Gallagher Benefit Services Management Company Ltd v Peter Meagher [2026] EWHC 1966 (KB)

[2026] EWHC 1966 (KB)

Claim Number: KB-2024-002876

IN THE HIGH COURT OF JUSTICE

KING'S BENCH DIVISION

Venue THE ROYAL COURTS OF JUSTICE

Date 29.07.2026

Before

MR JUSTICE RITCHIE

Between

GALLAGHER BENEFIT SERVICES MANAGEMENT COMPANY LTDClaimant

- and –

Between

PETER MEAGHERDefendant

Charlotte Davies (instructed by Mayer Brown International Limited) for Claimant

Peter Head (instructed by Keystone Law Limited) for Defendant

Hearing Hearing dates: 7,8,9,10,13,14,15,16 July 2026

APPROVED JUDGMENT

[1]The Claimant (Gallagher) is a large international insurance brokerage dealing in employee benefits. The Defendant (PM) was the founder and Chief Executive of a boutique insurance brokerage dealing in employee benefits in the UK. The former bought the latter and then, within 15 months, the key seniors reached a settlement agreement. These claims resulted from the circumstances surrounding that agreement.

Bundles

[2]For the hearing I was provided with 10 Core Bundles (lever arch and digital); 29 large digital bundles; two skeleton arguments in opening; closing submissions and some enlarged pages as we went through the trial. It was a great credit to both parties that they took disclosure seriously and provided such full disclosure. It was a credit to the lawyers involved that the bundles were so well arranged and the case so well presented. Some disclosure was provided late by the Claimant after the end of the evidence. Summary

[3]The Defendant (PM) started his insurance brokerage, Churchills, in 1974. I find that he is a consummate salesman and professional broker. He built the business up from scratch, with the help of his wife, such that in the year end (YE) 2022 the revenue was around £2.3 million. He employed 15-16 staff and the office was situated in a converted Barn on his estate in Nottinghamshire, situated between Nottingham, Newark and Mansfield. His staff all lived in that triangle. Costs were low and profits were high. The business focussed on brokerage of insurance for employee benefits (EBs) such as health insurance, employee pension provision and managing those benefits. The main clients were in the “Tech” sector. The clients’ business models were modern. PM predicted that, to take the next step up and get into the big league, he needed to have a Global IT Platform (the Global Platform) to service his clients and their employees and the backing of a multi-national company. He wanted to transition from boutique to big.

[4]PM provided a video of a competing Global Platform to four senior staff at Gallagher in 2021 to show what he was talking about. It provided, on a simple screen, access for every client employer and employee, anywhere in the world, to the EBs which they were entitled to and the key information about EBs. That information was, for instance, the level of benefits, the renewal date and how to make claims. In response, he was informed by senior staff at Gallagher that they did not yet have such a platform but they were “developing better Tech” and that they were pretty confident “this is happening” in Gallagher.

[5]PM negotiated with Mr Burns, the CEO of Gallagher, to sell Churchills to Gallagher and the documents were signed on 7.4.2022. There was a Share Purchase Agreement (SPA) and an Employment Contract (EC). PM was 73 years old. The purchase price was a lump sum of £12,375,000, with an additional earnout of £5,199,250 maximum (the Earnout), to be paid over 3 years, based on revenue not net profit, in years 2 and 3. Schedule 9 of the SPA contained the Earnout details. There was: zero in year 1, a maximum of £1,375,000 in year 2 and a maximum of £3,824,250 in year 3. For PM to achieve the maximum Earnout figures, Churchills would need to achieve revenues of £2,588,260 in year 2 and £3.5 million in year 3. PM was made an employee of Gallagher under the EC. He would remain CEO of Churchills for 2 years, then go. Over year 1, Churchills would keep its name and PM would run it, whilst integration went on behind the scenes. The staff would be retained. It was PM’s case that Mr Burns offered to finance 5 new staff, provide the Global Platform to attract bigger clients, resource Churchills properly and grow the business. In year 2, the clients would be informed of the sale and integration would be accelerated. In year 3, Gallagher would cease to use the Churchills brand and take over the business and PM would exit at the end of year 2.

[6]The parties squabbled over the course of year 1, but they did not fall out. Gallagher were frustrated by PM’s refusal to integrate, squabbling over the completion accounts, refusal to disclose information in the format which Gallagher were used to, high marketing expenses, the mixing of personal and business payments and PM’s constant complaints about: the lack of a Global Platform; insufficient funding for expenses for marketing; insufficient staff and corporate bureaucracy. PM was frustrated by the substance of those very complaints. Mr Burns carried the relationship well until he resigned or left Gallagher in November 2022. Mr Threader took over and matters got worse. Despite the clash of cultures, PM and his team increased revenue by 30-40% in year 1. This was a very impressive performance and much higher than Gallagher had forecast. His profit margins were impressive as well, but his staff were stressed and overworked. By April 2023, Mr Threader and PM decided to start negotiations for PM to stay on for another year. I will find below that Mr Threader suggested PM could exit early instead. They negotiated and settled on an up-front lump sum of £3.65 million, instead of the 3-year Earnout. That deal was signed and paid in mid-July 2023. From that date Gallagher took over the business. They immediately terminated the lease of the office in the grounds of PM’s country estate and moved the office to Nottingham, then to Newark, then to Birmingham, then to Woking. They made all of the staff redundant 11 months later, in June 2024. They stripped out the clients. This shocked and angered PM, who cared deeply for his staff. He felt a fool for ever having believed Mr Burns when he had been told that Gallagher would grow the business and keep, support and grow the staff.

[7]This claim arises from a discovery which Gallagher made in August 2023, when Debbie Ashby a junior member of staff, informed them that Churchills’ biggest client, Globalization Partnerships (GP), had given notice to terminate their retainer with Churchills back in January 2023. PM had not told Gallagher about that notice in January or at all. GP provided approximately £419,000 pa of revenue, which was put at risk and eventually lost in year 3. It is Gallagher’s case that PM should have told them and, if he had done so, they would not have offered such a high settlement. They would have assumed zero income from GP from 31.12.2023 and the settlement would have been around £1.8 million. Gallagher claims damages for breach of PM’s employment contract, breach of fiduciary duty, breach of warranty and fraudulent misrepresentation. They submit that the correct measure of loss for the breaches is about £1.8 million. PM admits that he did not tell Gallagher about the notice to terminate served by GP but denies all breaches and denies the measure of loss claimed. Alternatively, he asserts Gallagher failed to mitigate and he counterclaims for £1.549 million, on the basis that Gallagher failed to manage the business properly between April and July 2023, during the negotiations for his exit. Had they done so, or had he stayed on and run the business, he would have achieved his full earn out of £5.199 million, so he claims the difference.

The applications

[8]So that they could give their best evidence, I permitted video evidence to be given by two witnesses.

Pleadings and chronology of the action

[9]In the amended Particulars of Claim (PoC) Gallagher relied on clauses: 1.7; 3.3.31; 3.3.8; 3.3.9 and 3.3.10 of the EC. Those required PM promptly to notify Gallagher of any fact or matter which might adversely affect them; to use his best endeavours to promote protect and develop the interests and business of Gallagher; to make such reports as Gallagher determined from time to time as were reasonably required; promptly to report competitive threats or activity which might harm Gallagher; promptly report his own wrongdoing to Gallagher and to comply with his statutory and fiduciary duties. Gallagher also relied on implied terms which they asserted PM owed to them including trust, confidence, and fidelity. Gallagher also pleaded that PM owed them fiduciary duties covering: avoiding potential conflicts of interest; disclosing materially significant information; not deliberately misleading Gallagher and reporting this own wrongdoing.

[10]The breach alleged was failing to inform Gallagher about GP giving notice (the Notice) and then beginning early exit negotiations on the basis of the Earnout based on year 2 and year 3 revenue being similar to the year 1 revenue, which included the GP revenue. Six specific misrepresentations were pleaded out. Those on:(1) 14.4.2023;

(2) 17.4.2023;

(3) 1.6.2023;

(4) 2.6.2023;

(5) 2.6.2023;

(6) a general representation via conduct. All of those arose during the negotiations between Gallagher and PM for his exit under a lump sum deal to settle the SPA Earnout. Gallagher asserted that, at the date when the lump sum settlement was signed off, Mr Threader (ST) “understood that year two and year three revenue was not expected to be materially lower than year one revenue”. In support of that understanding, Gallagher specifically pleaded as follows: 10.1 Representation 1. 14.4.2023: PM to ST:

“Hi Steve Good Meeting. As discussed happy to go immediately to save further angst. William advises on our 40% increase in revenue (round numbers) to 3.2 million the earn out including my contract would be 4.25 million.”

Gallagher pleaded that a reasonable person would infer (and ST did infer) that PM was implicitly representing that, based on the information available to him, that there was no reason to expect that year 2 and 3 revenue would be materially different to year 1. 10.2 Representation 2. 17.4.2023: PM to DT:

“severance numbers calculated from the SPA… £ Yr 1 - Yr 2 1,375,000.00 Yr 3 1st part 2,250,000.00 Yr 3 2nd part 333,133.22 Second Year Contract 150,000.00 4,108,133.22” £ Yr 2 1,375,000.00 Yr 3 1st part 2,250,000.00 Yr 3 2nd part 333,133.22 4,108,133.22”

“Regarding the future losses and wins, we think you should just draw a line in the sand on April 7th as all the other activities are BAU and naturally change in real time. Gallagher also need to allow for natural inflationary increases which adds more complexity. We therefore need a single figure that we can all work to, ie lets deal in facts rather than assumptions.”

Gallagher pleaded that this expressly or impliedly contained a representation that activities on all client accounts (including GP) save those which had been identified as in the Claimant’s spreadsheet as a “lost client” were “BAU” meaning ‘business as usual’. A reasonable person would have inferred from PM’s words and his conduct in their context (and ST did infer) that, by stating that such activities were “BAU”, the Defendant was implicitly representing that there was no activity on those accounts (including GP) which was materially relevant to the calculation of estimated year 2 revenue. 10.4 Representation 4. 2.6.2023: PM to ST:

“therefore list below the issues Finance have now raised: 1. The 13 month payments are easily exceeded by the 11 month underpayments. Indeed, we make the figure £42k to add back against your £33k. For simplicity, we will write off the balance of £10k and that this issue is “cost neutral”. 2. We fail to understand the thought process behind “new and lost clients”

. No two clients are the same. We know however that we have at least 2 “hot” new clients, one of whom has shared their approved headcount forecast of 100 new joiners for 2023. This alone makes up for the loss of smaller accounts. 3. Again, we don’t understand if accounts have been signed off over 12 months ago how a phantom £64k can be dragged back into the settlement. 4. We regard the above 3 items as accounting chaff, and would again reiterate our headline figure of cash received is £3,153,077 and should be sacrosanct. This produces an earn out settlement of £3,958,133. I fully accept the rationale behind the interest charge for immediate payment at the end of June, and this deduction naturally leads us back to our original figure of £3,750,000 we discussed yesterday evening. … Churchills have been built on strong foundations of recurring revenues, so Finance need to accept Churchills are probably the best unit they have bought in the EB sector. …” Gallagher pleaded that a reasonable person would have inferred from these words and PM’s conduct, in their context, (and ST did infer) that PM was implicitly representing that there were no other lost accounts save those which had been identified in the Claimant’s Spreadsheet and/or that only ‘small’ accounts had been lost. 10.5 Representation 5. 2.6.2023: PM to DT: Revenue £3,153,077 Target £3,059,000 Difference £94,077 SPA Year 2 £1,375,000 £46,406 (9 months) Year 3 (part 1) £2,250,000 £177,187 (21 months) Year 3 (part 2) £335,854 £26,448 (21 months) Less Interest Charge for immediate settlement -£250,041 £3,710,813 Gallagher pleaded that a reasonable person would have inferred from PM’s words and conduct, in their context, (and ST did infer) that PM was implicitly representing that, based on the information available to him, there was no reason to expect that year 2 and year 3 revenue would be materially lower than the year 1. 10.6 Representation 6. Overall. PM’s conduct, between 14 April and 14 July 2023, in acting as though he was not aware of any client activity which presented a material risk to Churchills’ future business revenue (including failure to inform the Claimant that GP had given notice), amounted to conduct from which a reasonable person would have inferred (and Gallagher did infer) that PM did not know of any client activity which presented a material risk to Churchills’ future business revenue.

Yr 3 2nd part 333,133.22

[11]Gallagher also pleaded breach of the warranty in the Settlement Agreement at clause 9.1.5.

[12]The loss asserted was all pleaded as amounting to the difference between what Gallagher paid PM to settle the Earnout under the SPA: £3.65 million, and what Gallagher say they would have settled on with PM, had they known of the Notice from GP: £1,798,216, which was calculated by taking approximately £500,000 pa off the revenue agreed for year 1, and taking into account revenue to the date when GP actually stopped paying, which was April/May 2024 (Gallagher were granted a 3-4 month extension by GP due to handover issues). They also pleaded an unspecified figure of loss through having to investigate the asserted breaches by the Defendant. No other basis for loss was pleaded.

[13]In the Amended Defence PM denied breach. He pleaded out the circumstances within which the SPA was signed. He had first been approached by Gallagher in 2014 and the first offer was made in 2020. Negotiations recommenced after Covid and Mr Burns, the CEO of Gallagher, had assured PM that Gallagher had a 5 year plan to develop Churchills and take them to the next level, by hiring 5 new staff and having fun growing it. In July 2021 Mr Burns wrote saying that Gallagher wanted growth and they would do all that they could to help with incentives and would develop and provide a Global Tech Platform so they could compete with larger brokers. PM accepted he was employed by Gallagher under the EC but denied any fiduciary duties. He was not a director of Gallagher and had no management powers over Gallagher. He owed such duties only to Churchills. PM pleaded out the retainer with GP, which started on 1.1.2016 and was a two year auto-renewing contract, with a 12-month notice to terminate period, requiring registered post or recorded delivery and receipt before the two-yearly renewal anniversary. PM pleaded that shortly after the SPA was signed it became apparent to PM that Gallagher had no plans to develop Churchills, Mr Burns left after 6 months and no significant new staff were recruited. He set out the disputes over the completion accounts and other complaints which he had made. PM asserted that he had informed Gallagher of the risk with the GP contract on 20.12.2022 relating to IT issues. PM admitted that GP served a letter dated 23.12.2022 purporting to give notice to terminate. He asserted that it was not received until 2.1.2023 (so outside the renewal date by one day). PM pleaded that the notice was ineffective because it breached the retainer terms and was void and at no time did GP give valid notice. He relied on email communications around 20.1.2023 in which GP agreed to extend the retainer to 31.12.2023, but asserted those did not constitute good notice. He admitted that he did not tell Gallagher about the Notice and denied he was under any duty to do so. By an amendment, PM pleaded that he understood that the retainer was due to expire on 31.12.2023 in accordance with its terms and he had no duty to inform Gallagher of that. However, he did inform Gallagher on 11.1.2023 that Churchills’ top 5 clients were “at risk” in a Powerpoint presentation and warned them that Churchills was understaffed and overworked. PM admitted asking some staff not to disseminate GP’s purported termination within Churchills to avoid fears about lower bonuses. He denied instructing them to keep this secret from Gallagher. GP had given purported notice twice before and subsequently withdrawn it. Churchills had used their expertise to retain GP and PM was confident he would do so again. PM denied that Gallagher did not know that the GP contract was “at risk”. He relied on his messages to ST on 20.12.2022; the Powerpoint on 11.1.2023; and messages to Liam O’Neill Kerr (LOK) in March 2023 that Mercer (a large competitor) were looking over the fence at GP and Churchills needed to retain the account at all costs.

[14]PM pleaded that, at a meeting on 14.4.2023 at the George Hotel, Stamford, ST and he discussed the issues, he offered to work for an extra year (total 3 post SPA) but they agreed he would leave early instead, if they could agree a figure to settle a lump sum for the Earnout. PM’s accountant (Mr Oates) then provided figures for the Earnout which PM sent to Gallagher on 17.4.2023, asking for a £4.108m lump sum settlement based on revenue figures for year 1, which had just finished (on 7.4.2023). PM pleaded that, after toing and froing, on 2.6.2023, in a phone call with ST, they horse traded to a figure of £3.65m. As to Gallagher’s discovery of the GP Notice, PM asserted that all they discovered was a purported notice.

[15]As to each of the alleged misrepresentations, PM denied the asserted express or inferred representations, denied that Gallagher relied on any of them and denied that he had intended them to rely on them and denied they were false if they were made. He pleaded in relation to each asserted representation by inference that:15.1 Representation 1: the inferred representation was denied. PM conveyed his accountant’s Earnout calculation to Gallagher as a lump sum. The inferred representation was denied, too vague and raised terminology PM would not use.

15.2 Representation 2: the inferred representation was denied and was too vague and raised terminology PM would not use.

15.3 Representation 3: the inferred representation was denied and “BAU” meant Churchills would continue doing business as usual including negotiating the continuance of the GP contract and was too vague and raised terminology PM would not use.

15.4 Representation 4: the inferred representation was denied, no reasonable person would have inferred what Gallagher sought to assert.

15.5 Representation 5: the inferred representation was denied, no reasonable person would have inferred what Gallagher sought to assert, was too vague and raised terminology PM would not use.

15.6 Representation 6: the inferred overall representation was denied and too vague and no reasonable person would have inferred what Gallagher sought to assert. PM pleaded that Louise Salmons was not his agent. PM was concerned that the possibility that GP would terminate its contract should not be disseminated to staff, given its effect on staff morale.

[16]PM asserted that the lump sum settlement of the Earnout was negotiated at arms’ length, not in his capacity as a director of Churchills and Gallagher had their own duty to satisfy themselves, by proper enquiries, that the settlement was appropriate. Gallagher had said on 14.4.2023 that they would do their “own numbers”. Furthermore, ST was a director of Churchills, had access to its records by right and knew that Churchills’ top 5 clients were at risk. He wanted PM to exit. PM also denied breach of his EC, breach of fiduciary duties (the existence of which was denied) and denied being in breach of the Settlement Agreement para 9.1.5.

[17]Dealing with the asserted loss and damage, PM pleaded that Gallagher would not have behaved differently had he told them of the GP events. Alternatively, he denied that he would have accepted a much lower lump sum in settlement. In any event there was no deduction for year 2 because GP were contracted to continue paying and in year 2 and year 3 the revenue would have had no deduction because they should have been retained or because Churchills should have rejected their purported notice. Further, Gallagher failed to mitigate their loss by failing to take adequate steps to retain GP, despite Churchills having done so after GP purported to terminate twice before. The obligation was on Gallagher to provide the revenue statement on which the Earnout would be calculated. Further, the losses claimed were too remote. Breach of the warranty was denied. Further, on the counterfactual, the negotiations would have been on the basis that: there was a likelihood of GP being retained; Churchills could have replaced the revenue with other clients if GP were lost or would have made staff savings. PM pleaded that the deal was not made on the asserted assumptions made by Gallagher: that GP were 100% lost, no replacement clients would have been found and no costs savings would have arisen. Thus, the lump sum settlement would have been the same.

[18]PM counterclaimed for breach of clause 5.1.1 of Schedule 9 of the SPA asserting that Gallagher failed to manage Churchills from 8.4.2023 to 14.7.2023 by failing: to develop the business; to provide the Global Platform; to provide sufficient staff; to implement a new business strategy and to introduce new clients from Silicon Valley. PM claimed the difference between the maximum Earnout of £5.1 million and the agreed lump sum of £3.65 million. PM asserted that, had Gallagher managed Churchills properly, he would have stayed and the revenues would have been not less than: year 2: £2,588,260 and year 3: £3,500,000. New staff would have been hired, the Global Platform would have been provided and the GP contract would have been retained.

The Issues

[19]The parties provided a list of 28 issues. I consider that the key issues can be boiled down as follows:19.1 In failing (as admitted) to inform Gallagher of GP’s Notice to terminate, and (if proven) swearing staff to secrecy and failing to report wrongdoing, did PM:

(1) breach his employment contract?

(2) breach his fiduciary duties (if any)?

(3) make the alleged fraudulent misrepresentations?

(4) breach the warranties in the Settlement Agreement?

19.2 If so, was the pleaded approach to assessment of damages for the breach/es made out? Can another unpleaded basis be awarded instead? and what, if any, damages are due?

19.3 On the counterclaim: (1) Does the Deed of Variation settle matters fully so that it is excluded? (2) If not, can PM sue on his wife’s behalf? (3) Were Gallagher in breach as alleged?

19.4 If so, what is the correct approach to assessment of damages for the breach/es? and what damages are due?

The contracts

[20]The SPA. On 7.4.2022 Gallagher bought the shares in Churchills from PM and his wife for £12,375,000. Warranties were given by PM at clause 7, none of which Gallagher assert were breached. There was a restrictive non-compete for 3 years, to 7.4.2025. Gallagher do not assert that PM breached that. There was a whole agreement clause (21) excluding any pre-agreement arrangements, understandings and representations and claims thereon. The “Deferred Consideration” was set out in Schedule 9. None was payable in year 1. In year 2, if revenue (turnover) was over £2,300,000 Earnout started and hit a peak of £1,375,000 if revenue reached £2,588,260. In year 3, none was payable unless revenue reached £2,588,260 and it reached a peak of £3,824,250 if revenue reached £3,500,000. Gallagher were required to prepare and provide the Revenue Statement for the calculation. Under clause 3.4 of Schedule 9, PM was required to provide Gallagher with all reasonable access to the premises and information and books of accounts and documents. In year 1 PM would run the business. There were no warranties from PM tied to that in Schedule 9. There were duties imposed on Gallagher in clause 5 of Schedule 9 for their conduct of the business. In years 2-3 Gallagher undertook to: manage the business so as not negatively to affect the Deferred Consideration and for the long-term benefit of Gallagher; provide sufficient working capital and not to redirect clients away from Churchills. PM accepted: not to take bad faith decisions to increase the Deferred Consideration and agreed he would manage Churchills for the long-term benefit of Gallagher and to adopt professional standards and business practices.

[21]The Employment Contract (EC). On 8.4.2022 PM became a Gallagher employee with the title CEO of Churchills. His salary was £150,000 pa. He reported to ST. The offices were at Chartwell, Edingley, Nottinghamshire. It was for 2 years. Relevant clauses were:

“1.7 You shall promptly notify the Board if you become aware of any matter, fact or circumstance which might adversely affect the Company's and/or a Regulator’s assessment of your Fitness and Propriety. … 3.3 During your employment you shall: 3.3.1 use your best endeavours to promote, protect, develop and extend the business, reputations and interests of the Company and any Group Company; 3.3.2 faithfully and diligently perform and render such duties and services to the Company or any Group Company as may from time to time be assigned to you by the Company or the Board, together with such person or persons as the Company may appoint to act jointly with you; 3.3.3 carry out duties on behalf of any other Group Company as requested; … 3.3.8 promptly make such reports to the Board or such other person that the Company shall determine from time to time in connection with the affairs of the Company or any Group Company on such matters and at such times as are reasonably required; 3.3.9 promptly report any competitive threat to the Company or a Group Company or any activity which may harm the Company or a Group Company; 3.3.10 promptly report your own wrongdoing and any wrongdoing or proposed wrongdoing of any other employee, contractor or director of the Company or any Group Company to the Company immediately on becoming aware of it;”

There was a 12 month non-compete in the EC.

[22]The Deed of Variation. (DOV) On 14.7.2023, so 15 months after the SPA, PM and Gallagher signed this contract. Under it, the SPA was varied. Gallagher paid PM and his wife £3.65 million as a lump sum in full and final settlement of all of the Earnout. It was tied to a deed of surrender of the lease of the offices based on PM’s estate. The contents of Schedule9 were therefore deleted. There was no warranty imposed on PM in the DOV in relation to information provided to Gallagher by PM during the negotiations, which made sense because Gallagher had a complete right to access to Churchills’ accounts, books and records, if they wished to exercise it under clause 3.4 of Schedule 9 of the SPA.

[23]The EC Settlement Agreement. Because PM was leaving Gallagher’s employment and leaving Churchills, this was signed on the same day as the DOV, 14.7.2023. It is marked “without prejudice and subject to contract” which was an error. No one relied on those words. The non-compete clauses were retained. Clause 6 provided that it had been signed following “careful consideration” of the facts and that PM agreed not to bring any claims listed in that paragraph (employment rights and Equality Act claims). Claims under the SPA were excluded from that bar (clause 6.3.4). PM gave warranties in clause 9. Gallagher relied on the following warranty clause:

“9.1.5 the Employee is not in breach of any duty the Employee owes to the Company … nor has the Employee acted in breach of the Employment Contract and there are no matters of which the Employee is aware relating to any acts or omissions by the Employee or any third party which, if disclosed to the Company, GBS or Churchills, might affect its or their decision to enter into this Agreement.”

The lay witness evidence

[24]I received written evidence from the following witnesses and read it. Those in italics did not give live evidence, all of the others did. For the Claimant:24.1 Hannah Shone (refused to give evidence live).

24.2 Steven Threader.

24.3 David Cartwright Forbes.

24.4 David Cordani. For the Defendant:

24.5 Peter Meagher.

24.6 William Withall (not required for XX).

24.7 Natalie Bacon (by video).

24.8 Hannah Capewell (by video).

24.9 Victoria Clay (not required for XX).

24.10 Dawn Marshall.

24.11 Joanna Holford.

24.12 Adele Glowa.

24.13 Terence Towers.

24.14 Nicole Liposits.

24.15 Jennifer Mitchell.

24.16 Haydee Simpson.

24.17 Phillippa Allwood.

[25]I shall summarise key parts of the evidence below. I shall interpose findings of fact, made on the balance of probabilities on all of the evidence, whilst doing so. I shall take into account that the written and live evidence of witnesses was based on memory which may be degraded by time or by emotion or self-interest. Their evidence was also based on documents and that recollection may be degraded or enhanced by the wording of the questions, the way in which their lawyers have drafted their written evidence and by emotions and self-interest. I shall also apply the rationale summarised by Robert Goff J in Armagas Ltd v Mundogas S.A. (The Ocean Frost)

[1985] 3 WLR 640

at [57]:

“Speaking from my own experience, I have found it essential in cases of fraud, when considering the credibility of witnesses, always to test their veracity by reference to the objective facts proved independently of their testimony, in particular by reference to the documents in the case, and also to pay particular regard to their motives and to the overall probabilities. It is frequently very difficult to tell whether a witness is telling the truth or not; and where there is a conflict of evidence such as there was in the present case, reference to the objective facts and documents, to the witnesses' motives, and to the overall probabilities, can be of very great assistance to a Judge in ascertaining the truth.”

[26]Hannah Shone This witness wrote that she joined Churchills after the takeover. She found the environment unpleasant because there were cliques. Oddly, she asserted that two weeks after she joined, in June 2022, Gallagher announced the takeover. I reject that evidence because all the other witnesses stated that announcement occurred in April, before Ms Shone joined Churchills. She administered pensions for clients. She did not work on the GP account. The staff were loyal to PM. She found PM became hostile to Gallagher over the months because they wanted their protocols to match Churchills’. She asserted that in December 2022 PM told staff not to have contact with Gallagher as he was running the business. She asserted that Ms Holford told staff that GP had given notice, which was big news. Staff were called in by PM who told them not to tell Gallagher. She thought that was “not right”. After PM left there was a Teams meeting with all Churchills’ employees, who were working from home at that time because they had no offices. The staff were silent in answer to questions about GP. On 24.8.2023, at a meeting, staff told Mr Cartwright Forbes they knew of GP's Notice in January 2023 and the whole team had been told to stay silent. She refused to give evidence in person and did not want to see her ex-colleagues or PM. In her second witness statement she corrected her start date to March 2022.

[27]I do not place any weight on the evidence of this witness. English Courts decide issues on live evidence. The reasons given for refusing to give evidence were insufficient. There were obvious errors in her first witness statement and she did not submit herself to cross examination.

[28]Steven Threader (ST). Mr Threader is the principal for Gallagher in the benefits consulting part of the wider Gallagher group, having joined in 2016. He does not do client management. The group acquires smaller businesses and often comes across issues with “integration”. He sought to give evidence about the contract negotiations for the SPA, but he did not lead them. Mr Burns did and the Claimant did not call Mr Burns. Mr Threader asserted that PM had told Gallagher that Churchills often lost clients when they became too big, for instance providing revenue to Churchills of more than £550,000 per annum. He pointed out that the SPA included warranties from Churchills at clauses 12.4 and 12.5, that no client had given notice of termination. I contrast that with the DOV in which Mr Threader did not require that warranty from PM when he exited. Mr Threader summarised the assurances which PM has asserted Mr Burns had given around the time of and before the SPA: PM trusted Gallagher not to sue owners or staff and that Gallagher aimed to grow Churchills to a revenue of £3.5 million.

[29]Mr Threader asserted that Gallagher relied on PM's staff for accurate information. He had raised issues after the takeover relating to PM's personal expenses paid through the business including relating to: a racehorse, charitable donations, local rugby club sponsorship and Help for Heroes. The completion statement became contentious. They squabbled over marketing budgets and bonuses. PM spent marketing sums at Ascot, Henley, Silverstone and Goodwood. Mr Threader did not believe those events had “much prospect of winning business”. PM wanted £150,000 of marketing expenses to mix at a high level and “walk the walk”. Gallagher offered £54,000. PM complained that he was suffering “battle fatigue” from Gallagher and should instead have been dealing with five corporate inquiries per month. Mr Threader relied on a request by Mr Burns, dated 12.9.2022, requiring PM to provide details of clients “lost”, their value, presentations given to clients and “at risk” clients. He criticised PM for responding on 15.9.22 that “all clients are at risk, particularly the big 5”. Mr Threader set out the many complaints raised by PM against Gallagher for failing to align for growth and the broken promises. He stated that, after closing the disputed completion statement in November 2022, Gallagher focused on controlling PM's expenses and authorising them. Gallagher wanted to insert an office manager but this was rejected by PM. I note that he did not say that either he or Gallagher focussed on growth.

[30]In a meeting on 15.12.2022 at the French Horn Hotel, recruitment of staff was discussed. In a meeting on 11.1.2023, PM complained about: no new staff, he having been offered five by Mr Burns; under resourcing; lack of support; breach of trust and PM objected to changing the company name, despite the agreement in the SPA. In fact, the SPA provided for no change of name for year 1, so Mr Threader was wrong on this and PM was correct. Mr Threader accepted that he was shown PM's Powerpoint slides at that meeting and that one stated that the “top five clients were at risk”, but he complained that PM never told him that GP were “at risk” and did not inform him about the Notice. Mr Threader complained that PM refused to use Gallagher staff or follow Gallagher practices. Instead, Churchills interviewed staff without sending Gallagher a business case for approval of them. Mr Threader complained that Louise Salmons provided a table of revenue on 2.2.2023, but gave no indication of the loss of GP as a client. He asked for details, better to understand the revenue forecast. So did Mr Cordani, in the monthly reports, who required information about new business wins and losses. Ms Salmons provided responses on 3.2.2023 but made no mention of the Notice. PM threatened that he would lose clients due to Gallagher's delay in permitting the hiring of more staff, but PM did not inform Gallagher about the Notice, which Mr Threader considered was “outrageous”.

[31]Mr Threader signed off 1 new recruit in February 2023. PM complained, on 4.3.2023, that a year had passed and no “new business” development meeting or development strategy had been provided by Gallagher and no marketing executive had been provided. On 11.3.2023, PM set out a long list of complaints which he described as the “four pillars” of the takeover. Pillar 1, was to identify tech startups. Pillar 2, to build relationships within the tech community. Pillar 3, was to work with the San Francisco office to make Churchills the go-to supplier of EBs for tech companies, and pillar 4 was to build the Global Platform to compete with Mercer. PM alleged Gallagher had failed on all fronts, thus damaging the year 2 and year 3 targets and thus being in breach of trust. PM offered to extend his two years of work at Churchills for an extra year, as a result. On 15.3.2023, Mr Threader met with PM and provided a response Powerpoint about strategy. In that he stated that PM was still putting personal costs through the business account. He projected steady revenue, noting “won” versus “lost” clients was roughly neutral. Mr Threader asserted that, had he known of GP’s Notice at that time, his revenue projections would have been impacted.

[32]On 14.4.23 Ms Salmons had written to Gallagher that new clients were balancing lost clients, so revenue was stable or there might be small growth. The same day, an end of year meeting was held between PM and Mr Threader. They agreed the working relationship was challenging but the meeting was entirely polite. Mr Threader asserted that they discussed PM's offer to work an extra year or alternatively to exit early. Mr Threader was attracted by early exit and agreed to ask the US board. PM asked for a lump sum to settle the Earnout to be calculated on the basis of the year 1 revenue being used for the projected income for years 2 and 3. After the meeting, Mr Threader asked internally for a detailed summary of year 1 revenue to assess revenue sustainability and new and lost business. Mr Threader asserted that Gallagher had concerns that revenue might fall and needed clarity on contracts with key clients. He asserted that they were “alive to the risk” yet he also asserted that he understood, from his conversations with PM, that there was “no reason to think revenue would fall in years two and three”. However, he accepted there was a lot which Gallagher did not know, because they had separate IT systems and offices and there was resistance at Churchills to involvement of Gallagher staff. Gallagher knew the numbers but not what was behind them - the client interactions.

[33]Mr Threader then went through each of the six alleged misrepresentations. He relied on a Whatsapp from PM dated 14.4.2023 at 5.15pm which, in context, was as follows:

“14/04/2023, 5:15 pm - Peter Marr: Hi Steve Good Meeting. As discussed happy to go immediately to save further angst. William advises on our 40% increase in revenue (round numbers) to 3.2 million the earn out including my contract would be 4.25 million. Gallagher could then develop Churchills as they wish and integrate asap Thank you so much for lunch Best Peter 14/04/2023, 5:19 pm - Steve Threader: Thanks Peter. Agreed it was a good catch up and gives us a base to move forward. If you have any figures that Will has done that you can share with us that would be good. We will of course need to do our own numbers but better if we can agree before I put to the states. Will speak again next week. Cheers Steve 14/04/2023, 5:59 pm - Peter Marr: OK Can you give me the exact revenue figure Was it 3.17m or something similar 14/04/2023, 6:00 pm - Steve Threader: It was £3,153,077 14/04/2023, 6:06 pm - Peter Marr: OK I will get Will to do the matrix On the previous ball park figures Gallagher will save 1million and I will retain my sanity Have a great weekend 14/04/2023, 6:13 pm - Steve Threader: Haha! I have sent a note to David to crunch the numbers as well so let’s agree them and then if we both agree it is the preferred option (or at least one we want to put to the US for consideration) then I will put it to them. Have a great weekend too! 17/04/2023, 1:24 pm - … 17/04/2023, 2:16 pm - Steve Threader: Ok. I had two questions; One was the settlement agreement for Lynne - is there anything you need and will that be back with us in the next day or so? Secondly, did you back the winner of the Grand National?? Leslie arrived today so I will see her tomorrow and put Option 1 to her. It won’t be her decision but she will hopefully give me a steer on how it will be received. 17/04/2023, 3:29 pm - Peter Marr: Louise in tomorrow so we can get Lynnes document printed off and checked for signature Regret no winner in the Grand National 17/04/2023, 3:35 pm - Peter Marr: The pitch to Leslie is we have categorically proved the business is robust by achieving 40% growth ie almost 4 times Gallagher base line growth. The intergration can therefore now take place far earlier than anticipated Early severance will also save Gallagher a million quid from the SPA”

Mr Threader stated that he and hence Gallagher understood that to mean that there was no reason to expect revenue in years 2/3 to be materially lower because that was implicit.

document printed off and checked for signature Regret no winner in the Grand National

[34]After hearing and considering all of the evidence, I do not find Mr Threader’s assertion of his understanding to be likely on the balance of probabilities. Nor do I consider that the words written, when construed objectively by a reasonable person and in their context, constitute the representations which Mr Threader seeks to infer. I conclude so for the following reasons.(1) From 14.4.2023 the parties had entered arms-length negotiations starting at the meeting that day. After the negotiations started, in those negotiations, PM was no longer acting as director of Churchills or as an employee of Gallagher, he was acting as a party to settlement negotiations, clearly in his own interests, not Gallagher’s interests. Both knew that every pound PM received was a pound paid by Gallagher.

(2) PM asked Mr Threader to provide a more accurate figure for year 1 revenue than his rough estimate of £3.2 million and Mr Threader did so from Gallagher’s internal data and their calculations, it was £3.153 million. That figure was well below the maximum revenue target for year 3 and so would save Gallagher money when compared with the £5.199 million maximum Earnout.

(3) Year 1 revenue was, in itself, irrelevant to the Earnout because no money was paid to PM on the year 1 revenue. That only started in year 2.

(4) The year 1 figure Gallagher provided could be a starting point for negotiations. Whether it became the end point depended on how each party weighed up the risk of the variables to their own interests and then agreed to use it.

(5) Mr Threader stated Gallagher would do their own figures on whatever data they wished to gather. That was their own responsibility. Gallagher and ST had the power to ask any questions they wished to of Churchills’ staff and to walk into Churchills’ office and access their systems whenever they liked under clause 3.4 of the SPA and as a director. They did not do so.

(6) The future revenue for years 2 and 3 was unknown and uncertain. Mr Threader and PM knew that future revenue could have been affected upwards or downwards by a huge number of variables. For instance: (a) inflation going up or down and hence fees and commission going up or down; (b) pandemics destroying revenue; (c) favourable or adverse world events; (d) competition falling away or improving; (e) clients being taken over and lost; (f) clients growing and hence having more employees, providing more revenue; (g) PM’s impressive marketing and deal making skills, he had achieved a 30-40% increase in year 1, he might well achieve that again in year 2; (h) Gallagher’s influence positively or negatively on Churchills’ performance. (i) Gallagher’s handling of year 3 business when they would take over controls completely in any event.

(7) Gallagher never asked PM for a list of clients who had given notice to terminate. This was so despite the fact that they had required PM to warrant that no notices had been given before the SPA was signed in 2022.

(8) Gallagher senior staff knew very well that Churchills’ top 5 clients were “at risk” from the “Big Boy” brokers and specifically that Mercer was the Big Boy looking over the fence at GP, because Denis Kelly had said so and PM had told Gallagher staff so.

(9) Churchills’ year 1 revenue was already £565,000 higher than the maximum target set in the SPA (£2,588,260) to get the whole of the year 2 Earnout. Likewise, PM was over the base target to start earning out in year 3 (£2,588,260) and Churchills only needed an increase of £347,000 in year 3 revenue to reach the year 3 maximum. So, if Mr Threader could get PM to agree to use only the year 1 figure and discount that for early receipt at 4.5% (the rate of inflation) he would chop the maximum payout of £5.199 million down a lot. If Mr Threader could chip away at the year 1 figure with details, Gallagher would be even better off.

(10) Churchills’ general insurance book had already been transferred to Gallagher so was money in the bank, which did not go towards the Earnout. In my judgment, read objectively, in their context, all that PM said in the relevant WhatsApp message was that Churchills’ accountant (Mr Oates) had calculated the SPA Earnout using the year 1 figure and that was the basis of his lump sum offer.

[35]The rest of the representations were then set out in Mr Threader’s witness statement. He repeated his asserted inferred misrepresentations relying on the communication dated 17.4.2023 from PM at 12.40 hours. In my judgment, taking into account the factors set out at paragraph 34 above, this email was nothing more than a negotiation with an Earnout calculation based on the year 1 figure provided by Gallagher. It contained no representation expressly nor impliedly as asserted by Mr Threader. I consider Mr Threader’s implied representation to be a post event construct. On 2.5.2023 a Gallagher employee, another Mr Kelly, sent Mr Threader a recalculation of the year 1 revenue, a table of all client revenues and a summary of the value of revenue for lost and newly won clients of Churchills. It had taken over two weeks to produce because Mr Threader had asked on 14.4.2023. The top client was GP who had paid £454,372 over 13 months (so £419,420 over 12 months). Even then Mr Threader did not ask anything about GP. Churchills had lost £118,905 of clients over the year and gained £156,672. Mr Threader complained in his witness statement that GP were not listed in the “lost clients” column and this lack of listing came from Churchills. Mr Threader then reported to the US, estimating revenue at £3.079 million for year 1, after strip outs, and suggesting the same for years 2 and 3. He asserts in the claim that, had he known of GP’s Notice, he would have estimated the year 2 and 3 figures for revenue at a lower level. I accept that he would have, also Mr Fuss asked about the likelihood of revenues going down because clients might have fewer employees in future.

[36]The third misrepresentation about which Mr Threader complained was made on 1.6.2023. The day before, on 31.5.2023, he had sent an email to PM stripping out overpayments (13 months) from revenue and reduced the net year 1 figure to £3.097 million, thus reducing the Earnout lump sum to £3,698 million. He added a Gallagher Table of figures showing all new clients and all known lost clients in year 1 and asked PM to fill out the same columns for year 2. PM responded at 11.24 am on 1.6.2023. He focussed solely on the negotiations. He did not fill out the blank columns. He set out the list of clients who had underpaid (11 months) in year 1 (tit for tat) thus increasing the year 1 revenue. He dealt with losses and wins by inviting Mr Threader to draw the line in the sand at 7.4.2023 because all other activities were “BAU and naturally change in real time”. He raised inflation as a point in his favour. He spiced the email with self-praise about the revenue increase in year 1. He sought to avoid getting bogged down in historical accounting and asked Gallagher to revert to £3.153 million as the base line year 1 figure for the Earnout calculation. Mr Threader asserts that he was “sceptical” about BAU in relation to future losses and wins and now knows that the list was “not true” because GP had given Notice. Looking at the criticised communication objectively and in its proper context, and for the reasons set out above at paragraph 35, I do not consider that the email makes any such representation, as Mr Threader asserts. It is little more than a negotiating response in which PM was seeking to persuade Mr Threader to stick to his starting year 1 revenue figure and then to use that for the Earnout calculation. PM certainly did not make any representation about “at risk” clients and did not project the year 2 or 3 income. He was maintaining the negotiating line that the Earnout deal should be based on the known year 1 revenue, not predictions about years 2 and 3. In any event, as I shall find below, at Churchills, no client was “lost” whilst they were still in contract, paying and Churchills were servicing them every day.

[37]The fourth misrepresentation asserted by Mr Threader arises from an email sent by PM on 2.6.2023 at 11.33 am. Excluding the graph, Louise Salmons communicated for PM and wrote:

“Hi Steve Below are Peter’s comments, as a platform for your discussion with him at 1pm. Kind Regards”

PM wrote “Hi Steve As discussed, the challenge today is to change the mindset of Finance so they understand they have negotiated an exceptional deal. Below are the notable “wins” Finance have achieved thus far: 1. Cash at bank was increased from the agreed £1.5 million to £1.64 million resulting in a profit of £164,000 2. The promised £1.5 million was reduced (“chipped”) by £17k to £1.483 million 3. Early severance achieves a saving of c£1.4 million on earn out 4. Marketing budget of £150k was never allocated, with the funds increasing the bottom line 5. A saving of £125k on my “contracted” salary 6. General Insurance book numbers not taken into account 7. Bonus payments paid to the staff but £50k rejected for Directors despite achieving a 30% increase in revenue 8. £200k additional PI premium from the above, Finance have already achieved savings of over £2 million, and Churchills vastly improved revenue numbers prove Gallagher have made an exceptional acquisition, ie, it’s win/win for Gallagher, before we even take into account any inflationary increases. I therefore list below the issues Finance have now raised: 1. The 13 month payments are easily exceeded by the 11 month underpayments. Indeed, we make the figure £42k to add back against your £33k. For simplicity, we will write off the balance of £10k and that this issue is “cost neutral” 2. We fail to understand the thought process behind “new and lost clients”. No two clients are the same. We know however that we have at least 2 “hot” new clients, one of whom has shared their approved headcount forecast of 100 new joiners for 2023. This alone makes up for the loss of smaller accounts 3. Again, we don’t understand if accounts have been signed off over 12 months ago how a phantom £64k can be dragged back into the settlement. 4. We regard the above 3 items as accounting chaff, and would again reiterate our headline figure of cash received is £3,153,077 and should be sacrosanct. This produces an earn out settlement of £3,958,133. I fully accept the rationale behind the interest charge for immediate payment at the end of June, and this deduction naturally leads us back to our original figure of £3,750,000 we discussed yesterday evening. I am therefore open to a pragmatic approach to settlement, but we have to change the mindset of Finance, so they appreciate the pedigree of Churchills which is illustrated in the following graph: … Churchills have been built on strong foundations of recurring revenues, so Finance need to accept Churchills are probably the best unit they have bought in the EB sector. I am around all day today after 12.30, and happy to discuss so we achieve a resolution before you depart for your holiday.” Mr Threader asserts that the failure to raise the Notice served by GP and the focus on new “hot clients” and “strong foundations” amounted to misrepresentations about revenue recurring. In the same paragraphs Mr Threader accepted that he knew that PM was obviously negotiating on his own behalf. I am struck at this time by five matters. Firstly, Mr Threader’s failure to follow up on his own request for PM to populate the year 2 column. He just let it go. Secondly, Gallagher’s failure to ask the simple question to PM or to Louise Salmons:

“has any large client served notice to terminate?”

. Thirdly, Gallagher did not ask the account holder staff for the top 5 clients how they were progressing and whether any had served notice. Fourthly, Gallagher did not go into the office and check the digital records themselves with assistance from any staff or, more particularly the account holder staff for the top 5 clients. (5) Fifthly, Gallagher did not speak to Denis Kelly. I will come back to the claim for breach of the EC below, but looking at this communication objectively and in context, it does not contain either any express representation or the implied representations which Mr Threader asserts. PM was clearly negotiating on his own behalf to get more money. He was expressly avoiding any detailed or evidence based estimates of revenue in years 2 and 3. He was putting forwards, as the basis for the Earnout, that the parties should simply use the year 1 figures. That is quite different from predicting, assuming or asserting that year 2 revenue would be the same as year 1. PM wrote

I therefore list below the issues Finance have now raised:

[38]Mr Threader asserted that the fifth misrepresentation was made later on 2.6.2023 in an email timed at 15.28 hours, but that contained nothing more than another calculation of the Earnout under the SPA using the base line year 1 revenue of £3.153 million and allowed a discount of 4.5% for accelerated receipt, producing a settlement offer of £3.75 million. Mr Threader’s attempt to imply from the email that PM was representing anything about not expecting lower revenue is wholly artificial and I reject it.

[39]Mr Threader asserted that a sixth representation arises in all of the former statements, which he says affected him at the meeting on 2.6.2023 because he had “consistently been led to believe” that revenue was not “anticipated to reduce” and PM did not know of any client activity which presented a “material risk” to Churchills’ future business revenue. To support this, he stated at para 131 of his first witness statement that Gallagher “simply did not have the ability to attempt to find out independently whether more clients had been lost or were at risk.” I reject that assertion as incorrect. Mr Threader was a director. He was entitled to ask for and get whatever information he needed. Gallagher was the sole shareholder. Gallagher in fact made an effort to speak to the points of contact in all of Churchills’ clients before the DOV was signed. They were attempting to “hive up” at the time. The only one which they did not speak to was GP. That was a bizarre oversight, considering that GP were the biggest client. Nor did Gallagher make the enquiries I have set out at paragraph 38 above of Churchills’ staff. Nor did they require PM to disclose whether any client had served notice to terminate or ask him to warrant that in the DOV. Under Mr Threader, either Gallagher had a blind spot about notice to terminate or they were not too interested in such. Certainly, Mr Burns had been sensitive to this because he had ensured a warranty from PM was in the SPA. Mr Threader did not require such a warranty in the DOV. In any event on 2.6.2023 Mr Threader and PM agreed a lump sum of £3.65 million and the deal was then passed by the US staff, higher up and was signed on 14.7.2023. Mr Threader stated in his witness statement that he wishes he had delayed. He no doubt does, but that does not mean that any of the alleged misrepresentations were made or relied upon.

[40]Mr Threader asserted that, had he been told of the GP Notice in January 2023, he would not have considered GP were likely to have been retained and his lump sum offers would have been significantly lower. He relied on the fact that, after the exit of PM, Mr Cartwright Forbes had tried to retain GP but had failed. In his second witness statement Mr Threader stated that Gallagher had made “no promises” about any Global Platform and did not believe that Mr Burns had offered that despite the fact that Gallagher had bought a company in April 2023 with such IT. In any event, he asserted that Gallagher wanted Churchills to “stay boutique”. He asserted that Gallagher did not promise new staff for Churchills. He referred to the Whatsapps he had exchanged with Mr Cartwright Forbes and Mr Cordani which were unprofessional and admitted that he was extremely embarrassed by them. He raised that PM had started “Teamchurchills” as a competing business.

[41]In cross examination Mr Threader accepted that PM expressed his frustration over Gallagher failing to perform on what PM asserted were their promises. He denied that Mr Burns made any such promises. He accepted that all of Churchills’ clients were at risk from global brokers and he had been warned about the risk to Churchills’ top 5 clients by PM. He denied he was specifically told in December 2022 at the French Horn Hotel by PM that GP was at risk for a “specific reason”.

[42]Mr Threader was shown the photos of a gun and ammunition and the jokes to kill PM which were sent in messages between himself, Mr Cartwright Forbes and David Cordani, when PM had contracted flu/covid and had to cancel a meeting in January 2023. He denied that he had held PM in contempt. When I asked him if such unprofessional behaviour about a fellow employee in Gallagher would normally lead to disciplinary proceedings, he said he “did not know”. I found his messages and involvement in that set of communications indicated Mr Threader’s lack of professionalism and disrespect for a very successful businessman (PM) and his arrogant and dismissive attitude to Churchills’ business, staff and CEO generally. When PM sent his “4 pillars” email, Mr Threader passed it on to Gallagher staff in a sarcastic and belittling way instead of treating it seriously. This indicated to me that Mr Threader never really intended to help grow this business, he was always intending to tolerate, but get rid of PM, shut the office, make the staff redundant and extract the clients into the Gallagher Group, it was just a question of when. After he was appointed as a director in April 2023, he held no board meetings and did nothing positive for the business. He just negotiated PM’s exit. He admitted this. In cross examination, he admitted that no express misrepresentations were made by PM (save for “BAU”). He admitted that PM had never said he had no reason to believe that revenue would be materially lower. He accepted that he was fully aware that revenue might decline in years 2 and 3. He accepted that, internally, he had said that using year 1 figures was probably best for Gallagher:

“settle one and done”

. No clawback from PM was imposed. Mr Threader asserted that he had been “very thorough” in the exit negotiations, yet he admitted he did not go into the Churchills’ office and get the information he now asserts that he needed, despite being a director and that he did not ask for a list of clients who had given notice. He accepted that he could have hired auditors or accountants, but did not. I do not find that he was very thorough.

[43]He denied wanting to get rid of PM quickly. Stopping there, I do not accept Mr Threader’s evidence on that point. I consider that, from the internal messages between himself, Mr Cartwright Forbes and Mr Cordani and from his failure for over 4 months (November 2022-March 2023) to agree substantially more staffing for Churchills as requested, his failure to introduce PM to the San Fransico office and to make client introductions to PM, his failure to research and propose a Global Platform and his penny pinching on PM marketing strategy, it was clear that he did not respect PM’s business ability, he did not want to work with PM and he was planning, in his mind, to remove PM from Churchills early if he could achieve that, with savings. Whilst nothing was disclosed on paper about how Gallagher would run Churchills after PM left, the events leading up to the exit and immediately after July 2023 also showed me that, contrary to Mr Burns’ approach and his promises and plans to grow Churchills’ business, Mr Threader intended to client strip Churchills and make the staff redundant by moving the offices away from Nottingham sooner rather than later.

[44]Mr Threader wrote, on 14.4.2023, to David Cordani that an exit based on year 1 figures was probably the best outcome for Gallagher, with a noncompete, because they would not be paying the full Earnout. He considered proposing a clawback if revenue turned out lower, but rejected the idea. That decision was crucial in my judgment. His stated concerns about revenue going down could have been hedged by clawback. He chose not to hedge them. Mr Threader repeatedly asserted that he did not want PM to go. I reject that evidence. He clearly did. He accepted he could have obtained the information he now complains that he did not have. He was a director. He could have gone into the Churchills’ office. He could have hired an accountant or auditor. For all of the alleged implied representations, he accepted no express representation was made, save perhaps for the “BAU”. He accepted that Gallagher had to do their own due diligence for the exit discussions. When it was put to him that GP were not a lost client in April/July 2023, he accepted that they were still paying and continued to do so long past 31.12.2023. He asserted that Gallagher categorised clients who were still paying as “lost” if they had given notice. He was shown Mr Kelly’s table of lost clients (that Mr Kelly was employed by Gallagher) and asked to confirm that only those no longer paying were put into it. He would not accept that. He was shown Ms Salmons’ disciplinary note in which she stated that Churchills never regarded a client as lost until they actually stopped paying, not least because PM planned to save the retainers. Staff at Churchills were in daily contact with GP senior staff. Mr Threader asserted that, in the weekly meetings between Mr Cordani and Ms Salmons, she should have raised the fact that GP were at risk after the Notice. He accepted he had not asked PM whether any of the top 5 clients had served notice to terminate. Mr Threader accepted that Mr Fuss had warned him that revenue could go down as well as up and he knew this. As to representation 3, he accepted that PM did not populate the year 2 table. Ms Salmons later provided information on lost and won clients. Mr Threader accepted, in relation to lost and won clients, that the revenue is certain when a client signs, for the duration of the contract, and after notice is given the revenue is uncertain. Counsel put that, in relation to the words “BAU” and “change in real time” and that email, PM had not written any of the asserted representations. Mr Threader agreed. It was put to him that he forwarded Ms Salmons’ list of new and lost clients to Mr Cordani with a sarcastic comment; “interesting read” and Mr Threader accepted that he thought “differently” about the contents. She had provided the data he had asked for from PM. She did not know his definition of “lost clients”. Mr Threader would not accept that GP was not “lost” at that time, despite the fact that it was still paying Churchills’ fees. Mr Threader agreed that on 14.4.2023 he sent PM’s year 1 figures to Mr Cordani and wrote that it was probably the best outcome for Gallagher for PM to exit, so that matters were settled “one and done”. Neither side could ask for money back if revenue turned out to be lower. He agreed that Gallagher considered imposing a clawback if revenue turned out lower, but they decided not to do so. He refused to agree that he wanted PM out. He needed to provide a credible case to the US decision makers. He carefully considered sustainability of revenue over years 2 and 3. Gallagher analysed wins and losses in year 1. The preferred option was for PM to exit. He agreed that, contrary to what he said in paragraph 85 of his first witness statement, he was a director from April 2023 and he could do what he wanted and could have obtained information from Churchills. He could have gone into the office and required staff to give him information. He could have hired an accountant or auditors. He denied that he failed to do so because he wanted to get rid of PM. He asserted that he trusted the figures but did not know the details behind them. In relation to the second representation, he accepted that PM did not represent that he had no reason to believe revenue would be materially lower. He accepted that Gallagher had to do their own due diligence. Gallagher had worked on the year 1 figure and reduced the total by adjustments. He accepted that GP in fact continued paying Churchills until April 2024. He accepted that GP paid Churchills a mixture of fees for the work they did on EBs and commission on insurance policies obtained for health and other EBs. He accepted that, in year 1, the lost business total was around £40,000 lower than the new business total. He accepted that at Ms Salmons’ disciplinary meeting she had stated that, to Churchills, “lost” meant gone, not still paying. She had also asserted that PM planned to save the GP contract. He accepted that he did not list “at risk” clients on his spreadsheet with PM during the negotiations. He complained that Ms Salmons knew of the Notice but failed to inform Gallagher. By May Gallagher had chipped down the year 1 revenue number to £3.079 million. On 12.5.2023 he communicated with Mr Fuss in the US and they considered the potential for client losses would always exist but Mr Threader asserted revenue was sustainable. In answer to questions from the Court Mr Threader accepted he had not asked PM whether any of the top five clients had served notice to terminate before approaching decision makers in the US. In relation to representation 3 he asked PM to populate his table. He left blank columns. PM refused. However, later Ms Salmons had populated a table with data. Counsel put to Mr Threader that in PM’s communication dated 1.6.2023 he asked Gallagher to draw the line at the end of year 1, he conceded inflationary increases in revenue and stated all activities were BAU but could change in real time. Mr Threader sought to separate unknown unknowns from known unknowns. He put the failure of PM to inform Gallagher of the Notice as an unknown unknown, when it should have been a known unknown. He accepted that PM did not state that: there was no “activity of material relevance” on other accounts that would affect year 2 revenue estimates. As for representation 4, counsel put to Mr Threader that he forwarded the communication dated 2.6.2023 from PM to Mr Cordani with a sarcastic comment and hence he had placed no reliance upon it, but he denied this. Mr Threader asserted that PM would have known that Gallagher would assume that the revenue would be no lower than year one.

[45]When asked by the Court if, in his long experience in the business, any clients had served notice and yet been persuaded to stay on, quite remarkably Mr Threader said he could not recall any such success. I reject his evidence on that as unlikely to be true.

[46]Mr Threader accepted he knew very well that PM was advancing his own position in negotiations. As for representation 5 Mr Threader accepted that PM did not expressly represent that there was no reason to expect revenue would be materially lower. He asserted that PM implied that revenue would be no lower in years 2 and 3 than year 1. He accepted that PM never used the word “materially” and it was not the sort of word he would use. He accepted that PM said “let's deal in facts” not assumptions and that PM's approach was not to seek to squabble over the potential revenues for year 2 and year 3, but simply to work on the actual year 1 figure. As for the asserted 6th representation, he accepted that PM never stated that there was “no material risk” due to client activity. He agreed that he and PM came to a deal at £3.65 million and Mr Cordani sold it to the US. Gallagher would save £1.2 million and PM’s salary. He accepted the US decision makers considered clawbacks and holdbacks with him, due to the risks of future revenue reduction, but they decided the risk was acceptable. He stated he expected to have known of big clients having served notice to terminate which would affect the risk. He stated that Gallagher took the risk of unforeseen changes but did not take the risk of matters they should have known about.

[47]On the DOV, Mr Threader accepted that it was different from the SPA, which had contained a warranty that no notice of termination had been given. The DOV had no such warranty. He accepted there was no clawback in the DOV. He accepted Gallagher had never asked PM whether any client had given notice of termination. He had only asked about lost clients. Counsel put communications in August 2023 to Mr Threader showing that Gallagher decided to “go after” PM “big time” and that Mr Threader had driven the legal claim. Mr Cordani had calculated the excess sum paid to PM at £1.9 - £2 million based on the lost revenue from GP. Mr Threader asserted that, but for the failure to inform about the Notice, he would have deducted the GP revenue from the year 1 revenue figure and that he did not know whether PM would have agreed to settle at the much lower sum. He accepted that Gallagher had lost hundreds or thousands of clients over the years who had served notice. He did not think Gallagher would have used their lawyers had he known GP had served Notice. On the counterclaim he was shown paragraph 5 of Schedule 9 of the SPA, which stated that Gallagher only took over recruitment for Churchills after April 2023. He admitted he had not read that clause and did not know about it. He was not aware that Churchills had the right to insist on its practises being followed in the first year.

[48]In re-examination Mr Threader was taken through the various requests made by Gallagher of Churchills for details of clients “at risk”, for instance on 15.9.2022 and 16.12.2022. He stated that PM had not engaged in attempting to quantify future revenue. He restated his position on the other representations. At the end of his evidence Mr Threader confirmed that he had never told PM or Churchills that Gallagher's definition of “lost clients” included clients who had given notice to terminate but were still paying and he did not know whether anybody else had.

[49]I was not favourably impressed by Mr Threader. His unprofessional communications with Mr Cordani and Mr Cartwright Forbes about PM were an indicator that he did not respect PM or Churchills’ business or staff. He was denigratory, rude and belittling of PM behind his back. His post exit handling of Churchills’ staff disclosed his true objectives, which were to remove PM, asset strip the clients and onboard them to other Gallagher offices and to make the Churchills’ staff redundant by moving the offices a long way from Nottingham. I consider that his Powerpoint in March 2023 was hypocritical and was shown by events to have been so. I consider that after Mr Burns left, the whole emphasis of Gallagher changed from weakly supporting and growing Churchills with its staff, to undermining PM and asset stripping. I found some of Mr Threader’s answers manipulative and others unacceptable. His assertion that no client who had given notice to Gallagher had ever been won back was unimpressive. Subject to the documentation, where PM’s evidence contradicts Mr Threader’s evidence, I will generally prefer PM’s evidence.

[50]David Cartwright Forbes. In his written evidence in chief Mr Cartwright Forbes stated he was divisional director of Gallagher's specialist markets team. He joined in August 2016. He worked under Mr Threader. He made frequent visits to the Barn after the acquisition. He asserted that PM frustrated his involvement. He stated there was a difference in culture between Gallagher and Churchills. He criticised PM for being an “old man” employing “young women” on his “country estate”. That indicated an underlying jealousy which ran through his evidence. He asserted that PM paid bonuses at his own discretion and that staff had to “stay on side”. He had lengthy disagreements about the completion accounts and PM's entertaining expenses. He asserted PM's entertaining was lavish and his charitable sponsorships of a race horse likewise. He asserted that obtaining information was persistently difficult. Churchills operated a system called Durrell and Gallagher had no access to the system. PM pushed back on management accounts, so Mr Cartwright Forbes instigated weekly phone calls with Ms Salmons. They discussed staff numbers, clients at risk, client losses and new clients. They spoke regularly. He dealt with PM's counterclaim. He asserted he had helped PM by helping with the renewal of the Splunk account. He stated he helped with Churchills’ staff by training them and a buddy system, visits and video messages. PM objected to one of his videos and PM did not want the office manager that Mr Cartwright Forbes had announced in a video shown to staff, rather than discussing with PM first. He relied on a bonus system called MTIP, introduced by Gallagher. He asserted that Gallagher had never agreed to increase Churchills’ staff by 5 around the time of the SPA. I reject that evidence because Mr Cartwright Forbes was not involved in those negotiations, Mr Burns was. Mr Cartwright Forbes asserted that Gallagher used a system called “Myhire” but PM wanted to hire direct. He put in his witness statement that Gallagher had hired 9 staff. At the start of his evidence he corrected that to only seven staff, because two were in error. What he did not do is show which had replaced staff who had left. He asserted that Gallagher did not have a global EB platform. He asserted that Gallagher's business strategy was delayed by squabbles with PM. He asserted Churchills got assistance from LOK on the Cloudflare bid and the GP medical EB renewal. He asserted PM had been invited to Las Vegas in 2023, but had refused to go. He asserted that PM had been invited to a Gallagher UK event called “Pursuit of Growth” but refused to go. He asserted PM was resistant to any new business strategy. He considered the business would benefit if PM exited and during the negotiations he organised access to Churchills’ clients, which he called a “hive up”. He accepted that no one at Gallagher ever spoke to GP before signing the DOV. He gave evidence about Gallagher discovering what he called wrongdoing from Debbie Ashby on 10.8.2023 who spoke to him and told him GP had given Notice. Gallagher arranged a Teams meeting on 16.8.2023 and he asked about the GP Notice. He asserted that the Churchills’ staff fell into a suspicious silence. Subsequently he was emailed by Debbie Ashby who asserted she would be hung, drawn and quartered for telling him about the GP Notice. Subsequently, she sent the e-mail chain from January 2023 between Churchills and GP, so he knew the full details of the Notice to terminate and its extension for 12 months on that day. On 17.8.2023 he spoke to Debbie Ashby who confirmed the account was lost, that Ms Glowa had taken a call at Christmas and had been told by GP they were serving notice. Notice was then given and staff were told not to share that information with Gallagher. The whole team were told that by PM. Debbie Ashby asserted she was “shocked” by this deliberate concealment. Mr Cartwright Forbes stated he would have expected Ms Salmons to inform him at the weekly meetings or the monthly meetings, but she never did. He relied on communications from Ms Salmons dated 3.1.2023; 3.2.2023; 1.3.2023, in particular after Mr Cordani had asked “It would be helpful to see the at risk list” to which Ms Salmons had answered “currently we don't have anyone at risk”. Later there was discussion about Splunk being at risk but no mention was made of GP. He complained that the spreadsheet of 12 lost clients dated 23.3.2023 did not include GP. There was further monthly reporting in June and July 2023 and Ms Salmons did not mention GP. He dealt with the warning given on 29.7.2022 by GP to Churchills by Denis Kelly that they were reviewing their options for brokers and accepted that he had assisted in the BUPA renewal quote that year. He accepted that there was huge urgency because Churchills were under attack from a new broker. LOK had assisted Churchills in that. LOK had been told in July 2022 that GP were looking to move. In his witness statement he dealt with a request by Churchills in March 2023 for help with the GP account renewals. Churchills told LOK on 28.2.2023 that GP were “at risk and the account was under attack”. But he knew of no specific risk, namely no Notice. He decided this information was noise and overblown language and the risks were vague. I do not accept his evidence about the at risk status of GP at that time. I find that he knew very well that the GP account was at risk of being lost.

[51]Mr Cartwright Forbes gave extensive evidence about the disciplinary proceedings that Gallagher brought against Ms Salmons for failing to tell Gallagher of the GP Notice. Ms Salmons apparently admitted to Gallagher that Ms Bacon, and Jo Holford knew of the Notice but that no other staff did. Ms Salmons apparently asserted that PM had told her not to tell Gallagher. Mr Cartwright Forbes and Ms Salmons disagreed over the definition of “lost clients” as described above. He required Ms Salmons to list GP as “lost” on 21.8.2023. In the same part of his witness statement he described how one of his priorities was to retain GP. I do struggle to understand how a client can be “lost”, sill paying, and also one which Gallagher seeks to retain. It seems to me that the Gallagher definition of “lost” is less apposite than the definition of “at risk”. In any event, he described various on-site meetings on the 23 and 24.8.2023 between Gallagher and staff, about which he made notes, which were the subject of considerable dispute by the Churchills’ staff who were present. In summary, his evidence was that, during these meetings he found out that PM had required Churchills’ staff not to inform Gallagher of the GP Notice. Mr Cartwright Forbes had individual meetings with various staff members and summarised those. The notes are disputed. Ms Salmons was disciplined by Adam Peel. Her defence to the charges was that she followed instructions from PM who had regretted selling to Gallagher and continually blocked the changes which Gallagher sought to introduce. Mr Peel concluded that Ms Salmons had deliberately withheld the GP Notice from Gallagher and that she was aware that it would result in a higher Earnout settlement for PM. Ms Salmons resigned and if she had not resigned Mr Cartwright Forbes stated that she would have been dismissed. She appealed and the appeal was dismissed. Mr Cartwright Forbes set out Gallagher's efforts to retain the GP account. He asserted that he “immediately took steps” to attempt to win it back. I was particularly unimpressed by his evidence on that as I shall describe below. Having been told on the 10-16th of August he did nothing for a month. His evidence was that on the 16.9.2023 he had a staff meeting at which an e-mail from Denis Kelly was discussed in which Mr Kelly had sought information from Churchills to understand the level of support they provided. I consider that that e-mail indicated that the GP account was not lost at that time. Ms Salmons informed Mr Cartwright Forbes that this was their chance to “save” the GP account. Mr Cartwright Forbes stated in his witness statement that he was in communication with Denis Kelly, but strangely made no note of any such conversation and provided no email record. After Ms Salmons resigned, Mr Cartwright Forbes states he took over the communications with GP. I think that would have been in November 2023, so 3 months had passed since Mr Cartwright Forbes had discovered the GP Notice and his witness statement sets out no real efforts to save the account. He asserts, vaguely, in his witness statement that “early on” he was told a new contract had been signed with Mercer. He says this made the prospect very limited. I found that evidence particularly unimpressive. He made no note of that communication. There was no e-mail confirming that. He did not tie the statement to any particular date. I find that he was intentionally vague about that. Mr Cartwright Forbes asserted that he focused on a longer transition for GP and eventually managed to extend the revenue from GP past the end of December 2023 into another three months in 2024. Mr Cartwright Forbes asserted that he did not know what more he could have done. He then blamed PM for failing to do enough between January and July 2023. I found that evidence unimpressive in view of the efforts which PM did in fact make in:(1) preparing a marketing document, hand in hand with LOK of Gallagher, and

(2) in providing a special project in relation to salary swap for pensions, which was presented after his exit but devised and worked upon before his exit. In his second witness statement, Mr Cartwright Forbes tried to answer the witness statements of each of the Defendant's staff one by one. I did not find his responses either credible or helpful. Remarkably, he criticised Ms Holford for some of her communications which included happy emojis and kisses. In the light of his own involvement in utterly unprofessional internal communications with Mr Cordani and Mr Threader involving threats to kill PM and photographs of guns and emojis of Aubergines (penis inference) his level hypocrisy was laid bare. Furthermore, his later actions and involvement in making Churchills’ staff redundant, having no plan to move the Churchills’ office to a permanent office near Nottingham, focusing on removing PM and asset stripping Churchills’ clients, spoke for themselves. In that second witness statement he accepted that his internal communications were unprofessional and inappropriate, but sought to explain them as a result of his frustration with PM. He asserted that those communications did not reflect how he behaved. I shall return to this when I go through the evidence of the Churchills’ staff. At the end of his second witness statement he gave evidence about PM's new company, “TeamChurchills” and the fact that that company is employing Ms Glowa and Ms Marshall and was operating in the same field in 2026. Also, he complained that one of Gallagher's old Churchills’ clients, Withalls, had moved to TeamChurchills in 2026. I found this less than helpful in view of the fact that the non-compete for PM ended in April 2025. When I raised this fact with Claimant’s counsel, no submission to the contrary was made.

[52]The cross examination of Mr Cartwright Forbes was effective in disclosing his underlying approach to PM. He admitted he had wrongly listed two members of staff as hired by Gallagher. He admitted he had no personal knowledge of the hirings. He blamed Gallagher HR. He accepted he was not involved in the SPA deal, although he had been present at some meetings. He was shown the wholly inappropriate communications between him, Mr Cordani and Mr Threader involving penis symbols and face in hands emojis and his evidence in response was also inappropriate. Putting aside the “male symbol” emoji which was not in the email and was artefact, at first, he suggested he could not see the symbols that he had put in his communications. When they were blown up for him, he sought to suggest that he did not know what they meant. He had used them. I found his evidence on that to be deceptive. Those communications were, objectively speaking, a window into his mind. He had utter contempt for Churchills’ chief executive officer. He was asked about Churchills’ request to him to help, in July 2022, to retain the GP account by assisting in their effort to renew medical benefits. He said that he did not recall. He was shown the correspondence from July 2022 that GP were reviewing their brokerage options in relation to EBs. He was shown documentation sent to him that GP had received a lower BUPA quote from a competitor. Mr Cartwright Forbes’s responses were generally that he did not recall conversations with PM about the risk of losing the GP account. Eventually LOK, a more junior Gallagher staff member, assisted Churchills with the renewal proposals, but Mr Cartwright Forbes denied being grudging about assisting Churchills. Mr Cartwright Forbes refused to accept that this was evidence that the GP account was at risk. He was shown correspondence dated 6.9.2022 in which PM informed him that PM had some juicy client leads and Mr Cartwright Forbes’s response in internal communications was in effect to call PM a “dick”. There was then questioning on the internal exchange of correspondence in relation to shotguns and Mr Cartwright Forbes accepted that he was rude and disrespectful about PM in his internal communications in January 2023. He admitted that the aubergine emoji was intended to convey that PM was a “dick”. When asked about PM's efforts in February 2023 to seek help from Gallagher to save clients who were at risk, in response to the assertion that these were serious concerns, Mr Cartwright Forbes asserted this was merely “typical behaviour” by PM and the relevant department only quoted for new business not retentions. Mr Cartwright Forbes complained that PM would go around him to others for help. When the Court asked him whether he had helped, Mr Cartwright Forbes’s response was that PM had to follow the proper process. It was put to him by counsel that he was ignoring the risk to the GP account and describing it as “noise”. Eventually, he accepted that it was concerning that GP might go to larger global brokers.

[53]Mr Cartwright Forbes was taken through the “Gallagher Way” principles. Signs setting those out had been put up in Churchills’ offices. These principles involved professional courtesy, professional support, high standards morally, ethically and of behaviour. Under sustained cross examination, he admitted that his standards had not been the highest but explained that he was not there to support every Churchills’ client. He complained that PM went to LOK directly, rather than through him. He rejected the assertion that he was starving Churchills of resources, instead asserting that was not the way it should be done. PM was “not following the process”. As to the definition of when a client is “lost”, Mr Cartwright Forbes accepted that there was no document to evidence the Gallagher definition of “lost client”. There was no contract, no e-mail, no letter and no agenda or meeting note setting out their definition. Yet he asserted that Ms Salmons was aware of Gallagher's definition from their meetings. He was taken to the disciplinary process records and had to accept that Mr Peel, who had run the disciplinary, did not set out any Gallagher document policy or definition of “lost client”. When asked about his weekly meetings with Ms Salmons, he admitted that there were no weekly meetings between end December 2022 and April 2023. He also admitted that he had made no minutes of the earlier meetings at all. This was in sharp distinction when compared with the disputed minutes he made of the meetings in August 2023.

[54]Mr Cartwright Forbes was taken through PM's list of complaints about Gallagher's alleged failures to support Churchills’ business in the Counterclaim. He accepted there was a need to recruit more staff. However, he qualified this need by stating that Churchills needed to establish the “business case” for recruitment based on need. I compare this with Mr Cartwright Forbes’s knowledge that Churchills were well on the way to increasing their revenue by 40% in year 1. That was the obvious business case but he would not see it. He admitted that Gallagher's staff recruitment processes did not kick in until the end of year 1 under the SPA, in any event. He admitted he was not aware of that. Counsel put to him that Gallagher had no right whatsoever to interfere with Churchills’ hiring priorities. The Court then asked him to explain and Mr Cartwright Forbes explained that he wished Churchills to follow the Gallagher hiring process, which was different from their hiring process, but he refused to accept that he was trying to excuse himself for refusing to support the hiring of more staff. I find as a fact that Mr Cartwright Forbes was being intentionally bureaucratic to frustrate PM over recruitment. He was shown Mr Threader's report to the US board at the end of April 2023 which recorded that Churchills’ staff were “incredibly stressed”. He agreed with that. He agreed that only one member of staff had been recruited between April and July 2023. This was despite the fact that Churchills’ staff were incredibly stressed. It was put to Mr Cartwright Forbes that Gallagher had not provided a Global EB Platform and, for the first time in his evidence, he mentioned the global Tech platform “A2B”, which he said Gallagher had. He asserted that this was obliquely referred to in his witness statement at paragraphs 58. As for staff resources, he denied the assertion by Jo Holford that he was arrogant, belittling and bullying, however he accepted that Churchills’ staff became demoralised because they were working hard and had insufficient resources. He denied belittling Ms Clay. He did not recall saying to Ms Allwood that she could not have access to the wider system for a range of renewals.

[55]Mr Cartwright Forbes accepted that Gallagher did not have a system which informed staff month by month whether they were reaching their targets and that this could demoralise them because they would not know what bonus they might achieve. As for the complaint made by PM about the lack of a business strategy and a social media plan, he accepted that nothing was done by Gallagher between April and July 2023. He could not recall whether they provided any marketing support or had any business strategy. In relation to the failure to introduce Churchills to Silicon Valley start-ups, he accepted that no such introduction was made between April and July 2023. He accepted not a single new business lead had been provided by Gallagher to Churchills since April 2023. I find that there was no business strategy and nothing was done. He was taken to each of the Churchills’ staff witness statements and the disputes about his notes of the various meetings. Many of them disputed the assertion that the whole team knew of the GP Notice and disputed other parts of the notes of his meetings. These staff were Ms Glowa, Ms Marshall, Ms Capewell and others. As for his efforts to retain GP, he accepted that Denis Kelly was very happy with the work done on the salary sacrifice scheme for GP. He denied that he ignored Ms Bacon's requests for access to the Gallagher toolkit for that scheme. He could not recall the detail, when questioned on his conversations with Denis Kelly, about when GP had signed up with Mercer. He made no note of those conversations. He did not know why he did not make notes of those crucial business conversations. When questioned on Ms Salmon’s communication dated 6.9.2023, stating that Churchills had the chance to save the GP account, he could provide no evidence that he did anything in response. I was particularly unimpressed by this part of his evidence. It seems to me that, at this stage, Mr Cartwright Forbes had decided Gallagher should sue PM and he would not bother with trying to keep GP as a client, long term. The Court asked him whether he would have written the responses which he did to the 6.9.2023 e-mail from Ms Salmons if he had already been told that GP had signed up with Mercer. His response was “possibly not”. He accepted that, although he discussed going to Ireland to have face to face discussions with Denis Kelly of GP, he did not actually make the offer to do so for another two months. He denied that he had left it too late to recover the GP account, but he could not explain why he did not go and see Denis Kelly in August, September, October or November 2023. He accepted that he did not ride on the back of the success of the salary sacrifice presentation to press home a longer extension of the GP retainer. I did not find his evidence about retaining GP at all convincing.

[56]In relation to the time he spent, which he claimed as a loss, he accepted he had no details of any meetings with GP to record that time. In relation to TeamChurchills, he accepted that Gallagher were making no claim for breach of a restrictive covenant and I note that Gallagher did not require Mr Whithall, to be cross examined and therefore Mr Cartwright Forbes’s evidence about PM enticing clients over is not relevant. In any event, as will be seen below, Mr Whithall denies that.

[57]In re-examination Mr Cartwright Forbes explained that the tech platform “A2B” was a high-level employee benefits technology platform. I was left wondering why that was never offered to PM, as was PM who gave evidence that he had never been offered it.

[58]I did not find Mr Cartwright Forbes to be a credible witness doing his best to assist the court by telling the truth from the documents and his recollection. His wholly inappropriate internal communications, denigrating and belittling PM, were a window into his personality and business practises. It is clear to me that, when he took over the day-to-day running of Churchills, he was far more interested in frustrating PM and later in bringing a claim against PM, than in improving or growing the business revenue or helping the staff, hiring more staff, gaining new clients or retaining “at risk” clients. He provided no evidence to show that he made any effort at all to gain new clients. With the chief client gainer: PM gone, Mr Cartwright Forbes needed to step into the role or recruit another marketeer to do so. He wholly failed to do so. He demotivated Churchills’ staff by his wide-ranging allegations of involvement in fraud and concealment. Gallagher put Ms Salmons through disciplinary proceedings which led her to resign and then to suffer mental health problems. Within 11 months, Mr Cartwright Forbes had moved the offices and staff, firstly to work from home, secondly to Nottingham, thirdly to Newark, fourthly to Birmingham and eventually to Woking/Bristol and had made all of Churchills’ staff redundant. It did not bother him that 2 years earlier in April 2022, Gallagher had promised to support those staff and lectured them on the ethics of the Gallaher Way. I asked Claimant’s counsel, at the end of the hearing, whether there was any document in the voluminous bundles showing Gallagher's plan for the offices after PM’s exit. Counsel very professionally pointed me to a document dated the week before the signing of the DOV, in which Gallagher first thought about looking for serviced offices in the area. This was another window into Gallagher's and Mr Cartwright Forbes’s thinking. They had no long-term, supportive plan. Together with the whole of the evidence, I have come to the conclusion, on the balance of probabilities, that once Mr Burns had left, Mr Cartwright Forbes’s, Mr Threader’s and Gallagher's plan was to frustrate PM, dispose of PM and all of the Churchills’ staff and asset strip the clients. They were just looking for the appropriate way to do so. Having reached a good agreement to pay PM off and get him out, they found a reason to sue in the Notice to terminate, which had been concealed from them, and from then on they proceeded as they always intended to proceed. They made no efforts to gain new clients for Churchills, they mucked around with frequent office moves for 11 months, they made little effort to retain GP and then they made all the staff redundant. I take into account that no disclosure was provided of USA head office documents about plans for Churchills.

[59]David Cordani. In his evidence in chief Mr Cordani stated he was the Claimant’s finance director. He had worked for them for 8.5 years. He was not involved in the SPA. His focus was on revenue. He asserted that the focus in the SPA for the Earnout on revenue rather than profit led to a lack of alignment between the Claimant and Churchills. I do not understand why that should have been the case. Both should have wanted revenue to increase and should have been aligned to that extent. Net profits from Churchills were high, as a percentage of revenue. If Gallagher planned to reduce expenses and revenue increased, the net profit basis would have been even worse for Gallagher in relation to Earnout. Mr Cordani complained that Churchills could not be brought into the Gallagher Way. PM was opposed to moving Churchills’ brand. Stopping there, the SPA specifically provided that brand move would not occur until year 2. Therefore, there was nothing in that complaint. Mr Cordani stated that PM was difficult to work with. Mr Cordani concentrated on PM's expenses and staff recruitment. He set out his concerns over difficulties with both. He often informed PM that Gallagher would not pay for his personal expenses, including swimming pool insurance, classic car insurance, Ferrari Owners Club membership and the Help for Heroes charity. That was fair enough. He required PM to put all his business expenses via their system in March 2023 and that he would need approval for any expense over £100. That may not have been fair enough. Mr Cordani did not appear to have any insight into how a chief executive officer, who had run his business for 38 years, might find that demeaning. Mr Cordani set out his complaints about settling the completion accounts arising from the SPA, asserting PM was uncooperative and hostile. Mr Cordani complained about PM’s and Churchills’ marketing methods and costs. PM spent large sums on events which “did not appear to have discernible business benefit”. As examples, he cited Ascot and asserted that PM invited old friends who he used to do business with. Interestingly Mr Cordani did not set out any analysis of the interlocutors from whom PM obtained his business leads. He did not name names. He did no analysis of the routes to clients achieved by PM over the years before the SPA or the year after. He just complained about PM’s methods. I note here that Mr Cordani did not profess any expertise in marketing. Mr Cordani also complained about Churchills’ sponsorship of the local rugby club, and ownership of a horse and suggested that these had no material benefit to the business. However, in the same sentence Mr Cordani stated that Gallagher sponsored Premiership Rugby, implying that this did have business benefits and was worth doing. This contradiction did not appear to worry Mr Cordani. In June 2022 PM sought a marketing budget of £150,000 and stated that he needed to walk the walk to gain clients. Gallagher proposed £50,000 of entertainment, £62,000 for sponsorship and £50,000 for charities.

[60]As to financial reporting, Mr Cordani asserted the Churchills’ system gave no access to Gallagher. They were reliant on information from Ms Salmons for profit and revenue data. She sent monthly reports with management information and forecasts and details of wins and losses. Mr Cordani asked for details of losses, for instance on 2.2.2023. Mr Cordani complained that Churchills never informed Gallagher that GP had given Notice in January 2023. He had asked for a list of “at risk” clients and Ms Salmons had responded “we don't currently have any at risk”. I accept that Ms Salmons’ response was inaccurate. She should have disclosed the GP Notice. I find that PM bears responsibility for that. Mr Cordani asked specifically about Splunk, who he thought was at risk. On 23.3.2023 Ms Salmons sent him a list of “lost” clients but did not include GP. On 3.4.2023 and 1.6.2023 when Gallagher, through Mr Kelly, asked for a forecast for the next year, Ms Salmons wrote “give me pointers, I lean towards keeping it similar to the previous year. We don't know what new business we'll get or if we could lose an account”. He highlighted the different interpretation he and Ms Salmons had on “lost clients”. As to the warnings given to Gallagher by Churchills, about GP being “at risk”, he did not consider that the Powerpoint presentation dated 13.1.2023, stating that the top five clients were at risk, indicated that GP were at risk because it was in the context of the forthcoming name change. He dismissed the relevance of the warning that there could be a 25% loss of revenue.

[61]On the settlement agreement, Mr Cordani gave support calculations. He asserted he was reliant on data from Ms Salmons. He was asked to calculate the Earnout on the basis that revenue in year 2 and year 3 would be the same as year one. Mr Threader asked this of him. He adjusted the year 1 figure in various ways, some clients had paid for 13 months and the general insurance book had been transferred. He complained that Ms Salmons had sent an e-mail dated 2.5.2023, listing GP in “current clients”. Mr Threader had asked PM to fill in a table for year 2, but PM had refused to do so and had asserted that all other activities were “BAU”. Mr Cordani told the USA decision makers that he expected the performance to be stronger than projected. He stated that, in year 1, the revenue was 30% up and the margins were 58%. They corresponded on a potential clawback clause but, as they were working on cautious figures, they considered the risk of reduced revenue was low and that the business was growing. They considered they could make potential savings and could “hive up” clients. He was not involved in the direct negotiations but, despite that obvious disadvantage, asserted there was no horse trading.

[62]Mr Cordani then turned to the discovery that GP had given Notice. Ms Salmons had informed him on 18.8.2023 that GP had given Notice to terminate earlier in the year. He spent considerable time analysing matters after that. He asserted that Gallagher would have had a better chance of retaining GP had they been told in January 2023. He had no expertise to say that. That was well outside his field of responsibility.

[63]As for the loss calculation arising from the alleged breaches, Mr Cordani gave the financial evidence. He asserted that the settlement offer from Gallagher would have been lower. He would have reduced the revenue figure for year 2, due to the loss of revenue from GP, down to £3,039,484 (GP had paid throughout all of the 12 months). This would have produced an Earnout of £1.375 million, which would then have been reduced for accelerated receipt. For year 3 he would have reduced the revenue figure to £2,698,705, which would have produced a total earn out of £52,681. That would have needed to be reduced for accelerated receipt and therefore the total offer to PM to settle the Earnout would have been £1,798,215. Therefore, Mr Cordani asserted that Gallagher had overpaid by £1,851,784.

[64]I found Mr Cordani to have been a willing and enthusiastic member of a trio of senior Gallagher employees involved in a clear effort to undermine PM, Churchills’ staff and the Earnout, with a view to getting rid of PM, moving the office away from Nottingham and making the staff redundant. That was, of course wholly, within Gallagher’s power, they owned the shares. It also matched the pre-SPA plan in the disclosure documents, but they wished to accelerate the plan and remove PM earlier and get to the clients direct. Mr Cordani made no mention of Gallagher’s internal pre-SPA plan in his evidence.

[65]It makes chronological sense to set out here the Gallagher internal, pre-SPA plan for Churchills. It was in my bundle 5 tab 22 and was undated. “8.3 What are the reasons for the transaction? Please include:  A thorough explanation on how the proposed acquisition fits into the proposed controllers’ overall strategy.  Details for the short, medium and long-term and differentiate between them The Target represents an opportunity for GBS to acquire a high quality employee benefits business with a high quality reputation in the niche in which it operations (technology). Its operations and culture are very similar to our successful acquisition Orb Financial Services in 2016. Gallagher and GBS’s strategy is built on four pillars: 1. To grow organically 2. To improve the business through operating more efficiently 3. To maintain our culture 4. To grow through a targeted M&A programme The acquisition of the Target meets pillar four and with is accretive margins and strong client and introducer relationships we believe the Target will contribute to the 1st and 2nd pillars of our strategy. From the date of the acquisition and continuing long-term we believe the entrepreneurial culture of the target will add to and maintain our unique culture. Refer to the following sections our integration plans and strategy for the Target. 9.1 Will the proposed controller become a parent undertaking (or a parent of a parent) of the target firm(s)? (See the Handbook Glossary or section 420 of FSMA for definition of ‘parent undertaking’.) Yes: Please provide a business plan containing as a minimum:  Strategic developmental plan;  Due diligence report/board pack highlighting the risks identified and how you propose to mitigate them  Forecasted financial statements for the target firm(s) (solo and consolidated if applicable) for three years; and  Information about the impact of the acquisition on the target firm(s) including but not limited to its: a) Capital adequacy forecast b) Governance (including Board membership/composition, committee structure) c) Integration plans including but not limited to IT, group policies, staff integration, outsourcing arrangements d) Systems and Controls e) Data Security/financial crime Strategic Development Plan We intend to maintain the Targets existing service offering and strategy while generating synergies through: 1. Offering existing clients a global rather than solely UK solution through use of Gallagher’s global footprint, which is particularly relevant for the large clients; 2. Offering existing clients the range of services current provided by GBS including communications, reward consulting and broader employee consulting arrangements; and 3. Marketing our enhanced service offering to new technology clients. Due Diligence Due diligence is ongoing up to finial signing of the SPA, at this stage no red flags have been reported with due diligence being led by: Legal External counsel Commercial Nick Burns (CEO), Steve Threader (MD, Reward and Benefit Consulting), David Cartright Forbes (Regional Director) Finance Andrew Maxwell (CFO) Tax Sandy Smith (Tax Director) HR Victoria Brice (People & Culture Director) Operations Melissa McCalla (Head of Operations) Compliance and Regulatory Gillian Hood (Risk & Governance Director), Jonathan Rice (Head of Compliance), Michelle Longworth (Data Protection Officer) IT Jagdeep Dosanjh (IT Business Partner) Financials Refer to below for our adjustments to pro forma: Pro Forma Bridge £’000 Revenue FY20 2,309 Pro forma 2,309 Compensation 489 Adj 133 a Pro forma622 Operating Expenses 781 Adj (566) b Pro forma 215 EBITDA before HO 1,039 Adj 433 Pro forma 1,473 Margin 45% 64%a. Key adjustments include market rate MD salary and salary uplifts for existing staff

b. Key adjustments include saving on rent and rates (utilise existing GBS office space), insurance (utilise existing Gallagher contracts as minimal incremental increase), removal donations/sponsorship/membership And our forecast for the following 3 years 5 Year Forecast £’000 Revenue Pro Forma FY22 FY23 FY24 Revenue 2,309 2,450 2,599 2,664 Growth 6.1% 6.1% 2.5% EBITDA before HO 1,473 1,572 1,676 1,722 Growth 6.7% 6.7% 2.7% Impact of acquisition Board composition: Immediately post acquisition we would remove Terence Towers (who is due to retire) and appoint to the board existing Gallagher FCA authorised management: Nick Burns (CEO) and Steve Threader (MD, Reward and Benefit Consulting). Staff: Staff will move from the current locations to agile working at existing GBS premises. The business will become part of our Specialist Markets practice within Benefits Consulting.. Policies, Procedures and Operations: Immediately post acquisition we will start the implementation of our integration plan. This will include moving to standard GBS / Gallagher operating models with oversight by existing Gallagher / GBS management. Insurances: Post acquisition transactions will be covered by Gallagher existing insurances, tail cover policies will be purchased to cover pre acquisition events for E&O (3 years), D&O (6 years) and Cyber (3 years). IT Systems: We would continue with the current IT systems for 12 months post acquisition and thereafter hive-up to our standard Gallagher solutions being Advisor Office (Client Servicing) and JDE (General Ledger). Other services such as payroll, accounts payable, expense and bank account management will also operate on our standard Gallagher IT systems. 9.3 Will control be actively exercised by any of the controllers and if so, what is the rationale for this? Please explain in full below. If the proposed controller will a passive investor only, please also explain in full below We will look to make suitable appointments to the Board of directors of the Company and its subsidiaries to ensure appropriate and consistent governance and controls exist both within the group and across its UK regulated entities. It is envisaged that the following individuals will be appointed at completion (subject to regulatory approval and both currently FCA approved persons): Nick Burns and Steve Threader. 9.5 What influence do the controller(s) propose to exercise on the target firm(s)’ financial position, strategic development and allocation of resources? Gallagher Benefit Services Management Company Limited will be the sole shareholder of the target firm following completion and will have 100% control over the target firm’s financial position, strategic development and allocation of resources. The allocation of resources and strategic direction will be overseen by the board of the target firm via the appointments outlined above. The overall strategy will form part of GBS UK business plan, and oversight of the implementation of this strategy will be given by GBS UK Executive Team as well as the Global GBS Executive team 9.6 Please describe intentions and expectations toward the target firm(s) in the medium-term, covering elements such as rationale, financial goals, synergies, reallocation of resources, integration etc We intend to maintain the Company’s existing service offering and strategy whilst integrating operations into our business and aligning operations processes and procedures. From a financial perspective, we will aim for sustainable revenue growth, whilst maintaining client service and profit margins. We intend to promote revenue growth through offering Churchill customers our wider product offerings and ability to use the additional jurisdictions that the wider Gallagher group operates in. Immediately post acquisition we would look to start the implementation of our integration plan. Staff will be relocated to agile working from the existing GBS property portfolio. We will bring inhouse outsourced services such as finance and payroll by transferring these to Gallagher central resources. The Company will continue to operate as a standalone legal entity on its existing systems for a period of approximately 1 year when we migrate the business to Gallagher Risk and Rewards Limited and our Advisor Office platform We do not expect existing clients, providers or other stakeholders to experience any adverse consequences from the change of control. All clients will continue to be serviced by the target firm in a consistent manner with past practice, a Integration of the Target Firm into GBS’s compliance (i.e. second line of defence), conduct, risk management and professional standards regimes will provide greater security to clients, as will the enhanced financial covenant of our group. We confirm that appropriate undertakings and professional indemnity/E&O/D&O insurance policies will be in place to ensure protection for the existing clients.” Nothing was said about this internal document in any Claimant’s witness statements. There is no evidence that it was given to PM. However, close analysis shows firstly, that the answers to para. 9.1 generally matched the assurances which PM asserts Mr Burns gave to him. Secondly, Gallagher expected PM to grow the business revenue only 6.7% in years 1 and 2, whilst he was in charge and, when Gallagher took over, the plan was:

“Key adjustments include saving on rent and rates (utilise existing GBS office space), insurance (utilise existing Gallagher contracts as minimal incremental increase), removal donations/sponsorship/membership”

. I do not know whether (utilise existing GBS office space) meant the new offices would be in or near the Nottingham area, or far way. No mention is made of making all the staff redundant. Please include:  A thorough explanation on how the proposed acquisition fits into the proposed controllers’  Details for the short, medium and long-term and differentiate between them Gallagher and GBS’s strategy is built on four pillars: Yes: Please provide a business plan containing as a minimum: We intend to maintain the Targets existing service offering and strategy while generating synergies through: Due Diligence Legal External counsel Finance Andrew Maxwell (CFO) Tax Sandy Smith (Tax Director) HR Victoria Brice (People & Culture Director) IT Jagdeep Dosanjh (IT Business Partner) Financials Refer to below for our adjustments to pro forma: Pro Forma Bridge £’000 Revenue FY20 2,309 Pro forma 2,309 Compensation 489 Adj 133 a Pro forma622 Operating Expenses 781 Adj (566) b Pro forma 215 EBITDA before HO 1,039 Adj 433 Pro forma 1,473 Margin 45% 64% And our forecast for the following 3 years Revenue Pro Forma FY22 FY23 FY24 Revenue 2,309 2,450 2,599 2,664 Growth 6.1% 6.1% 2.5% 1,473 1,572 1,676 1,722

Impact of acquisition

[66]Peter Meagher. (PM) lives in Edingley, Nottinghamshire. He and his wife sold Churchills to Gallagher on 7.4.2022 and signed an SPA with an Earnout. He became an employee of Gallagher for two years at the same time. 15 months later he reached the settlement agreement for the employment contract and signed the DOV and Settlement Agreement on the same day, for himself and his wife, to pay off the Earnout up front. It was a clean break from Gallagher. He set out his lifetime of honourable business and his unblemished record. He and his wife are shocked, dismayed and distressed by the fraud claims brought against them. His wife suffered a stroke a few days after the claims were made in December 2023. He denies the claims.

[67]PM set out the history of Churchills starting in 1974. It did so well that by 2014 Gallagher was making attempts to buy it. Churchills focused on international Tech clients which were growing exponentially by 2020, with international offices worldwide. Churchills needed to provide worldwide services. They were impressed by the “Gallagher Way” and the list of values. Gallagher asserted that it was the World's Most Ethical of companies and had well-being policies for staff and clients. Mr Burns, the CEO of Gallagher, repeatedly stated these values were the cornerstone of the business. Negotiations took place primarily with Mr Burns. Mr Burns repeatedly promised that Gallagher would provide support to Churchills, welfare to their staff and that PM could rely on him to implement his promises, because he was committed to being CEO of Gallagher for the next three years and would then be chairman. The essence of the promises made by Mr Burns were that Churchills would become a fully fledged, integrated member of the group with its needs satisfied, well-resourced and its staff cared for. Gallagher would provide a Global operating Platform to clients with state-of-the-art technology and would provide new business leads from the San Francisco office, utilising Gallagher's financial muscle to achieve a dominant market position for US tech start-ups. There would also be additional staff recruitment to build the Churchills team and avoid staff being overworked. This was Gallagher's programme for Churchills. In 2021 PM set out Churchills specific need for a Global Platform and sent them the advertising video of a competitor, Alliant to senior staff who all received it. It would supply clients with a single sign on and then access to EBs for all of their employees and it would likewise provide the same for each employee, dealing with benefits, payroll, accounting and HR entries. PM had discussions with four named big companies who were willing to engage once Churchills had been integrated into the Gallagher group. The “Global Platform” was the key. PM believed that, through his contacts, he would have received gross revenue in the region of £3.5 million by the end of the first year had this been provided. PM set out his method of attracting the four big companies which involved: attending the Bentley Motor Cars Owners Club dinner on the Royal Yacht Britannia, planned lunches at “the Ned” in London and discussions with TikTok at Silverstone Grand Prix on the invitation of Ferrari in July 2023. Some of this was discussed with Mr Burns initially. Mr Burns assured PM that they would have a lot of fun growing the Churchills’ business in the Tech sector and together would conquer the Silicon Valley EB provision market. PM set out the documents he sent to Gallagher in December 2021 evidencing that vision. Due diligence took place before the SPA was signed. Churchills recorded the won and lost clients in disclosed documents. Lost clients were only those who had ceased to pay. Churchills warned Gallagher that they tended to lose clients when the clients became too big, because such clients went to global EB brokers. The night before the signing of the SPA, Mr Burns and PM discussed the future and Mr Burns reassured PM that Gallagher would provide the Global Platform so that their offering would no longer be restricted to the UK. At 06.01 hours on 7.4. 2022, PM set out the key points from the conversation with Mr Burns in an e-mail to Gallagher. After signing that day, Mr Burns and PM and others held a meeting at Churchills’ offices to notify the staff. Mr Cartwright Forbes and Mr Threader were present. A Powerpoint presentation was provided. Gallagher reassured staff that they would be fully resourced, there would be no redundancies and they would be taken care of. The 25 tenets of the “Gallagher Way” were explained. There was a particular emphasis on staff well-being to show they would be well cared for after the acquisition.

[68]PM then described how between April and December 2022, despite frequent requests for additional staff and complaints about under resourcing, Gallagher failed to provide the promised 3 new staff. They should have been: an account manager, a junior consultant and a consultant. No marketing was provided and no provision was made for an updated website (he was wrong on the last point). PM became more and more frustrated and the staff became demoralised. Some handed in notice of resignation. Mr Threader, instead of supporting PM's efforts to retain one particular member of staff, offered her a job in a different Gallagher office. PM provided warnings of collapse, overwork and the need for further support, through the summer of 2022. But none was provided. A meeting was arranged at Luton Hoo hotel in July 2022 when PM outlined his complaints and frustrations. Mr Burns, Mr Threader and Mr Cordani attended. PM asserts that Gallagher realised things had not gone as they had promised and that they promised they would deliver. After the event Mr Burns congratulated him for his business performance and promised to catch up on growth plans.

[69]PM corresponded with Mr Threader about client opportunities obtained from the San Francisco office. What PM did not know, at the time, but found out through disclosure, is that in July 2022 Mr Cordani and Mr Threader were already communicating in a belittling and disrespectful way about PM using words like “what the fuck is wrong with him” and “cut this bollocks” and “Shut the fuck up” and “you utter cunt” behind his back.

[70]PM described his concerns about announcing they were part of Gallagher during year 1 and the bickering about the completion statement. He had lots of correspondence with Mr Cordani about his expenses. PM explained to Mr Threader in September 2022 that although Gallagher had focused on growing the business before the SPA, afterwards they had focused on squabbling over trivial costs. PM used graphic language like “withering on the vine”. In November, PM was dismayed when Mr Burns resigned. Mr Threader became his main contact with Gallagher. He asked Mr Threader for additional staff and new business initiatives. A meeting was arranged at the French Horn hotel on 15.12.2022, to discuss working together going forwards. PM asserted that, at that meeting, many matters were discussed including him informing Mr Threader that the GP account was at risk. He summarised the meeting in an e-mail the next day and Mr Threader agreed with his points that they needed to put the corporate politics behind them and work together to achieve the goals the team were capable of producing, namely revenue growth. PM set out the history of the retainer with GP. It started in 2016 as a start up with 3 staff and over the years had grown to 700 employees. It was one of Churchills’ top five clients. It was a material client named in the SPA. Gallagher knew it needed to provide a Global Platform because it was going global. Gallagher knew GP was at risk and that Denis Kelly was the primary contact and had previously worked for Mercer and was leaning towards going to them for their brokerage. In 2022 Denis Kelly had authorised Mercer to access their employee information to obtain a quote from BUPA. That renewal created a big flurry of activity between Churchills and Gallagher to match or understand the competing quote. Gallagher were well aware that Mercer were trying to take over. On 28.7.2022 Louise Salmons had sent an e-mail from Denis Kelly in which GP stated they were reviewing their options about benefits brokers in the UK and PM discussed this with Mr Cartwright Forbes, therefore he was well aware that Mercer were putting the retainer at risk. Ms Salmons emailed Mr Cartwright Forbes the next day. However, Mr Cartwright Forbes offered no help, so they went directly to LOK, who did help. From that date onwards, PM stated that Mr Cartwright Forbes could not have been unaware that GP were at risk. In response to a request from Mr Burns in September 2022, PM had stated that “all of the top five clients were at risk from global brokers”. On 13.10.2022 Ms Salmons informed Mr Threader, who had asked for clarity on the situation with GP, that the renewal was tortuous and the loss of GP was in the process but they had managed to overturn termination by producing something fairly spectacular to compete with Mercer's BUPA offer. On 21.10.2022 Ms Salmons received notification that GP had issued a letter of authority to Mercer for access to their EB records as part of their ongoing brokerage review. PM asserted both Mr Threader and Mr Cartwright Forbes knew very well, by the end of 2022, that Mercer were trying to take the GP account from Churchills and on 20.12.2022 he wrote to Mr Threader stating he did not wish to give GP any reason to complain with “Denis the Menace on the prowl”. He stated that they had discussed GP being at risk at the French Horn only five days before.

[71]PM referred to the Notice served by GP and the correspondence between Churchills and GP in January 2023. He sent the purported notice to his lawyers and took advice. Churchills responded to GP's notice on 3.1.2023 suggesting GP should hand over to Mercer in 2024, because the notice period was 12 months and GP had only provided 2 months. PM asserted that he considered GP had not given valid notice. Therefore, when Jo Holford was gossiping about GP “leaving” he reprimanded her and reassured her that her bonus would not be affected, she being the account manager. He then instructed Ms Salmons to stop office gossip about the GP contract being “lost”. Meanwhile, on 11.1.2023 PM provided a Powerpoint presentation to Gallagher at Churchills’ offices. Mr Threader and Mr Cartwright Forbes were there. He described it as a damning report about their failure to support Churchills through lack of funding and staffing and failure to provide a Global Platform. He described to them that Churchills’ top five clients were “at risk” from global brokers and there was a potential 25% loss of revenue. He needed five new staff. The response, a few days later from Mr Threader, was that it was a very good session and that Gallagher would continue to make big strides and how they could work well together in future. In fact, two days before that presentation, Mr Threader, Mr Cordani and Mr Cartwright Forbes had been taking part in an unprofessional exchange of messages including reference to hazmat suits because they would be meeting with PM, using a shotgun jokingly to kill him, describing themselves as allergic to PM and buying ammunition to shoot him.

[72]Whilst senior Gallagher staff were belittling and demeaning about PM behind his back, PM was working on retaining GP for longer, despite the short Notice. He informed GP that if they did terminate in two months the severance due under the retainer was £386,166. By 20.1.2023 PM had persuaded GP to continue using them as their broker under the retainer until 31.12.2023, with Mercer taking over in 2024. Ms Salmons confirmed this by e-mail to Denis Kelly stating:

“there is nothing further that we require from you, as of course your notice of termination was given at the correct time to end the contract on 31st December, so we are all good with that”

. PM then advised his account manager to make herself totally embedded so that there would be nowhere else for GP to go. On 21.1.2023 PM communicated with Mr Threader and Mr Cartwright Forbes obliquely referring to £500,000 in revenue that could walk if they did not retain the intensity of their services negotiating key contracts. He was seeking more staff. PM asserts that Gallagher knew that the only client producing revenue that high was GP. On the same day he instructed Ms Salmons not to tell Gallagher that Churchills had retained GP for the moment. She replied saying that Gallagher did not know Churchills had nearly lost the account.

[73]The phrase “BAU” or business as usual was used in correspondence from time to time both by Gallagher and PM and PM asserted that it was used to mean he was running the business with all its inherent wins and losses. He communicated with a consultant on 17.1.2023 that his own contract was to April 2024 with a potential option to extend to 2025. To Mr Threader that month PM communicated that he was exhausted, under resourced, lacking the Global Platform and that his focus was all about growth.

[74]As the anniversary of the takeover approached, communication between PM and Mr Threader continued with a view to a review meeting. In a key e-mail, dated 11.3.2023, PM set out the “four pillars” which he had discussed with Mr Burns around the time of the takeover. Those were: 1, identify and prospect all new Tech startups; 2, build relationships within the VC community; 3, work with Gallagher's San Francisco office to become the go-to supplier of EB in the UK for Tech; 4, build out a Global Platform to complete with Alliant, Mercer etc. He complained that Gallagher had not performed on those 4 pillars. They had failed to supply more staff, which prohibited Churchills from achieving their year 2 and year 3 targets. He asserted there had been a complete breach of trust and they needed to review. He suggested they should start again and he warned, in early March, of a big BUPA renewal for one of their biggest clients who Mercer were looking over the fence at. He sought assistance from the Gallagher team. LOK responded pushing back but PM explained the account warranted special attention because it brought in £500,000 per annum in fees and the big boys were showing an unhealthy interest in the client. The client had been with them from 2016 and now employed over 700 staff. LOK responded that Churchills should consider him at their service in the light of that information. PM then named GP as the “client at risk”. In the light of that clearly recorded evidence in the documentation and the previous statements to Mr Threader and Mr Cartwright Forbes, I find as a fact that Gallagher well knew that Churchills considered GP to be “at risk” because Mercer were seeking to replace them. LOK then worked with Churchills to produce a brilliant set of corporate videos introducing all of Churchills’ staff to GP and the detailed work which they did for GP, which they believed Mercer could not duplicate. On 15.3.2023 Mr Threader produced a presentation to PM on the way forward. So, by the date of the anniversary of the SPA, PM asserted he had made it clear to Gallagher that they had failed to implement the Gallagher programme for Churchills. He asserted he was still in it for the long haul and doing everything within his power to repair the carnage of year 1, caused by Gallagher's lack of support and delays.

[75]A key meeting took place on 14.4.2023 at the George Inn, Stamford, between PM and Mr Threader. PM offered to stay on an additional year, until the end of year 3, despite his frustrations. Mr Threader was not enthusiastic about that, so PM responded that his position would be untenable without the promised resourcing and later in the discussion Mr Threader asked PM whether he would go early. PM stated he would, if a sensible severance package could be agreed. Mr Threader stated that early exit was his preferred option and suggested the severance could be calculated by reference to the revenue in year 1, which was the only certain revenue at that time. After the claim started, PM was sent Mr Threader's internal note after the meeting which set out Option 1: early exit at £3.159 million pa, Option 2: PM staying on for two years with hiving up delayed by a year and Option 3: PM staying on for three years with hiving up delayed for three years. PM accepted that summary although he did not see it at the time.

[76]Thereafter, the parties were in negotiations and PM offered to settle for a lump sum based on year 1 revenue of £3.2 million, resulting in a settlement of £4.25 million. Mr Threader responded agreeing that the offer gave them a base to move forward and asked PM to ask his accountant to share his figures. PM asked Mr Threader for the exact revenue figure, which he supplied and it was £3.153 million. Then PM agreed his accountant would do the Earnout calculation and Mr Threader stated Mr Cordani would crunch the numbers and they would be put to the US decision makers. On 17.4.2023 PM sent Mr Threader an e-mail as part of the severance negotiations, offering to exit for a lump sum of £4.108 million, based on figures prepared by Mr Oates the accountant, and restating that revenue had grown by 40% in year 1. Mr Threader communicated with US seniors that Churchills had achieved 40% growth, which he described as almost four times Gallagher's baseline growth and suggesting integration could therefore take place earlier than anticipated. PM clearly had his own internal concerns about the lack of support and continuing, rather than exiting, but on 2.5.2023 he further negotiated by reminding Gallagher that they would be saving more than £1 million. Gallagher started the “hive up”, whereby Gallagher staff were introduced by Churchills’ staff to Churchills’ clients. PM and Mr Threader negotiated over various adjustments to the year 1 revenue, Gallagher seeking to reduce it and PM seeking to maintain it, with various pieces of evidence. On 31.5.2023, Mr Threader sent a spreadsheet to PM asking him to fill in a column for year 2 revenue and negotiating down the year 1 revenue, due to some clients having paid for 13 months. Mr Threader balanced the new clients with the lost clients over the year, realising the former revenue was greater than the latter. He stated he needed to ascertain the revenue received in year 1 versus what they were likely to receive in year 2. Therefore, he asked PM to populate the relevant columns. Mr Oates advised that although it was right to deduct the 13th month of payments Gallagher had overlooked that they could add an additional month where clients had only paid for 11 months. PM decided not to fill in the columns in Mr Threader's spreadsheet for year 2, because the revenues were not ascertainable. He decided to continue to negotiate solely on the basis of the revenue in year 1. He was never asked again by Mr Threader to populate the columns. On 1.6.2023, he emailed Mr Threader stating that they should draw a line in the sand at the end of year 1 and all other activities were BAU and naturally changed in real time. Louise Salmons sent Mr Threader a spreadsheet of clients who had underpaid. That day Mr Threader and PM tried verbally to agree a severance figure but failed. In the evening Mr Threader emailed PM setting out the respective positions and suggesting that there were many moving parts where they were getting stuck, so they needed to discuss whether there was an outcome that worked for both of them or continue on the existing basis. On 2.6.2023, PM emailed Mr Threader offering to settle for £3.75 million. Mr Threader rejected that and that evening, they spoke. Mr Threader counter offered at £3.65 million, which he said was the maximum. PM withdrew to consider that offer and shortly thereafter messaged Mr Threader to accept that sum “net net” without any further chipping. Mr Threader responded that he agreed.

[77]PM refers in his witness statement to documents disclosed by Gallagher, which he did not see at the time, sent to the US decision maker, in which Mr Cartwright Forbes informed the US decision maker that the deal was based on Churchills’ year 1 revenue of £3.153 million, discounted at 4.5% per annum for early receipt. The US decision makers approved the deal and the DOV and EC Settlement Agreement were signed on 14.7.2023. Hiving up had progressed during this process and Gallagher had already gained access to all of Churchills’ clients. Clients were being informed of the Gallagher takeover. Letters were issued to clients. Communications were sent to Denis Kelly at GP before the DOV.

[78]After his exit, on 17.8.2023, Ms Salmons called PM to inform him she was upset because Mr Cartwright Forbes had asked her to explain the Notice and Churchills’ failure to inform Gallagher of it. PM calmed her and sent her various WhatsApp messages he had sent to LOK in March 2023 clearly showing that the GP account was at risk. He gave Ms Salmons some support but she was reluctant, having been banned by Mr Cartwright Forbes from talking to him. Overall, PM stated he had left Churchills with sadness but in the knowledge that he had done all he could to develop Churchills and care for his loyal staff. He felt that the litigation breached the clean break and full and final settlement they had reached. PM considers that Gallagher are trying to renegotiate a deal which they made in full knowledge that GP were at risk of going to Mercer and they did so in the light of their own failure to support and grow Churchills during year one after the SPA.

[79]In cross-examination PM stated that he sent his e-mail, on the day of signing the SPA on 7.4.2022, setting out his received assurances from Mr Burns that Gallagher would not sue owners and sack staff and various other warranties, because he was aware that Gallagher often took over companies from owners who had built them up and who were elderly and they had a standard policy of suing the owners, after takeover, for about $2,000,000. He stated that they had a recovery rate of 75%. One of his friends had suffered exactly that problem. He foresaw such a dispute and was very apprehensive. He took legal advice before signing the SPA. It was put to him that the promises he alleged were not made by Mr Burns. He maintained that Mr Burns did make the promises that he asserted and he expected people to be honest and honour their assurances. He agreed none of the assurances were put into the SPA and he agreed there was an entire agreement clause in the SPA. He accepted that that clause excluded the promises set out in his e-mail on the day of the SPA. Then, remarkably, PM suggested he did not realise there was a clause excluding peripheral representations from the agreement. He stated he would not have signed the SPA if he had known of the clause. He asserted that nobody had advised him that all the negotiations were wiped out by that clause and, in any event, he stated that the promises reemerged straight after the SPA and he relied on them. He believed what Mr Burns had told him and thought that they would work together with the Global Platform to increase revenue. He accepted that the SPA plan was for behind-the-scenes integration in year 1, then the name would be changed in April 2023 and the clients would be fully integrated as time went by. He was incentivized through his work in year 2 to achieve increased revenue. He wanted to succeed. He agreed his Earnout target for year 2 was between £2.3 and £2.588 million. PM would then earn £1.75 million. He agreed that his year 3, part one, revenue target was between £2.6 million and £3.059 million and he would earn a maximum of £2.25 million for the first part of year 3.

[80]It was put to PM that clause 5 of Schedule 9 of the SPA was intended to protect him. The seller was under various obligations to adopt Gallagher's professional standards and business practises. GP were identified as a material contact in the SPA. He agreed that clause 12.5 was a warranty provided by him to Gallagher in the SPA that no termination notice had been given by any material client. He accepted that the EC imposed obligations upon him to inform Gallagher and to report. He was taken through clause 3.3.1. He agreed cause 1.7 related to his FCA certification as a senior manager and he was not to do anything that would affect his fitness to practise. He was taken through his duties of integrity under the FCA certificate. Oddly, he suggested he had never seen the certificate before and did not know he was certified. He said the office did it in the background for him. He thought only the consultants were certified. He was clearly wrong about that. He agreed that Gallagher could not access Churchills’ IT. It was important for him to report on business matters. He had IT consultants called Greenfrog who could assist in bridging between the platforms. He agreed it was reasonable for Gallagher to ask him and Churchills to provide information that they could not access on the Durrell system. He agreed employees should not hold back relevant information. He agreed that employers should not have to search for information and employees should inform them.

[81]PM did not agree that he did not engage with Gallagher after the SPA. He considered that Mr Cordani and Ms Salmons were playing “maths tennis”. PM had a simple approach to business which is money in the bank equals profit. He found Gallagher’s processes to be clunky and they challenged his travel and entertainment. He had difficulty understanding how to entertain VIP clients who sent him work without top of the line entertainment. He found Gallagher's to be very “low rent”. He described Mr Cordani's approach on his marketing budget as a culture shock. PM's evidence was that the company was being starved of finances and he was trying to explain how more entertainment and bigger VIP clients brought in more work. For instance, he handled the Help for Heroes show himself and that involved a mixture of VIPs, centres of influence, introducers and supporters. He paid with his Amex card and asserted that unless you are in the room with the big boys you cannot be “in the deal”. He would arrange multiple events and Gallagher would not pay for them all. Eventually, Gallagher did pay for a number of events. He accepted that he and Gallagher squabbled over the completion accounts but they were eventually agreed. He complained that if he bought a coffee he had to pay for it but if he was with a client, Gallagher would pay for it. He stated that Gallagher sponsored Premier League rugby to the tune of £20 million a year and complained that he wanted to continue sponsoring his local rugby team at £8,000 a year, so eventually he paid himself.

[82]PM asserted that he had planned for the staff numbers to go up to about 30. He was responsible for the business for year 1 and it would dock into the mothership in year 2. He was questioned about the GP retainer which started in 2016 and had an automatic renewal provision every two years, unless 12 months notice was given before the end of the term. Churchills obtained remuneration per employee per month and also commission on insurance products introduced. He asserted that notice to terminate had been given and withdrawn in 2019 and 2021. That was their habit. It was a ritual or standard corporate practise. He accepted that there was no written evidence of any previous notice to terminate in the trial bundles. When cross examined on GP, he stated that Denis Kelly had notified Churchills they were looking to move in 2022. He accepted Denis Kenny only arrived in GP in 2022. He accepted Kelly had come from Mercer. He accepted he called him “Denis the Menace”. Mr Kelly had tried to terminate their brokerage of the BUPA medical benefits insurance but, through hard work, Churchills had saved that commission. When cross examined carefully on the details of the Notice to terminate, PM's evidence was confused. He accepted he was obliged to tell Gallagher about “at risk” clients. He was taken through various requests by Gallagher to Churchills in relation to “at risk” clients, including those dated 6.6.2022 and 12.9.2022. He knew it was important for Gallagher to know about “at risk” clients.

[83]On the Global Platform, he reasserted that he wanted to be able to offer that to his clients as they grew, so he would not lose them. He stated Churchills were a pea shooter compared to the howitzers of global brokers. He had never been told about the A2B platform that Gallagher had owned. He had informed Gallagher that all top clients were at risk from global brokers. He intended to keep Gallagher in the background and wait until a client informed him that they were going to a global broker. He had difficulty obtaining help from Gallagher. He asked for help on GP’s BUPA renewal, but he got no help from Mr Cartwright Forbes and so he went to LOK instead, who did help. In July 2022 GP had informed Churchills that they were reviewing their brokerage options and Gallagher knew this very well because of the BUPA renewal work which they did together. He used the term “BAU” in that correspondence. In October 2022, GP sent a letter of authority to Mercer to access their records. When GP gave Notice he took advice from his lawyer. Mr Kelly was enamoured by Mercer and did not understand how much Churchills worked on their employees’ accounts. They had 700 employees in 500 different firms, which were incubators. Many had different EBs. There were many moving parts with employees coming and going and his female staff serviced GP well. Denis Kelly did not understand the intensity of the account and PM considered that he could explain and win back the retainer. As to the meeting in December 2022, at the French Horn, Mr Cartwright Forbes had sent a video to Churchills’ staff referring to a new office manager which he had not informed PM about. Churchills did not need a new office manager because Ms Salmons ran the office and had done so for 20 years. In year 1, PM had control over staff. He wanted more account and marketing staff, but they were not provided, instead an office manager was recommended, which he did not want. Gallagher held the purse strings on staff expenditure. PM admitted that his e-mail summary of the meeting on 14.12.2022 did not mention Denis Kelly or GP. It focused on the office manager dispute. As for Gallagher's summary of that meeting, PM considered it to show they were completely off the pace. All the matters agreed with Mr Burns in April had not been fulfilled. PM maintained he did speak to LOK and Mr Threader about GP but eventually conceded he did not recall whether, at the French Horn meeting, he had discussed GP. In relation to the termination Notice, counsel put to PM that Denis Kelly never mentioned needing a Global Platform. PM stated that he knew that GP had a Thompson online platform called “Darwin”. He accepted that he did not know for sure why Denis Kelly moved to Mercer. PM asserted that he did not think that Churchills received the Notice until 2.1.2023 but he had sought legal advice, did not make any suggestion to GP that they had to continue for two further years and then became confused about the autorenewal provisions of the retainer with GP. It was clear that in live evidence, he could not recall whether it auto renewed for two years or not. Eventually on 20.1.2023, Churchills responded to GP, negotiating a continuing 12 months of the retainer and then full termination. He accepted that the e-mail stated that Churchills required nothing more from GP. He was taken to his various contradictory positions in the letter before action, his Amended Defence and his witness statement on the status of GP's notice to terminate. Eventually, he asserted that the contract was expiring in accordance with its terms. I reject PM’s evidence on the status of the Notice as wrong. I consider that the GP retainer was expiring under the 12 month notice to terminate which had been accepted by Churchills expressly in correspondence. Additionally, PM sought still to rely on late delivery of the notice after 1.1.2023, but I reject that assertion, on the basis that Churchills waived any right to object in the correspondence subsequently. At some points PM also relied on his lawyer's advice and suggested that his lawyer may have misunderstood matters. PM asserted that there was no need for him to report the Notice of termination to Gallagher because either it was invalid or the contract was simply expiring and I reject that assertion as incorrect. However, I do accept that PM truly and honestly believed that he had the power to persuade GP to renew their retainer, through the provision of excellent service from his staff, his own persuasiveness, his ability to get in touch with one of the founding partners of GP, who he had known since 2016 and Churchills’ ability to inform Denis Kelly about the high level of service provided monthly to all of the 700 employees.

[84]PM asserted that he did not wish to introduce Gallagher to GP because Gallagher had not provided the Global Platform which would permit him to present as an international broker. PM denied that he instructed the whole of his team not to inform Gallagher of the notice. He was confident that Churchills would be able to retain GP and he did not wish morale to be affected or bonuses. It seems to me that this evidence is key when looking at PM’s thought processes. He accepted that the Notice would affect staff bonuses and therefore, in my judgment, he should reasonably have understood that the Notice would affect Gallagher's decision making, because it was relevant information about a key client who would probably in future be stopping providing revenue. Indeed, in answer to the Court's question, he accepted this link.

[85]PM did not accept the assertion that he had called a meeting of the whole of his staff team and sworn them to secrecy. He denied the assertions of Ms Shone and Ms Ashby. He denied Ms Salmons’ note for the disciplinary hearing, which was not a witness statement, was not signed, was not dated, did not have a statement of truth and needs to be considered in the context of Ms Salmons’ refusing to be a witness in the case at all.

[86]PM was challenged on his failure to tell Mr Cordani on 21.1.2023, that GP had given Notice and he responded he wanted to use the “win” of the retention of the GP revenue for 12 months, to deploy at an appropriate time. That was good news not bad news. He stated he had used the severance penalty against GP and they had made a commercial decision to continue for 12 further months. That was a win. However, the very next day he communicated with Mr Cordani stating that £500,000 of revenue could walk from a key contact. PM explained this by stating he was seeking to secure more staff and wanted to hold back the fact that he had persuaded GP to stay on for a year, in an attempt to secure more funding for more staff because his staff were overstretched. He stated he gladiatorially brought in work, whilst Gallagher complained about the price of loo rolls. PM could not explain away Ms Salmons stating on 1.3.2023, that Churchills did not currently have any clients “at risk”. Counsel put to him that statement was untrue. PM explained that GP were continuing their contract as normal and that by December 2023 he could well have secured a further year or two of work from them. In any event PM had already informed Gallagher that his top five clients were at risk and that GP were at risk because Denis Kelly was enamoured with Mercer. So, he did not consider, once he had negotiated the 2023 income, that they were officially “at risk”. I do not accept that evidence and find that GP were an “at risk” client. As to the meeting with Mr Threader at the French Horn, he had flown back from the United States. He had made a forthright presentation about Gallagher's broken promises and asked them to stop flaunting themselves as the world's most ethical company. He relied on his Powerpoint slide stating that the top five clients were at risk. He stated that Mr Threader and Mr Cartwright Forbes knew GP were one of the top five clients. He accepted however, that none of his slides informed Gallagher that GP had given Notice. He stated that GP were not a “lost client”. Firstly, he had good prospects of recovering them, secondly, their one year contract was actually extended until April of 2024 by Gallagher. If he had been in charge, he would have managed to get a further 12 month extension, rather than only 3 months. He accepted that, in his communications with LOK in March 2023, over the BUPA renewal for GP, he never told LOK that GP had served Notice to terminate. He and LOK had worked on a corporate video, alongside the salary sacrifice project, to persuade GP to keep them on. He had a plan, he had his art of persuasion and he had the great work of his staff. He is an optimist. He thought it was maybe 60/40 or 80/20 in favour of him succeeding in extending the GP retainer. In the end, he would have called Nicole, one of the founders.

[87]By March 2023, PM was considering his Earnout. He sent his “four pillars” e-mail setting out Gallagher's failings. He had begun to feel he was beginning to get his message across. He had increased revenue substantially. He was still ambitious. He considered the relationship was repairable. Mr Threader's Powerpoint on 15.3.2023, set out his potential Earnout. Gallagher accepted he had increased revenue by 36% in year 1. It set out a future growth plan. However, Gallagher never discussed with him whether, if he left, they would move the office out of the Barn. They had a rental agreement for two years at £60,000 per annum. The earnout looked achievable from the year 1 figures. PM said that as at mid-March, Gallagher and Churchills ought to have been able to move forwards together. That was what PM wanted. What he did not know was what had been going on behind the scenes by way of belittling and denigration of him by Mr Threader, Mr Cartwright Forbes and Mr Cordani.

[88]PM did not consider that integration would be successful without the Global Platform and proper resourcing. At the meeting on 14.4.2023, he and Mr Threader reflected on year one. PM had toyed with early exit but wanted to fix the issues and work on. He did not accept that he himself suggested early exit, but accepted he did say he could not cope with lies and deceit, in which case he would have to go. He and Mr Threader discussed two options; severance or extending his contract. When counsel put to him that, at that meeting Mr Threader did not know about the Notice to terminate and the potential loss of £500,000 in revenue, (an inaccurate question in relation to figures, because the annual revenue was £419,000), PM accepted that he did not, but countered by saying if Churchills had been given more staff and resources, the year 1 revenue would have been £3.5 million. In any event, he and Mr Threader did not go further than considering settling on the basis of the year 1 revenue, once it was sorted out. So, the starting approach was based on avoiding squabbling over what the year 2 and 3 revenues might be and simply using year 1 as the basis for the settlement. PM asserted that the relevance of year 1 was not as a forecast, it was as a basis for settlement. He refused to enter into squabbles over forecasting. He dealt in reality, not gymnastics. PM then used the year 1 number provided by Gallagher at £3.153 million. He had achieved a 40% increase in revenue with his own staff and Gallagher had failed to onboard 5 more staff as they had promised. The negotiations went backwards and forwards with him offering £4.2 million, based on his accountant's figures. In answer to a question from the Court, PM explained that the original SPA was based on revenue, not profit, because Gallagher did not believe the level of net profit Churchills were achieving. Revenue was a more certain figure. Net profit was high because they used PM's Barn for his offices at a low rent, with low rates and low staff costs, based in and around Nottingham. PM explained that the plan was to continue Churchills leasing there until the end of year 2. If they had stayed on, they would have continued to get those benefits, but Gallagher had ended the lease and left as soon as the DOV was signed. When he was involved in the exit negotiations it never entered PM's mind that Gallagher would, in effect, close the business, take the clients and make all the staff redundant. Under intense questioning by Claimant’s counsel, PM repeated that the basis of the settlement was the use of the year 1 figure, which was real. Neither he nor Mr Threader entered into discussions on the potential increase or decrease in year 2 or year 3. That was not the basis of the negotiation. What they did was negotiate over the real figure for year 1. Future estimates did not come into the negotiations. It was a horse trade. It was a compromise. His opening offer was £4.2 million and he dropped to accepting £3.65 million. He rejected the assertion that he ever made the suggested representations pleaded in the claim. Either expressly or impliedly. He asserted that the wins which Gallagher were achieving were that they would: take control, accelerate integration and had already achieved a 40% increase in revenue, furthermore they would be paying a lot less than £5.1 million to him.

[89]I asked PM what would have happened if he had told Gallagher of GP’s Notice and they had offered to settle at no more than the sum set out in the Amended PoC. His evidence was that he would not have accepted a far lower settlement. He would have gone on working.

[90]When taken through each of the alleged express or implied representations PM rejected the assertions firmly. He stated Gallagher could have inquired whether any client had given notice, but did not. He thought later, having seen disclosure, that the reason why they did not was that they were not really interested in doing so, they wanted him out and he later came to know that they had belittled him behind his back, wanted to strip out Churchills’ clients and make the staff redundant. He accepted that GP had never previously given notice under Denis Kelly’s control. He stated that if Mr Threader had offered him only £1.8 million to settle, he would have refused and continued running Churchills and, with a fair wind, would have made the full £5.1 million Earnout. He would have made sure his clients were told by his staff of the Gallagher buy out and provided sensitive service. He might have persuaded Denis Kelly to continue to retain them. He gave evidence about TeamChurchills, most of which was barely relevant. He confirmed that Gallagher never discussed with him, before the negotiations for exit or after, where Churchills’ office would go if he exited. He thought they would stay in the Barn. However, he agreed to surrender the lease as part of the exit package. He stated that, before the SPA, Churchills’ headcount of staff was 14 to 15. When he exited Churchills had between 13 and 16 staff. He became confused about the length of the contract of 1 member of staff, Ms Scott, whose contract showed she was working 35 hours a week and he thought she had been part time. He showed the Court the video of the competing Global IT Platform, which I found very impressive. It was provided by Alliant. He referred to communications from Mr Cartwright Forbes, Mr Threader and Mr Burns, to whom he sent the video, who recognised it was a fundamental part of the negotiations that they would develop their own software. In relation to his counterclaim, in cross examination he stuck to his evidence that Gallagher had provided no marketing strategy, no sufficient additional staff or resources and had not introduced him to any new clients through the San Francisco office. He explained that, in retrospect, he considered that Gallagher were providing a smokescreen that they would comply with Mr Burns’ assurances through the three senior staff with whom he dealt. His insight was that he had got it so wrong, they had fooled him. They just wanted to make staff redundant and strip out Churchills’ clients. When cross examined on his allegation that Gallagher failed to improve his website, he accepted that his website before the SPA was static and old fashioned and they did make reasonable efforts to improve it, so that part of the counterclaim was abandoned. He accepted that he had not informed Gallagher about 5 key prospective clients, but stated that there was no point at the time.

[91]There was no re examination of PM but, in answer to questions from the Court, PM stated that if he had stayed for the full 2 years, with adequate resources, he might have doubled the income to £7 million, if he had gained the big clients he was after, however if the status quo had been maintained, he would still have pressed for more staff. He probably would not have got the Global Platform, but he might well have achieved a further 40% growth in revenue. He would have “gone again”, put his nose to the grindstone and chased every opportunity. As for year 3, he would not have been present in any event.

[92]Not all of PM’s evidence was credible. His rationale for refusing to disclose the Notice, was part of his optimistic, can do, we will win it back, approach to sales. But it was wrong and I find it was indefensible. He should have informed Gallagher by 20.1.2023 at the latest. His negotiations to rectify the defective 2-month notice were understandable in the context. He knew the client and he was the CEO. He achieved a win by extending the relationship for 12 months, or making GP stick to their contract terms.

[93]In his evidence, PM became confused about the full terms of the GP retainer. I did not find his post event analysis to be logical or persuasive on that. He was also confused about the length of the contract for one staff member too. He is 77 years old. But I consider that the majority of his evidence was honestly given, robust and that his motivation was clear. He was always fighting for the Churchills’ business, for the staff, for the best way to build a better revenue stream and to build a larger, stronger client list. I consider that he dealt with Gallagher robustly but honestly and openly on business matters, save for the Notice. I accept his evidence generally and specifically about the assurances he was given for the underlying business deal, by Mr Burns and I reject Gallagher’s witnesses’ evidence to the contrary. I find that Mr Burns made the assurances which PM said he did before and after the SPA. I find that Mr Cartwright Forbes and Mr Threader were unwilling to fund sufficient recruitment fully to support Churchills in year 1. I find that Mr Cordani’s restrictions on PM’s marketing at VIP events undermined his most effective client winning methods.

[94]As to the exit negotiations, in my judgment PM was first asked to exit by Mr Threader on 14.4.23. PM did not suggest the exit but he decided with Mr Threader to avoid squabbling about the potential future revenue and they decided at that first meeting to use the year 1 revenue figure, because it was certain. That suited Mr Threader. It meant that any future revenue growth that PM was very likely to achieve in year 2 was ignored. Mr Threader was facing another 30-40% increase (midpoint 35%). Gallagher would save money from that approach. I find that PM would have refused a low offer at £1.8 million, to buy off his Earnout, would have fought on in year 2 in 2023-2024, with his staff still based at the Barn, and he would have grown the revenue by 35% above the year 1 figure of around £3.153 million. I find he would have achieved that growth because he was a good salesman and because Tech clients were growing and through hiring employees and because he had achieved that growth in year 1. I apply that increases to the revenue, not including the £419,000 lost income from GP. I find, on balance, that he would have achieved revenue of not less than £4.109 million in year 2. I calculate that as follows: £3.153 - £419,000 x 1.35 = £3.69 million. Because in fact the GP revenue was not lost in year 2, I add it back in totalling £4.109 million. Then, I find that Gallagher would have maintained that figure in year 3, despite moving offices and the disruption caused by that. I make that finding because they achieved maintaining the actual year 2 revenue in year 3 at £2.9 million, which was higher than the figure for year 1 after deduction of £419,000 from GP, which stopped paying at the end of year 2. I find, on balance, that PM would have been entitled to his full £5.199 million Earnout had he stayed on. Even if I had found a lower figure for the growth under PM in year 2, say 15%, the year two revenue would have been £3.563 million and the full Earnout would have been achieved.

[95]William Whithall (not required for XX). Mr Whithall was managing director of Withalls and Co, a chartered accountancy firm. He accepted he had a phone call with Mr Cartwright Forbes in April 2026. He did not agree Mr Cartwright Forbes’s attendance note of the call. He had served notice on Gallagher in April, having tried for a few days before to speak to Mr Cartwright Forbes, but with no callback. He told Mr Cartwright Forbes that he was moving to PM’s new business, due to their long history and the personal relationship between PM and his family. He did not suggest any pressure had been put on him. He also informed the Court that Withalls would have left Gallagher in any event because their service had not met their expectations. I accept his evidence and reject Mr Cartwright Forbes’ evidence on this.

[96]Natalie Bacon (by video). This witness had been employed by Churchills since 2018/2019. She lived in Nottinghamshire. She had been promoted and had passed level 4 exams. She provided webinars and technical support to clients, mainly in pensions. She had had previous experience of Gallagher as a claims manager and had found the company and her department to be dismissive, impolite and rude. She was concerned about a culture clash when the SPA was signed. She started looking for a new job but PM had persuaded her to stay on. She recalled a team meeting after the SPA at the Barn in which Mr Burns, Mr Threader and Mr Cartwright Forbes had presented the Gallagher Way. It did not take long to find out that her previous concerns were well founded. She found Mr Threader and Mr Cartwright Forbes were not really interested and called her work pointless. She was belittled and upset. She told Leslie Lemenager of Gallagher, but she did nothing. Her workload increased throughout year 1 and no new resources were deployed by Gallagher. Churchills were understaffed and overworked. She was responsible for developing the salary exchange scheme for GP and interacted regularly with Denis Kelly. There were tax advantages. It was complex, she was successful and Denis Kelly was very happy and impressed. He said that Mercer could not do it in time or in price. She did not know that the GP account had been lost in January 2023 and heard in the summer of 2023. She had no recollection of PM swearing the staff to secrecy. In August 2023 she felt criticised by Gallagher and was shocked. She rejects some parts of Mr Cartwright Forbes’ attendance notes of various meetings in August. She had asked Mr Cartwright Forbes to help her with the salary sacrifice scheme, but he ignored her. In October she tried to persuade Mr Cartwright Forbes to retain GP by going to Ireland to see Denis Kelly. He did nothing for two months. Due to criticism from Mr Cartwright Forbes, she resigned in early 2024. She even gave up a bonus to do so. She was signed off work with stress. I listened carefully to the answers she gave in cross-examination and I found her to be a balanced, careful and honest witness doing her best to help the court. I accept her evidence. I prefer her evidence to that from Mr Cartwright Forbes.

[97]Hannah Capewell (by video). Hannah Capewell worked for Churchills from October 2020 as an administrator. She lived in Nottinghamshire. She provided two witness statements. She was present at the first meeting at the Barn after the SPA was signed at which Mr Burns, Mr Cartwright Forbes and Mr Threader made assurances about smooth integration, the Gallagher Way and valuing Churchills’ staff. Thereafter, in year 1, she did not find the transition smooth, they were frequently short staffed, overworked and stressed. Some staff resigned and were not replaced. She gave evidence about the meetings in August 2023 at which she was present. She rejected many parts of Mr Cartwright Forbes’s note of those meetings. She did not know of the potential loss of the GP account in January 2023 and only found out in July 2023 when Jo Holford informed her. PM did not rule Churchills by fear. He did not have favourites. His bonuses were not unfair. Ms Salmons was a good manager. Ms Capewell was made redundant in June 2024 by Gallagher and Mr Cartwright Forbes tried to persuade her to give a witness statement. She was unhappy that Mr Cartwright Forbes had said things about her which were not true.

[98]I do not consider that any of the answers that she gave in cross-examination undermined her evidence in chief. She strongly disagreed with the suggestion that PM had any favourites among staff. She confirmed that Mr Cartwright Forbes was wrong to state she was hired after Gallagher's SPA. She had a good working relationship with PM and liked him as a boss. I accept her evidence. I consider, from her substantive answers, her consistency and her demeanour, that she was an honest witness doing her best to assist the Court. Where her evidence clashes with the evidence of Mr Cartwright Forbes I prefer the evidence of Ms Capewell.

[99]Victoria Clay (not required for XX). This witness lived in Nottinghamshire. She started in Churchills in April 2023. She denied being in tears as alleged in a set of interview notes with Dawn Marshall, dated August 2024. She was made redundant in 2024. Mr Cartwright Forbes had made her upset by being dismissive and belittling and she found it unbearable to work for Gallagher by the time she had been made redundant. I accept her evidence and prefer it over the evidence of Mr Cartwright Forbes.

[100]Dawn Marshall. This witness lived in Nottinghamshire. She now works for TeamChurchills. She started with Churchills in 2013/2014 and there were 15 to 20 staff in the Barn by the time of the SPA. She was a client liaison manager. She enjoyed the job and had a good relationship with PM, who was a fair boss. She recalled a meeting in April 2022 attended by Mr Burns, Mr Cartwright Forbes and Mr Threader. The SPA was announced and they stated it was an opportunity, there would be a TUPE transfer with no material changes. They would help integration and keep the name. They described the Gallagher Way and the values. She was delighted. The Tech sector was growing fast and they needed more resources and an international platform to take the business forwards. She worked well with Mr Cartwright Forbes, who managed the integration. She became a champion. She had daily contact with GP. She worked with Jo Holford. In December 2022 Denis Kelly left a voicemail which ended up on her phone. It stated he wanted to serve notice. She was not concerned, it had happened before, it was not uncommon with clients. After PM left, the staff were moved out of the office to Nottingham and then to Newark. As for Mr Cartwright Forbes’ notes of various meetings in August 2023, she rejected that Churchills had lost the GP account in January 2023. There had been no meeting at which PM had instructed her to keep the Notice secret. At the meeting on 24.8.2023, Mr Cartwright Forbes asserted that PM had been fraudulent in his negotiations by concealing the Notice. Mr Cartwright Forbes asked her to sign a witness statement saying that PM had threatened to withdraw bonuses if she did not conceal GP's Notice. She wrote a WhatsApp message stating that “surely PM had committed a fraud” and that she was fully behind Gallagher. Later, she thought it over and told Mr Cartwright Forbes that there had been no meeting where PM required staff to stay secret. She refused to sign a witness statement. She said that Mr Cartwright Forbes’ note of the meeting on 24th August was not correct. She was not aware that GP’s business had been lost in January 2023. She had not been asked to any meeting about secrecy. She stated that Gallagher's management of Churchills, after August 2023, was poor. Service levels dropped. Employees of clients were onboarded in far too long a period, it should only take two days and in fact took them a month. Churchills staff resigned. Gallagher ignored them. One staff member self-harmed and Gallagher told her to go and get another job. Gallagher broke their own values. She was made redundant in June 2024. She raised a grievance, but it was brushed aside. Mr Cartwright Forbes was demeaning and belittling and did not provide a supportive environment. She was cross examined. She accepted she was employed by TeamChurchills from September 2025. It had taken some persuading for her to leave the company, EBC, where she was working and join PM, but she knew what a good businessman PM was. It was always fun working for him. She confirmed that the term:

“lost client” meant a client that had stopped paying. Mr Cartwright Forbes tried to get her to make a statement that PM had instructed her to conceal the Notice. Because that did not happen she refused to do so. She was horrified when Mr Cartwright Forbes called PM a fraudster. They were raising £1,000,000 for charity with PM in that very month. In retrospect she regretted writing the WhatsApp message to Mr Cartwright Forbes stating “surely it's a fraud”

. I accept her evidence, save where it clashed with Hannah Capewell.

[101]Joanna Holford. This witness lived in Mansfield and started with Churchills in January 2020. She provided two witness statements. She was promoted and became the account manager for GP. She really enjoyed working there and asserted that Churchills had a good atmosphere. In April 2022 she attended a meeting at the Barn at which Gallagher announced the takeover and reassured staff that the transition would be smooth. They explained the Gallagher Way. Within months the atmosphere became stressed and toxic. Mr Cartwright Forbes was arrogant, belittling and bullying to her. During her work for GP, she spoke daily to Denis Kelly. They had an excellent relationship. Ms Glowa told her in January 2023 that Denis Kelly wanted to terminate the retainer. She was concerned. PM overheard her gossiping in the office about loss of her bonus as a result and PM reassured her that it was nothing to worry about and at weekly tea and cakes Ms Salmons asked her not to gossip about it and reassured her that GP would see out their contract until the end of the year. PM messaged her on 20.1.2023 that the GP account has been saved and she should make herself indispensable to “Denis the Menace” so that Churchills became embedded and he would have another crack at the end of the year to retain them. PM asked her not to mention to anyone that Churchills had retained the GP account, particularly Gallagher. After PM left the staff morale was low. The offices were moved to Nottingham then Newark. Ms Holford disagreed with many parts of a meeting note made by Mr Cartwright Forbes, dated 16/17.8.23. It was not correct that the whole team knew the GP account was “lost” in January 2023. Ms Holford was told that it had been rescued. There was no team meeting at which they were sworn to secrecy. On 23.8.2023 she met senior Gallagher staff and for the first time Gallagher asked her about the GP account. They had not done so before. Mr Cartwright Forbes took over the GP account after Ms Salmons resigned but he was rarely in the office. Mr Threader did not attend, to her recollection. She thought that Gallagher had washed their hands of Churchills and their staff. She was upset that they did not try more to retain the GP account. She was never asked how best to retain it. She even had a complaint from Denis Kelly that Mr Cartwright Forbes was slow to answer enquiries. Jo Holford was made redundant in June 2024. She had no recollection of Mr Cartwright Forbes asking her to notify Gallagher of “at risk” or “lost clients”. This evidence from her second witness statement which was not challenged in cross examination.

[102]In cross examination on her first witness statement only, Ms Holford accepted that she joined in January 2020. She accepted that GP had indicated they wanted to terminate the retainer in July 2022, but that did not happen. When they did in January 2023 it was big news. She was concerned about her bonus. She was told not to gossip and was reassured. It was “BAU”. She rejected the assertion that there was ever a meeting at which staff were told not to tell Gallagher about the Notice. She was the account manager. She would have known if Gallagher had asked her, she would have told them. She asserted that she was working hard to save the account, but Mr Cartwright Forbes did not. She stated that PM would provide a “same day service”, whereas Gallagher did not.

[103]I accept the evidence of Ms Holford, who I find to have been doing her best to assist the Court. Where it clashes with the evidence of Mr Threader or Mr Cartwright Forbes I prefer her evidence.

[104]Adele Glowa. This witness provided two statements in chief. She started with Churchills in October 2020 and managed the accounts for Snapchat and Splunk. She was senior to Debbie Ashby, who was difficult to manage. PM generated the new business, he was a decent and honourable man. He was passionate about the business and charities. She enjoyed the work, the atmosphere was good. After the SPA Mr Burns, Mr Threader and Mr Cartwright Forbes met the team and told them that all staff would be retained and the company would stay individual and boutique. Gallagher would value the staff and employ more staff. There would be marketing and new clients would be attracted. In December 2022 she called Denis Kelly back after he had left an answerphone message to terminate the retainer. She said she was very sorry. She asked him to email the office. Staff had no way to check their performance targets from Gallagher’s IT system. Mr Cartwright Forbes was dismissive. She was frustrated by Gallagher’s failure to permit recruitment. PM became more and more frustrated. GP had threatened to leave before but had not done so. Clients would often say that they wanted to leave to get better terms. Ms Glowa disputed Mr Cartwright Forbes’ note of the meeting on 16/17.8.2023. Debbie Ashby did not run the GP account and it was not right to record that she said that GP were “knowingly lost”. Nor was the “whole team” aware of that. There was no “secrecy meeting”. Ms Glowa complained that Gallagher was treating all the staff as if they were “in cahoots” with PM. Ms Glowa disputed the contents of Mr Cartwright Forbes’s notes of meetings in August 2023. Staff were required to inform Gallagher if there was anything major happening on any client account. As for the year 1 work, hardly any new staff were hired and work increased. After PM left, the office was moved to Nottingham then Birmingham. She took redundancy in June 2024 because she did not want to move to Bristol or Woking. She had cancer in August 2023. She spoke to Ms Salmons who was very distressed by the way she was treated by Gallagher. In her second witness statement she denied Mr Cartwright Forbes’ assertions that he had meetings with staff in which he explained that he expected staff to inform him of at risk or lost clients. This was not challenged in cross examination. Ms Glowa accepted that she was wrong to assert that the use of the term “the Barn” was derogatory. Otherwise, cross examination of her did not affect her evidence.

[105]I accept the evidence of Ms Glowa, who I find to have been doing her best to assist the Court. Where it clashes with the evidence of Mr Threader or Mr Cartwright Forbes I prefer her evidence.

[106]Terence Towers. This retired insurance broker was an impressive, honest witness. He had worked all his life in general insurance and from 1985 to 2023 for Churchills. He retired after the SPA. He was a director. He dealt with compliance. He admired PM hugely and considered him to be a good businessman, who cared for his clients and his staff, who were loyal to him. He found Churchills a fun and responsive place to work. PM often discussed selling with him and it was clear that PM wanted to make sure staff and clients were looked after. After the takeover PM told him of his enthusiasm that Gallagher would expand Churchills at the international level. Mr Towers attended the meeting in April when Mr Burns told staff that Gallagher were not looking to make immediate changes and their commitment to Churchills becoming an international player, they would help Churchills grow and provide better opportunities to compete with international brokers. Mr Cartwright Forbes stated that he had worked for a company which had been bought by Gallagher and it was a great place to work. After the SPA, Mr Towers did not see a change in staffing or an expansion of support. PM became frustrated at the failure to assist. Ms Salmons was stressed by being pulled from pillar to post by Mr Cordani. PM was let down by Mr Burns leaving. On one occasion before the SPA, GP had tried to leave Churchills but had been persuaded to stay. He was not aware that GP had given Notice in 2023.

[107]Cross-examination of Mr Towers only fortified my very positive impression of him. He arranged PM’s FCA certification. Where Mr Towers’ evidence conflicts with Mr Threader’s or Mr Cartwright Forbes’ or PM’s evidence, I prefer the evidence of Mr Towers.

[108]Haydee Simpson, lived in Nottingham and worked under Mr Towers. She had worked at Churchills since 2016. She became aware of the GP Notice in the summer of 2023. She resigned in December 2023, have been isolated and ignored by Mr Cartwright Forbes. She complained.

[109]Nicole Liposits, alsolived in Nottinghamshire. She was and is the PA to PM. She contacted two witnesses to see if they would give evidence. I did not that find her evidence had any significant effect on the key issues.

[110]Jennifer Mitchell. This witness lived in Newark. She started at Churchills in 2015. She was made redundant by Gallagher in June 2024. She was at the April meeting led by Mr Burns, at which the Gallagher Way was presented. She was told her job was safe and there was a new bonus scheme. It was all rosy. Gallagher gave others a pay rise but Mr Cartwright Forbes refused her a pay rise unless she increased from part time to full time. She had children. She felt undervalued. She disputed Mr Cartwright Forbes’ notes of meeting in August 2023.

Findings of fact

[111]I have made various findings of fact above. On the balance of probabilities, I find that the underlying business agreement between Gallagher and PM which led to the signing of the SPA and the EC, involved PM wishing to expand the business, obtain a Global Platform, protect and grow his clients and staff and hand over control to Gallagher. Mr Burns assured him that they would have fun growing the business, Gallagher would obtain and supply a Global Platform, increase staffing to support increased revenue and Gallagher would give Churchills access to their global client base, including their San Fransico office’s contacts in Silicon Valley. They agreed that PM would continue running the business for 2 years whilst gradual integration took place and would do his best to increase revenue in those years to obtain his Earnout. In year 1, the name would remain unchanged and PM would run the business, including recruitment, with Gallagher in charge of the purse strings. In year 2, the name would be a combination of Churchills and Gallagher and PM would run the business. In year 3, Gallagher would take the steering wheel and PM would exit. I find that Messrs Burns, Threader and Cartwright Forbes presented to Churchills staff in April 2022 setting out the Gallagher Way, telling staff how ethical they were and reassuring them that their jobs were safe and they would be supported by more recruitment and resources.

[112]I find that Mr Burns did his best to support PM and Churchills between April and November 2022, but Mr Cordani squeezed the pips out of the marketing budget and other expenses and Mr Threader and Mr Cartwright Forbes did very little to support the growth of revenue or to provide support through additional staff. More junior staff, including LOK, did help Churchills with renewals, like the BUPA renewal for GP. In year 1, I find that PM gave Gallagher at least 3 warnings that his top 5 clients were at risk of being poached by global brokers, but Gallagher did not provide Churchills with the A2B platform or even inform him that they had such a platform and tied PM up in form filling, red tape, expenses forms, decreased marketing budgets and squabbles over the completion statement, instead of supporting him in recruiting more staff to fulfil the increased workload created by the increased revenue he was achieving in year 1. After Mr Burns departed, Mr Threader, Mr Cartwright Forbes and Mr Cordani regarded PM as figure of ridicule whom they wished to remove, so that Gallagher could take over the steering wheel earlier. They saw little or no value in VIP corporate entertaining despite PM’s obvious success. They saw good value in stressing the staff to work harder, instead of recruiting more staff. As the year end approached and they realised that revenue was 30-40% above the pre-SPA total, Mr Threader wanted PM out. He listened to PM’s suggestion of staying on an extra year but instead proposed that PM should exit. Whilst he knew that the SPA calculated the Earnout on year 2 and 3 revenues, the internal plan at Gallagher had predicted only 6.7% increases, PM had achieved nearly 40% and so Gallagher was facing having to pay the full £5.199 million. Mr Threader was keen to chop that by an early exit agreement. He proposed calculating the Earnout using just the year 1 figure, with no increase in revenue for years 2 or 3 and no squabbling over estimated future revenue. PM was prepared to negotiate on that basis and they did so. They carefully calculated the accurate year 1 figure making “up and down” points and settled on £3.153 million. That led to a lump sum agreement by horse trading of £3.65 million and the US decision makers were asked to recommend it. They did so by taking into account that revenue could go up as well as down, but they were balancing the saving of £1.45-1.5 million, the effects of inflation, the likelihood that PM would grow the revenue more in year 2 and the costs savings of integrating Churchills into the Gallagher offices and support systems. So, Gallagher did not require a clawback for lower revenue or a warranty that no client had served notice to terminate. They did not ask any Churchills staff whether any of their account clients had served notice and they did not ask GP whether they had served notice. They took the risks knowingly.

[113]1 month after the exit DOV and Settlement Agreement were signed, Gallagher discovered about the Notice from GP. Instead of making real and sustained efforts to retain GP as a client, Gallagher decided to sue PM and held a series of oppressive meetings with staff accusing them of being involved in group secrecy covering up PM’s “fraud”. Gallagher had signed a partnership referral agreement with GP through their multinational business by that time. They did not leverage that. They did not leverage the marketing videos made by LOK for GP. They did not leverage the salary sacrifice scheme created by Natalie Bacon for GP. Furthermore, Gallagher did nothing to seek to put in place a senior marketing executive to grow the client base of Churchills and retain GP. Certainly Mr Cartwright Forbes did not fulfill the role. Instead, they moved the offices first to working from home, then to Nottingham, then to Newark, then to Birmingham and then to Bristol/Woking and made all the staff redundant in June 2024. Yet, despite all of that disruption, the staff achieved revenue of £2.9 million in year 2 and Gallagher staff achieved the same in year 3, although I was provided with no accurate analysis of the actual revenue and was only informed by counsel of those figures. No Claimant witness produced them.

Applying the law to the facts

[114]Breach of Contract. On the findings of fact made above I consider that PM breached the following clauses of the EC: clause 3.3.1 (promoting Gallagher’s interests); 3.3.9 (competitive threats); 3.3.8 (proper reporting). I make no finding on clause 1.7. The Notice from GP was a threat to future revenue. GP were an “at risk” client already but this made them even more at risk. I do not find that they were a “lost client”. I consider that Churchills’ definition of lost client, as one no longer paying, was objectively reasonable. Churchills’ staff still had day to day contact with Denis Kelly and GP employees. They still worked for GP. I find that no Gallagher employee ever provided Churchills staff with a different definition of “lost client”, either on paper, by email or verbally. I do not consider that PM was in breach between 1.1.23 and 20.1.23 because he was striving, through negotiations, to protect Gallagher’s interested and obtain a full 12 months more revenue instead of only 2 months. But once that deal was done, the information about the Notice should have been passed on to Gallagher. PM accepted that Gallagher would have wanted to know in his evidence. In the light of the express terms, I do not consider that the implied terms which were pleaded were necessary to cover the behaviour complained of and add nothing. I consider that PM’s instruction to Ms Salmons not to inform Gallagher was part of that breach. I do not find that PM told all staff to keep the Notice secret from Gallagher. I do not find that he held any secrecy meeting. I reject the evidence of Ms Shone and Ms Ashby on this issue. Damages for breach of contract, causation and loss.

[115]The Claimant relied on para 21-008 of Civil Fraud 1st Ed: “In many claims founded in fraud, the claimant seeks damages based on an attempted reconstruction of what would (or might) have happened absent the wrong. Such claims are necessarily counter-factual; they involve the attempted recreation, via a pecuniary award, of an alternative world in which the wrong did not occur. In such cases, the courts have warned against the application of a strict balance of probabilities test, which, whilst appropriate to the establishment of certain past asserted losses (e.g. claims that certain expenses in investigating the fraud were incurred), has no place in awards of damages seeking to compensate for wider claimed losses of profits: “Some claims for consequential loss are capable of being established with precision (for example, expenses incurred prior to the date of trial). Other forms of consequential loss are not capable of similarly precise calculation because they involve the attempted measurement of things which would or might have happened (or might not have happened) but for the defendant’s wrongful conduct, as distinct from things which have happened. In such a situation the law does not require a claimant to perform the impossible, nor does it apply the balance of probability test to the measurement of the loss.”10 Rather, the court estimates the loss sustained by the claimant by making the best attempt it can to evaluate the chances, great or small (unless those chances amount to no more than remote speculation), taking all significant factors into account.11 The court will adopt a broad brush in such circumstances, where appropriate discounting the damages award by an overall single percentage to reflect the possibility (which may involve a consideration of multiple contingencies) that the asserted profits would not have been made. [Footnote 10: Parabola Investments Ltd v Browallia Cal Ltd

[2009] EWHC 901 (Comm)

and

[2010] EWCA Civ 486

; [2011] Q.B. 477, at [22]. ..] “Some claims for consequential loss are capable of being established with precision (for example, expenses incurred prior to the date of trial). Other forms of consequential loss are not capable of similarly precise calculation because they involve the attempted measurement of things which would or might have happened (or might not have happened) but for the defendant’s wrongful conduct, as distinct from things which have happened. In such a situation the law does not require a claimant to perform the impossible, nor does it apply the balance of probability test to the measurement of the loss.”10

[116]The Defendant relied on the text in Chitty on Contracts 36th Ed, at paras. 30-130 to 30-133. “Modern statement of the rule The principles laid down in Hadley v Baxendale were interpreted and restated by the Court of Appeal in 1949 in Victoria Laundry (Windsor) Ltd v Newman Industries Ltd744 and by the House of Lords in 1967, in Koufos v C. Czarnikow Ltd (The Heron II). The combined effect of these cases may be summarised as follows: A type or kind of loss is not too remote a consequence of a breach of contract if, at the time of contracting (and on the assumption that the parties actually foresaw the breach in question), it was within their reasonable contemplation as a not unlikely result of that breach. The following paragraphs expound the different aspects of this summary. It must be borne in mind that a loss may not be recoverable merely because it was not too unusual, if in the circumstances it was not reasonable to assume that the defendant was accepting responsibility for it. Relevant date A preliminary point is that the question is what was contemplated by the parties at the time at which the contract was made, not what they may have contemplated at some later date such as the date of breach. What must be contemplated and the degree of probability The formulation used by the Court of Appeal in the Victoria Laundries case gave rise to the principal issues that arose in The Heron II. These were whether the parties must have contemplated the extent of the loss or only the kind, and the degree of probability required, in particular for a kind of loss to fall within the first limb of Hadley v Baxendale, i.e. to be “in the usual course of things”. The Victoria Laundry case The three main propositions in the Victoria Laundry case were750: “(2) In cases of breach of contract the aggrieved party is only entitled to recover such part of the loss actually resulting as was at the time of the contract reasonably foreseeable as liable to result from the breach … (3) What was at that time reasonably so foreseeable depends on the knowledge then possessed by the parties or, at all events, by the party who later commits the breach … (4) For this purpose, knowledge ‘possessed’ is of two kinds; one imputed, the other actual. Everyone, as a reasonable person, is taken to know the ‘ordinary course of things’ and consequently what loss is liable to result from a breach of contract in that ordinary course … But to this knowledge, which a contract-breaker is assumed to possess whether he actually possesses it or not, there may have to be added in a particular case knowledge which he actually possesses, of special circumstances outside the ‘ordinary course of things,’ of such a kind that breach in those special circumstances would be liable to cause more loss.” (Footnotes removed). “(2) In cases of breach of contract the aggrieved party is only entitled to recover such part of the loss actually resulting as was at the time of the contract reasonably foreseeable as liable to result from the breach … (3) What was at that time reasonably so foreseeable depends on the knowledge then possessed by the parties or, at all events, by the party who later commits the breach … (4) For this purpose, knowledge ‘possessed’ is of two kinds; one imputed, the other actual. Everyone, as a reasonable person, is taken to know the ‘ordinary course of things’ and consequently what loss is liable to result from a breach of contract in that ordinary course … But to this knowledge, which a contract-breaker is assumed to possess whether he actually possesses it or not, there may have to be added in a particular case knowledge which he actually possesses, of special circumstances outside the ‘ordinary course of things,’ of such a kind that breach in those special circumstances would be liable to cause more loss.” (Footnotes removed).

[117]The principle. Damages for breach of contract, in the absence of a tailor-made clause in the relevant contract, are compensation for the loss suffered through the breach. As Lord Reed put it in Morris-Garner v One Stop

[2018] UKSC 20

“(ii) Common law damages for breach of contract 31. … Damages in contract serve a different remedial purpose from damages in tort, reflecting the different nature of the obligation breached by the wrongdoer in each case. The law of tort is concerned with civil wrongs, that is to say with breaches of duties imposed by the law, sometimes generally and sometimes on those who are party to particular relationships or have assumed particular responsibilities, which protect the interests of others in respect of such matters as their bodily integrity, their liberty, their property, their privacy and their reputation. Damages in tort are generally intended to place the claimant as nearly as possible in the same position as he would have been in if the tort had not been committed. The law of contract, on the other hand, gives effect to consensual agreements entered into by particular individuals in their own interests. Remedies granted by the courts are designed to give effect to what was voluntarily undertaken by the parties. Damages in contract are therefore intended to place the claimant in the same position as he would have been in if the contract had been performed. 32. In Robinson v Harman (1848) 1 Exch 850 , 855, Parke B said: “The rule of the common law is, that where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed.”

That statement has been endorsed on many occasions at the highest level, most recently in Bunge SA v Nidera BV (formerly Nidera Handelscompagnie BV) [2015] Bus LR 987, para 14, where it was described as the “fundamental principle of the common law of damages”. It has also been described as the “ruling principle” (Wertheim v Chicoutimi Pulp Co

[1911] AC 301

, 307), the “fundamental basis” for assessing damages (British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd

[1912] AC 673

, 689), and the “lodestar”: Golden Strait Corpn v Nippon Yusen Kubishika Kaisha (The Golden Victory)

[2007] 2 AC 353

, para 36. 33. … 34. The compensatory nature of damages for breach of contract, and the nature of the loss for which they are designed to compensate, were explained by Lord Diplock in Photo Production Ltd v Securicor Transport Ltd

[1980] AC 827

, 848–849. As Lord Diplock stated, a contract is the source of primary legal obligations upon each party to it to procure that whatever he has promised will be done is done. Leaving aside the comparatively rare cases in which the court is able to enforce a primary obligation by decreeing specific performance of it, breaches of primary obligations give rise to “substituted or secondary obligations” on the part of the party in default. Those secondary obligations of the contract breaker arise by implication of law: “The contract, however, is just as much the source of secondary obligations as it is of primary obligations … Every failure to perform a primary obligation is a breach of contract. The secondary obligation on the part of the contract breaker to which it gives rise by implication of the common law is to pay monetary compensation to the other party for the loss sustained by him in consequence of the breach …”: p 849. 35. Damages for breach of contract are in that sense a substitute for performance. That is why they are generally regarded as an adequate remedy. The courts will not prevent self-interested breaches of contract where the interests of the innocent party can be adequately protected by an award of damages. Nor will the courts award damages designed to deprive the contract breaker of any profit he may have made as a consequence of his failure in performance. Their function is confined to enforcing either the primary obligation to perform, or the contract breaker's secondary obligation to pay damages as a substitute for performance (subject, according to the decision in Attorney General v Blake, to a discretion to order an account of profits in exceptional circumstances where the other remedies are inadequate). The damages awarded cannot therefore be affected by whether the breach was deliberate or self-interested. 36. It follows from the principle in Robinson v Harman 1 Exch 850 that the language of election is not appropriate in a discussion of the quantification of damages for breach of contract. The objective of compensating the claimant for the loss sustained as a result of non-performance (an expression used here in a broad sense, so as to encompass delayed performance and defective performance) makes it necessary to quantify the loss which he sustained as accurately as the circumstances permit. What is crucial is first to identify the loss: the difference between the claimant's actual situation and the situation in which he would have been if the primary contractual obligation had been performed. Once the loss has been identified, the court then has to quantify it in monetary terms.” “The rule of the common law is, that where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed.” “The contract, however, is just as much the source of secondary obligations as it is of primary obligations … Every failure to perform a primary obligation is a breach of contract. The secondary obligation on the part of the contract breaker to which it gives rise by implication of the common law is to pay monetary compensation to the other party for the loss sustained by him in consequence of the breach …”: p 849.

[118]Net loss. I shall use the net loss approach to assessment of damages for PM’s breach. Lord Leggatt explained the approach in Stanford International v HSBC

[2022] UKSC 34

, thus:

“55. SIB's argument is thus flawed because it disregards the net loss rule. This is the basic rule that applies in awarding damages for breach of contract or in tort that losses and gains arising from the breach must be netted off against each other and only any net loss awarded as damages. The leading authority for the rule as it applies to claims for breach of contract is British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd [1912] AC 673, where the House of Lords held that savings made by the claimant from installing more efficient turbines to replace turbines supplied by the defendant which did not comply with the contract had to be taken into account in computing damages. Viscount Haldane LC said, at p 691, that “the principle which applies here is that which makes it right … to look at what actually happened, and to balance loss and gain”

. Among many authorities for the net loss rule as it applies to claims based on negligence in tort, a good example is Hodgson v Trapp

[1989] AC 807

, 819, where Lord Bridge of Harwich said:

“My Lords, it cannot be emphasised too often when considering the assessment of damages for negligence that they are intended to be purely compensatory. Where the damages claimed are essentially financial in character … the basic rule is that it is the net consequential loss and expense which the court must measure. If, in consequence of the injuries sustained, the plaintiff has enjoyed receipts to which he would not otherwise have been entitled, prima facie, those receipts are to be set against the aggregate of the plaintiff's losses and expenses in arriving at the measure of his damages. All this is elementary and has been said over and over again.” “My Lords, it cannot be emphasised too often when considering the assessment of damages for negligence that they are intended to be purely compensatory. Where the damages claimed are essentially financial in character … the basic rule is that it is the net consequential loss and expense which the court must measure. If, in consequence of the injuries sustained, the plaintiff has enjoyed receipts to which he would not otherwise have been entitled, prima facie, those receipts are to be set against the aggregate of the plaintiff's losses and expenses in arriving at the measure of his damages. All this is elementary and has been said over and over again.”

[119]Restrictions on let loss. Such net losses are subject to various restrictions:(1) Mitigation, the Claimant cannot recover for losses which he could have avoided by taking reasonable steps to mitigate his loss.

(2) The remoteness rule, which permits a type of loss to be recovered only if it: (a) arose in the usual course of things, or (b) was within the reasonable contemplation of the parties at the time the contract was made as not unlikely, on the assumption that the parties actually foresaw the breach in question (see the judgment of Stuart-Smith LJ in Brown v K.M.R Services [1995]4 ALL ER 598 at pa 621).

(3) The Claimant will not recover for loss arising in the usual course of things, unless the Defendant could reasonably be regarded as having assumed responsibility for the losses of that kind (see Transfield Shipping v Mercator (The Achilleas)

[2008] UKHL 1

A.C. 61).

[120]Causation. Only loss for which the breach was the effective, substantial or dominant cause, is recoverable.

[121]But for events. Gallagher’s case is that but for the breach, they would have known of the Notice and would have offered PM his exit for a lump sum of around £1.8 million. They submit at para. 20.2 of the closing submissions, in effect, that the kind of loss and the extent of the loss, were in the reasonable contemplation of the parties when the EC was signed.

[122]The Defendant relied on a remoteness point as the answer to the claim based on causation and loss. The Defendant asserted that breach of the EC does not sound in damages assessed by considering the SPA or the DOV. Those were separate contracts. I take into account that the EC was only signed because the SPA was negotiated and agreed. I find that the parties considered at the time that Schedule 9 and the Earnout was a key provision. I note that there was a warranty in the SPA relating to “material clients” having given notice to terminate. I take into account that Gallagher had a history of litigating against former owners of business which they had bought and PM knew this very well and expressed his concern about it on the day of the SPA. I consider that it is reasonable to infer that the parties had in their contemplation, at the time when they signed the SPA and the EC, that an early exit might be negotiated if it suited them both. Likewise, it is reasonable to infer that a breach of the EC, involving PM failing to tell Gallagher about a termination Notice by a large client, would undermine Gallagher’s ability to come to a mutually acceptable settlement and would have produced an offer which was too high. Therefore, in my judgment, the kind of loss and the rough extent falls within limb of the remoteness test. I find that the loss is not too remote.

[123]I find that the evidence from Mr Threader, Mr Cartwright Forbes and Mr Cordani on what they would have done, had they known about the Notice, was credible. It fitted with what they wanted and their general approach to PM. I find that they would have offered a lump sum of £1.8 million or close to that sum. However, PM asserted that he definitely would not have accepted a low offer at that level. I find, on balance, that PM would not have accepted such a low offer. Instead, he would have continued to run the business for another year, despite the friction. He would probably have persuaded Gallagher to fund some more staff. I find that he would probably have achieved 15-35% growth in the revenue in year 2 from all clients, overall (excluding GP). I refer back to paragraph 94 above. I find that, once PM had left at the end of year 2, Gallagher would have kept the revenue steady in year 3, as they did in any event. Thus, I consider that, but for the breach, PM would have received his full Earnout and Gallagher would have been substantially worse off financially in relation to their payments to PM, but somewhat better off in relation to Churchills’ revenue and hence net profit from Churchills. PM was thinking of setting up TeamChurchills in 2023, but that was a longer-term plan for fruition after the end of the non-compete clause. I reject Gallagher’s submissions that PM was fatigued and desperate for the exit deal. It follows that the accelerated receipt of a lump sum of £3.65 million does not provide any basis for any net loss suffered by Gallagher, in the light of the very substantial saving Gallagher made by entering the lump sum settlement which they did. Gallagher were in fact far better off. Thus, the Claimant’s case fails on the issue of causation and proof of loss on the pleaded basis.

[124]Mitigation. I take into account that the duty to mitigate has a low standard, but doing nothing does not satisfy even that low standard. Lord Macmillan made the standard clear in Banco de Portugal v Waterlow & Sons Ltd

[1932] AC 452

at p. 506, where he said:

‘Where the sufferer from a breach of contract finds himself in consequence of that breach placed in a position of embarrassment the measures which he may be driven to adopt in order to extricate himself ought not to be weighed in nice scales at the instance of the party whose breach of contract has occasioned the difficulty.’

The Court is not therefore asking whether Gallagher did everything possible to try and retain GP but rather: (i) whether Gallagher acted reasonably after it discovered the GP Notice; and (ii) if not, whether the steps it failed to take (but should reasonably have taken) would have led to increased revenue.

[125]I do not need to consider failure to mitigate in the light of the loss finding. Had I needed to do so I would have found that Gallagher did nothing to replace the business and “new client” finding skills of PM after his exit. That was a failure to mitigate from August 2023, when the breach was discovered. I also find that Gallagher’s efforts to retain the GP account were almost non-existent and were unreasonable. I reject Mr Cartwright Forbes’ assertions that he had regular discussions with Denis Kelly. He made no notes of any such discussions, which was not like him. He delayed trying to secure or extend the Churchills’ retainer from Denis Kelly for 3-4 months and only offered to talk to Denis Kelly in Ireland in December, right at the end. I accept PM’s evidence that the best way to have extended GP’s revenue stream to Churchills would have been to require a 12-month extension, after 1.1.2024, when GP found out that they could not obtain the requisite service from Mercer and needed 3-4 months more help. I consider that was a loss of a chance. Doing the best I can, I put that chance at 40/60 against Gallagher. At best that might have saved the following sums: £419,000 x ¾ x 40% = £125,700. I have used ¾ because in fact GP were retained for 3 months until April 2024.

[126]Alternative basis. In submissions during the trial the Claimant sought to rely on an alternative, unpleaded basis for causation and loss, namely that, had PM stayed on and had the revenue been as it actually was (so £2.9 million), he would have received £788,000 less than the lump sum of £3.65 million he was actually paid. There are two reasons why I reject that submission. Firstly, it was not pleaded, so the Defendant had no opportunity to plead in response and deal with that in his evidence and seek disclosure of the actual figures and client lists and performance. Secondly, I do not accept the underlying assumption within it. If PM had stayed on in year 2, I consider that he would have grown the revenue as set out in paragraph 94 above, not let it drop to £2.9 million.

[127]Fiduciary Duty. Gallagher submits that PM owed fiduciary duties to Gallagher as well as to Churchills. Gallagher relied on Bristol v Mothew

[1998] Ch. 1

, per Millett L.J at page 19. That page does not support the proposition made in submissions. The Claimant provided no previous authority supporting this asserted fiduciary duty for a director of a subsidiary to a parent company through mere parallel employment with the parent as a non-director.

[128]Employees are not per se fiduciaries of their employers, see Nottingham University v Fishel

[2000] IRLR 471

at [90] per Elias J:

“…the essence of the employment relationship is not typically fiduciary at all. Its purpose is not to place the employee in a position where he is obliged to pursue his employer’s interests at the expense of his own. The relationship is a contractual one and the powers imposed on the employee are conferred by the employer himself. The employee’s freedom of action is regulated by the contract, the scope of his powers is determined by the terms (express or implied) of the contract, and as a consequence the employer can exercise (or at least he can place himself in a position where he has the opportunity to exercise) considerable control over the employee’s decision-making powers.”

In Ranson v Customer Systems plc

[2012] EWCA Civ 841

;

[2012] IRLR 769

, at [25] Lewison LJ ruled that:

“the starting point for determining whether [an employee] owed fiduciary duties to [an employer] and if so, what duties, is his contract of employment…”

Where, in a departure from the norm, an employee may owe fiduciary duties to his employer, those will be as a result of specific contractual obligations undertaken by the employee in his contract of employment, see Fishel at [91]:

“This is not to say that fiduciary duties cannot arise out of the employment relationship itself. But they arise not as a result of the mere fact that there is an employment relationship. Rather they result from the fact that within a particular contractual relationship there are specific contractual obligations which the employee has undertaken which have placed him in a situation where equity imposes these rigorous duties in addition to the contractual obligations. Where this occurs, the scope of the fiduciary obligations both arises out of, and is circumscribed by, the contractual terms; it is circumscribed because equity cannot alter the terms of the contract validly undertaken...”

The types of case where a Court has held that an employee does owe fiduciary duties to the employer involve the employee having substantial autonomy vis-à-vis his employer for instance: (a) autonomy over placing, negotiating and approving substantial transactions on behalf of the employer, for example employees having control over substantial company property; (b) autonomy over exercising a high-level management function; and (c) autonomy over committing their employers to substantial courses of action. So, in Otkritie International Investment Management Limited v Urumov

[2014] EWHC 191 (Comm)

at [72] Eder J ruled thus: “In the employment context, the courts typically look to the employee's contractual obligations and the circumstances of his employment, for example seniority, managerial responsibility, decision making autonomy, independence and the vulnerability of the employer, which may justify holding the employee bound by a duty of loyalty to the employer”.

[129]In contrast to directors and senior managers with power, PM was not a director, he did not have access to Gallagher’s bank accounts, he did not have the power to make large contracts for Gallagher, or any contracts on their behalf. He had no substantial power over Gallagher and managed no team of employees within Gallagher. They were merely the parent company and they had all of the power over him. They controlled his business finances. They even restricted his business expenses for Churchills to £100 without authorisation. His contractual reporting duties were the normal ones for any employee, they were not extraordinary. I accept that he had power within Churchills, granted by the SPA, but that was not the point. In my judgment PM did not owe fiduciary duties to Gallagher.

[130]Fraudulent misrepresentations. The Claimant’s assertions of fraudulent misrepresentations were perhaps the most aggressive part of the claims.

[131]In Bradford Third Equitable Benefit Building Society v Borders

[1941] 2 All ER 205

, , Viscount Maugham said that an action for deceit requires four things to be established at p211: "First, there must be a representation of fact made by words, or, it may be, by conduct. ... Secondly, the representation must be made with a knowledge that it is false. It must be wilfully false, or at least made in the absence of any genuine belief that it is true ... Thirdly, it must be made with the intention that it should be acted upon by the plaintiff, or by a class of persons which will include the plaintiff, in the manner which resulted in damage to him ... Fourthly, it must be proved that the plaintiff has acted upon the false statement and has sustained damage by so doing ..." (Citations omitted.)

[132]Deceit was considered in detail by the Privy Council, in Credit Suisse Life (Bermuda) Ltd v Bidzina Ivanishvili and Others [2025] UKPC, Lord Leggatt ruled: “127. … [W]hat is traditionally called the tort of deceit … involves a simple and perfectly general principle: a person who causes another person to suffer loss by deceiving that other person is liable to compensate the other person for such loss. 128. What it means to deceive someone can be unpacked into a number of separate elements. It involves(1) making a representation of fact (or law) which

(2) is false,

(3) the maker does not believe to be true,

(4) is intended to be believed by the representee, and

(5) causes the representee to believe that the representation is true. 129. The scope of what counts as a representation for this purpose is very broad. The concept is not limited to statements which expressly assert the truth of a proposition. Indeed, it is not limited to statements: it includes actions as well as words. For the purpose of the law of deceit, the term "representation" encompasses any words or act calculated to cause another person to believe a proposition. .… 132. There is nothing recent or novel in the notion that deceit can be perpetrated by entirely non-verbal conduct, including conduct of which the claimant is unaware. An old example is Schneider v Heath (1813) 3 Camp 506, where the seller of a ship, to hide the fact that the hull was worm-eaten and the keel broken rendering the ship unseaworthy, had the ship removed from the ways where she lay dry and floated in a dock so that the defects would not be seen when the buyer came to bid for her. Sir James Mansfield CJ had no hesitation in holding that on these facts the buyer was entitled to succeed in a claim to recover back his deposit on the ground that he was induced to pay it by deceit. … 161. There is no doubt that reliance or inducement is an essential element of a claim for deceit (or other claim for damages for misrepresentation). There are two aspects to the requirement. The first is that the representation must have deceived the claimant (C) by causing C to hold a false belief ("reliance in belief"). The second is that C must because of holding that false belief have acted so as to suffer loss ("reliance in action"). Both aspects of reliance require the representation to operate on the mind of C. But neither logically requires C to be consciously aware of the representation at the time when C acts on it. Nor is there any good reason to insist on such an additional requirement. 162. It is an everyday feature of human experience that people form and act on beliefs without any conscious awareness or thought. If someone takes advantage of such unconscious mental processes to deceive another person and cause her to act to her detriment, there is no reason why a claim for damages should not lie. The mischief is no less than in a case involving conscious awareness. … 170. There are certainly cases in which, to establish that the defendant's words and/or conduct caused the claimant to hold a false belief, it will in practice be necessary to show that the claimant understood them to convey a particular meaning. This is so whenever the meaning is unclear or ambiguous and the representation is false only if it bears one particular meaning. … … 172. … what matters in a claim for deceit is not whether the plaintiff understood the defendant's statement according to the construction put on it by the court, but whether the plaintiff understood the statement in the sense that the defendant intended the plaintiff to understand it (and knew to be false or at least did not believe to be true): see eg Akerhielm v de Mare

[1959] AC 789

, 805. How the court interprets the statement may well be relevant to the court's assessment of how either or both parties probably understood it. But it is the parties' subjective beliefs that are critical. That said, in a case such as Arkwright v Newbold where a particular statement made is false only if interpreted in a particular non-obvious sense, it is clearly correct that to prove "reliance in belief" the plaintiff must show that it understood the statement in that sense. … 175. … The categories of representation and assumption are not mutually exclusive. It is possible, and indeed common, for a person to act on the basis of an unconscious assumption and in reliance on a representation. … 176. What matters is whether, in a case where the claimant has acted on an assumption, the assumption was one which the claimant would naturally be expected to make in response to the defendant's words or actions or whether it was one made independently by the claimant. If the claimant has acted as a result of an erroneous belief not caused by the defendant, the defendant will not be liable. 177. … The distinction between misrepresentation and non-disclosure - which reflects that between acts and omissions - is an important one because, except in those cases (such as the formation of contracts of insurance) where there is a duty to disclose material facts, non-disclosure does not give rise to liability. 178. The distinction turns on whether the defendant (1) has done something to cause the claimant to hold a false belief on which the claimant has acted to its detriment or (2) has merely failed to inform the claimant of a material fact or to correct a false belief which the claimant independently holds. A case may fall in the first category without the claimant being aware of what the defendant has done, …. Such ignorance does not turn the case into one of non-disclosure. The seller who takes active steps to conceal a defect in order that a buyer should not discover it stands in a different position from the seller who is aware of a defect not apparent to the buyer but does nothing actively to hide it. The line is not always easy to draw. But it depends entirely on what the defendant has or has not done and not at all on the claimant's awareness or understanding of acts done by the defendant.”

beliefs without any conscious awareness or thought. If someone takes advantage

[133]I will follow that guidance. Taking each of the pleaded representations in turn, which are laid out in full in paragraph 10 above. Representation 1. 14.4.2023: PM to ST:

“Hi Steve Good Meeting. As discussed happy to go immediately to save further angst. William advises on our 40% increase in revenue (round numbers) to 3.2 million the earn out including my contract would be 4.25 million.”

I refer back to my findings as paragraphs 34 and 35 above. The pleaded asserted representation was not made expressly. Furthermore, I do not consider that objectively, a reasonable person would draw from the words relied upon, any inferred representation about the revenue of Churchills in years 2 or 3. The words focus only on year 1. Taking into account my findings of fact and in particular the commercial factors at paragraph 35 above, I do not consider that PM made any such representation of fact. Those facts which he did represent, the increase achieved in revenue in year 1 over the year before the SPA, the total revenue in year 1 and the Earnout calculation, were all true and in any event I find that PM considered those facts to be true. I do not consider that PM intended to make any false representation, nor do I find that Mr Threader actually believed the alleged false representation was made. I find that it was a post event construct by Mr Threader.

[134]Representation 2. 17.4.2023: PM to ST:

“severance numbers calculated from the SPA…”

I refer to paragraphs 35 and 36 above. Firstly, PM did not make any express representations of the sort which were pleaded. Secondly, in my judgment, PM did not make any implied representations of fact of the sort pleaded. There was nothing which was false in the table he provided. It was merely another SPA Earnout calculation based on a reasonably accurate year 1 figure. I find that PM believed the calculations to be true and the year 1 figure to be reasonably accurate. PM did not try to make Mr Threader believe anything about projections for years 2 or 3. He eschewed that approach, as did Mr Threader. He simply used the proposed year 1 figure to make the calculation of the Earnout. I do not find that Mr Threader was caused to rely on any representation as pleaded about the sustainability of revenue in year 2, because no such representation was made. He had to do his own due diligence and he said that he would do that. In any event he had proposed negotiating the Earnout lump sum by using the year 1 figure in the first place.

[135]Representation 3. 1.6.2023: PM to ST:

“Regarding the future losses and wins, we think you should just draw a line in the sand on April 7th as all the other activities are BAU and naturally change in real time. Gallagher also need to allow for natural inflationary increases which adds more complexity. We therefore need a single figure that we can all work to, ie lets deal in facts rather than assumptions.”

I refer to paragraphs 35 and 37 above. I find that PM did not make the asserted representations of fact expressly or impliedly. This was a negotiation, not an employee reporting back. All PM did was suggest continuing to negotiate, using only the year 1 figure, instead of falling into a dispute over what the years 2 and 3 revenue might be. I find that the “BAU and naturally change in real time” statement was not false. It was a vague phrase open to different interpretations about the uncertainty of business. I find that PM believed what he wrote in that negotiating statement to be true. He was drawing a line at the end of year one. All other activities at Churchills were business as usual going forwards into year 2 and 3 and would change day by day. That term meaning, at best that both objectively in context and subjectively for PM, the normal struggle of fighting to retain clients, despite a lack of support from Gallagher, went on. The normal marketing and the exercise by PM of the art of persuasion to gain clients continued, despite Gallagher seeking to trim his marketing expenses budget. The normal business for PM involved losing some clients and winning other clients, but it also involved persuading clients who had given notice, or threatened to do so, to stay. It involved negotiating retainers and renewals, servicing clients who complain and those who do not. It involved the Tech sector growing. The normal business at that time involved PM already having won an extra year for GP to continue paying Churchills in and from January 2023. Thereafter, retaining GP would be a matter for Gallagher if PM departed. There was no falsity in PM believing that GP would be paying for three quarters of year 2 and I find that PM was rightly being self-confident enough to believe that he and his team had a good chance of persuading Denis Kelly to continue the contract into the last quarter of year 2 (which did happen, so he was right) and also beyond, into year 3, (which did not happen, because he had exited and Gallagher failed to mitigate that loss). I find that PM (and Churchills staff) rightly did not regard GP as “lost” and would not do so until they had actually stopped paying. PM considered rightly, that a client is a client until the retainer ends. I do not find that PM had any intention to make Mr Threader believe anything about GP other than what he had already told him expressly: that, like all of Churchills’ big 5 clients, they were “at risk” from the big boys. I find that Gallagher and Mr Threader knew very well that GP were specifically “at risk” because Denis Kelly was an ex Mercer employee, who had expressly stated twice, in 2022, that he wanted to review the EB brokerage and move to Mercer. If Mr Threader wanted to know if any top 5 client had actually taken the step of giving notice, he only had to ask PM or Churchills’ staff. He never did. I also consider that the words “materially relevant” which Gallagher asserts were part of the implied representation are impossible to draw from the words actually used and are probably too vague to found the tort of deceit in the context.

[136]Representation 4: “the issues Finance have now raised: … I refer to paragraphs 35 and 38 above. I find that PM was expressly making no representations about year 2 revenue. He was negotiating on the basis of the year 1 revenue figure. Two of his points were figure changes to the year 1 revenue. He spiced the communication with self-praise, about his revenue growth in year 1 and strong foundations, and rightly so. A bit of persuasive “mere puff” is what he added. I find that the Claimant has failed to prove that PM made the pleaded representations of fact and, in any event, even if such could be implied, I would have found that any relevant pleaded representation was not false from PM’s point of view. I also find that PM believed the express representations made in the communication to be true. I do not find that PM intended to make any representation about year 2 or year 3 revenue which he wished to be believed by Mr Threader, and I do not find that anything which PM wrote caused Mr Threader to believe that the pleaded representations either arose or were true. Gallagher’s pleaded case was, in my judgment, an after the event reconstruction, without foundation in fact.

[137]Representation 5. 2.6.2023: The table of the SPA Earnout calculation. I refer to paragraphs 35 and 39 above. I find that the Claimant has failed to prove the pleaded representation was made either expressly or impliedly.

[138]Representation 6. I refer to paragraphs 35 and 40 above. In my judgment, the Claimant has failed to prove that PM made the express or implied representations of fact pleaded in the PoC or that any of those which he did make were false or that PM did not believe any relevant representations to have been true. The parties were in negotiations. Separately, Gallagher had access to the information it needed and could have requested a list of clients which had given notice. It did not. I do not consider that any of the pleaded express or implied representations were sufficiently clear to form the basis of a claim in deceit. In any event, I do not consider that Mr Threader was misled about the matters complained of. He had the power to enquire about notices to terminate but did not. He knew GP, as a top 5 client, was “at risk” from Mercer and did not specifically check before the SPA was signed or before he started the negotiations to get PM to exit or during negotiations. His staff spoke to all other Churchills’ clients before the SPA was signed, save for GP. He could have imposed a warranty into the DOV in the same terms as that in the SPA, but he chose not to do so. In my judgment, the factors set out in paragraph 35 above made such a strong business case for Mr Threader to seek PM’s exit, that he did not do his due diligence on GP because he was in a rush to get his hands on the Churchills’ steering wheel and clients and wanted PM out, because Gallagher was facing PM achieving high growth in year 2 which would trigger a full £5.199 million Earnout. He was trying to horse trade his way out of that and to bring forward “integration”, which to him meant making the staff redundant and taking the clients into the bosom of Gallagher.

[139]Causation and loss. If I am wrong about fraudulent misrepresentation, the deceit claim fails in any event on causation, remoteness and net loss, for the reasons set out above at paragraphs 121-125 above.

[140]Breach of warranty in the Settlement Agreement. Clause 9.1.5 of the EC Settlement Agreement was clear enough. I find that PM failed to inform Gallagher of the GP Notice to terminate and therefore PM had breached his EC settlement agreement. Such information, considered at the time of entering the contract, probably would have changed Gallagher’s decision to enter a Settlement Agreement and would have changed the sum offered for early settlement. I understand PM’s thought process though. GP were “at risk” and Gallagher knew this, but Churchills were still very busy servicing their needs throughout the negotiations between April and July 2023. Churchills were tooling up to persuade GP to stay on by putting together an excellent marketing video with LOK’s help, showing the huge administrative burden of servicing GP’s 700 employees in 500 different businesses and creating the salary sacrifice scheme for them. However, the issue of whether to pass the information about the Notice on to Gallagher was not his choice, it was his obligation under the EC and the Settlement Agreement and he had failed to do so. The warranty in the Settlement Agreement simply backed up the duties in the EC and his breach of the EC, which I have found above, arises from the same facts and actions as his breach of the Settlement Agreement.

[141]Remoteness – unlinked contracts. PM asserts that the breaches are of the terms of the EC or the Settlement Agreement, not the SPA or the DOV, so the only loss suffered by Gallagher under the EC can be that paid under the Settlement Agreement for the EC, which was £1,600. On the but for projection, I have found that no settlement would have been agreed. No DOV would have been entered. Thus, I accept that Gallagher would not have paid the £1,600 to PM, but that sum is wholly outweighed by the huge saving which Gallagher have made by underpaying the full Earnout as a result of the breach and of entering the DOV and the Settlement Agreement. Thus, I find that but for the breach Gallagher would have been better off financially. In addition, I do not accept that the contracts were unlinked. I find that they were linked and co-dependent. Thus, as I have explained above, the parties would have contemplated that breach of the EC would have had an effect on any early exit lump sum agreement.

[142]Causation and loss. I refer back to the paragraphs above on these issues at 121-125. The breach of the Settlement Agreement did not result in any net loss for Gallagher. They were substantially better off by settling with PM and paying £3.65 million early than they would have been had they not settled and paying £5.199 million.

[143]Wasted management time. I was unpersuaded that the assertedly wasted management time of Mr Threader, Mr Cartwright Forbes and Mr Cordani, was caused by the breaches I have found that PM effected. I accept that some management time was involved, but the team meetings held in which staff were accused of being accessories to fraud, invited to sign witness statements and demotivated, then ignored and under resourced, were all part of Mr Threader’s and Mr Cartwright Forbes’ plan to move Churchills away from Nottingham and then to make the staff redundant. I do not accept that any sum more than £2,000 of management time should reasonably have been spent on finding out that Gallagher was unaware of the Notice. That sum is wholly subsumed by the net profit made by Gallagher in settling the Earnout early. No sum was pleaded in the PoC.

[144]The counterclaim(1) Does the DOV settle matters fully so that it is excluded?

(2) If not, can PM sue on his wife’s behalf?

(3) Were Gallagher in breach as alleged? If so, what is the correct approach to assessment of damages for the breach/es? and what damages are due?

[145]PM relies upon asserted breaches by Gallagher of clause 5.1.1 of Schedule 9 of the SPA. PM asserts that Gallagher failed properly between 8.4.2023 and 14.7.2023 to develop Churchills, to hire new staff, to develop and supply the Global Platform or to introduce Churchills to new clients.

[146]Clause 3.2 of the DOV deleted the whole of Schedule 9 of the SPA as from the date of signing. Clause 3.3 deleted and replaced the restrictive covenants on PM relating to future competition for 3 years after the signing of the SPA (hence to April 2025). Clause 6 retained the rest of the SPA in force. Clause 2.2 provided that the DOV and the payments made thereunder were “in full and final settlement of the Deferred Consideration”. Although the Claimant submitted that this settled all claims arising for breach of the SPA, I reject that submission. It did not. It left them all open save for those relating to the Deferred Consideration. Clause 5.1.1 needs to be interpreted in its context. It was a term imposing duties on Gallagher in years 2 and 3, when they were intended to be more integrated into the business. In year 2 they were intended to be working with PM, but with Gallagher staff as directors and the joint business names disclosed to clients. In year 3, Gallagher were intended to be running the whole business, in the absence of PM. So, the duties in clause 5 were there to protect PM’s Deferred Consideration and the revenue upon which it was based, from abuse or manipulation by Gallagher. Once the DOV was agreed and signed, PM had nothing left to protect. He had been paid out in full. His settlement was final. In my judgment, the words “full and final settlement of the Deferred Consideration” covered any actual or arguable breaches both by PM and Gallagher of the Schedule 9 clauses before that date, of which they were aware. Certainly, PM was aware of Gallagher’s alleged breaches, he had complained of them all along.

[147]I consider that PM cannot sue on his wife’s behalf. Although he had apparent authority to enter the DOV on her behalf, and she did not sign it, his wife signed the SPA on her own behalf and she is not a party to this litigation.

[148]I do not need to consider the allegations of breach in the light of my ruling that no claims could be brought after the signing of the DOV.

Conclusions

[149]For the reason set out above, I find that PM did not make the alleged fraudulent misrepresentations so the claim for misrepresentation will be dismissed.

[150]I find that PM was not in a fiduciary position towards Gallagher so the claim for breach of fiduciary duties will be dismissed.

[151]I find that PM breached the EC and the EC Settlement Agreement when he failed to inform Gallagher on or soon after 20.1.2023 that GP had given 12 months’ notice to terminate their retainer. Had PM told Gallagher about the Notice when he should have, Gallagher assert that they would have settled PM’s Earnout rights under the SPA for a much lower sum, just under £1.8 million, thus they plead that they have lost: £3.65 - £1.8 million = £1.85 million (approximately). I reject that assertion on the evidence relating to the counterfactual (the but for projection). I consider the PM would have refused to accept such a low lump sum and would have worked on for year 2. His skills as a businessman would have led to a rise in revenue in year 2 and a plateau in revenue in year 3, after he left, which would have led to him receiving his full Earnout, of £5.199 million. Thus, Gallagher would have paid out much more to PM had the breach not occurred. I find that the Claimant has failed to prove causation or loss and so the claim for breach of contract will be dismissed.

[152]I find that the counterclaim was barred by the DOV and hence will be dismissed. END