The Employee Who Copied the Client List
Nadia is a senior sales manager at Ferro Metals Ltd. Her employment contract contains a confidentiality clause but no non-compete. She resigns on 1 March and joins a competitor on 15 March. Before leaving, she emails herself Ferro's customer list, pricing formulas, and a spreadsheet of pending quotes. She also calls six key clients and tells them she is moving, hinting that Ferro's prices will rise. Ferro's board wants urgent injunctions and is considering proceedings against Nadia and the competitor. The competitor says it did not ask her to bring anything and has not used the list. Ferro's share price has fallen 8% since the departures.
1. What causes of action does Ferro have against Nadia, and what must it establish for an injunction?
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Ferro has three overlapping causes of action. First, breach of the express confidentiality clause: the customer list, pricing formulas, and pending quotes are likely confidential information, and Nadia's email is a clear breach. Second, breach of the equitable duty of confidence: information with the necessary quality of confidence, imparted in circumstances importing an obligation, and used without authorisation. Third, breach of the implied duty of good faith and fidelity during employment, which can extend to preparations to compete made while still employed.
For an interlocutory injunction, Ferro must show: (1) a serious question to be tried on each cause of action; (2) that damages would not be an adequate remedy because the information cannot be unlearned and loss of clients is hard to quantify; (3) that the balance of convenience favours restraint; and (4) that the injunction is not so wide as to prevent Nadia from earning a living using her general skills and knowledge. The court will distinguish confidential information from the employee's own skill and memory of client relationships.
The strongest relief is a springboard injunction restraining use of the copied material pending trial, plus delivery-up and destruction orders. A broad non-compete cannot be granted because none was agreed and a restraint of trade would be unreasonable.
2. Does Ferro have a claim against the competitor, and how should the 8% share-price fall be treated?
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A claim against the competitor requires more than hiring Nadia. Ferro must show the competitor knowingly received confidential information, induced Nadia's breach, or conspired with her. The competitor's assertion that it did not ask for the material is not conclusive: if Nadia brought the list and the competitor's managers knew or turned a blind eye, knowing receipt or inducement can be established. Ferro should seek discovery of the competitor's onboarding records, emails, and any use of the pricing formulas. If the competitor has not used the information, the claim is weaker but a quia timet injunction may still be available to prevent use.
The 8% share-price fall is not recoverable as damages in itself. Share-price movements reflect market sentiment and are too remote and speculative to be attributed to Nadia's conduct. Ferro must prove actual loss: lost clients, lost margin on pending quotes, and the cost of rebuilding the list. The share-price fall may be relevant context but is not a measure of damage. Ferro should focus on identifiable client losses and the value of the misappropriated information, and should consider whether the competitor's conduct gives rise to a separate claim in conspiracy or inducing breach of contract.