‘maturing business opportunity’ and it was not pursuing further business orders nor where the director's resignation was not itself prompted or influenced by a wish to acquire the business for himself.

11.	As regards breach of confidence, although while the contract of employment subsists a director or other employee may not use confidential information to the detriment of his employer, after it ceases the director/employee may compete and may use know-how acquired in the course of his employment (as distinct from trade secrets–although the distinction is sometimes difficult to apply in practice).”

236.	Mr Goldberg particular draws my attention to paragraphs 4 and 7 on the basis, as regards paragraph 7, that it cannot be said that Mr Hampton resignation was prompted by a wish to acquire maturing business opportunities because he did not actually resign but rather was dismissed.

237.	The CMS case itself addressed the question of the extent to which the duties of directors to safeguard the interests of their company extended to directors who resigned their office to take advantage of a business opportunity of which the director had knowledge as a result of his having been a director

238.	The director in that case was found to be in breach of fiduciary duty and liable to account because, by resigning, (my emphasis) he had exploited the maturing business opportunities of the claimant, which were to be regarded as its property. 

239.	The rationale of that case as identified by Rix LJ was that Lawrence Collins J. was 

“not saying that the fiduciary duty survived the end of the relationship as director, but that the lack of good faith with which the future exploitation was planned while still a director, and the resignation which was part of that dishonest plan, meant that there was already then a breach of fiduciary duty, which resulted in the liability to account for the profits which, albeit subsequently, but causally connected with that earlier fiduciary breach, were obtained from the diversion of the company's business property to the defendant's new enterprise.

240.	Mr Goldberg points out that there is no evidence that the Harbro, or indeed the JS, database, were copied with a view to future exploitation at the company's expense.  He makes the same point as I have mentioned above namely that Mr Hampton did not actually resign.  His relationship with the company came to an end at the initiative of Mr Breden.  Importantly he argues, there was no link between the resignation and the acquisition of the company's information.  Accordingly he argues that there has been no breach of fiduciary obligations by Mr Hampton as a director and accordingly there is no obligation on him not to use information legitimately obtained which is not confidential.

241.	This ignores the fact that I have found that the JS database was created without authority and thus it was likely to be for purposes detrimental to the company but I proceed with my analysis of the law on the basis that I am wrong in that or that such a finding is irrelevant to the overall determination of case.

242.	The fact is that Rix LJ made it clear that he would find it; 

“difficult to accurately encapsulate the circumstances in which a retiring director may or may not be found to have breached his fiduciary duty. As has been frequently stated, the problem is highly fact sensitive”. 

243.	Later on in the same paragraph of his judgment he points out that an important issue is whether there has been a misuse of the company's property in the form of business opportunities or trade secrets.  In connection with the issue of misuse of the company's property, there can be no doubt that the information in the format in which it is on the Harbro database is Harbro property albeit that the information per se may be available to the public at large.  Even Mr Hampton and for that matter Mr Haines agree that the database should not have been used; that is why on their account they did not use it and why Mr Hampton indeed says that he deleted it from his computer.  

244.	It seems to me that the views expressed in Foster Bryant do not exclude the possibility in principle of the fiduciary duty extending beyond the date of termination of employment with the company even where that termination does not come about at the initiative of the director and even where the issue is the use of company property legitimately acquired.   As Rix LJ pointed out, the problem is fact sensitive.

245.	In his supplemental submissions Mr Bayne confronts head on the issue of the use to which an ex-director can put legitimately acquired/copied non-confidential information. First he points out that paragraph 4 of the analysis of Mr Livesey QC in Hunter Kane Ltd v Watkins talks of the “general”, not the unswerving, position.

246.	He describes 2 scenarios, the first where the copy is legitimately taken pre termination and kept on termination for use post termination and the second where the legitimate copy is taken pre termination but the decision to use it to compete is only made after termination.

247.	His starting point is Robb v Green 1895 2 QB1 where Hawkins J stated

"I have no doubt that the taking of his master’s book and the using of its contents was a gross breach of his duty and of his obligations to his master for which the plaintiff is entitled to maintain this action"

248.	I agree with Mr Bayne when he contends, in paragraph 3 of his supplemental submissions, that the first scenario is no different to the position which has pertained since Robb v Green.  I can do no better than to adopt what he says in that paragraph

"it would be as much of a breach of the duty to act with undivided loyalty towards the claimant for the defendant to decide, during the currency of his appointment that he would keep documentation which he knew he had no right to keep, as it would be for him to copy it for that express purpose”

249.	In the second scenario the fact is that even if his resignation from the company is not prompted by a desire to use the data that he has legitimately obtained, nevertheless he would still then be using the company’s property for purposes contrary to his former company's interests and to the advantage of his new company.

250.	In Crowson (paragraph 109) Peter Smith J cites Nourse LJ in Roger Bullivant Ltd v Ellis 1987 ICR 464 at 474

"the value of the card index to the defendants was that it contained a ready and finite compilation of names and addresses of those had brought business  to the plaintiffs and who might bring business to them.   Most of the cards carry the name or names of particular  individuals to be contacted.  While I recognise that it would have been possible  for the  first defendant  to contact some, perhaps many, of the people concerned  without use of the card index,  I am far from convinced  that he would have been able to contact anywhere near all of those whom he did contact…  having made deliberate and unlawful use of the plaintiff's property, he cannot complain if he finds that the eye of the law is unable to distinguish between those whom, had he so chosen  he could have contacted lawfully and those whom he could not.  In my judgment it is of the highest importance that the principle of  Robb v Green which, let it be said, is one of no more than fair and honourable dealing, should be steadfastly maintained"  

At paragraph 112 Peter Smith J goes on to say;

"The defendants have failed to persuade that none of this vast array of material was of any use to them.  It is an unattractive plea.  If it was such little use I cannot understand why it was taken or retained.  If they wish to use the material in the public domain and in their own heads that would not have been actionable.  What the defendants have done is shortcut that exercise in the same way in which the defendants did in the Bullivant case.  In other words, they have sought to take an illegitimate step and provide themselves with a springboard so that their business is up and running "fully armed as it were" from the word go.  There is no other reason why they would have all of this documentation.  It is not theirs.  They have no legitimate use for it thereafter……….  The documentation which they had legitimately whilst they were employees ought to have been returned.”

251.	Bullivant and Crowson were actually concerned with conduct by the director before termination so is not directly on point (although the last sentence quoted above is interesting) but nevertheless it is not irrelevant to an analysis of the law as it applies to this case.  

252.	However in First Conferences Ltd v Richard Bracchi [2009] EWHC 2176 (Ch), Peter Smith J. was concerned with the situation in which the defendant had downloaded his employer’s data both before and after the end of his employment The rationale of this case is that the court formed the view that downloading information after the end of the employment relationship is indistinguishable from the conduct in Crowson.

253.	The observations of Peter Smith J on the use of non confidential information in that case are also instructive in that they build on those he made in Crowson;

“It is becoming increasingly common with the computerisation of information for employees who wish to set up their own competing business to help themselves to their employers' confidential information. Some of this material is not necessarily confidential as such and is capable of being found with hard work. However the employees do not wish to go through the hard work and in effect what they do is they seek to take advantage of their employers' time effort and expense in putting together valuable material which provides a tool to an emerging business. Instead of doing their own work using their own brains they simply hijack the employers gathered material. This gives them what is called “a springboard” for their business to be up and running almost immediately at the expense of the former employer”

254.	In Penwell Publishing (UK) Ltd v Ornstein 2007 EWHC 1570 the Deputy High Court judge had to consider whether employees were entitled post termination to use e-mail address lists legitimately compiled and used during the course of employment.

255.	His conclusion at paragraph 127 and 128 is as follows:

"I am satisfied that where an address is contained on Outlook or some similar programme which is part of the employers e-mail system and backed up by the employer……. the database or list of information…… will belong to the employer. I do not consider that the position would change where the database is accessed not from the employer's computer but from the employee's home computer by dialling up or otherwise logging on to the employers e-mail system by some form of remote access.

In all the circumstances I find that such lists will be the property of the employer and may not be copied or removed in their entirety by employees for use outside their employment or after their employment comes to an end."

256.	If it be needed, this is clear authority for the proposition that the information on the Harbro database is Harbro's property.
257.	So, in order to tie up the necessary threads, it seems to me that it is not the law that the fiduciary duty inevitably ceases when the director ceases to be a director. It may or it may not.  I go back to paragraph 242 above and what Rix LJ said in Bryant 

“it is difficult to accurately encapsulate the circumstances in which a retiring director may or may not be found to have breached his fiduciary duty”. 

258.	Clearly the fiduciary obligation will not cease where the relationship ceases at the initiative of the director because he seeks to take advantage, for purposes adverse to the company but which benefit the ex director, of the company’s information that has come into his possession.  In my view, on the basis of the authorities to which I have referred it is unlikely to cease in that event even if the information has been legitimately copied and used pre termination. 

259.	I accept that it is not inevitable in that event that the breach of fiduciary duty has occurred before termination which is what Rix LJ saw to be the rationale of CMS Dolphin but the fact is that, notwithstanding that, Rix LJ made it clear in Bryant at paragraph 76 that 

"The jurisprudence also demonstrates, to my mind, that in the present context of retiring directors, where the critical line between a defendant being or not being a director becomes hard to police, the courts have adopted pragmatic solutions based on a common sense and a merit based approach".

260.	In my view it would defy common sense to hold that the use of Harbro’s database was not a breach of Mr Hampton's fiduciary obligations where he himself acknowledges that that information ought not to have been used but I have found as a fact that it has.  In those circumstances it is a blatant misuse of Harbro's property for springboard purposes as described by Peter Smith J and set out at paragraph 253 above.  

The effect of this finding Mr Haines and JSL

261.	As I have I hope made clear Mr Haines is in a different position in that he has never had a fiduciary obligation to Harbro.  I recognise that such an obligation is not simply confined to those who have the office of director, it can extend to those in senior posts.  It would be impossible in my view to conclude that Mr Haines fell into this category in the light of the nature of his employment, his salary and the notice period which he was obliged to give.

262.	In Vestergaard Frandsen AS v Bestnet Europe Ltd 2013 UKSC 31 the Supreme Court gave consideration to the liability of an employee who actually had no access to a database and did not have any knowledge of the secrets it contained.  It is a case concerning confidential information but it contains some principles which it seems to me are applicable here.  The court held that essentially an action in breach of confidence was based ultimately on conscience.  

“In order for the conscience of the recipient to be affected she must have agreed, or must know, that the information was confidential”

263.	Mr Haines on his own admission recognised that this database was the property of Harbro and should not be used by anybody else.  I have found, as a fact, that he did use the database at least in connection with the exercise of compiling names of those to be sent e-mails and that he knew that Mr Hampton was using the database.  On that basis, if the "conscience" test is to be applied then it seems to me that he cannot meet it.

264.	The claim against him is based on the proposition that he knew or ought to have known that Mr Hampton was unlawfully using this information for purposes contrary to the interests of Harbro.  In effect the contention is that he unlawfully assisted Mr Hampton.  In my view it matters not that he did not appreciate that Mr Hampton's activities constituted a breach of his fiduciary obligations.  What matters is that in fact Mr Hampton was in breach of his fiduciary obligations and Mr Haines assisted him knowing at least that Mr Hampton was utilising the information that he was not entitled to utilise.

265.	In the circumstances, and I have to say not without some regret in the light of the nature of his employment with Harbro, I am driven to the conclusion that Mr Haines is liable along with Mr Hampton.  I come to this conclusion with some regret because it is unusual, in my experience, for a company to bring claims such as this against such a junior employee and I have no doubt that Mr Hampton is the more culpable of the two in respect of the database.  But, in the context of claims such as this, one is liable or one is not.  On that basis I am satisfied that the claim against Mr Haines set out in paragraph 14 and 17 of the Particulars of Claim is established.

266.	It follows that the claim against JSL is also established for reasons which I apprehend must be obvious since the corporate mind is that of Mr Hampton. Accordingly, it is axiomatic that it will have been aware that the use of the Harbro database was unlawful

The pleadings points

267.	For completeness, I would not like Mr Goldberg to be under the impression that I had not considered his pleading point concerning paragraph 14 of the Particulars of Claim as set out particularly in paragraph 17 of his closing submissions.  In the light of my finding that Mr Hampton did have a fiduciary duty post termination and the pleading is not confined solely to an allegation of the use of confidential information but also extends to non confidential information copied/used for springboard purposes I do not accept that my findings overstep the parameters of the pleadings.

Final Remarks
268.	I suggest that the parties actively consider whether this matter is now capable of resolution without incurring the costs of a further hearing and the preparation for it.  I suspect that there is a real possibility that costs are already disproportionate to the value of this claim.   If that is so, the position can only become worse as the matter proceeds.

I am grateful to counsel for their very able assistance in this matter and the spirit in which the hearing was conducted.
HHJ Saffman