Personal Management Solutions Ltd & Anor v Brakes Bros Ltd & Ors [2017] EWHC 383 (QB)

[2017] EWHC 383 (QB)Case No HQ14X01581IN THE HIGH COURT OF JUSTICEOn Appeal from Master DavisonQUEEN'S BENCH DIVISIONVenue Royal Courts of Justice, Strand, London, WC2A 2LLDate 01/03/2017
Before
MRS JUSTICE WHIPPLE DBE
Between
(1) Personal Management Solutions LimitedClaimants/(2) Personal Group Benefits LimitedAppellants(1) Brakes Bros. LimitedDefendants/ Respondents(2) Gee 7 Group LimitedRespondent(3) Gee 7 Wealth Management LimitedRespondent(4) Mr Mark EatonRespondent
Andrew Stafford QC and Simon Goldberg (instructed by McDaniel & Co. Solicitors) for Claimants/AppellantsRobert-Jan Temmink QC and Christopher Jay (instructed by Bristows LLP) for Second and Third Defendants/RespondentsHearing Hearing dates: 16 February 2017
Judgment Approved

Introduction

[1]This is an appeal from the decision of Master Davison dated 10 November 2016 (the “Master’s Judgment”). It proceeds with permission granted by May J on 20 December 2016. The Master acceded to the application dated 28 July 2016 made by the Second and Third Defendants (hereafter, the “Defendants”) which sought to restrict the scope of the assessment of damages hearing then scheduled for February 2017 to a narrow basis. He ordered the Defendants to give disclosure to the Claimants which was limited in scope to that narrow basis of assessment. He dismissed the remainder of the Claimants’ application dated 12 July 2016 seeking specific disclosure on a wider basis. I will explain the narrow and wide basis of assessment later.[2]The assessment of damages had been ordered by HHJ Curran QC on 14 November 2014. That Order followed a speedy trial before HHJ Curran at which the Claimants succeeded in their claim against the Defendants. Judgement was accordingly entered for the Claimants against the Defendants, with damages to be assessed.[3]The speedy trial had taken place on 15-18 July 2014, with judgment handed down on 24 October 2014 (I will refer to this as the “Curran Judgment”). The Curran Judgment runs to 237 paragraphs and is extremely detailed in its factual findings and analysis of the law. The precise nature of the claims advanced before HHJ Curran, and the scope of his judgment in answer to those claims, is disputed. It suffices to say, for present purposes, that HHJ Curran found that the Defendants had breached the Claimants’ right of confidence in certain business information which had come into the Defendants’ possession, and that the Claimants had suffered loss as a result.[4]The answer to this appeal lies, in my judgment, in determining precisely what HHJ Curran decided and, in consequence, what he left open for argument at the assessment of damages hearing. Specifically, did he limit the assessment of damages to the narrow basis for which the Defendants contend, which the Master concluded was the case; or was his judgment less prescriptive, so that it remains open to the Claimants now to seek damages on the wider basis, as the Claimants contend on appeal? To answer that question, it is necessary, as ever, to start at the beginning.

Background

[5]The Claimants are companies which carry on business in the provision of employee benefit packages (“EBPs”). The Claimants had a contract dated 3 November 2008 with Brakes Bros Ltd (“Brakes”), named as the First Defendant on the Claim Form, but not in the event a participant in the trial before HHJ Curran or subsequently. Brakes is a food and produce supplier to the retail trade. That contract was for a fixed term, originally for two years, but extended to expire on 31 December 2013 (this is the “Brakes contract”). The Defendants had engaged certain employees who had formerly worked for the Claimants, and were by 2013 in competition with the Claimants. On 5 April 2013 the Defendants signed an exclusive agreement with Brakes to provide EBPs to Brakes’ employees from 1 January 2014 (the “Gee 7 contract”).[6]Most of Brakes’ employees paid premiums for the Claimants’ policies by direct deduction from payroll. Brakes held a list of all of its employees who had policies with the Claimants, together with the gross premium paid by those employees per month (the “List”). The Claimants discovered that Brakes had provided the List, and the information contained within it, to the Defendants and that the Defendants were using it to compete with the Claimants. The Claimants issued proceedings against the Defendants on 21 February 2014 together with an application for urgent interim relief. The application for interim relief was compromised by the parties on 7 April 2014, with the Defendants giving undertakings pending a speedy trial. Related proceedings by the Claimant against its former employee, Mark Eaton (Fourth Defendant, who takes no part in the current appeal) were consolidated. As I have said, the trial commenced on 15 July 2014.[7]I pause at this stage to note two important features of the background just outlined. The first is that the timeframe to trial was extremely short. The Claimants had first become aware of the circumstances giving rise to the action in early 2014. Trial took place within a few months after that. It was for good reason a speedy trial, with the parties making enormous efforts (and possibly some compromises) in order to get the matter on for trial within the desired short timeframe.[8]The second is that the central issue at trial, and the reason for the urgency, was the status of the List and the information contained within it, specifically, was it confidential information? If it was, then put simply the Claimants’ case was that the Defendants were prohibited from using it in future in their business, and would be required to compensate the Claimants for any damage suffered by its use in the past. If it was not, then the Defendants were at liberty to use it to expand their business in the future and there would be no question of damages. Thus, the business interests of both Claimants and Defendants pivoted on this central issue. I jump ahead in time, but this issue was formulated by HHJ Curran as issue (1) in his list of issues, set out at paragraph 62 of his judgment.

Pleadings – Round 1

[9]The Claimants’ pleaded case for trial was settled, finally, on 4 July 2014, by its Re-Amended Particulars of Claim. So far as is relevant for this appeal, the Re-Amended Particulars of Claim asserted the following: i) By paragraph 19B, that the commercial value of the alleged confidential information lay in the combination of names of Brakes employees who had policies with the Claimants and the amount of the monthly premium each paid. Thus, it was argued, the Defendants had a ready source of information as to which employee paid what premium. ii) By paragraph 20A, that the Defendants had used the List to target Brakes’ employees to seek to persuade them to change the EBP provider from the Claimants to the Defendants. This was the “poaching” allegation. iii) By paragraph 20B, that the Defendants had used the List to facilitate or arrange a new Group policy with a third party provider, Amlin. This was the “Amlin” allegation. (In the event, this was not pursued by the Claimants at trial.) iv) By paragraph 21A, that the Defendants had by their wrongful acts gained an unfair commercial advantage over the Claimants. (No distinction was drawn between the poaching allegation and the Amlin allegation at this point in the pleading.) v) By paragraph 21C, that the Defendants had obtained an unlawful head start in their attempts to solicit the business of those employees of Brakes who appear on the List. vi) By paragraph 22, that “by reason of the matters aforesaid” the Claimants had suffered loss and damage and sought compensatory damages. (No distinction was drawn between the poaching allegation and the Amlin allegation.) vii) By paragraph 23A that the Defendants should be restrained from using the List for such reasonable period as the Defendants might have taken to compile the confidential information contained in it.[10]A Schedule of Loss was annexed to the Re-Amended Particulars of Claim. It stated that it was to be read with paragraphs 20A to 22 of the Re-Amended Particulars. It stated this in the second paragraph on the first page: “It is the Claimant’s primary case that but for the [Defendants’] breach of confidence in using the List provided by Brakes on 29 May 2013 in the manner set out in those paragraphs, the [Defendants] would have been unable to poach the business of those Brakes employees with the Claimant’s EBPs, and certainly not to the extent that occurred”.[11]I pause there to note that the Schedule here described the Claimants’ claim as a claim for damages consequent on the poaching allegation. The primary claim was that the Defendants would not have been able to poach the business of any Brakes employees who had policies with the Claimants but for their possession of the List. The alternative claim was that the Defendants would have been less successful in poaching such employees but for possession of the List.[12]The Schedule continued thus: “Since at least 1st January 2014, the [Defendants have] been actively seeking to persuade Brakes employees with the Claimant’s insurance policies to take out replacement [Defendants’] policies. On the Claimant’s case, this competition was unlawful by reason of the [Defendants’] misuse of the Claimant’s confidential information in the form of the list. The Claimant’s damages claim is for loss of profits arising from the loss of insurance premium income caused by the Brakes employees switching to [Defendants’] policies”.[13]The Schedule went on to state that the Claimant’s annual premium income from Brakes employees was £193,000 and that the Claimants would expect some attrition decreasing over time. But the Claimants asserted that they had seen a much greater attrition rate, which “[they] can attribute only to the unlawful poaching of Brakes employees” by the Defendants. The Schedule continued: “The Claimant’s loss is the profit it would have made on the premium income it has lost as a result of the Claimant’s poaching of Brakes’ employees”.[14]The claim was then illustrated in a table of figures. The Schedule set out certain notes and assumptions which underpinned the figures. The first column set out the “Previous Position”, which started with the figure of £193,000 for the year to January 2014 and then applied a percentage lapse rate (ie assumed attrition) for every year to 2024, to arrive at an overall projected income of £1,087,543, representing the total hypothetical income the Claimants would have generated from the Brakes contract, assuming it had been renewed on 1 January 2014 for a further 10 years. The second column set out the “Current Position”, which showed projected actual income for 2014-2018 from premiums paid by Brakes employees who remained with the Claimants, in the total amount of £466,768 shown. That projected income ceased in 2018 due to a compromise reached between the Claimants and Brakes independently of the litigation. The difference was £526,924, which was the amount of the claim. Damages were therefore claimed for the gap in income, being the difference between hypothetical projected income but for termination of the Brakes contract and actual projected income in light of the termination of the Brakes contract.[15]There can be no doubt that the Schedule advanced a claim for damages consequent on the poaching allegation. Further, the Schedule asserted that attrition in excess of historic expectations was attributable to unlawful poaching by use of the Claimants’ confidential information. This was a generic claim based on generic evidence. It was not a claim which was limited to showing that any identified individual had been unlawfully induced to switch provider.[16]Yet further, the measure of claimed losses was the gap in income assuming that the Brakes contract had been renewed from 1 January 2014: this is what the table shows. That assumption may or may not be sound, but it was how the Claimants put their case. It was, therefore, a claim predicated on the loss of the Brakes contract.[17]I add that the Schedule is a fairly rudimentary document. The Schedule would have taken little time to prepare and would have occupied little attention in the run up to trial or at trial. But while the Defendants may argue that the Claimants could have set out their primary case based on loss of the Brakes contract more clearly, so the Claimants may argue, with justification, that their primary case was at least adequately set out. The figures in the table were not difficult to understand. They plainly represented a case based on loss of the Brakes contract, attributable to the Defendants’ unlawful use of their confidential information.[18]By their Re-Amended Defence, the Defendants denied that the List contained confidential information. They argued that the information was not commercially sensitive, nor of any value in the hands of a competitor to the Claimants. The poaching allegation was denied. The Defendants denied that they had obtained any unfair commercial advantage, and denied that the information had been used to solicit business from Brakes’ employees. They denied that any loss and damage had been caused. They did not plead to the Schedule of Loss or acknowledge it at all in their defence.

Curran Judgment

[19]The Curran Judgment is a careful and thorough piece of work. The Judge found for the Claimants. For present purposes, it is necessary for me to record only three aspects of the Curran Judgment: i) The list of issues ii) The liability findings iii) The adjournment for assessment of damages.

The list of issues

[20]At paragraph 62, the Judge set out the agreed issues as follows, so far as the Defendants are concerned: “(1) Whether the information contained in the List sent by Mrs Reader of Brakes to Mr Eaton on 29 May 2013 was,(a) the claimants' confidential information within the meaning of clause 3 of the contract between the claimants and Brakes; and,(b) whether it was information of a confidential character. (2) Whether the second and third defendants were and are under a duty of confidence to the claimants in respect of the information contained in the List. (3) Whether the second and third defendants used the List unlawfully to target employees with the claimants' insurance policies, in order to persuade them to change provider. (4) Whether the second and third defendants should be restrained from further use of the List. (5) Whether the claimants have suffered any loss as a result of any wrongful use of the List by the second defendants as set out at 3 above. (6) What damages should be awarded to the claimants. (7) Should the claimants be denied an equitable remedy on the basis that they have not come to the court with clean hands.” (a) the claimants' confidential information within the meaning of clause 3 of the contract between the claimants and Brakes; and, (b) whether it was information of a confidential character.[21]Issues (1) to (3) were issues going to liability. Issues (4) to (7) were issues going to remedy, assuming liability was established. In the event, issue (7) was not pursued. I have already noted that issue (1) was the key issue at trial (and in this respect I depart from the Master’s view that issue (3) was the most important – see [6] of the Master’s Judgement - a small point). Issue (1) was, in one sense, a preliminary issue: if the Defendants succeeded on issue (1), then the whole of the Claimants’ claim and the other issues fell away; it was only if the Claimants succeeded on issue (1) that the rest of the issues came into play at all.

The Liability Findings

[22]The Judge embarked on a review of the relevant case law at paragraph 161. There was no dispute between the parties as to the principles relevant to a claim for breach of confidence, as was alleged by the Claimants. For present purposes, it is sufficient to note the Judge’s reference at [163] to Megarry J’s formulation in Coco v Clark [1969] RPC 41, 47, which contains three elements for breach of confidence to be established: i) The information must have the necessary quality of confidence about it; ii) The information must have been imparted in circumstances importing an obligation of confidence; and iii) There must be an unauthorised use of that information to the detriment of the party communicating it.[23]The Judge considered the first element at [191] to [196]. At paragraph 196 the Judge makes certain findings. The first of those was:
“As it was a customer list, collecting together the names of a particular group of Personal Group's policy-holders, those names were collected together in it in a way which was not to be found elsewhere. It provided Gee 7 with something which was of value to them in any competition for the same business. It was not something which they could readily have obtained through their own efforts. The information was confidential to Personal Group's business, and Personal Group were entitled to expect Brakes to respect that confidence, contractually or otherwise.”
[24]The Judge concluded that the list did indeed contain confidential information. The first element of Megarry J’s test was met on the facts.[25]Further, and importantly, by this passage and others, the Judge appears to have accepted the Claimants’ case (pleaded at paragraph 19B) that what was confidential was the information contained within the List, namely the combination of names of Brakes employees holding policies together with the premiums they paid monthly be deduction from wages. This was the commercially valuable and thus confidential information. I would consider that conclusion to be manifestly correct. It was not the List, so much as the information contained in it, which was confidential. References in the Curran Judgment, and indeed in this judgment, to the “List” should be read subject to that important rider, and are in general a shorthand for the information which was contained in the List.[26]The Judge considered the second element at [197] to [200]. He concluded that any reasonable businessman would have known that this material was confidential. The Judge concluded that on an objective analysis, the Defendants’ conduct came close to dishonesty, it was underhand and devious, it lacked probity and amounted to conscious impropriety, it plainly crossed the threshold between ethical and unethical, and was unconscionable (see [198]). These are strong words.[27]The Judge considered the third element at [201] to [202]. The Judge concluded that there had been an unauthorised use of the confidential information, because “the evidence establishes… that the List was used in a number of ways” (see [201]). He then recited a number of ways in which the (physical) List had been used, all of them post-dating 29 May 2013, that being the date on which the List (in its physical form) had been emailed to the Defendants by an employee of Brakes. His concentration on that event on that date was hardly surprising given the way the parties had formulated issue (1). But his findings elsewhere in the Judgment went further. He concluded that the disclosure of the List on 29 May 2013 was part of a “continuing dialogue” between Brakes and the Defendants (by Mr Eaton) (see [143]), and concluded that “the List was being sent to enable Gee 7 to compete with Personal Group by offering an alternative premium” ([144]). The Judge did not specify the nature and extent of this “continuing dialogue”. And it is important to recall that the conclusion that there was a “continuing dialogue” was reached without full disclosure having been made by the Defendants. Given the constraints of time, disclosure before trial had been limited (by agreement between the parties, so I understand) and by the time of trial the Defendants had not provided disclosure going to the inception of their negotiations with Brakes or the formation of the Gee 7 contract – in other words, there was no disclosure relating to the “continuing dialogue”. Indeed, it is that disclosure which (in essence) the Claimants now seek and which the Defendants now resist.

The Adjournment for Assessment of Damages

[28]The Judge then moved to consider remedy. In relation to damages, the Claimants invited him to adjourn the assessment of damages (see [205]). The Claimants relied on late disclosure (this was a reference, I understand, to the disclosure only days earlier by the Defendants of taped telephone discussions between Mr Wilson, then an employee of the Defendants, and individual employees of Brakes in relation to switching policies from the Claimants to the Defendants). The Defendants resisted adjournment, arguing that there were only a few policy holders involved, that the possibility of a further hearing would be disproportionate given the likely quantum of loss, and that there was no evidence of wider dissemination of the List. The Judge dismissed the Defendants’ objections and decided that there should be an adjournment for an assessment of damages to take place on another date (see [206]). At the end of the Judgment, he said this (my emphasis):
“[237] In my view there is evidence that the claimant companies will to some degree have suffered loss. As I have said, I consider that such loss is probably smaller than they originally feared. For the reasons given by counsel, however, the evidence of the extent of such loss is neither clear nor complete, partly as the result of late disclosure of the audio recordings. With all respect to [the Defendants’] submission that adequate evidence was given at the hearing on the issue of damages, I consider that the claimant companies are entitled to make further enquiry into the matter, and I decline to assess the quantum of damages at this stage.”
[29]The hope that there would be little dispute over quantum once the claim was reformulated has turned out to be forlorn. But whatever the Judge hoped, it is clear that the purpose of the adjournment was to enable the Claimants to formulate their case on loss and damage (see [206]). As matters stood before the Judge, the evidence of the extent of loss was unclear and incomplete (see [237]). The Judge thought that the Claimants should be entitled to make further enquiry into the matter (see [237]). This was, as I read it, a clear recognition that further disclosure on the issue of loss and damage would be required.[30]By an Order dated 14 November 2014,

the Judge adjourned the action for damages to be assessed, and ordered disclosure in two categories:

“The Second and Third Defendants shall, by 4pm on 26th December 2014 give to the Claimants disclosure of the following categories of documents, in so far as they have not already done so: (a) All correspondence, memoranda and notes and/or recordings of meetings between the Second and/or Third Defendants and any employee of the First Defendant who has taken out an EBP with the Second and/or Third Defendant having previously had an EBP with the Claimants, since 1st January 2014; (b) All policy schedules in respect of insurance policies taken out by any employee of the First Defendant who has taken out an EBP with the Second and/or Third Defendant having previously had an EBP with the Claimants, since 1st January 2014.”
He directed the matter to come back to the Master for a CMC in due course.

Central Issue – Wide or Narrow Approach

[31]It is at this point that the parties come to a crossroads. The Claimants argue that the Judge simply adjourned the question of damages on terms that damages were at large, generally. They say that the Judge envisaged the Claimants having time to formulate their claim for damages in light of the disclosure recently received, the evidence which had emerged during the four days of trial, and the Judge’s own findings of fact and analysis of the claim in the judgment. He imposed no boundaries on the reformulation. No restrictions can be implied, save that the adjournment was to enable damages to be assessed. The Claimants argue that the Judge opened a door, and permitted the Claimants to consider how to put their claims for consequential losses, and to seek any further disclosure which was necessary and relevant to those claims. Further, it was to permit the Claimants to persist in the “wide” approach to damages, which they say was already pleaded in the original Schedule of Loss and Damage. The wide approach means this: the Claimants are not limited to claiming losses consequent on individual Brakes policyholders having switched provider (although that much they are certainly entitled to claim); they are at liberty also to persist in their claim that the Defendants would never have concluded an agreement with Brakes in the first place if they had not had the unfair advantage of the Claimants’ confidential information – ie, that but for the Defendants’ breach of confidence, there would have been no Gee 7 contract at all. On this wide approach, the Claimants project losses assuming that they would have remained the EBP provider for Brakes until 2024.[32]The Defendants argue that the Judge permitted the adjournment only on narrow terms, to enable the Claimants to reformulate their claims to reflect losses consequent on individual Brakes policyholders having switched provider (the narrow approach). This was the point to which the recently disclosed audio evidence went, and the Judge allowed the adjournment on the basis of that late disclosure, see [237]. Further, the Claimants cannot now suggest that the Defendants used the confidential information in different or greater ways than are already covered by the Judge’s fact-finding; and the only unauthorised uses he found are set out at [201] and centre on the use of the List to provide comparable quotations to individual policy-holders after 29 May 2013. In other words, the Defendants argue, the Curran Judgment closes the door on all claims for losses beyond those which can be demonstrated in individual cases: this was the “probably smaller” claim for damages which the Judge had in mind (see [237]).[33]Resolution of that sharp difference of view will determine the outcome of the applications which are now before me on appeal from the Master. The Master (in a judgment I will come to) concluded that the narrow approach was correct. The Claimants challenge that conclusion on appeal.

Pleadings – Round 2

[34]Before resolving that central issue, I turn to the current pleadings. On 6 November 2015 Master Eastman gave directions by consent. Those included an obligation on the Claimants to file Points of Claim in respect of their claim for damages, and for the Defendants to file a Response.[35]The Claimants submitted Points of Claim dated 29 January 2016. The narrative set out in that document reflects the findings of fact in the Curran Judgment. Included within that narrative is an assertion that Mr Eaton had on 25 March 2013 requested an example of the data held by Brakes in relation to their employees holding policies with the Claimants; on 26 March 2013 Brakes had supplied such an example; on 4 April 2013 Brakes had provided further examples. It is then asserted at [10] that these contacts were “part of a dialogue by which Mr Eaton [of the Defendants] was concerned to ensure that [the Defendants] would have sufficient information … to poach the Claimants’ policyholders once they had taken over the Brakes contract from the Claimants”. The point is developed at [11] where it is asserted:
“It was vital for [the Defendants] to know that they had access to details of the premiums being paid by the claimants’ policyholders prior to entering into any agreement to provide EBPs to Brakes employees because Gee 7’s business plan was based upon poaching the claimants’ policyholders by offering like for like cover or enhanced cover at a lower price.”
[36]It is then asserted that on 5 April 2013 the Defendants entered into the Gee 7 contract and that:
“[12] … Without the comfort of knowing that it had access to the what were effectively the types of policies and premiums being paid by the claimants’ policyholders, Gee 7 would not have entered into the [Gee 7 contract]”
[37]Particulars of Loss and Damage are then set out. The claim is put on the basis that the loss to the Claimants of the Brakes contract was attributable to the Defendants’ unlawful use of the Claimants’ confidential information: “[35] The claimants’ primary case is that, if it were not their use of the information comprised in the List, Gee 7 would not have entered into the [Gee 7 contract], would not have provided EBPs to Brakes employees … or have contracted with any of the claimants’ policyholders employed by Brakes. In short the claimants would have continued to provide EBPs to Brakes employees on an exclusive basis as it had done under the [Brakes contract] since 2008”.[38]The primary case is then illustrated by reference to a table attached at Appendix A. That table is materially identical in its structure and concept to the original table set out in the Schedule of Loss. The percentages assumed for attrition in the left hand box (hypothetical projected income from the Brakes contract) are lower, and the lapse rate assumed in the right hand box (projected actual income from the Brakes contract during the run off period) is higher. The resulting figure is higher at £918,529. Table A in the Points of Claim is, as Mr Stafford put it, “philosophically identical” to the table contained in the original Schedule of Loss.[39]The Points of Claim advance an alternative case based on the loss of 12 specific and named policyholders (see [38]-[39]), illustrated at Appendix B. The amount claimed on this alternative basis is £18,529.51.[40]The Defendants have lodged Points of Defence dated 24 March 2016. That document opens with the contention that the Points of Claim constitute an abuse of process and/or seek to re-litigate matters which are res judicata between the parties (see [1]) which is, I think, a prelude to the arguments advanced by the Defendants on this appeal objecting to the wide approach to the damages assessment represented by Appendix A of the Points of Claim. The Points of Defence go on to assert that HHJ Curran has made findings as to the use of the List, that he has made no findings about any wider use by the Defendants of the Claimants’ confidential information, that to raise such issues now amounts to a collateral attack on the Curran Judgment, and that in any event it is now too late to raise such issues which could and should have been argued at the liability trial before HHJ Curran (see [39] and [41] in particular). The claimed quantum is challenged on a number of other bases too.

Analysis

[41]My starting point has been to establish exactly what, if anything, is new in the Points of Claim and thus to identify where, precisely, the Defendants’ objections lie.[42]There are, I believe, two relevant ways in which the Points of Claim change the Claimants’ case. The first is the amendment to the figures in the table. That table appeared in the original Schedule of Loss. It reappears in the Points of Claim but with different assumed percentages for attrition and lapse leading to a larger bottom line figure. I accept Mr Stafford’s submission that the table in the Points of Claim is ‘philosophically identical’ to its earlier incarnation. The Defendants at one stage suggested that the Claimants should not be able to rely on this table at all – in its original or its amended form - at the assessment of damages hearing, but that cannot be right, given that the table has always been part of the Claimants’ case on quantum and so at the very least, the Claimants would have been entitled to rely on the original version contained in the Schedule of Loss. As to the changes in the version annexed to the Points of Claim: I conclude that the changes are not of substance but essentially of arithmetic, and are permissible in light of the adjournment, the purpose of which was to enable the Claimants to reformulate their case on quantum.[43]The second is the expansion of the reasons for asserting that claim. For the first time in the Points of Claim, the Claimants articulate their case that the Defendants only secured the Gee 7 contract because they had access to or knew that they would have access to the Claimants’ confidential information (see [10]-[12] of the Points of Claim, which I have referred to above). For reasons I have already given, the loss of the Brakes contract due to poaching by the Defendants is not a new claim; it was always part of the Claimants’ case set out in the original Schedule of Loss. But that claim is now advanced on a more specific and particularised basis. I will refer to this as the “expansion” of the Claimants’ original claim.[44]The expansion of the Claimants’ case is, I believe, the true target of the Defendants’ objections. The Defendants are right to say that if this expansion is permitted, it will require further fact-finding at the assessment of damages hearing, going to the nature and extent of the Defendants’ reliance on the Claimant’s confidential information and unauthorised use of it. Further disclosure by the Defendants will be required, and in all probability further witness evidence too. The Defendants argue that it is too late to expand the case now: the liability hearing has happened, and HHJ Curran has found the facts; the Claimants cannot now retrospectively re-engineer their case to widen the liability findings. In answer, the Claimants accept that there will need to be further findings of fact, based on further evidence; but they say this is all properly within the ambit of the assessment of damages hearing directed by HHJ Curran.[45]I prefer the Claimants’ arguments, and conclude that the Claimants are not precluded from expanding their case at this stage in the manner suggested in the Points of Claim.[46]The first and important point is that the expansion relates to the Claimants’ case on quantum. It amounts to a particularisation of the Claimants’ long-pleaded claim that the Brakes contract was lost as a result of the Defendants’ unlawful action.[47]Secondly, HHJ Curran has adjourned all matters going to quantum. He did not impose any limitation on the scope of the assessment of damages hearing. Indeed, there was no argument before him at all on the scope of that hearing which was not a live issue. He adjourned to allow the Claimants to seek further information and to reformulate their case. That is precisely what the Claimants have done.[48]Thirdly, I reject the Defendants’ efforts to characterise any further fact-finding on the extent of the Defendants’ unauthorised use necessarily as “liability” findings which belong to that part of the case which has been and gone. There is no bright line between liability issues and quantum issues, in this case or indeed as a general proposition. It is often the case that particular issues span liability and quantum. The Court’s procedures are inherently flexible, so the Court can deal with such issues in the most appropriate manner. Specifically, the Court is not precluded from finding further facts at the assessment of damages stage, even facts which could, had the litigation been managed differently, possibly have been found at the liability stage. In this case, the further fact finding relating to the extent of the Defendants’ unauthorised use would seem to fit comfortably into the stage of the litigation concerned with assessing damages. That seems to reflect HHJ Curran’s intention: he adjourned the case to enable the Claimants to seek further disclosure and to reformulate their case, and must therefore have envisaged the Court ruling on that reformulated case, with the benefit of the wider disclosure, at the resumed hearing.[49]Fourthly, once accepted – as in my judgment it must be - that the Claimants are entitled to advance their case based on the table in the Schedule of Loss, as that table it has been amended in the Points of Claim, and so to argue that the Brakes contract was lost as a result of the Defendants’ unlawful conduct, then it is absurd to preclude the Claimants from particularising that case. That is to allow form to prevail over substance and to defeat the overriding objective.[50]Fifthly, that expansion is in truth only a modest step from the originally pleaded case. The expansion makes express the point that was implicit in the originally pleaded Schedule of Loss, namely that the Defendants poached the Brakes contract from the Claimants by undercutting the Claimants’ prices for Brakes employees. And they were able to do that, so the Claimants argue now in terms, asserted implicitly before, because they knew what the Claimants’ prices were, and how much was deducted from employees’ salaries: that is, by unauthorised use of the confidential information. This argument cannot come as a surprise to the Defendants.[51]Finally, and importantly, the merits are in any event with the Claimants. The Claimants have taken and won an action against the Defendants for breach of confidence. The Defendants by their employees and directors have been found to have acted in a manner which was unlawful and underhand against the Claimants. All matters going to quantum have been adjourned to a subsequent assessment. The purpose of the assessment hearing will be to determine the quantum of damages payable in order to compensate the Claimants for the losses sustained as a result of the Defendants’ unlawful conduct. It is in the interests of justice that the Court should be able to identify, from the best information available, what is the extent of the loss and order damages to be paid accordingly. The Defendants seek to escape that outcome. They resist an order for disclosure of evidence relevant to quantum on the Claimants’ pleaded case. If they are right in their arguments, the Claimants will never know what is the full extent of their loss. The Claimants’ will be limited to recovery of the £18,000 or so (Appendix B), contingent on the disclosure the Defendants chose to make just a few days before trial. The Defendants will have achieved a very advantageous outcome, by capping damages at that figure. There will have been no proper investigation of quantum at all. I fail to see how this would accord with the merits, or further the overriding objective of the CPR.

The Decision of the Master

[52]The Defendants sought to persuade me that the Master’s decision was a case management decision with which I should not lightly interfere. Without deciding whether this was or was not, on proper analysis, “merely” a case management decision, I have concluded that the Master proceeded on the basis of two important misunderstandings which pervade his Judgment and in the end require me to set it aside.[53]The first misapprehension was that the Claimants were now advancing a claim in the Points of Claim which was fundamentally different from the claim as it had been originally pleaded. The Master stated:
“[11] Points of Claim … enlarged the damages claim to include not just the poaching or flipping of employees but also the switching of the Services Agreement from the claimants to the defendants.”
[54]This was to suggest that the original claim for poaching was different from the claim as now put for loss of the Brakes contract. That is not right. The original claim was always for loss of the Brakes contract; and that loss was always argued to be the result of poaching. The expanded claim particularised that poaching by reference to the “ongoing dialogue” between Brakes and the Defendants which predated the Gee 7 contract being formalised. And that “ongoing dialogue” had been identified by HHJ Curran. Rather than enlarging the damages claim to include a wholly new argument (as the Master appears to have thought), I conclude that the Points of Claim simply expanded the existing claim by particularising it. This is a much more modest step.[55]The second was a misapprehension about what HHJ Curran had decided. The Master stated that the reformulated claim set out in the Points of Claim was “an impermissible departure from the terms of reference for the assessment”. This was his starting point and at the heart of his reasoning. For reasons I have set out, I disagree with him on that central point. HHJ Curran had not given any terms of reference for the assessment of damages. He adjourned all matters going to quantum. The only issue for the Court, at this stage, therefore, is whether the Claimants’ expanded case goes to quantum, and for reasons given above, I conclude that it does.[56]The Master gave five detailed reasons for his conclusion at paragraph 16. I will briefly address them: i) The Master concluded that a claim so formulated was obviously not within the contemplation of Judge Curran. But HHJ Curran had not limited the scope of the assessment for damages to the loss flowing from the specific breaches of confidence found by him, or to the loss of named individual policy holders. HHJ Curran simply adjourned all matters going to quantum. That included the assertion in the original Schedule of Loss to the effect that the Claimants would have renewed the Brakes contract in 2014 but for the Defendants’ unlawful conduct. If HHJ Curran intended the Claimants to be prohibited from arguing that pleaded case, clear words were needed (and he would doubtless have wished to have heard argument on the point before so concluding). There are no such words. There was no such argument. There is no limitation on the scope of the assessment of quantum hearing implied by the Curran Judgment. ii) The Master concluded that the wider approach would require a completely new set of findings on a different form of misuse of confidential information. I agree that further findings of fact will be needed to address the Claimants expanded case. But for reasons given, I do not believe that is fatal to the Claimants’ case. In fact, the Claimants had always pleaded that the Defendants’ unlawful conduct had caused them to lose the Brakes contract and this is not a new case at all; rather it is the same case, reformulated, which was precisely the purpose of the adjournment. The facts as they arise from the reformulated case can properly be found as part of the assessment of damages hearing. iii) The Master concluded that to allow the reformulated claim would be an abuse. But the Claimant has always maintained a claim for damages based on the loss of the Brakes contract. That aspect of the claim was always pleaded as part of the quantum case, it was adjourned by the Judge and its determination lies in the future. This case is a long way from the type of case covered by the rule in Henderson v Henderson. Specifically, the Defendants cannot seriously suggest that they are being ‘unjustly harassed’ by the request for evidence going to the extent of their unlawful conduct, nor can they suggest that they are being ‘twice vexed in the same matter’ when they are seeking to be absolved from having to be vexed at all, even once, to answer the allegation that they unlawfully poached the whole of the Brakes contract from the Claimants (these quotes are from Henderson). Further, any application to strike out a claim as an abuse on this basis requires the Court to reach a “broad, merits-based judgment taking account of public and private interests involved and the facts of the case” (per Lord Bingham in Johnson v Gore Wood and Co [2002] 2 AC 1, at 30H-31F, an authority to which the Master does not specifically refer). For reasons I have outlined above, I believe that the merits are with the Claimants. Further, the tight timetable to speedy trial is an important factor to take into account at this point. That extreme time pressure explains why disclosure to trial was limited and argument at trial was focussed on issue (1), phrased as it was. I do not consider that there is any abuse by the Claimants, in seeking to have their damages assessed on the basis now asserted in the Points of Claim. iv) The Master concluded that the reformulated claim is vague and hard to follow. I do not agree. I have tried to explain the reformulated claim above. v) The Master concluded that the material before the Court fails to support a reasonably arguable case that the Gee 7 contract was procured by misuse of confidential information. But HHJ Curran found, even based on the limited information before him, that the Defendants were party to a “continuing dialogue” which started on a date unknown, but was ongoing at least on 4 April 2013 (see [142]) and extended to the spreadsheets of names and deductions from payroll in relation to Brakes employees; those spreadsheets ended up being sent to the Defendants on 29 May 2013 as the List (see [143]). The Judge rejected the evidence of Mr Eaton and Mr Pardoe, the key witnesses put forward by the Defendants. There is every reason, it seems to me, for the Claimants to want to investigate the events leading up to the Gee 7 contract. The Defendants will be able to argue at the assessment of damages hearing that the timings do not fit, and that the List was only emailed by Brakes to the Defendants in May 2013 after the Gee 7 contract was concluded. But that argument, advanced with considerable energy before me, seems to miss the Claimants’ point that the Gee 7 contract was concluded as part of the “continuing dialogue” and in the expectation of receipt of the List. This needs to be adjudicated.[57]For those reasons, I believe that the Master was in error. I have considered the parties’ arguments afresh and reached a different conclusion.

Justiciability

[58]In light of my conclusions stated above, I do not need to deal with the justiciability point. That point arose out of the Defendants’ acceptance, by letter dated 12 May 2016, that they would not pursue an application to strike out the Claimants’ Points of Claim, but would leave the scope of the assessment of damages hearing to the trial judge. The Claimants then issued their application for specific disclosure dated 12 July 2016, which (they say) flows from their Points of Claim; and the Defendants then issued their cross-application dated 28 July 2016 by which they sought to restrict the assessment of damages hearing to the assessment of damages flowing from Mark Wilson’s use of the List, alternatively, to strike out certain points of the Claimants’ Points of Claim on the basis that they are an abuse, yet alternatively an order for summary judgment. (Further alternatives were included but it is not necessary to outline them here.)[59]The Claimants argue that by their application of 28 July 2016 the Defendants were in effect going back on their earlier agreement to leave the scope of the assessment of damages hearing to the judge, that they were not entitled to resile from their earlier compromise, alternatively they were estopped from doing so.[60]The Master concluded that he was not bound by the parties’ agreement (if there was such an agreement) and he had to determine the merits of the Defendants’ application for himself. Given that I have decided that the Master was wrong to decide the merits of that application as he did, there is no need for me to consider the justiciability point: it adds nothing to the outcome of this appeal either way.

Disposal

[61]This appeal is allowed. The Master was wrong to limit the assessment of damages to the narrow basis. The Claimants are entitled to advance their case on the wide approach.

Consequential Issues

[62]The consequence of allowing this appeal is that I dismiss the bulk of the Defendants’ application dated 28 July 2016. The only parts of it which may remain at large are: i) The Defendants’ disclosure application consequent on a request for further information dated 8 June 2016; and ii) The Defendants’ application for further directions for exchange of witness statements and permission for witness statements in reply. Plainly a new trial timetable will now be needed.[63]The Claimants’ application for disclosure dated 12 July 2016 is, therefore, allowed in principle. However, I have not heard argument on the specifics, and gather that the Defendants would still wish to object to certain aspects of it even if the appeal were allowed.[64]Mr Temmink invited me to remit this to the Master for further directions if I was minded to allow the appeal. That will incur further delay and will be potentially wasteful of Court resources because the Master will have to read into this case afresh. I am now familiar with this case and so I direct the parties to consider whether they can agree disclosure and consequential directions for the assessment of damages hearing. If they cannot, then they should come back before me for argument on any outstanding issues which I will resolve.