The case of Helmet Integrated Systems Ltd v Tunnard yet others , involved a dispute over what actions could be allowed underneath the relation to a jobs contract. The claimant ("HISL") produced and sold protective clothing. In 1993, it commissioned a brand new helmet design that has been successfully marketed especially towards the London Fire Brigade. The defendant would be a senior salesman using the claimant.
Whilst in the claimant's employment, the defendant had the thought for any new modular helmet. He considered that his employers were not considering having a new helmet, particularly around the European market, where he perceived there to be a gap for this kind of product to get a foothold.
Between September 2001 as well as the 28th of February 2002, the defendant took numerous steps to succeed his idea. He obtained some funding and arranged for designers to organize initial drawings of his concept. He handed in the notice of resignation on the 1st of February 2002 and worked 'till the end of his notice period until he left around the 28th of February.
The defendant incorporated Modular Helmet Systems Ltd ("MHSL") two months after his departure in the claimant. Shortly thereafter, an adversary company to HISL, Lion Apparel Inc ("Lion") dedicated to many shareholding in MHSL. The claimant brought claims alleging how the defendant had acted in breach of his duty of fidelity in having a safety helmet which will be in competition with HISL's safety helmet, coupled with acted in breach of his fiduciary duties in neglecting to report his activities while still under HISL's contract of employment.
Those claims were rejected by the judge inside the patents county court. He figured that acts of preparation before departure were not actionable which there wasn't any breach of duty of good faith or fidelity for the worker. He held how the employee was allowed to opt to generate a business competing together with his employer and that the preliminary steps taken to do this were permitted. He also concluded that there wasn't any breach of the fiduciary duty because this type of obligation needed to be restricted to his duty like a salesman.
The claimant appealed using this decision. On appeal the claimant relied on the fact that the defendant's printed contract of employment provided that it had been his duty to advise his employer about the activities of competitors as well as their pricing structures. They argued he was, therefore, under a duty to report such activities whether they were undertaken by a competitor or on his own in their plan to take on his former employer.
The appeal was dismissed. It was held:
- Beneath the circumstances, even though defendant's activities could have amounted to competitor activity if undertaken by a competitor (and he therefore might have owed a fiduciary obligation never to misuse information regarding such activity for his or her own benefit or for the advantage of someone besides the claimant), it didn't signify he was under any obligation to inform HISL of their own activities.
- The words with the job specification did not restrict the defendant's freedom to prepare for competition on leaving. He was employed like a salesman not really a designer plus it wasn't in contemplation of either party which he would develop a helmet. Clear words were needed to restrict the ordinary freedom of your employee who had been quitting his employment and setting up competing to his former employer, that the defendant's job specification didn't do.
- He was under no relevant fiduciary duty to the claimant. The defendant owed no fiduciary obligations with regards to the creation of a preliminary concept for any new helmet. Therefore he was not in breach associated with a such obligation by trying to raise funds for such a project while still in employment. The defendant was working on his idea in the own some time and as a result the concept developed belonged to him.