Ranson v Customer Systems plc [2012] EWCA Civ 841
The Court of Appeal in this case found that the High Court was
wrong in holding that Mr Ranson had fiduciary duties towards his
employer. The Court of Appeal found that Mr Ranson had only the
ordinary duty of loyalty owed by employees, which was not to be
confused with the distinct and greater duty of loyalty that is
peculiar to directors.
Mr Ranson was not a director and therefore his implied duty of
loyalty required him only to have regard to the interests of his
employer. He was not obliged to sacrifice his own interests to
further those of his employer or to act with the
"single-minded or exclusive loyalty" required of a
director.
The Court of Appeal made repeated reference to the earlier case of
Wessex Dairies Ltd v Smith, in which it was held that an employee
can "be as agreeable, attentive and skilful as it is in his
power to be to others, with the ultimate view of obtaining the
benefit of the customers' friendly feelings when he calls upon
them if and when he sets up business for himself".
The only way in which Mr Ranson's duties to the company might
have be modified was by the express terms of his contract. The
Court of Appeal found that there was no evidence to show any
relevant modification.
Implications
This decision reflects the more traditional and accepted law in relation to the distinct duties of employees and directors. Subject to any further appeal, it closes down the window temporarily opened up by the High Court's original decision for employer's to pursue claims against employees on the basis of them having fiduciary duties equivalent to directors.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
