SOWING THE SEEDS OF DISSENT

Sowing the seeds of dissent

The IPKat has found a curiosity on BAILII. This is a decision of the Court of Appeal (Lords/Ladies Justices Ward, Arden and Moore-Bick) last Wednesday in Gorne v Scales, Taylor and Bill, an extraordinarily rare split decision on how to assess damages for breach of a duty of confidentiality in respect of material held on a database.

The information in question was customer information that was stored in a card index and computer database belonging to a business called Seeds Direct. Gorne was a partner in the first business that owned the data, but not in a subsequent partnership - set up after the original one was dissolved - which actually used the card index data commercially. The trial judge (Kevin Garnett QC, sitting as a Deputy Judge of the Chancery Division) directed that there be an inquiry as to the damage suffered by Gorne on the assumption that her loss be measured by reference to the value of the confidential information.

The inquiry was conducted by Master Bragge, who accepted the method of valuing the card index that was suggested by Gorne's expert witness. This method involved valuing the card index as part of the assets of a going concern, i.e. by reference to the actual trading results of the new partnership. Gorne was held entitled to damages in respect of her one third interest in the card index on this basis. One of the defendants (a former business partner) however said that the master was wrong to accept this method: he should have assessed its value by working out the price at which it could have been sold by the former partnership in the open market under the circumstances that existed at the time.

The Court of Appeal (Arden LJ dissenting) allowed the appeal and ordered a fresh inquiry. In the Court's opinion

* the method adopted by the master proceeded on the erroneous assumption that the former partnership was a well established business that could be valued as a going concern. In truth its only real asset was the card index, but the dissolved partnership was in no position to make any use of it other than by selling it on the open market. This being so, Gorne's loss had to be assessed by reference to the value of the index on the open market at the time of its removal, not by reference to the use to which it was subsequently put by the new partnership.

* the master's approach was not so much to inquire into the damage suffered by Gorne as to create an account of the profits wrongfully gained through the misuse of the information.

* the correct measure of damages in this sort of case was to establish the market value of the confidential information on a sale between a willing seller and a willing buyer at the time of the dissolution of the former partnership.

The IPKat notes that "willing seller/willing buyer" is still a permissible. He got the impression that a differently-constituted Court of Appeal in Reed v Reed was not so enthusiastic about it.

Secret seeds here
Primal seeds here
Wimbledon seeds here