Aquinas Education Ltd v Miller & Ors

The main issue on this application is whether or not, and if so for how long, the claimant is entitled to a springboard injunction.

The claimant, Aquinas Education Limited, is an educational recruitment agency based in Nottingham which specializes in placing teachers in schools on supply and long term contracts. Aquinas maintains records of teachers who have registered with it, including their contacts details and CVs, and records of schools that take temporary teachers, and the contact details of those at the schools who are responsible for recruiting supply teachers.

The First Defendant Mr. Dorian Miller was first employed by Aquinas in or around 2010 and by December 2017 he was a Senior Consultant. The Second Defendant, Mr Pembleton, was first employed in or around March 2015 and was a Recruitment Consultant. On 13 December 2017 they gave notice to terminate their employment. They told Mr Anderson, who is Aquinas’ Managing Director, that they were setting up a new competing business. But that was not the whole story. They now admit that in fact they and the Third Defendant Mr Gatter, who is Mr Pembleton’s cousin, had been planning to set up a competing business since about May 2017; that that business was incorporated as Link3 (the Fourth Defendant) on 2 August 2017; that at some stage prior to 29 August 2017 Mr Pembleton had copied to a memory stick information belonging to Aquinas; and that on 19 September 2017 and thereafter they approached teachers identified from Aquinas’ records and tried (and in some cases succeeded) to place them with schools on behalf of Link 3.

It is also now admitted that on 29 November 2017 Mr Miller asked Aquinas’ provider of IT services to create a list for him. It is important because of the prominence it has had in the formulation of the relief so far sought and obtained. It has been referred to as the Candidate List though this is a slightly misleading name for it. The list which Mr Miller was given has three parts. First there is a list of (simply) email addresses entitled “Approved Candidates Emails”. There are over 1500 teachers’ emails. The name of the individual can be inferred from many, but certainly not all, of these email addresses. Then there is another list of email addresses entitled “School emails”. The name of the school concerned can be inferred from almost all of these. There are over 1000 entries. Finally there is a list of mobile phone numbers entitled “Mobile Numbers for Approved Candidates”. It is simply a list of numbers, with no indication of the person to whom the numbers belong.

When Aquinas began to discover what Mr Miller and Mr Pembleton had done, they started these proceedings. In summary, the Statement of Claim alleges that the four defendants are parties to an unlawful scheme pursuant to which they have wrongfully diverted business from Aquinas to Link3, and in so doing Mr Miller and Mr Pembleton have breached express and implied obligations owed to Aquinas.

It is convenient at this stage to set out what are accepted by the parties to be the express terms of Mr Miller’s and Mr Pembleton’s contracts. So far as relevant the provision is as follows:

Importantly, neither Mr Miller’s nor Mr Pembleton’s employment contract contained any post-termination restrictive covenant of any sort.

Aquinas applied for an injunction. It was listed for 12 January 2018.

That date is significant because it is accepted by the Defendants, for the purposes of this application, that Mr Miller’s and Mr Pembleton’s notice periods expired on 13 January. That in turn means that at all material times they have been bound either by their contractual duties and/or by the obligations subsequently imposed by injunction.

Shortly before the hearing the Defendants admitted many of the allegations of misconduct then alleged, and stated they would accept the grant of an interim injunction in relation to confidential information and trade secrets, and they offered to pay Aquinas’ costs. But Aquinas was seeking a springboard injunction and other relief including delivery up, and so the hearing went ahead.

On 12 January 2018 Picken J made an interim order. Paragraph 2 was in these terms:

It will be noted that Mr Miller and Mr Pembleton were therefore precluded from doing business with every teacher on the Candidate List, and that that restraint existed even if such a teacher approached them via Link 3, and even if such a teacher had never in fact been registered with Aquinas – all that mattered for the restraint to bite was that their e-mail address appeared on the Candidate List. Similarly, Mr Miller and Pembleton could not place any teacher in any school identified on the Candidate List. I understand (there is no note or transcript of the 12 January hearing) that the order was couched in this way to “hold the ring” pending a more detailed consideration of whether, and if so for how long, a springboard injunction was appropriate.

Paragraph 3 of Picken J’s order restrained all the Defendants from using confidential information or trade secrets as defined in Schedule A, until trial or further order. Schedule A said that confidential information and trade secrets included (inter alia) the identities and contact details of teachers who have registered with or approached the Claimant, and the identities of schools to whom the Claimant has supplied teachers, and the contact details of relevant persons within those schools. Paragraph 3 of the Order did not (by virtue of paragraph 4) apply to any information which had come into the public domain (other than as a result of an unauthorised disclosure).

The Order (paragraph 5) required the Defendants to deliver up to the Claimant by 19 January 2018 the Candidate List, and any records of confidential information or trade secrets as defined in Schedule A.

Paragraph 6 ordered the Defendants to permit all their electronic storage media to be accessed by an IT expert who was to recover and erase any confidential information or trade secrets (as defined in Schedule A). Finally, by paragraph 7 the Defendants were to swear an affidavit confirming the extent of confidential information and trade secrets belonging to the Claimants, and the use they had made of it.

On 7 February 2018 the matter came back to Court before Ms Rowena Collins-Rice, sitting as a Deputy High Court Judge. Again I have no note or transcript of what was said. By this time the IT experts had carried out some of their retrieval and deletion exercise, although not all of the retrieved material had been analysed, and the Defendants had sworn affidavits in compliance with Picken J’s order. The Defendants sought to discharge the springboard injunction at that hearing. Because the parties were therefore not in a position fully to argue out the springboard injunction, the matter was dealt with, again, on an interim basis. In the light of submissions made by the Defendants about the breadth of the order and the extent of what was truly confidential information, some adjustments were made to the list of teachers and schools which the first two Defendants were prohibited from dealing with.

Paragraph 4 replaced what had been paragraph 2 and it said this:

The Claimants duly provided the Registered Teachers List which identified 1463 teachers, and the Schools List which identified 641 schools.

The effect of the order has been that the Defendants cannot do business with a teacher or a school on either list, even if both the teacher and the school were to contact Link3 entirely of their own accord.

Accordingly the matter came before me on 26 February 2018. This is an interim application and I remind myself that, although there has been delivery up of some electronic media, disclosure has not taken place and there has been no cross-examination of witnesses. I need to decide whether and in what terms to continue the interim prohibitory injunction restraining use of confidential information or trade secrets, and I also have to decide whether and in what terms to grant a continued springboard injunction.

The typical purpose of a springboard inunction is to deprive a Defendant of any head start they have obtained by improper use of information or other property belonging to the Claimant. In QBE Management Services (UK) Ltd v Dymoke [2012] EWHC 80 (QB) Hadden-Cave J reviewed the authorities on springboard injunctions and summarised the principles as follows

The parties agreed that those principles were to be applied in this case.

The following issues arise for decision:

What is the proper approach on an interim application seeking a springboard injunction?

Insofar as the Claimants seek a traditional interim injunction to restrain unlawful acts by the Defendants, the parties are agreed that the usual American Cyanamid principles apply. The threshold question is whether there is a serious question to be tried, and if there is, the court should consider the balance of convenience.

Insofar as the Claimants seek a springboard injunction they are seeking to restrain acts that would otherwise be lawful. The injunction is being used to deprive the Defendants of the benefit of having, earlier, acted unlawfully, rather than to restrain an act which is itself unlawful. If such an application is decided at trial, the judge will decide factual issues on the balance of probabilities. The position is more difficult if a springboard injunction is sought on an interlocutory application because, especially if the injunction will expire before the case can be tried, the order is in its effect a final order despite being given at an interlocutory hearing, and if it turns out at trial to have been wrongly made that might give rise to serious difficulties in assessing the damage it has caused to the Defendants by wrongly delaying the start of a legitimate business.

In CEF Holdings v Mundey [2012] EWHC 1524 (QB) Silber J was dealing with an interlocutory application both for traditional injunctive relief to enforce time-limited post termination covenants, and for a springboard injunction. He considered that in relation to both parts of the application, given that judgment was unlikely to be given before the restrictive covenant periods had expired, the American Cyanamid approach was inappropriate. He said this:

Silber J said that the trial was unlikely to take place until July 2012, and then went on:

Mr Benzie, who made submissions on behalf of all four Defendants, contended that in relation to the springboard injunction I should try, as best I could, to predict the likely outcome at trial on the balance of probabilities, and take that into account when deciding whether to exercise my discretion to grant an injunction, rather than adopting an American Cyanamid approach. Mr Tolley QC (who appeared for the Claimants with Mr Simon Paul) reserved his position on whether that was the correct test.

I agree with Mr Benzie, and in relation to the springboard injunction application I propose to follow the approach adopted by Silber J in CEF Holdings. I will try to assess the likely outcome on factual issues on the balance of probabilities, and in the light of that assessment will consider the balance of convenience and any other matters that go to the exercise of discretion.

What information was taken from Aquinas by Mr Miller and Mr Pembleton, what use has been made of it, and to what extent was it confidential?

There is, for present purposes, no material dispute between the parties about the facts which I set out below, most of which are in any event supported by contemporaneous documentation including recovered WhatsApp messages, and emails. Pending disclosure and trial Aquinas reserve their position as to whether these facts cover the full range of the Defendants’ wrongdoing, but at this stage there are no specific allegations of wrongdoing which are in issue between the parties. I shall therefore proceed on the basis that these facts will be established at trial.

Mr Miller and Mr Pemberton began planning a new business with Mr Gatter from about May 2017. Aquinas does not contend that the early stages of that planning constituted any breach of their express or implied duties to Aquinas.

Link 3 was incorporated on 2 August 2017. Mr Gatter was the sole director and capital was provided by his father.

Mr Gatter, Mr Miller and Mr Pembleton had a shared WhatsApp group. A series of exchanges on 29 August 2017 show that they were planning to purchase laptops for the new business and that, as Mr Miller put it, we can “then start putting everything from the memory stick onto the laptop”. That was a reference to a memory stick onto which Mr Pembleton admits that he had copied information belonging to Aquinas. He says there were 697 documents primarily consisting of CVs of Aquinas candidates. He says that the memory stick itself cannot now be found. A month later, on 26 September, Mr Pembleton said on WhatsApp “Got all my shit on last night. CVs. Useful documents to use. The whole memory stick.”

Meanwhile, no later than 19 September 2017, Mr Miller and Mr Pembleton started using information and documents which they had stolen from Aquinas in order to seek business for Link3. On 19 September Mr Pembleton emailed Mr Gatter five CVs of Aquinas registered teachers. The CVs carried Aquinas branding. Two hours later an email was sent from Mr Gatter’s Link3 email address to a teacher at Kimberley School (one of the schools on the “Schools list”) saying “one of my teachers has informed me that you are in need of a Science teacher after Christmas. I have attached some terrific candidates for your consideration, if you are interested in any of the profiles attached please do not hesitate to contact me and let me know when you will be meeting candidates.”

It is unclear to whom Mr Gatter could have been referring as one of “my teachers”, but in any event the attached CVs were the five Aquinas CVs, amended so as to carry Link3 branding. None of those five candidates was in fact placed. Link3’s first candidate was placed on 20 October, a point enthusiastically announced by Mr Miller to his WhatsApp group.

By 20 October 2017 Mr Pembleton was describing himself on Link 3 emails as “Managing Director”.

At some stage between 23 October and 21 November Mr Miller and Mr Pembleton copied and sent to a Link3 email address an excel spreadsheet setting out details of 188 teachers and 133 schools.

In total the Defendants have approached at least 32 teacher candidates who were registered with Aquinas, attempting to place them into schools via Link3. They succeeded in placing eight of them into full time work, and six into temporary positions. The Defendants say that, from those placements, they have so far made a profit of £8,806 on a turnover of £46,306.

On 29 November 2017 Mr Miller contacted Mr Turton of the Computer Shop (Aquinas’ IT services provider) to ask for a list of the email addresses, telephone numbers and contact details of every teacher or candidate who is or had ever been associated with Aquinas. The list, which I have described above was produced for Mr Miller by Mr Turton. It seems at least possible that Mr Miller also asked for a list of all school contacts: in any event the list he received contained school contacts.

In mid-December 2017 the Defendants attempted (unsuccessfully) to tender, via Link 3, for a potentially lucrative contract with a series of schools called the Shine Trust. This was a business opportunity belonging to Aquinas. There is a major issue between the parties as to the likely profitability of this retainer, which, in the event, went neither to Aquinas nor to Link 3.

I do not intend to describe the entirety of the evidence, but can summarise the position. Given the extent of the admissions made and the unchallenged documentary evidence now available, it is in my view much more likely than not that the Claimants will at trial establish that:

Mr Tolley seeks to go further and contends that even after proceedings were commenced, the Defendants failed to make a clean breast of their wrongdoing. I am satisfied that they did not fully disclose the extent of their wrongdoing in their initial affidavits, but I am unable to resolve on this application, and without the benefit of cross-examination, whether and if so to what extent those failures were deliberate, or, as the Defendants say, unintentional.

It is important to note that there is no evidence to suggest that Link 3 has at any time mailshotted (whether by email or text or otherwise) either the schools or the teachers whose contact details were given on the Candidate List. The Defendants say they have not done so, and indeed they say that they have never used the Candidates List for any purpose. I proceed on that basis.

I can deal briefly with the issue of the extent to which the information which Mr Miller and Mr Pembleton took from Aquinas was confidential, and it seems to me only necessary (for present purposes) to consider the express contractual terms.

I am satisfied that it is very likely to be found at trial that all of the information belonging to Aquinas which the Defendants copied is caught by clause 10.1 of the contract terms, and that those terms are not drawn so widely as to be unenforceable. In any event all of Aquinas’ records and documents plainly ought, in accordance with clause 10.2, to have been returned to Aquinas when the Defendants left their employment.

The misuse of Aquinas’ information prior to 13 January 2018 is very likely to be found to constitute a breach of the implied duty of fidelity, as well as being a breach of the express terms of clause 10.

The Defendants did not resist there being some form of continued restraint on them from using confidential information belonging to Aquinas. I propose to grant an injunction the effect of which will be that the Defendants are enjoined until trial or further order in the meantime from using or disclosing any document which is caught by clause 10.2 of their contracts (that is to say which they ought to have returned on the termination of their employment), and which will also restrain them from using or disclosing information falling within a schedule which will be similar to the existing schedule A. I will hear Counsel on the precise form of wording of the order but I will not easily be persuaded to make an order which refers to “confidential information” without defining what is meant by that, since it is not in my view desirable to expose the Defendants to an order the meaning of which is not crystal clear.

I should also say that I am not satisfied that information which Mr Miller and Mr Pemberton may have in their heads about schools which have traded with Aquinas, or who take lots of temporary teachers, is confidential information the use of which should be restrained by interim injunction. I remind myself of what Nourse LJ said in Roger Bullivant v Ellis [1987] ICR 464:

I now turn to the question of springboard relief, on the hypothesis that my predictions as to likely outcome at trial are correct.

Mr Tolley for the Claimants submits that a 9 to 12 month restraint is appropriate because it would typically take 9 to 12 months for a start-up business like Link 3 to achieve its first placement. Mr Benzie submits that no head start at all has been demonstrated, that even if a head start has been achieved it is impossible to say what period of injunction is appropriate, and that in any event any head start is less than the 6-week period that has now elapsed since the order of Picken J.

I need to say a little more about how businesses such as Aquinas and Link 3 operate. They will maintain a list of teachers who are potentially available for work, and they will seek to match these teachers with schools which they know are looking for staff. They make their money by charging more – typically £50 a day more – to the schools than they pass on to the teachers. Occasionally teachers will enter into a guaranteed income arrangement with an agency, in which case they provide their services exclusively through that agency, but for the most part supply teachers can be, and are likely to be, registered with more than one agency. Some teachers post their CVs onto various on-line platforms, some behind paywalls, others not. The agencies can access those CVs. School contact details are of course available on-line, although it might not be easy immediately to find the right individual to approach to talk about the school’s requirements for temporary teachers. Some valuable information is available from public sources as to individual schools’ spend on temporary staff. Like all businesses which intermediate between providers and buyers of a service, contact lists, personal contacts, reputation, and a strong database of information are likely to play an important role in whether a business succeeds.

I consider first what benefit the Defendants have in fact achieved as a result of their (ex hypothesi) unlawful actions, and then consider the position that the Link 3 business would now be in had there been no such breaches.

I have summarised above the relevant actions of the Defendants. In my view they amount to a deliberate attempt, sustained from at least 17 September 2017 onwards, to use stolen information for the purposes of Link 3’s business. But those breaches were stopped on 12 January 2018, and their success, in terms of actually generating business, appears on the evidence to have been modest, giving rise so far to only 14 employees being placed, creating a profit of £8,806 on a turnover of £46,306, over a period of very roughly 3 months. To put that in context it can be compared with Aquinas’ estimate, for the 3 month period August to December 2016, of the gross profit attributable to Mr Miller’s desk of £171,202 and on Mr Pembleton’s desk £68,374, these being two of the eight desks comprising the entirety of Aquinas’ business outside London.

Link 3 presently has just 51 teachers on its books.

To what extent, then, has Link 3 obtained a head start by reason of the Defendants’ breaches? It has managed to do only a modest amount of business, but that business is in my view disproportionately important precisely because it was its first business – it allowed it to say to other teachers and other schools that it was an up-and-running agency.

On the other hand Link 3’s business came to an abrupt halt on the grant of the injunction, and as I understand the evidence no further teachers have been placed since then. Insofar as any bandwagon had started to roll, it was stopped in January by the broad terms of the injunction then granted, and has remained more or less stationary ever since.

I also need to consider the position had there been no breaches by the Defendants. I am not satisfied that there would have been anything to prevent Mr Gatter setting up Link 3, with a view to it starting to trade only when Mr Miller and Mr Pemberton’s notice periods had expired. Neither Mr Miller nor Mr Pemberton were under any contractual obligation not to compete with Aquinas once their notice period had expired. It seems to me therefore that Link 3 could lawfully have been up and running, and lawfully employing Mr Miller and Mr Pemberton, on or very shortly after 14 January.

Mr Tolley’s submission that a new business like Link 3 would be unlikely to place any teacher for 9 to 12 months was based solely on some evidence given by Mr Anderson (M/D of Aquinas) in these terms

“Based on my experience of the specialist teacher recruitment agency business, I believe that it would take a period of at least nine months and possibly twelve months, in order legitimately to start such a business and reach a point at which it was successfully able to place teacher candidates with schools”.

Mr Anderson says in his third witness statement that he gave this view “based on my experience of working in this sector for many years and running Aquinas since it was established.”

I do not derive any assistance from this evidence, and do not consider I can afford it any weight, for the following reasons.

First, it seems to me that it is opinion evidence and that it comes from a source which is clearly not independent. Secondly, little detail is given of the experience on which it is based and no examples or factual material is cited in support. It is a bare expression of opinion. Third, any assessment of the time lag before a teacher is placed must depend on the expertise and knowledge of those whom the business employs.

In any event, even if it were true that Link 3 would, but for its breaches, have taken 9 months to secure any business, it would simply not follow that the appropriate springboard period was 9 months. Suppose that, now that it is restrained from abusing confidential information, it will in fact take Link3 5 months until it books its first teacher. In those circumstances the appropriate period of spring board restraint would be 4 months – the 9 months that it would have taken, less the 5 months that it would in fact take because of the unlawfully achieved head start.

In fact I very much doubt that it would take a lawfully performed Link3 business very long to book its first teacher, and I doubt that it is right to suggest that a new business of this kind would typically experience a very long lead time before it places anybody at all.

I can now give my conclusion, which I shall do first by reference to Haddon-Cave J’s guidelines.

I am being asked to grant an injunction to deprive the Defendants of any advantage which I consider they have built up because of their unlawful acts (1, 2). Those unlawful acts extend to breaches of the duty of fidelity and of the express terms of the contract which I have described, as well as breaches of confidence (3). Such an advantage must still be being enjoyed if I am to grant a springboard injunction (4). The purpose is to restore the parties to the competitive position they would have been in but for the misconduct (5). In this case I think difficulties of assessing damage and doubts as to the creditworthiness of the defendants would make a monetary award an inadequate alternative (6). I must consider the effect of the unlawful activity on the Claimant and consider the extent of the illegitimate advantage obtained by the Defendants. I am not to punish the defendants for their wrongdoing: the egregiousness of the breaches is irrelevant (7). The burden is on the claimant to spell out the precise nature and period of the advantage (8).

Doing the best I can I consider that an unfair advantage, in terms of timing, was obtained by the Defendants, but that it was modest. Up to 14 January they were able to say to potential clients that they had an up and running business which had already placed teachers, but they had obtained all of that business by acting unlawfully. The most obvious advantage that the Defendants could have obtained would have been to do a mail shot using the contact details they had stolen from Aquinas. Perhaps they were intending to do that at some stage, but the evidence is that they did not in fact do so. Had they done so I think that would have given them a very considerable advantage. But on the evidence as it is, and doing the best I can, I assess the temporal length of the head start which the Defendants obtained from their unlawful activity as being in the region of 6 weeks.

The orders already made have in fact already effectively restrained the Defendants from what would otherwise have been lawful trading for a period of approximately six weeks, and I am satisfied that any head start they had illegitimately obtained has now gone. I do not know how long it will take them to build up business but so long as they comply with the terms of the ongoing injunctions I am satisfied that the future course of their business will not be materially different to the course it would have taken had they acted lawfully throughout.

I stress that this is an interim determination. Different evidence will no doubt be available to the trial judge, who may well take a different view.

However, I am not persuaded that the Claimant has demonstrated any ongoing springboard advantage, and I decline to make any continuing order of this nature.