To what extent can a former employer require a new employer and its ex-employees, in receipt of its confidential information, as a result of the wrongful acts of an ex-employee, to permit inspection of their electronic devices and for the destruction of confidential information contained on those devices?
This was the issue that faced the High Court in Arthur J. Gallagher Services (UK) Limited v Skriptchenko.
Arthur J Gallagher Services are insurance brokers. Mr Skriptchenko worked for Gallagher, as a broker, until July 2014. He then joined Portsoken, another insurance broker. Mr Skriptchenko took a client list from Gallagher and disclosed it to Portsoken who then used it to approach over 300 of Gallagher's clients.
An injunction was sought against Mr Skriptchenko and others which resulted in the disclosure of over 4,000 documents demonstrating that directors and employees of Portsoken were misusing Gallagher's confidential information. In particular, one email from Portsoken's chairman to a director indicated that the information would be kept "in our back pocket to show on a nudge nudge wink wink basis to interested parties".
In the proceedings, Gallagher sought an order requiring not only the delivery of the computers and devices belonging to Portsoken and the ex-employees, but also the destruction of any of its confidential information that was found on the computers and devices.
The High Court granted the order despite there being no previous authority for ordering the destruction or deletion of confidential information. The Court considered the facts that the defendants admitted taking and knowingly misusing Gallagher's information, they used a "high degree of subterfuge" in using the information and they couldn't be trusted to seek and delete the material themselves.
The Court formed the view that, in this case, an order requiring delivery up of, imaging of, and search of the defendants' electronic devices was required to protect Gallagher's confidential information and would involve the least risk of injustice if it turns out to be wrong.
It is an implied term of employment that an employee must not (during their employment) disclose to third parties employer's trade secrets and confidential information obtained in the course of the employment, and must not use the employer's confidential information for their own purposes.
In respect of trade secrets, the implied duty of confidentiality lasts even after the employment has ended. Express terms are required to protect any further confidential information after the employee has left.
This case demonstrates the breadth and extent of a court's ability to protect an employer's confidential information and the draconian steps it can take in appropriate cases to require destruction of information that has been wrongly acquired and misused.
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