Thomas Marshall (Exports) Ltd v Guinle: ChD 1979

The managing director defendant had resigned before the end of the contractual term. There was an express covenant in his contract against using or disclosing the company’s confidential information during or after his employment. It was submitted that this was a repudiation which brought the contract to an end and with it any obligation to observe the restrictive covenants.
Held: Sir Robert Megarry VC considered the power of a court to prevent a wrongdoer from benefiting from his wrong: ‘Above all, I think the courts must be astute to prevent a wrongdoer from profiting too greatly from his wrong. If without just cause a servant who has contracted to serve for a term of years refuses to do so, it is easy to see that the court is powerless to make him do what he has contracted to do: neither by decreeing specific performance nor by granting an injunction can the court make the servant perform loyally what he is refusing to do, however wrongfully . . But why should the court’s inability to make a servant work for his employer mean that as soon as the servant refuses to do so the court is forthwith disabled from restraining him from committing any breach, however flagrant, of his other obligations during the period of his contract? I would wholly reject the doctrine of automatic determination, whether in its wide form or in its narrowed version.’
As to whether information was confidential, Sir Robert Megarry VC said: ‘If one turns from the authorities and looks at the matter as a question of principle, I think (and I say this very tentatively, because the principle has not been argued out) that four elements may be discerned which may be of some assistance in identifying confidential information or trade secrets which the court will protect. I speak of such information or secrets only in an industrial or trade setting. First, I think that the information must be information the release of which the owner believes would be injurious to him or of advantage to his rivals or others. Second, I think the owner must believe that the information is confidential or secret, i.e., that it is not already in the public domain. It may be that some or all of his rivals already have the information: but as long as the owner believes it to be confidential I think he is entitled to try and protect it. Third, I think that the owner’s belief under the two previous heads must be reasonable. Fourth, I think that the information must be judged in the light of the usage and practices of the particular industry or trade concerned. It may be that information which does not satisfy all these requirements may be entitled to protection as confidential information or trade secrets: but I think that any information which does satisfy them must be of a type which is entitled to protection.’
Sir Robert Megarry VC
[1979] Ch 227, [1978] 3 All ER 193, [1978] ICR 950, [1978] 3 WLR 116
England and Wales
Cited by:
CitedSG and R Valuation Service Co v Boudrais and others QBD 12-May-2008
The claimant sought to require the defendants not to work during their notice period to achieve the equivalent of garden leave despite there being no provision for garden leave in the contracts. It was said that the defendants had conspired together . .
CitedSociete Generale, London Branch v Geys SC 19-Dec-2012
The claimant’s employment by the bank had been terminated. The parties disputed the sums due, and the date of the termination of the contract. The court was asked ‘Does a repudiation of a contract of employment by the employer which takes the form . .
CitedGunton v Richmond-upon-Thames London Borough Council CA 1980
The plaintiff college registrar had been the subject of disciplinary proceedings, but the defendant had not followed the contractual procedure. The judge had ordered an inquiry as to damages on the basis that the Plaintiff was entitled to remain in . .
CitedLancashire Fires Ltd v S A Lyons and Co Ltd CA 1996
It was claimed that a loan to the employee from a customer of the employer coupled with an exclusive supply agreement by the employee as and when the competing business becomes operative was in breach of an non-compete clause.
Held: The . .
CitedFaccenda Chicken Ltd v Fowler CA 1986
Nature of Confidentiality in Information
The appellant plaintiff company had employed the defendant as sales manager. The contract of employment made no provision restricting use of confidential information. He left to set up in competition. The company now sought to prevent him using . .

These lists may be incomplete.
Updated: 04 June 2021; Ref: scu.270349