Court Refuses Barring Order to Prevent Breaches of Confidentiality

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Posted on 05 Jan 2012

The High Court has refused an employer’s application for a barring order preventing a former employee from being involved in its commercial relationship with her new employer, who was one of its clients. 

In Caterpillar Logistics Services (UK) Ltd v Huesca de Crean, H was a middle manager for CLS managing its logistics centre which provided logistics services to clients, including QH. She left to take up a senior management role with QH. Her employment contract did not contain any restrictive covenants although she had signed a separate confidentiality agreement. 

CLS sought a barring order preventing her from being involved in its commercial relationship with QH. CLS argued that in taking on a role which conflicted with her fiduciary duties to CLS, it was likely, if not inevitable, that she would use or disclose its confidential information. It sought to rely on a previous case, Bolkiah v KPMG. In that case, a court was prepared to bar an adviser from acting for one party to a claim when it had previously acted for the other party, in circumstances where the measures it had in place to protect against accidental disclosure of confidential information, such as Chinese Walls, were found to be insufficient. 

The High Court refused the order. It noted that the effect of leading case law on confidential information and employees is that an employer wishing to protect its confidential information should include restrictive covenants in the employment contract, something which had not happened here. It was not prepared to extend Bolkia to the relationship of employer and employee. 

CLS also sought an injunction restraining H from using or disclosing confidential information but this was refused as the confidentiality agreement was too wide and had no time restriction. 

This was a creative attempt, which ultimately failed, by an employer to protect its confidential information in circumstances where it had failed to include restrictive covenants in the employment contract. It serves as a reminder of the need to ensure that appropriate post-termination restrictions are included in employment contracts to protect an employer’s interests and that confidentiality obligations are tightly drafted.

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