Celebrity Speakers Ltd v Daniel & Ors

Factual and Procedural Background

The Defendants breached multiple court orders, resulting in their statement of case being struck out and judgment entered for the Plaintiff on liability. The case concerns remedies sought by the Plaintiff, a speaker bureau incorporated in 1983, against two former associates: the Defendant Director and a sub-agent who jointly established a competing speaker bureau, Company B. The Plaintiff maintained a confidential database containing sensitive client and speaker information, access to which was governed by a Service Agreement with the Defendant Director.

The Defendant Director was employed for approximately 25 years, promoted to a statutory director role in 2015, and bound by restrictive covenants including non-competition and confidentiality obligations. The sub-agent, a close associate of the Defendant Director, was engaged without a written contract but owed duties of good faith and confidentiality under a relational contract.

Company B was incorporated in November 2020 with the sub-agent as sole director and the Defendant Director as a shadow director. Both Defendants were found to have misappropriated the Plaintiff’s confidential database and diverted business opportunities to Company B.

The COVID-19 pandemic led to furlough and garden leave for the Defendant Director. Despite restrictions, the Defendant Director and the sub-agent accessed the Plaintiff’s confidential database without authorization, including during garden leave. The Defendant Director resigned in January 2021, and his employment terminated in July 2021, after which the restrictive covenants continued to apply for nine months.

The Plaintiff issued a claim in July 2021 seeking injunctions, damages, and other relief for breaches of contract, misuse of confidential information, and unlawful competition. The Defendants denied allegations and resisted interim injunctions, which were refused. Following procedural non-compliance by the Defendants, their statement of case was struck out, judgment entered for the Plaintiff on liability, and directions given for a remedies hearing. The present judgment concerns the remedies to be granted.

Legal Issues Presented

1. On what factual basis should the Court determine remedies given the Defendants' statement of case was struck out and judgment entered for the Plaintiff?
2. Is the Plaintiff limited to recovering the amount claimed on the Claim Form, specifically £120,000?
3. Did the Defendant Director have contact with or become aware of a key client during the 12 months before termination "in the course of his employment" despite periods of furlough?
4. Has the Plaintiff established that breaches by the Defendants caused loss of bookings with the key client?
5. What loss has the Plaintiff established as a result of breaches relating to the key client’s bookings?
6. What sum, if any, should be awarded for other business lost due to the Defendants' breaches?
7. Should negotiating damages be awarded for interference with the Plaintiff’s confidential database, and if so, in what sum?
8. Should the Court grant injunctions, and if so, on what terms?
9. What award of interest, if any, should be made?

Arguments of the Parties

Defendants' Arguments

• The Defendants contended that the Plaintiff had not established causation of loss, particularly regarding the key client’s bookings.
• They argued the Plaintiff was limited to the amount claimed on the Claim Form and that damages should be capped at £120,000.
• The Defendants submitted that the Defendant Director could not have had relevant contact with the key client during furlough periods, rendering restrictive covenants inapplicable during those times.
• They disputed that the sub-agent owed a duty not to compete or had relevant knowledge of the key client.
• The Defendants further argued that injunctive relief would amount to double recovery given the award of damages for misuse of confidential information.
• They submitted that an injunction would impose an unreasonable restraint of trade.

Plaintiff's Arguments

• The Plaintiff argued that the struck-out statement of case and judgment on liability established the factual basis for determining remedies, limiting the Defendants’ ability to contest liability but not damages.
• The Plaintiff maintained there was no cap on damages despite the amount claimed on the Claim Form.
• It was asserted that the Defendant Director had contact with the key client within the relevant 12-month period, including after furlough, as established by admissions in the Particulars of Claim.
• The Plaintiff contended that the Defendants caused loss by diverting business opportunities, including specific tours and events involving the key client, and misusing confidential information.
• The Plaintiff sought damages for lost commissions on diverted business, negotiating damages for misuse of the confidential database, and injunctive relief to prevent further misuse.
• The Plaintiff rejected the argument that injunctions would constitute double recovery, emphasizing the distinct nature of negotiating damages and ongoing misuse.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
New Century Media v Makhlay [2013] EWHC 3566 (QB)	Default judgment establishes liability based on pleaded facts but does not settle damages or causation.	Used to confirm that the Defendants cannot contest liability but may argue on damages and causation.
John Turner v P.E Toleman (1999)	Summary judgment with damages to be assessed does not establish causation for all aspects of loss.	Supported the principle that causation remains open for argument at damages stage.
Lunnun v Singh (1999)	Default judgment implies liability for some damage but leaves quantification and causation issues open.	Reinforced that causation and quantification remain for assessment despite liability judgment.
Pugh v Cantor Fitzgerald International [2001] CP Rep 74	Consistent with Turner and Lunnun on causation and damages assessment.	Followed in line with established principles on default judgment and damages.
Enron (Thrace) Exploration and Production BV v Clapp [2005] EWHC 401 (Comm)	Application of principles regarding damages and causation after judgment.	Supported the approach to damages assessment post liability judgment.
Strachan v The Gleaner Co Ltd [2005] 1 WLR 3204	Damages assessment principles following liability judgment.	Applied in confirming scope of damages assessment.
Symes v St George's Healthcare NHS Trust [2014] EWHC 2505 (QB)	Damages and causation principles in context of judgment on liability.	Used to support the court’s approach to damages and causation.
Harrath v Stand for Peace Ltd [2017] EWHC	Claim Form value does not limit court’s power to award damages beyond stated amount.	Supported rejection of Defendants’ submission on damage cap.
Morris-Garner v One Step (Support) Ltd [2019] AC 649	Measure of damages for breach of non-compete covenants and negotiating damages principles.	Guided the award of negotiating damages for misuse of confidential information.
Watson, Laidlaw & Co v Pott, Cassels & Williamson [1914] HL	Assessment of damages involving estimation and hypothetical negotiation.	Supported approach to assessing negotiating damages where precise quantification is difficult.
Carrasco v Johnson [2018] EWCA Civ 87	Appropriate rate of interest in damages awards.	Supported awarding interest at 1% over base rate.

Court's Reasoning and Analysis

The Court began by clarifying that the struck-out statement of case and judgment on liability bind the Defendants as to liability but do not preclude them from contesting causation and quantum of damages. This approach follows established case law confirming that default judgments with damages to be assessed leave causation and assessment open.

The Court rejected the Defendants' argument that damages were capped by the amount claimed on the Claim Form, citing procedural rules and case law that allow the Court to award damages beyond the stated figure where appropriate.

Regarding the restrictive covenants, the Court interpreted the definition of "Restricted Client" in the Service Agreement to require contact or awareness within the 12 months before termination "in the course of employment." Despite furlough periods, admissions in the pleadings established that the Defendant Director had relevant contact with the key client, making the client a Restricted Client under the Agreement.

The Court examined the duties owed by the sub-agent, finding that although no express non-compete covenant existed, duties of good faith and confidentiality were established by the relational contract and were sufficient to ground liability.

The Court found credible evidence that the Defendants conspired to divert business opportunities, including the key client’s tours and events, to Company B, causing loss to the Plaintiff. The Defendants’ failure to cooperate with expert evidence and adverse inferences strengthened this conclusion.

On quantum, the Court accepted the Plaintiff’s calculations of lost commissions on the key client’s tours, having deducted commissions and bonuses payable to the Defendants, thus properly reflecting lost profits rather than turnover. The Court declined to award damages for other lost business due to insufficient evidence.

The Court awarded negotiating damages for misuse of the confidential database, applying principles from Morris-Garner and One Step, recognizing the difficulty in precise quantification and valuing the hypothetical fee the Plaintiff would have charged for database use. The sum awarded was £50,000, deemed modest relative to the database’s value.

The Court rejected the Defendants' submissions against injunctive relief, holding that injunctions preventing further misuse of confidential information and disclosure are justified to protect the Plaintiff’s proprietary rights and prevent ongoing harm. The injunctions were not considered an unreasonable restraint of trade.

The Court declined to require an affidavit disclosing dealings with clients named in the database, as the Plaintiff did not pursue an account of profits or enquiry into damages, rendering such disclosure unnecessary.

Finally, the Court awarded interest at 1% above base rate on damages and negotiating damages, reflecting compensation for delayed payment and the circumstances of the case.

Holding and Implications

The Court's final decision is as follows:

• Judgment was entered for the Plaintiff on liability.
• Damages awarded: £160,383 for lost commissions on the key client’s bookings and £50,000 in negotiating damages for misuse of the confidential database, totaling £210,383.
• Interest awarded: £10,042.22 at 1% over base rate.
• Injunctions granted: Restraining the Defendants from using or disclosing the Plaintiff’s confidential information and database.
• Costs: The Plaintiff must pay an additional court fee of £4,000 due to damages awarded exceeding the Claim Form value.

The decision directly affects the parties by enforcing the Plaintiff’s proprietary and contractual rights, awarding compensation for losses and misuse of confidential information, and preventing further misuse through injunctions. No new legal precedent was established; the Court applied established principles to the facts of this case.