(Trail)finders keepers (again!): Court of Appeal upholds obligation of confidence on the recipient of information

In a recent decision in the Travel Counsellors Ltd v Trailfinders Ltd case the Court of Appeal held that a recipient of potentially confidential information has the obligation to make enquiries as to whether the information is confidential if objectively there are doubts about its origin.

See our blog on the IPEC decision, where for the first time a UK court considered the impact of the Trade Secret Directive on UK principles governing the protection of confidential information: (Trail)finders keepers: High Court considers interplay of Trade Secrets Directive and breach of confidence for the first time | Fieldfisher

Recap of the facts

Travel Counsellors Limited (TCL) and Trailfinders are two competing travel agencies in the UK. In 2016 around 40 employees left Trailfinders to join TCL and took with them client names, contact details and other information. The judge noted that this was "was expected and positively encouraged by TCL". The IPEC ruled that this constituted breach of the ex-employees' employment contracts. More pertinently, the court further ruled that TCL had breached its equitable obligation of confidence to Trailfinders. TCL appealed the decision.

The appeal

The Court of Appeal recognised that there was little authority on the test but confirmed that whether a recipient should have known the information was confidential is determined by considering whether a reasonable person standing in the position of the recipient would have known. So, a duty of confidence does not only arise where a recipient knew or turns a blind eye to whether information is confidential. On the facts, TCL were aware that at least some of the information brought to them by their new employees came from Trailfinders’ database. Any reasonable person in that position would have made enquiries into whether the information in question was confidential.

The judge confirmed that this obligation also arises if the recipient is only on notice that parts of the information are likely to be confidential.

Comments

This case clarifies the key principles for determining breaches of confidence outside of the usual contractual scenario. Recipients of information from third parties must exercise caution and positively make enquiries if they suspect that the information might be confidential.

With special thanks to trainee, Fabia Breuer, for her contribution to this blog.