Michael Farnan v Sunderland Association Football Club Ltd [2015] EWHC 3759 (QB) [2016] IRLR 185

The Court reiterated that (1) “banking” confidential information for use in future litigation does not justify diversion of such information to an employee’s personal email account; and (2) dissemination of confidential information with a view to promoting an employee’s future plans (i.e. job-seeking) was unjustified.  

Mr Farnan (“F”) commenced employment with Sunderland Association Football Club (“SAFC”) on 17 August 2011 as International and National Marketing Director. He was also to sit on the SAFC Executive Board as a statutory director.

Clause 4 of his service agreement (“the SA”) required F to comply with any rules, policies or procedures set out in the Staff Handbook. This included the policy on Confidentiality, which required staff not to divulge confidential information to any person or otherwise make use of it. Clause 16 of the SA prohibited use or disclosure of Confidential Information (as defined in the SA) to any person, unless that disclosure was authorised by the Board.

One of F’s key objectives upon joining SAFC was obtaining shirt sponsorship for the 2012/13 football season. On the advice of the then Chairman, in the winter of 2011-2012 F began “banking” documents proving the work he had done on this front. He did so by forwarding any emails or attachments he wished to secure to his wife’s email address.

On 3 April 2013 F exchanged “curt” emails with SAFC’s CEO. The same day he emailed David Miliband, a former director, stating “looks like my time is up I done my best”. Later that evening, looking for work, he emailed a football agent, attaching a presentation prepared while at SAFC. On 4 April 2013 he sent a second email attaching the same presentation to a business contact. His “banking” practices intensified as his fears for his bonus and job grew. On 23 May 2013 SAFC summarily dismissed F for gross misconduct.  

The Court reiterated that the possibility of future litigation with an employer does not justify an employee in transferring or copying confidential documents for his own retention [77]. The Court cited Brandeaux Advisers (UK) Ltd v Chadwick [2011] IRLR 224 and Tokio Marine Kiln Insurance Services Ltd v Yang [2013] EWHC 1948 (QB), in particular Coulson J’s statement in Tokio Marine that: 

In Brandeaux, Jack J stated:  

Both Tokio Marine and Farnan put it somewhat higher. If any doubt remained following Brandeaux it appears to have been resolved – and not in the employee’s favour.  

It is worth noting that the Court did not find that all emails sent by F to his wife constituted “banked” documents. SAFC were not, for example, entitled to object to emails forwarding documents for printing, particularly where it had been agreed that F would often work away from SAFC’s offices [71]. Other emails informing F’s wife of developments at work and seeking her input were at worst only a “trivial” breach of the SA [72]. These were contrasted with an email forwarded to F’s wife containing an email from the CEO which enclosed SAFC board minutes. This was considered a “significant” example of F’s “banked” documents [74].  

F argued that his “banking” had been authorised by the Chairman. The Court rejected this on the basis that the Chairman had left in February 2012; it was at its highest a piece of advice from a colleague; the Chairman was not telling F to breach his contract with SAFC; and the informally given advice of a single director could not amount to board authorisation [75-76].  

UKEAT/0036/12/DM, 24 May 2012. However, the Court noted that in Khan the EAT cited Laughton v Bapp Industrial Supplies [1986] ICR 634, which had rejected the proposition.  

In Laughton, employees informed their employer’s suppliers that they intended to start up in business on their own, in competition with their employer, and asked for details of their products. It was held that this was not a breach of the duty of loyalty and that dismissal for gross misconduct was unfair. Gibson J at 638 cited Harris and Russell Ltd. v Slingsby [1973] ICR 454: seeking employment with a competitor is an insufficient reason for dismissal “unless it could be shown that there were reasonably solid grounds for supposing that he was doing so in order to abuse his confidential position and information with his present employers”.  

In Khan, two employees who planned to set up in business in competition with their employer were summarily dismissed for gross misconduct on the basis of breach of trust and confidence. The EAT cited Laughton, but quashed the ET’s finding of unfair dismissal, in part on the basis that the ET had failed to assess whether relevant information was, in fact, confidential. Plainly then, while F was justified in arguing that an employee may plan for his future while still employed, this cannot trump duties of confidentiality.

F also argued that the information was generic or in the public domain and thus was not confidential. This was rejected: it contained details of a new SAFC initiative and details of the steps taken to progress it with third parties. The fact that it had already been sent to some carefully chosen corporates and agencies did not put it in the public domain.  

Whipple J noted that “it was a pity that SAFC chose to pursue so many allegations against Mr Farnan…at this trial: many were trivial or, on examination, not established as breaches at all” [142]. However, this is in part the value of Farnan for the practitioner: it provides a useful illustration of the Court’s approach to a variety of forms of alleged breach of confidentiality.  

The full judgment can be read here.