Inspired Education Online Limited v Tom Crombie [2025] EWHC 1236 (Ch)

2025] EWHC 1236 (Ch)

Case No BL-2023-000661

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

BUSINESS LIST (ChD)

Venue Rolls Building, Fetter Lane

Date 20/5/2025

London, EC4A 1NL

Before

MRS JUSTICE JOANNA SMITH

Between

INSPIRED EDUCATION ONLINEClaimant

LIMITEDClaimant

TOM CROMBIEDefendant

Ms Laura John KC and Mr James Hart (instructed by Stephenson Harwood LLP) for Claimant

Ms Anna Boase KC and Ms Joyce Arnold (instructed by Howard Kennedy LLP) for Defendant

Hearing Hearing dates: 11-14, 17, 18 and 21 March 2025

APPROVED JUDGMENT

This judgment was handed down remotely at 10.00 am on 20 May 2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

[1]These proceedings concern allegations of breach of warranty, breach of contract and fraudulent misrepresentation in respect of a share purchase agreement entered into by the parties on 15 November 2022 (the “SPA”) involving the acquisition by the Claimant (“Inspired”) of the entire shareholding of My Online Schooling Ltd (“MOS” or the “Company”) from the Defendant (“Mr Crombie” or “the Defendant”).

[2]Although not the only issue, at the heart of the case lies the parties’ strikingly different interpretations of ten email exchanges (the “Emails”) between Mr Crombie, the sole director and Chief Executive Officer (“CEO”) of MOS and Mr Ewen Burgess (“Mr Burgess”), Chief Operating Officer (“COO”) of MOS. In opening, Inspired described the Emails, which were exchanged on work email accounts, as “highly offensive, obscene, vulgar, racist, sexist and discriminatory”, whereas Mr Crombie described them as “obviously jokey” exchanges or “banter” between long-standing close friends of 20 years, often intended as “an ironic comparison” between their own clean-living lifestyles and those of some of their favourite movie characters, including characters in ‘The Wolf of Wall Street’.

[3]It is Inspired’s case that the Emails, whether independently or in combination, amount to gross misconduct on the part of Mr Crombie for which he would have been liable to be dismissed by MOS. Accordingly it contends that Mr Crombie was in breach of two warranties given to Inspired in the SPA (relating broadly to the compliance with laws, together with the lack of knowledge on the part of Mr Crombie of any dispute claim or litigation, or circumstances likely to give rise to the same at the time of the SPA), and that he fraudulently misrepresented the truth of those warranties to Inspired. It says that it relied upon the warranties in entering into the SPA and that had it been aware of the content of the Emails it would have walked away from the acquisition. It seeks contractual damages by reference to the difference in value between the value of the MOS shares as warranted and their true (distressed) market value at the time of completion of the SPA.

[4]In addition, Inspired alleges breach on the part of Mr Crombie of a non-compete clause in the SPA by encouraging and supporting another employee in his plan to set up a rival online school. Inspired claims by way of damages from Mr Crombie the legal costs that it spent, but was unable to recover, in seeking to secure its confidential information that had been downloaded by the departing employee and a colleague in connection with this plan.

[5]Inspired also seeks a declaration that by reason of Mr Crombie’s gross misconduct and/or the breach of his non-compete provisions in the SPA there has been a TC Event of Default (as defined in the SPA) and that the Deferred Cash Consideration payable to Mr Crombie pursuant to the terms of the SPA has been “deemed agreed” at a specific figure.

[6]Mr Crombie denies all of the allegations made against him and counterclaims for declaratory or injunctive relief in respect of the mechanisms under the SPA for the determination of Completion Accounts and of Deferred Cash Consideration.

Background to the Claim

[7]I begin by setting out the (largely) uncontroversial background to the dispute. In so far as there is a dispute on the facts, I shall deal with that dispute in connection with my consideration of each of the elements of the claim and counterclaim. Mr Crombie and MOS

[8]Mr Crombie, originally a teacher with a decade of teaching experience in Scotland and in New Zealand, founded MOS in 2016 to meet the needs of pupils who were unable to attend school owing to mental health or special educational needs. However, from 2017 onwards MOS operated as a full curriculum online school, initially for pupils aged 10 to 16 and, latterly, for pupils aged from 6 to 18. By the time of the Covid 19 pandemic (the “Pandemic”), MOS was flourishing and, as on-line learning became mainstream during the Pandemic, pupil numbers quickly expanded from around 400 in the academic year prior to the Pandemic to around 1,500 by July 2020. In March 2019 and July 2022 respectively, MOS expanded geographically establishing offices in Melbourne and in Dubai to service these markets. Although there was a decline in pupil numbers immediately following the Pandemic, by mid-2022 MOS had approximately 1000 registered pupils from around 80 different countries.

[9]Between 2016 and 15 November 2022, Mr Crombie held 100% of shares in MOS and acted as CEO. In the early days, Mr Crombie had a parent-facing role, but by early 2019 he had taken a step back from that role. He did not act as Headmaster or Principal of MOS, a role that was held by Mr Euan MacLean (“Mr MacLean”). In or around September 2021 Mr Crombie signed a contract with MOS recording his role as CEO and setting out the terms of his employment with MOS. It is common ground that, by virtue of the contractual relationship between MOS and Mr Crombie and Mr Crombie’s office of director, there were mutual duties of trust and confidence between them and Mr Crombie also owed fiduciary duties to MOS.

[10]In 2019, Mr Crombie hired Mr Burgess, originally as Business Development Manager and, from August 2021, as COO. Mr Burgess took on much of the work that Mr Crombie had been doing before his arrival. Mr Burgess also signed a contract with MOS recording his role and the terms of his employment. MOS had in place a number of internal policies dealing, amongst other things, with disciplinary issues. The MOS Employee Handbook contained provisions relating to gross misconduct. Mr Burgess was involved in keeping these policies up to date.

[11]In 2022, following growth in the number of pupils and teachers, MOS created three new leadership roles, Executive Head, Head of Secondary and Head of Juniors. Following a recruitment process, during which MOS was assisted by Ms Angela Fairs (“Ms Fairs”) of Full Circle Education Consultancy (“Full Circle”), Mr Rob Leitch (“Mr Leitch”) was appointed Executive Head. Subsequently, after final interviews involving both Mr Leitch and Mr Crombie, Ms Roxanne Pearce (“Ms Pearce”) was appointed Head of Secondary. Ms Sara Goyea (“Ms Goyea”) was appointed Head of Juniors. Inspired

[12]Inspired is part of the Inspired Group (the “Inspired Group”) which was established in 2013 by Mr Nadim Nsouli (“Mr Nsouli”), an entrepreneur with a private equity background. The Inspired Group owns 111 schools across 26 countries, many of which were acquired by, and integrated into, the Inspired Group. Prior to the Pandemic, the Inspired Group, which is said to be worth over €7 billion, consisted solely of physical schools. However, in 2021, the Inspired Group established its own online school, “King’s College Online”. In the same year, the Inspired Group acquired Wey Educational Services Limited (“Wey”) which operated a leading online school, “InterHigh”, and a provider of alternative education provision, “Academy21”. Inspired merged InterHigh with King’s College Online to create King’s InterHigh (“KIH”), which is said to be the world’s leading British curriculum and International Baccalaureate online school. The Inspired Group continues to operate Academy21 as a standalone online education provider.

[13]Following the success of KIH and Academy21, Inspired looked for other opportunities to continue its growth in the online schools’ market through acquisition and it identified MOS as a potential target. Following an initial exploratory meeting between Mr Crombie and Mr Mark O’Donoghue (“Mr O’Donoghue”), CEO of Inspired, on 21 March 2022, Mr Nsouli decided that he wished to acquire MOS and he met with Mr Crombie to discuss this possibility on 31 March 2022. Thereafter an NDA was signed to facilitate further negotiations between the parties. The acquisition of MOS by Inspired

[14]Mr Crombie was open to the potential for acquisition, which represented an opportunity for him to enjoy the fruits of his labour and for his business to grow with the support and investment of the much larger Inspired Group. Mr Crombie was represented in the negotiations with Inspired by Ernst & Young (“EY”), which provided Inspired with, amongst other things, student enrolment figures of 1,044 for the academic year 2021/22 and forecast figures of 1,289 for the academic year 2022/23. EY’s EBITDA projection for the 2022/23 academic year was £588,000.

[15]On 13 June 2022, a first non-binding offer was made by Inspired to purchase a 60% stake in MOS at an Enterprise Value (“EV”) of £10 million. On 21 June 2022, a second non-binding offer was made by Inspired at an increased EV of £11.5 million, again for a 60% stake. Mr Crombie accepted this second offer and Inspired proceeded to conduct due diligence with the assistance of KPMG and its legal advisers, Veale Wasborough Vizards LLP.

[16]It appears to have been common ground between the parties that, following acquisition, MOS and KIH would be combined to create a single undisputed leader in the online schools’ market (“the Combined Business”). This would inevitably involve a process of integration and, at least for the 2022/23 academic year, it was understood that MOS would continue to operate as a separate school with the intention that the businesses of MOS and KIH would be fully merged by the start of the academic year 2023/24. In a presentation to its Board made shortly before the SPA, it was confirmed that Inspired considered the period leading up to the start of the academic year 2023/24 to be sufficient time in which to deal with the “limited red flags” that had been identified on due diligence.

[17]On or about 20 September 2022, EY provided a revised FY23 Budget to Inspired which included a reduced forecast for the 2022/23 academic year in respect of student enrolment numbers (of 1,066) and EBITDA projection (of £356,000) causing Inspired to revisit (and significantly reduce) its offer by reference to its own revised forecast for the FY 2023. Although there is evidence of the parties discussing and considering various forecasts and budgets prior to completion of the SPA, there is no evidence to show exactly how the parties assessed the EV of MOS using these forecasts and budgets.

[18]Inspired’s initial reduced offer (valuing 100% of MOS at £8 million) was not acceptable to Mr Crombie and so Inspired increased its offer. A revised EV of £9 million was agreed for 100% of MOS on around 12 October 2022. It was also agreed that Mr Crombie would receive Cash Consideration representing 85% of that value (subject to adjustments for cash, indebtedness and the difference between target working capital and working capital) together with Deferred Cash Consideration representing 15% of that value and designed to mimic a shareholding by Mr Crombie of 15% in MOS (or approximately 0.8% of the Combined Business).

[19]Although, at the time of the first and second non-binding offers, Mr Crombie had been offered the role of CEO of the new Combined Business (subject to Inspired expressing flexibility on this score), by the time of the SPA, discussions as to Mr Crombie’s role had moved on and, although it seems that there was an intention that he would, in due course, become Chief Growth Officer of the Combined Business (a post that would be created for him) it appears to have been agreed that, for the period of the transition to the Combined Business, he would remain subject to the terms of his existing MOS contract (terminable on notice) and would continue in the post of CEO of MOS.

[20]The SPA between Inspired and Mr Crombie was signed on 15 November 2022. It is common ground that a Completion Payment, as defined in the SPA, was paid to Mr Crombie on account of Cash Consideration in the sum of £5,693,965.20 (i.e. the Completion Payment of £5,801,812.11 less the repayment of a director’s loan in the sum of £107,836.55). Inspired kept a Retention sum of £500,000 pending the operation of a contractual mechanism under Schedule 7 of the SPA (involving the preparation of Completion Accounts and a Purchase Price Statement) designed to identify MOS’s exact financial position at the time of completion and (if appropriate) any further adjustments to Mr Crombie’s Cash Consideration.

[21]A mechanism for the crystallisation of Mr Crombie’s entitlement to Deferred Cash Consideration was provided for in Schedule 10 to the SPA. Broadly, Deferred Cash Consideration was a sum which it was agreed would be calculated at a later stage by reference to a proportion of the fair market value of the Combined Business. That percentage, defined as the Relevant Proportion, started at 0.8% (although the exact starting point would depend on the final Completion Accounts) but could be reduced if Inspired acquired other online businesses. Either party could call the moment of calculation in the fourth or fifth years after the SPA. In the event of a default by Mr Crombie (defined in the SPA as a “TC Event of Default”), Inspired could call the moment of calculation sooner, at a point at which the amount of the Deferred Cash Consideration was likely to be lower. In this event, the Relevant Proportion applied was 90% of what it would otherwise have been. In the case of both the Completion Accounts and the Deferred Cash Consideration, provision was made in the SPA for any dispute to be referred to an independent accountant.

[22]Pursuant to Schedule 5 of the SPA, Mr Crombie provided numerous warranties to Inspired. It is not in dispute that these warranties were also representations. In addition, Mr Crombie provided a disclosure letter in respect of the warranties. Pursuant to clause 9 of the SPA, Mr Crombie also undertook not to compete with Inspired for a period of three years, whether employed by Inspired or not. Events following the SPA

[23]The continued operation of MOS in the academic year immediately following the SPA meant that Inspired planned to keep all the existing MOS teachers in the short-term, albeit that redundancies were contemplated in due course once the Combined Business was in place. However, at the time of the SPA there was no clear integration plan and, as set out in the KIH Senior teams Briefing on the day of the SPA, the merger of KIH and MOS was “concept only at this point and needs a lot of work to define properly and execute”. This uncertainty appears to have led to disgruntlement and anxiety amongst MOS staff as reflected in Happiness Survey results from December 2022, although there is a dispute over whether Mr Crombie was creating a negative atmosphere.

[24]On 19 December 2022, Mr Leitch resigned. On 17 January 2023, Inspired discovered that he had departed with the intention of setting up a rival online school, known as ‘Hive’, and that Mr Leitch had taken with him Ms Goyea. Inspired also discovered that, shortly before resigning from MOS, Mr Leitch and Ms Goyea had downloaded over 5,000, and 66,000 (respectively) confidential files from Inspired. Inspired instructed Stephenson Harwood LLP (“SH”) to act on behalf of MOS and subsequently took legal action to recover its files and protect its position. As is clear from an Order dated 20 April 2023, the dispute with Mr Leitch was resolved through court undertakings and a payment by Mr Leitch of £75,000 in costs. The terms on which MOS’s dispute with Ms Goyea was resolved have not been disclosed. No business use was ever made of the downloaded data and Hive was never launched. In the course of seeking to defend themselves, both Mr Leitch and Ms Goyea sought (in correspondence) to implicate Mr Crombie in their plans.

[25]Mr Crombie’s case is that he did not know of Mr Leitch’s (and Ms Goyea’s) plans until 17 January 2023, when he was told of those plans over dinner with Mr Leitch. It is his case that he immediately reported them to Inspired the following morning. This is not accepted by Inspired and forms the basis for its allegations of breach of Mr Crombie’s non-compete obligations in the SPA. During the course of Inspired’s investigations into the conduct of Mr Leitch and Ms Goyea in January 2023, Mr Crombie assisted Inspired in its investigations and (on 3 March 2023) he provided Inspired with a transcript of various Whatsapp messages between himself and Mr Leitch. He now accepts that he deleted some relevant Whatsapp messages (“the Deleted Leitch WhatsApps”) such that the messages he provided to Inspired were not a complete record. Inspired relies heavily upon these deletions in asserting Mr Crombie’s knowledge of, and involvement in, the covert activities of Mr Leitch and Ms Goyea.

[26]On 3 February 2023 Inspired sent Mr Crombie draft Completion Accounts and a Purchase Price Statement pursuant to Schedule 7 of the SPA which purported to calculate an adjustment to the Cash Consideration by reference to MOS’s financial position at completion. These identified a positive Post Completion adjustment of £353,289.38 and thus a total cash release to Mr Crombie from the Retention of £146,711.

[27]On 10 February 2023 Mr Crombie sent a letter to Inspired, under cover of an email of the same date, informing it that he was giving 6 weeks’ notice of his departure pursuant to the terms of his ongoing contract with MOS. This prompted Inspired to send a letter dated 17 February 2023 suspending Mr Crombie with immediate effect pending an investigation into allegations concerning him. Inspired did not at this time divulge the nature of that investigation. Mr Crombie’s access to his MOS work email account was immediately suspended. On 27 February 2023, Mr Crombie sent to Inspired evidence from his doctor that he was not fit to work and had been signed off until 24 March 2023.

[28]On 3 March 2023 Mr Crombie sent an email to Ms Sophie Stewart (“Ms Stewart”) of Inspired notifying her that he did not agree the draft Completion Accounts and Purchase Price Statement and pointing specifically to two errors in those documents. There is a dispute between the parties as to whether this written notification from Mr Crombie complied with the terms of Schedule 7 of the SPA and whether the Completion Accounts and Purchase Price Statement are “deemed agreed” under that Schedule or remain to be agreed such that it is premature for the parties to act on them.

[29]On 7 March 2023, in circumstances to which I shall return, Mr Crombie deleted WhatsApp messages between himself and Mr Burgess (“the Deleted Burgess WhatsApps”) on his personal phone.

[30]On 17 March 2023, SH sent a letter before action to Mr Crombie, informing him, amongst other things, of the discovery by Inspired of email communications between him and Mr Burgess which it was alleged gave rise to claims of breach of warranty under the SPA and fraudulent misrepresentation. These communications consisted of seven of the ten email chains on which Inspired relies in these proceedings. It is not in dispute that these email chains were sent (and received) by Mr Crombie on his MOS work email account. This letter also alleged breach by Mr Crombie of the non-compete provisions in the SPA by reason of his alleged knowledge and encouragement of Mr Leitch and Ms Goyea in their intended creation of a new online school business.

[31]Mr Crombie’s immediate response to these claims came in a letter dated 31 March 2023 from Anderson Strathern LLP, Mr Crombie’s then solicitors, in which they made clear that he refuted all the claims made and considered them to be no more than a cynical and vindictive attempt to deprive him of his legitimate rights under the SPA.

[32]On 10 May 2023, Inspired issued a claim form against Mr Crombie, which they served on Howard Kennedy LLP (“HK”), now acting as Mr Crombie’s solicitors, on the following day (11 May 2023), together with a copy of the Particulars of Claim.

[33]Also on 11 May 2023, Inspired sent to Mr Crombie an Exercise Notice of a TC Event of Default under the SPA (the “Exercise Notice”). The Exercise Notice did not specifically identify or particularise the TC Event of Default. Nevertheless, it is Inspired’s case that it was entitled to serve the Exercise Notice in light of Mr Crombie’s gross misconduct (as evidenced by the Emails), his alleged gross misconduct in relation to another email chain between himself and Mr Burgess sent on 10 January 2023 (the “10 January Emails”) and/or his breach of the non-compete provisions in the SPA.

[34]Acting on behalf of Mr Crombie, HK disputed the validity of the Exercise Notice in a letter dated 18 May 2023 and observed that no further steps under the SPA could be taken until that matter was resolved. There remains a dispute between the parties over the validity of the Exercise Notice and the existence of a TC Event of Default

[35]Under cover of a letter dated 9 June 2023, Inspired provided copies of final management accounts and monthly management accounts (referred to in the SPA as the “Draft Documents”) and set out its “bona fide” assessment of the Deferred Cash Consideration due to Mr Crombie under Schedule 10 to the SPA in the total sum of £358,043.76 (the “9 June Notice”). There followed discussions between solicitors for the parties as to the potential for a stay of the operation of both Schedule 7 (the Completion Accounts) and Schedule 10 (the Deferred Cash Consideration) and there is a dispute over whether Inspired acted in good faith in these discussions. In any event, by email dated 20 July 2023, SH wrote to HK to say that Mr Crombie had not complied with the contractual mechanism under Schedule 10 of the SPA (which required him to serve a notification stating whether he agreed with the Draft Documents and, if not, enclosing Amended Draft Documents within 20 Business Days of receipt of the 9 June Notice) and that, accordingly, he is deemed to have accepted the Deferred Cash Consideration figure of £358,043.76. This is challenged by Mr Crombie in these proceedings.

Relevant Procedural Background

[36]On the first day of trial, Ms John KC, acting for Inspired, indicated that Inspired wished to make certain amendments to its existing Amended Particulars of Claim. Draft Re-Amended Particulars of Claim and a draft application notice were subsequently provided by Inspired and it was agreed that the parties would file short skeleton arguments to address these amendments by 6pm on the second day of the trial, thereby enabling me to deal with any additional oral arguments swiftly at the outset of the third day. I gave judgment that afternoon. In short, as appears from my judgment, Mr Crombie did not object to three (of the five) proposed categories of amendments, albeit reserving his right to contend that they had no real prospect of success. However, he opposed the remaining two categories.

[37]In the event, I rejected the application in respect of a proposed amendment to rely upon allegations of misconduct (as opposed to gross misconduct) on the part of Mr Crombie, but I permitted the application to rely on three additional email chains between Mr Crombie and Mr Burgess in which racist language was used. My reasons appear in my ex tempore judgment. This explains why the dispute at trial centred around the content of ten email chains, rather than the original seven email chains identified by Inspired during its original investigations and (until the amendment at trial) forming the basis of its pleaded case on breach of warranty and fraudulent misrepresentation. I have already indicated that I shall refer to the ten email chains hereafter as the “Emails”. The Defendant indicated his intention not to serve a Re-Amended Defence addressing the new allegations relating to the use of racist language and Inspired confirmed that there was no need for him to do so in circumstances where his case on those allegations was already amply set out in his witness statement.

[38]Also by way of the amendment, Inspired chose to delete certain allegations that had been on the face of its statement of case from the outset and were included (and positively pursued) in its skeleton argument for trial. Specifically, it deleted(i) an allegation that the Emails contain evidence of “unlawful” sexist and discriminatory behaviour on the part of Mr Crombie (leaving an allegation of improper sexist and discriminatory behaviour); and

(ii) an allegation that the Emails contain evidence of “illegal drug purchase and possession”, alternatively that they give rise to a “reasonable inference” of the same, replacing that very serious allegation with the allegation that the Emails were “reckless and unprofessional” in that they give rise to a reasonable “impression” of an “intention to purchase and take cocaine while on Company business”.

[39]It would appear that Inspired accepts that it has no evidence to support its originally pleaded case on the illegal purchase and possession of cocaine and, given the nature of that case, I am very surprised that it remained on the face of the pleadings for as long as it did. Inspired should not have included that case in its skeleton argument for trial only to drop it upon questions being raised by the court during opening submissions. I do not consider that to have been fair to Mr Crombie. I have no doubt that, as Inspired must have anticipated, the existence of such serious allegations hanging over his head in the lead up to trial will have been the source of enormous anxiety.

[40]This is not the only issue that Inspired was forced to abandon, shortly prior to, or at, the trial of these proceedings. As Ms Boase KC pointed out in closing, Inspired dropped an allegation of loss of opportunity to make alternative investments a couple of weeks before the trial and, in its skeleton closing submissions, Inspired abandoned a case on breach of warranty 19.1 of the SPA, which concerned compliance with (amongst other things) Health and Safety Law, together with a related allegation in respect of warranty 8.2. In closing, Inspired also altered the scope of its complaint on the Emails, including the way it puts its case on gross misconduct (apparently relying in closing on gross negligence or wilful misconduct, a case not previously articulated). Inspired also abandoned an important aspect of the evidence advanced by its expert valuer (to which I shall return).

The Issues in the Proceedings

[41]Against that background, the key issues for trial fall within the following broad headings:a. the true interpretation of the SPA and, in particular the two warranties on which Inspired now relies, namely the warranties at paragraphs 8.2 and 16.5 of the SPA (together the “Warranties”);

b. whether Mr Crombie was in breach of warranty and made fraudulent misrepresentations by reason of the Emails and his failure to disclose them to Inspired in the lead up to the SPA. Specifically, Inspired alleges that the Emails amount to gross misconduct which rendered Mr Crombie liable to be dismissed and which Mr Crombie chose wilfully to conceal from Inspired. Although wilful concealment was relied upon by Inspired in opening for the purposes of a finding of breach of Warranty 16.15, Inspired confirmed in closing that wilful concealment and/or fraudulent misrepresentation are relied upon by Inspired solely for the purposes of disapplying contractual limitations contained in Schedule 6 to the SPA;

c. whether Mr Crombie knew of Mr Leitch’s plan to set up a rival online school from around November 2022 and whether he acted in breach of the non-competition provisions in clause 9 of the SPA;

d. quantum, both in respect of the alleged breach of warranty/fraudulent misrepresentation and in respect of the alleged breach of the non-competition provisions in the SPA;

e. Inspired’s claim (and Mr Crombie’s counterclaim) in respect of the Deferred Cash Consideration including the true interpretation of schedule 10 to the SPA, the existence of a TC Event of Default, the validity of the Exercise Notice and whether the Deferred Cash Consideration has been deemed agreed; and

f. Mr Crombie’s counterclaim in respect of the Completion Accounts and Purchase Price Statement, including the true interpretation of Schedule 7 of the SPA and whether the Completion Accounts and Purchase Price Statement have been deemed agreed.

[42]The parties have agreed upon a much more detailed List of Issues to which I shall refer from time to time by way of ensuring that I have captured all of the relevant issues. The Evidence

Approach to the Evidence

[43]It is common ground that many of the liability issues in this case do not turn on findings of fact. The main area of factual disagreement between the parties concerns the allegation of breach of the non-competition provisions in the SPA and the interactions between Mr Crombie and Mr Leitch between 15 November 2022 (the date of the SPA) and 18 January 2023 (the date on which Mr Crombie informed Inspired of Mr Leitch’s plans for Hive).

[44]Where I am required to make findings of fact on disputed evidence (and although this is not a particularly document-heavy case), it is also common ground that I should approach that task based on all of the available evidence and that “my primary focus must be on the state of mind and motivations of the witnesses at the relevant time as revealed by the contemporaneous documents” (see TMO Renewables Ltd v Yeo

[2021] EWHC 2033 (Ch)

at [103]-[109] and particularly at [108]). I bear in mind that internal documents such as emails and instant messaging created when an individual’s “guard is down and their true thoughts are plain to see” are a particularly important means of getting to the truth (Simetra Global Assets Ltd v Ikon Finance Ltd

[2019] 4 WLR 112

per Males LJ at [48]). I must consider the extent to which the witnesses’ evidence at trial is consistent or inconsistent with the documents, bearing in mind also that some witnesses may, for whatever reason, have better (or less fallible) recollections than others. Given the passage of time, it is unlikely to be the case that individual witnesses will be consistently reliable or unreliable.

[45]Before turning to the evidence of the witnesses, I must first say something about the Emails which have been at the centre of the allegations in this case. The Emails

[46]The Emails were discovered by Inspired in Mr Crombie’s MOS mailbox which it appears to be accepted will have contained many thousands of emails.

[47]It was common ground at trial that the Emails fall into five general categories: four email chains referring to cocaine and the use of cocaine; two email chains referring to alcohol; two email chains making allegedly inappropriate and vulgar references to women; three email chains using allegedly racist language and one email chain which is said to evidence improper sexist and discriminatory behaviour. A couple of the email chains fall into more than one category. Attached at Annex A is a document setting out relevant extracts from the Emails and identifying them (as they were identified at trial by the Defendant in his own Annex) as Emails 1-10.

[48]Mr Crombie frankly accepts that the Emails were unprofessional, that he should not have sent the Emails to Mr Burgess on his Company email account and that he was in breach of various of the MOS policies in doing so. Mr Burgess echoes these admissions. Mr Crombie and Mr Burgess both explain that they are clean living family men with a penchant for hiking at the weekends and a relationship which occasionally involves the use of obscene, vulgar and (what to others might appear to be) offensive, banter. They do not take drugs. I found their evidence about this to be consistent and compelling. I have no reason to suppose that it is anything other than true.

[49]Just as it is now accepted by Inspired (contrary to its originally pleaded case) that the Emails are not in fact evidence of the possession and use of cocaine, I also accept Mr Crombie’s evidence, for reasons to which I shall return, that they are not evidence of actual over-consumption of alcohol at work events or (as was suggested by Mr Nsouli in an entirely unwarranted observation during his evidence) of the use of prostitutes. There was no evidence whatever at trial to support such a case.

[50]It is common ground that the question of whether the Emails amount to breach of MOS policies, breach of Mr Crombie’s duties as a director and thus to gross misconduct are matters of law for the court. Mr Crombie and Mr Burgess were cross examined at some length as to the question of breach and made frank admissions, but ultimately it is a question on which the court must make a decision having regard to the legal test for gross misconduct. Inspired’s Factual Evidence

[51]Inspired served witness statements from three witnesses (Mr Nsouli, Mr Herrera and Mr Harrold) and called each of those witnesses to give oral evidence at trial. In closing, Ms Boase submitted (and I agree) that a consistent feature of these statements is that they stray well beyond the bounds of PD57AC, particularly in connection with the views of the witnesses on the impact of a public scandal on schools – evidence which was then relied upon by Inspired’s expert.

[52]Inspired’s choice of witnesses also means that the court has not heard from various individuals at Inspired who were directly involved in the underlying events, including Mr O’Donoghue, Ms Stewart and (despite the court being shown a solicitor’s letter in which he was asked to provide a witness statement in support of Inspired’s case) Mr Leitch. I have been provided with no explanation for the absence of any of these witnesses by Inspired and the Defendant does not invite me to draw adverse inferences by reason of their absence. However, I bear in mind that there does appear to be a not-insignificant, unexplained gap in Inspired’s evidence and this is particularly the case in respect of Mr Leitch. Inspired’s case on the breach of the non-compete provision in the SPA is, at least in part, premised upon allegations made by Mr Leitch about Mr Crombie in correspondence at the time his activities in relation to Hive were discovered and in the context of the legal proceedings that followed. Indeed it is plain that parts of Inspired’s own pleaded case are directly lifted from the allegations made by Mr Leitch in that correspondence. In due course, I shall need to consider the weight to be attached to these allegations in his absence as a witness. Mr Nadim Nsouli

[53]Mr Nsouli is the founder, Chairman and CEO of Inspired Education Holdings Limited, which is the overall parent company of Inspired and part of the Inspired Group of companies. He originally qualified as a lawyer in New York before moving into investment banking at JP Morgan and Morgan Stanley in London. He subsequently worked for a couple of private equity firms before founding the Inspired Group in 2013. His evidence is that he has had over 30 years’ experience of mergers and acquisitions and company valuations, particularly in the education sector.

[54]The evidence in Mr Nsouli’s witness statement addressed, in broad terms, the background to Inspired, including its acquisition and growth strategy; the acquisition of MOS, including its rationale and the terms of the deal; the integration of MOS into the wider group; the issues that arose post-SPA, including in relation to the conduct of Mr Leitch and Mr Crombie; and the Emails.

[55]I formed the impression during Mr Nsouli’s evidence that he was keen to argue Inspired’s case and that from time to time that led him to exaggerate its merits. Thus he maintained that a scandal in relation to the Emails would have “destroyed MOS” and would also “potentially [have] destroyed KIH as well”, a suggestion which I consider to be wholly unrealistic, particularly given the abandonment of Inspired’s case as to the possession and use of cocaine. Furthermore Mr Nsouli frequently chose to make caustic and obviously prejudicial observations about Mr Crombie as part of answers he was giving. Examples include:(i) when asked about the content of a WhatsApp exchange he immediately observed that “it is nice we have some WhatsApp messages that were not deleted and shared”;

(ii) more than once he referred sarcastically to “the talented Mr Crombie”; and

(iii) when asked about whether he knew about the Emails at a particular point in time (and despite Inspired’s abandonment of the case on use of cocaine and the absence of any case on the use of prostitutes) he said “[n]o, I didn’t know about prostitutes, escorts and cocaine, no”, a formulation he used more than once.

[56]I had to warn Ms Nsouli on a couple of occasions that he should answer the questions that he was posed and that he should not make speeches, argue the case or speculate as to where the cross examination was going next, but this did not appear to deter him.

[57]It also became clear that Mr Nsouli sometimes did not wish to make obvious concessions or (on occasions) to answer straightforward questions. Contrary to the weight of the evidence, he refused to accept that he had expressed displeasure in a conversation with Mr Crombie on 26 January 2023 and (despite being a highly sophisticated investor) he would not accept that it is more advantageous or preferable to own shares in a company than merely to have a contractual right to deferred consideration (a proposition which appears to me to be obvious). When asked about the decision within Inspired to pass the estimated legal costs of the action against Mr Leitch and Ms Goyea on to Mr Crombie via the Completion Accounts (a decision which could not be justified as those legal costs were not owing by MOS on the date of Completion), Mr Nsouli said the documents were prepared by Ms Stewart and Mr Herrera but repeatedly avoided saying that they had made the relevant decision. He claimed not to recall being asked about it or giving his approval, evidence which I do not consider to be credible, given his position at Inspired.

[58]Mr Nsouli described himself as a decisive and direct individual in his dealings with others, but I do not consider him to be a reliable or entirely truthful witness. I consider that his evidence (in so far as it is relevant to the issues I must decide) is to be treated with the utmost caution, save where it is corroborated by reliable documentary or witness evidence or is evidence given against the interests of Inspired. Mr Herrera

[59]Since March 2023, Mr Gerardo Herrera Larringan (referred to at the trial as “Mr Herrera”) has been the Vice President of Acquisitions and Business Development at Inspired Finco Holdings Limited, which is the direct parent company of Inspired, and part of the Inspired Group of Companies. Prior to joining Inspired in April 2021, Mr Herrera worked in the investment banking division of HSBC Global Banking and Markets in London where he specialised in mergers and acquisitions. At the time of the acquisition of MOS, Mr Herrera was a senior associate in the Acquisitions and Business team and it was his evidence that he was “heavily involved” in that acquisition, working alongside, and under the supervision of, Ms Stewart (at that time the Vice President of Acquisitions and Business Development). The evidence in Mr Herrera’s witness statement dealt with Inspired’s approach to the acquisition and valuation of prospective acquisitions; the rationale for and valuation of the MOS acquisition; the due diligence conducted on the MOS deal; and his views on the content of the Emails.

[60]Under cross examination, it became clear that, notwithstanding his apparently “heavy” involvement in the acquisition, Mr Herrera was not identified by Inspired as a “custodian” in the disclosure review document and Mr Herrera’s emails and other documents had not been searched as part of Inspired’s disclosure exercise.

[61]In his witness statement and under cross examination, Mr Herrera came across as overly keen to argue Inspired’s case in the proceedings. It also became clear under cross examination that he was not prepared to make appropriate concessions. I do not consider therefore that his evidence was entirely honest. A few examples will suffice.

[62]First, in his statement he suggested an involvement in “several prospective acquisitions” which had been abandoned owing to concerns around the behaviour of the members of the leadership team and/or safeguarding concerns – quite obviously seeking to draw an analogy between those cases and the present case. However, on close analysis of his examples, they did not begin to support the point he wished to make, and the details of various of the cases were quite obviously outside his direct knowledge. Focussing on one example only, it involved a “widely known” recent case in Spain where the headmaster had been convicted of raping two women (involving strangulation), and had been accused of punching another woman and throwing boiling water on her – quite obviously a very much more serious allegation than arises in this case, albeit that Mr Herrera chose to double down on his evidence. While he confirmed that he considered the case to be “horrible”, upon it being put to him that its facts were “very far removed” from the facts of this case (as indeed they are), his response was “I don’t necessarily agree”.

[63]Second, in his statement he sought to put forward evidence of his “understanding”, having reviewed email exchanges following a call with EY which, as he accepted, had not involved him. Upon it being suggested that this appeared inconsistent with the confirmation of compliance provided at the end of his statement, he changed his evidence to say that he had “personal knowledge…of those conversations”, that Ms Stewart kept him informed of all conversations with EY and that the statement was intended to reflect his “personal recollection of the events” backed up by emails.

[64]Third, in his statement, Mr Herrera had used the word “inflated” to describe student numbers as identified by Mr Crombie at the outset of the acquisition. It was put to him that the use of this word was unfair because it suggested that Mr Crombie had been seeking to mislead, but, instead of acknowledging (as he should have done) that there was no evidence of Mr Crombie seeking to mislead in the information he had provided about student numbers, Mr Herrera continued to insist that the number had been inflated, suggesting that he was “not close to whether the numbers were higher because he had deliberately wanted to, or whether he genuinely messed the numbers up”.

[65]Finally, in an apparent attempt to emphasise the seriousness of the Emails, Mr Herrera sought in his witness statement to link the Emails with issues in relation to safeguarding, something which has never been pleaded by Inspired and in respect of which there has been no disclosure.

[66]In all the circumstances, I consider that I must treat Mr Herrera’s evidence, in so far as it is relevant, with considerable care, accepting it only where it is corroborated by reliable documentary or witness evidence or is evidence given against the interests of Inspired. Mr Ashley Harrold

[67]Mr Ashley Harrold (“Mr Harrold”) is currently the Chief Executive Officer of Inspired and is employed by Inspired Finco Holdings Limited. His background is in teaching and he first joined Inspired in 2021 as the Executive Headteacher of the Inspired Online Schools group, which comprises KIH and Academy21. He was promoted to CEO of Inspired in July 2023. Mr Harrold’s witness statement addressed online schools in general, including the importance of reputation and online accreditation; the integration of MOS into Inspired; and his views on the content of the Emails.

[68]I found Mr Harrold (who was cross examined by Ms Arnold) to be a rather more straightforward and measured witness than either of Messrs Nsouli or Herrera. However (in common with them) the evidence in his witness statement also dealt with matters outside his experience (in particular his evidence on a scandal at an East London primary school, in respect of which he frankly accepted in his oral evidence he had no personal experience). Mr Harrold was also prepared to accept that some aspects of his evidence relied upon reports from Mr O’Donoghue about incidents of which he was not personally aware.

[69]Overall I am inclined to the view that Mr Harrold was prepared to make appropriate concessions under cross examination and that he came across generally as endeavouring to assist the court. Mr Crombie’s factual evidence

[70]Mr Crombie served two of his own witness statements and relied upon the witness statements of two additional witnesses, Mr Burgess and Ms Fairs. Mr Crombie

[71]Mr Crombie worked as a primary school teacher in Scotland between 2007 and 2012 and then in New Zealand between 2012 and 2016. In 2016, he and his partner returned to Scotland and it was around this time that he decided to set up his own business. Mr Crombie describes in his first witness statement how he went about setting up MOS, its evolution and growth. He goes on to describe his role at MOS, the culture of the organisation (including the support provided by HR) and the company policies that were in place. Mr Crombie then deals with the sale of MOS to Inspired, the issues following the sale and his resignation. Mr Crombie describes his relationship with Mr Burgess and deals in detail with the content of the Emails, together with the content of other documents disclosed by Inspired. These included the three email chains in which it is alleged that he used racist language and which have since been added to the claim by amendment, as described above. Mr Crombie comments on documents and WhatsApp messages within his disclosure and he explains how he came to delete other WhatsApp messages, including messages between himself and Mr Burgess and Mr Leitch. Finally, Mr Crombie deals with the circumstances surrounding the departure of Mr Leitch and Ms Goyea.

[72]In his second witness statement, Mr Crombie makes some corrections to his first witness statement.

[73]I formed the impression that Mr Crombie was a candid witness who gave his evidence in a clear and straightforward fashion in what were obviously difficult and often embarrassing circumstances (albeit circumstances of his own making). He repeatedly made frank and unequivocal concessions in relation to his conduct in respect of the Emails, accepting without hesitation or qualification that they were unprofessional and in breach of Company policy. Under lengthy cross examination, he maintained his evidence that the Emails were no more than jokey banter with Mr Burgess, that he had always thought them to be private (not least because until the middle of 2022 he was the only person with access to all staff emails) and that, at no point whilst working for MOS had he thought he was behaving in breach of Company policy. His explanation for the Emails was that they were a “way of letting off some steam”.

[74]Whilst Mr Crombie’s behaviour in engaging in the Emails with Mr Burgess was (as he now accepts) naïve and unprofessional, I consider his evidence on this issue (which was echoed by that of Mr Burgess, whose evidence I also accept) to be entirely honest. For reasons to which I shall return, I am unpersuaded that its credibility is in any way affected by the deletion of either the Burgess WhatsApps in March 2023, or the deletion of the Leitch WhatsApps in January 2023. I accept Mr Crombie’s evidence that he worked extremely hard whilst running MOS, that he is a “people-person” who focused on cultural well-being and (the Emails aside) that he always maintained high levels of professionalism. Mr Burgess

[75]Mr Burgess joined MOS in May 2019. For the first 18 months or so he was the Business Development Manager but, as the Company increased in size, he became part of the executive team and was appointed COO. Mr Burgess’ employment at MOS ceased in 2023 when he was suspended and subsequently dismissed. Mr Burgess currently works as COO of a technology firm in Glasgow.

[76]In his statement, Mr Burgess describes his role at MOS, his relationship with Mr Crombie and he addresses the content of the Emails in some detail. Mr Burgess then goes on to deal with the acquisition of MOS by Inspired and the events leading to his suspension and dismissal.

[77]I found Mr Burgess to be a straightforward and obviously honest witness who was doing his best to assist the court. Like Mr Crombie, he accepted without qualification that the Emails were inappropriate, unprofessional and that they were in breach of MOS policy. Inspired sought to suggest that Mr Burgess had acted dishonestly in relation to a secretly taken screenshot of a zoom conversation which referred to the return to MOS of a £20,000 rental deposit, but Mr Burgess’ rejection of that suggestion was immediate and, to my mind, rang true. I have no hesitation in accepting Mr Burgess’ evidence in its entirety. Ms Fairs

[78]Ms Fairs is an education consultant and the founder of Full Circle, a consultancy for educational investors and British online international schools. She has 22 years’ experience in the education sector. She set up Full Circle in 2020 having realised that online schools could be an effective solution for SEND students who are unable to attend traditional schools. Since then she has built a presence in the online, international and inclusive school space.

[79]In her statement, Ms Fairs describes meeting Mr Crombie and Mr Burgess in 2020 and the retainer she then entered into with MOS to build a strategic development plan and to coach Mr Crombie to be a more effective CEO of an online school. Ms Fairs worked with Mr Crombie and his senior leadership team “to develop the policies and processes which transformed MOS…to an online school”. Ms Fairs sets out her views on MOS and Mr Crombie and then goes on to deal with her involvement in Mr Leitch’s recruitment in March 2022 (one of the occasions on which it is said Mr Crombie drank alcohol to excess) and her view of emails dated 27 and 28 July 2022 between Mr Crombie and Mr Burgess (emails included in the Emails on which Inspired relies at trial for its breach of warranty claim).

[80]In opening, Inspired described this statement as a combination of inadmissible opinions and irrelevant commentary and it chose not to require Ms Fairs’ attendance at the trial for cross examination. I do not accept Inspired’s characterisation of Ms Fairs’ statement and, given that it is unchallenged, where it is relevant and admissible I accept it in its entirety. The Deleted Burgess and Leitch WhatsApps: General Principles

[81]The destruction of evidence plainly raises important issues in the context of this trial and Inspired sought to rely upon it for the purposes of inviting the court to draw various adverse inferences. In my judgment, for reasons to which I shall return in a moment, the issues raised by the Deleted Leitch WhatsApps are different from those raised by the Deleted Burgess WhatsApps. However, before I address these in more detail, I must first turn to the general principles surrounding the destruction of evidence.

[82]Although Inspired referred briefly in its closing submissions to the impact of the deletion of these WhatsApp messages on Mr Crombie’s general credibility as a witness and, in passing, mentioned both Armory v Delamire [1722] EWHC J94 and Malhotra v Dhawatt [1997] 2 WLUK 464, I was not provided with any specific references within these authorities and no oral submissions were made on either side in connection with the principle to which they refer. However, doing the best I can, I adopt the summary by Chamberlain J in the recent case of Wright v McCormack

[2022] EWHC 2068 (QB)

at [128] of the Armory principle as follows:

“where the defendant has destroyed or wrongfully prevented or impeded the claimant from adducing relevant evidence, the court will make presumptions in favour of the claimant”

. Chamberlain J went on to explain at [130] that these words connote “some form of morally culpable conduct on the part of the defendant which contributed to the absence of evidence” and that “[i]f there was no such culpability, it is difficult to see why it would be justifiable to make presumptions against the defendant”. It is clear from this that the issue of when, and in what circumstances, the destruction occurred is of considerable importance.

[83]The scope for the court to draw an adverse presumption where there has been a deliberate destruction of evidence was articulated in a similar way in Malhotra in which Morritt LJ formulated the principle in the following terms: deliberate destruction of evidence designed to hinder the proof of a claimant’s case will “obviously reflect on the credibility of the destroyer” such that the court may disregard his evidence and make such assumptions against that party’s interests as are consistent with the rest of the evidence. However, Morritt LJ qualified this principle, saying that if the judge forms a clear view, having borne in mind all the difficulties which may arise from the unavailability of material documents, as to which side is telling the truth, the judge is not required to make any such assumption but is entitled to reject evidence she does not believe or to accept evidence she finds to be truthful.

[84]I shall return to the Deleted Burgess WhatsApps in a moment in the context of considering various inferences that Inspired invite me to draw. However, in my judgment, the Deleted Leitch WhatsApps (and the veracity of Mr Crombie’s explanation for their deletion), together with the question of whether any inferences or presumptions should be drawn from the fact of their deletion, will need to be considered in detail in conjunction with all of the available evidence on the issue of breach of the non-compete clause in the SPA. As I have already said, I consider Mr Crombie’s evidence in relation to the Emails to be honest (and to be corroborated by that of Mr Burgess) and I do not consider the Deleted Leitch WhatsApps to impact upon this finding.

[85]For present purposes, I remind myself (as Ms Boase invited me to do) that even though Mr Crombie has deliberately deleted apparently relevant WhatsApp messages with Mr Leitch, that does not necessarily mean that he has in fact acted in breach of his non-compete clause, much less that he has lied about other issues in the case. People tell lies (and, by analogy, delete documents) for various reasons, including attempting misguidedly to bolster a genuine case and/or (in the case of deletion of documents) to remove the potential for innocent communications to be misconstrued (see the extract from Abbey Forwarding Ltd (in liquidation) v Hone

[2010] EWHC 2029 (Ch)

per Lewison J at [49] cited at [39] of Haringey LBC v Hines

[2010] EWCA Civ 1111

per Rimer LJ – a case to which Ms Boase drew my attention in closing). This of course ties in with the proposition that a court is not required to rely on the Armory principle to make a presumption against the interests of the destroyer if the evidence points in a different direction. Proposed Inferences to be drawn from the fact of the Deleted Burgess WhatsApps

[86]I accept Mr Crombie’s explanation given orally that he exchanged a lot of messages with Mr Burgess, that the vast majority of his WhatsApp messages with Mr Burgess were highly personal, that they rarely mentioned work matters, and that he frequently cleared his mail box of these messages as a “housekeeping” measure upon receiving a notification on his phone so as to free up data capacity. Thus I also accept that the deletion of the Deleted Burgess WhatsApps on 7 March 2023 was not prompted by any request from Inspired: Mr Crombie would (as he said in evidence and I accept) have been “going about [his] day-to-day life, seen a notification come up to say that ‘Your storage in your phone is taken up’ and deleted them”. This evidence struck me as quite obviously credible and consistent with the observation in Hollander’s Documentary Evidence (15th Ed 2024 at 12-05), echoed by Steyn J in Clarke v Guardian news & Media Ltd

[2025] EWHC 222 (KB)

at [57] that “[e]veryone deletes, and thus potentially destroys, electronic documents all the time. A failure to retain the contents of overlarge mailboxes may occur without any nefarious intent…”.

[87]At the time of and after his suspension on 17 February 2023, Inspired did not inform Mr Crombie of the nature of its investigations into his conduct; in an email from Mr O’Donoghue of 1 March 2023 Inspired merely sought access to his WhatsApp messages in connection with “an investigation into various matters” – those “various matters” were not identified and there was certainly no suggestion of any wrongdoing in relation to communications between Mr Crombie and Mr Burgess. I accept Mr Crombie’s evidence, that he chose not to pass over his existing WhatsApp communications with Mr Burgess in response to this request owing to their highly personal nature and his belief that he had no obligation to do so. I also accept that, at the time he cleared his WhatsApp exchanges with Mr Burgess on 7 March 2023, Mr Crombie did not understand there to be any reason why he needed to retain them or why they might be important to Inspired. As he said under cross examination, “[i]t’s not like I had a long historic chain of messages and they were wiped then. They would have been wiped, I would imagine, some weeks prior to 7 March as well”. It was only once proceedings had commenced and Mr Crombie was informed by his solicitors that he should not delete messages, that he ceased the practice.

[88]To my mind, these findings mean that there can be no Armory type presumption against Mr Crombie arising by reason of his destruction of the Deleted Burgess WhatsApps because his conduct was not in any way morally culpable. These WhatsApps were not destroyed with the intention of depriving Inspired of relevant evidence. For this reason alone I would not be prepared to draw any inferences in relation to the Deleted Burgess WhatsApps. Even if I am wrong about that, I consider these findings to represent important background context to the three separate adverse inferences that Inspired invites me to draw, which I can describe loosely as “the non-compete inference”, “ the misconduct inference” and the “over-consumption of alcohol inference”. The Non-Compete Inference

[89]It was suggested to Mr Crombie that he removed the Deleted Burgess WhatsApps from his phone to “cover [his] tracks” and this appears to have been a reference to his alleged breach of the non-compete provisions of the SPA and his alleged involvement with Hive. Mr Crombie responded “[a]bsolutely not” and, in light of the findings I have made above, I accept that evidence.

[90]In the circumstances, I reject the suggestion that there might have been anything in the Deleted WhatsApp messages between Mr Crombie and Mr Burgess that would have been relevant to Inspired’s allegation of breach of the non-compete provisions of the SPA and I decline to draw an inference to that effect. Ms John did not take me to any authority on which she relied for the purposes of inviting the court to draw adverse inferences and I agree with Ms Boase that, beyond a rather vague assertion that the deleted messages might have contained evidence that was “damaging to Mr Crombie” in connection with the non-compete allegations, Inspired has not identified the precise inference that it invites the court to draw, the finding of fact that it invites the court to make, or (with the possible exception of the Zoom Chat dealt with below) the reason why Inspired considers it likely that these missing WhatsApp messages would have contained material evidence on this particular point (see by way of analogy Magdeev v Tsvetkov

[2020] EWHC 887 (Comm)

per Cockerill J at [154(ii)] in the context of inferences in relation to the absence of witnesses). I do not consider Mr Crombie’s section 2 of the Disclosure Review Document to the effect that his deleted WhatsApps may have contained evidence relevant to these proceedings to advance Inspired’s position. Aside from the fact that this is a very general statement, Mr Crombie also provided a detailed explanation in section 2 of the Disclosure Review Document as to the reasons for his deletion of the Burgess WhatsApps, which I have already accepted as genuine.

[91]In closing, Ms John suggested that a screenshot of a zoom chat (“the Zoom Chat”) between Mr Crombie and Mr Burgess (obtained in circumstances where Mr Crombie and Mr Burgess thought that they were speaking privately), provided by Ms Goyea to Inspired in a letter dated 22 February 2023, supports the drawing of this adverse inference because it makes reference to starting up a new school. Essentially, Inspired says that if Mr Crombie and Mr Burgess were discussing this issue on a Zoom Chat, they were almost certainly also discussing it via WhatsApp. I shall return to the detail of the Zoom Chat when I deal with the non-compete allegations, but in summary, I consider it plainly to evidence a jokey conversation borne out of frustrations that the men had with the progress of integration at Inspired. It contains no discussion about the subject of Mr Leitch’s departure or the setting up of Hive and I do not consider it to contain evidence that Mr Crombie knew of, or encouraged those plans, or indeed that he was discussing them with Mr Burgess. Mr Burgess was not asked about this aspect of the Zoom Chat. In the circumstances, I cannot see that it assists Inspired.

[92]Inspired could of course have sought to cross examine Mr Burgess about the Deleted Burgess WhatsApps and the Zoom Chat. However, it was not suggested to Mr Burgess that he had engaged in any conversation with Mr Crombie over WhatsApp (or Zoom) about Hive or about Mr Leitch’s plans (or indeed any plans on the part of Mr Crombie) to set up a rival online school and nor has it ever been suggested that Mr Burgess was involved in the plans for Hive.

[93]In the circumstances, and for all the reasons I have given, it does not appear to me to be open to Inspired to invite the court to draw the suggested inference and I do not consider there to be any proper basis on which I could do so. The Misconduct Inference

[94]Inspired also sought to suggest that I might draw an adverse inference from the fact of the Deleted Burgess WhatsApps in respect of Mr Crombie’s misconduct in general (albeit that it appeared to be acknowledged that Inspired “did not need” this inference to be drawn). Given the findings I have already made, I reject that suggestion. However, a couple of additional points may be made.

[95]Essentially, Inspired asks the rhetorical question: if Mr Crombie and Mr Burgess spoke to each other in the terms used in the Emails in work emails, how must they have communicated in unguarded moments via WhatsApp? Aside from the fact that, once again, this formulation fails adequately to identify the terms of the inference that the court is invited to draw (or findings of fact that the court is invited to make), it also appears to me to ignore the way in which this case is pleaded. Inspired’s case is concerned with gross misconduct in relation to the Emails alone. There is no more generally pleaded case of misconduct and I cannot see how the content of the Deleted Burgess WhatsApps could possibly have been of assistance in addressing the pleaded case of gross misconduct in respect of the Emails. The fact that the Emails were sent, and their content, is not in dispute and the question of whether it amounts to gross misconduct is in any event a question of law for the court.

[96]In closing it was suggested that the content of the Zoom Chat in which a nickname was accorded to Ms Pearce (“Foxy Roxy”) provided a “line to draw into the WhatsApps” because it illustrated what might be said in an unguarded communication. But once again, I fail to see the relevance. There is no allegation of gross misconduct in relation to that Zoom Chat and I am not prepared to draw any inference from its contents about the content of the Deleted Burgess WhatsApps. The Over-Consumption of Alcohol Inference

[97]Finally, Inspired invited me to draw an adverse inference from the fact of the Deleted Burgess WhatsApps in respect of Mr Crombie’s alleged over-consumption of alcohol. This suggested inference was not really articulated in Inspired’s written closing submissions but advanced orally, first on the basis that there might be communications between Mr Crombie and Mr Burgess discussing getting “smashed” generally; and second (upon it being pointed out by the court that the only relevant evidence would relate to the work trips that were being referred to in the relevant Emails) that the WhatsApps might contain evidence of over-consumption on those specific occasions, perhaps along the lines of a comment to the effect that one or other of Mr Crombie or Mr Burgess had a “terrible hangover”.

[98]Once again, this is not an inference that I can properly draw. Inspired’s pleading on actual over-consumption of alcohol is confined purely to the two occasions discussed in two of the ten Email chains on which it relies for its allegations of gross misconduct, which date from March 2022. There is no basis on which to find that WhatsApps between Mr Burgess and Mr Crombie from around that date would have contained relevant evidence and (importantly in my judgment) no such suggestion to that effect was made to Mr Burgess in cross examination. Finally, it is perhaps worth noting that, consistent with Mr Crombie’s evidence (which I have accepted), WhatsApps from March 2022 would have been deleted as part of Mr Crombie’s regular deletions long before 7 March 2023, such that the fact of the deletions of the Burgess WhatsApps on 7 March 2023 could not possibly be used to support an inference in respect of the content of much earlier WhatsApps deleted long ago in entirely unremarkable circumstances

[99]In my judgment, Inspired’s attempt to rely upon an inference to establish its case on over-consumption of alcohol is indicative of the extremely weak nature of that case. Mr Crombie firmly denies that he ever consumes excessive amounts of alcohol on work trips, observing during his evidence that he “rarely drinks”, and I accept that evidence. As I shall come to in a moment, his evidence as to the specific circumstances of the work trips referred to in the two Emails which make reference to the over-consumption of alcohol is corroborated by Mr Burgess and Ms Fairs and there is no evidence whatsoever to support Inspired’s case. It cannot now salvage that case by seeking to rely upon inference. The Expert Evidence

[100]The parties each relied upon an accounting expert. Permission for expert accounting evidence was granted by order of Deputy Master Jefferis dated 2 November 2023 which provided that the experts were to address “issues in relation to the value of the shares [in MOS] on the assumption that the Claimant’s allegations as to breach of warranty are made out (i.e. on the warranty false basis)”. There was no permission to consider the value of MOS on the “warranty true” basis, it being accepted by both parties that the market value of MOS at the date of the SPA on the “warranty true” basis was £9 million. Neither party obtained permission for, or called expert evidence in respect of, the management, mitigation or effects of reputational damage. Mr Fred Brown

[101]Inspired’s expert was Mr Fred Brown, a partner in Grant Thornton UK LLP (“GT”) and a Fellow of the Institute of Chartered Accountants of England and Wales. Mr Brown describes himself as a valuation and damages expert within the Forensic and Investigation Services practice of GT with more than 20 years’ experience. He is the co-leader of the contentious business valuations practice. He has also acted as an expert in transaction disputes, including in the education sector. Mr Brown produced an expert report dated 19 December 2024. Mr Karthik Balisagar

[102]Mr Crombie’s expert was Mr Karthik Balisagar, a Senior Managing Director in the London office of FTI Consulting Inc (“FTI”). FTI is a global business specialising, among other things, in valuation, financial analysis and the assessment of losses in the context of litigation and arbitration. Mr Balisagar has 18 years’ experience in business valuation and estimation of damages in both contentious and non-contentious situations. He is a member of the Europe committee & Asia committee of the International Valuation Standards Council. Mr Balisagar produced an expert report dated 18 December 2024.

[103]The accounting experts met after service of their respective reports and produced a Joint Statement for the court dated 7 February 2025 (“the Joint Statement”). I shall return to address my views on the expert evidence later in this judgment. For present purposes, however, suffice to say that this is a case in which the methodology used by each expert for the purposes of his “warranty false” valuation was fundamentally different. This leaves the court in the position of having to determine which of the experts is more credible – there is really no middle ground. For reasons to which I shall return, I have no difficulty in concluding that the evidence of Mr Balisagar is to be preferred.

The Warranty and Misrepresentation Claims

[104]Before I can determine whether the Warranties on which Inspired relies were false, I must first consider the question of their true construction. Construction of the SPA (Issue 1)

[105]The principles of contractual construction are well known and were not in dispute. They were authoritatively explained by Lord Hodge in Wood v Capita Insurance Services Ltd

[2017] UKSC 24

[2017] AC 1173

at [10]-[15]. They were summarised by Lord Hamblen in Sara & Hossein Holdings Ltd v Blacks Outdoor Retail Ltd

[2023] UKSC 2

[2023] 1 WLR 575

at [29] as follows: “(1) The contract must be interpreted objectively by asking what a reasonable person, with all the background knowledge which would reasonably have been available to the parties when they entered into the contract, would have understood the language of the contract to mean. (2) The court must consider the contract as a whole and, depending on the nature, formality and quality of its drafting, give more or less weight to elements of the wider context in reaching its view as to its objective meaning. (3) Interpretation is a unitary exercise which involves an iterative process by which each suggested interpretation is checked against the provisions of the contract and its implications and consequences are investigated”.

[106]Although the parties, unsurprisingly, focused on the wording of the individual Warranties, I must begin by placing those Warranties within their proper context in the SPA by setting out some key contractual provisions.

[107]The SPA provides for the transfer by Mr Crombie of the legal and beneficial title in the issued share capital of MOS to Inspired on the Completion Date, i.e. 15 November 2022, the date of the SPA. Pursuant to clause 3, the transfer was to take place in consideration for the Cash Consideration and the Deferred Cash Consideration.

[108]SH acted on behalf of Inspired on the acquisition, while Anderson Strathern LLP acted on behalf of Mr Crombie. The governing law of the SPA (pursuant to clause 29) is English law.

[109]The definition section of the SPA, at clause 1.1, defines “Warranties” as “the representations and warranties set out in Schedule 5”. A “Warranty Claim” is defined as “a claim for breach of any of the Warranties…”. For the purposes of these proceedings I am concerned only with “Business Warranties”, as set out in Part 2 of Schedule 5; I am not concerned with Fundamental Warranties or Tax Warranties, which appear in Parts 1 and 3 of Schedule 5 respectively.

[110]The definition section of the SPA expressly refers to the Companies Act 2006, as amended, which is defined as the “Act”.

[111]Clause 1.23 of the SPA provides that: “where a statement is qualified by the expression "so far as the Seller is aware" or "to the best of the knowledge, information and belief of the Seller", or any similar expression, that statement shall be deemed to include an additional statement that it has been made having regard to what the Seller is or ought to be aware of (given the nature of the Seller’s position, duties and responsibilities in relation to the Company) and after due and careful enquiry by the Seller into the facts and circumstances relevant to such statement including, without prejudice to the generality of the foregoing, after having made such reasonable enquiry of Ewen Burgess, Rob Leitch and Ian Marshall”;

[112]Clause 6 of the SPA is concerned with the Warranties as defined. Clauses 6.2 to 6.4 read as follows: “6.2 The Seller hereby warrants to the Buyer that each Business Warranty and Tax Warranty is true, accurate and not misleading at the date of this Agreement. 6.3 The Seller accepts that the Buyer is entering into this Agreement in reliance upon the Warranties and that the Buyer has been induced to enter into this Agreement by each of the Warranties. 6.4 Each of the Warranties is separate and independent and unless otherwise expressly provided shall not be limited by reference to any other Warranty or anything in this Agreement”.

[113]Clause 8 of the SPA makes provision for limitations on Mr Crombie’s liability under the SPA for (amongst other things) any liability in relation to a Business Warranty Claim: “The provisions of Schedule 6 (Limitations on Seller's Liability) shall limit the liability of the Seller in relation to any Business Warranty Claim, Fundamental Warranty Claim, any claim in relation to the Tax Warranties, Indemnity Claim or Tax Deed Claim in each case, to the extent set out therein”.

[114]Clause 23 of the SPA provides that (amongst other things) all Warranties “contained in or entered into pursuant to this Agreement, shall remain in full force and effect notwithstanding Completion”.

[115]Schedule 5, Part 2 sets out the “General Warranties”, also defined as “Business Warranties”. The Warranties on which Inspired relies in these proceedings are as follows: “Compliance with laws 8.2 The Company and all of its directors, officers, agents and employees (during the course of their duties in relation to the Company) have at all times complied in all material respects with all applicable laws, regulations, bylaws, rules codes and administrative requirements in the UK and, so far as the Seller is aware, all applicable laws, regulations, bylaws, rules codes and administrative requirements in all other jurisdictions”; “16 Employment … 16.15 No dispute, claim or litigation has arisen within the last three years between the Company and any of its Employees or Workers or former or prospective employees, officers or workers and the Company has not received notice (whether in writing or verbally) that any such dispute, claim or litigation is pending or anticipated. So far as the Seller is aware, there are no present circumstances which are likely to give rise to any such dispute, claim or litigation”.

[116]Schedule 6 provides in so far as relevant:

“1.1 Subject to paragraph 1.2, this Schedule 6 limits the liability of the Seller in relation to any Business Warranty Claim … to the extent set out herein; 1.2 Nothing in this Schedule 6 applies to any claim under a Transaction Document to the extent that such claim arises or is delayed as a result of fraud (including fraudulent misrepresentation) or wilful concealment by the Seller… 3 Maximum Liability The total aggregate liability of … (b) the Seller in respect of any and all Warranty Claims and/or Tax Deed Claims shall be limited to an amount equal to 35% of the Cash Consideration received by the Seller from time to time. Notwithstanding the foregoing, the Seller shall be responsible for any and all the costs incurred by the Buyer or any member of the Buyer’s Group in relation to or otherwise in connection with any and all Fundamental Warranty Claims, Warranty Claims, Tax Deed Claims and Indemnity Claims, in each case, as regards such costs to the extent the Seller agrees to reimburse the Buyer or the relevant member of the Buyer’s Group as regards such costs or as determined by a court of competent jurisdiction or pursuant to any binding arbitration award”

. Warranty 8.2

[117]Warranty 8.2 is one of twenty-one warranties given under the overarching heading “Conduct of business and compliance”, appearing under the sub-heading “Compliance with laws”, as set out above. There are five other warranties under this sub-heading, four of which are concerned with investigations, enquiries, notices, penalties or compensation by or from regulatory and governmental authorities (8.3, 8.4, 8.5 and 8.7); one of which is concerned more broadly with “material complaints” made against the Company by third parties in respect of its business (8.6). Also within the warranties provided under the heading “Conduct of Business and compliance” are warranties as to(i) competition law compliance, and

(ii) anti-corruption law compliance. Part 2 of Schedule 5 also contains a number of other warranties concerned with the compliance with expressly identified Statutes and/or identified laws (such as “Environmental Law and Health and Safety Law” and “Applicable Data Protection Law”) of varying descriptions.

[118]It is Inspired’s case that(i) the reference to “all applicable laws, regulations, bylaws, rules codes and administrative requirements in the UK” includes a reference to the provisions of the Companies Act 2006; and

(ii) the reference to “directors” makes plain that the parties intended to include laws applicable to directors within the scope of the warranty. Thus Inspired contends that Warranty 8.2 includes within its scope (i) the duties of directors under the Companies Act 2006, sections 172 (duty to promote the success of the company) and 174 (duty to exercise reasonable care and skill).

[119]The Defendant rejects this construction. It is his case that Warranty 8.2 refers to legal obligations owed by the Company (or its directors, officers, agents and employees) to the State, the relevant regulator or third parties. Neither duties (codified by statute) which are owed by a director to the Company itself, nor the Company’s own internal policies (whether put in place to ensure compliance with statutory duties or otherwise) fall within its scope. He says this construction is supported by the context of the surrounding warranties, by the fact that the Companies Act 2006 is separately defined in the SPA and is not specifically referred to in Warranty 8.2 (by contrast with other warranties such as warranty 2.7) and by the fact that, were Warranty 8.2 objectively intended to cover director’s duties, many if not most of the other warranties given would be redundant.

[120]In considering these opposing arguments, it appears to me to be significant that clause 6.4 of the SPA expressly provides that each warranty is “separate and independent” and “shall not be limited by reference to any other Warranty” or indeed “anything in this Agreement”. I understand this to mean that each warranty is intended to be construed on its face by reference to the ordinary and natural meaning of the language used and that this meaning should not be restricted (unless otherwise expressly provided) by reference to the content and language of other warranties or by anything in the SPA more generally. In other words, taken at face value, clause 6.4 appears to be an agreement between the parties that the canons of construction (which require consideration of the surrounding contractual context) should not apply if they would have the effect of limiting the ordinary meaning of the language used in a particular warranty. Ms Boase submitted that the wording of clause 6.4 is insufficiently clear to have this effect, but on balance I disagree.

[121]I bear in mind that the SPA is a commercial agreement negotiated between parties apparently operating on a level playing field with the involvement of solicitors and that accordingly I must assume that they meant what they said. Rules of construction are not rules of law, but are merely guidelines to the presumed intention of the parties (see Mitchell (George) (Chesterhall) Ltd v Finney Lock Seed Ltd

[1983] QB 284

per Kerr LJ). Here I consider that the objective intention of the parties is plain: each warranty is to be considered separately and is not to be restricted in its scope (having regard to the plain and natural meaning of the language used) by reference to other warranties.

[122]Returning to Warranty 8.2, I therefore do not consider it appropriate to have regard to the terms of other surrounding warranties under the same sub-heading as a means of restricting its scope (as the Defendant suggests). Specifically I do not consider it appropriate to limit the scope of the (very broad) phrase “all applicable laws” on the basis(i) that the majority (but not all) of the other warranties under the sub-heading “Compliance with laws” are concerned with investigations, enquiries, notices, penalties or compensation by or from regulatory and governmental authorities; or

(ii) that there is no specific reference in Warranty 8.2 to the Act, as defined in the SPA; or

(iii) that applying such a broad construction to the term “all applicable laws” would render many other warranties redundant (assuming that to be correct).

[123]In any event, in my judgment, the words used in Warranty 8.2 are, as Inspired contends, extremely broad. There is nothing in the wording of Warranty 8.2 itself to suggest that it was intended to be restricted only to compliance by MOS, its directors etc. with legal obligations owed to the State, the relevant regulator or third parties. The only limitations on the scope of the warranty appear to me to come from the wording of the warranty itself. Thusa. the compliance that was warranted by MOS was compliance “in all material respects” with all “applicable” laws etc. Although not expressly stated, the natural meaning of this provision appears to me to be that applicable laws will be laws which are applicable to the Company in the course of its business and that compliance need not be “absolute”.

b. the compliance that was warranted in relation to directors, officers, agents and employees was compliance “during the course of their duties in relation to the Company” in “all material respects” with all “applicable” laws etc. – i.e. laws applicable to them acting in that capacity. Again, compliance need not be “absolute”.

[124]Against that background, I consider that the duties of directors under the Companies Act 2006 (which is a “law” that applies to directors acting in the course of their duties in relation to the Company) plainly fall within the scope of Warranty 8.2. Even if I am wrong as to the effect of clause 6.4 of the SPA, I would have construed Warranty 8.2 in this way having regard to its very clear words. I do not consider that contextual analysis would have permitted me to depart from their very broad meaning.

[125]However, I do not consider breach of the Company’s internal policies to fall within the words “all applicable laws, regulations, bylaws, rules codes and administrative requirements in the UK”. It would have been easy to add the words “internal policies” or “Company Policies” to this lengthy list had that been what the parties intended and I do not consider the existing words apt to cover such internal policies. I understood this to be accepted by Ms John in closing. If, however, the breach of an internal Company policy also amounts to the breach of “applicable laws”, such as a director’s duty under the Companies Act 2006, then that breach would, in my judgment, be caught by this warranty. Warranty 16.15

[126]Warranty 16.15 is one of twenty-seven warranties dealing with matters relating to employment.

[127]It is Inspired’s case that Warranty 16.15 encapsulates all disputes, claims and litigation between the Company and its Employees etc., regardless of the identity of the initiator or complainant. It says that the terms “dispute” and “claim” are not defined or prescribed terms and that their ordinary meanings would encompass “an allegation, investigation and/or a suspension of an employee for misconduct” – i.e. allegations or disputes which could crystalise into a claim being brought against, or by, MOS. Inspired says that the reference to ‘notice’ in Warranty 16.15 is not a reference to contractual notice under clause 27 of the SPA and “is therefore used in the less formal sense of matters being brought to the Company’s attention – such matters could and would include disputes, claims or litigation which could be brought by or against the Company”.

[128]The Defendant disputes this interpretation. He points out, and I agree, that the words “dispute, claim or litigation”, on their natural and ordinary meaning, are strongly suggestive of the existence of a cause of action and thus of legal proceedings (or of the potential for legal proceedings arising by reason of a dispute between the parties over their legal rights or a claim in respect of those rights). I do not consider a mere allegation to fall within this wording, just as I do not consider an internal investigation or suspension to do so.

[129]While I may not use other warranties to limit the meaning of Warranty 16.15, I observe that, as the Defendant points out, the meaning I consider it to convey sits very comfortably alongside Business Warranty 16.13 which separately provides that “[t]here are no current, pending or anticipated investigations, grievances or disciplinary procedures relating to any Employee”. Where the parties have intended to refer to investigations and disciplinary procedures they have done so expressly in warranty 16.13. They have used very different language, one must assume, deliberately, in Warranty 16.15. Where that language does not naturally encompass investigations or disciplinary procedures such as suspension, there is no need to strain the language to do so where warranty 16.13 addresses that very point.

[130]In response to Inspired’s point about notice, the Defendant submits that the fact that the disputes, claims and litigation contemplated by Warranty 16.15 are those in respect of which the Company will receive “notice” indicates that the intention here is only to capture claims made against the Company by an Employee (or other identified person). Although I agree with this construction in so far as Warranty 16.15 is confirming that the Company has not received notice of a pending or anticipated claim, it does not appear to me to govern the remainder of the warranty. Warranty 16.15 has three separate and distinct parts:(i) that no dispute, claim or litigation has arisen “between the Company and any of its Employees or Workers etc” within the last three years (emphasis added);

(ii) that the Company has not received notice of any pending or anticipated dispute, claim or litigation (which I read as a clear reference to notice being given to the Company by an Employee etc.); and

(iii) that the Seller is not aware of any present circumstances likely to give rise to a dispute, claim or litigation. Neither the first, nor third of these parts depends upon the claim, dispute or litigation being instigated by notice from the Employee to the Company or indicates any intention to restrict the scope of the words “dispute, claim or litigation” only to claims made against the Company (as opposed to claims made by the Company).

[131]Finally, I accept the Defendant’s submission that, for the purposes of the last sentence of Warranty 16.15 (“[s]o far as the Seller is aware, there are no present circumstances which are likely to give rise to any such dispute, claim or litigation”) this warranty is only concerned with “present” circumstances (i.e. existing at the time of the SPA) of which the Seller is or ought to be aware (see clause 1.23 of the SPA) that are “likely” to give rise to a “dispute etc”. I accept that the word “likely” is not apt to capture circumstances which “might” potentially lead to a dispute. For the last sentence to be false, I consider that the circumstances must be such that the “dispute etc.” is probably going to arise.

[132]Thus, in my judgment, Warranty 16.15 is expressly concerned only with a dispute, claim or litigation(i) which has arisen within the last three years between the Company and an Employee; or

(ii) which (as the Company knows because it has received notice of it from an Employee) is pending or anticipated or

(iii) which (as the Seller is or ought to be aware) is “likely” given present circumstances. I agree with the Defendant that (having regard to the final sentence of Warranty 16.15), he was warranting that, as matters stood on 15 November 2022, he was not aware (having regard to clause 1.23) that any dispute, claim or litigation between the Company and any Employee etc. was likely to arise. Did the Emails amount to Gross Misconduct? (Issue 2) Gross Misconduct: the Law

[133]I did not understand there to be any real dispute between the parties(i) that the question of whether the Emails amount to gross misconduct is an issue of law for the court; and

(ii) that gross misconduct is characterised as conduct that entitles the employer summarily to dismiss the employee.

[134]In Ardron v Sussex Partnership NHS Foundation Trust

[2018] EWHC 2157 (QB)

(“Ardron”), Jacobs J summarised the law as follows (at [78]-[79]): “The concept of ‘gross misconduct’ in the employment law context connotes misconduct which justifies summary dismissal, and which therefore amounts to a repudiatory breach of contract. There is no fixed rule of law defining the degree of misconduct which will justify dismissal. Gross misconduct may include, but is not limited to, dishonesty or intentional wrongdoing, for example: conduct which is seriously inconsistent with the employee’s duties to his employer, or conduct which is of such a grave and weighty character as to amount to a breach of the confidential relationship between employer and employee, such as would render the employee unfit for continuance in the employer’s employment, and give the employer the right to discharge him. The focus is on the damage to the relationship between the parties. Dishonesty and other deliberate actions which poison the relationship will obviously fall into the gross misconduct category, but so in an appropriate case can an act of gross negligence…Very considerable negligence, historically summarised as ‘gross negligence’ is therefore required for a finding of gross misconduct. If a contract defines misconduct to include a minor transgression, then this cannot override the law; viz that gross misconduct must involve a repudiatory breach of contract”.

[135]Thus in the employment context, gross misconduct is likely to entail either wilful and deliberate contravention of an essential term of the contract or gross negligence (see Robert Bates Wrekin Landscapes Ltd v Knight

UKEAT/0164/13/GE

(“Robert Bates”) at [24]). Gross Misconduct is conduct which is incompatible with the employment relationship in that it undermines the relationship of trust and confidence between employer and employee to such an extent that it renders the employee unfit for the position and justifies the employer in treating the contract as repudiated. Contractual provisions which appear to permit dismissal for any breach, however minor or inadvertent, will not be construed as having that meaning but will be construed as intending to apply only to serious and wilful or grossly negligent breaches (Robert Bates at [31]).

[136]Harvey on Industrial Relations and Employment Law Issue 322 (“Harvey”) considers there to be certain “immutable” categories of gross misconduct that will apply to “just about any employer” such as “theft or fraud, physical violence, deliberate and serious damage to property and serious insubordination” (at [445]). Harvey also points to more recent causes of concern in the employment context such as “deliberate internet abuse, unlawful discrimination or harassment, serious breach of health and safety rules and serious breach of confidence”. The particular requirements of a business may make conduct which might not be quite so serious generally completely unacceptable in that particular organisation and conduct outside the workplace may be repudiatory depending (again) upon the employment in question (Harvey at [445.01] and 445.03]).

[137]Gross negligence will occur where “the negligent dereliction of duty…was ‘so grave and weighty’ as to amount to a justification for summary dismissal” (Adesokan v Sainsburys Supermarkets Limited

[2017] EWCA Civ 22

, per Elias LJ at [24]). In closing, Inspired sought to rely on both “wilful misconduct” and “gross negligence” to describe the Emails.

[138]Inspired drew my attention to two authorities which it contends are illustrative of the approach the court should take to a case involving misuse of company emails/a WhatsApp group of employees.

[139]In the first, Williams v Leeds Football Club

[2015] EWHC 376 (QB)

(“Williams”) the Technical Director of Leeds football club, Mr Williams, had used the club’s email system to forward an email together with pornographic images (including pictures of women displaying breasts and genitalia and engaged in simulated sexual contact with each other) to a male friend at Newcastle United. In addition, as the club discovered after Mr Williams’ dismissal, he had also forwarded the same email and pornographic images to a junior female employee of the club (whose work computer was at the reception area of the club’s training ground) and another male friend at Tottenham Hotspur. The club contended that this conduct, taken as a whole, amounted to gross misconduct justifying summary dismissal.

[140]Lewis J rejected Mr Williams’ evidence that he had forwarded the email to the junior female employee because he thought she would appreciate the photos and “have a giggle”. He also rejected Mr Williams’ explanation for forwarding the email to his two male friends. He went on to consider whether Mr Williams’ conduct, viewed objectively, was a breach of the implied term of mutual trust and confidence and, if so, whether it was sufficiently serious to amount to a repudiatory breach which entitled the club to terminate Mr Williams’ contract of employment summarily. At [53] Lewis J said this: “In general terms, in assessing the seriousness of any breach, it is necessary to consider all the relevant circumstances including the nature of the contract and the relationship it creates, the nature of the contractual term that has been breached, the nature and degree of the breach and the consequences of the breach…In the context of contracts of employment, relevant circumstances include “the nature of the business and the position held by the employee”: see Jupiter General Insurance Co Ltd v Shroff

[1937] 3 ALL ER 67

per Lord Maugham. The opinion of the Privy Council in that case recognises that immediate dismissal is, as Lord Maugham expressed it, a ‘strong measure’ and there needs to be careful consideration of the evidence to determine whether the conduct is such as to amount to repudiatory breach entitling the employer to dismiss the employee without notice”.

[141]Lewis J held that Mr Williams’ conduct was a sufficiently serious breach to amount to repudiation of the contract. In summary, this was because of Mr Williams’ position at the club, the pornographic and obscene nature of the images, the fact that the images had been sent to a junior female employee by a senior manager with influence over her career (potentially leaving the club open to a claim of harassment), the nature of the club’s business, the importance of its reputation which would have been damaged had Mr Williams’ conduct (including that he had sent the pornographic images to other well-known persons in professional football) become common knowledge and the lack of any reasonable explanation (see [56]-[59]). Lewis J observed at [60] that, viewed objectively, the use of the Club’s email system to send obscene and pornographic images in this way was “simply incompatible with the role and duties of [Mr Williams] as a senior manager at the Club” and he held that such conduct amounted to gross misconduct which justified summary dismissal. At [61] he found that the sending of the images to the junior female employee was sufficiently serious in itself to justify summary dismissal. At [62] he declined to determine whether each of the incidents of forwarding the email and images to the two male friends was itself sufficient to amount to repudiatory breach as it was not necessary to do so in the particular circumstances of the case.

[142]In the second, Paul Wells v Cathay Investments Limited

[2019] EWHC 2996 (QB)

(“Paul Wells”), HHJ Simpkiss (sitting as a Deputy High Court Judge) was tasked with considering various different acts of misconduct on the part of the claimants (male members of the senior management), the Financial Controller of one of the defendants (Mr Stokes) and “several other more junior male employees”, including their participation in a “work” WhatsApp group. Messages and photographs were posted to this group of “a highly sexist, offensive, obscene and pornographic nature” together with “comments of a banterous nature of which no complaint is made”. Much of the material was sent during working hours in circumstances where the members of the group worked in an open office together with female employees. Some of the comments made were not just offensive to women in general but made specific reference to two female employees working in the same office of an obscene and offensive nature.

[143]HHJ Simpkiss adopted the guidance given by Jacob J in Ardron at [78] together with the guidance given by Lewis J in Williams at [53], as set out above. However, most of the available evidence related to the period prior to the relevant employment agreements (dated 20 January 2017) and the court was therefore concerned only with whether there had been gross misconduct in respect of the WhatsApp group between 20 January 2017 and 25 January 2017, when Mr Stokes left the group and there was no further evidence as to whether the group continued. This led to the Judge’s finding (at [153]) that if it had been proved that the WhatsApp group continued in the same vein after Mr Stokes’ departure he would have had no difficulty in finding that a serious breach of duty amounting to gross misconduct had occurred observing that “[i]n a modern office environment this is not banter but wholly unacceptable, particularly when commenting on female colleagues, and this is not something that a senior manager should be part of nor condone or permit”.

[144]However, the Judge found that it was not proved that the WhatsApp group continued as it had done before after 25 January 2017. He therefore had to consider whether the postings on the WhatsApp group in the short period of only a few days constituted gross misconduct. As to that, he held (at [154]) that: “The First Claimant put a pornographic clip on the WhatsApp group on 21st January 2017 and the Second Claimant on 25th January 2017. One of these was of a Buzz Lightyear toy holding a man’s penis. That, in my judgment, was a breach of the duty but as there is no evidence that it was repeated thereafter, not sufficient to amount to gross misconduct or a Material Breach”.

[145]It is the Defendant’s submission that while it is uncontroversial that the sending of an email from a work account can amount to gross misconduct (depending on the circumstances), the facts of Williams and Paul Wells are “so far removed” from the facts of the present case as to offer no assistance. He submits that Inspired has not deployed any remotely comparable cases and he cautions that, as is uncontroversial, every case must be determined having regard to its own facts and circumstances. I am inclined to agree that the facts found in Williams and Paul Wells are much more serious than the facts of this case and that I am unlikely to be much assisted by them. However, in so far as may be necessary I shall return to them when I come to consider the content of the Emails.

[146]Finally, Inspired relied upon the published panel decision of the Teaching Regulation Agency into the case of a primary school teacher dated 3 June 2024, together with a report of that decision in the Daily Mail Online on 11 September 2024, calling this a “characteristic example”. The teacher involved had been a member of a WhatsApp group chat alongside three of his colleagues in which he had received and sent what the Daily Mail Online described as “a slew of grossly offensive” sexist, homophobic, misogynistic and racist messages about other members of staff. The issue for the Agency was whether the facts as proved amounted to unacceptable professional conduct and conduct that may bring the profession into disrepute. It concluded that the teacher’s conduct had fallen significantly short of the standards expected of the profession and a prohibition order of 2 years was imposed.

[147]I am not sure what Inspired means when it describes this case as a “characteristic example” and I do not consider that I am much assisted by this evidence. As I have already said, I must determine whether the conduct as evidenced by the Emails is sufficient to amount to gross misconduct (whether separately or cumulatively) and I am not assisted in doing that by considering the circumstances of a disciplinary process which was not even concerned with summary dismissal. I am certainly not assisted by a sensationalist report of that process in the press. The Contractual Context

[148]Mr Crombie’s employment contract from around September 2021 contained a right for MOS to terminate his employment without notice for gross misconduct. It also provided inter alia that:a. in addition to the terms of his contract, Mr Crombie was “required to abide by all other policies and procedures related to the job including but not limited to the Staff Handbook and IT Use Policy” and that each policy was to be found on the MOS intranet “and it is the employee’s responsibility to familiarise themselves with them”; and

b. that “[t]he Company may monitor, intercept, read and record your telephone, email and other electronic communications for the purpose of monitoring and recording to establish facts, to establish compliance with regulatory procedures, to prevent or detect crime, to establish appropriate use of the Company’s systems, to investigate or detect the unauthorised use of the Company’s systems or to ascertain compliance with the Company’s practices or procedures”.

[149]The MOS Employee Handbook contains examples of misconduct and gross misconduct. It was put in place by Mr Burgess in around September 2021 with support from an external HR department and was subsequently updated following annual reviews at the start of a new academic year, albeit I did not understand those updates to be material. Under the heading “Gross Misconduct” it says this: “The following acts are examples of gross misconduct and as such are considered so serious that the employee may be liable to instant dismissal.• …

• Conduct likely to damage the reputation of the Company

• Drunkenness or being under the influence of legal or illegal drugs

• Discrimination on the grounds of …race…sex…or harassment or bullying of colleagues…

• Indecent…or offensive behaviour…

• Serious breaches of the IT Security policy

• Slanderous or defamatory statements made regarding the Company, its employees, clients or associates either verbally, in writing (electronically or hard copy)…

• Discrimination, Bullying and Harassment… My Online Schooling is committed to treating all workers, customers, suppliers and members of the public with dignity and respect and will ensure we provide a workplace that is free from discrimination, bullying or harassment. The Company will comply with all our obligations under relevant state and federal legislation. The policy applies to an employee’s conduct in or out of office hours, when entertaining customers or at work events. All employees have responsibility for complying with this policy and treating all colleagues with dignity and respect”.

• …

• Conduct likely to damage the reputation of the Company

• Drunkenness or being under the influence of legal or illegal drugs

• Discrimination on the grounds of …race…sex…or harassment or bullying of colleagues…

• Indecent…or offensive behaviour…

• Serious breaches of the IT Security policy

• Slanderous or defamatory statements made regarding the Company, its employees, clients or associates either verbally, in writing (electronically or hard copy)…

[150]The Defendant points out the language of the introductory paragraph to this list of examples is ambiguous in that, on the one hand the acts identified are said to be examples of gross misconduct but, on the other hand, it appears to be open to the employer to affirm the contract rather than accept the repudiatory breach (“the employee may be liable to instant dismissal” (emphasis added)). In context, as the Defendant suggests, the best way of construing the list is that conduct which prima facie falls within the examples must also meet a seriousness threshold in order to constitute gross misconduct. I did not understand Inspired to disagree with this.

[151]The Employee Handbook also contains a Disciplinary Procedure which envisages a five-stage approach, culminating in termination of employment. The Handbook states that in cases of gross misconduct the first four stages (informal counselling, verbal warning, written warning and final written warning) may be omitted. However, it also provides that “at all stages of the formal disciplinary procedure” the employee will be “given a right of reply to all and any allegations made against [him] BEFORE any decision or disciplinary action is taken”. The right of reply is envisaged as happening at a disciplinary meeting at which the employee is given “the opportunity to respond and to put forward any defence or arguments [he] wants”. There is provision for questions to be asked by the employee and for evidence to be presented, including the calling of witnesses.

[152]Inspired relies on two additional employee policies, the Personal Integrity Policy and the IT Security Policy (the latter being part of the Employee Handbook). The former, created by Mr Burgess in 2019 and never updated, relevantly provides that: “Partners whose conduct falls below the standards laid out in this policy may, after investigation, be subject to disciplinary action in accordance with the Disciplinary Policy. In addition a serious breach of the personal integrity principles outside the normal course of employment may result in disciplinary action”.

[153]Under the heading “Conduct” the policy provides that “all Partners” are expected to take time to understand and conduct themselves in line with the Personal Integrity Policy. Five rules are then identified. In closing, Inspired relied upon Rule 2 (“[y]ou must act with due skill, care and diligence”) and Rule 5 (“[y]ou must observe proper standards of market conduct”). In addition, Inspired relied upon paragraphs 1.3 and 1.4 of this Policy which read as follows:

“1.3 Partners should ensure that…electronic or social media sent or used within, or related to, My Online Schooling do not contain abusive, obscene…comments or contain any content that may bring embarrassment to or could harm the reputation of My Online Schooling… 1.4 Partners are requested to behave in an appropriate manner at work-related events whether within or outside of office hours e.g. marketing events, office parties, drinks with Partners. Any inappropriate conduct or behaviour by Partners has the potential to affect the reputation of My Online Schooling. For this reason, My Online Schooling requests that you consider your conduct and behaviour carefully so as to ensure it is appropriate.”

[154]The IT Security Policy includes a specific email policy, which points out that “[i]nappropriate use” of the email system “can cause many problems, ranging from minor distractions to legal claims against the Company” and expressly reserves the Company’s right to “monitor the use of email”. The policy confirms that personal use of the Company email system is permitted “if it is not excessive and does not interfere with the performance” of an employee’s duties or distract others from their duties. However, it provides that work email accounts “must not be used for the transmission of…jokes” and that employees must not(i) “send or forward emails containing anything which may be considered offensive or harassing including discrimination against others based on their race…sex”;

(ii) “send or forward sexually oriented emails or images”;

(iii) “send unnecessary or trivial emails such as jokes or gossip”. The policy states that if an employee receives an offending email from an internal source he “should raise the issue with [his] manager. If not, immediately delete the email”.

[155]The IT Security Policy goes on to caution that “nothing should be put in an email which you would not be prepared to put on an internal memorandum or on Company headed notepaper” and it provides that “[e]mails must never contain anything unprofessional or content that could damage the Company’s reputation. You should not refer to anyone (either internally or externally) in an email in a way that you would not want them to read. You must not send emails which are irresponsible or likely to cause offence…”. In line with the warning in Mr Crombie’s contract of employment that his electronic communications may be monitored, the IT Security Policy provides that “[t]he Company reserves the right to examine the content of emails or files belonging to computer users to maintain the functionality of the system. Or where the Company has reason to suspect that these regulations are being breached…”.

[156]The evidence from both Mr Burgess and Mr Crombie, which I accept, is to the effect that they were both aware of these policies and that Mr Burgess would have taken Mr Crombie through them. Various extracts from the policies were put to Mr Crombie in cross-examination and he accepted that he would have been aware of them. Specifically he said that “I wouldn’t know every policy inside out, I wouldn’t know the wording of everything, but I would certainly have seen these documents, yes”. The Emails: Preliminary Observations

[157]Before turning to make factual findings about the Emails themselves, there are some important preliminary points that apply to all of them.

[158]At one point during the trial it was suggested by Inspired that the Emails do not constitute the entirety of Mr Crombie’s acts of alleged breach of warranty but are merely “examples” of such acts. I observed at the time that this was not the way in which the case had been pleaded and, in my judgment, it is not open to Inspired now to rely on any conduct other than that evidenced by the Emails as constituting a breach. Although Inspired cross-examined Mr Crombie by reference to other emails and messages, I do not consider those to be relevant to the issues that I must decide. I understood this to be accepted by Inspired in closing in that its focus was concentrated solely upon the Emails.

[159]The Emails were sent between two life-long friends in the realistic expectation (at least to the middle of 2022) that they would not be seen by anyone else. I accept Mr Crombie’s evidence that he was the only person with access to staff emails until the middle of 2022 such that, notwithstanding the provision for monitoring in his contract and in the IT Security Policy from around September 2021 onwards and notwithstanding that the Emails were sent in work hours using Company email, he had good reason to believe that his emails to Mr Burgess were “completely private”. One of the Emails (dated 17 September 2020) attached a document intended as a spoof pay review for Mr Burgess. I accept Mr Crombie’s evidence that this document was “saved in a private space on my computer, not in a shared space, so nobody else would have access to it”. I also accept his evidence that at the time of sending this document to Mr Burgess it was his belief that it could only be seen by Mr Burgess and that it would not be viewed by anyone else.

[160]As for Emails sent after the middle of 2022, I find that Mr Crombie knew that they could be monitored but, given his role at MOS he did not expect or anticipate that might happen. In his witness statement he explains (and I accept) that in the middle of 2022, Emily Booth became the Company’s “IT person” and he subsequently learnt (although he was not aware at the time she started) that she also had the ability to access staff emails through the Company’s email systems. Mr Crombie says that Ms Booth was “not meant to read the content of other people’s emails without authorisation” and that, as far as he was aware “she did not do so”. He was not cross examined about this statement. Accordingly even after mid-2022, when he exchanged emails with Mr Burgess, I accept that Mr Crombie still considered them to be on “a private email chain” and that he did not therefore consider that he was acting in breach of policy. Mr Burgess thought the same. It was his evidence that the Emails “were exchanged privately between [Mr Crombie] and myself [and] were not intended to be seen by anyone else”. No doubt both Mr Crombie and Mr Burgess were somewhat naïve in this regard, but I accept their belief as to the privacy of the emails to have been honestly held, whatever the content of the Employee Handbook and IT Security Policy.

[161]Related to this point is that I also accept (and find) that at the time the Emails were exchanged between Mr Crombie and Mr Burgess it was extremely unlikely that anyone else within MOS would be exposed to them and there is in fact no evidence that anyone else was ever exposed to them (until they were located by Inspired during its investigations in early 2023). Mr Crombie was cross-examined about the possibility of the Emails “spilling out” to others (to use Mr Crombie’s phrase), but he confirmed that MOS was a paperless business and so had no printers in the office. Mr Crombie was also cross-examined about the possibility that he might have used inappropriate language of the type used in the Emails in a location where he could be overheard. I am not concerned with any allegations of inappropriate language being used at work and there is no evidence of Mr Crombie being overheard using such language. Mr Crombie’s evidence, which I accept, is that he would never use inappropriate language when there “would even be any small chance of anybody else hearing”. This appears to me to be entirely consistent with Mr Burgess’ evidence that he had never witnessed Mr Crombie behaving in an unprofessional manner at work and nor had any incidents been reported to him. Ms Fairs’ evidence is to like effect.

[162]Finally, although Mr Herrera sought to suggest that there was a safeguarding issue arising out of the Emails, this was never suggested to Mr Crombie or to Mr Burgess and I accept the Defendant’s submission that there is no basis to suppose that the Emails posed or evidenced any risks to the pupils at MOS. In any event, no such case is pleaded.

[163]I shall now consider each of the five categories of Emails in turn before turning to consider whether they amount to gross misconduct. Allegedly Racist Language Emails

[164]There are three email exchanges on which Inspired relies (Emails 8, 9 and 10 at Annex A) in which Mr Crombie refers to Mr Burgess (who is of Italian descent) as a “wop”. These email exchanges (one of which involves a relatively lengthy exchange of emails) date from August 2020, September 2020 and November 2020 respectively:a. Email 8: on 27 August 2020 at 20:51, an email from Mr Crombie to Mr Burgess, in which Mr Crombie said “Oh fuck off and make some pasta you wop cunt” to which Mr Burgess responds (at 08:27 the following day, 28 August 2020) “Fuck off and tell me what the weathers like up there ya lanky cunt”;

b. Email 9: on 19 September 2020 at 19:20, an email from Mr Crombie to Mr Burgess (subject “Ewan Burgess Pay Review Sept 2020”) attaching a letter to Mr Burgess on MOS headed paper which said “Go fuck yourself you wop cunt”; and

c. Email 10: on 3 November 2020 at 14:19, another email, from Mr Crombie to Mr Burgess, in which Mr Crombie said: “I here by give you all of my business and £1000000000000 pay rise. Also sorry for calling you a wop cunt. Actualy I forgot im not sorry” (sic).

[165]Inspired alleges that the use of the term “wop” amounts to “improper and unprofessional levels of the use of racist language in the course of the Company’s business” and that these emails were not only reckless and grossly negligent but also amounted to repeated serious breaches of the IT Security Policy and the Personal Integrity Policy. Although in closing, the Defendant quibbled over whether the term “wop” was genuinely to be described as a racist term (rather than as an ethnic or national slur - Italians not generally being considered a race), I understand it often to be regarded as a derogatory and offensive term for a person of Italian descent. However I note that Mr Burgess did not regard “wop” as a racist term and was not offended by it, although he accepted that “[o]thers may interpret it differently”. He also accepted that it would be inappropriate to use the term “wop” in connection with an Italian employee, absent a relationship of the sort he had with Mr Crombie.

[166]Mr Crombie frankly accepts that the use of racist language in work emails is irresponsible, unprofessional and “a complete no-no”. Further he accepts that even one instance of such use would be a serious breach of the MOS IT Policy and/or the Personal Integrity Policy. He also accepts that the use of the word “cunt” is offensive, unprofessional and obscene; he acknowledges that it has no place in a work email. He admits that if these emails had been in the public domain or seen by others internally they could have harmed the reputation of MOS. He accepts that he never suggested to Mr Burgess that they should not send emails of this type to each other.

[167]However, Mr Crombie explained (and I accept) that there was a “backstory”: “Mr Burgess is of Italian descent, and it is something I have always admired in him. He knows very well it's a country that I have a huge amount of admiration for, so this particular term, from my understanding, is a −−refers to southern Europeans, particularly Italians , often from gangster films , and such, and it is a −−I guess what I would describe between Mr Burgess and myself, given our sense of humour and our very close friendship, it 's almost a term of endearment. There was no malice meant. He, I knew, would accept it very lightheartedly . It is something that −−I don't address him as this, you know, often, but it is almost a −−I guess a term of endearment on some level, and I know that it is something that he would find −−take in jest and very lightheartedly”.

[168]More generally Mr Crombie said that all of the Emails could be explained by reference to “a moment of quite high stress” and that they were “to create some sort of camaraderie between the two of us”. This explanation is borne out by the totality of the email chain of 27 and 28 August 2020 (Email 8), which begins, as can be seen from Annex A, with a highly apologetic work email from Mr Burgess to Mr Crombie sent at 22:20 in which Mr Burgess says he feels guilty for “letting you down with payments”. The email ends with the words:

“I would hate for you to think im not giving this 100% and that im not absolutely dedicated to the role and MOS. Sorry for the late email but its been playing on my mind all evening” (sic). Mr Crombie responds the next morning to say that there is “[a]bsolutely no need to apologise”

. He goes on to say that Mr Burgess is doing an “unbelievable job” and that it is evident how dedicated he is. He acknowledges how “mental busy it’s been for everyone”. Two hours later, Mr Burgess emails to say that he appreciates the reply but he hates “letting you down”, to which Mr Crombie replies “Thanks for that pal, appreciate all your work. Ok can we now stop emailing each other polite, respectful emails”. At 16:39, Mr Burgess responds saying “100%! I hate pretending that I give a fuck about your stupid business”. It is against this background that the two emails expressly referred to above are sent. The email chain ends, to my mind tellingly, with the following exchange at 08:29 and 08:30 on 28 August 2020: Mr Crombie says “Well this escalated”, to which Mr Burgess replies immediately “Not like us to take a normal situation/email and turn it on its head”.

[169]In my judgment, this exchange illustrates the way in which two old friends dealt with an emotionally vulnerable exchange of emails about work, by deliberately seeking to lighten the mood, exchanging insults (which were plainly intended to be joking) and then recognising that this is what they had done. Mr Burgess’ final email appears to me to encapsulate the approach they often took in their relations with one another – taking a mundane situation and subverting it for light relief or (as here) to diffuse an uncomfortable situation. I find that these emails were not intended to be racist or offensive and neither Mr Crombie nor Mr Burgess was offended by them; on the contrary, they valued this form of communication as an affirmation of their friendship – as Mr Burgess said in his statement “this was our way of not losing sight of our friendship and having some fun while creating and growing the business”.

[170]Mr Burgess also explained that “Tom and I have spent 20 years taking the mick out of each other, calling each other names” and he said that he would not have expected an apology from Mr Crombie for his use of this language because “[t]here was nothing to apologise for between the two of us because, as I have said, we have jokingly called each other names”. In his statement he explained, and I accept, that all of the Emails are from a time when he and Mr Crombie were working long hours. The Cocaine Emails

[171]Inspired relies on four Emails (Emails 1, 5, 6 and 7 at Annex A) which it says give rise to a reasonable impression of the intention to purchase and take cocaine while on Company business:a. Email 1: An email exchange between Mr Crombie and Mr Burgess on 17 December 2021 apparently prompted by an email from Mr Burgess to the MOS Senior Leadership team discussing fixing up coffee chats or “121” meetings against the backdrop of the Pandemic. Mr Crombie emails Mr Burgess at 10:33 to say “we should probably have a one-2-one…hmmmm….doooooo they NEED to be ‘coffee’ chats? Or can it be co…….”. Mr Burgess responds at 13:46 “I think you got cut off there at the end…???” to which Mr Crombie replies at 14:46 “COCAINE”. At 14:49, Mr Burgess responds with “Probably get through a lot of work id imagine”.

b. Email 5: An email exchange between Mr Crombie and Mr Burgess on 27/28 July 2022 prompted by an invoice being sent by Full Circle to Mr Burgess. He forwards the invoice to Mr Crombie at 20:07 on 27 July joking that the invoice had been sent “before the work has been carried out, with a due date set for today! hahaha”. Mr Crombie replies at 20:22 “👃💯” (it is common ground he was suggesting that Ms Fairs might use the money for cocaine), to which Mr Burgess replies “Haha, na I reckon gambling mate”.

c. Email 6: An email exchange between Mr Crombie and Mr Burgess between 10 and 12 September 2022, a few days after the death of Queen Elizabeth II. On 10 September (a Saturday), Mr Crombie sends Mr Burgess a long email with details about a London trip during which Mr Crombie was to meet Inspired and there was also to be a Company meeting with Mr Leitch, Ms Pearce and Ms Goyea. The email presents a congested itinerary for the day of the meetings. Mr Crombie finishes the email with the words “actually scrap that, lets just go and get S and C instead” (it is common ground that “S and C” is a reference to “strippers and cocaine”). Mr Burgess responds at 18:58 the following day (a Sunday) “So reading between the “lines” Arrive in London (which should be quite quiet this week, not just saying, it ll be really quiet), C & S till we leave (in body bags) on Weds?”. This prompts an email from Mr Crombie, also on Sunday evening, saying “Who nose how busy London will be this week. Will be good to see Charlie, the new king if he’s in town. Weather looking cooler next week and possible snow. Looking like that fine powder type. Think there are tourists coming from as far afield as Columbia which will be great to see.” Mr Burgess responded the next morning “Hope not, hope not!”.

d. Email 7: An email exchange between Mr Burgess and Mr Crombie between Friday 21 and Sunday 23 October 2022. In the first two exchanges, the men are discussing payment of the October pay. On Sunday 23 October 2022 at 16:37, Mr Burgess emails saying “Choice mucks, good to get that paid”, to which Mr Crombie responds at 16:47 “not really, would have rather used the money for COCAINE”. Mr Burgess responds at 16:48 “Something tells me we are going to have money in the next few weeks to purchase a shit ton of ching so…..”. Mr Crombie emails back at 16:54 “probably buy columbia actually, in a way” to which Mr Burgess responds “Start our own cartel in a way”.

[172]I agree with the Defendant that on a fair reading of these emails it would not be reasonable for a third party, still less a third party who knew Mr Crombie and Mr Burgess, to form the impression from these emails that Mr Crombie and Mr Burgess had the intention of purchasing and taking cocaine on Company business. I consider that on a reasonable reading of these emails, they are plainly intended as jokes. They amount to light hearted banterous (and sometimes ludicrous) exchanges of the type that occur between friends. I also accept that a number of these Emails evidence Mr Crombie and Mr Burgess’ shared long running joke, intended (ironically) to contrast their lives and conduct with the “alpha male” conduct of the protagonists in the film “The Wolf of Wall Street” in which (in Mr Crombie’s words) “two guys running a business get into the world of drugs and other related trouble”. As Mr Crombie said in his statement (and repeated in his oral evidence), and I accept, “[t]he joke is that, in fact, Ewen and I are the complete opposite of that, we rarely drink, don’t take drugs or try to meet women and have never been in trouble”.

[173]Turning to the detail of the emails:a. Email 1 occurs against the background of the Pandemic and the tone is quite obviously wry and jokey, as Mr Burgess’ final observation “[p]robably get through a lot of work id imagine” makes plain – this is the opposite of what would occur in the event of a meeting at which they took cocaine. The use of language, capital letters and feigned ignorance (“I think you got cut off there at the end…???”) in these exchanges makes plain that they are jokes. In fact, as is common ground, Mr Crombie and Mr Burgess did not have a “121” at which they took drugs.

b. Email 5 in which the two men are laughing about the efficiency of Ms Fairs’ invoicing is plainly no more than a joke – she does not take cocaine and nor is she a gambler, as she confirms in her statement. I note her unchallenged observation that “I know Tom and Ewen well enough to understand that the email exchange was in the nature of informal chat between close colleagues as is usual in many organisations”. She was not offended by it. I accept Mr Crombie’s unchallenged evidence that he had never spoken to Ms Fairs about drugs or gambling and had no reason to think she would spend the money on either drugs or gambling. It is impossible to see how Email 5 could give rise to an impression that Mr Crombie and Mr Burgess intended to purchase cocaine.

c. Email 6 again is obviously jokey and I accept Mr Crombie’s evidence that his reference to “S and C” is a reference to the film “The Wolf of Wall Street” – Mr Burgess picks up on that reference with his play on the word “lines” and Mr Crombie then enthusiastically contributes with his double entendres referring to cocaine use. These are not serious:

“[w]eather looking cooler next week and possible snow”

. Mr Burgess’ suggestion that they would be leaving “in body bags” is plainly humorous, as is Mr Crombie’s earlier observation “[e]arly to bed. (welllll)”. It is common ground that the trip to London proceeded largely according to its itinerary and that Mr Crombie and Mr Burgess did not see strippers or take cocaine. d. Email 7 is also plainly intended to be humorous. The exchange occurs on a Sunday afternoon shortly before the SPA which, if signed, would financially benefit both Mr Crombie and Mr Burgess. The way in which the friendly exchange (“choice mucks”) escalates into a quick fire, silly, exchange (“probably buy Columbia in a way”; “Start our own cartel in a way”) makes clear it is far from serious, but rather reflective of their good fortune. I accept Mr Crombie’s evidence that he put the word cocaine in capital letters to create a shock factor. The October 2022 payroll was paid to MOS’ employees and there is no suggestion that Mr Crombie or Mr Burgess used the money they received following the SPA to purchase cocaine, purchase the country of Columbia or start a cartel.

[174]Inspired’s alternative pleaded case is that Mr Crombie was “reckless and unprofessional as regards the foregoing”, a case it expanded upon in closing by reference to gross negligence. This alternative case was explained as amounting to(i) reckless and unprofessional conduct in that the Emails were sent on work email accounts; and

(ii) because they gave the impression of illegal drug use. I reject the latter for reasons I have given. As to the former, Mr Burgess candidly accepted that it was unprofessional and inappropriate to refer to illegal drugs in work emails and, although Mr Crombie was not asked an equivalent question so as to avoid repetition, he can fairly be understood to have made the same concession, as was accepted in closing. I shall return in a moment to whether this is enough to amount to gross misconduct. The overconsumption of alcohol Emails

[175]Inspired relies on two Emails in this category (Emails 2 and 3 at Annex A). Inspired continues to maintain that these emails evidence reckless overconsumption of alcohol while on Company business, alternatively give rise to a reasonable inference of the same, alternatively were reckless and unprofessional. I have addressed some of these allegations above, but now set out the detail of the emails themselves:a. Email 2: an email exchange between Mr Crombie and Mr Burgess on 3 and 4 March 2022 discussing a trip to London on 22 March to conduct interviews with candidates to be Executive Head of School. Mr Crombie was also due to meet Mr Nsouli. The interview panel was to be Mr Burgess, Ms Fairs (referred to by Mr Burgess and Mr Crombie as “Angelo”) and Mr Wesley Emmett. In an email on 3 March at 21:30 Mr Crombie set out some arrangements and then said “ive enquired about meeting space in a few hotels as per Angelos suggestion. Monday night we can get smashed. Joking. Nah, im actually not. Looking forward to it”. Mr Burgess responded the next morning at 08:12 “Right, well your first answer was “were getting smashed” so…Shame we are barred from the Londoner!”.

b. Email 3: an email exchange between Mr Crombie and Mr Burgess between 26 and 28 March 2022 in relation to the second stage assessment for the Executive Head role, due to take place on 4 April 2022. Mr Leitch, one of the candidates, wrote to Mr Burgess to ask if he could meet some students. Mr Burgess forwarded this email to Mr Crombie on 26 March at 19:00. Mr Crombie replied at 19:38 “Just send him his contract now and we can spend the 4th getting cunted in the meeting room at mal (a la tete) maison”. Mr Burgess replied early the next morning “See it, say it, sorted pal”. It is common ground that the use of the word “cunted” here is a reference to getting drunk.

[176]I reject the suggestion that these emails evidence the overconsumption of alcohol or that such conduct is to be inferred from their content. I have already dealt generally with this allegation, but dealing more specifically with the content of these Emails, I accept the evidence of Mr Crombie and Mr Burgess that on the night before the interviews on 22 March 2022, they got an early night as they knew they had two “intensive and important” days of interviews ahead of them. I also accept the Defendant’s submission that if they had gone out and got “smashed” on that evening, it is very likely that the after-effects would have been apparent to Ms Fairs over the long day of interviews the following day. However, her unchallenged evidence is that she had no knowledge or suspicion of Mr Crombie and Mr Burgess consuming alcohol on this trip and that, on the contrary, they were “working really hard on finding the right candidate for this role. They were always on the ball and were incredibly professional throughout the whole arrangement which turned out to be one of the best interview selection processes I have ever been involved in”. Mr Crombie explained the reference to being “barred” from the Londoner was a joke which had nothing to do with alcohol, evidence which was corroborated by Mr Burgess, and I accept.

[177]As for the second round of interviews on 4 April 2022, the evidence of Mr Crombie and Mr Burgess accords with the unchallenged evidence of Ms Fairs that “[a]s with the first stage interviews in London, Tom and Ewen conducted themselves very professionally during the second stage interviews. I can also confirm that they absolutely did not consume alcohol in the meeting room at the Malmaison on 4 April 2022”.

[178]As for Inspired’s alternative case that these emails were reckless and unprofessional (and in relation to the use of the word “cunted”, also obscene), Mr Crombie accepted that he had acted unprofessionally, that this was not a suitable topic for a work email and that anyone who did not know his relationship with Mr Burgess might not have thought that he was joking. However, he maintained that his relationship with Mr Burgess did not revolve around drink and that these emails were jokes. This he says is evident from Mr Burgess’ jokey reference to being “barred from the Londoner”. Given the nature of these men’s relationship and given that I have accepted that they rarely drink, let alone to excess, I accept that these emails were intended as jokes, once again contrasting the perceived conduct of “alpha males” with their own somewhat more prosaic lives. Emails referring to Women

[179]In closing submissions, Inspired dropped its previous reliance on Email 6, on the grounds that although the reference to strippers in that email was inappropriate for a work email there is nothing sexist or vulgar in referring to strippers. It now seeks to rely on two Emails (Emails 2 and 4) which it alleges amount to “improper and unprofessional levels of sexism and vulgarity in the course of the Company’s business”.

[180]Specifically: a. Email 2: I have already dealt with this email chain in the context of the allegations about the overconsumption of alcohol. However, Inspired relies on it under this heading because, in connection with the trip to London, the email from Mr Burgess at 08:12 says “i ll put out a few feelers and see who is about”. Mr Crombie responds at 08:14 “Hmmmm, feelers…..putting the feelers out….”, to which Mr Burgess says at 08:29:

“Feeling the feeling for feelers IN London WITH the tidies”. b. Email 4: this is an email exchange between Mr Crombie and Mr Burgess on 30 and 31 May 2022 concerning the recruitment of a Head of Secondary School. The exchanges begin with a discussion about the second round of interviews due to take place in Edinburgh. Mr Crombie’s evidence, which I accept, is that he had seen the written applications for the first round candidates but did not meet them in person or virtually. He was due to be attending the second round of interviews. In an email on 31 May 2022, timed at 09:42, Mr Crombie said “Will be great to welcome Antonia to the school. I mean it will be great to be part of the second stage of interviews”

. Mr Burgess replied at 9:50 “Mate, why do you keep mentioning Antonia? She didn’t make it through, its: Roxanne Pearce, Jankoma Crisp and Stacey Begg”. Mr Crombie responded at 9:53: “Well that was a waste of time then. Guess red light will have to get it”.

[181]Inspired invites me to find that “tidies” is a disrespectful, demeaning and sexist term for a woman. However, Mr Burgess and Mr Crombie both gave evidence to the effect that it is a term used in Scotland for a good-looking, attractive, woman. They denied that it was disrespectful or offensive, albeit they accepted that it was not a term that would be used in a professional context to refer to women. In closing, Inspired showed me nothing to suggest that this understanding of the meaning of the word “tidies” is wrong and I accept Mr Crombie and Mr Burgess’ evidence. Absent any other evidence as to the meaning of the word “tidies”, I do not consider it to be open to me to find that it is a derogatory or offensive term for a woman.

[182]Next Inspired contends that the various references to “feelers” (after Mr Burgess’ initial innocent email referring to the fact that he would “put out a few feelers” to build his business network) are sexually suggestive with the obvious connotation of touching or “feeling” women. It invites me to find that these references were lewd and disrespectful to women. Mr Crombie was prepared to accept that this proposition “could be taken” from Mr Burgess’ response, although he described Mr Burgess’ email as a “nonsense email” essentially because it picked up on words used in his previous email to comic effect. Mr Burgess, on the other hand, staunchly denied that there was any suggestion of sexual connotation, repeating the point that this was just a “nonsense email” in “the usual fashion of Tom and I saying silly things to each other”.

[183]On balance, I am inclined to agree with Mr Crombie that one could regard this email chain (and particularly Mr Burgess’ final email) as being somewhat disrespectful to women. It is undoubtedly unprofessional. However, at the same time, it is clear that the two men were playing on words (“feeling the feeling for feelers”) in a jokey way. Mr Burgess’ use of the word “tidies” was not sexist and although the play on words in both his and Mr Crombie’s earlier email did have a potentially lewd connotation, I accept that it was no more than banter. There is no evidence whatever that Mr Burgess or Mr Crombie are inclined to seek out attractive women on their business trips.

[184]As for the email chain of 31 May 2022, neither Mr Crombie nor Mr Burgess are able to explain why Mr Crombie kept “mentioning Antonia” and Mr Crombie cannot remember whether he saw a photograph of her at the time. However Inspired invites me to infer that Mr Crombie was inappropriately expressing a preference for a candidate, probably based on her looks (which it suggests he could have checked online). Inspired points out that if this were not the case then it is difficult to see why Mr Crombie would have referred to the process as a “waste of time” and then said that a different female candidate to whom he refers as “red light” will “have to get it”.

[185]This point is not expressly pleaded and does not appear to me obviously to sit within a plea of “sexist or vulgar” conduct. Nevertheless, I have no doubt that the casual observer would draw the inference suggested by Inspired and indeed Mr Burgess himself accepted the implication of the email as put to him by Ms John. However, that notwithstanding, I do not consider that it would be right to find that Mr Crombie was serious in the observations that he made and Mr Burgess confirmed that he did not take this as “a serious comment”. As Mr Crombie explained to the court, while he sat on the final interview panel with Mr Leitch and Mr MacLean, he left it to them to make the final decision on the candidate (with himself in reserve as a “tie-break” if necessary). Mr MacLean and Mr Leitch agreed that Ms Pearce was the best candidate and Mr Burgess’ evidence is that he also reviewed the interview notes and CVs and considered that Ms Pearce was “a great addition to the school”. Inspired has produced no evidence suggesting that Mr Crombie’s comments had any impact whatsoever on that process. While I accept that he should not have said anything in an email which appeared to suggest that the selection process had been in any way pre-judged (and Mr Crombie himself admitted that it was unprofessional), I also consider that this ill-advised and inappropriate “jokey exchange” was not intended to, and did not, reflect his real approach to selection.

[186]Finally, Inspired relies upon the reference to Ms Pearce as “red light” – a reference which Mr Crombie acknowledges is to the song by The Police, Roxanne and specifically the lyric “Roxanne, you don’t have to put on the red light”. Inspired contends that this was an obvious reference to Ms Pearce being a prostitute and that such reference was highly offensive and sexist and, in a professional or work context incapable of being merely an “affectionate nickname”, least of all for someone who is not a friend but only a prospective hire. Inspired points out that that connotation will be sufficiently notorious to be obvious to any third party reading these email exchanges. It also says that the risk of third parties becoming aware of this offensive nickname is demonstrated by the way in which another nickname later ascribed to Ms Pearce (“Foxy Roxy”) came to light when Mr Crombie used it in the Zoom Chat.

[187]Mr Crombie and Mr Burgess both explained that they did not know that The Police lyric referred to above is a reference to a sex worker. Mr Crombie accepted that he knew what “red light” means and that he knew the line from the song, but said that he had “never really thought about the context of it”. He said that he and Mr Burgess would often use affectionate nicknames for people which were not intended to be offensive and that “Roxanne immediately to me was the song by The Police. There was absolutely – and I want to be clear here, from my perspective absolutely no reference to prostitution whatsoever”. Mr Burgess said that he didn’t know the lyrics to the song and just knew this one phrase but had “never made the connection” with prostitution. Although I am inclined to the view that this evidence is somewhat implausible, overall I consider Mr Crombie and Mr Burgess to have been telling the truth about their Email exchanges and, given their extensive and frank concessions, it is difficult to see why they would lie about this particular issue. What is obvious to one person when listening to lyrics may not be obvious to another and, on balance, I am not prepared to find that Mr Crombie and Mr Burgess are both lying about this. I reject Ms John’s submission in closing that knowledge of jokey and slang words for cocaine necessarily indicates a knowledge of the meaning of this particular song. Accordingly, I accept their evidence that there was no intention to refer to Ms Pearce as a prostitute – even if that is the way in which many people would have read this email exchange.

[188]While it is true that the nickname “Foxy Roxy” came to light subsequently in circumstances which Mr Crombie and Mr Burgess could not have anticipated – i.e. the Zoom Call - it is not Inspired’s case that there was any breach of warranty in relation to this incident. As I understood Ms John in closing, Inspired says that this is evidence that the misuse of language can come to light and suggests that it supports the drawing of an appropriate inference. I have already rejected that submission.

[189]I shall return in a moment to address Inspired’s case that these Emails, in common with the others on which Inspired relies, were grossly negligent and amounted to gross misconduct. Emails alleged to constitute discriminatory behaviour

[190]Inspired originally sought to make out this case in relation to Email 4, but chose not to pursue it in closing. In circumstances where all candidates in the final round of interviews for Head of Secondary School were women (and where it appears that all first-round candidates may also have been women – although owing to Inspired’s decision to redact one name in an email of 24 May 2022 it is impossible to know) there appears to have been no proper basis on which to allege discriminatory behaviour. Gross Misconduct?

[191]As Ms John confirmed in closing, on Inspired’s pleaded case, there can only be a breach of the Warranties if there has also been gross misconduct on the part of Mr Crombie. This is plain from paragraphs 17-21 of the Re-Amended Particulars of Claim (in relation to Warranty 16.15) and paragraph 22 in relation to Warranty 8.2, which adopts the facts and matters pleaded in 17-21). The allegation of breach of Mr Crombie’s employment contract and breach of his duties as a director under the 2006 Act is made solely on the grounds of his “actual gross misconduct and/or his failure to disclose his own gross misconduct and/or that of Mr Burgess”. Thus Inspired’s case in closing was that “[i]t is axiomatic that the gross misconduct was also the negligent exercise of Mr Crombie’s office of director”.

[192]The decision on gross misconduct is therefore of critical importance to this case.

[193]In summary, Ms John submits that each of the ten Emails referred to above amounts to gross misconduct in that each is a serious breach of the Company’s policies. She accepts, however, that some are “stronger meat” than others. In addition she says that, taken together, the repeated nature of the breaches (and the failure to put a stop to them) puts the question of gross misconduct beyond doubt. Ms John highlights the allegedly racist emails and the emails referring to women as being particularly egregious, although she accepts that this is ultimately a matter for the court. She acknowledges that in considering the issue of gross misconduct I must factor in any explanation for that conduct which I have accepted as true, but she says that even if one accepts the evidence of Mr Crombie and Mr Burgess in its entirety (as I have done), Mr Crombie’s conduct still amounts to gross misconduct, inconsistent with his duties as a manager and director of MOS and justifying immediate discharge. She rejects the suggestion that a belief in the privacy of the Emails or their “jokey” nature can amount to a defence.

[194]Standing back, viewing the Emails objectively, and taking stock of my findings on the Emails themselves, I do not consider them to amount, whether separately or together, to gross misconduct. I say that for the following reasons.

[195]I bear in mind that gross misconduct must (on Inspired’s Employee Handbook) be “so serious that the employee may be liable to instant dismissal”. This reflects the caselaw to which I have already referred. I also bear in mind Mr Crombie’s position of seniority and that he was working for an Online School. However, this is not a case about safeguarding and Inspired does not run a case premised upon the harm that any of these Emails might have caused to pupils.

[196]The Emails reflect a miniscule proportion of the emails sent by Mr Crombie and Mr Burgess to each other over a period of just under two years. Given that Inspired appears to have carried out a trawl of those emails for anything on which it might rely, it would appear that the Emails are not the tip of the iceberg, but represent all that could be found. Certainly that is the way the case has been pleaded. Looked at dispassionately, the Emails evidence the occasional unprofessional and inappropriate use of work emails as a means of letting off steam. The mere fact of sending an inappropriate or unprofessional message from a company email address does not itself constitute gross misconduct, but that is not to say that any one (or any combination of the Emails) may not amount to gross misconduct if serious enough.

[197]Given the explanations that I have accepted from Mr Crombie and Mr Burgess and the findings I have made as to their belief in the privacy of the Emails, together with the realistic nature of that belief, it was not likely that the Emails, or any of them, would in fact damage the reputation of the Company or cause it embarrassment. Whilst I accept that this is not a defence to the charge of breach of MOS policy in sending emails which “may bring embarrassment” or “could cause harm to the reputation of MOS” (see the Personal Integrity Policy), I nevertheless consider it to be an important factor relevant to “the consequences of the breach” (see Williams at [53]) and also to the question of whether the Emails amount to “conduct likely to damage the reputation of the Company” for the purposes of the Gross Misconduct section of the Disciplinary Procedure in the Employee Handbook. At all times the overarching question must be the seriousness of the conduct.

[198]Even assuming that the Emails might have been uncovered, had they been properly investigated and the explanations I have accepted been given for them, it is difficult to see that there could genuinely have been any real likelihood of embarrassment or damage to MOS (as opposed to embarrassment to Mr Crombie and Mr Burgess themselves), notwithstanding evidence from Inspired’s witnesses to the contrary. They had not been acting improperly on school business. On the contrary their conduct towards everyone outside their tight-knit friendship was at all times entirely professional. They did not consider their exchanges with each other to be offensive or harassing and the banter they exchanged in their Emails does not appear to be a reflection on their conduct at work. It is, in my judgment, very hard to see that the Emails could be viewed objectively as amounting to a “grave and weighty” dereliction of Mr Crombie’s duty to MOS.

[199]The alcohol and cocaine emails do not evidence actual overconsumption of alcohol or the possession of, or use of, illegal drugs, but rather a somewhat immature and naïve “letting off steam” by two close friends with a dark and ironic sense of humour who were working all hours to make the business a success. There is no evidence whatever of their unprofessional observations in the Emails “spilling out” elsewhere, much less of anyone else (whether externally or internally) finding them offensive – prior to Inspired locating them.

[200]The four emails referring to drugs, whilst obviously inappropriate and unprofessional in a work context, could not seriously be read as evidencing an actual intention to take illegal drugs. No doubt it was reckless and unprofessional to conduct banterous (and sometimes obscene) exchanges about drugs and alcohol from work email addresses, and no doubt it was (on each occasion) a breach of Company IT Security Policy. However, I find that, contrary to Inspired’s alternative case, there was no risk of these emails giving the impression of actual illegal drug use or overconsumption of alcohol on Company business. They were intended as jokes between two men who were old friends and any investigation into these emails would inevitably have held that such conduct would be so entirely out of character as to be utterly implausible. Whether independently or together, I do not consider these emails to be so serious as to justify dismissal.

[201]While the three Emails containing racist language might be misconstrued when considered in isolation, when viewed in context they are very far from being offensive or harassing emails. The language is unprofessional and inappropriate for the work context and, in each case, it was a breach of the Company IT Security Policy (and the Personal Integrity Policy) but, on the evidence, these Emails were as much an affirmation of friendship in difficult work circumstances as anything else and I do not consider them to amount to conduct so serious that it would justify dismissal. I note in this context that it was only during the course of the trial itself that Inspired chose to amend its case to include these Emails – had they genuinely considered them to be of a very serious nature, it is difficult to understand why they would not have sought to make that amendment a great deal sooner.

[202]As for the two Emails containing language that could be read as making “sexist and vulgar” references to women, I accept that these were unprofessional, inappropriate and offensive and further that they were in breach of the Company IT Security Policy and the Personal Integrity Policy. However, I do not consider either to be a serious breach of these policies. Email 2 involved rather juvenile exchanges building on the use of the word “feelers” but I have found that while they had somewhat lewd connotations they were no more than banter. Inspired did not seek to advance a case that they evidenced an intention to pick up women on the trip to London – thereby plainly accepting that the reference to “strippers” was a joke. As for Email 4, to my mind the suggestion that Mr Crombie was pre-judging an interview process and his reference to “red light” in connection with a potential hire might have been the most serious of all the Emails in terms of the potential for damaging the reputation of MOS, but for the fact that the evidence establishes that there was no “pre-judging” and that the term “red light” was used innocently. There is no longer any claim of discrimination. Standing back and considering what is left, I do not consider these emails to be so serious as to justify dismissal.

[203]Looking at all of the Emails together, there is a pattern of occasional jokey exchanges suggesting various things (at least to Inspired), but in truth evidencing no really harmful conduct. There can be little doubt that sending the Emails amounts to misconduct, to breach of MOS policy and thus to breach on the part of Mr Crombie of his duties as a director. However, in my judgment, even taken together, the Emails are insufficiently “grave and weighty” to amount to a repudiation of Mr Crombie’s employment contract or to justify dismissal.

[204]Furthermore, although there is a consistent and repeated breach of Policy, as Inspired contends, I have held that Mr Crombie genuinely considered his exchanges to be private and thus outwith the terms of the Policy such that he could not sensibly or fairly be punished for their repeated nature (and nor would the need to speak to Mr Burgess about his emails ever have arisen). In this he was both thoughtless and foolish but, as Mr Crombie also said, and I accept, “these messages were sent [and] very quickly forgotten about. They were nothing that I even remembered sending or receiving”. They were, as Mr Crombie said, “flippant, albeit inappropriate remarks between two trusted people” which he would have no reason to recall, much less to bring to mind upon the sending of a further Email.

[205]I accept Mr Crombie’s evidence now that if an employee of MOS had been discovered sending multiple emails of this type he would have taken a “very sensible approach” and found out “exactly what was going on here” and “[got] to the bottom of what the potential problem would be”. As he said “context is very important here” and one cannot determine the seriousness of any particular conduct without also understanding its context:

“everything would be depending on the context of the situation”

. Thus when answering questions about the allegedly racist emails, Mr Crombie said that if they were between two people and nothing was “spilling out” and there was no offense caused, “I think we would have to have serious conversations with any parties involved to ensure that this type of behaviour stopped immediately, it did not happen again” but he would again “take a rational and sensible approach”. He said something similar in relation to the emails involving alcohol “[i]f this was banter, back and forth jokes, again I would ensure it was shut down, and we would have appropriate conversations with those individuals”. Mr Crombie also said that if he had already spoken to a member of staff and the misconduct had continued then “we would be looking at very serious territory”, but, as I have said, Mr Crombie was not in that position himself. As was pointed out by the Defendant in closing, it was not put to either Mr Crombie or Mr Burgess that the Emails, or any one of them, would have been grounds for instant dismissal had they been written by another MOS employee (including where there had been an investigation and they had been determined to be jokes).

[206]Finally, I return to Williams and Paul Wells. As I have already said, neither case appears to me to support the proposition that the Emails in this case amount to gross misconduct and I have been shown no other case involving personal exchanges of email messages between friends of the type with which I am concerned which have been held to amount to gross misconduct.

[207]In light of my findings as to gross misconduct, there is strictly no need to consider issues 3-9 of the List of Issues. However, in case I am wrong in my decision on gross misconduct I must nevertheless make appropriate findings. Was the alleged gross misconduct wilfully concealed from Inspired by Mr Crombie? (Issue 3)

[208]The words “wilful concealment” as used in paragraph 1.2 of Schedule 6 are ordinary words and must be construed having regard to their ordinary and natural meanings. The word “conceal” means “to keep something secret, either by taking active steps to hide it, or by failing to disclose it” (see Potter v Canada Square Operations Ltd

[2024] AC 679

per Lord Reed at [98]). At [99] Lord Reed (who was dealing with the construction of section 32(1(b) of the Limitation Act 1980) observed that “in most, if not all cases where “conceal” is used in the active mood, concealment involves intentional hiding or withholding of information”. It is accepted by Inspired that to establish “wilful concealment” under the terms of the SPA, it must prove that Mr Crombie was guilty of an intentional failure to disclose.

[209]There is no evidence of an intentional failure to disclose the Emails. As Mr Crombie explained in his evidence, and I accept: “Mr Burgess and I would work incredibly long hours. We were working at a time of particular high stress at this point. We would often send these emails very flippantly. We would often forget the emails that had been sent after they had been sent. They were certainly not front of mind. When having those conversations at the due diligence phase, it never crossed my mind that there was an area of concern here. This was something that Mr Burgess and I, as I said, had spilled over into our work emails, wholly unacceptable and wholly inappropriate, but at the time of giving those warranties and having those conversations, I had no concerns, there was nothing I felt I had to hide, we were very transparent. It was a relatively straightforward due diligence process”.

[210]This is consistent with the findings that I have already made in considering the issue of gross misconduct. It explains why Mr Crombie did not think to disclose the Emails to Inspired at the time of the SPA and also why it had never occurred to him to sanction Mr Burgess for his unprofessional emails.

[211]During closing Ms John pointed out that at the time of the SPA, not all of the Emails were historic – Emails 6 and 7, both referring to cocaine and the latter referring to purchasing cocaine with the proceeds of the SPA - date from September and October 2022 respectively, in other words, only a few weeks before the signing of the SPA. Ms John contends that these Emails must therefore have been “at the forefront” of Mr Crombie’s mind when he signed. However, that was not his evidence. Had Mr Crombie really had an appreciation of the significance of the Emails or the need to disclose them, it is very difficult to see why he would have been continuing to send them in the weeks leading up to the SPA, by which time he was already involved in due diligence and receiving advice about the importance of the Warranties.

[212]Finally, as was pointed out by the Defendant in closing, there is no allegation of conduct amounting to active concealment on the part of Mr Crombie. He sold MOS to Inspired, complete with the Company server containing the Emails.

[213]I decline to draw the inference that Inspired invited me to draw in closing that Mr Crombie was aware that he was obliged to disclose the Emails under Warranty 8.2 and/or Warranty 16.15 but deliberately failed to do so. I can see no proper basis on which to draw such an inference.

Was there a Breach of Warranty 8.2 by Mr Crombie? (Issue 4)

[214]Absent gross misconduct, on Inspired’s pleaded case, there can be no breach of Warranty 8.2. However, even assuming the Emails (or one or more of them) amount to gross misconduct, I reject Inspired’s case that Mr Crombie acted in breach of Warranty 8.2. I say that for the following main reasons.

[215]While I have found that the reference to “all applicable laws” in Warranty 8.2 includes a reference to the 2006 Act, such that it includes a warranty in relation to both sections 172 and 174 of that Act, I do not consider that a finding of gross misconduct in relation to the Emails would lead to a finding of breach of this warranty.

[216]Pursuant to section 172 of the 2006 Act, it is common ground that Mr Crombie had a duty to act in a manner he considered, in good faith, “would be most likely to promote the success of the company for the benefit of its members as a whole”. In so doing he was to have regard to the factors set out in section 172(1)(a)-(f), namely: “(a) the likely consequences of any decision in the long term, (b) the interests of the company's employees, (c) the need to foster the company's business relationships with suppliers, customers and others, (d) the impact of the company's operations on the community and the environment, (e) the desirability of the company maintaining a reputation for high standards of business conduct, and (f) the need to act fairly as between members of the company”.

[217]The core principal of this section is that “directors must make decisions in good faith with a view to promoting the success of the company for the benefit of the members as a whole” (see TMO Renewables Ltd v Yeo

[2021] EWHC 2033 (Ch)

at [389]-[390] and Palmers Company Law [8.2603]-[8.2616] in which the acts of the director under section 172 are described as “business judgments”, “practical decisions”, “transactions” and (repeatedly) “decisions” ). When a director “acts” in such a way as to engage this section he or she must have regard to the factors identified in section 172(1)(a)-(f).

[218]I agree with the Defendant that in exchanging personal Emails of the type described already at length, Mr Crombie was not acting in breach of his duties under this section, just as he was not acting in the “course of [his] duties in relation to the Company” for the purposes of Warranty 8.2. He was not making any “business decisions” or “business judgments” on behalf of the Company and I reject Inspired’s case that merely through the use of his Company email address to send personal emails to Mr Burgess he was carrying out a function of the Company, or carrying out duties in relation to it, so as to engage section 172. I accept Mr Crombie’s evidence that the Emails were intended as “private exchanges”. Even recognising that section 172 was not intended to introduce a ”tick box” culture requiring a director to consider each factor one by one every time he made a decision (see Palmer at [8.2614]), the section is plainly focussed on the making of business decisions and the carrying out of a director’s functions in connection with the company; it is not concerned with conduct of the type evidenced in the Emails. Even if I am wrong about that, it is very difficult to see how the Emails could possibly be “material” for the purposes of Warranty 8.2 given that there is no suggestion whatever that they in fact had any impact on the success of MOS. Inspired did not seem to have any answer to this point.

[219]Section 174(1) of the 2006 Act provides that a director of a company must “exercise reasonable care, skill and diligence”. Section 174(2) makes clear that this means the care, skill and diligence that would be exercised by a reasonably diligent person with “the general knowledge, skill and experience that may reasonably be expected of a person carrying out the functions carried out by the directors in relation to the company” and “the general knowledge, skill and experience that the director has”.

[220]Reliance on this section was included by Inspired very much as an afterthought by way of amendment at the trial and I am rather surprised that it was introduced at all. Once again, reliance on this section involves similar difficulties to those arising in relation to section 172. These Emails, albeit sent from a work address, did not involve the exercise of any function on the part of Mr Crombie qua director and therefore they did not require the exercise of reasonable care, skill and diligence under the section. Furthermore Mr Crombie did not send or receive the Emails “during the course of [his] duties in relation to the Company”.

[221]The best case Inspired can make on this appears to be to point out the respective roles of Mr Crombie and Mr Burgess at the Company and to assert that each of the Emails (sent from Company email addresses and on the Company server) was “an extension of a communication between Mr Crombie and Mr Burgess on a MOS business matter (or in the case of [Emails 9 and 10] were ostensibly company communications”). However, while I accept that most of the Emails commenced with a communication about a business matter (and that many – although not all - of them took place during working hours), I do not consider that fact to change the essential nature of the personal communications between Mr Crombie and Mr Burgess. I also reject the suggestion that Emails 9 and 10 were “ostensibly company communications”.

[222]In opening, Inspired maintained that the Emails amount to “paradigm director’s negligence” within the scope of section 174 of the 2006 Act as well as “a paradigm example” of breach of a directors’ statutory duties under the 2006 Act. However, it referred me to no authority in connection with this submission and so I have seen no case from which I could draw any analogy. Inspired did seek to rely upon Brumder v Motornet Service and Repairs Ltd

[2013] EWCA Civ 195

for the proposition that an abrogation of duties (in that case, a failure to give consideration to health and safety matters in a workshop) can amount to a breach of section 174 CA 2006. However, in so far as Inspired was seeking to suggest a parallel in this case by reason of Mr Crombie’s omission to disclose his own breaches of policy, or indeed to act upon Mr Burgess’ breaches of policy, I reject that suggestion.

[223]Once again, even if I am wrong about this, it is difficult to see how a breach of section 174 of the 2006 Act (arising by reason of the Emails) could be “material” for the purposes of Warranty 8.2 given that there is no evidence whatever that the Emails impacted on the conduct of MOS’ business.

[224]Finally, I note that in its closing written submissions, Inspired submitted that “Mr Crombie’s failure to disclose the foregoing breaches was, in and of itself, a breach of his statutory fiduciaries”. When asked about this, however, Ms John confirmed that this assertion was not intended to suggest that she did not first need to establish gross misconduct.

Was there a breach of Warranty 16.15 by Mr Crombie? (Issue 5)

[225]Absent gross misconduct there was no breach of Warranty 16.15. However, even assuming one or more of the Emails amounted to gross misconduct, I reject Inspired’s case of breach of this warranty.

[226]I have already rejected Inspired’s case that the words “dispute claim or litigation” can properly be said to include reference to any knowledge of an allegation, investigation and/or action taken in response to employee misconduct. For Mr Crombie to be in breach of Warranty 16.15, Inspired would therefore have to show that as at the date of the SPA, he knew, or ought to have known given his position, duties and responsibilities in relation to the Company and after “due and careful enquiry of Ewen Burgess, Rob Leitch and Ian Marshall” (see section 1.23 of the SPA) that the existence of one or more of the Emails would probably give rise to a dispute, claim or litigation (in the form of legal proceedings or the potential for legal proceedings).

[227]I agree with the Defendant that as at the date of the SPA there was no reason whatever for Mr Crombie to think this was the case. Realistically, the prospect of any form of disciplinary process was only likely if the Emails came to the attention of someone other than Mr Crombie or Mr Burgess and, as they were not copied to anyone else and were buried amongst many thousands of other emails, it was inherently unlikely that any third person would find them and raise them as an issue requiring investigation or resolution, much less that they would give rise to a legal dispute.

[228]Even if Mr Crombie had been alive to the possibility of an investigation or a disciplinary process in relation to one or more of the Emails, I reject the suggestion that he ought to have known that such a process would probably result in a “dispute, claim or litigation”, or that he would have been alerted to that probability had he made reasonable enquiry of Mr Burgess (who was not asked about this point), Mr Leitch and Mr Marshall (neither of whom gave evidence). Inspired’s case simply does not appear to me to be consistent with reality.

[229]Mr Crombie’s own evidence about conduct of this sort is that the outcome of any investigation all depends on the context. In the case of the Emails, Mr Crombie’s case at trial is that, while he accepts that they were unprofessional, the Emails do not amount to gross misconduct. Although this is ultimately a matter for the court and not a point on which Mr Crombie gave evidence, it is impossible to see (given the nature of his evidence) that he would have viewed any of the Emails as amounting to gross misconduct at the time of the SPA or (more importantly) that he would (or ought) to have formed the view that they would give rise to a dispute, claim or litigation.

[230]Finally, I reject Inspired’s attempt to rely in closing (“as a sense check”) on the fact that Mr Burgess was suspended and investigated for two and a half months before being dismissed, which he considered unfair. Inspired invites the court to infer from this that the idea that the existence of the Emails were not likely to give rise to a dispute as at the date of the SPA (even if what is required is a litigation dispute) is without substance. In fact, although Mr Burgess considered his dismissal to have been unfair, I understand there to have been no dispute. In any event, Inspired cannot establish its case on breach of Warranty 16.15 against Mr Crombie by reference to the dismissal of Mr Burgess, about which the court has no documentary evidence whatever.

Were Warranties 8.2 and 16.5 fraudulent representations on which Inspired relied? (Issues 7 and 8)

[231]It is common ground that in respect of the allegation of fraudulent misrepresentation the onus is on Inspired to prove(i) that at least one representation (made by the Warranties) was false;

(ii) that Mr Crombie knew that the Warranty (or Warranties) was false, or alternatively was reckless as to its truth;

(iii) that Mr Crombie intended that Inspired should act in reliance on the Warranty or Warranties; and

(iv) that Inspired did so act and in consequence suffered loss (see ECO3 Capital Ltd v Ludsin Overseas Ltd

[2013] EWCA Civ 413

per Jackson LJ at [77]).

[232]In my judgment there is no scope whatever for a finding of fraudulent misrepresentation in this case and I need not go into it in detail. As the Defendant pointed out in closing, it was not put to Mr Crombie in cross examination that the Warranties were false (or that they were reckless as to their truth). It is a basic principle of fairness that if a party is being accused of fraud, and is then called as a witness, the particular fraud alleged should be put specifically to that party so that he/she may answer it (see Haringey LBC v Hines

[2010] EWCA Civ 1111

;

[2011] HLR 6

per Rimer LJ at [39]).

[233]It was fairly accepted by Ms John in closing that she had not put her case on fraudulent misrepresentation to Mr Crombie in relation to Warranty 8.2, albeit that she sought to suggest that the point had been sufficiently put in relation to Warranty 16.15. However, I disagree. On close analysis of the transcript, Ms John put to Mr Crombie in cross examination(i) that writing Email 7 (which refers to cocaine) just weeks before the SPA “would absolutely plainly be present circumstances likely to give rise to a claim” – a question directed at whether Email 7 amounted to a breach of Warranty 16.5 (which Mr Crombie denied); and

(ii) that again in relation to Email 7 “it is just not true – you were well aware of the conduct and your reprehensible conduct, wrongful conduct in that regard when you gave these warranties, weren’t you?” – a question directed to Mr Crombie’s awareness at the time of the SPA of his own alleged wrongful conduct. However, it was not squarely put to him that he knew that by reason of his wrongful conduct Warranty 16.15 was false.

[234]In the circumstances I do not need to go on to consider whether Mr Crombie intended Inspired to rely upon his alleged misrepresentations (a point that was also not put to him). For completeness, it is common ground that it was accepted and acknowledged by the parties to the SPA (at clause 6.3) that Inspired was entering into the SPA in reliance upon the Warranties.

[235]In all the circumstances, whatever the outcome on the issue of gross misconduct, I reject the claim of fraudulent misrepresentation.

[236]Absent a case on wilful concealment or fraudulent misrepresentation, I find that in so far as Inspired has a Warranty Claim against Mr Crombie under the SPA (contrary to my findings in this judgment), the “maximum liability” and “threshold” provisions at paragraphs 3 and 4.2 of Schedule 6 will apply. Thus:a. Owing to the fact that the portion of Cash Consideration that Mr Crombie has received is only the Completion Payment of £5,801,812.11, Mr Crombie’s maximum liability in respect of a Warranty Claim under paragraph 3 of Schedule 6 is limited to £2,030,634.24.

b. If damages for a Warranty Claim were to be assessed at under £75,000, then Mr Crombie would not be liable to make any payment of damages at all under paragraph 4.2 of Schedule 6. Quantum (Issue 9)

Introduction

[237]Given my findings, there is strictly no need to deal with quantum. However, in case it may prove important, I must make findings on relevant factual issues together with setting out my views on the approach of the experts and the outcome of the arguments on quantum.

[238]I did not understand it to be controversial that:a. the measure of damages for breach of warranty is the difference in value of the MOS shares (“the Shares”) as warranted (“warranty true”) and their actual value (“warranty false”) as at the date of breach (i.e. the date of the SPA) (see The Hut Group Limited v Oliver Nobahar-Cookson

[2014] EWHC 3842 (QB)

per Blair J at [184]);

b. quantum must be assessed “on the basis of a hypothetical reasonable willing buyer and a hypothetical, reasonable willing seller, rather than being bound by the subjective views of [the parties]” and should not be unduly affected by hindsight, i.e. events subsequent to the SPA that the parties could not have known about or anticipated at the date of the SPA (see Arani v Cordic Group Ltd

[2023] EWHC 95 (Comm)

per Bright J at [120]-[121]);

c. however, all that being said, the thinking and conduct of the parties at around the time of the SPA and subsequently can in principle be relevant to this inquiry. If those parties can be taken to be reasonable commercial people, their assessment of the relevant commercial risks and opportunities “may shed light on how the hypothetical reasonable willing buyer might be expected to have approached matters” (see Arani at [122]); and

d. in determining the warranty false value, as at the date of the SPA, it is appropriate to take into account the degree to which a contingency, which existed at that time, would have, if known, depressed the actual value. The question of whether the contingency eventuated, after the date of the contract, is irrelevant to the determination of actual value and thus the measure of damages (see MDW Holdings Limited v Norvill

[2022] EWCA Civ 883

;

[2023] 4 WLR 33

per Newey LJ at [49]).

[239]Here the primary issue on quantum (assuming that the breach of Warranty allegations are made out), as articulated by Inspired, is what value would have been ascribed to the Shares by a hypothetical third party buyer(i) who had been informed of the existence of the Emails; and

(ii) who would thus need to factor in the risk of the Emails becoming public (and in particular how that risk may impact on both MOS’ business and the hypothetical acquirer’s business) and the consequence of the inevitable departure of Mr Crombie.

[240]It is agreed by the experts:a. that the EV reflected in the acquisition of MOS (i.e. the value of the MOS Shares in the warranty true position) on 15 November 2022 is £9,000,000;

b. that the general approach to calculating the value of the MOS Shares in the warranty false scenario is to make adjustments to the warranty true value to reflect the impact of the breach of Warranties;

c. that, in some circumstances, a “key person” is sufficiently important to the business of a company that it would be worth less in his or her absence; and

d. that their respective arithmetic calculations are accurate.

[241]However, the experts have arrived at very different warranty false values. In Mr Brown’s opinion, the warranty false value of the MOS Shares as at the date of the SPA ranged between £4,551,447 and £5,952,895. In Mr Balisagar’s opinion, the warranty false value of the MOS Shares as at the date of the SPA was between £8,628,582 and £9,000,000.

[242]The differences between the expert’s valuations are primarily explained by their very different approaches to the required adjustments, which are in turn driven by their differing opinions on the key drivers behind the Warranty True EV. Mr Brown focuses upon the potential for synergies between the two merged businesses together with Mr Crombie’s individual value as a “key person”, whereas Mr Balisagar focuses on the extent to which student numbers drive the value and forecasted income growth of MOS as a standalone business. In brief summary:a. Mr Brown was instructed to value the MOS Shares “from the perspective of a reasonable hypothetical purchaser with Inspired’s characteristics in circumstances where [the Emails] had been disclosed to the buyer (and only the buyer) without the benefit of hindsight”. He makes two counterfactual assumptions and applies a downwards adjustment to the warranty true EV for each. First he approaches the question of how the hypothetical purchaser would have addressed the business risk of the Emails becoming public by assuming that the hypothetical purchaser would have identified a synergistic value to merging MOS with its existing business but that, in the counterfactual, it would have delayed that integration for between 1 and 2 years. This approach, by itself (i.e. before taking account of Mr Crombie’s inevitable departure) results in a warranty false value that is between £1,062,806 (for one year’s delay) and £2,931,404 (for two year’s delay), lower than the warranty true value. Second he assumes that knowledge of the Emails on the part of the hypothetical buyer would inevitably have led to Mr Crombie’s departure (thereby depriving the hypothetical purchaser of his “key person” value). He concludes that this assumption leads to a warranty false value that is between £1,517,149 and £1,984,299 lower than the warranty true value.

b. Mr Balisagar was instructed to assess the market value of the MOS Shares, an assessment which assumes that the Shares would be purchased by a hypothetical “willing buyer”. He assumes (with certainty) that the Emails would have come into the public domain and been widely publicised, causing reputational harm. However, he explains that the key difference between the warranty true and warranty false position is the risk (not certainty) of the Emails becoming widely publicised and causing reputational harm. Quantification of that risk is outside the area of his expertise but he adopts a discounted cash flow (“DCF”) approach (derived from financial forecasts produced by MOS on 20 September 2022 for FY24-FY27 (which he refers to as “the Closing Forecasts”) and based on an implied discount rate of 25.3%) and he adjusts the Closing Forecasts by reducing the forecast growth by various percentage amounts designed to reflect the impact of reputational harm on student enrolments and thus on revenue. Assuming a 100% chance of wide publicity, this results in a warranty false value that is £371,418 lower than the warranty true value. Reducing the percentage chance of publicity leads to a commensurate narrowing of the gap between warranty true and warranty false values.

[243]Before I explain the view I expressed earlier as to my general preference for the evidence of Mr Balisagar, I must first deal with an important factual issue – the question of whether Mr Crombie was a key person. Is Mr Crombie a “Key Person”?

[244]It is agreed by the experts in the Joint Statement that the question of whether, and if so how much, value was attributed by Inspired to Mr Crombie is a factual matter. Mr Balisagar accepted in cross examination that if the facts supported the proposition that Mr Crombie was a key person then there might be a value attributable to that. Two issues arise: the first is whether Mr Crombie was as a matter of fact a “key person” to whom value was attributed; and the second is, if so, what is the correct quantification of any key person discount? It is clear from the available literature attached to the Joint Statement that there is no standard percentage or range.

[245]Mr Crombie was of course (as Mr Balisagar accepted) a key person in the ordinary meaning of those words – he was CEO and founder of MOS. There was nothing between the evidence of the factual witnesses on both sides on this point. Mr Nsouli explained that his assessment from the outset had been that “MOS’ reputation was tied to Mr Crombie personally, as he was the face and leader of the business” and he repeatedly said in cross examination that he was “buying” Mr Crombie. Mr Crombie’s evidence was that he understood that Inspired respected and valued him. He had built MOS from scratch himself and was its driving force. He was close to his employees who were very loyal to him.

[246]In light of these uncontroversial facts, the question remains as to whether the Warranty True EV at £9 million included within it an element of value for Mr Crombie which would need to be stripped out on the hypothetical basis that he would not have continued in the business following the SPA had the Emails been publicised and he had been dismissed. Looking carefully at the evidence, on balance, I do not believe that it did. I agree with the Defendant that Mr Nsouli’s repeated assertions that he was “buying” Mr Crombie are not credible reflections of the corporate value that Inspired in fact placed on him.

[247]Although in the early stages of the deal, Mr Crombie appears to have held the upper hand and was being offered the role of CEO of the Combined Business, by the date of the SPA as Mr Nsouli said in his evidence “I decided what role I would like to offer to Mr Crombie and it is up to Mr Crombie to decide if he wants to accept it”.

[248]By 13 October 2022, Mr Crombie had accepted Inspired’s offer to proceed with the SPA at a price of £9 million, as is clear from an email sent by Ms Stewart to Mr Nsouli on that date. In that email, Ms Stewart asks Ms Nsouli whether he is happy for her to propose the title of Chief Strategy Officer to Mr Crombie and she also asks for information on “any compensation you would like me to put forward”. Mr Nsouli responds on the following day that Mr Crombie could be Chairman or CSO and asks what Mr Crombie is currently being paid. Ms Stewart replies to say that Mr Crombie is “currently on £60K…second highest at MOS behind only their Executive Head who was hired this summer on £108k”. Ms Stewart goes on to say that she has not yet made any assumption about salary uplift or reduction “as assumed if stepping in would be to replace an existing role, or otherwise would be stepping away from the business”. Far from asserting Mr Crombie’s independent value, Mr Nsouli’s direct reaction to this is to say “SO LET’S ASSUME SIMILAR COMP TO WHAT HE HAS TODAY”.

[249]On 18 October 2022, Ms Stewart emails Mr Nsouli again to say that Mr Crombie is excited to be moving ahead. She records that Mr Crombie has expressed the view that it makes “a lot of sense” for him to be Chief Strategy Officer, working with Mr O’Donoghue but reporting to Mr Nsouli, as that aligns with his strengths. However Mr Crombie had also expressed the view that he is “happy for this to be an organic role …that gets further defined as integration proceeds” and understands that there will be “no change to contract or comp in the meantime”. Mr Crombie confirmed during his oral evidence that this was an accurate summary of his conversation with Ms Stewart and that although he would have liked the CEO role, he did not wish to press for it knowing the role was already occupied.

[250]By 25 October 2022, Mr O’Donoghue had come up with the role of “Chief Growth Officer” which Mr Nsouli thought sounded better. Mr Nsouli denied that Inspired was trying to find a title for a job which did not yet exist, suggesting in cross examination that the role of Chief Growth Officer was more important than the role of Chief Strategy Officer. However, he had to admit that Inspired did not already have a CGO, does not have a CGO now and has never had a CGO.

[251]No provisions were inserted into the SPA to reflect any agreement about Mr Crombie’s future role and Mr Nsouli’s evidence is that no description of the role was needed “the title says it all in my opinion”. Mr Nsouli apparently did not consider Mr Crombie’s employment position further. He explained that “[i]t’s HR’s role to draft the contracts”.

[252]Mr Crombie’s evidence, as Inspired points out, is that he considered the SPA to represent an exciting opportunity and that he understood his role would be to continue to lead MOS during the integration phase before moving at a later stage into a different role. It was his understanding that he would have clarity over that at a later point. I accept this evidence but do not consider that it is determinative on the question of whether his personal value was factored into the EV for the deal.

[253]Crucially, in my judgment, there is no provision in the SPA which tied Mr Crombie in to Inspired for any period of time. There was no new compensation package, no long notice period and no attempt to incentivise long service. Mr Crombie remained employed under his MOS contract pursuant to which he could leave following an eight week notice period. Mr Crombie’s right to Deferred Cash Consideration was not conditional upon him remaining with Inspired, as to which Mr Nsouli admitted:

“[t]he SPA could have been structured differently in hindsight”

. Although Mr Crombie was bound by a non-compete clause which prevented him from working in the education sector for 36 months were he to leave, he could have handed in his notice on the day after the SPA and gone off to do something different, whilst remaining entitled to receive his Deferred Cash Consideration.

[254]On the evidence, it seems that Inspired was only too aware of the potential for Mr Crombie to leave, but still chose to take no steps to prevent him from doing so. Mr Nsouli, who had been involved in numerous acquisitions, acknowledged “that’s always the risk when you buy from a founder” and went on to say that it is a “big mental adjustment” and that “some people take the money but still think they own the business. Other people take the money but still think they run the business, and not everybody can adjust to becoming an employee when they ran their own business for a long time”. Mr Nsouli referred to “multiple examples” of founders leaving:

“they decide to sell to us. After the transaction, like: mm-hm, its very different working for a big company than working for us running the school; and they leave and the put/call option doesn’t exercise for several years…”

. No doubt this thinking drove the observation made by Ms Stewart to which I have referred above to the effect that one option for Mr Crombie would be to “step away from the business”.

[255]As Mr Balisagar said, and I accept, “nothing ties Mr Crombie down, even in true position he could have left, so that risk is already embedded in the valuation”.

[256]Indeed, Inspired’s own evidence was to the effect that Mr Crombie’s personal value was reflected not in the Cash Consideration under the SPA but in the Deferred Cash Consideration: Mr Nsouli confirmed in cross examination that “the fact that we agreed for him to keep his stake is what reflects the value of him for the company”, a view with which Mr Herrera also agreed. Consistent with this evidence, Mr Brown was instructed that Deferred Cash Consideration was designed to incentivise Mr Crombie and was a reflection of the benefits of him remaining employed. He agreed that “the corollary of that is that cash consideration did not include or reflect anything about Mr Crombie remaining employed”.

[257]In all the circumstances, I reject Inspired’s case that an adjustment must be made to the warranty true value to reflect Mr Crombie’s value as a key person. I do not consider that Inspired reflected any such value in the warranty true value. Standing back, it also appears to me to be unrealistic to suggest that a man who was continuing to be paid only £60,000 after the SPA nevertheless had a value to the business of (on Mr Brown’s evidence) more than £2 million. Mr Brown’s Evidence

[258]Mr Brown’s evidence was, in my judgment, significantly and fatally undermined during Ms Boase’s skilful and forensic cross examination. Numerous examples could be given but I begin with three big picture points as to his approach and methodology and then return to aspects of Mr Brown’s evidence which clearly indicated that he had not approached his task with the rigour of the truly independent expert.

[259]First, Mr Brown’s evidence was immediately undermined, in my judgment, by his instructions to value in respect of the hypothetical buyer only (rather than the hypothetical buyer and hypothetical seller) and to assume a hypothetical buyer with Inspired’s characteristics – an assumption which appeared premised on the view that only such a buyer (who was set on integration) would have paid the EV of £9,000,000. He accepted that this approach to valuation was not consistent with the commonly used IBIS definition of market value and that focussing on a buyer with specific characteristics (selected by him and which he insisted must be satisfied) had the effect of “very significantly” narrowing the pool of potential reasonable hypothetical buyers. I agree with the Defendant that in taking this approach, Mr Brown was effectively seeking to opine on the warranty true value (for which there is no permission). Mr Brown denied this saying that his approach was “maybe…slightly clumsy”, but I did not find his denial credible. It included the assertion that “as a standalone business MOS is not worth anything near to the deal value”, an assertion he repeated more than once.

[260]Second, Mr Brown’s evidence in relation to his “key value drivers” did not appear sustainable under cross-examination. Initially he continued to maintain that the risk of a scandal reducing student numbers was not the right way to look at the relevant counterfactual, but he then quickly acknowledged that “the key metric” for a hypothetical buyer of an online school was pupil numbers because this in turn drove the revenue. As to the risk of the Emails becoming public, Mr Brown accepted that he had not considered the degree of risk, had not dealt with it in his report and had made no attempt to quantify the impact of any scandal.

[261]Third, Mr Brown’s proposed adjustments to reflect a counterfactual world in which(i) integration would be delayed by the hypothetical buyer “to avoid contamination of its existing business while it investigated and resolved any potential reputational issues” and

(ii) the hypothetical buyer would consider the loss of Mr Crombie to MOS’ business, appeared, on analysis, to be both unsupported by evidence and without proper foundation:

a. On the first (delay to integration), he was forced to accept that if the court did not agree with him as to the characteristics of the hypothetical buyer “there wouldn’t be an integration so there wouldn’t be delay to the integration”. He had no answer to the point that even a hypothetical buyer with Inspired’s characteristics might not have planned to merge the two businesses (again putting paid to any “delay to integration” counterfactual), but when pushed on the point retreated to the position that “I think that’s a matter for the court”. The evidence in his report as to the delay to integration caused by the assumed reputational impact of a scandal in relation to the Emails was, to my mind, little more than baseless speculation. Mr Brown’s assertions as to the steps that the hypothetical purchaser would have been obliged to take were plainly outside his expertise and he had no source to support them. As to the length of the delay, Mr Brown appeared to have jumped straight to the conclusion that a one or two year delay might be required without any analysis as to whether that was reasonable or sustainable. Eventually he acknowledged under cross examination that he had referred to two years’ delay “as a scenario for the court” but that he was “a lot more comfortable with a one year delay” and that anything more than that “would need other evidence”. This admission led to Inspired abandoning its case on a two year delay to integration in closing. To my mind, it was inappropriate for Mr Brown ever to suggest a counterfactual of two years’ delay to integration when even he did not consider he had the evidence to support that counterfactual.

b. On the second (Mr Crombie would have departed), I agree with the Defendant’s submission that Mr Brown’s reasoning for applying a key person discount of 25% was alarmingly thin (and in light of my finding above, does not in any event hold water). I consider that Mr Brown ought to have been more circumspect in his report in making clear that the question of whether Mr Crombie was in fact of value to the business such that a deduction should be made in the counterfactual for his assumed departure was a factual question for the court. Under cross examination he admitted his report did not give a “complete picture of the reasons” for the discount and that “it would be nice if there were more paragraphs in there”. He tried to support his reasoning that the deduction should be 25% by reference to US tax cases (which he did not choose to exhibit but merely relied upon a summary of those cases in Mr Pratt’s book), but was forced to accept that those cases were “not current relevant cases” because they were “too old”. Mr Brown had performed no sense check on his conclusion and had no sensible answer to the point that it appeared unrealistic to make a key person adjustment of circa £2.25 million in circumstances where Mr Crombie was paid only £60,000 per annum.

[262]There were numerous other difficulties with Mr Brown’s evidence, including a somewhat partial approach (inappropriate in an independent expert) which (in addition to some of the points I have made above) is evidenced by the following examples: a. In seeking to identify in his report the risks caused by publication of the Emails, Mr Brown said this:

“[c]olleagues within Grant Thornton’s SPA Advisory and Corporate Finance teams have experience of advising in over 100 school transactions in the UK and globally, including in relation to numerous K12 school disposals. Below I set out a summary of the risks I have identified from my internal enquiries and in the witness evidence”

. He did not provide any details of the “colleagues” he had sought information from, the transactions with which those colleagues had been concerned or the information he had received from them. He did not attempt to explain which aspects of his report had been influenced by these “internal enquiries” or whether his views on particular “risks” had been affected by them. He also did not appear to understand that this approach was quite obviously inconsistent with his duties as an expert and his expert’s declaration. He admitted that he had not shared the information derived from these internal enquiries with Mr Balisagar because he did not regard the content of the information to be “controversial”, thereby showing a surprising ignorance of the importance of experts operating on a level playing field. b. Mr Brown’s only third party source about the on-line school industry was an IBIS World publication, which in fact contains an analysis of a far broader sector than merely the on-line schools’ industry, as he accepted in cross-examination, acknowledging that “caution” must be applied in this respect. He had not sought to caveat his references to this publication in his report or to draw the court’s attention of his own volition to its limitations. c. Not only did Mr Brown rely heavily upon controversial assertions by Inspired’s witnesses, apparently without a second thought as to their reliability, but he also drew conclusions from witness statements that were not available to him. He accepted in cross examination that relevant passages in the witness statements were not supported by any documentary evidence and (on their face) fell outside the witnesses’ knowledge. He also accepted that his report had misrepresented evidence given by Mr Herrera. d. Mr Brown was forced to admit that his report had omitted information contained in the ASA manual, chapter 7, on which he relied, that was obviously unhelpful to Inspired. e. Central to Mr Brown’s assessment of a key person adjustment was a paragraph in his report which said this:

“[i]deally, the magnitude of the key person discount should be the estimated difference in the present value of net cash flows with and without the involvement of the key person. Alternatively, Shannon Pratt, in his widely used work on valuing private companies, suggested a key person discount of between 10%-25%, though he left the number almost entirely to appraiser discretion”

. Mr Brown went on to conclude that the key person adjustment should be at the top of this range. The second sentence in this paragraph was said to be evidenced by an exhibited document referred to in the footnote. However, this document turned out to be an undated presentation whose author was not specified. Inspired applied to amend the report to address this point, but, more importantly, an extract from Mr Pratt’s book (exhibited to the Joint Statement) said no such thing. Mr Brown accepted that the 10-25% discount was not referred to in the excerpt and said he appreciated that his “sourcing’s not great”, but maintained “my evidence is what he says. It’s just not sourced in here”. An article by Professor Damodaran from May 2009 (exhibited to Mr Balisagar’s report) was put to Mr Brown which showed clearly that “there is no simple formula that will help in determining how much cash flows will be lost as a result of the loss of key personnel since it will vary not only across businesses but across the personnel involved”.

[263]Against that background, I do not consider that I can safely adopt the methodology advanced by Mr Brown or need to consider it further. It is flawed in too many significant respects. Although it is common ground that a key person discount may sometimes be appropriate, I have already determined that Mr Crombie was not a “key person” in the required sense and that accordingly an adjustment to warranty true value to reflect any value attributed to him is not required.

[264]Although I shall need to touch on the question of synergies in addressing Inspired’s criticisms of Mr Balisagar’s evidence, there is no need for me to make detailed factual findings on the issue of “synergies and efficiencies” in connection with the purchase by Inspired (or a hypothetical buyer with Inspired’s characteristics) of MOS, specifically whether, as Mr Brown thought, Inspired had placed significant value on expected synergistic gains. I might have had to look at this in more detail if I had been inclined to accept Mr Brown’s methodology, but I am not. I have rejected Mr Brown’s speculative and unsubstantiated evidence about “delay to integration” and the issue of synergistic gains is relevant only to that point. Mr Balisagar’s evidence

[265]Given my findings as to Mr Brown’s evidence, I intend to adopt Mr Balisagar’s method as being the more reliable. I formed the view during his cross-examination that Mr Balisagar gave his evidence in a thorough, articulate and measured fashion. He had based his evidence on the available material and had not sought to opine on areas that fell outside his expertise. I do not consider his evidence to have been undermined in cross examination and on any issue on which the experts disagreed on matters within their expertise, I prefer his evidence.

[266]Although Mr Brown had taken a different approach, he accepted that Mr Balisagar’s method (sometimes referred to as the income approach) of taking an agreed EV and working backwards from it, making assumptions, to produce a DCF which showed how hypothetical parties might have reached that conclusion was legitimate. That there is no evidence that Inspired actually did a DCF or considered the MOS FY2024 forecasts does not matter. As Mr Balisagar explained, his implied DCF model was one which hypothetical parties could reasonably have used “[[]t might not be exactly that model…but there needs to be some cash flows to determine how do you pay £9 million”.

[267]Mr Balisagar’s approach was premised upon the key driver of value in the MOS business being student numbers. I find he was right about this – that is the driver that would matter to every kind of potential buyer of MOS. Mr Brown accepted this driver (as I have said) and Mr Nsouli explained that in buying a school, one is, to use his expression “acquiring students” and that “student numbers are key”. This is because student numbers drive revenue. Mr Herrera thought the same and observed that student numbers are “effectively what you’re basing your deal EBITDA or your deal structuring around”. The Inspired pro-forma document for initial enquiries of a potential acquisition target identifies as its first (of a number of) “key stats”, “student enrolments by grade”.

[268]Aside from the point that Mr Balisagar’s DCF approach was not in fact used by the parties, Inspired’s primary attack on Mr Balisagar’s evidence was based on two main contentions. First, that the Closing Forecasts on which he relies are “unreliable to the point that they cannot be used”, specifically that they predict “pie in the sky” rates of growth which are entirely unsubstantiated. Second, that his “scandal adjustments” are insufficient and not properly applied.

[269]To address the first point, I need to look in a little more detail at the Closing Forecasts. As Mr Balisagar explains in his report, EY provided shared financial forecasts to Inspired on 22 September 2022 in the form of a financial model showing projections for FY23-FY27 – these had been prepared in coordination with MOS and were intended to reflect the expected financial performance of MOS’ business on a “standalone/continue as usual” basis. Mr Swan of EY explained to Ms Stewart in his email of 22 September 2022 that they were intended to be “the best reflection [of] the team’s current growth plan”. The projections showed a projected EBITDA of £356,154 for FY23 and £642,425 for FY24, and thereafter a continuing, very substantial year on year growth in projected EBITDA. Mr Swan gave various reasons for the projections which on the face of it appear sensible and which I accept were genuine in circumstances where Mr Crombie was not challenged on them.

[270]In light of the decline in expected student enrolments since the date of Inspired’s second non-binding offer, Ms Stewart and Mr Herrera took the implied student enrolment numbers from the September forecast of 1066 (calculated by taking the average over FY23 of the total number of students projected for each month) and revised them down to 975. There is no document which explains how this was done, but it was Mr Herrera’s evidence that this was based on historic growth and conversion rates. This produced a revised (negative) EBITDA for FY23 (as shown in a table included in an email from Ms Stewart to Mr Nsouli of 3 October 2022) of (£344,433). The notes to this table corroborate Mr Herrera’s evidence as to the way in which it was calculated. Inspired then adjusted this figure to a positive sum of £479,000 to reflect (amongst other things) a VAT upside together with efficiencies that could be achieved on a standalone basis (excluding post-merger cost synergies) and an uplift to reflect potential initiatives to increase student enrolments (“the Revised FY23 Budget”).

[271]Based on its Revised FY23 Budget, Inspired put together a final financial model (version 17) which was circulated internally on 10 November 2022. As Mr Balisagar explains, this forecast model contains long term projections of MOS’ financial performance over the period FY23-FY27 in its ‘Summary’ tab which are identical to those set out in the ‘Summary’ tab of the September forecast model (i.e. on a standalone basis). A separate tab in the November model sets out Inspired’s Revised FY23 budget. In a table in his report Mr Balisagar summarises the key components of the long term projections in the ‘Summary’ tab, save that he replaces the FY23 projections with the Revised FY23 Budget so as to identify the Closing Forecasts, i.e. “to reflect expectations in respect of FY23 which are most contemporaneous to Closing”. Thus the Closing Forecasts adopt MOS figures from the September 2022 financial model for FY23-27 and Inspired’s figures for the Revised FY23 Budget. Mr Balisagar’s implied DCF analysis is based on the agreed EV of £9 million and the Closing Forecasts.

[272]Mr Balisagar was challenged over his reliance on the MOS forecasts for 2024 given Inspired’s reduction in student numbers in FY23, a reduction of approximately 24%. However, Mr Balisagar explained that on Inspired’s own projections for FY23, it had assumed a month on month growth from 880 in August 2022 to 1,049 in July 2023, a 20% increase in that year (i.e. as Mr Balisagar said “the numbers are on the rise”). He then said this: “…what is important to understand is whether 2024 MOS numbers are right or wrong, you need to see how the inventory build−up happened month on month between July 2022 and August 2023. As I said, August 2023 the number was 1,049, and if you look at MOS's number starting in August 2023, on MOS's basis it was 1,072, a mere 2.5% more than what was estimated by Inspired, and that is a very important point to understand the validity and the veracity of the projection starting point on MOS's basis in FY24”.

[273]On this basis, it was Mr Balisagar’s evidence, which I accept, that there is no basis for the suggestion that MOS’ projections for FY2024 were incorrect:

“a 2.5% error in forecast of student numbers, I wouldn’t consider that to be material”

. Indeed, when asked about this, Mr Brown did not appear to disagree. This evidence also answers Inspired’s point that historically there had been a decline in student numbers – as Mr Balisagar said “they had already seen these declines, and had adequate time to discuss and enquire and yet…Inspired projected the 20% growth on a month-on-month basis between July 2022 and August 2023”. In fact, as a table in Mr Brown’s report showed, average student enrolments had been flat between FY21 and FY22 (there had only been a small decline from 1,030 in FY21 to 1,025 in FY22) but there had been a significant decrease in EBITDA from £669,000 to (£376,000), which Mr Balisagar explained was driven by “significant investments in teaching staff and non-teaching staff” resulting in increased costs of approximately £1m.

[274]Mr Balisagar frankly acknowledged in cross examination that MOS was projecting large growth figures for the years to 2027 (“materially large numbers”) and an EBITDA growth of 617%, reflecting student enrolments of 135%. He accepted that he had seen no growth plans to support this but had relied on “the only evidence that’s …available. I am not subscribing to this particular growth rate but I’m relying on it because I do not see any opposition from Inspired”. He also acknowledged that if he had been acting for a hypothetical buyer he would have wanted to interrogate that growth, but he refused to accept that the Closing Forecasts were unreliable. He explained, by way of a “sense check” that, in order to get to an EV of £9 million, Inspired was willing to transact on the basis of a high multiple and that “you can pay such high multiples only if there’s high growth…it needs to grow very steeply if you have to pay £9m”.

[275]In closing and in cross examination, emphasis was placed on a DCF valuation prepared by AAB for MOS on 10 May 2022 for the purposes of a proposed enterprise management investment scheme. The AAB valuation had arrived at a value for the MOS Shares of circa £1,159,874. The combined 12 month EBITDA forecast for FY22 was negative (£137,000) and in fact MOS under-performed on this forecast, making an EBITDA loss of (£376,000). Mr Brown had calculated that the MOS revised forecasts as reflected in the Closing Forecast were on average 121% higher than the forecasts in the AAB report over the same period, which Mr Balisagar accepted. However, Mr Crombie was not asked why different (lower) forecasts had been given to AAB.

[276]Mr Balisagar refused to accept that the AAB valuation and the forecasts it contained was relevant to the exercise he had undertaken or should be given weight (beyond pointing out in the Joint Statement that it forecast a cash flow growth of circa 100% between FY24 and FY25). As to the valuation, he pointed out (correctly) that his starting point for willing seller and willing buyer had to be £9 million. As to the forecasts, Mr Balisagar agreed that there was a huge difference between the forecasts in the AAB valuation and the MOS forecasts provided in September 2022, but he observed that their relevance “depends [on] what the forecasts are meant for” (an issue which was also not explored with Mr Crombie). He came back to the point that he had to assume a market value of £9 million and that the AAB valuation had not been market tested. Importantly to my mind, Mr Balisagar disagreed with the proposition that it was reasonable to infer from the AAB Valuation that the EV of £9 million

(i) “was not a DCF of the stand-alone cash flow potential of MOS” and

(ii) was in fact “driven by other value drivers such as synergies and key person value”. Mr Balisagar said that Ms Stewart’s explanation in her email of 3 October 2022 had identified a revised EBITDA without synergies “and that is the perfect definition of market value”. It was his evidence in the Joint Statement, which I accept, that there were various issues with the AAB valuation which reduced its reliability. It was common ground between the experts that there is no evidence that the parties to the SPA relied on, or placed any weight on, the AAB valuation in assessing the Warranty true value.

[277]Notwithstanding the obvious limitations in the available evidence, I accept Mr Balisagar’s opinion that “[i]t is not out of the ordinary for a start-up business who have invested heavily in teaching and non-teaching staff, just…before the time of the acquisition, to have certain very high growth rates”, an opinion which he fortified by repeating that “importantly…on [Inspired’s] calculations, they showed a 20% growth rate in student enrolments figures in 2023”. Given that, he said “I don’t foresee why a significant growth rate for a temporary period couldn’t be achieved”. Ultimately Mr Balisagar refused to accept that there was no basis on which to rely upon the Closing Forecasts – he had “made sense” of them for the purposes of arriving at his opinion. Given that all of MOS’ documents were transferred to Inspired under the SPA, there can be no proper basis for criticism of the Defendant or his expert for doing their best with the available documents.

[278]The second stage of Mr Balisagar’s method (i.e. taking his implied DCF model and applying revenue reductions to reflect the likely impact of a scandal caused by publicity surrounding the Emails) was one which Mr Brown agreed could in theory be done. Mr Balisagar identified two issues to consider,(i) the probability of the risk of the Emails being widely publicised and causing reputation harm and

(ii) the likely effect on MOS’ business of this occurring.

[279]As to the latter, Mr Balisagar relies upon academic research in the United States by Rooney and Smith into “[t]he Impact of Highly Publicised Campus Scandals on College Outcomes…” (2019) which assesses the impact of a scandal/misconduct on student applications. It does not purport to offer a methodology for calculating the impact of a scandal on the financials of an education business. He frankly acknowledged in his report and under cross examination the “many limitations” of this research but (“in the absence of better evidence”) he maintains, and I accept, that it is a reliable basis on which to proceed. Mr Balisagar explained that he had applied the “Rooney and Smith” approach on a conservative basis by reference to reductions to the entire student population rather than only the reduction in new student applications. Specifically, he assumed percentage reductions in revenue for FY2023-2027 to reflect the reduced student enrolment. This gave him a warranty false value of £8,629,000 (a reduction of £316,000 on the warranty true value) assuming a 100% certainty of publicity.

[280]Mr Balisagar rejected attempts in cross examination to suggest that he had not used a “proper” application of the Rooney and Smith approach, attempts which were renewed in closing by Inspired through its counsel presenting the court with new calculations (not identified or addressed by Mr Brown) designed to undermine Mr Balisagar’s evidence. Essentially, it is Inspired’s contention that the Rooney and Smith approach does not provide any data in respect of the decline in expected or forecast growth in applications and that, accordingly, a proper application of their approach would be to strip out otherwise expected growth and use flatline figures from which to apply what Ms John described as a “haircut” to reflect reduced student applications. Mr Balisagar did not accept that Rooney and Smith had stripped out growth figures, observing simply that it was impossible to know what they had done from the information in their article.

[281]I accept that Mr Balisagar has done his best in all the circumstances to model the impact of a possible scandal having regard to available academic research. This is not an exact science and the approach he has taken is legitimate. Mr Brown made no criticism of him for failing properly to apply the Rooney and Smith approach but merely made the point that the Rooney and Smith study was “not sufficiently comparable to this case”. I agree with the Defendant’s submission in closing to the effect that, in any event, Mr Balisagar’s application of Rooney and Smith is logical:

“if you strip out growth and apply the haircut you are likely to be overcompensating for the scandal”

. In all the circumstances, there is no need for me to consider further the new calculations provided by Inspired in closing submissions, or indeed the short notes submitted from both sides about those calculations following the trial.

[282]As to the probability of publication and widespread scandal, Mr Balisagar was unable to opine, but helpfully provided the court with an analysis of the sensitivity of his conclusions depending on the percentage probability of the Emails being widely publicised and “causing a scandal”. On a 50% probability, the revised reduction on the EV of £9 million would be £158,000. On a 25% probability, the reduction would be £79,000. On a 0% probability there would be no impact on the EV of £9 million.

[283]Bearing in mind the findings that I have already made about the Emails, even assuming that as a matter of law, and contrary to my findings, they amount to gross misconduct, I find that if their existence had been disclosed by Mr Crombie at the time of the SPA, there is little chance (less than 20%) that they would have entered the public domain or, even if they had become public, that they would have caused a damaging scandal. On the latter point I am not assisted by the views of Inspired’s witnesses as to how they would have assessed the reputational risks if the Emails had been disclosed to them before the SPA. As I have indicated when considering the evidence of each of Inspired’s witnesses in detail, their (obviously partial) attempts to justify their (often) extreme reactions to the Emails fell flat. I am also not assisted by the range of examples that Inspired sought to place before the court of scandals in other schools. None of these examples resembled the circumstances of this case and a number were very considerably more serious. Most were referred to at a generic level without particularisation and some were identified by witnesses with no personal knowledge of them. I agree with the Defendant that in no case was there any reliable evidence about the timing or scale of the impact of the scandal on student numbers.

[284]In addition to the factual findings I have already made about the nature of the Emails themselves, the following matters assist in shaping my conclusion:a. Had they been disclosed, the Emails would have been seen only by the hypothetical buyer, who (ex hypothesi) would have proceeded with the purchase, and by Mr Crombie and Mr Burgess.

b. The hypothetical buyer might have chosen to do nothing about the Emails, an approach that Inspired itself took when it was alerted at the time of the SPA to the possibility of a claim of race discrimination by two MOS teachers: the details of the possible claim were not even drawn to Mr Nsouli’s attention by Ms Stewart.

c. The hypothetical purchaser might have decided to take a pragmatic view – it could have warned Mr Crombie and Mr Burgess in respect of their conduct and then deleted the Emails, as the Defendant submits.

d. On these scenarios (which I consider to be by far the most likely given the commercial context), the Emails would never have seen the light of day.

e. Alternatively, the hypothetical purchaser might have decided to investigate the Emails and start disciplinary proceedings against Mr Crombie and Mr Burgess on the grounds of gross misconduct. On this scenario the Emails are likely to have been made public but (given my findings as to the explanation for the Emails) it is difficult to see that they would have been widely publicised and caused a scandal bringing with it reputational harm. Quantum: Conclusion

[285]Given my finding that there is no breach of warranty, Mr Crombie has no liability to Inspired.

[286]Even if I am wrong in that finding, Mr Crombie also has no liability to Inspired because, given my findings on the quantum evidence, any damages which he might be liable to pay fall below the threshold of £75,000 in paragraph 4.2 of Schedule 6 of the SPA.

The claim of breach of the Non-Competition Provisions

[287]Inspired claims damages against Mr Crombie for breach of the non-competition provisions of clause 9 of the SPA. It is not alleged that Mr Crombie himself acted in competition with MOS or Inspired, but rather that he “encouraged and supported Mr Leitch in his plan to start a rival online school, at that stage with the name ‘Hive’, and to take at least one other employee of the Company with him”, namely Ms Goyea. Inspired claims its legal costs and lost management time spent in “taking action to ensure the cessation of the wrongful actions of Mr Leitch and Ms Goyea”.

[288]It is Mr Crombie’s case that Inspired’s case on loss arising from this alleged breach has significant legal and evidential problems. However, even if Inspired cannot prove loss, the determination of liability for breach of clause 9 of the SPA has important financial consequences for the parties as it would amount to a TC Event of Default under Schedule 10 of the SPA, thereby triggering the assessment of Mr Crombie’s Deferred Cash Consideration. Relevant Provisions of the SPA

[289]Inspired alleges a compendious breach of four sub-clauses of clause 9.2, which relevantly provides that: “To ensure that the goodwill in the business of the Buyer's Group is properly protected, the Seller undertakes to the Buyer and each member of the Buyer's Group that he shall not directly or indirectly in any Capacity: … 9.2.4 during the Restricted Period within the Territory be concerned in any Restricted Business; 9.2.5 during the Restricted Period within the Territory be interested in any Restricted Business; 9.2.16 in connection with any Restricted Business either:(a) …; or

(b) solicit or seek to employ or entice away, or endeavour to solicit or entice away, from the Company or any member of the Buyer’s Group, Any Restricted Person (whether or not such a person would commit a breach of contract by reason of leaving his employment with or engagement by the Company) or any member of the Buyer’s Group. 9.2.19 knowingly or intentionally or recklessly do anything which is intended to damage the goodwill or reputation of the Company or any member of the Buyer's Group or of any business carried on by the Company or any member of the Buyer's Group or which is reasonably likely to lead any person either to cease to do business with the Company or any member of the Buyer's Group on substantially equivalent terms to those previously offered or not to engage in business with the Company or any member of the Buyer's Group.” (a) …; or (b) solicit or seek to employ or entice away, or endeavour to solicit or entice away, from the Company or any member of the Buyer’s Group, Any Restricted Person (whether or not such a person would commit a breach of contract by reason of leaving his employment with or engagement by the Company) or any member of the Buyer’s Group.

[290]Pursuant to clause 9.1 of the SPA:a. “Business” means the business of MOS as at the date of the SPA;

b. “Capacity” means “on its own account or on behalf of any other company, firm or person and whether as principal, shareholder, partner, officer, employee, agent or otherwise”;

c. “Relevant Period” means the twelve month period immediately preceding the Completion date;

d. “Restricted Business” means “(a) the provision of education services of any description to any student from kindergarten to year 12 (whether full day classes, tutoring, ancillary services and whether in person or online); and/or (b) any business that competes or proposes to compete with the whole or any part of the Business at any time and from time to time”.

e. “Restricted Person” means anyone within MOS or Inspired holding (“at any time and from time to time”) the office of director or a senior managerial position or with a remuneration package equal to or in excess of £50,000 per annum or with a job title which contains the words “Head of” or “Chief” or similar.

f. “Territory” means England, Wales, Scotland and Northern Ireland, Australia and the United Arab Emirates and any other jurisdiction where the Company or Inspired is carrying on any Restricted Business” from time to time.

[291]In opening, the Defendant made various submissions as to the true interpretation of these provisions, but Inspired did not identify how it said these clauses should be construed or how they were engaged by the pleaded conduct. In summary, the Defendant contends that: 9.2 is not well-drafted; that the words “concerned in” and “interested in” (in 9.2.4 and 9.2.5 respectively) should be given their ordinary meaning; that 9.2.16(b) requires “activity” on Mr Crombie’s part amounting to actual solicitation or an attempt to solicit; and that 9.2.19 must be construed in its contractual context including the introductory language of 9.2 and the preceding eighteen comprehensive sub-clauses and that it involves two separate limbs both of which require an act that is done “knowingly or intentionally or recklessly”.

[292]In closing, Inspired dealt briefly with these points, focusing in particular on the proper construction of clauses 9.2.4 and 9.2.5. However, it advances no positive case on the construction of the phrases “concerned in” and “interested in” beyond the assertion that these phrases are capable of capturing a person who “instigates or encourages” a competing business, including by “being a participant in and involved in business planning”. It submits that there is no need under these clauses to establish the holding of an official or direct role in the competing business or to show a financial interest in that business.

[293]Having regard to the principles of construction to which I have already referred in this judgment, I have arrived at the following conclusions on the interpretation of these provisions.

[294]The natural and ordinary meaning of the phrases “concerned in” and “interested in” is illustrated by the use of such phrases in the range of legal contexts set out in Stroud’s Legal Dictionary, to which I was referred by the Defendant. In the context of a business, I understand the words “concerned in” to indicate involvement with or participation in the business. I understand the words “interested in” to indicate a financial stake of some kind. I reject Inspired’s contention that merely encouraging another to set up a rival business naturally falls within these concepts, notwithstanding the prefatory language of clause 9.2 (“he shall not directly or indirectly in any Capacity”), and the definition of the words “Capacity” and “Restricted Business”. A person is directly “concerned in” or “interested in” a rival business if he or she has a direct involvement or stake in that business. A person is indirectly concerned in or interested in a rival business if he or she is (for example) controlling the business from behind the scenes or has an indirect financial stake. I do not see that the fact that “Capacity” includes “on his own account” and that “Restricted Business” includes “any business that…proposes to compete…” affects my interpretation. I shall of course need to consider in due course whether any of Mr Crombie’s activities fall within this meaning.

[295]I agree with the Defendant that clause 9.2.16(b) is engaged where, in connection with any Restricted Business, an individual either(i) actually solicits or seeks to employ or entice away a Restricted Person, or

(ii) endeavours to do so. I accept that by reason of the introductory words of clause 9.2, this prohibition includes both direct and indirect solicitation or attempts to solicit. I did not understand Inspired to quibble with this construction in closing, albeit that, as the Defendant pointed out, Inspired did seek to advance an entirely new case to the effect that Mr Crombie “indirectly or directly, endeavoured to entice Mr Leitch away from MOS and Inspired and indeed directly or indirectly Ms Goyea”. I shall return to this in a moment.

[296]Inspired made no submissions at all as to the construction of clause 9.2.19 from which I can only infer that it accepts the construction advanced by the Defendant. I agree with the Defendant that 9.2.19 must be read in context, including the introductory language of 9.2 (which indicates that its purpose is to “ensure that the goodwill in the business of the Buyer’s Group is properly protected”) and the eighteen preceding sub-clauses. As the Defendant points out, the first sixteen sub-clauses are all limited in scope by reference to time and/or territory and/or type of business and the next two sub-clauses also have a narrow focus. In contrast, the acts prohibited by clause 9.2.19 apply indefinitely and without territorial restriction. I agree with the Defendant that the parties must objectively have intended those acts to have a narrow scope, specifically that they cannot objectively have intended them to undermine or render otiose the more specific provisions of the other sub-clauses (any different interpretation would likely engage the doctrine of restraint of trade).

[297]For the first time in closing it became clear that Inspired relies only upon the first limb of clause 9.2.19. This limb requires an intentional or reckless act whose purpose is to damage the goodwill or reputation of the Company or the Inspired Group. Inspired now alleges that Mr Crombie has acted in a manner “recklessly intended to damage the goodwill of MOS by assisting in the establishment of a rival online school staffed by members of the MOS’ senior leadership team” and that a “rival school with those staff could only damage the brand value of MOS at a post-acquisition and pre-integration stage”. Once again, this forms no part of Inspired’s pleaded case.

Alleged Breach of clause 9.2 (Issues 10 and 11)

[298]I have already indicated that Inspired’s pleaded case on breach is limited to the question of whether Mr Crombie “encouraged and supported” Mr Leitch’s plan to start up a rival online school and to take Ms Goyea with him, albeit that this is said to have amounted to a breach of all of the sub-clauses on which Inspired relies. This is clear from paragraph 32 of the Re-Amended Particulars of Claim which goes on to plead particulars of the alleged support and encouragement. No application to amend this paragraph was made at trial. I note also that (although not definitive) the List of Issues for trial on this subject raises two questions: “Did the Defendant have knowledge of Mr Robert Leitch’s plan to establish a rival online school at the relevant time?” (issue 10) and “Did the Defendant breach non-competition provisions of the SPA by encouraging and supporting Mr Leitch’s plan to start a rival online school and by failing to inform the Claimant of the same” (issue 11).

[299]In the circumstances, I do not consider it to be open to Inspired to raise for the first time in closing new allegations of active attempts “to entice Mr Leitch away from MOS”, of similar attempts in relation to Ms Goyea, or of reckless intention to damage goodwill. That is not the way in which the case has been pleaded and I do not see why a defendant should be expected to divine the nature of the case that is being advanced purely because a compendious plea identifying a number of different non-compete clauses has been made. It is incumbent upon a claimant to plead its case in such a way as to enable the defendant to know the case it must answer at trial. Inspired’s pleaded case is that Mr Crombie’s support and encouragement of Mr Leitch breached the various provisions of 9.2 on which it relies. That is the case that I shall now turn to consider.

[300]I shall start by considering the available documentary evidence, largely contained in WhatsApp messages between Mr Leitch and Mr Crombie, together with Mr Crombie’s account of events. I shall return in due course to consider the significance of the destruction of the Deleted Leitch WhatsApps, but I must first say something about Mr Leitch’s letter of 21 February 2023, on which Inspired placed significant reliance in closing.

[301]The 21 February 2023 letter was written by Mr Leitch in response to a letter from SH of 17 February 2023 in which they required information from Mr Leitch as to Mr Crombie’s conduct. In the 17 February 2023 letter, SH informed Mr Leitch that Mr Crombie was now subject to an allegation of “conspiracy to defraud”. Given the circumstances in which the 21 February 2023 letter was written and given that Mr Leitch has not been called by MOS to give evidence, I am not inclined to put weight on it save where it is corroborated by Mr Crombie and/or the documentary evidence. Mr Leitch had been caught secretly downloading MOS’ data and was the subject of expensive legal proceedings by Inspired. I agree with the Defendant that he had a clear motive for wishing to try to minimise his own culpability by “pointing a finger” at Mr Crombie. If Inspired wished to rely upon Mr Leitch’s evidence it should have called him as a witness at trial. I have been given no explanation as to why he has not given evidence, albeit one possibility is that, as we shall see, Mr Leitch’s account of events both in the letter of 21 February 2023 and in an earlier one of 24 January 2023 was not always unhelpful to Mr Crombie.

[302]On 25 November 2022, Mr Leitch and Mr Crombie had dinner together in Dubai. After dinner they exchanged WhatsApp messages, initially chatting about the evening and then a football match. Mr Crombie then sent a message to Mr Leitch saying this:

“I should add that I’m not joking when I say online school 2.0”, to which Mr Leitch replied “I felt guilty for even considering it before we spoke 😂”

. Mr Crombie responded “One to discuss in all seriousness when we are back on home turf”.

[303]Inspired contends that this exchange shows that the idea for a rival online school came from Mr Crombie and was being pushed by Mr Crombie to such an extent that it overcame Mr Leitch’s reluctance (given his response (“I felt guilty etc.”).

[304]Mr Crombie’s evidence about this exchange has not been entirely consistent. Although he has always maintained that he personally had no intention of getting involved in another on-line school, in his first statement he sought to explain the exchange by putting the reference to “online school 2.0” into the mouth of Mr Leitch saying “I understood him to be referring generally to another company in the education sector…but not specifically a rival online school”. However, in his second statement (having appreciated his error) Mr Crombie corrected his statement to say that he did not now recall sending or receiving the messages but that he thought that the evidence he had given in his first statement was in fact his own understanding of what he meant by the words.

[305]Pausing there, it is very difficult to read the reference to “online school 2.0” as merely a bland reference to “another company in the education sector” and there can be no doubt from his answers during cross-examination that Mr Crombie was under-playing this in his statement. I also think he was mistaken in his first witness statement when he said that Mr Leitch “did not mention any desire to set up an online school” at the dinner and that “I did not get any impression that was something he was considering”. I consider it to be clear from the WhatsApp messages that the possibility of setting up an online school (in similar mould to MOS) was discussed over dinner (albeit probably as part of a high level discussion about Mr Leitch’s future options). Mr Leitch appears to have been considering this possibility prior to the dinner and so I reject Inspired’s suggestion that the idea “came from Mr Crombie”. When this theory was put to Mr Crombie in cross examination he responded that he had “no intention of starting a rival business certainly within my restricted period…”.

[306]Mr Crombie went on to explain that “we had a…pie in the sky conversation about what may happen in the future, and we talked about how we could in essence, you know, perhaps work together at some point”. He also said that “an online school [was] something that we may have embarked on and not necessarily a competing business, some sort of business that we may have embarked on at some stage in the future. Certainly not something that I was expecting Mr Leitch to start immediately as he did”. Upon it being put to him that the WhatsApps showed that in fact he had plotted with Mr Leitch “for [Mr Leitch] to go off” and set up an online school, Mr Crombie accepted that Mr Leitch had been planning all sorts of things at this stage, but that he (Mr Crombie) knew “I would not be going with him”. He then said this: “I do accept that I shouldn’t have had any conversation about anything to do with an online school in hindsight…” albeit that he and Mr Leitch were “talking about all sorts of things that you could do online”…

[307]Doing the best I can with this evidence, and given the content of the WhatsApp messages, I have little doubt that the men were discussing Mr Leitch’s future in circumstances where they had become friends and it was clear to them both that Mr Leitch “was not going to be part of Inspired any more”, as Mr Crombie explained. I accept Mr Crombie’s evidence (which appears to me to fit with the probabilities) that he felt sorry that Mr Leitch was being pushed out and that he felt it was his duty to support him in connection with the next stage of his career. The discussion plainly involved the possibility of Mr Leitch becoming involved in an online school, together with the potential for Mr Crombie to become involved in a business venture (including possibly an online school) with Mr Leitch (as he said) “at some stage in the future”. However, I also accept Mr Crombie’s evidence that he was aware of his restrictive covenants and that he personally did not intend immediately to go into business with Mr Leitch. Indeed this fits with a letter from Mr Leitch’s solicitors dated 24 January 2023 in which they asserted that although there had been discussion about future collaboration, Mr Crombie had conceded that he would be restricted from such collaboration “for a time at least” owing to the terms of the SPA. I consider the most likely explanation for the WhatsApp messages following this discussion is that Mr Crombie was alluding to Mr Leitch’s possible future plans which had been discussed in a light-hearted way, taking seriously the need to discuss them, and offering his support. This is borne out by what happened next.

[308]In unchallenged evidence, Mr Crombie says that upon their return from Dubai, Mr Leitch had a meeting about his future role and that he had reported back to Mr Crombie that it had been made clear to him that he wouldn’t be retaining the title of Executive Head of School. There would be a job for him but it would be in a lesser role. Mr Crombie’s evidence, which I accept, is that Mr Leitch was despondent about this apparent demotion. I reject Inspired’s case (based on Mr Leitch’s letter of 21 February 2023) that Mr Crombie checked Mr Leitch’s employment contract for him, which is unsupported by any contemporaneous documentation and was denied by Mr Crombie (“Mr Leitch had a copy of his own contract. If he wanted to check that, he could. I did not look at his contract on his behalf”). Equally I reject its case that Mr Leitch showed Mr Crombie screenshots on his phone of possible logos for Hive. When this was put to Mr Crombie he plausibly explained that Hive was a brand that the MOS marketing team had come up with in advance of the SPA as a “school within a school”, but that he did not know of this word from Mr Leitch’s business.

[309]By this stage, issues surrounding integration had already begun to rear their heads. Mr Crombie’s WhatsApp messages with Mr Leitch on 28 November 2022 include a message from Mr Crombie to Mr Leitch informing him that he (Mr Crombie) had raised concerns about integration with Mr O’Donoghue: “Had quite a frank conversation with mark today about concerns I have. Think he was quite taken aback and I’m going to raise these more formally on Thursday with him and also Nadim”.

[310]On 30 November 2022, Mr Leitch messaged Mr Crombie:

“Appreciate it’s very uncertain for anyone in leadership roles, still working on what the post-Sep world and opportunities look like” – clearly a reference to the uncertainties that existed in connection with the integration of MOS into the Inspired business. Mr Crombie suggested a “quick catch up” and the two men appear to have had a zoom call, after which Mr Leitch messaged Mr Crombie to say “Thanks for continuing to bang the drum for me and others. Really appreciate it. As you say, good for everyone to have options open”

. Pausing there, it was suggested by Inspired that Mr Crombie had lost all interest in the business after the SPA (that he had “checked out”). I reject this suggestion and accept Mr Crombie’s evidence (as illustrated by this WhatsApp exchange) that he was working hard, trying to enthuse his staff with the benefits of working at Inspired, trying to fight their corner with Inspired and that he continued to want “the absolute best” (as he said in evidence) for the business he had started.

[311]On 14 December 2022, Mr Leitch messaged:

“Not high up the priority list at all but was going to ask whether you would mind doing a written reference for me on MOS headed paper – just that I could keep on file as a generic one ‘To whom it may concern’ – just conscious that officially a reference for me in 6 months time could have to go directly through Inspired etc and would like to have insurance one in back pocket!”

. In a subsequent message he added that “Also (sorry) been asked whether I would be interested in doing some consultancy for a physical college group over a few bits. Wouldn’t start for a few months and not sure about it…”. Mr Leitch asked Mr Crombie whether he knew what education consultants charge. To both messages Mr Crombie replied “Absolutely, I’ll do this tomorrow and a good shout”. He then messaged to say that “Consultancy is something that I’ve thought about” and he gave some advice about fees. He ended by saying “Maybe there’s a future consultancy business there for us!” – a comment he explains in an unchallenged passage of his statement as reflecting his disillusionment with Inspired and his own thoughts about exploring the possibility of working as a consultant. Mr Crombie says, and I accept that “I meant this as a passing comment that we may in future work together in the field of consultancy. I did not mean it as a serious suggestion”. This is plainly how Mr Leitch took it because he replied “I am convinced we will have lots to do together in the future, whatever paths we take, hope so for sure”. Mr Crombie replied “I’d be surprised if there isn’t. Maybe one to talk about over a pint(s)”.

[312]I accept Mr Crombie’s evidence that this was a message of support for Mr Leitch and that he was not suggesting that he wanted to discuss serious plans for starting a new business with Mr Leitch – that is not the tone of the messages and nor does it fit with the request for a reference, which would only be required if Mr Leitch were considering going into employment. I agree with the Defendant that this exchange is also flatly inconsistent with Mr Crombie and Mr Leitch already having a plan to go into business together – rather to my mind it fits with Mr Crombie’s evidence that “We discussed many things. He talked about his own business, he talked about returning to physical schools, he talked about consultancy, he talked about online consultancy. We had conversations about all sorts of things that he may go off and do”.

[313]On 16 December 2022, at the Company Christmas party, Mr Leitch told Mr Crombie that he was planning to hand in his notice. Mr Crombie’s evidence (which fits with the earlier conversations to which I have referred which do not suggest that Mr Leitch had any firm plans) is to the effect that Mr Leitch told him that he could no longer work alongside Mr O’Donoghue and that he did not know his future plans at this stage. It seems that Mr Leitch was not the only one having problems working with Mr O’Donoghue – both Mr Knowles and Ms Pearce said something very similar to Mr Crombie in early January 2023 (as is clear from Mr Crombie’s WhatsApp exchanges with Mr Knowles).

[314]I attach no weight to Mr Leitch’s assertion in his letter of 21 February 2023 that he also told Mr Crombie he was 90% certain that he would set up a new business in online education as had been discussed in Dubai, which appears to me to be inconsistent with the very much more general discussions that were taking place via WhatsApp at around this time. Furthermore, Mr Leitch’s assertion in the letter of 21 February 2023 is inconsistent with his solicitor’s letter of 24 January 2023 in which a meeting with Mr O’Donoghue on 20 December 2022 is said to have involved an explanation from Mr Leitch that his plans were “not yet concrete and…could involve either…a physical school, an online school or with an education-based corporate”. Mr Crombie denied that Mr Leitch had said that he was 90% certain he would set up a new online business and I accept his evidence.

[315]The following Monday (19 December 2022), Mr Leitch resigned. He sent his resignation letter to Mr Crombie under cover of an email in which he expressed his gratitude at having been involved with the MOS team for the last six months and stated that he was giving four weeks’ notice. In his letter he explained that it had been made clear to him that he would not have the role of Executive Headteacher moving forwards and that this had prompted personal reflection about his next steps. The two men shared some brief WhatsApp messages in which Mr Leitch expressed his “heavy heart”.

[316]On 20 December 2022, in a message to Mr Leitch which Mr Crombie deleted from the messages he later provided to Inspired, Mr Crombie commented “Looking forward to chatting business in the New Year”. It is Inspired’s case that this message “shows quite clearly that the discussions which started in Dubai were continuing”. I shall return to the deletion in a moment but, in context, I consider that this message appears clearly to indicate that Mr Crombie wanted to discuss Mr Leitch’s plans in the New Year, although, looking at the surrounding messages, it does not seem to me that this was a reference to the setting up of an online school, as opposed to the expression of a wish to find out what Mr Leitch’s intentions were. By this stage, Mr Leitch had expressly raised the possibility of consultancy work and it seems that he had also been approached for headship positions (as Mr Crombie confirmed in his email to Inspired of 26 January 2023).

[317]When asked about this message in cross examination, Mr Crombie’s response appeared to me to ring true (given the surrounding contemporaneous documents): “I used the word business because I was very much looking forward to discussing with Mr Leitch about what he was going to go and do next. Mr Leitch had talked to me about consultancy work, he talked… to me about returning to physical schools, he talked to me about setting up his own business, something in the education world. As a proud entrepreneur myself, I always like to assist others…I was very supportive of what Mr Leitch may have gone to do next, and I said to him that I would like to chat business, I would like to hear what he has to do, and if I could be of assistance, then absolutely I would”.

[318]On 21 December 2022, Mr Crombie messaged Mr Leitch to say that he and Mr O’Donoghue had been talking about next steps:

“If you are happy, going to present it as ‘Rob has decided to pursue the next stage of his career in physical schools’…or something to that effect. Keep it very positive”

. Mr Leitch responded “Will keep positive but not specific to which part of the sector” to which Mr Crombie replied that “we don’t even need to mention physical school” and it was agreed that the issue could be settled in January. These messages certainly do not fit with Mr Leitch having told Mr Crombie that he would be setting up an online school but are far more consistent with Mr Crombie’s evidence that Mr Leitch had previously told him that he was seriously considering an Executive Head role he had been headhunted for in a physical school – this may explain why these messages were not referred to by Inspired in closing.

[319]On 30 December 2022, Mr Leitch incorporated Hive Education Group Limited. In his solicitors’ letter of 24 January 2023, Mr Leitch explained that this followed a discussion with his father over the Christmas period and his decision, made only at that point, to pursue a new online school venture. I consider this part of the letter to be consistent with Mr Crombie’s evidence that prior to that date Mr Leitch had not provided any definitive information about his ‘next steps’.

[320]On 4 January 2023, Mr Crombie and Mr Leitch exchanged WhatsApp messages about a letter announcing Mr Leitch’s resignation. Mr Crombie said “Dropped you a draft letter for approval. I have gone down the ‘return to physical schools’ route but happy to amend as you see fit. A tough letter to write from a personal perspective!”. Mr Leitch later responded that he had sent it back “removing all and any reference to next steps”. Mr Crombie replied “Ok no problem. We can maybe chat about messaging for parents just to relieve any anxieties. You free to have a longer catch up tomorrow?” Mr Leitch said that he was and then said this:

“Thanks – just don’t want to commit to anything re: my future if possible. I’m a player available on a free transfer – at the depressing stage of my career!”

. Mr Crombie replied “Haha, of course. A good January signing though.” Mr Crombie then continued the joke about Mr Leitch being signed by a football club: “might be a job there for you”, to which Mr Leitch responded “Think we might have to be league 2 before they get that desperate”.

[321]Pausing there – I consider this exchange to be important evidence of the extent of Mr Crombie’s knowledge of Mr Leitch’s activities at this time. Mr Crombie’s evidence is that he thought it was odd that Mr Leitch did not want to include any reference to physical schools in the letter because he “assumed this was his intended next step”, but he says that the removal of the reference to physical schools did not cause him any concern because he merely thought that Mr Leitch wanted to keep his options open. This is entirely consistent with the last few messages of this chain. If Mr Leitch had been keeping Mr Crombie in the loop as to his plans for Hive (which had just been incorporated) or indeed if the two men were plotting to go into business together in competition with Inspired, it is very difficult to see that Mr Leitch would at the same time have been seeking to give the impression (in unguarded private exchanges) that he was “a player available on a free transfer” i.e. that he had no future commitments. I note that, again, Inspired omitted reference to these messages from the “factual matrix” analysis in its closing submissions.

[322]By this stage, Mr Crombie was certainly aware that MOS employees were becoming increasingly disaffected with Inspired. In an email to Mr O’Donoghue on 9 January 2023, he expressly refers to the fact that he has “mentioned previously” the potential for MOS resignations.

[323]On Saturday 7 January 2023, Mr Crombie exchanged WhatsApp messages with Mr Knowles about their mutual discontent with the way in which Inspired was being run, including their shock at an email they had received from Mr Nsouli. Mr Knowles informed Mr Crombie that he intended to “plan [his] exit with Nadim”. Mr Crombie responded:

“I will likely follow suit with regards to an exit too and I should imagine a lot of my SLT will be doing the same”

. Later that same day, Mr Crombie messaged Mr Leitch (in a message he later deleted) saying “Tony [Knowles] won’t be there much longer either. Definitely someone (with a superb knowledge of online education) who would be good for you to learn from alongside me”.

[324]When questioned about this message, Mr Crombie denied hatching a plan to go into business with Mr Leitch although he accepted that by this stage he thought it unlikely that his future would be at Inspired. He said that he had no idea about Hive and that this message (which with hindsight he thought was “naïve”) was merely intended as support for Mr Leitch in whatever he intended to do. In closing Inspired sought to make out an entirely new case that this WhatsApp plainly shows that Mr Crombie was intending to work alongside Mr Leitch and “hatching a plan for Mr Knowles…to do the same”. I reject that case which is yet another example of Inspired’s continuing attempts to move the goal posts. I also reject the suggestion that this message evidences Mr Crombie’s knowledge of Mr Leitch’s own plans – such knowledge does not fit with evidence to which I have already referred.

[325]Also on Saturday 7 January 2023, Mr Leitch and Ms Goyea downloaded thousands of MOS’ files. It has never been suggested (even by Mr Leitch) that Mr Crombie was involved in, or aware of this unlawful conduct. I agree with the Defendant that a close reading of the available evidence suggests that, having formed a plan in relation to Hive at the end of December 2022, Mr Leitch nonetheless continued falsely to represent to Mr Crombie that he had no set plans in order to give himself and Ms Goyea time to download MOS documents before Mr Leitch’s last day on 13 January 2023.

[326]On 9 January 2023, Ms Goyea resigned. Mr Crombie’s evidence is that although he had been aware that Ms Goyea was unhappy (and had been meeting with her), he did not know that she intended to resign until he received her resignation letter. That letter provided no clue as to her intentions, saying only that she intended to “explore the avenues and options that are available to me”. In unchallenged evidence Mr Crombie said that he had a meeting with Ms Goyea at which she implied that she was planning to return to physical schools. I am inclined to accept that Mr Crombie did not know about Ms Goyea’s departure, which is not heralded in any contemporaneous document.

[327]Also on 9 January 2023, Mr Crombie emailed Mr Nsouli to inform him of Ms Goyea’s resignation. Mr Nsouli responded with a terse, one paragraph email expressing his disappointment that Mr Crombie had been unable to keep his team to run the MOS business until the end of the academic year. Mr Crombie replied that he was also disappointed by the resignations but that his priority since the SPA had been “keeping the team in place and keeping them motivated”. He said that he had been meeting “with our senior team on a daily basis to enthuse them…”. I can see no reason to find (as Inspired invited me to do) that Mr Crombie was “negative briefing” against Inspired at this time, although he had certainly begun to consider his own position with Inspired and had talked to Mr Knowles (an existing employee of Inspired and not a member of the MOS team) about his disillusionment.

[328]On 10 January 2023, Mr Crombie messaged Mr Leitch to say “Looking forward to some business planning in the pub on Tuesday”, to which Mr Leitch responded “Lots to update you on next week”. Mr Crombie’s unchallenged evidence is that this was a reference to a planned trip to London the following week when he had arranged to meet Mr Leitch for dinner. This message was also later deleted by Mr Crombie and Inspired place considerable emphasis on the words “business planning” which it says are plainly to be understood as business planning discussions to set up a rival online school. I note, however, that Mr Leitch clearly thought he had lots to update Mr Crombie on, which tends to undermine the suggestion that Mr Crombie knew all about Hive at this point and was planning to become involved in it with Mr Leitch.

[329]In closing, Inspired prayed in aid the Zoom Chat with Mr Burgess which appears to have taken place on or around 10 January 2023, which it says involved Mr Crombie clearly setting out his plans. In the Zoom Chat Mr Burgess says “…we could literally start our own school with the number that’s left/leaving MOS”. Mr Crombie responds “Yup. I genuinely wonder is anyone at Inspired and put 2 + 2 together with that one. You’ve got every position covered”. Mr Crombie then goes on to sketch out the possible leadership team which includes both Mr Leitch and Ms Goyea together with Mr Burgess.

[330]I reject Inspired’s case that a plain reading of this chat is that Mr Crombie was concerned in an active plan to set up a rival online school and was anxious that Inspired might become suspicious. On the contrary, it appears to me to be plain from the language used that this was, as Mr Crombie said “a hypothetical off the cuff conversation”. Mr Burgess, who does not appear to have been involved in any discussions with Mr Leitch and is not mentioned in any of the letters from Mr Leitch’s solicitors, introduces the topic using words which, to my mind, immediately make clear that there was no serious plan “we could literally start our own school” (emphasis added), much less a plan between Mr Crombie and Mr Leitch to set up Hive. I also accept Mr Crombie’s evidence that at this stage he and Mr Burgess were “very despondent …about the number of staff that were leaving” and “deeply concerned…about the integration, that it wasn’t going to plan”. Indeed emails between Mr Crombie and Mr O’Donoghue on the following day show detailed discussion about whether there is any role at Inspired for Mr Burgess. Importantly, to my mind, Mr Burgess was not asked about this conversation or what he might have meant when he said “we could literally start our own school”.

[331]Also on 10 January 2023, Mr Crombie had another long exchange with Mr Knowles via WhatsApp. Amongst other things, he said that he had “Just had a chat with my lawyer about the SPA and my employment restrictions. Think I am good to get a resignation in!”. He also explained that he had a meeting “with our advisors tomorrow to get clarity on the final accounts and the retained amount that was held back (due to be released next week). Once I know more on that I’ll provide feedback and also resign” and “I never actually had a contract in place for myself until I had to sign one during the deal so I think im technically in probation period”. Mr Crombie accepted in his oral evidence that this was a misunderstanding of his actual employment position. On the following day, he sent a message to Mr Knowles letting him know that he had “two lawyers check over my agreement and I might get a third as have no trust in them”.

[332]13 January 2023 was Mr Leitch’s final day. Mr Crombie messaged him to wish him a “good final day”.

[333]On 17 January 20023, as anticipated in Mr Crombie’s message of 10 January 2023, Mr Crombie and Mr Leitch had dinner together in London. Mr Crombie’s evidence is that during the dinner, Mr Leitch told him that he was planning to start an online school called Hive, that he had built a website and planned to launch in April. He also told Mr Crombie that Ms Goyea was to be Hive’s Head of Junior School. Mr Crombie says, and I accept, that he was “very shocked” and that he felt disappointed in Mr Leitch. He knew that he needed to tell the leadership of Inspired, which he did the following day.

[334]Importantly, to my mind, Mr Leitch’s account appears consistent with Mr Crombie’s about this meeting. He says in his letter of 21 February 2023 that “[n]ow that I was out of contract, I was keen to share further details openly and transparently with him, out of respect, ahead of any prospective public launch of Hive. In this meeting I shared timescales and planning and also notified him that Sara Goyea was going to join Hive”. It is clear from this (which is consistent with Mr Crombie’s evidence) that Mr Crombie had not been kept in the loop, whether about the involvement of Ms Goyea or the decision to launch Hive. This was the first occasion after his employment had ended that Mr Leitch felt he was in a position to share this information with Mr Crombie.

[335]Inspired says that Mr Crombie’s evidence about the 17 January meeting is not to be believed, essentially for five main reasons: first that Mr Crombie had known about Mr Leitch’s plans since 25 November 2022, second that he and Mr Leitch had been in planning discussions ever since (precise details of which will never be known owing to Mr Crombie’s deletion of WhatsApps); third that Mr Crombie had “started sketching out a senior leadership team for the new rival online business” as the 10 January 2023 Zoom Chat shows, fourth that Mr Crombie had started to look carefully at his own legal position and fifth that he had got “cold feet” once he understood his legal position and thus alerted Inspired to Mr Leitch’s activities. Inspired says that Mr Crombie then started to cover his tracks after 23 January 2023 with the selective destruction of the Deleted Leitch WhatsApps.

[336]At the heart of Inspired’s submissions lies it case on the deliberate destruction of evidence which it says should lead the court to draw the conclusions I have recorded above, together with inferences about what other (unavailable) material might have shown. Specifically, it submits that the fact of the Deleted Leitch WhatsApps lays bare Mr Crombie’s breach of his non-competition provisions. Inspired says that the Deleted Leitch WhatsApps were not deleted because they were open to mis-interpretation, but rather because they exposed the truth.

[337]There is no doubt that Mr Crombie deleted WhatsApps between himself and Mr Leitch from the screenshots that he sent to Mr O’Donoghue on 26 January 2023. During the course of his cross-examination, Mr Crombie admitted that he had selectively deleted messages (and there are three that it has been possible to identify as falling within that category) – namely messages to Mr Leitch of 20 December 2022 and 10 January 2023 which both refer to talking “business” and a message of 7 January 2023 which raises the potential for Mr Leitch to learn from Mr Knowles “alongside me”. I accept that the destruction of these messages inevitably reflects poorly on Mr Crombie’s credibility in relation to this issue but I must also bear in mind my findings about the detail of the available evidence. I do not consider that evidence overall to support Inspired’s case and I remind myself that I may only make assumptions and inferences premised on deletion of evidence where those assumptions are consistent with the rest of the evidence.

[338]Mr Crombie explained his deletions during his oral evidence as follows: “I am a very supportive individual, and I’m a very caring individual, and I genuinely wanted the best for Mr Leitch, so I did want to support him and I understood that the optics of some of our conversation would be taken to mean something else, and having been at Inspired for a number of months and seeing the aggressive management style, I did make a decision to delete some messages because I was – I guess for want of another word – afraid of what they would be perceived to mean…I felt that had I provided them there would be, you know, a different picture shown than what the reality was, and I understood that particularly Mr Nsouli would read them to mean something completely different to what they were, so I made that decision, rightly or wrongly, and I do accept that, you know, perhaps that was wrong to have done that… I think the optics of this, given what was going on at the time and the approach Inspired had taken to raise proceedings against Mr Leitch, I felt that although Mr Leitch and myself had a good understanding of where we both stood. For somebody else to have sight over this would perhaps draw a different conclusion”.

[339]On balance, I find that this explanation is true. It fits with the contemporaneous documents which do not, to my mind, show Mr Crombie to have any knowledge prior to 17 January 2023 that Mr Leitch intended to set up a rival online school in the form of Hive, much less do they show that he was plotting with Mr Leitch to set up such a rival school. As I have already said, a number of the messages between the two men appear to me to be flatly inconsistent with Mr Crombie having such knowledge. I observe that, aside from Inspired’s closing submissions on this topic bearing little relation to its pleaded case, Inspired appears to be seeking to run a number of competing “theories” in the hope that something will “stick”. These include that Mr Crombie and Mr Leitch had been plotting an online school from November 2022 onwards, that Mr Crombie was looking to involve Mr Knowles in the plan and that Mr Crombie was himself sketching out the possible leadership roles at such a rival school with Mr Burgess – i.e. was actively involved – even before Mr Leitch’s departure from Inspired.

[340]I agree with the Defendant that it makes no sense to suggest (as Inspired did in cross-examination of Mr Crombie) that he became “super spooked” when he spoke to Mr Leitch on 17 January 2023 owing to concerns about “getting his SPA monies”. On one iteration of Inspired’s case, Mr Crombie had been plotting with Mr Leitch from a mere 10 days after the SPA and would inevitably have had the provisions of the SPA well in mind throughout (as indeed Mr Leitch’s account in his solicitors’ letters make clear). That he was less certain about his employment position is entirely understandable where Inspired had not provided him with new employment terms. I agree with the Defendant that the fact that Mr Crombie blew the whistle on Mr Leitch as soon as he found out about his plans to set up Hive is not only inconsistent with Mr Crombie plotting to go into a rival venture with Mr Leitch, but also with Mr Crombie having encouraged Mr Leitch to set up such a venture.

[341]In all the circumstances, I do not consider it to be appropriate to draw any adverse inferences from the destruction of the Deleted Leitch WhatsApps and I decline to do so. Conclusion on Breach

[342]Returning to the pleaded case, I must focus on whether Mr Crombie breached the pleaded non-competition provisions in the SPA by encouraging and supporting Mr Leitch’s plan to start a rival online school. I do not consider that he did. My main reasons are as follows:a. The discussion in November 2022 involved encouragement and the offer of support from Mr Crombie to Mr Leitch but not in connection with a particular venture or proposal. Various options were being discussed and Mr Leitch had not at that stage settled on anything. Mr Crombie was, at a high level, interested in discussing possible future collaborations but was at the same time only too aware of the restrictions imposed on him by the provisions of the SPA.

b. Thereafter Mr Crombie continued to offer his support to Mr Leitch in circumstances where his role at MOS was uncertain. The men discussed options available to Mr Leitch including consultancy, employment as a Head Teacher in the physical school and possible online offerings but Mr Leitch did not divulge his plans to incorporate Hive at the end of December 2022 to Mr Crombie. As Mr Leitch’s solicitors observed in their letter of 24 January 2023, “at no point during these conversations did Mr Crombie evince any intention to act in breach [of] any restrictions placed on him by Inspired as part of the purchase of MOS”.

c. Mr Crombie had no knowledge of the download of data carried out by Ms Goyea and Mr Leitch on 7 January 2023 and no knowledge of the real reason behind Ms Goyea’s resignation. Inspired does not suggest otherwise.

d. It was only on 17 January 2023 that Mr Leitch informed Mr Crombie of his plans, who immediately reported them to Inspired.

e. Against that background: i. There was no breach of clauses 9.2.4 or 9.2.5 of the SPA. Mr Crombie was not “concerned in” or “interested in” a Restricted Business, i.e. Hive. Discussing the possibility of setting up such a business in high level terms, even encouraging the potential for that to take place in the future is not, to my mind, sufficient to amount to a breach. Inspired has never sought to allege that Mr Crombie had any role or financial interest in Hive. As I have found, Mr Crombie was not involved in the setting up of, or business planning for, Hive and was not informed of its existence until 17 January 2023. ii. There was no breach of clause 9.2.16 and it is very difficult to see (even on Inspired’s own case) how it alleges that Mr Crombie actually solicited or endeavoured to solicit Mr Leitch. In its statement of case Inspired relies upon what it describes as “support and active advice” given in January 2023, but I have already rejected that suggestion. There is no scope for Inspired to rely upon the 17 January 2023 meeting (also pleaded) because Mr Crombie reported what he had been told at that meeting the very next day to Inspired. In closing, Inspired was left to assert that Mr Crombie either instigated, or emboldened, Mr Leitch with the idea for “Online School 2.0” and that he thereby (directly or indirectly) endeavoured to entice Mr Leitch, and Ms Goyea, away from MOS and Inspired. There is no basis to make such a finding and, in any event, the point is not properly pleaded. iii. Finally, there is no basis to find that Mr Crombie in fact did anything knowingly, intentionally or recklessly intended to damage the goodwill or reputation of the Company in breach of clause 9.2.19. He certainly did not (as Inspired suggested in closing) “assist in the establishment of a rival online school staffed by members of the MOS’ senior leadership team”. There is no evidence whatever that the establishment of such a school would in fact (as Inspired asserts) damage the brand value of MOS at a post-acquisition and post-integration stage. Once again, the point is not, in any event, pleaded.

Alleged Loss in the event of Breach of the non-compete provisions (Issue 12)

[343]Given my findings above, I need deal with this only briefly. Inspired seeks its legal costs of taking action against Mr Leitch and Ms Goyea to ensure the cessation of their wrongful conduct.

[344]In essence, Inspired’s case on causation is that “but for Mr Crombie’s instigation of and/or involvement in Mr Leitch setting up Hive, from November 2022 onwards, on the balance of probability Mr Leitch would not have set up Hive and thus Mr Leitch and Ms Goyea would not have, and would not have had cause to, download the thousands of documents that Inspired took legal action to protect and prevent the use of”. In its opening submissions, Inspired asked the court to infer that, but for Mr Crombie’s conduct,(i) the defection of Mr Leitch and Ms Goyea to Hive would not have happened, or

(ii) Inspired would have been aware of their intention to defect and would have taken preventative measures to avoid the download occurring and to safeguard its confidential information. In either case, Inspired contends that the need to take legal steps would not have arisen.

[345]Inspired acknowledges that the damages claimed are consequential in nature but contends that it was reasonably foreseeable that Inspired would have to take legal action to protect its confidential information against either Mr Crombie or third parties, to the extent that Mr Crombie breached the non-compete provisions. Inspired submits that it took reasonable steps to mitigate its loss by recovering a proportion of its costs through its agreement to settle with Mr Leitch. However, it contends that it is entitled to recover from Mr Crombie the remainder of the fees and disbursements it spent in pursuing the claim. For the first time in closing Inspired put this figure at £155,236.60.

[346]In answer to a point taken by the Defendant in opening, Inspired confirmed in closing that it seeks damages under this head in the alternative to its primary case that the Completion Accounts have been deemed agreed – thereby acknowledging that the legal costs claimed have been included in the Completion Accounts such that the additional recovery of damages would amount to a double recovery.

[347]In brief summary (and aside from the detailed arguments on quantum), I consider that Inspired cannot recover any damages under this head (whether as an alternative to its claim on the Completion Accounts or at all) for the following main reasons:a. The claim to damages must fail at the causation stage. It is impossible to see how or why any conduct on the part of Mr Crombie caused legal fees to be incurred. Neither Mr Leitch nor Ms Goyea had any restrictive covenants in their contracts and Inspired’s claim against them arose solely out of their decision unlawfully to download MOS’s data. Mr Crombie was not involved in this activity and did not know anything about it. In the circumstances, in my judgment, it was Mr Leitch and Ms Goyea’s breach of confidence that caused these costs to be incurred, not any conduct on the part of Mr Crombie (even if Inspired could establish that he had encouraged Mr Leitch to start an online school in competition with MOS in breach of clause 9 of the SPA). On balance I consider on the evidence to which I have already referred that Mr Leitch would always have sought to set up Hive – he had already thought of an online school before his conversation with Mr Crombie in November 2022 and thereafter he proceeded to take the steps to set up Hive unaided (whilst at the same time dissembling about his future plans in his dealings with Mr Crombie). Mr Crombie did not know about the incorporation of Hive or the defection of Ms Goyea to Hive. Further he was unaware of Mr Leitch’s activities until 17 January 2023, by which time it would have been too late to warn Inspired – Mr Leitch and Ms Goyea had already downloaded the MOS materials by that date.

b. As it has belatedly accepted, Inspired did not itself incur any legal costs. They were incurred by MOS. On 4 March 2025, £186,283.92 was re-charged to Inspired by an invoice of that date (£155,236.60 of fees and disbursements and VAT at 20% of £31,047.32). As a matter of causation it is also difficult to see why Mr Crombie should be liable for a loss which Inspired has voluntarily assumed.

c. I also consider that Inspired has failed to establish on the evidence that it took reasonable steps to mitigate its loss. Inspired’s claim is that it is entitled to recover these costs from Mr Crombie “[t]o the extent that [Inspired] is unable to recover such costs and/or losses from Mr Leitch and Ms Goyea”. Accordingly, it accepts that it is required to mitigate its loss by taking reasonable steps. The Defendant put Inspired to proof that it was “necessary to incur the legal costs and that all such costs were reasonably and proportionately incurred”. However, Mr Nsouli’s evidence was clear – he said that Inspired had been “very generous with Ms Goyea; it had decided not to pursue her for fees but to let her “get away with it”. Inspired has provided no disclosure as to Ms Goyea’s means and, in light of Mr Nsouli’s evidence, I do not consider that it has proved on the balance of probabilities that it has taken all reasonable steps to mitigate its loss. In the circumstances I need not explore the question of whether Inspired should have provided disclosure in accordance with the exception to the without prejudice privilege rule articulated in Muller v Linsley & Mortimer [1996] PNLR 74. Inspired offered such disclosure on 15 March 2025 under a “limited waiver” but Mr Crombie’s solicitors replied that it was far too late – a stance with which I agree.

Counterclaim and Claim: TC Event of Default / Deferred Cash Consideration

[348]By way of summary, Mr Crombie’s counterclaims are concerned with the mechanisms under the SPA for determining his total consideration. First, he seeks declaratory and/or injunctive relief in connection with the process of finalising the Completion Accounts and Purchase Price Statement. Specifically he seeks a declaration that:(i) the Completion Accounts and Purchase Price Statement are not “deemed to be agreed” under Schedule 7, paragraph 4.2 to the SPA;

(ii) he has validly raised objections in accordance with Schedule 7, paragraph 3 to the SPA; and

(iii) he is entitled to have his objections resolved in accordance with the process in Schedule 7, paragraphs 5 to 10. Second, he seeks declaratory and/or injunctive relief to the effect that no TC Event of Default has occurred such that Inspired should not be permitted to rely upon its Exercise Notice of 11 May 2023; this is potentially a very valuable counterclaim because it goes to the question of whether Inspired’s reliance upon a TC Event of Default to crystallise the value of the Deferred Cash Consideration at a much earlier stage than would otherwise have been permitted under the SPA is valid.

[349]Inspired responds to this Counterclaim with its own claim for declarations, first that there has been a TC Event of Default and second that the Deferred Consideration has been deemed agreed at £358,043.76. I shall deal with these claims in chronological order, taking the counterclaim in relation to the Completion Accounts first and then turning to deal with the issues arising in respect of the Deferred Cash Consideration. The Completion Accounts (Issues 21, 22 and 23)

[350]By Clause 1.1 of the SPA the following terms are defined:

““Completion Accounts” means a statement in the form of the Pro-forma Completion Accounts showing an amount equal to the Cash, Indebtedness and Working Capital as the close of business at the Completion Date and as prepared and agreed or determined (as the case may be) in accordance with Schedule 7.” “Purchase Price Statement” means the statement setting out the amount of the Cash, Indebtedness and Working Capital as shown in the Completion Accounts, together with the resulting calculation of the Consideration, and as prepared and agreed or determined (as the case may be) in accordance with Schedule 7.”

[351]Clause 5.1 provides that:

“Following Completion, the Parties shall comply with the provisions of Schedule 7 (Completion Accounts), so that the Completion Accounts and the Purchase Price Statement can be prepared and agreed or determined (as the case may be) in accordance with Schedule 7 (Completion Accounts).”

[352]Following the agreement or determination of the Completion Accounts and the Purchase Price Statement, clauses 5.2, 5.3 and 5.4 provide for the potential adjustment of the Cash Consideration payable to the Defendant.

[353]Schedule 7 to the SPA includes the following relevant provisions: “2. As soon as reasonably practicable and in any event not later than 40 Business Days after Completion the Buyer shall cause to be prepared and delivered to the Seller first draft of the Completion Accounts and the Purchase Price Statement. 3. Following receipt of the first draft of the Completion Accounts and the Purchase Price Statement (together "the Draft Documents"), the Seller (with assistance from such accountants as they deem appropriate ("Seller's Accountants")) shall examine the Draft Documents, and within 20 Business Days of such receipt, the Seller shall notify the Buyer in writing whether the Seller agrees with the Draft Documents and, if not, shall include in such written notification a copy of the Draft Documents amended to show such alterations (and giving explanations of such alterations) ("Amended Draft Documents") as the Seller considers necessary to ensure that the Amended Draft Documents have been prepared in accordance with Part 2 of this Schedule 7. 4. If4.1 the Seller notifies the Buyer in accordance with paragraph 3 that the Seller agrees with the Draft Documents prepared by the Buyer; or

4.2 the Seller fails to make any written notification within the period of 20 Business Days referred to in paragraph 3; the Completion Accounts and the Purchase Price Statement shall be deemed to have been agreed for the purposes of this Schedule 7 in the form of the Draft Documents with effect from

(i) where paragraph 4.1 applies, the date of receipt of such notification; or

(ii) where paragraph 4.2 applies, the date of expiry of the period of the 20 Business Days referred to in paragraph 3”.

[354]Paragraphs 5 to 10 of Schedule 7 make provision for a mechanism to enable the agreement or determination of the Completion Accounts and Purchase Price Statement in the event that the Buyer receives amended draft documents from the Seller pursuant to paragraph 3.

[355]Part 2 of Schedule 7 is concerned with the “Basis for Computation” and (amongst other things) specifies that the Completion Accounts shall be prepared “by applying the relevant definitions of Cash, Restricted Cash, Deferred Cash Revenue, Indebtedness or Working Capital”. Indebtedness is defined at clause 1.1 of the SPA as an amount calculated in accordance with Schedule 7 and as set out in the Completion Accounts as representing “the aggregate amount of the Company’s borrowings, loans, advances, letters of credit and other financial indebtedness in the nature of borrowings…in each case as at the close of business on the Completion Date”.

[356]Clause 27.1 of the SPA provides that:

“Any notice given to a party under or in connection with this Agreement (unless otherwise expressly provided for in this Agreement) shall be in writing in English and sent to the Party, by a method set out in clause 27.3, at the address or the email address, and for the attention of the contact as set out in the following table”

. The table referred to in clause 27.1 identified Mr Nsouli as the Buyer’s contact.

[357]Pursuant to paragraph 2 of Schedule 7, Inspired was required to deliver the first draft of the Completion Accounts and Purchase Price Statement to Mr Crombie as soon as reasonably practicable and, in any event, within 20 Business Days of Completion. Inspired sought two extensions to this deadline, which Mr Crombie agreed.

[358]On 3 February 2023, as referred to above, Ms Stewart sent an email to Mr Crombie attaching a letter enclosing the draft Completion Accounts and Purchase Price Statement together with supporting financial information. The email said that these were provided “[p]ursuant to clause 5 and Schedule 7 of the SPA dated 15th November 2022 and the extensions agreed on 4 January and 20 January 2023”. The reference to clause 5 of the SPA appears to have been an error. Ms Stewart said that Inspired was available for a call to discuss and “walk through at your convenience” next week.

[359]The attached letter identified a “positive post Completion adjustment of £146,711. It also stated that “[t]his letter shall constitute satisfaction of the obligations of the Buyer under paragraph 2 of Schedule 7 of the SPA and in accordance with paragraph 3 of Schedule 7 of the SPA the 20 Business Day review period shall start on the first business day following transmission of this letter”. The draft pro-forma Completion Accounts attached to the letter included a figure of £150,000 under the entry “Other indebtedness”. On 9 February 2023, Mr Crombie asked Ms Stewart about the inclusion of this figure which she explained was 50% of Inspired’s estimated legal costs in its dispute with Mr Leitch and Ms Goyea.

[360]Mr Crombie resigned on 10 February 2023 and was suspended on 17 February 2023, losing access to his work email.

[361]On 3 March 2023 Mr Crombie emailed Ms Stewart from his personal email address saying this:

“In respect of the Draft Completion Accounts and Purchase Price Statement…sent with your letter dated 3rd February 2023, I hereby notify the Buyer pursuant to paragraph 3 of Part 1 of Schedule 7 to the SPA that I do not agree with some of the Draft Documents”

. Mr Crombie went on to point out (i) that there was no legal basis for including the sum of £150,000 as “Other indebtedness” in circumstances where “[t]he situation involving Rob Leitch and Sara Goyea has arisen after the Completion Date”; and (ii) that there was an entry for “Australia Liabilities” in the draft pro forma Completion Accounts for £21,000 (designed to address the costs of closing the Australian branch of MOS), but Mr Burgess had provided a fee estimate of AUD 10,000 (approximately £5,700) in relation to these costs. Nevertheless, Mr Crombie suggested a compromise in relation to each of these entries so that the accounts could be finalised.

[362]Ms Stewart never replied to Mr Crombie’s email. Instead, as part of a very lengthy letter before action, SH on behalf of Inspired “rejected” Mr Crombie’s points on the draft Completion Accounts and said that “[i]n any event, you are deemed to have agreed the Draft Documents pursuant to paragraph 4 of Schedule 7 of the SPA in circumstances where you failed to provide any Amended Draft Documents within the deadline set out in paragraph 3 of Schedule 7 of the SPA or at all”. SH pointed out that(i) pursuant to clause 27.1 of the SPA, all notices to Inspired were to be sent to Mr Nsouli at his email address and that Mr Crombie’s email to Ms Stewart “therefore had no contractual effect”; and

(ii) pursuant to paragraph 3 of Schedule 7 of the SPA, Mr Crombie was required to provide a copy of the Draft Documents amended to show his alterations, which he had failed to do. This remains Inspired’s case at trial. There is no dispute that Mr Crombie’s email was provided within the time period required by the SPA.

[363]Notwithstanding Inspired’s case that Mr Crombie is deemed to have agreed the Completion Accounts and Purchase Price Statement, it has not complied with its obligation under clause 5.3.1 of the SPA to pay the positive adjustment of £146,711 to Mr Crombie by the Adjustment Date, i.e. “the fifth Business Day following the date on which the Completion Accounts are agreed or determined in accordance with Schedule 7”. No explanation for this failure has been provided by Inspired, just as it has not chosen to seek to justify or explain the inclusion in the Completion Accounts of estimated legal costs which had not even been incurred as at the date of the SPA.

[364]Mr Crombie denies that the Completion Accounts and Purchase Price Statement are deemed agreed. He contends that(i) they could only be deemed agreed in the absence of any kind of written notification objecting to their content sent within the time period stipulated;

(ii) the objection need not include Amended Draft Documents; and

(iii) the written notification could be sent to a valid email address for an officer or employee of Inspired and did not need to be sent to Mr Nsouli’s address, identified in the table in clause 27.1. Furthermore, Mr Crombie contends that in circumstances where he had willingly granted Inspired extra time for the provision of the Completion Accounts, where those accounts had included without explanation an obviously improper item of indebtedness and where (as Inspired knew) he had been excluded from his work email account and was on sick leave, Inspired’s objections to his email of 3 March 2023 are both disingenuous and, having regard to the true construction of Schedule 7, incorrect. The Construction of Schedule 7

[365]At the heart of the issue on construction in relation to Schedule 7 lies the question of whether, objectively construed, the requirement for “notification” in paragraph 3 is a requirement for notification in accordance with the provisions of clause 27.1 of the SPA, or not.

[366]Inspired contends that it is well established that contractual notice provisions generally require strict compliance and it relies on Stobart Group Ltd v Stobart and Tinkler

[2019] EWCA Civ 1376

per Simon LJ at [25]-[38]. These paragraphs repeat the well-known guidance as to the objective approach to construction as articulated by Lord Hodge in Wood v Capita Insurance Services Ltd

[2017] UKSC 24

at [10] and dismiss an argument as to the subjective understanding of a unilateral notice served for the purpose of giving notice of claims under a share purchase agreement. At [36], Simon LJ observes that “although every notification provision is likely to turn on its own wording…the purpose of notification in this type of contract is to make clear in sufficiently formal terms that a claim is being made against the vendors”. At [37] he goes on to cite a passage from the judgment of Stuart-Smith LJ in Senate Electrical Wholesalers Ltd v Alcatel Submarine networks Ltd (formerly STC Submarine Systems Ltd) [1999] 2 Lloyds LR 423 at [90] as to the importance of certainty in commercial activity. At [38] he says this: “Furthermore, as Cooke J observed in Laminates Acquisition Co v. BTR Australia Limited

[2003] EWHC 2540 (Comm)

at [29] having referred to the speech of Lord Steyn in Mannai Investments (above) and the judgment of Stuart-Smith LJ in Senate Electrical: ‘Notice clauses of this kind are usually inserted for a purpose, to give some certainty to the party to be notified and a failure to observe their terms can rarely be dismissed as a technicality’”.

[367]In closing, the Defendant submitted (and I agree) that Stobart is not authority for the wide proposition advanced by Inspired. Specifically he points to the fact that Stobart concerned clauses requiring notification of claims, without which a Seller will not be liable. The observations of Simon LJ in Stobart about construction make clear that a key factor in that case was the purpose of the notification clause.

[368]Very recently in Drax Smart Generation Holdco Ltd v Scottish Power Retail Holdings Ltd

[2024] EWCA Civ 477

; [2024] 2 ALL ER (Comm) 1062, the Court of Appeal has considered the interpretation of a similar clause, referred to as a “notice of claim clause”. Males LJ, with whom Vos MR and Birss LJ agreed, said this at [47]-[49]: “[47] Clauses which bar a claim unless notice is given within a specified time limit are a common feature of share purchase agreements. Such clauses sometimes require the notice to state ‘the nature of the claim’ and sometimes require this to be done ‘in reasonable detail’. [48] In general terms, the purpose of a Notice of Claim clause was described by Lord Justice Popplewell in Dodika Ltd v United Luck Group Holdings Ltd

[2021] EWCA Civ 638

at [46]. The clause in that case required the notice to state ‘in reasonable detail the matter which gives rise to such Claim, the nature of such Claim and (so far as reasonably practical) the amount claimed in respect thereof ’. It was accepted that the notice in question had provided reasonable detail of the nature of the claim, the issue being whether it provided reasonable detail of the amount claimed. Lord Justice Popplewell said: ‘46. … The purpose of a notice clause such as that in schedule 4 para 2(b) of the SPA is to enable the recipient to make such inquiries as it is able, and would wish, to make into the factual circumstances giving rise to the claim, with a view to gathering or preserving evidence; to assess so far as possible the merits of the claim; to participate in the tax investigation to the extent desirable or possible with a view to influencing the outcome; and to take into account the nature and scope of the claim in its future business dealings, whether by way of formal reserving or a more general assessment of the potential liability. As Mr Choo-Choy accepted, the additional detail available, if included in the 24 June letter, would not have advanced any of these purposes. I balk at a conclusion that the level of detail provided in a notice of this sort fell short of what was required as reasonable, that is to say was unreasonably deficient, when the additional level of detail said to have been required would not have furthered any of the commercial purposes for giving such a notice. What is reasonable takes its colour from the commercial purpose of the clause, and what businessmen in the position of the parties would treat as reasonable. Businessmen would not expect or require further detail which served no commercial purpose. That would be the antithesis of what was reasonable.’ [49] Taking a step back, the initial purpose of such clauses is to provide a contractual limitation period. If no notice is given by the specified deadline, the parties can close their books on the transaction. That promotes finality and certainty in commercial dealings. It is only if some kind of notice is given that the purposes identified in Dodika come into play. In that event, it will be obvious that the buyer is seeking to make a claim, so that the achievement of finality and certainty must be postponed. [50] Whether a notice is sufficient to satisfy the requirements of any given clause must depend primarily on the language of the clause. Commercial parties are free to impose whatever requirements they wish. However, where they use broad and general terms such as ‘the nature of the claim’ and ‘in reasonable detail’, those requirements should be interpreted in the light of the commercial purposes of such clauses, including those identified in Dodika. It is important that Notice of Claim clauses should not become a technical minefield to be navigated, divorced from the underlying merits of a buyer’s claim. While a seller’s interest will always be to knock the claim out if it can on the technical ground that the notice is insufficient, courts should not interpret such clauses as imposing requirements which serve no real commercial purpose unless compelled to do so by the language of the clause”.

[369]Males LJ went on at paragraph 51 to observe that Notice of Claim clauses were essentially exclusion clauses and he agreed with the approach taken by Briggs LJ (as he then was) to such clauses in Nobahar-Cookson v The Hut Group Ltd

[2016] EWCA Civ 128

at [18]-[19].

[370]I agree with the Defendant that Notice of Claim clauses are different from the notice clause and deeming provision with which I am concerned here. I must interpret Schedule 7 using all the tools of linguistic, contextual, purposive and common sense analysis to discern what it really means. However, I consider that the observations of Males LJ (in particular at [50]) are, as the Defendant submits, useful guidance as to the approach to be adopted.

[371]Turning first to the purpose of the notice requirement in paragraph 3 of Schedule 7, as with a Notice of Claims clause, the initial purpose is to provide a limitation period (20 Business days) on any response from the Seller to the first draft Completion Accounts and Purchase Price Statement. This is plainly intended to foster both finality and certainty – agreement with the Draft Documents will bring the process under Schedule 7 to an end, whereas disagreement will trigger the provisions of paragraphs 5 and onwards. A failure to respond will not stall the process because the “deeming” provision in paragraph 4 will kick in. Aside from this, the provisions of paragraph 3 are plainly intended to ensure that the Buyer understands any proposed amendments to the Draft Documents that the Seller considers necessary for compliance with Part 2 of Schedule 7. This is important because it is only with such an understanding that the Buyer can then engage with the Seller on his proposed amendments for the purposes of paragraph 5 (which requires the Buyer to notify the Seller in writing whether it agrees with the amended draft documents and, if not, to particularise and explain the adjustments necessary to ensure compliance with Part 2 of Schedule 7).

[372]Having regard to the purpose of this provision, I reject Inspired’s contention both that written notification must be in accordance with clause 27.1 of the SPA and that it must always be accompanied by Amended Draft Documents. My reasons are as follows:a. Clause 3 requires the Seller to “notify” the Buyer.

b. Clause 27.1 refers to “any notice” given “under or in connection with this Agreement”. Clause 27 (read in its entirety) is concerned with the giving of “a notice”. As such it is obviously applicable to the requirement to give a written notice (in clauses 18.1.1 and 18.1.2; under Schedule 6, paragraphs 5 and 12; and under Schedule 10, the Exercise Notice in paragraph 2).

c. By contrast, paragraph 3 of Schedule 7 does not require the giving of “a notice” – but rather it requires that the Seller “shall notify the Buyer in writing”. The parties have deliberately used a different (and very general) formulation here and, objectively, I consider that the words used imply a less formal process than would be the case where “a notice” must be given; in other words, under paragraph 3 of Schedule 7, the Seller must inform the Buyer in writing of his position on the Draft Documents but need not serve on him a formal notice compliant with the requirements of clause 27.1.

d. That this is the correct construction of paragraph 3 is, to my mind, supported by the reference to “any written notification” (emphasis added) in paragraph 4.2 of Schedule 7 – which continues to eschew reference to a written “notice” in favour of a wider and more general formulation. If the words in paragraph 4.2 were intended to bring into play the strict provisions of clause 27.1, one wonders what the parties could have meant by the word “any”. To my mind, the addition of the word “any” plainly signals an intention that there could be a number of ways in which the notification is given and that it will only be in the event of a failure to make “any” written notification that the deeming provisions will kick in.

e. That this is also a reasonable construction of a widely drafted provision is borne out by the commercial purpose of the clause and whatbusinessmen in the position of the parties would treat as reasonable.Businessmen would not expect or require a formal notice to be provided to the identified individual in clause 27.1, as long as the Seller’s position is made clear to the Buyer in some form of (“any”) written notification. The individual identified as the Buyer representative in clause 27.1 may not in any event be the person dealing with the detail of the Completion Accounts (as was in fact the case here). There is no commercial purpose whatever in requiring a notice of this type to be provided to the individual identified in clause 27.1 when it can be provided to the Buyer representative who is obviously involved in the process. Equally I consider that it is the antithesis of reasonable to reject a notification which is sent to the person at the Buyer who is in fact dealing with the Completion Accounts (as Ms Stewart was).

f. If these commercial parties had intended paragraph 4.2 of Schedule 7 to cover a failure to comply with the provisions of clause 27.1, it is to be expected that they would have said so, just as they have expressly referred back in this paragraph to the temporal constraint.

g. Although paragraph 3 requires the written notification to include a copy of the Draft Documents amended to show alterations, the wording of paragraph 4.2 is not, to my mind, so prescriptive. It simply provides that the deeming provision will apply if the Seller “fails to make any written notification within the period of 20 Business Days referred to in paragraph 3”. As I have just observed, the period of time for compliance is key here and there is a reference back to paragraph 3 for that purpose. However, although the parties plainly had the requirements of paragraph 3 in mind when they drafted paragraph 4.2, they chose to make no reference to the requirement for Amended Draft Documents. Instead, they focused on the temporal requirement and added the word “any” - “any written notification”. In my judgment this is a clear indication that (as one might expect) the parties intended the deeming provision to kick in only where there had been no attempt whatever to provide any form of written notification identifying the Seller’s position within the 20 Business Days such that there would otherwise be an impasse.

h. In other words, the parties did not intend that a failure to provide the Amended Draft Documents as described in paragraph 3 would have the effect of triggering the deeming provision, and there is no warrant to read words to that effect into the text of paragraph 4.2. The parties could have, but they did not, draft paragraph 4.2 to say “the Seller fails to make any notification in compliance with paragraph 3”. As long as the notification is sufficient to identify whether the Seller agrees with the Completion Accounts and, if not, the alterations that they require in order to ensure compliance with Part 2 of Schedule 7, then the commercial purpose of the clause is met.

i. I agree with the Defendant that there is no reason for the court to re-write paragraphs 3 and 4 of Schedule 7 so as to refer directly to the need to comply with clause 27.1 or (in paragraph 4) to the need to comply with all aspects of paragraph 3. I also bear in mind, as the Defendant points out, that deeming provisions can operate harshly (as this provision would on the facts of this case) and it is perfectly reasonable for the parties to have agreed that a timeous written notification of the alterations required to the Draft Documents would prevent that effect – as paragraph 4.2 indicates. I do not consider that I am compelled to take a different view by reason of the wording of these paragraphs and so I am not prepared to interpret them in a way which, to my mind, would serve no useful commercial purpose.

[373]I consider that the consequence of my interpretation above is clear; Mr Crombie made a written notification by way of his email of 3 March 2023 (which it was not suggested by Inspired failed to identify the alterations he required so as to ensure that the Completion Accounts and the Purchase Price Statement had been prepared in accordance with Part 2 of Schedule 7). Accordingly, the Completion Accounts and the Purchase Price Statement have not been deemed agreed. For what it is worth, I also consider this to be a just result. Inspired received Mr Crombie’s email in which the adjustments he proposed were clearly set out and explained. He even suggested a compromise. Instead of engaging with that email, Inspired has instead chosen to defend its position to the last, even though it has chosen to advance no defence whatever to either of the substantive issues raised by Mr Crombie. If the SPA operates in the manner for which Inspired contends, it seems plain that the Completion Accounts and Purchase Price Statement were wrong on their face, at least in so far as they included legal costs incurred long after completion of the SPA. Conclusion on the Completion Accounts (Issues 21, 22 and 23)

[374]Against that background, I agree with the Defendant that the remainder of the contractual machinery in Schedule 7 to the SPA should now be permitted to operate.

[375]I am prepared to grant declaratory relief to Mr Crombie to the effect that(i) Inspired’s draft Completion Accounts and Purchase Price Statement are not deemed to be agreed and

(ii) Mr Crombie is entitled to have his objections (raised in his 3 March 2023 email) resolved in accordance with the process set out in Schedule 7, paragraphs 5-10 of the SPA. I do not presently consider that Mr Crombie requires injunctive relief to fortify these declarations but will hear the parties on this issue at the consequentials hearing in due course.

Deferred Cash Consideration (Issues 13-20)

[376]Schedule 10 to the SPA contains the parties’ rights and obligations in relation to Deferred Cash Consideration.

[377]Schedule 10 defines a TC Event of Default as follows: “TC Event of Default means the occurrence of any of the following matters, facts or circumstances in respect of Tom Crombie at any time:… (c) the committing of any act of fraud or serious dishonesty or gross misconduct in relation to any Group Company; (d) any act or omission which if the act or omission was by an employee would customarily give the employer a right to summarily dismiss such employee; (e) the committing of any breach of any obligation in favour of any Group Company in relation to non-competition, non-solicitation or otherwise a breach of any other type of restrictive covenant provided for in this Agreement…including without prejudice to the generality of the foregoing a breach of any of the provisions of clauses 9.2.1 to 9.2.19 (inclusive) of this Agreement…”.

[378]Paragraph 1 of Part 2 of Schedule 10 provides that the Deferred Cash Consideration under the SPA (if any) “shall be paid to the Seller in accordance with the provisions of this Schedule 10”.

[379]Paragraph 2 of Part 2 of Schedule 10 provides that the application of the provisions of Schedule 10 may only be invoked by either party following the giving of an Exercise Notice, including in paragraph 2.3 “by the Buyer giving the Seller written notice pursuant to this paragraph 2.3 at any time following TC Event of Default”.

[380]Paragraph 3 of Part 2 of Schedule 10 provides that “Following a notice being given pursuant to paragraph 2 the Deferred Cash Consideration shall be agreed or determined and thereafter paid following the application of the remainder of this Schedule 10”.

[381]Paragraph 7 of Part 2 of Schedule 10 involves an undertaking from the Buyer and the Seller to each other “that where any matter is pursuant to the provisions of this Schedule to be agreed amongst them they shall each act in good faith and use reasonable endeavours to reach agreement”.

[382]Part 3 of Schedule 10, entitled “Preparation of the Deferred Cash Consideration documents” provides as follows:

“1 As soon as reasonably practicable and in any event not later than 20 Business Days after the date of service of an Exercise Notice (unless otherwise revoked in accordance with the provisions of this Schedule 10) the Buyer shall cause to be prepared and delivered to the Seller a statement setting out the Buyer’s bona fide assessment of the Deferred Cash Consideration due to the Seller, together with copies of the Final Management Accounts and the Monthly Management Accounts and a summary of how it derived what it considers to be the fair market value of the Online Business from which such assessment of the Deferred Cash Consideration has been derived (together “the Draft Documents”). 2 Following receipt of the Draft Documents, the Seller (with assistance from such accountants or other advisers as he deems appropriate (“Seller’s Accountants”) shall examine the Draft Documents, and within 20 Business Days of such receipt, shall notify the Buyer in writing whether he agrees with the Draft Documents. If the Seller does not agree with the Draft Documents, he shall include in such written notification a copy of any relevant Draft Documents amended to show such alterations (and giving explanations of such alterations) and any additional documents (“Amended Draft Documents”) as the Seller considers necessary to ensure that the Amended Draft Documents have been prepared in accordance with Parts 4 and 5 of this Schedule 10 and/or that the Deferred Cash Consideration is calculated in accordance with this Schedule 10. 3 If: 3.1 the Seller notifies the Buyer in accordance with paragraph 2 that he agrees with the Draft Documents prepared by the Buyer; or 3.2 the Seller fails to make any written notification within the period of 20 Business Days referred to in paragraph 2; the Deferred Cash Consideration shall be deemed to have been agreed for the purposes of this Schedule 10 in the form of the Draft Documents with effect from (i) where paragraph 3.1 applies, the date of receipt of such notification; or (ii) where paragraph 3.2 applies, the date of expiry of the period of the 20 Business Days referred to in that paragraph.”

[383]Part 4 of Schedule 10 is concerned with the “Basis for Computation”, while Part 5 sets out the applicable “Accounting Policies”.

[384]I have already indicated that the broad economic effect of the Deferred Cash Consideration provisions make it advantageous to Inspired for an Exercise Notice to be sent when the value of its online business is relatively low, whereas the opposite is true for Mr Crombie – it is to his financial advantage that an Exercise Notice be sent once the online business has matured and is in a stronger financial position. Prior to the SPA the parties considered that the Deferred Cash Consideration could be very significant – on 13 October 2022, Inspired estimated it at £8.5 million.

[385]On 11 May 2023, the day these proceedings were issued) Inspired wrote to Mr Crombie. The letter, on Inspired headed paper and signed by Mr Nsouli, said this:

“Exercise Notice of TC Event of Default 1. We refer to the share purchase agreement between our client and you dated 15 November 2022 (“the SPA”). 2. Pursuant to Schedule 10, part 2, paragraph 2.3 of the SPA, we hereby give you notice of a TC Event of Default as defined in Schedule 10, part 1 of the SPA.”

[386]The Exercise Notice gave no indication as to the nature of the TC Event of Default, although it is fair to observe that by this date Mr Crombie had been sent a lengthy and detailed letter before action dated 17 March 2023.

[387]In a letter dated 18 May 2023, Howard Kennedy observed that for reasons set out in pre-action correspondence dated 14 April and 4 May 2023, Mr Crombie rejected the assertion that a TC Event of Default had occurred. Howard Kennedy also stated that it considered the Exercise Notice to be invalid and said that “no further steps under the SPA can take place in this regard” until the claim against Mr Crombie was resolved.

[388]Notwithstanding this letter, SH wrote back to Howard Kennedy on 9 June 2023 setting out Inspired’s “bona fide assessment of the Deferred Cash Consideration” due to Mr Crombie and enclosing Final Management Accounts and Monthly Management Accounts pursuant to Schedule 10, part 3, paragraph 1 of the SPA. Having explained Inspired’s calculations, SH identified a figure of £358,043.76. That calculation used the Completion Accounts and Purchase Price Statement which I have determined are not deemed agreed and therefore subject to the contractual mechanisms set forth in paragraphs 5-10 of Schedule 7.

[389]On 23 June 2023, the Defence and Counterclaim in these proceedings was filed seeking declaratory and/or injunctive relief to the effect that Inspired’s Exercise Notice of 11 May 2023 was not valid and no steps could be taken in respect of it. On 26 June 2023 Howard Kennedy wrote to SH proposing a stay of the operation of Schedule 10 noting that it was “not appropriate or practical for such procedures to proceed”.

[390]On 29 June 2023, SH responded (at paragraph 4) “our client is amenable in principle to staying the procedure for Deferred Consideration and Completion Accounts subject to your clients irrevocable agreement that, if the Court holds that a TC Event of Default occurred, the relevant valuation date is 11 May 2023 (in other words no other challenge to the validity of the Exercise Notice served on that date is or will be pursued).”

[391]Over 5 and 6 July 2023, there then followed these exchanges:a. HK to SH on 5 July 2023: “our client agrees not to challenge the validity of the Exercise Notice after the conclusion of the ongoing Court proceedings”

b. SH to HK on 5 July 2023: “It is unclear from your final paragraph whether you accept in principle the proposal at paragraph 4 of our letter dated 29 June 2023. If it is not accepted please explain why.”

c. HK to SH on 6 July 2023: “our client is willing to give his irrevocable agreement that, if in these proceedings the court holds that a TC Event of Default has occurred and the Exercise Notice dated 11 May 2023 is valid, the relevant valuation date will be 11 May 2023 and he will not pursue any further challenge to the validity of the Exercise Notice”.

[392]Assuming that Inspired’s 9 June 2023 letter was an assessment of the Deferred Cash Consideration following a valid Exercise Notice, Mr Crombie would have had 20 Business days in which to consult with his accountants and notify Inspired whether or not he agreed with its assessment in accordance with Schedule 10, Part 3, paragraph 2. The last day for Mr Crombie to take this step would have been 10 July 2023.

[393]That date passed with no response from SH to HK’s email of 6 July 2023 referred to above. HK chased SH on 11 July 2023, receiving a substantive response on 12 July 2023 in the following terms: “Our client’s position as to any stay remains as set out [in the letter of 29 June 2023]. The additional conditionality that you seek to introduce…(leaving open the possibility of an alternative challenge to the validity of the Exercise Notice) is not acceptable”.

[394]In an email of 18 July 2023, HK responded that it was not reasonable to seek to conflate the issue of staying the procedure for the Completion Accounts and Deferred Cash Consideration with the question of the validity of the Exercise Notice. However, they noted that Mr Crombie now agreed to the condition set out in the 29 June 2023 letter.

[395]However, in an email dated 20 July 2023, SH rejected this proposal, observing that “the position has changed since your letter dated 26 June 2023…Your client did not serve any notification and Amended Draft Documents within 20 Business days of our client’s notice dated 9 June 2023 pursuant to paragraph 2 of Part 3 Schedule 10 to the SPA. Thus, pursuant to paragraph 3.2 of Part 3, Schedule 10 of the SPA, your client is deemed to have accepted the Deferred Cash Consideration figure of £358,043.76 set out in our client’s notice. No stay of the deadline was agreed when the deadline came and went and no stay has been agreed since”.

[396]Following these exchanges, Inspired filed its Amended Particulars of Claim on 29 August 2023 in which it added claims for declarations that there had been a TC Event of Default and that Deferred Cash Consideration had been deemed agreed at £358,043.76. Inspired has never in fact paid this sum to Mr Crombie, notwithstanding that under Schedule 10, Part 2, paragraph 5 of the SPA the Deferred Cash Consideration is to be paid within 10 Business days of being agreed or determined.

[397]Against that background, the following issues arise for the court:(i) as at 11 May 2023, had there been an existing TC Event of Default? (Issues 13(a) and 15);

(ii) if so, was Inspired’s 11 May 2023 letter a valid Exercise Notice? (Issue 13(b) and 16)

(iii) if so, did Mr Crombie fail to make any written notification in response to Inspired’s 9 June 2023 letter so that its assessment of the Deferred Cash Consideration was deemed agreed on 10 July 2023? (Issues 17 and 19);

(iv) Did Inspired fail to act in good faith in breach of paragraph 7 of Part 2 of Schedule 10 to the SPA and or is a term to be implied into Schedule 10 of the SPA that where the Buyer or Seller has challenged the validity of an Exercise Notice in Court Proceedings, the remaining steps in Schedule 10 as to the agreement or determination of the Deferred Cash Consideration are to be suspended until the court has ruled on that challenge or the dispute as to validity has been otherwise determined? (Issues 14 and 18); and

(v) Is Inspired entitled to the declaratory relief it seeks; alternatively is Mr Crombie entitled to the declaratory and/or injunctive relief that he seeks? (Issue 20).

[398]I begin with the question of whether there was a TC Event of Default as at 11 May 2023. Inspired relies in its statement of case on three grounds to make good this allegation. First, Mr Crombie’s breaches of warranty and/or misrepresentation in respect of the Emails; second Mr Crombie’s breach of the non-compete provisions in clause 9 of the SPA and third an email exchange that took place between Mr Crombie and Mr Burgess on 10 January 2023.

[399]The first two grounds are no longer open to Inspired in light of the findings I have already made and I reject them. I observe that even if I am wrong on the issue of whether or not the Emails amount to gross misconduct (under sub-paragraph (c) of the definition of TC Event of Default), a TC Event of Default will only arise where there has been “gross misconduct in relation to any Group Company”. The definition section of Schedule 10 at Part 1 makes clear that “Group” means “Inspired Education Holdings Limited and its subsidiaries from time to time or, where there is a New Holding Company, the New Holding Company and its subsidiaries from time to time and ‘Group Company’ will be interpreted accordingly”. In my judgment the Emails could not amount to gross misconduct “in relation to” any Group Company because they all date to the period before the SPA when MOS was not a subsidiary of Inspired Education Holdings Limited.

[400]The prefatory words “at any time” in the definition of TC Event of Default do not appear to me to change that position. I note that both sub-paragraphs (e) and (f) of the definition of TC Event of Default are also tied to breaches of obligations to “any Group Company” and I am inclined to the view, having regard to the purpose of this Schedule 10 that, objectively, the parties intended a TC Event of Default to be a matter, fact or circumstance falling within the definition which had occurred at any time after the date of Completion of the SPA. This is clear from the repeated reference in the definition of TC Event of Default to Group Companies, the reference to “this Agreement” in sub-paragraph (e) and the commercial context (which, as the Defendant submits, creates mechanisms in the form of warranties and indemnities to manage pre-contract risk, together with others, such as the concept of TC Event of Default, designed to factor in post-contract risk).

[401]I understood it to be accepted by Inspired in closing that the provisions of sub-paragraph (d) in the definition of TC Event of Default add nothing to the analysis on gross misconduct – they are plainly intended to apply to people who are not employees.

[402]I turn then to the third ground relied upon by Inspired. The email exchange of 10 January 2023 (sent after Completion of the SPA and thus capable of being an act “in relation to” any Group Company and thus falling within the definition at (c) of TC Event of Default) is in the following terms.

[403]At 09:21 that day, Mr Burgess forwards Mr Crombie’s employment contract to him saying “Here you go pal. If there is anything in there you don’t like, we can change it before you share with KIH!”. Mr Crombie responded at 09:25:

“can you change it to ‘Tom Crombie doesn’t actually work here and this isn’t actually a contract of employment’”

. Mr Burgess chipped in at 09:26:

“And marks got a shit fringe so”

. At 09:27, Mr Crombie added “’and shit clothes’ Joking aside, this contract was sent across in DD stage I think so prob cant change it”. At 09:31, Mr Burgess (still riffing on the subject of a senior individual at Inspired) replied “And a rotten missus and gimpy kids”.

[404]In closing, Inspired accepted that Mr Burgess was joking when he first raised the possibility of amending Mr Crombie’s employment contract and it is clear from a reading of the emails that the joke ran on from there. Mr Crombie made an (obviously jokey) response (“this isn’t actually a contract of employment”) and Mr Burgess continued the joke, making other absurd proposed amendments referring to the senior individual at Inspired. Mr Burgess and Mr Crombie both accept that Mr Burgess’ escalation of the joke (“And a rotten missus and gimpy kids”) was a horrible/disgusting thing to say – indeed Mr Burgess frankly acknowledged that he was embarrassed that his name was attached to this email. These were, as Mr Crombie accepted, “hurtful remarks” about a senior individual at Inspired and his partner and children.

[405]It was put to Mr Crombie that “gimpy” is offensive slang for disabled, although Mr Crombie said that he did not know what the word meant. The same point was not put to Mr Burgess (who had used the word) and so I have no evidence as to what he meant by it. In closing, the Defendant contends (by reference to Cassells Dictionary of Slang (2nd ed 2005)) that “gimpy” has broadly two meanings: one denoting physical disability and one denoting foolishness or inadequacy. Given that the meaning of the word was not explored with Mr Burgess, I accept that I am not in a position to know which meaning Mr Burgess had in mind. In any event, as is accepted by the Defendant, either meaning is inappropriate in the context of this email exchange from work email addresses.

[406]Mr Crombie and Mr Burgess both candidly accept that these exchanges were inappropriate and unprofessional; that it was improper to suggest amending Mr Crombie’s contract and that such suggestion should never have been made. Mr Crombie accepts that he did not censure Mr Burgess for his remark about the senior individual’s fringe and that he “absolutely should have done” as CEO and as a director of MOS. He also accepts that he could and should have put a stop to the exchange at that point. Instead he carried the joke further (“and shit clothes”). This was plainly unprofessional in that it amounted to an unpleasant observation about a senior colleague with whom Mr Crombie was supposed to be working closely. However, I reject Inspired’s case that this was “a form of workplace bullying”. The senior colleague was not copied into the exchange and nor were any other Inspired employees. The email exchange was, as Mr Crombie confirmed, intended to be private and between two very close friends. There is no evidence that it was seen by anyone else until it was later found by Inspired.

[407]By way of context, I accept that (consistent with findings I have already made) this email exchange occurred at a time when both Mr Crombie and Mr Burgess were experiencing “immense frustration” as to the way in which Inspired was being managed and Mr Burgess was concerned about his future and the actions of the senior individual at Inspired referred to in the exchange. While, as Mr Crombie acknowledged “that is not to say that this is an appropriate reason for using this language”, standing back, I cannot see that Mr Crombie’s involvement in (and failure to put a stop to) these exchanges amounts in itself to a repudiatory breach on the basis of which MOS would have been entitled summarily to terminate his employment. Unpleasant and misguided they no doubt are, but to my mind they are insufficiently serious or grave to amount to gross misconduct. During the trial and in closing, Inspired sought to suggest that this exchange was “of a piece with” other, unpleaded, conduct, but it is not open to Inspired to rely on any other such conduct in an attempt to bolster its case on gross misconduct. I also reject Inspired’s submission that I should infer that the Deleted Burgess WhatsApps would have contained “further material showing gross misconduct”, for reasons I have already given.

[408]In light of the above analysis, I consider that there was no subsisting TC Event of Default as at 11 May 2023 and I shall grant the Defendant the declaratory relief that he seeks (issue 20). That conclusion means that it is unnecessary for me to deal in any detail with the remaining issues in relation to Deferred Cash Consideration, but, in the event that they may later prove to be of importance, I do so as briefly as possible below. Was there a valid Exercise Notice?

[409]Under part 1 of Schedule 10, an Exercise Notice is a notice given in accordance with paragraph 2. Paragraph 2 addresses the circumstances in which an Exercise Notice may be given but is silent as to what it must contain. Under paragraph 2.3 the uyer may give the Seller an Exercise Notice “at any time following TC Event of Default”. What a notice requires is a matter of construction of the relevant provisions by reference to the principles to which I have already referred.

[410]The Defendant contends that on a proper construction of Schedule 10, an Exercise Notice must specify both the limb or limbs of the definition of TC Event of Default that is relied upon and the grounds on which it is said that those limb(s) are satisfied. However, there is nothing in Schedule 10 to suggest such a requirement and I am not persuaded that the scheme of Schedule 10 requires such a construction. I note that the wording of paragraph 2.3 does not require a notice to be given “of a TC Event of Default”, but rather “following TC Event of Default”, which suggests that the parties considered the occurrence of such an event to be all that was required. I note also that Schedule 10 makes no provision whatever for any response or challenge to an Exercise Notice, such that it cannot be said that the Seller would be unable to fulfil his obligations under the SPA without an explanation being provided in the Exercise Notice. Accordingly, I agree on this issue with Inspired – if the parties had intended to prescribe the content of the Exercise Notice they could have done so.

[411]However, the Defendant makes another point about the Exercise Notice. It says that it could not possibly apply to the 10 January 2023 email exchange owing to the fact that that exchange was first mentioned by Inspired in its Reply and Defence to Counterclaim filed on 20 July 2023. Certainly there appears to be no evidence that Inspired was aware of the email exchange prior to 11 May 2023. On balance, however, I again prefer Inspired’s submissions on this point. There is nothing whatever in the wording of Schedule 10 to suggest that the Buyer can only rely upon a TC Event of Default of which it is aware at the time of giving notice. If the parties had intended the trigger to be the parties’ knowledge, then they could have made that clear by the use of words such as “if the Buyer has reasonable grounds for believing that there has been a TC Event of Default”. I agree with Inspired that in the absence of such language the proper interpretation of paragraph 2.3 of Part 2 of Schedule 10 is that an Exercise Notice may be given when there are factual circumstances to justify it – this is not dependent either upon particularisation of those circumstances or upon Inspired’s state of knowledge or belief.

[412]For these reasons, if I am wrong and a TC Event of Default was subsisting at the time of the Exercise Notice, then I consider that the Exercise Notice was a valid notice (Issues 13(b) and 16). In such circumstances, Inspired’s letter of 9 June 2023 was also a valid statement under Schedule 10, Part 3 paragraph 1 (Issue 17). Has the Deferred Cash Consideration been deemed agreed? (Issue 19)

[413]Similar construction arguments arise on this issue as arose in relation to the Completion Accounts and I approach the construction in the same way. In short, paragraph 2 of Part 3 of the SPA requires the Seller to notify the Buyer in writing within 20 Business Days whether he agrees with the Buyer’s statement and Draft Documents provided under paragraph 1 and includes a requirement as to the provision of Amended Draft Documents by the Seller. Paragraph 3 makes provision for deemed agreement in the event, either, (3.1) that the Seller notifies the Buyer that he agrees with the Draft Documents, or, (3.2) that “the Seller fails to make any written notification within the period of 20 Business Days referred to in paragraph 2”.

[414]In my judgment, for reasons I have given, “any” written notification within the specified period is sufficient to fall within paragraph 3.2. The Defendant says that HK’s letter of 26 June 2023 was such a written notification, because it was clear from that letter that Mr Crombie (reasonably) considered that the process under Schedule 10 should not proceed pending resolution of his counterclaim.

[415]Although the letter of 26 June 2023 does not identify alterations to the Draft Documents, I am inclined to agree with the Defendant that it was nevertheless sufficient to amount to a written notification so as to escape the effect of the deeming provision in paragraph 3. In effect it amounts to notification that Mr Crombie does not agree the Draft Documents because he fundamentally disagrees with the process. HK referred in the letter to Mr Crombie’s Defence and Counterclaim in the extant claim, to prior correspondence relating to(i) the Completion Accounts (which fed into the calculation of the Deferred Cash Consideration); and

(ii) the Deferred Cash Consideration itself. HK summarised Mr Crombie’s counterclaim in the proceedings and observed that it was “not appropriate or practical” for the mechanisms in the SPA to determine the Completion Accounts or the Deferred Cash Consideration to proceed. Accordingly, they invited Inspired to agree to a stay. I reject Inspired’s submission that this correspondence is incapable of amounting to a notification because it is of a “wholly different character” on a different topic. Objectively I do not consider that either party could have taken this view.

[416]Given my construction, however, I am not inclined to agree with the Defendant’s submissions to the effect that a term should be implied into Schedule 10 of the SPA to the effect that where the Buyer or the Seller has challenged the validity of an Exercise Notice in court proceedings, the remaining steps in Schedule 10 as to the agreement or determination of the Deferred Cash Consideration are to be suspended until the court has ruled on that challenge or the dispute as to validity is otherwise resolved. I do not consider such a term to be necessary to give business efficacy to the SPA or to be so obvious that it goes without saying.

[417]Finally, I reject the Defendant’s case that Inspired acted in bad faith in relation to the potential stay in breach of Schedule 10, Part 2, paragraph 7 of the SPA (issue 18). As Inspired correctly points out, HK’s email of 6 July 2023 did not agree to the proviso that there would be no challenge to the Exercise Notice in the event that the Court were to find that a TC Event of Default had occurred. Instead, HK’s email incorporated within it the proposition that the question of the validity of the Exercise Notice would be considered by the court and that it would only be if the court held that the Exercise Notice was valid that there would be no “further” challenge to its validity. Although Mr Nsouli appears to have thought in cross examination that HK’s email was to the effect that Mr Crombie was willing to agree to Inspired’s terms for a stay, I doubt that is what his lawyers would have thought at the time. In the circumstances I am certainly not prepared to infer (simply by reason of Mr Nsouli’s inability to explain why SH did not respond to HK before the relevant deadline and/or his inability to explain why there was no later response from SH agreeing a stay) that he acted in bad faith towards Mr Crombie. That Mr Nsouli admitted an earlier instance of Inspired failing to reveal its views to Mr Crombie is wholly insufficient, to my mind, to permit a finding of bad faith in relation to the stay.

Conclusion

[418]For all the reasons I have given, I dismiss Inspired’s claims and I grant the declaratory relief sought in Mr Crombie’s counterclaims. Annex A Email 1: exchange between Mr Crombie and Mr Burgess, 17 December 2021 Email from EB to the MOS Senior Leadership Team, Weds 15/12/21 at 11:37 Subject:

“121/ Coffee Chats” “Hi All, Hard to believe we are only a few days away from the end of term 1. There has been a considerable amount of disruption in everyones lives in the past 18 months and this has impacted some more than others. With the recent government update strongly advising another period of WFH, its important we, as leaders, have regular check in’s with our teams. These meet ups don’t have to be a formal documented 121, these can be a relaxed zoom chats or coffee chats (when in the office). The importance of these should not be understated as this is the first opportunity we have to identify work or personal challenges, wellbeing concerns and the general mood and feeling amongst our teams. Knowing this, can help us resolve any challenges before they escalate. If you havnt scheduled a coffee chat or 121 with each member of you team recently, please can you try to do so before the end of the year. I have a weekly slot with each of my team and its sits in both our diaries, again, if not doing so already, please can you start this from Jan. [Addresses format of 121s] Happy to chat through this on a call. Thanks”

Email from TC to EB (only), Fri 17/12/21 at 10:33 “we should probably have a one-2-one ..... hmmmm ..... doooooo they NEED to be 'coffee' chats? or can it be co......” Email from EB to TC, Fri 17/12/21 at 13:46 “I think you got cut off there at the end… ???” Email from TC to EB, Fri 17/12/21 at 14:46 “COCAINE” Email from EB to TC, Fri 17/12/21 at 13:46 “Probably get through a lot of work id imagine” Email 2: exchange between Mr Crombie and Mr Burgess, 3-4 March 2022 Email from TC to EB, Thurs 3/3/22 at 21:30 Subject:

“London” “Hi pal, trains are booked to London for interviews. [Gives details of trains] Im going to meet with the CEO of Inspired Group at 2pm on the 21st. Feel free to arrange any meetings down there that afternoon. Im arranging for us both to see some WeWork office space around 3:30pm on the Monday. ive enquired about meeting space in a few hotels as per Angelos suggestion. monday night we can get smashed. joking. Nah, im actually not. Looking forward to it.”

Email from EB to TC, Fri 4/3/22 at 08:12 “Nice one mate, I need to work on building my network in London, i ll put out a few feelers and see who is about Right, well your first answer was, “were getting smashed” so… Shame we are barred from the Londoner!” Email from TC to EB, Fri 4/3/22 at 08:14 “Hmmmm, feelers.....putting the feelers out....” Email from EB to TC, Fri 4/3/22 at 8:29 “Feeling the feeling for feelers IN London WITH the tidies” Email 3: exchange between Mr Crombie and Mr Burgess, 26-28 March 2022 There were exchanges between Mr Burgess and Mr Leitch over 25-26 March 2022 in relation to the second stage of assessment for the Executive Head role, which would happen on 4 April 2022. In an email at 18:54 on Saturday 26 March 2022, Mr Leitch asked Mr Burgess:

“I was going to drop you a line to ask whether it might be possible to briefly meet virtually with a small sample of students. Really keen to capture their voice in my SWOT. Appreciate that this may not be possible, or if it were, a MOS staff member would need to host for safeguarding etc.”

Email from EB to TC, Sat 26/3/22 at 19:00 [Forwarding Mr Leitch’s email] “Mate, This is the difference, thinking outside the box. I’ll ask Emily B if this will be possible.” Email from TC to EB, Sat 26/3/22 at 19:38 “Just send him his contract now and we can spend the 4th getting cunted in the meeting room at mal (a la tete) maison” Email from EB to TC, Mon 28/3/22 at 7:01 “See it, say it, sorted pal” Email 4: exchange between Mr Crombie and Mr Burgess, 30-31 May 2022 Email from TC to EB, Mon 30/5/22 at 16:24 Subject:

“Secondary Interviews” “Hi pal, Rob messaged me to say that the interviews today went well and they are taking three forward to the next stage. Im not sure what the next stage looks like but I said you would let him know. You can perhaps reach out. As I said, more than happy to be involved in final stage if needed. Def either you or me on the panel to make sure we get the right person. This will be a hugely significant hire and I really want to make sure the person meets the culture/values of MOS.”

Email from EB to TC, Tues 31/5/22 at 09:21 “Hi Mate, Just to confirm what I said last night. 2nd round will be in Edinburgh and either both or 1 of us (depending on if we are both available), will be on the interview panel.” Email from TC to EB, Tues 31/5/22 at 09:42 “Cheers mate, Will be great to welcome Antonia to the school. I mean, it will be great to be part of the second stage of interviews.” Email from EB to TC, Tues 31/5/22 at 09:50 “Mate, why do you keep mentioning Antonia? She didn’t make it through, its; Roxanne Pearce, Jankoma Crisp and Stacey Begg” Email from TC to EB, Tues 31/5/22 at 9:53 “Well that was a waste of time then. Guess red light will have to get it.” Email 5: exchange between Mr Burgess and Mr Crombie, 27-28 July 2022 Full Circle Educational Consultancy Ltd, Ms Fairs’ company, sent an invoice to finance@myonlineschooling.com, copied to Mr Burgess on 27 July 2022 at 18:55. Email from EB to TC, Weds 27/7/22 at 20:07 [Forwarding the invoice] “Standard Angelo, Sending an invoice for work before the work has been carried out, with a due date set for today! hahah" Email from TC to EB, Weds 27/7/22 at 20:22 👃💯 Email from EB to TC, Thurs 28/7/22 at 08:18 “Haha, na I reckon gambling mate!” Email 6: exchange between Mr Crombie and Mr Burgess, 10-12 September 2022 Email from TC to EB, Sat 10/9/22 at 13:16 Subject:

“London trip” “Hi pal, just passing over London itinerary. [Train details: out on 13/9/22, return on 14/9/22] Provisional itinerary Tuesday 13:30 - Train Edi- Ldn (taxi booked from office for 12:50 - means leaving meeting 10 mins early) Arrive 17:50. Wee gym/swim 6:30-7:30 Rob has booked Duck and Waffle (choice place we went) for a bite to eat at 8pm (next door to our hotel). I will be having max 1 beer with the inspired meeting next day. Early to bed. (welllll) Wednesday 8:30 start at office at office. 5 min walk from hotel. 10-12:30 Tom meeting with Inspired. You can meet with Rob at this time. Roxanne and Sara in office 10-3 but plenty meeting rooms etc. Tom/Ewen/Rob 2-4:30 Train at 17:30. Booked you a taxi from Waverley to home. actually scrap that, lets just go and get S and C instead.”

Email from EB to TC, Sun 11/9/22 at 18:58 The subsequent email in the chain has a timestamp of 17:04; it is likely that EB and TC were likely in different time zones at the time of this exchange. “So reading between the “lines” Arrive in London (which should be quite quiet this week, not just saying, it ll be really quiet), C & S till we leave (in body bags) on Weds??” Email from TC to EB, Sun 11/9/22 at 17:04 “Who nose how busy London will be this week. Will be good to see Charlie, the new king if he’s in town. Weather looking cooler next week and possible snow. Looking like that fine powder type. Think there are tourists coming from as far afield as Columbia which will be great to see.” Email from EB to TC, Mon 12/9/22 at 06:47 “Hope not, hope not!” Email 7: exchange between Mr Burgess and Mr Crombie, 21-23 October 2022 Email from EB to TC, Fri 21/10/22 at 14:56 Subject:

“Oct Pay” “Here you go pal…”

Email from TC to EB, Sun 23/10/22 at 16:36 “all paid mate. Will be in AAB account Monday” Email from EB to TC, Sun 23/10/22 at 16:37 “Choice mucks, good to get that paid!” Email from TC to EB, Sun 23/10/22 at 16:37 “not really, would have rather used the money for COCAINE” Email from EB to TC, Sun 23/10/22 at 16:48 “Something tells me we are going to have money in the next few weeks to purchase a shit ton of ching so…” Email from TC to EB, Sun 23/10/22 at 16:54 “probably buy Columbia actually, in a way.” Email from EB to TC, Sun 23/10/22 at 16:53 “Start our own cartel in a way” Email 8: exchange between Mr Burgess and Mr Crombie, 26-28 August 2020 Email from EB to TC, Weds 26/8/20 at 22:20 Subject:

“Hey” “Just wanted to acknowledge today and apologies as I feel guilty for letting you down with the payments. I hope you don’t think its through negligence or being blasé, ive just been so busy the past 3/4 weeks. Although that’s not an excuse. I should’ve spoken with you and let you know that I had a lot on the go but I wanted to try and do it without any support, looking back now that probably wasn’t the best approach, sorry mate. I worked with the girls for an hour or so tonight and we have got the payments in an good shape and that will be our focus again for the rest of the week. I spoke to Catherine and she is more than happy to take on all of the finance role and support the PL’s during her quieter periods. I would hate for you to think im not giving this 100% and that im not absolutely dedicated to the role and MOS. Sorry for the late email but its been playing on my mind all evening.”

Email from TC to EB, Thurs 27/8/20 at 09:24 “Absolutely no need to apologise. It’s more that we just need to revise the procedure for payments etc as with 1000+ families it is a massive job and will be challenging. Everything will be fine, I just want to ensure theres not a mad rush at the start of term. Lets maybe chat again about a good process here and see if this is something that Catherine takes on herself. You’re doing unbelievable job and you don t need to tell me how dedicated you are it s pretty evident to see. I know how mental busy it’s been for everyone so understandably things are taking longer than normal. Let s chat about a good process for payments and try and get something in place shortly after terms starts. Appreciate the email pal, but honestly, you didn t need to apologise at all.” Email from EB to TC, Thurs 27/8/20 at 11:23 “Appreciate the reply, hate letting you down and felt like I did yesterday. I understand the importance of getting the finances in a good place and we can work with Catherine (whos is keen to take ownership of this), and put in place a structure for all finance related tasks.” Email from TC to EB, Thurs 27/8/20 at 11:38 “Thanks for that pal, appreciate all your work. Ok can we now stop emailing each other polite, respectful emails.” Email from EB to TC, Thurs 27/8/20 at 16:39 “100%! I hate pretending that I give a fuck about your stupid business” Email from TC to EB, Thurs 27/8/20 at 20:51 “Oh fuck off and make some pasta you wop cunt” Email from EB to TC, Fri 28/8/20 at 08:27 “Fuck off and tell me what the weathers like up there ya lanky cunt” Email from TC to EB, Fri 28/8/20 at 08:29 “Well this escalated” Email from EB to TC, Fri 28/8/20 at 08:30 “Not like us to take a normal situation/email and turn it on its head” Email 9: email with attachment from Mr Crombie to Mr Burgess, 17 September 2020 Email from TC to EB, Thurs 17/9/20 at 19:20 Subject:

“The real letter” “Please find attached [Italian flag emoji]”

Attachment Attachment name:

“Ewen Burgess Pay Review Sept 2020 2.pdf”

The attachment says, on MOS-headed paper:

“Dear Ewen, Go fuck yourself you wop cunt. Yours sincerely, Tom Crombie Gaffers Gaffer”

Email 10: email from Mr Crombie to Mr Burgess, 3 November 2020 Email from TC to EB, Tues 3/11/20 at 14:19 No subject “I here by give you all of my business and £1000000000000 pay rise Also sorry for calling you a wop cunt. Actualy I forgot im not sorry.”