Faccenda Chicken Ltd v Fowler and Others; Fowler v Faccenda Chicken Ltd

Employment - Unauthorised Use of confidential information: CA (Kerr, Neill and Nourse LJJ): 5 December 1985
While employed by the company, the first defendant established an operation whereby fresh chickens were daily offered for sale from itinerant refrigerated vans.

He resigned and formed a company to carry on similar business in the same area.

Eight of the company's employees went to work for him.

The company brought an action against the first defendant and his company and the former employees, claiming damages for the alleged wrongful use of confidential information as to customers and prices.

In the first defendant's action for commission due to him from the company, the company counterclaimed damages for breach of contract by abuse of confidential information.

Goulding J found that the information, necessarily gained by the employees in their employment, was confidential, but that confidential information short of a trade secret was, in the absence of an express restrictive covenant, only protected from unauthorised disclosure for the duration of the employment.

He dismissed the company's claim and counterclaim.

The company appealed.

Conrad Dehn QC and John Trench (instructed by Penningtons for Shoosmiths & Harrison, Banbury) for the company.

Peter Crawford QC and James Gibbons (instructed by Johnson & Gaunt, Banbury) for the defendants.

Neill LJ, delivering the judgment of the court, said that in the absence of express terms, an employee's obligations as to the use and disclosure of information gained in his employment were the subject of implied terms.

While he remained in the employment he was subject to the implied duly of good faith.

The duty would be broken if an employee deliberately memorised, or made or copied, a list of his employers' customers for use after his employment ended.

The implied term preventing an employee from using a disclosing information after the end of his employment covered trade secrets but not merely 'confidential' information.

All the circumstances had to be considered in determining whether information was protected by the second implied term.

A restrictive covenant would not be enforced unless such protection was reasonably necessary to protect a trade secret or to prevent customers being enticed away by abuse of personal influence.

In the present case the sales information was not to such a nature that an employee was bound not to use or disclose it after the end of his employment.

Appeals dismissed.