Truth unfolds in Clements v Frisby [2023] EWHC 320 (Ch)

March 23, 2023

Case Details

  • Court: Chancery Division, Manchester District Registry
  • Judge HHJ Cawson KC (sitting as a Judge of the High Court)
  • Date of Judgment: 16 February 2023
  • Counsel: Giles Maynard-Connor KC and Stephen Connolly
  • Article produced by: Hateema Zia (Business & Property Department Pupil)
  • Judgment: click here

Following a hotly contested trial heard in January 2023 in Manchester, Giles Maynard-Connor KC and Stephen Connolly of the Business and Property Department at Exchange Chambers successfully defended their client Mr Adam Frisby, founder and CEO of “In the Style” (ITS) against fraudulent and dishonest claims valued at £125M that had been brought against him.

The trial heard the parties presenting fundamentally different narratives. His Honour Judge Cawson KC sitting as a Judge of the High Court, had to ultimately determine who was lying and deliberately giving false evidence.

You can read a Case Digest for Clements v Frisby [2023] EWHC 320 (Ch) here.

Evidence and Fact Finding

Mr Clements claimed that Mr Frisby stole his business plan for ITS in 2013. In brief his version of events suggested that he had a novel idea, which he shared with Mr Frisby and their mutual friend, Ms Jessica Devine, and that he provided monies in the sum of £10,330 in cash in differing and accumulated sums over a period of approximately six months. He claimed that this was to be used in part for Mr Frisby remuneration of £200 a week, who was to carry out ‘menial tasks’ to set up the business. This involved producing a report to inform Mr Clements of whether the business plan would be successful. Mr Clements claimed that Ms Devine reported back to him suggesting that the business plan would not be a success, knowing that it would and then went to set up the business with Mr Frisby instead.

Ms Devine and Mr Frisby’s account was strikingly different to Mr Clements. Ms Devine gave evidence that neither she nor Mr Frisby had ever received any payment from Mr Clements. Mr Frisby gave evidence that he had only met with Mr Clements once at some point in 2013. At this point he and Ms Devine had already started to set up their business and came to Mr Clements for an investment. However, Mr Clements showed no interest in their business, and after this meeting Mr Frisby never met Mr Clements again. The Court was presented with email exchanges, newspaper articles, bank statements, business plans and business communications with third parties, which demonstrated the work Mr Frisby had put in to growing his business, ITS.

These proceedings were brought almost 10 years after the business of ITS was set up. The Court was provided with a history of WhatsApp Chats between Ms Devine and Mr Frisby which undermined Mr Clements’ case. The evidence presented to the court showed that the business was originally set up by Mr Frisby and Ms Devine and that it did not involve Mr Clements whatsoever. Mr Clements never had any contact details for Mr Frisby, and only first asserted his false and fraudulent claim after reports surfaced in the press of the proposed floatation of ITS in December 2020. There were many inconsistencies in Mr Clements’ case, and he was found by the Judge to be an unreliable and dishonest witness.

Matters of Law

Questions of fact aside, this case also raised a number of interesting legal points.  With the findings of fact that the Judge made, there was no need for any ruling on such legal points to be made.  Notwithstanding that, in the context of this article, they are worthy of mention.

Novelty, Trade Secret, and Confidential Information

Mr Clements claimed his business plan for ITS in 2013 was a novel idea. ITS is an online retailer selling fast fashion womenswear. It markets to young women by utilising reality TV celebrities and social media influencers to model clothes at an affordable price. Mr Clements claimed that he shared his business plan with Ms Devine and Mr Frisby in circumstances which self-evidently imposed duties of confidentiality.

Mr Clements claimed that when the business plan was imparted to Mr Frisby, this gave rise to a fiduciary duty and a contractual obligation not to misuse the confidential information imparted to him. Mr Clements’ case was that Mr Frisby breached his duties by exploiting the opportunity and confidential information provided to him for his own purposes.

Breach of Confidence

The classic case of breach of confidence involves the claimant’s confidential information being used inconsistently with its confidential nature by a defendant, who received it in circumstances where he had agreed, or ought to have appreciated, that it was confidential (see e.g. per Lord Goff of Chieveley in Attorney General v Guardian Newspapers Ltd (No 2) [1990] 1 AC 109, 281). The language of the authorities talks in terms of a defendant’s conscience being affected by the receipt of the confidential information which equates to a defendant agreeing or knowing that the information is confidential so as to affect his conscience if that information is thereafter misused.

Cause of Action for Breach of Confidence

There are three elements necessary for a cause of action for breach of confidence, namely:

i) The information was of a confidential nature;

ii) It was communicated in circumstances importing an obligation of confidence; and

iii) There was an unauthorised use of the information.

It was submitted on behalf of Mr Clements that his alleged business plan provided a good example of what Lord Greene MR referred to in Saltman Engineering Co Ltd v Campbell Engineering Co Ltd (1948) 65 RPC 203, when he said that “the more striking the novelty, the more commonplace its components”, the key point being that the alleged business plan, it was said, married the emerging powers of online retail with the emerging influence of reality TV celebrities/social media influencers on young women and their fashion tastes, and the availability of cheap clothing from, for example, China. It was said that just how novel it was is amply demonstrated by the success of the Company and the business of ITS.

In contrast it was submitted on behalf of Mr Frisby that none the three key elements for breach of confidence were met. Dealing specifically with the first element (that the information was confidential), case law has developed a number of factors which, if present, will negate confidentiality, and of particular note for this case were (1) the necessity of identification and (2) public domain.

As to (1) (necessity of identification), the information must be specific in the sense that it must be clear and identifiable as confidential (i.e. the information must be capable of being clearly identified and, having been so identified, would be regarded by the reasonable person as being confidential) (see De Maudsley v Palumbo [1996] FSR 447 at 445 to 446 and 458 to 459 per Knox J (the Ministry of Sound case) and Bailey v Graham [2011] EWHC 3098 (Ch) at 104 to 108 per HHJ Pelling KC (the Chili Reggae Sauce case)).

As to (2) (public domain), for information to be confidential it cannot be either public property or in the public domain (see Attorney General and Others v Observer Newspaper and Others (Spycatcher) [1990] 1 AC 109 at 282 per Lord Goff).

It was argued on Mr Frisby’s behalf that, at its best, Mr Clements’ business plan was not clearly and identifiably confidential (i.e. was not an original idea) and was in the public domain in any event.  In support of that, Mr Frisby was able to point to evidence in relation to Reality TV celebrity Charlotte Crosby, and her collaboration with ‘Dress the A-List’, and to contemporaneous press articles at the relevant time demonstrating that a great many other reality TV stars were undertaking similar clothing collaborations.

Joint Venture

Independently of whether Mr Clements’ alleged business plan was confidential, it was his evidence that it represented a joint venture with Ms Devine.  Given that, and relying on the case of  Murray v Yorkshire Fund Manager Limited [1998] 1 WLR 951, Mr Frisby was able to argue that, even if Mr Clements was correct in all that he was alleging, he had no sustainable claim against Mr Frisby as Ms Devine, as a joint owner of the alleged business plan, was entitled to make use of the business plan herself and to allow Mr Frisby to similarly make use of it as well.

Whilst neither the question of whether the alleged business plan was confidential nor the question of the alleged joint venture between Mr Clements and Ms Devine fell to be determined, the Judge did indicate at paragraph 227 of his judgment that he had reservation as to whether Mr Clements could make out his legal arguments, given his case as to there being a joint venture and given the real issues as to the originality and confidential nature of the alleged business plan.

Finding

The judgment was handed down by His Honour Judge Cawson KC sitting as a Judge of the High Court on 16 February 2023.  In that judgment (at paragraphs 222 to 225) he found that:

  1. Strong evidence is required to prove a serious allegation of a party advancing a wholly false and contrived claim.
  2. The narrative advanced by Mr Frisby was the true narrative and that the narrative advanced by Mr Clements was a false narrative.
  3. The idea behind ITS and its business concerning collaboration with celebrities involved in reality TV was that of Mr Frisby and Ms Devine and that Mr Clements played no part in that idea.
  4. Mr Clements’ claim based on the imparting of confidential information, and the engagement of Mr Frisby under a relationship giving rise to fiduciary and contractual duties as between Mr Frisby and Mr Clements must fail.

Comment

If there were one learning point to take out of this case, it would be the importance of documents to corroborate oral accounts of events and, with that, the importance of ensuring that disclosure is dealt with thoroughly and effectively.  In this case, and in large part through the work of his solicitors, TLT LLP, Manchester (Mr Julien Luke), Mr Frisby was able to produce and rely upon a whole range of contemporary documents to corroborate his account of events.  In contrast, Mr Clements was not able to produce similarly relevant contemporaneous documents.  Undoubtedly, the availability of that contemporaneous material will have assisted the Court in its decision to prefer the account of Mr Frisby over that of Mr Clements and to find him to be an ‘honest’ and ‘impressive’ witness.

Representing the Defendant Mr Adam Frisby was Giles Maynard-Connor KC and Stephen Connolly of Exchange Chambers, instructed by Mr Julien Luke, TLT LLP, Manchester.

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