TAKÉ LIMITED v BSM MARKETING LIMITED

Také Limited (“Také”) is a limited company incorporated in England and Wales specialising in the importation wholesaling and design of high and medium quality furniture. At the time of the dispute the furniture was manufactured in factories in China and Vietnam which, in the past, probably only manufactured furniture for Také although these factories may also have manufactured furniture for a customer in the United States. Také also imported furniture manufactured in Malaysia and itself manufactured (and still manufactures) bedding in the United Kingdom. At the relevant time, Také had the exclusive right to sell furniture from the manufacturer in Malaysia. These arrangements may have changed to some or even a considerable extent since November 2005.

Mr. Majid Sadaghiani is Také's managing director and ultimately controls and makes all the important decisions in the company.

Mr. Turton has the title of finance director but defers to Mr. Sadaghiani on all matters of policy. Although Mr. Sadaghiani has the final say, Mr. Turton has considerable responsibility in financial matters.

Také has had an agent in Asia, Mr. Low Hock Seng (Mr. Low) based in Malaysia. Mr. Low has had the responsibility of liaising with the factories in China, Vietnam and Malaysia. He was fully aware of Také's production costs, specifications and design. Mr. Low speaks good English. Mr. Chew Baoguo, (Mr. Chew) who is the managing director of the company who manufactured Také's products in China until about October/November 2005, does not speak English. Mr. Low interpreted for Mr. Chew when Mr. Chew needed to communicate to Také in English.

Mr. Morley, who has worked in the furniture business for 42 years, is the sole director of BSM Marketing Limited (BSM). Mr. Morley's wife is the company secretary of BSM. The shares in the company are divided between Mr. Morley and his wife. Except where it is necessary to differentiate between them, I shall refer to Mr. Morley alone when he is acting on his own behalf and/or on behalf of BSM.

In the year 2000 Mr. Morley was working as agent for Také. By a written agreement signed on 8^th November 2000 Mr. Morley agreed to carry out consultancy work for Také through BSM for which he would be paid on an agreed formula largely based on the net sales of Také. It was expected that his fees from this source would amount to about £110,000. In addition, he would undertake various activities of a more managerial nature, in particular relating to Také's major customer, Benson, for which he would be paid a further £24,000.

Také originally contested Mr. Morley's claim that his relationship with Také was one of agency but this is now accepted.

Mr. Morley's agency agreement was renegotiated in subsequent years (not without difficulties). The last signed agreement covered the period from 1^st April 2004 to 31^st March 2005. Mr. Morley continued to perform services for Také after 31^st March 2005 until a date in October/November 2005. The actual date is disputed. There is also a dispute as to the terms on which Mr. Morley acted as agent after 31^st March 2005.

On 20^th October 2005 Také obtained an interim injunction restraining Mr. Morley/BSM.

On 3^rd November 2005 this injunction was continued on the basis of undertakings by Mr. Morley (BSM) not to use or disclose any confidential information acquired directly or indirectly by the defendants in respect of customers and suppliers listed in Appendix B to the Order (38 names).

Such information was to include (a) the claimant's UK pricing structure for its ranges of furniture; (b) the production costs of the claimant's suppliers for products to be supplied to the claimant; (c) details of the claimant's customers' requirements and preferences in terms of styles, size and design; (d) details of the claimant's designs for its existing and planned ranges of furniture; (e) the claimant's customer lists. The undertaking states explicitly that it does not apply to information which is or may come into the public domain otherwise than through the defendant's fault.

Také's claim was made in the Particulars of Claim on a number of grounds which have not subsequently been pursued.

First the final signed written agreement contained a restrictive covenant which purported to restrain Mr. Morley from working for or servicing any of Také's customers during the period of the agreement and in respect of Také's major customers for a period of 12 months following the termination of the agreement. At a relatively late stage, Také decided not to seek to try to enforce the restrictive covenant.

The claim was also put originally on the grounds that Mr. Morley was in breach of his duty not to interfere in Také's contractual relations with third parties. Again, this claim has not been pursued.

Further, it is important to underline that the claim that Také has legal and enforceable rights in Také's products and that Mr. Morley has acted, or at least threatened to act, in breach of those rights, has also not been pursued in this hearing. It has appeared from time to time, particularly both in the written and oral evidence of Mr. Sadaghiani, that he has been confused about this. I will only comment that Mr. Sadaghiani made it clear in evidence that he was very proud of the products which had been developed on behalf of Také and were marketed by Také.

Také's claims are based on two separate grounds. First, it claims that Mr. Morley (BSM) acted in breach of his duty of loyalty to Také during the time he was acting as Také's agent. Secondly, it claims that Mr. Morley acted in breach of his duty not to misuse information which he obtained in confidence either during his agency or afterwards.

Although it had previously been vigorously denied, Mr. Morley had to concede in his oral evidence that he had been disloyal to Také in the last months of his agency. Mr. McCue, in his final submissions, rightly conceded on Mr. Morley's behalf that he had in the summer of 2005 acted in breach of his duty of loyalty as agent of Také. Mr. Morley maintains that the admitted breaches did not cause Také any loss.

Mr. Morley claims that his agency came to an end on 6^th October 2005 as a result of Také's wrongful repudiation of his agency agreement and that after that date he was free to enter into discussions with other parties who would act as competitors or potential competitors with Také.

Také claims that Mr. Morley's breach of his duty of loyalty caused a substantial loss of business from two existing customers, Dreams and Benson. It also, so Také alleges, was responsible for Také's failure to obtain substantial orders from Argos.

Také now claims that Mr. Morley was in receipt of and misused four categories of confidential information: (a) the list of 32 customers serviced by Mr. Morley; (b) Také's pricing structure setting out the prices at which Také's products were sold to customers; (c) production costs paid by Také to its suppliers and (d) information concerning the preferences of Také's customers in terms of style, size and design of the products. It also claims that Mr. Morley had and divulged confidential information relating to product specifications.

It is said that this information has been divulged by Mr. Morley in circumstances which breached his duty of confidence and that he will continue to divulge such confidential information unless he is restrained from doing so by a permanent injunction.

Whilst Mr. Morley has conceded that he acted in breach of his duty of loyalty in the summer of 2005, he contends that Také has not suffered any damages. In relation to Dreams, Benson and Argos, he contends that other factors were responsible for the loss of business with Dreams and Benson, and in relation to Argos, he contends that Také cannot prove causation.

In relation to the alleged confidential information, Mr. Morley claims that much of it, e.g. customer lists, is not confidential but freely available. In relation to any information which was confidential, Mr. Morley disputes either that he had the information or that he misused it.

In these circumstances, Mr. Morley contends that the temporary injunction/undertakings should not be continued because (a) it should not have been imposed in the first place and (b) even if, contrary to his submission, some temporary restraint was justified, there is now no reason why it should be continued. I am asked to conclude that the undertaking should be discharged, and that Také's undertaking to compensate Mr. Morley in damages should be enforced. Mr. Morley claims that he has been unable to work since 6^th October 2005 and he is entitled to recover substantial damages. He also claims unpaid commission for the period from August to October 2005.

If I conclude either that Také is entitled to an account of damages or that Mr. Morley is entitled or may be entitled to recover damages, it is accepted that it will require a further hearing to assess these damages.

I heard extensive evidence from Mr. Sadaghiani and Mr. Turton on behalf of Také and from Mr. Morley on behalf of the defendants. In addition, I heard from Mr. Vella who is a computer expert called by Také to give evidence of emails retrieved from Mr. Morley's home computer.

I find that Mr. Sadaghiani and Mr. Turton were doing their best to give truthful evidence. This, of course, does not absolve me from making detailed findings on particular matters in the light of all the evidence which I have heard and read. Mr. Vella's evidence was not seriously challenged and I accept it. Mr. Vella's evidence has serious implications for Mr. Morley.

After an application by Také, the court permitted Mr. Vella to search Mr. Morley's home computer. This search has revealed extensive deletions on 14^th November 2005, described as "clean up", only a few days before Mr. Vella attempted to carry out his instructions to duplicate the hard drive on Mr. Morley's home computer.

A very substantial number of emails have been deleted covering the period from 10^th March 2005 to 19^th October 2005. Mr. Vella was able to recover some but by no means all the emails which had been deleted from Mr. Morley's computer. It was on the basis largely of Mr. Vella's findings from the emails which he was able to recover, and which Mr. Morley thought had been deleted, that Mr. Morley was forced to concede that he had acted in breach of his duty of loyalty to Také.

In relation to the extent to which I can accept Mr. Morley as a truthful witness, I note that Mr. Morley said in his second witness statement, before he saw Mr. Vella's evidence, that he had never directly sent out email communications either from his email account or otherwise. All emails were sent out, he said, from Také's London office. This was plainly untrue.

Also, as Mr. Vella said in his report, Mr. Morley told Mr. Vella untruthfully at the start of his investigations that he did not use his home computer and could not understand why Mr. Vella had been sent to examine the computer. In relation to the extensive deletions from Mr. Morley's home computer, Mr. Morley said that he and his wife did not know how to use the computer and he did not tell his son or daughter, who he said in evidence operated the computer for him, to delete the material.

Throughout the trial Mr. Morley persisted in denying any knowledge as to how it happened. I am unable to accept this evidence. I am satisfied that the material which was deleted from the computer was deleted by Mr. and Mrs. Morley's son or daughter on his express instructions.

In oral evidence, Mr. Morley said that a number of the detailed documents had been printed out in hard copy, no doubt so that he could read them more easily and refer to them when necessary. It is significant that none of these documents have been disclosed in these proceedings. I cannot accept that none would have been relevant to the issues which I have to decide. I cannot therefore accept Mr. Morley as a witness of truth. This does not, of course, mean that I do not consider his evidence carefully along with all the other evidence in making my findings of fact.

These are based on the agreed list of issues provided to the court on 16^th February 2006:

I consider (a) the law relating to the alleged duty of loyalty of Mr. Morley to Také and (b) the alleged duty of confidence under which Také claims that it can continue to restrain Mr. Morley from imparting information acquired by him from Také in circumstances of confidence.

In relation to (a) the parties are now agreed that the relationship between Také and Mr. Morley/BSM is one of principal and agent.

In order to describe the legal nature of their relationship I need to do no more than cite the well known passage from the speech of Lord Pearson in Garnac Grain Co Inc v. HMF Faure & Fairclough Limited [1968] AC 1130 at 1137:

It is now trite law that an agent owes to his principal a fiduciary duty of loyalty which subsists during the period of the agency. This duty was encapsulated by Millet LJ in Bristol & West BS v. Mothew [1998] 1 Ch.1 at p.18:

An agent also has the affirmative duty of making full disclosure to his principal of any matter which is required to be disclosed as a matter of good faith. See Bowstead & Reynolds on Agency 17^th Ed. at paragraph 6.055:

It is clear, therefore, that during his agency Mr. Morley had a duty of loyalty to Také. This duty extended to not acting for his own benefit or for the benefit of a third party against the interests of Také and also to an affirmative duty to inform Také of any matter inimical to Také's interest which good faith would require him to disclose.

This duty will be breached if an agent solicits his principal's customers before the end of his agency with a view to soliciting future business or setting up in opposition to his principal. See Wessex Dairies v. Smith [1935] 2 K.B. 80.

The equitable duty of confidence between fiduciaries has existed since at least the Statute of Uses in 1535. It was developed in a series of cases in the 1960s. As Lord Philips of Worth Matravers MR emphasised in Campbell v. Frisbee [2003] ICR 141, earlier decisions must be considered in the context of the Human Rights Act. In Campbell v. Frisbee, involving the well known model, Naomi Campbell, this was an obvious consideration. It is not such an obvious consideration in this case although it may be relevant.

The obligation of confidence does not depend on an implied contract. It depends on the broad principle of equity that he who has received information in confidence shall not take unfair advantage of it - See Lord Denning MR in Seager v. Copydex [1967] 1 WLR at 931.

The obligation of confidentiality arises where: (1) The information is of a confidential nature; (2) It was communicated in circumstances importing an obligation of confidence; and (3) There must have been an unauthorised use of the information to the detriment of the person communicating it. See Megarry J in Coco v. Clark [1969] RPC 44.

The obligation of confidentiality extends after the termination of the agency - see Cross J in Printers & Finishers v. Holloway [1965] RPC 239 at 255.

However, the obligation of confidence is confined to the principal's trade secrets and does not extend to information which has become part of the agent’s (or employee’s) general skill and knowledge. A person is, in principle, entitled to make proper use of his skill both for his own benefit and that of the public.

The distinction is set out clearly by Cross J in Printers & Finishers v. Holloway:

In Mont v. Mills [1993] RPC 577, Simon Brown LJ emphasised that a claim for breach of confidence must not be used as a substitute for a valid restrictive covenant. Although the following is said in the context of employment, it must also apply to agents:

“‘Once the employment relationship ceases, there is no continuing occasion for loyalty. All that is left is a residual duty of confidentiality in respect of the employer’s trade secrets. That, as many of the cases acknowledge, is in reality enforceable by taking a covenant from the employee by which he is not to go to work for a rival in a trade’, per Lord Denning in Littlewoods in the passage already cited - itself an echo of Sir Nathaniel Lindley's judgment in Haynes: ‘The prohibition against disclosing secrets is practically worthless without the restriction against entering the employ of rivals’."

Having noted this, it is clear that the duty of confidence will be enforced in appropriate circumstances after the termination of employment or agency.

In Campbell v. Frisbee [2003] ICR 141 at 148 Lord Philips of Worth Matravers MR left open the possibility that a duty of confidentiality that has been expressly assumed under a contract carries more weight when balanced against the right of freedom of expression than a duty of confidentiality that is not buttressed by express agreement.

In Lancashire Fires v. S.A. Lyons [1997] IRLR 113 at 126, Sir Thomas Bingham MR after reviewing the previous authorities including Thomas Marshall Exports v. Guinie [1979] Ch227 and Faccenda Chicken v. Fowler [1987] 1 Ch117, said:

In Faccenda Chicken at p.135 Neill LJ, giving the judgment of the court, set out the following principles in an employment context. They are also relevant to an agent in the present case:

I note in passing that Neill LJ in 1987 places the obligation (in the absence of an express term) on the basis of an implied contractual term. In Bristol & West BS v. Mothew in 1998 Millet LJ places the obligation on the basis of an implied obligation of trust and good faith. It may well be that in many cases, including Faccenda Chicken, the two formulations can be regarded as alternatives but it seems to me that conceptually the obligations arise because of the circumstances of confidentiality in which the information is imparted which give rise to an obligation of confidence. Implied contract is an example of the general equitable principle.

Neill LJ went on:

In Lancashire Fires v. Lyons [1977] IRLR 113 the Court of Appeal considered the principles set out in Faccenda Chicken. The court referred to Goulding J's classification of information, in Faccenda Chicken at first instance, into three categories (a) information, trivial in character or easy to access from public sources which is not protected; (b) information which could only be restrained by an enforceable non-competition clause and (c) specific trade secrets so confidential that even though there may have been learned by heart and even though the servant may have left the service of the employee cannot lawfully be used for anyone's benefit but the Master's.

At p.128 the Court of Appeal said:

Before November 2000 Mr. Morley was working as a commission agent for Také under an informal oral agreement with Mr. Sadaghiani. This agreement was thought by Také (and particularly Mr. Turton) to be too advantageous to Mr. Morley. On Také's figures it would have enabled Mr. Morley to earn up to £250,000 a year in commission.

In a fax dated 8^th November 2005 Mr. Turton, on behalf of Také, offered Mr. Morley (BSM) a written consultancy agreement which, based on Mr. Morley's sales projections, would enable him to receive about £135,000 per annum (£110,000 based on a percentage of net annual sales) and £24,000 for developing Také's relationship with Benson, a well known furniture retailer and Také's largest customer.

The proposal in Mr. Turton's fax was countersigned by Mr. Morley as agreed in the name of his company, BSM Marketing, and was countersigned by Mr. Turton on the same day. The agreement was expressed to last 12 months with three months' notice of termination on each side.

It is clear that there were continuing problems over Mr. Morley's relationship with Také. By 14^th July 2003 relations had deteriorated to the point where, in order to force renegotiation of the agency agreement, Mr. Turton wrote to Mr. Morley to inform him that the previous agency agreement had ceased to be effective. Each side claimed that the other was dragging out negotiations in the hope of gaining a negotiating advantage.

By August 2003 Také was falling behind in its commission payments to Mr. Morley. A handwritten note of 26^th August 2003 from Mr. Morley asked Mr. Turton to pay his commission outstanding for April, May and June 2003 and to provide the July 2003 sales figures so that he could calculate the commission due to him for July 2003.

The note was endorsed by Mr. Turton that the appropriate cheques were to be drawn and passed to Mr. Sadaghiani for payment. The note relating to the July 2003 figures was: "No agreement = No figures = No payment". There is no doubt that at various times in the course of the relationship, Mr. Turton either withheld sales figures or monthly payments in order to try to force Mr. Morley to negotiate a new agreement.

On this occasion in 2003 Mr. Morley said that he did not understand Mr. Turton's comments because no new agreement was due until November 2003. Mr. Morley had had discussions with Mr. Sadaghiani and had agreed to drop the £2,000 a month payment which was a bone of contention between Mr. Turton and Mr. Morley.

Mr. Turton's memo to Mr. Sadaghiani of 28^th November 2003, copied to Mr. Morley, made it clear that, without Mr. Turton's involvement, Mr. Sagadhiani had agreed to continue the previous agreement to November 2003.

A note from Mr. Turton to Mr. Morley dated 12^th September 2003 had made Mr. Turton's tactic clear: "You only have yourself to blame for this problem” (i.e. late payment of fees). “I wrote to you well over three months before your agreement stopped - I asked you - I talked to you - I did not want to end up where we are now".

For the new agreement starting in November 2003, Mr. Turton proposed in the same memorandum of 28^th November 2003 that it was necessary to have a formal agreement. Mr. Turton proposed in a draft that the commission should be split into three components: a retainer, a commission on overall sales and a percentage based on projected profits. The total package amounted to £127,000.

Také has argued that it was not necessary for it to provide the net sales figures in order to enable Mr. Morley to calculate the commission element of his remuneration. Mr. Morley disagrees. In the memorandum of 28^th November 2003 Mr. Turton proposed that: "The fees relating to sales will be payable monthly within 28 days following the month end payable on your invoice based on the summary sheet which will be provided to BSM during the month by myself."

I am satisfied and find that Mr. Morley should, as a matter of contractual obligation, have been provided with the net sales figures each month by Také so that he could work out his entitlement to commission without the risk of a substantial dispute on figures.

Mr. Morley emailed his response to Mr. Turton's proposal on the same day, 28^th November 2003. He confirmed that he had reached an agreement with Mr. Sadaghiani for the period to 1^st November 2003. He complained that Mr. Turton's new proposal was attempting to cut back his commission and he emphasised that he now had additional expenses including having to employ a typist and the installation of email and a new computer system at his home. Mr. Morley noted that he had given up his other agency work and was now working 100% of his time to obtain extra sales for Také.

The wrangling over the agreement for 2003-4 continued. Mr. Morley described Také's attitude on 14^th February 2004 as one of "total greed". He said that he was not prepared to negotiate the commission arrangements and required an agreement for the future to be concluded by 20^th February 2004 and all outstanding commission payments to be paid by 21^st March 2004. He demanded what he called "a major commitment from Také otherwise I have to make decisions".

On 24^th February 2004 Mr. Morley claimed that Také owed him £46,709.26 in outstanding commission.

Mr. Turton responded on 2^nd March 2004 that he had made a fair offer in November 2003 which Mr. Morley had rejected. The letter enclosed what was described as "a final offer on payment". The fee offered for the nine month period was £48,263.20 for commission for the period from July to the end of October 2003 and a fixed payment of £45,000 calculated at £9,000 a month for the period from 1^st November 2003 to 31^st March 2004. This makes a total of £93,263 for the nine month period or the equivalent of about £120,000 a year. This proposal was agreed by Mr. Morley on the same date, 2^nd March 2004.

On 24^th March 2004 Mr. Morley opened a new round of negotiations for the period from 1^st April 2004 to 31^st March 2004. He said, rather optimistically: "Must settle before 31 March 04". Mr. Morley's initial proposal was for commission based on net sales up to a maximum payment of £150,000 a year.

The problems in negotiating a new contract followed a familiar pattern. On 21^st May 2004 Mr. Morley was complaining to Mr. Turton that he had not received 2004 sales figures. Mr. Morley's invoice for April 2004 was rendered on 29^th June 2004 after Mr. Morley had received the sales figures. Mr. Morley was paid for April 2004 on 30^th June 2004.

On 10^th June 2004 Mr. Morley was insisting to Mr. Turton that the problems of payment must be sorted out. He said that his understanding was that he was carrying on with "the current commission deal". He proposed: "Normal commission rates. Payment by 21^st following month and please pay April/May".

On 24^th June 2004 Mr. Morley again complained that he had not been paid. On the following day he proposed a slightly modified version of his commission proposal of 24^th March 2004 this time with a ceiling of £145,000.

On 28^th June 2004 Mr. Morely reported to Mr. Turton that he had agreed with Mr. Sadaghiani a figure of £110,000 per annum commission on current sales and a 1.5% commission on all new sales.

On 2^nd July 2004 Mr. Turton responded with a new proposal for the period to March 2005. This had commission on existing customers of 0.6% of net sales to a cap of £110,000 and 1.5% of net sales on currently dormant or new customers to a cap of £35,000.

Mr. Morley made substantial manuscript amendments to the draft and faxed it back to Mr. Turton on the same day. These included a provision for a rolling 12 month contract with six months notice on either side and that the £110,000 should be a guaranteed figure. Mr. Morley also said that he required a guarantee that the money should be paid. All but one of his amendments (a relatively minor one) was rejected.

The contractual problems continued. There appeared to have been further discussions because on 23^rd October 2004, Mr. Turton sent a fax to Mr. Morley saying that he had sent him the information to enable him to raise the invoices to September 2004. The fax added the post script: "Please fax me back the signed agreement and initial each page". Mr. Turton reiterated the request on 15^th November 2004.

After July 2004 there seemed to have been fewer problems over payments. It appears that the payment for July 2004 was very late but the August 2004 invoice was rendered on 16^th September 2004 and was paid seven days later along with the July payment. The September 2004 invoice was rendered on 11^th October 2004 and paid on 26^th October 2004. The October invoice was rendered in November 2004 and paid on 1^st December 2004.

Finally, on 22^nd November 2004, Mr. Morley and Mr. Turton signed an agreement relating to the period from 1^st April 2004 to 30^th March 2005. It purported to apply a confidentiality agreement relating to all information made available to Mr. Morley in relation to his consultancy work during the period of the agreement and thereafter. The agreement provided that Také should be entitled in the case of a breach of confidentiality to terminate the agreement forthwith and to withhold all amounts unpaid in respect of the consultancy and all future fees for the rest of the consultancy period. The £145,000 annual cap on fees was agreed. Mr. Morley also agreed that the figure for active customers should be a fee which was a percentage of net sales capped at £110,000. Mr. Morley claims that he signed the agreement under duress. I do not find on the evidence that this was so.

The 2004-5 agreement formed the backdrop to the discussions for the year 2005-6. There is no dispute that no formal agreement was signed for 2005-6. There is also no dispute and Mr. Morley has not been paid commission for August, September and October 2005 but was paid commission for the earlier months.

The earlier part of the preparatory work on the case was completed before the emails in Mr. Morley's home computer had been discovered and analysed. The written evidence was presented by Mr. Morley on the basis that Mr. Morley was a loyal employee who had been wrongfully deprived of commission payments due to him and who had had a conversation with Mr. Sadaghiani on 6^th October 2005 when he had told Mr. Sadaghiani that he could not continue to represent Také unless he was paid his monthly commission. In response to this, Mr. Morley said that Mr. Sadaghiani had told him not to continue to represent Také. This amounted to a repudiation of his agreement by Mr. Sadaghiani which Mr. Morley said that he accepted.

I shall resolve the factual dispute relating to the meeting between Mr. Sadaghiani and Mr. Morley on 6^th October 2005 in due course, but the history and the relationship between Také and Mr. Morley now needs to be considered in the context of the emails between 10^th March 2005 and 19^th October 2005 which were deleted from Mr. Morley's home computer and which Mr. Vella was able to recover and in respect of which Mr. Morley has since conceded that he acted in a manner which was disloyal to Také.

I am satisfied that until the series of emails which were copied to Mr. Turton by mistake on 27^th September 2005, Také was not aware of Mr. Morley's disloyalty.

Mr. Morley's attitude may well have been coloured by the fact (as he said in his evidence) that he thought that since he had no signed contract with Také after 31^st March 2005, he could after that date act as a free agent. This is despite the fact that he was claiming, and until July 2005 was receiving, substantial sums from Také by way of commission.

I am satisfied that until new terms were agreed, Mr. Morley continued to act as Také’s agent on the same enforceable terms as he had in the period to 31^st March 2005. This excludes, for example, the restrictive covenant which Také does not seek to enforce. It does include a duty imposed on Mr. Morley to act loyally towards Také while the relationship of principal and agent subsisted.

I should also note a term in the November 2004 contract which reads as follows:

Originally, Mr. Morley sought to amend this provision but in the event he signed it unaltered. The defendants continued to be bound by those terms unless they can show that Také brought the agency to an end by repudiation that was accepted by the defendant.

Even though no agreement was reached between Také and Mr. Morley on new terms, Mr. Morley continued to act as Také's agent until 2005.

The documentary evidence as to efforts to reach a new agreement is not extensive. On 2^nd June 2005 Mr. Turton sent Mr. Morley a draft contract to cover the period from 1^st April 2005 to 31^st March 2006. This appears to be the first initiative by either party to conclude a new written agency agreement for the period. Mr. Morley did not respond directly until 5^th September 2005, some three months later.

Mr. Morley received the draft from Mr. Turton on the 2^nd June 2005, the same day as Mr. Vella later discovered that Mr. Morley had sent an email to Mr. Low and Mr. Chew making constructive suggestions as to how their relationship could proceed (without Také) if Mr. Chew withdrew from his relationship with Také. It was an email from an active participant in a possible scheme to set up a business in opposition to Také. I deal with it in detail in the section below dealing with Dreams. A loyal agent would not have written in these terms and, on the contrary, would have reported to his principal that Mr. Chew was contemplating breaking his relationship with Také.

Mr. Morley responded to Mr. Turton's email on 8^th June 2005 by asking for additional figures relating to three customers: Peerless (Dreams), Bedtime and Furniture Village. Mr. Morley said that he needed to discuss these matters with Mr. Sagadhiani.

Mr. Morley said in oral evidence that he made no reference to the draft agreement which Mr. Turton had sent him because he was being advised by his solicitor and his accountant that he should not do so. I cannot understand why this advice was given, if indeed it was given.

On 14^th June 2005 Mr. Morley, pursuing his independent discussions, set out the FOB prices which he needed Dreams to pay to cover both his and Mr. Low's commission if Dreams was to be supplied from China with Mr. Morley as Mr. Chew's London agent.

On 15^th June 2005 Mr. Morley, in his capacity as Také's agent, submitted an invoice for commission due for May 2005 calculated in accordance with the formula in the 2004-5 agreement. The sum invoiced was £8,998.20 including VAT.

The invoice has endorsed on it by Mr. Turton: "Ok to pay". It is also endorsed with the note that no further payments are to be made until Mr. Morley has signed and returned the draft agreement. The payment which Mr. Turton approved excluded sums claimed for Peerless (Dreams), Bedtime and Furniture Village which were "excluded pending identified Barrie orders".

On 25^th July 2005 Mr. Morley's commission for June 2005 was passed for payment in full. It amounted £18,168.97 including VAT. This included a payment in respect of the three accounts which had been excluded in the previous month.

The note from Mr. Turton indicates: "On account as agreement not signed". Mr. Turton noted that this would be the last payment until an agreement was signed as Mr. Morley had had well over one month to take up any issues on the draft agreement which he had been sent. The note from Mr. Turton on the page setting out the net sales was: "But you must sort out agreement with your accountant and then sign - as it is not fair to hold agreement and expect payment".

Mr. Morley did not respond to the request to discuss the agreement. On 8^th August 2005 he wrote to Mr. Turton to ask for the July sales figures. The note has endorsed on it that the request was repeated on 24^th August 2005, 30^th August 2005 and 2^nd September 2005.

Also on 8^th August 2005 Mr. Morley, unbeknown to Mr. Turton, had received on his home computer a memorandum of understanding between Mr. Chew and Dreams under which Mr. Morley was to act as the UK representative of the importers of furniture to be supplied to Dreams thus cutting out any participation by Také. Mr. Morley did not report this email to Také.

On about 2^nd September 2005 Mr. Turton responded to Mr. Morley's request for the July 2005 figures. He said he was: "a bit behind". He reminded Mr. Morley: "But, Barrie, I said last time that I wanted you to sort out the agreement and you said you would as your accountant was involved".

Finally, on 5^th September 2005 Mr. Morley responded directly to Mr. Turton's letter of 2^nd June 2005 enclosing the draft agreement. He said that he had consulted both his accountants and his solicitors and had been advised not to sign the agreement. He said that his solicitors were prepared to redraft the agreement but it would cost £1,500-£2,000 plus VAT. Mr. Morley said that he was only prepared to instruct them if Také agreed in advance to sign the revised agreement.

Mr. Turton took the last offer to be an encouraging sign and responded warmly. He said that Mr. Morley should speak to Mr. Sadaghiani on the following day and that he did not resist change provided Také was protected. He wished Mr. Morley luck with his meeting with Mr. Sadaghiani.

After his conversation with Mr. Sadaghiani, Mr. Morley reported to Mr. Turton on 7^th September 2005 there did not appear to be any problems and that Mr. Sagadhiani would conclude an agreement on his return from the Far East on 17^th September 2005. Mr. Morley asked Mr. Turton for the July and August net sales figures.

On 27^th September 2005 an email from Dreams to Mr. Morley's home computer was copied by mistake to Mr. Turton who passed it on to Mr. Sadaghiani. It naturally aroused their suspicions that Mr. Morley was not acting loyally as Také's agent. The email was the last in a series of four emails between Dreams (Mr. Orr) and Mr. Low copied to Mr. Morley. The emails related to shipments from the Vietnam factory to Dreams. Mr. Morley is unable to give any innocent and plausible explanation as to why they should have been copied to him. He said lamely that it was because Mr. Low liked to keep him informed of things.

Mr. Low's email to Mr. Orr included a response to Mr. Orr's earlier email. The first response included the words: "Barry (Morley) say you have not received this and I will call to let you know about this. This is very weird". Put in context, it is clear that Mr. Morley was not being copied in for information only but had been involved in previous discussions.

Mr. Sadaghiani said (and I accept his evidence) that his suspicions were aroused by the email but he hoped that Mr. Morley would raise the matter with him and show him that he was wrong. Mr. Morley did not do so.

On 6^th October 2005 Mr. Sagadhiani and Mr. Morley together visited Cambridge Futons. Afterwards they had a cup of tea at McDonalds. What was said in the discussion as they were leaving McDonalds is a matter of dispute. Mr. Morley says that it amounted to a wrongful repudiation of his agency by Také which he accepted. Mr. Sagadhiani disputes this.

First, there is the documentary evidence. Mr. Morley's diary shows that he was to attend a meeting on 7^th October 2005, the following day, which was cancelled. The note in the diary says: "advised by Roy Roddy" (Mr. Roddy was employed by Bensons – see paragraph 177 below). It is not therefore clear, as Mr. Morley suggests, that it was cancelled by Mr. Morley.

Mr. Morley's diary also notes meetings fixed for Monday, 10^th October 2005 and Tuesday, 11^th October 2005. It also notes a cancelled meeting with Argos on 12^th October 2005 and a meeting with Také on Thursday 13^th October 2005 which has been crossed out. A scrutiny of the telephone records shows that Mr. Morley did ring Také on the following Tuesday, Wednesday and Thursday but not on Monday, 10^th October 2005, and that, as I accept, he did not make direct contact with Mr. Sadaghiani.

Mr. Sadaghiani's account in his witness statement of his discussion with Mr. Morley on 6^th October 2005 is that after the meeting in Cambridge with Futons he and Mr. Morley drove to McDonalds for a coffee. This was around midday and was a normal event after a meeting with a customer. It was an opportunity to discuss what had taken place. As they left to walk to their cars after coffee Mr. Sagadhiani suggested to Mr. Morley that the contractual discussions had been dragging on and Mr. Morley should come to his office on the following Monday morning to discuss the contract. Mr. Sagadhiani explained in oral evidence that he was for some reason thinking the day was Friday and that Monday was the next working day. He certainly did not have the impression in the course of the discussion that Mr. Morley was terminating the agreement.

In oral evidence Mr. Sadaghiani agreed that Mr. Morley said that he could not go on without being paid any money. He said that he did not know that Mr. Morley had not been paid commission for July, August and September and had not been given the sales figures. He was adamant that he did not say words to the effect that he would not be seeing Mr. Morley in the following week, thus terminating his engagement. He said that it was not until 13^th October 2005 that he realised that Mr. Morley was ceasing to do anything for the company.

Mr. Morley's account of the same conversation is that in McDonalds Mr. Sadaghiani said he would be seeing Mr. Morley on the following Monday. Mr. Morley replied that he would not be seeing him unless some of the money which Také owed was paid. Mr. Sadaghiani replied that in that case he would not be seeing him in the following week implying that he was not going to pay him the money and that he accepted that the contract was at an end. Mr. Morley said in a statement which he made on 8^th November 2005 that he replied: "No, I cannot afford to work for nothing". Mr. Morley said that they then went their separate ways. Mr. Sadaghiani had previously given him some paperwork which he then took back.

In oral evidence Mr. Morley said that if matters had been resolved in the following week he would have continued to act for Také. I somewhat doubt this would have been the case. In a fragment recovered from Mr. Morley's computer (p.12 of Mr. Vella's summary) Mr. Morley was emailing Mr. Low information relating to a partnership to be set up between Mr. Morley, Mr. Low and Mr. Chew.

On 10^th or 11^th October 2005 Mr. Sadaghiani telephoned Mr. Low who accepted that he had been diverting business from Také but said that he done so at the insistence of Mr. Morley.

On 14^th October 2005 Mr. Morley received an email from Chelsea Futon referring to complaints by customers that fixing pads were missing from the beds when they were delivered as packs. Mr. Morley responded by arranging for someone at Také to send the missing fixing pads.

Také say that this is evidence that Mr. Morley had not terminated his agreement on 6^th October 2005 as he claims. Mr. Morley says that he dealt with the query, which related to a previous order, and that this does not indicate that he was continuing to act as agent for Také.

Late on 17^th October 2005 Mr. Turton faxed the sales figures to Mr. Morley for July 2005 and on 18^th October 2005 he faxed the sales figures for August and September 2005. This is not consistent with Mr. Turton believing that the agreement was at an end.

I make the following findings in relation to the conversation at McDonalds and its aftermath. I find that there was a discussion outside McDonalds. I accept Mr. Sadaghiani's evidence that he said the discussions over the contract were dragging on and needed to be resolved. I accept that Mr. Morley made a reference to the fact that he had not been paid. I find that Mr. Sadaghiani did ask Mr. Morley to go to the office on the following Monday to sort it all out. I reject Mr. Morley's evidence that Mr. Sadaghiani terminated the contract and that he, Mr. Morley, accepted the termination. An additional reason for this is that Mr. Morley gave no indication in the course of the next week that the contract was at an end. If he had brought the contract to an end, as he said he did, he would have sent a note to that effect either to Mr. Turton or Mr. Sadaghiani in the course of the following week. He did not do so. Alternatively, his solicitors would have written to Také indicating that the contract had been terminated. They did not do so.

Mr. Sadaghiani and Mr. Morley both expected on that Thursday lunchtime, 6^th October, that the other would make a direct approach during the following week.

Deleted emails may help to provide the answer as to what actually happened during the following week. I make no findings to this effect but a possible explanation of what followed is that Mr. Low told Mr. Sadaghiani on 10^th or 11^th October 2005 that Mr. Morley had been disloyal to Také. This would have confirmed Mr. Sadaghiani's suspicions aroused by the email which Mr. Turton received inadvertently on 27^th September 2005. Mr. Sadaghiani was expecting an approach and an explanation from Mr. Morley which he did not receive.

Whatever the reason, I do not find, as Mr. Morley claims, Mr. Sadaghiani terminated Mr. Morley's agency outside McDonalds by refusing to pay commission due to him and saying that if he wants to be paid some of his commission immediately he need not report on the following Monday. I accept Mr. Sadaghiani's version that he invited Mr. Morley to go to the office on the following Monday morning to sort matters out. This would have followed a familiar pattern in relation to contract negotiations.

On 18^th October 2005 Také heard from Mr. Kelly at Benson that Mr. Morley had approached Benson with an offer to supply the equivalent of Také products from China using a different name for the furniture. It was this information which acted as the trigger to the injunction proceedings. Although Mr. Kelly did not give evidence, I accept, taking into account the surrounding circumstances, that Mr. Morley did approach Benson as the statement says.

On 19^th October 2005 Také gave notice of its application for an injunction. I am satisfied that in effect this notice terminated the agreement since at that point any idea of trust and loyalty remaining between Také and Mr. Morley must have been at an end.

On 20^th October 2005 an interim injunction was granted by Silber J with a return date of 3^rd November 2005 when Grigson J accepted the undertakings which I have already set out.

On 2^nd November 2005 Také's solicitors wrote formally to Mr. Morley claiming that BSM had acted in breach of contract both in competing with Také and in misusing confidential information which had been given to Mr. Morley by Také. In view of these breaches the letter said that Také was terminating the agreement.

On 8^th November 2005 Mr. Morley's solicitors faxed a response including a handwritten note from Mr. Morley headed: "Termination of Contract" claiming that Mr. Sadaghiani had repudiated the contract on 6^th October 2005.

I have already found that the agency agreement came to an end on 19^th October 2005. I have also found that until that date Mr. Morley/BSM continued the agency on the same terms (in so far as they were enforceable) as those in the 2004-5 agreement.

I am satisfied that in fact from at least 2^nd June 2005, in breach of his duty of loyalty, Mr. Morley was engaged with Mr. Chew and Mr. Low in setting up a competing source of supply for Také's customers and later solicited their business. This breach of duty occurred not only by reason of Mr. Morley’s participation but also in his failure to tell Také what was happening.

Také contends that it has suffered substantial financial loss in respect of two customers Dreams Plc (Dreams) and Benson Bed Centres (Benson) and that Argos would have given substantial orders to Také but for the intervention of the defendant. Také also contends that Mr. Morley was in receipt of confidential information which he has misused and will continue to misuse unless permanently restrained from doing so. As I have already set out, while admitting acts of disloyalty to Také, Mr. Morley/BSM claims that Také has suffered no loss. Mr. Morley also claims that he has not had any confidential information which Také has the right to protect. Even if contrary to this contention Také was entitled to some form of temporary protection Mr. Morley contends that the protection should not be continued.

I now deal in detail with each of the specific claims.

Dreams have placed no orders with Také since 30^th June 2005. The furniture manufactured for Také in China and sold by Také to Dreams was manufactured at the Wuhan Factory of the Hubei Baoli Furniture Company. Mr. Chew is the proprietor. Mr. Chew worked closely with Také's representative in the Far East, Mr. Low. As I have already said, Mr. Low speaks fluent English and frequently interpreted for Mr. Chew.

Také dealt primarily with Dreams' buying controller, Mr. Orr. Mr. Morley says that the reason why Dreams ceased to give orders to Také after 30^th June 2005 had nothing to do with his activities. It was the result of "progressive deterioration in the relationship between Dreams and Také".

Dreams had been a longstanding and valuable customer of Také. There was no doubt that there had been some problems. On 24^th September 2004 Mr. Morley was reporting that Dreams had specified in an order for beds that beach spring slats were to be provided and that this had not happened. On 9^th March 2005 there was an email from Dreams saying that a consignment of drawers had been supplied at the wrong height in the furniture. Little can be made of this particular complaint because the writer, who was leaving her post, noted that the problem had been resolved and the email was explicitly written for the sake of good order.

Mr. Sadaghiani met with Mr. Orr in the Far East on about 9^th March 2005. Mr. Orr sent a cordial and constructive letter of thanks. On 16^th March 2005 Mr. Orr sent a request to Také to be supplied with a sample four poster bed:

There is no doubt that, as Mr. Morley alleges, Také wished to change Dreams' method of payment to CHAPS TRANSFER in US dollars and that Také hoped to be paid before production started although the standard order stipulated FOB, i.e. on production of the bill of lading. This is evidenced by a Také internal memorandum of 11^th May 2005. Mr. Sagadhiani confirmed in oral evidence that, although this was the case, Dreams were in fact never asked to do this.

I accept his evidence. I find that there was little evidence that Dreams wanted to break their established business relationship with Také although they would no doubt have been very interested, as a commercial matter, in cutting out the middle man and dealing with the supplier direct if this meant that they could purchase their stock at a cheaper price with no diminution of service. A crucial part of any plan to break with Také may well have been the provision of an agent of the manufacturer in London who could deal with any problems as they arose, a role which Mr. Morley would fulfil.

Mr. Morley claims that in May 2005, after an argument with Mr. Sadaghiani, Mr. Chew decided not to do further business with Také and Mr. Low decided not to continue as Také's agent in the Far East. Whether or not this was factually correct as the cause, while Mr. Morley remained Také's agent he should not have participated in a scheme to undermine Také's position. He should, as a loyal agent have reported to Také any plans which were in the process of being made which might undermine Také's position.

It is clear from the email recovered by Mr. Vella from Mr. Morley's home computer that Mr. Morley was participating in a plan to undermine Také's business relationship with Dreams. An email dated 2^nd June 2005 which Mr. Morley admitted in oral evidence was typed into his computer by his daughter was the email of an active participant and not someone who was simply being informed passively by Mr. Chew and Mr. Low of what they were planning to do.

The email said:

Mr. Morley did not give an answer as to whether there was any follow up to this email. The fact that he could not give an answer is in itself significant. Taking the evidence as a whole, I am satisfied that there was a continuing email correspondence between Mr. Chew, Mr. Low and Mr. Morley in which Mr. Morley was an active participant. This led to the outline agreement of 8^th August 2005 set out in another email recovered by Mr. Vella. I reject Mr. Morley's evidence that: "Mr. Chew just wanted ideas - that was all it was intended to be".

After 2^nd June 2005 the next email which Mr. Vella was able to transcribe is dated 14^th June 2005. Again, it indicates that Mr. Morley was taking a positive role and was not simply receiving emails from Mr. Chew or Mr. Low for information only. Mr. Morley said in oral evidence that the email was typed and sent by his daughter.

The email was sent using the email address of his son and is addressed to Mr. Chew at the factory in Xuan. It starts:

The email then lists various current products including Vicenza double and king size beds which Mr. Chew's factory were manufacturing for Také who were then selling them on to Dreams. It goes on to list various items in the new range of furniture. In item 4 it says: "Jim (Orr) also requires '...", and then there are various other items to be sold to Dreams.

The email ends: "Once I receive above I believe Jim can make an urgent visit to China and agree range. Dreams are also prepared to make 2-3 years signed commitment to Mr. Chew". Mr. Morley sought to explain the email by saying that he was not making any decisions and that if he could have sorted the problems out he would still have been working for Také.

I am satisfied on the evidence that Také knew nothing about this enquiry. The email is clear evidence that Mr. Morley was in active negotiation with Mr. Orr at Dreams acting as agent for Mr. Chew and Mr. Low. He was acting on the basis that an agreed commission for him would be built into the sales price. He was transmitting the information as a result of his own discussions with Mr. Orr that Dreams were prepared to enter into a two to three year commitment with Mr. Chew. This arrangement would divert sales previously made through Také. There is no doubt that this email was sent in the clearest breach of Mr. Morley's duty of loyalty to Také.

Mr. Morley agreed in oral evidence that Mr. Chew and Mr. Low were having direct discussions with Dreams. It is clear from this email, and I so find, that Mr. Morley was participating fully in those discussions and was an important link in London between Dreams and the manufacturer in the Far East.

This last email from Mr. Morley was sent at a time when he had been paid commission for April 2006 so the commission payments form Také were then up to date. He had a draft agreement from Také for a new contract to which he had not responded.

On 30^th June 2005, just over two weeks after Mr. Morley's email of 14^th June 2005, Dreams stopped ordering from Také.

On 30^th June 2005 Mr. Morley emailed Mr. Orr at Dreams wearing his Také hat. He noted that he and Mr. Orr had been discussing the way forward "for some weeks now" and how Dreams and Také could work in partnership. He noted that FOB prices would be available as part of a product package. He referred to Vincenza beds and the full range of headboards. In view of the separate discussions which Mr. Morley was having with Mr. Orr this email must have read rather oddly to Mr. Orr unless the situation has been explained to him by Mr. Morley in advance either in a telephone conversation or an email.

Mr. Turton received the email on 1^st July 2005. On 7^th July 2005 Mr. Turton spoke to Mr. Orr on the telephone. He was surprised that Mr. Orr should have been so upset because of a problem with one order. Mr. Turton thought that the complaint arose from a genuine mistake on Také's part but remembers thinking at the time that perhaps Mr. Morley had not passed on the order to Také.

On 8^th July 2005 Mr. Orr sent an email instructing Také not to ship more than one container of the same product at any one time. Mr. Turton became concerned about Mr. Orr and Dreams. Also on 8^th July 2005 he sent Mr. Morley a memo saying that he had had a telephone call from Mr. Orr to say that Také had lost Dreams' orders. Mr. Turton told Mr. Orr that the orders had been processed and had left China that day and would arrive in the United Kingdom in August. Mr. Turton said that Mr. Orr was threatening to claim against Také for five weeks late delivery and for the cost of Dreams' lost sales. Mr. Turton said that he was not prepared to entertain the claim.

Mr. Turton's note to Mr. Morley ends: "In summary. 1. I do not trust him (Mr. Orr) - this is the first time we have talked or communicated for three years. 2. Please, Barrie, tread carefully. I do not trust what is going on". Mr. Turton explained in evidence that he believed that Dreams had another agent. He was worried that Mr. Morley "would get it in the neck". In view Mr. Morley's negotiations with Dreams on his own behalf and that of Mr. Chew and Mr. Low, this note should have caused Mr. Morley considerable embarrassment.

On 22^nd July 2005 BSM submitted its invoice to Také for Mr. Morley's commission for June 2005 amounting to £18,168.97. It was paid within a few days.

It would appear from one of the documents deleted from Mr. Morley's computer that on 1^st August 2005 an invoice was sent by Mr. Low to Dreams for two Lincoln bunk beds at an FOB price of $15.20 with a copy to Mr. Morley. This invoice was sent on paper headed with the name "Total Furniture (China) PDT Limited". This was the marketing company of the Chinese factory. Mr. Morley was to act as the UK representative for Total Furniture. In the absence of any other reasonable explanation I am satisfied that Mr. Chew was already starting to trade directly with Dreams using Mr. Morley as agent.

It appears from a fragment of email found by Mr. Vella on Mr. Morley's home computer that by 8^th August 2005 a memorandum of understanding was about to be concluded between the Chinese company of Mr. Chew and Dreams including the appointment of Mr. Morley as Mr. Chew's agent. The agreement was to be an exclusive agreement for three years. The Chinese company was to be one of Dreams' preferred suppliers for imported products. The email made it clear that: "Barrie Morley to act as UK representative for Total Furniture".

Mr. Morley said in evidence that he was not making any decision as to what he would do. He said again that if he could have sorted things out with Také he would still be working for Také. He said that they set up a deal which, if he agreed to join them, he would get commission but he did not receive any commission. I do not accept Mr. Morley's evidence as a truthful explanation of the position. I am satisfied on the evidence that, whether he received commission or not, he was already participating in setting up an arrangement to cut out Také and enable Mr. Chew to deal directly with Dreams with Mr. Morley acting as Mr. Chew's agent.

Far from explaining to his principal, Také, what was going on, I accept Mr. Sadaghiani's evidence that when he asked what was happening with Dreams he was told by Mr. Morley that Dreams was deferring future commitments because business was slow.

Mr. Vella's report sets out the fragments of a number of emails relating to purchase orders sent by Mr. Chew's factory to Mr. Orr at Dreams on 15^th, 22^nd and 29^th August 2005; the 12^th, 19^th, 26^th and 30^th September 2005, and 3^rd, 12^th, 14^th, 24^th and 31^st October 2005. There is also the series of emails culminating in the one of the 27^th September 2005 which was copied inadvertently to Mr. Turton.

Mr. Morley has continued to deny that he was involved in the shipments. He said that he was copied in because Mr. Chew and Mr. Low wanted him to be copied in on things. I am unable to accept this explanation. These fragments of documentation (which Také was never of course intended to see) must be viewed in the context that Dreams had ceased to place orders with Také after 30^th June 2005 as Mr. Morley must have known. He also knew that Dreams had been a significant customer of Také. Net sales for July, August and September 2005 for goods ordered before 30^th June 2005 amounted to £86,524, £75,156 and £72,911.

On 27^th September 2005, as I have said, Mr. Turton was copied in on an email from Mr. Orr of Dreams to Mr. Low and Mr. Chew which was also copied to Mr. Morley. It enclosed two earlier emails, one of which was of no significance. Taking them in chronological order, the first email in time asks Mr. Low to confirm various shipment dates to Mr. Orr and gives Mr. Low's reply. These include a sample bedstead. Item 2 reads: "A signed copy of the memorandum of understanding with the reply - I will fax this by this week definitely". Item 3 asked for counter-prices on the Quest single bedstead and Firenzi double bedstead and received the reply: "We are working on this and will advise very soon". The later email refers to the answers by Mr. Orr to the questions. In relation to the sample bedstead Mr. Orr responded: "Barrie, you say you have not received this and I will call to let you [know] about this. This is very weird". Mr. Morley said that he was not aware of the emails. He said he does not know why he did not see them and he cannot recall whether he was involved.

I find that it is clear on the face of the emails that Mr. Morley was involved directly in the organisation of the sending of samples. I find that Mr. Morley was well aware of the email and saw it as soon as his son or daughter was available to operate the computer for him.

I was told that neither Mr. Sadaghiani nor Mr. Turton were aware that orders were being placed by Dreams direct to Mr. Chew and Mr. Low. It is not surprising that, as he said in evidence, Mr. Sadaghiani's suspicions were aroused as to Mr. Morley's participation in this arrangement. I accept his evidence that he was aware of this email and its potential significance when he saw Mr. Morley on 6^th October 2005 and hoped that he would receive an innocent explanation.

Mr. Vella also found fragments of two deleted emails dated 8^th October 2005 from Mr. Morley to Mr. Low and Mr. Chew. The first was an agenda for a meeting with Benson between Benson and Mr. Low, Mr. Chew and Mr. Morley which does not include Také. Part of the second fragment is headed: "Re Dreams". It says: "We need to set up a system which on a weekly basis you can update me on customer’s outstanding container delivery dates. I also need to keep customers advised. It will enable me to chase for new orders. I note Jim requested these details. Please advise all Dream details". This email appears to refer to a procedure which is already in progress and in which Mr. Morley was participating.

Také contends that but for Mr. Morley's actions in concert with Mr. Low and Mr. Chew at a time when Mr. Morley was Také's agents, Dreams would have continued to trade with Také. Mr. Morley argues that his actions were not responsible for Dreams withdrawing its business from Také. He contends that there were two main causes. First, by negotiating directly with Mr. Chew and Mr. Low they would have been able to negotiate lower prices than Také could offer. Také as middle man would have been eliminated. Secondly, business relationships between Také and Dreams had deteriorated to the point by June 2005 where Dreams would be looking to conclude its relationship with Také and look for other suppliers.

I am not able to accept either of Mr. Morley’s argument. There is no evidence that Dreams were prepared to act without an agent in London. Under the terms of the memorandum of understanding that agent was to be Mr. Morley. In the deleted emails which have been discovered it is clear that for much of the time Mr. Orr was in discussion with Mr. Morley. If Mr. Morley had told Také about plans to exclude Také and had made it clear that he would not be involved as the London agent, there is no evidence that Dreams would have ceased to do business with Také. Nor do I find that relationships between Také and Dreams had deteriorated in the way and to the extent that Mr. Morley suggests. The volume of sales for the last few months remained at a constant level and I have accepted the evidence of Také witnesses rather than Mr. Morley on this matter. Having considered the existing evidence in the light of my findings, I am satisfied that in relation to Dreams Mr. Morley did act in breach of his fiduciary duty of loyalty to Také. He did play an active part in the formation of the group which in competition with Také was responsible for Dreams ceasing to order goods from Také after 30^th June 2005. In respect of Dreams therefore, I find for the claimant.

Také claims that it suffered losses in relation to the drop in orders and in the margins which it was able to negotiate with Benson as a result of the conduct of the defendants while Mr. Morley was acting as the agent of Také. The diminution in margins is claimed both in respect of the range of products sold by Také to Benson to March 2006 and the range of new products from September 2005 to September 2006.

Mr. Kelly was Benson's marketing director until he left Benson's employment on 20^th October 2005. Mr. Burgham was Benson's distribution manager. In April 2005 the net sales from Také to Benson amounted to £568,937 which represented just over 70% of Také's net sales.

It is claimed by Mr. Morley that from January 2005, if not before, Benson were becoming unhappy with Také as a supplier. It appears that in January 2005 there was a problem over test safety certificates for beds supplied by Také to Benson. In April 2005 there were said to be problems over the Kensington Safe Bed and that this caused a temporary reduction in orders.

In May 2005 Také supplied Benson with a new bed called The Vermont bed. A note to Mr. Low of 27^th May 2005 from Mr. Morley indicated that about that date Benson had just taken their first delivery of the bed and noted they were missing some fixing pads.

On 14^th July 2005 Benson complained to Mr. Morley that three blades and a broken bottle were found in containers supplied by Také. Mr. Roddy, Benson's national warehouse and distribution manager, said: "This problem is now unacceptable and must be resolved".

Endorsed by Mr. Morley on the same email and dated 15^th July 2005 is a note that a container had been returned because bugs were found inside the container. In a separate note dated 15^th July 2005 Mr. Morley noted that there were complaints from Benson's customers that casters were missing in the assembly kit for the Admiral Cabin bed.

The effect of these complaints must be set against net sales figures for Také products to Benson which recorded as late as September 2005 the sum of £1,210,019.25 which was the highest figure in the period to September 2005. I am not satisfied that such problems as there were between Také and Benson were sufficient to damage Také's overall relationship with Benson.

Mr. Vella's exhibit PV/01 taken from Mr. Morley's home computer which Mr. Morley thought had been deleted prior to Mr. Vella's inspection showed a list of factory prices for Bshed, a Scottish subsidiary of Benson, dated 28^th September 2005. It is a list of prices FOB Shanghai for Bshed setting out old and new prices which Benson would pay for various items supplied by Také. It was customer sensitive information. Mr. Morley said he was not aware of the email or the information. I do not believe him. There were also emails deleted from Mr. Morley's home computer relating to Benson on 24^th August 2005 and 7^th October 2005.

On 22^nd September 2005 there appears to have been a meeting between Také and Benson at which the packaging of products destined for Benson was discussed at a time when Benson was to pass into the control of Steinberg Plc. Mr. Morley was due to meet with Mr. Roddy on 7^th October 2005. This meeting was cancelled. A fragment of an email found deleted from Mr. Morley's home computer reads: "Barrie, price list for Benson and Bedshead as at 1 October 2005". This appears as a file created on 11^th October 2005.

Mr. Kelly left Benson's employment on 20^th October 2005. As I have already set out, on 19th October 2005 he wrote at Mr. Sadaghiani's request to say that Mr. Morley had telephoned Benson on 17^th October 2005 to tell him that BSM Marketing could provide Benson with Také's range of furniture direct from the factory in China for less than Také's existing prices.

Mr. Kelly also wrote that: "Mr. Morley stated that Mr. Chew, who I understand runs the factory in China which produces Také's range, would be in the UK this weekend and might be available to meet with Bensons". Mr. Morley said he did speak to Benson but did not speak to Mr. Kelly. Mr. Morley's case is that by then he had ceased to be Také's agent was entitled to solicit orders from Také's customers.

I heard evidence to the effect and accept that the new management of Benson were determined to renegotiate prices from suppliers and told Také and other suppliers that they wanted them to reduce their margins by 4%. In early December 2005 Mr. Sadaghiani met with Mr. Toppin whose job title was chief executive Homestyle Group Plc, a subsidiary of Steinberg Plc.

On 5^th December 2005 Mr. Sadaghiani wrote to Mr. Toppin. He recalled the long business association which he had had with Benson and outlined the problems which he said that Také was having from Mr. Morley and Mr. Low. He noted that Mr. Morley and BSM had given certain undertakings to the court.

On 13^th December 2006 there was a meeting between Benson and Také. Amongst others, Mr. Toppin, Mr. Sadaghiani and Mr. Turton were present. Také claims that instead of requiring Také 32% profit margin to be reduced to 28%, Benson started off by offering a 1% margin and after a great deal of hard bargaining agreed to 5% from January 2006.

The note of the meeting was taken by Mr. Turton. It records in relation to the China range that Hubei (i.e. the China factory), in what is described as "unethically", approached Benson to deal direct and provide direct delivery dollar prices to Benson. New range orders were to be based on 10% made up on open book on all costs delivered to the warehouse.

The note recorded:

On 22^nd December 2005 Mr. Toppin in general approved Mr. Turton's minute of the meeting but said that his company could not guarantee a greater share of bed division business and both sides would have to work together to see where growth was possible.

The price list which Mr. Toppin showed Mr. Sadaghiani and Mr. Turton at the meeting set out detailed production costs. It is claimed by Mr. Morley that Mr. Chew would have this detailed information of Také's manufacturing costs base and that he would not have had it. Také claims someone had delivered a price list to Benson. It is not suggested that it was Mr. Morley, but it is suggested that Mr. Morley had the information. (See Mr. Vella's report). It is argued that Mr. Morley acted as a catalyst which resulted in Benson renegotiating its prices.

There is no dispute that in the course of the meeting Benson said that either Také must reduce its profit margins drastically or Benson would find another source of supply for products similar those sold by Také. The result was to reduce Také's margin from the 2005 figure of about 33% to a 2006 figure of 5%.

Benson (Homestyle) continues to trade with Také. It has not increased the volume to sales to compensate for the drastically reduced profit margin as Také had hoped. Once Také realised that this was not happening it resumed trading with Mr. Kelly's new company, Sleep Depot.

Whilst I find that Mr. Morley did solicit orders from Benson in conflict with his duty of loyalty, I am not satisfied that he was responsible for the reduction in margins which Také claims has caused it losses of £877,000 to the end of March 2006 and a loss of £3.5 million for the financial year 2006/7. On the balance of probabilities the problems for Také occurred as a result of the new management which took over Benson in October 2005 and was determined to achieve very significant reductions in costs. The negotiation took place between Homestyle and Také at the end of December 2005, a significant time after Mr. Morley ceased to be contracted as Také's agent. I hold that on the balance of probabilities, although Homestyle opened discussions by saying that they wanted reductions in margins of 4% from all their suppliers this was only an opening shot and did not mean that this was the maximum reduction which they were looking to achieve. It was the minimum reduction. I am not satisfied that but for the actions of Mr. Morley Také would have achieved a better price. Nor, on the balance of probabilities, am I satisfied that they have proved that Mr. Morley provided Homestyle with Mr. Chew's factory prices prior to the meeting in December 2005. The case was put by Také on the basis that it was more likely to have come from Mr. Chew and Mr. Low. I find that is the case.

Také attempted to solicit orders from Argos. Argos operated a system whereby they would invite potential suppliers to compete on quality and price. Také competed to supply metal beds. Before the competition in 2005 Mr. Dover of Argos sent Také an email on 18^th April 2005 to say that the samples which Také had provided did not come up to the standard of Argos' current lines and that Také should not enter the competition.

This was not a final decision because in May 2005 Také and Argos agreed that the best way forward was for Také to supply on an FOB basis.

The email of 17^th May 2005 from Mr. Morley to Mr. Hughes of Argos noted that (a) Argos had agreed to visit the factory in China at the end of August/early September 2005; (b) Také and Argos would meet in early July 2005 for a briefing on selections for Argos' next catalogue and (c) if Argos had any problems with deliveries from current suppliers Také could provide quotations quickly.

On 23^rd May 2005 Mr. Hughes responded that he would pass the information on to Argos' Hong Kong office so that they could arrange a preliminary visit.

On 30^th June 2005 Mr. Low filled in the detailed Argos vendor proposal form on behalf of Také and sent it to Hong Kong. The company profile of Také described the factory name as Hubei Baoli Furniture Company Limited and the contact person as H. S. Low. It is said by Také that this indicates that Také was close to completing an agreement with Argos to take Také products.

The expected meeting took place in China on 9^th September 2005. Mr. Sadaghiani was present. Mr. Bates and Mr. Hughes attended for Argos. It is alleged that at this meeting Argos selected products from Také's range for a substantial order but substantially abandoned the order without any explanation.

On 13^th September 2005 Také received Argos' terms and conditions of business.

On 25^th September 2005 Mr. Morley sent Mr. Low an email, a fragment of which was recovered from his home computer by Mr. Vella. It was headed "Re Argos/MFI" and told Mr. Low of the Také products which had been selected by Argos on 9^th September 2005. On 29^th September 2005 Také sent Argos photographs of 22 beds headed: "Argos - item selected". Underneath: "Side rail is angle bar (Argos system)".

It appears from another fragment of email recovered by Mr. Vella that on 6^th October 2005 Mr. Morley, while still Také's agent, offered Mr. Hughes of Argos: "FOB prices direct from China factory". The clear implication of this is that Mr. Morley would assist in the supply of the same products which Argos was proposing to order from Také at a cheaper price which would cut out Také.

Mr. Turton alleges that Mr. Morley met Argos on 17^th October 2005. Mr. Morley says that the meeting took place on 27^th October 2005 and that he gave the date of 19^th October 2005 in error. Mr. Morley said that Mr. Low and Mr. Chew were present together with Mr. Bates and Mr. Hughes. Mr. Morley said that: "The meeting was in order that Mr. Chew might interest Argos in supplying his products from his factory with prices and terms being clearly a matter for Mr. Chew himself to determine". This summary fails to mention that there was already a memorandum of understanding under which Mr. Morley would benefit as Mr. Chew's London agent.

Mr. Turton said in evidence that on 2^nd November 2005 Argos had done a due diligence search on Také and were set to proceed to give orders but suddenly Argos stopped the process. On 4^th November 2005 Také wrote to Argos informing them of the proceedings against Mr. Morley. On 11^th November 2005 Mr. Bates telephoned Mr. Morley to say that Argos would not become involved in the dispute between Také and BSM.

On 9^th December 2005 Mr. Sadaghiani wrote to Mr. Bates of Argos. The letter followed a telephone conversation on 22^nd November 2005 when Mr. Bates told Mr. Sadaghiani that Mr. Low had approached Argos with an offer to supply Také products direct from Asia. Mr. Sadaghiani's letter ends: "As you know, Argos intended in September 2005 to purchase a range of products from Také. It may be that this contract was delayed as a result of the approach by Mr. Low. Should Argos now wish to proceed with its order for Také products, please do not hesitate to contact me directly".

Také claims that, but for Mr. Morley's intervention in breach of his duty of loyalty to Také, Argos would have placed the order which they were close to placing in September 2005. This would have shown a very substantial profit for Také.

The defendants contend that although there were detailed discussions between Také and Argos, significant steps still had to be undertaken. (a) there was no agreement on price; and (b) the Chew factory had not been audited by the Argos Hong Kong office. Mr. Morley said that in addition, samples had to pass Argos quality control in the United Kingdom and after this a small order would be given by Argos to enable it to test the product with Argos customers. In these circumstances it is submitted on behalf of the defendants that causation is not established.

I find that on 9^th September 2005, after visiting the factory in China, Argos selected the products which they wished to order from Také. On 13^th September 2005 Argos sent their terms and conditions prior to placing an order. These terms and conditions are clear in relation to the inspection of goods factory audit and testing. On 29^th September 2005 Také sent Argos photographs of the beds which they had selected, presumably so that they could appear in the Argos catalogue.

Prior to September 2005 there had been a number of meetings between Argos and Také at which, even if prices had not been finalised, indicative prices must have been given otherwise there would have been no point in continuing the discussions. Equally, whether or not Mr. Chew's factory had been formally audited by Argos Hong Kong office, it had certainly been visited by Argos senior management and I have no doubt that discussions were continued and products were selected by Argos in the expectation that any audit would be favourable. Also there would be no point in continuing discussions unless the products were likely to pass a quality control test. I note that this was one of the first points which Argos considered with potential customers and that the samples which had been provided in April 2005 did not reach the required quality standard.

I am satisfied that but for Mr. Morley's disloyal actions in late September and October 2005, while still Také's agent, Také would have received some orders from Argos. It is for a further hearing to consider the precise nature and extent of those orders and therefore the precise loss and damage which Také has suffered.

I now turn to the issue of protection of confidential information. This is a relatively narrow topic. In view of Mr. Sadaghiani's most recent evidence, I should make it clear what it is not. It is not concerned with Mr. Morley's ability to sell Také products. As Mr. Morley well understands, his right as well as his duty to sell Také products came to an end when his agency ended. It is also not concerned with any right to restrain Mr. Morley from competing with Také provided his competition is lawful. Také's attempt to enforce restrictive covenant in the form of the written agreement for 2004/5 has been abandoned. It is also not concerned with any allegation that Mr. Morley is threatening to sell products which are either identical in design or copied from Také products. Although this issue has been in the background, particularly in Mr. Sadaghiani's witness statements, it is not before me for determination. I note in this context that a significant part of Mr. Sadaghiani's third witness statement is concerned with Mr. Morley's future plans and with knowledge of Také's designs and is directed to providing a factual basis for enforcing a non-competition clause. This is no longer relevant.

The plea from Také which I have to consider is that a continuing obligation of confidentiality should be imposed on Mr. Morley in respect of confidential information imparted to him in relation to customer lists; (b) Také's prices to customers; (c) the prices paid by Také to manufacturers and (d) information concerning the preferences of Také's customers.

These issues were touched on in the original witness statements and were the subject of separate witness statements, one from Mr. Sadaghiani to which I have already referred, and two from Mr. Morley. Mr. Sadaghiani and Mr. Morley also gave further oral evidence. In his fourth witness statement Mr. Morley acknowledges that he has been asked by Mr. Low and Mr. Chew whether or not he is free to act as UK agent for the sale of products manufactured at Mr. Chew's factory. Although he does not say so, presumably the August memorandum of understanding would provide the basis for any agreement which would be finalised.

In relation to customer lists, Také claims that the list of customers at the time when Mr. Morley last acted as Také's agent in October 2005 is confidential to Také and will be information which would be very helpful to any competitor by whom Mr. Morley was employed or acted as agent. Mr. Sadaghiani said in evidence that another aspect of this were the items which Také has in stock for customers in October 2005.

Mr. Morley says in his witness statement that 27 of the 32 customers who had done business with Také through him ceased to do business with Také before the case commenced. He notes that since the break with Mr. Chew Také has to a considerable extent restructured its business and taken on new suppliers. Like its competitors Také has introduced new products since October 2005.

In relation to Také's prices to customers which varied from customer to customer, Mr. Morley said that he had seen the prices given to individual customers with whom he was concerned but he had never been given a full list. He said that he had seen a list of 150 products and had "a broad memory" of the sort of things which Také sold. The prices at which Také provides its goods to its customers is confidential information. This information may be of less value as time goes on, but the type of negotiation which Také undertakes may also have a limited value. Také claims that sales prices are confidential and that if, as he maintains, Mr. Morley has not disclosed them to Mr. Chew and Mr. Low he should be restrained from doing so.

With reference to the claim that Mr. Morley has confidential information of the prices which manufacturers charge Také, Mr. Sadaghiani said that this was clear from the attachment PV/01 to Mr. Vella's findings.

Mr. Morley says that he has no knowledge of the prices and continues to deny having seen the information retrieved from his computer. I do not believe Mr. Morley. I have little doubt that he was provided with this confidential information by Mr. Chew and Mr. Low. Mr. Sadaghiani said in oral evidence that Mr. Morley knew the manufacturing costs of the products apart from the cost of mattresses which are manufactured in the United Kingdom. I accept this.

Také claims that the pricing structures are generally confidential information and confidential to Také's business. It claims that a further distribution to Také's customers (or potential customers) would be detrimental to Také and an advantage to Také's competitors.

Také also claims that Mr. Morley has confidential information in relation to customer preferences. Mr. Morley agreed in oral evidence that he picked up customer requirements and preferences in the course of his agency but pointed out that it was necessary for a manufacturer constantly to introduce new products onto the market and that customer requirements were not fixed and changed regularly.

Finally, Také claims to restrain Mr. Morley from dealing with products which although they have a different name are identical to products sold by Také. For this Také cites the Lancashire Fires case where it was said that using technical knowledge and experience gained at a previous employer was "on the wrong side of the line".

Také has also asked for an order that Mr. Morley/BSM deliver up all confidential documents in the form of product design specifications and Také customer files which are still in the possession of Mr. Morley or BSM and the defendant should swear an affidavit that they have done so. They should also swear an affidavit setting out the identity of all those to whom the defendants have already revealed the confidential information.

Také claims that a permanent injunction is appropriate to safeguard this information and that such an injunction would not prevent Mr. Morley from working.

As I understand the nature of the permanent injunction now contended for by Také, it does not include any restriction on servicing any major retailer. It is right that it should not do so. No argument has been advanced to support the restrictive covenant in Mr. Morley's 2004/5 contract and it would be wrong to impose such a restriction in the absence of an enforceable term in the contract.

It is said on Mr. Morley's behalf that he now has "no inside knowledge of Také's costs and margins from which Také needs protecting". The confidential information which he admits to having in order to do his job as agent gives him no unfair advantage since it is all knowledge by definition which the customers possess as well as Mr. Morley.

In relation to the information about the prices which Mr. Chew's factory charged Také until October 2005, the defendants say in addition to their contention that they do not have the information, that it was never very dangerous to Také since it was one component only of the end price which Také charges customers for goods manufactured in China. It is said that now this information is not dangerous at all because Také is no longer doing business with Mr. Chew. It is also said in relation to an injunction relating to Mr. Morley selling Také's product or products which are identical to Také's but under a different name, that this relief amounts to a claim that Také has some proprietary right in the design. This issue has not been before me and therefore it is argued there is no basis on which I can grant relief.

In summary, Mr. McCue asks rhetorically what are the trade secrets of Také that it now needs to protect? He contends on the defendant's behalf there is no inside knowledge which Mr. Morley could deploy to his unfair advantage if he worked in the business again.

In reaching my conclusions, I must bear in mind a number of factors:

In my view, it may have been appropriate to protect Také's list of customers known to Mr. Morley in October 2005, but this is no longer so. I accept Mr. Morley's evidence that it is a relatively small industry dominated by big names. It is to be assumed that others in the industry will know the identity of the largest customers and will compete for business against each other. In these circumstances I am not persuaded that the information of who were Také's customers in October 2005 constitutes a trade secret that any longer needs to be protected.

I take a different view over Také's prices which it sold to individual customers and Také's manufacturing costs from individual suppliers. This must have been known or ought to have been known by Mr. Morley to have been communicated to him in circumstances of confidence.

I have more difficulty with the preferences of Také's customers. In so far as these are written down the information is confidential to Také and Mr. Morley must have known this when he received the information. In so far as he acquired general knowledge about the likes and dislikes of customers, this is part of his stock in trade. I am fortified in this view by the consideration that if I found otherwise and I restrain Mr. Morley from using this general information I would effectively be imposing a restrictive covenant upon him.

As far as the claim to restrain Mr. Morley from dealing with what are essentially Také's products, I make no finding one way or the other because I do not have sufficient evidence of a threat which would be necessary to support such a finding.

I therefore continue the undertakings as injunctions to the limited extent which I have set out. I am satisfied that unless restrained Mr. Morley will divulge information which I have set out and which he knows or ought to have known came to him in circumstances of confidentiality.

He should also be restrained from disclosing any of Také’s documents to third parties and he should be required to return all relevant documents however stored, whether by computer or in hard copy to Také and Také should have reasonable access to any relevant computer to enable this to be done.

The further question is raised as to whether the injunction should have been granted in the first place and whether it reasonably prevented Mr. Morley from earning a living in the furniture business. I will hear argument on this if necessary at the next hearing when I will deal with costs. On the same occasion I will also hear any observations by the parties in relation to this very long judgment before I finalise the judgment. Equally, I have not heard argument as to whether Mr. Morley is entitled to recover commission for his last three months as agent for Také if this matter is pursued. It also can be argued on the next occasion in the light of my findings of fact and law in this judgment.

In the light of further consideration by the defendant on the basis of the findings in this judgment I record that the defendant has abandoned the Counterclaims.