Station Road, Sidcup

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Trust in an Employee Misplaced? The Law Will Help You Pick Up the Pieces

In spite of the obvious risks involved, a great many businesses have no choice but to entrust confidential information to their employees. A High Court case showed that, where such trust turns out to be misplaced, judges have a range of powers to deal appropriately with wrongdoers and limit any damage caused (Quantum Tuning Limited v White).

A company suspected that one of its employees had covertly misappropriated a large number of its confidential electronic files with a view to setting up a competing business. After he was suspended on full pay, the company launched legal proceedings against him, alleging fraud, breach of contract and wrongful interference with goods.

A judge issued an injunction against him, requiring him to, amongst other things, deliver up all computer and electronic equipment in his possession on which he could have secreted the files. That action was eventually settled after he apologised and purported to comply with the order in full by delivering up various computers and memory sticks.

The company, however, subsequently formed the view that it had been deceived and launched further proceedings against him. Analysis of digital footprints indicated that he had retained certain computers which should have been delivered up. A judge set the settlement aside and granted a further injunction in similar terms to the first. The company later applied to have the employee committed to prison for contempt of court on the basis that that order too had been disobeyed.

In upholding that application, the Court found that the employee had attempted to conceal his continued possession of certain laptop computers and, to that end, had lied to the company and the Court. His explanation that one of the computers had been damaged beyond repair when it fell in a puddle was condemned as a far-fetched invention.

The Court resolved to hear further argument before deciding what sanction to impose on the employee for his contempt, the maximum penalty for which is two years' imprisonment or an unlimited fine. He also faces a financial claim in respect of any loss or damage caused to the company and his assets have been frozen up to a value of £50,000.