Kynixa Ltd v Hynes & Ors [2008] EWHC 1495 (QB)

[2008] EWHC 1495 (QB)Case No HQ07X02129
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 30/06/2008
Before
THE HONOURABLE MR JUSTICE WYN WILLIAMS
Between
KYNIXA LIMITEDClaimant(1) MARTIN HYNESDefendants(2) SARAH PRESTONDefendant(3) HEATHER SMITHDefendant
Mr Michael Duggan (instructed by Messrs Paris Smith & Randall LLP Law Solicitors) for ClaimantMr Jeffrey Bacon (instructed by Messrs Plexus Law Solicitors) for DefendantsHearing Hearing dates: 27 th February 2008 to 19 th March 2008and 4 th April 2008.
Judgment
[1]In these proceedings, the Claimant seeks relief against the Defendants arising out of alleged breaches of express and implied terms of contracts of employment concluded between the Claimant and each Defendant. Further, in relation to the First Defendant and Second Defendant, the Claimant seeks relief arising out of alleged breaches of express terms of an agreement which, in this judgment, I will refer to as “the shareholder agreement” and alleged breaches of fiduciary duties by which, it is said, these two Defendants were bound. The trial before me has been concerned only with the issue of liability i.e. whether the Claimant has established against the Defendants a breach or breaches of the agreements and fiduciary duties to which I have referred.[2]The evidence before me has been detailed and, in many important respects, conflicting. It is as well to state at the outset, however, that I have no intention of reviewing factual issues and making findings upon them unless I consider that they are important to the resolution of the main issues in this case. To adopt any other approach would make this judgment much longer and even more burdensome than it is bound to be.[3]Inevitably there will be references in this judgment to extracts from witness statements. The principal witnesses in the case are Mr. Biden, Dr. Bonikowski and the three Defendants. Each of these persons made a number of witness statements. In this judgment reference to a witness statement in respect of any of these persons is a reference to the witness statement which was made by them in January 2008 and which was usually described in the hearing as their main witness statement for trial.[4]With those introductory remarks I turn, first, to a description of the more important background facts. In the main, this section of my judgment will focus upon facts which are not controversial between the parties. RELEVANT BACKGROUND FACTS[5]The Claimant is a specialist provider of rehabilitation and case management services for persons who have suffered injury, usually as a consequence of an accident at work or on the road. The Claimant began providing these services in 2001. At that time it was (as it still is) controlled by two men Mr. Michael Biden and Dr Edmund Bonikowski. In the remainder of this judgment they will be referred to as MB and EB.[6]EB is an experienced consultant physician and general practitioner. In the 1990s he developed an interest in rehabilitation. In the words of Mr Duggan, Counsel for the Claimant, the Claimant is the brainchild of EB. MB is a very experienced businessman who has held senior positions in international companies. In February 2001 MB and EB entered into a joint venture agreement. The agreement was, in summary, to carry on a business of providing rehabilitation and case management services and the Claimant was the vehicle chosen for the provision of those services. By the terms of the joint venture agreement EB became a 83.33% shareholder in the Claimant and MB became a 16.67% shareholder.[7]The Claimant was registered in February 2001. As I understand it, it began to provide its services more or less straightaway. At the outset it was understood that EB would be much more actively involved in operating the business of the Claimant; he became its chief executive officer; MB was appointed its Chairman. The basis of the agreement between MB and EB was that they wanted to build a business with a capital value. They did not see the Claimant simply as a vehicle to establish a private practice for EB.[8]From its inception, as I understand it, the Claimant also had one non-Executive Director. That was Mr Christopher Langford, a chartered accountant.[9]In its early days and, indeed, thereafter, the Claimant targeted work from solicitors and insurers who were involved in personal injury litigation or potential litigation.[10]On 20 November 2001 the Claimant’s Board of Directors agreed that a person named Steve Williams should be appointed a director of the Claimant with responsibility for business development in the insurance sector. The Board also resolved that he should become a shareholder. On 21 November 2001 the Claimant and Steve Williams entered into a written agreement which was called a business development agreement. It is clear from its terms that this agreement was intended to be short-lived and replaced, after a probationary period, by a different contract between the Claimant and Mr Williams. On 31 March 2002 the Claimant and Mr Williams entered into a written contract which was called a service contract.[11]Meanwhile on 19 December 2001 the Claimant’s Board of Directors had resolved to recruit the Second Defendant. EB and the Second Defendant had met each other in or about 1997 when they were both working for the National Health Service. As I understand it the Second Defendant was then a nurse specialising in the care of those suffering from Parkinson’s disease and/or other serious neurological diseases. It is clear that EB had formed a favourable impression of her skills. The prospect of the Second Defendant becoming an employee of the Claimant came about in late 2001. The Second Defendant was then working in a responsible post for the NHS in a hospital in Barnet. However, her home was in West London and she had to juggle the care of her child as well as holding down her job. Employment with the Claimant was attractive to the Second Defendant because the Claimant operated from premises in Ealing. Following discussions in the early part of 2002 a contract of employment was concluded between the Claimant and the Second Defendant. The contract was made in writing and it is dated 13 February 2002. The contract provided that the Second Defendant should take up her appointment with the Claimant on 5 June 2002 and that is what occurred. The contract specified that the Second Defendant was employed in the capacity of clinical services manager and her remuneration was a basic salary of £40,000 per annum and an entitlement to participate in any bonus scheme for “the managers employed by the company introduced by the directors …….”[12]In 2003 David Imber became a director and shareholder of the Claimant. His responsibility was vocational rehabilitation. Further, additional non-executive directors were appointed, namely Roy Hurley and Heather Lawrence. Also in 2003 the Second Defendant became a shareholder. I deal with the details of her acquisition of shares later in this judgment.[13]On 23 November 2003 the Directors of the Claimant approved a new Memorandum and Articles of Association. At or about the same time a document entitled “Shareholders and Subscription Agreement relating to Kynixa Limited” (hereinafter called “the shareholder agreement”) was signed by the then existing shareholders. At that stage those persons were MB, EB Steve Williams, David Imber, Chris Langford, Heather Lawrence, Roy Hurley and the Second Defendant. The document is long and, in places, complicated and in due course it will be necessary for me to consider, in detail, some of its provisions. At this stage it suffices that I record that it was intended to and did supersede the joint venture agreement which had been signed by MB and EB at the commencement of the business. I should also record at this stage that the signatories to the agreement apparently intended and understood that new shareholders would become bound by the terms of this agreement. The existing shareholders proceeded on the basis that any new shareholder would sign a document which was entitled “Deed of Adherence” and which would have the effect of binding that shareholder to the terms of the shareholder agreement. An example of the Deed of Adherence (which was incomplete in the sense that it was undated and the name and address of the shareholder was left blank) was an attachment to the shareholder agreement.[14]In April 2004 the Second Defendant received a substantial pay rise. It is common ground that this was, at least in part, motivated by the recognition that she was a valued, indeed, very valued, employee by this stage.[15]In or about July 2004 the Claimant appointed the company known as Partners in People Limited as human resources consultant. I will need to consider why they were instructed and what they were instructed to do later in this judgment. It suffices that I record at this stage that in November 2004, following work undertaken by Partners in People, a document entitled “Statement of Principal Terms and Conditions” (hereinafter called “SPTC”) was formulated and issued to employees of the Claimant. Further a document entitled “Employee Handbook” (“the Handbook”) had been composed and this was also circulated to the Claimant’s employees.[16]While the work of Partners in People was in gestation the Third Defendant became an employee of the Claimant. She signed a contract of employment on 12 August 2004 and she commenced her employment on 6 September 2004. Her job title in the contract was “Relationship Manager.”[17]Following the production of the SPTC and the Handbook the Second and Third Defendants were issued with them. The Second Defendant signed the SPTC on 19 January 2005. EB had signed the document on 4 January 2005. The Third Defendant signed her copy of the SPTC on 20 January 2005.[18]An issue arises for determination as to whether the SPTC signed by the Second and Third Defendants together with the Handbook constituted the terms of their employment from respectively 19 and 20 January 2005 or whether they were still bound by the terms of the first contracts which they had signed. The Second and Third Defendants assert that they ceased to be bound by any of the terms of the earlier contracts. The stance of the Claimant, however, is that the Second and Third Defendants remained bound by the earlier contracts save in those respects where the SPTC and/or the Handbook expressly or impliedly superseded the earlier terms. I deal with this issue, discretely, later in my judgment.[19]It was in the autumn of 2004 that the First Defendant began his association with the Claimant. EB and the First Defendant had known each other for much of their lives. The First Defendant had qualified as a chartered accountant as a young man and he had considerable corporate experience by 2004. Between about 1997 and 2004 he was employed in very senior positions by Universal Salvage Ltd, a public company with very close links to insurers. EB considered it sensible to recruit the First Defendant in a senior position within the Claimant and he persuaded MB to the same view.[20]In the summer of 2004 the First Defendant had set up a small car sales business using as his corporate vehicle a company called Kewferry Limited. Following discussions between EB and the First Defendant, Kewferry Limited agreed to undertake work for the Claimant by generating referrals from insurance companies. The terms upon which the Claimant and Kewferry were to do business were encapsulated in a letter dated 29 September 2004 from EB to the First Defendant. It is also the case, however, that on 2 October 2004 the First Defendant, on behalf of Kewferry Limited, signed a written confidentiality agreement. The agreement was produced by or on behalf of the Claimant and the First Defendant had no objection to signing the same. The agreement contained the following definition of confidential information: - “ ‘Confidential Information’ means any and all information in whatever form whether disclosed orally or in writing or whether eye readable, machine readable or in any other form including, without limitation, the form, materials and design of any relevant equipment or any part thereof, the methods of operation and the various applications thereof, processes, formulae, plans, strategies, data, know-how, designs, photographs, drawings, specifications, technical literature and any other material made available by Discloser to Recipient or gained by the visit by the Recipient to any establishment of Discloser whether before or after this Agreement is entered into, for the purpose of considering, advising in relation to or furthering the Negotiations (and any information derived from such information)” Under the terms of the agreement Kewferry Limited undertook: - “to maintain the Confidential Information in strict confidence and, save as provided herein, not to divulge any of the confidential information to any third party…..”[21]In December 2004 detailed discussions took place as to the role which the First Defendant should play in the Claimant. At a Board Meeting on 15 December 2004 a paper was put before the Board setting out a proposal to appoint the First Defendant to a role within the Claimant which was modelled on that of “a US style Chief Operating Officer”. The minutes of that Board Meeting record that:- “…Mr Hynes will be engaged on a contract with his trading company Kewferry Ltd for a fixed sum per month to include VAT and his personal expenses. In addition he would continue to benefit from the sales incentive incorporated in a letter to him dated 29th September in respect of referrals from certain named insurance companies.” The Board resolved to engage Kewferry Limited in accordance with that proposal subject to the First Defendant’s agreement of terms.[22]On 21 December 2004 a meeting took place between MB and the First Defendant. MB produced some notes in advance of the meeting to guide him through what he wanted to discuss with the First Defendant. The notes show that two of the issues which were to be discussed related to the corporate governance of the Claimant and to the joint venture and shareholder agreement which had been concluded earlier. It seems very likely, at the very least, that the First Defendant’s attention was drawn to the existence of the shareholder agreement and that he was also informed, perhaps in general terms, of the basis upon which the Claimant was controlled.[23]Side by side with this greater involvement on the part of the First Defendant, through Kewferry Limited, was the understanding that MB would be less involved than previously in the affairs of the Claimant – certainly in its day to day affairs. Further, quite well defined lines of demarcation were laid down for the responsibilities, respectively, of EB and the First Defendant. These lines of demarcation are summarised accurately in the table which appears in the document in Bundle 13 page 4572.[24]It is common ground that by the summer of 2005 MB and EB thought it desirable that the First Defendant should become an employee of the Claimant. It is also common ground that from the early months of 2005 the relations between Steve Williams and David Imber on the one hand and MB and EB on the other were becoming strained. So much so that by the summer of 2005 David Imber had resigned as a director of the Claimant and was willing to sell the shares which he had acquired in the Claimant. It is now accepted by the First Defendant that Mr Imber's shares were purchased by MB and EB but then sold to him for the same price. That price was 15p per share and it is common ground that the price was a beneficial one for the First Defendant. The documentation evidencing these transactions was produced before me during the course of the trial and it speaks for itself. Later in this judgment I will have to deal, in detail, with the evidence surrounding the transactions and whether or not upon his acquisition of the shares the First Defendant became bound by the shareholder agreement. At this stage, it suffices that I record that he became a shareholder.[25]In his evidence the First Defendant accepted that as from 13 July 2005 he became a director of the Claimant.[26]It was not until 12 December 2005 that the First Defendant signed a SPTC. There is no very clear explanation in the evidence for the lapse in time. In any event nothing turns upon the timing of the signing of this document since the First Defendant accepts that he became bound by it. At some point in time he was also provided with a copy of the Handbook and, similarly, the First Defendant accepts that he became bound by its terms.[27]I should also record that in September 2005 the First Defendant and the Claimant entered into an Option Agreement under the provision of Schedule 5 to the Income Tax (Earnings and Pensions) Act 2003 by virtue of which the Claimant granted to the First Defendant an option to acquire shares in the Claimant at a beneficial price. The Option is dated 22 September 2005.As I understand it, at or about the same time the Claimant and the Second Defendant also concluded such an agreement.[28]It was in the autumn of 2005, on the basis of the evidence put before me, that MB and EB first became interested in the possibility of purchasing companies (or assets of such companies) operating in the same or similar fields of business as the Claimant or alternatively selling their shares in the Claimant. An organisation known as Human Focus (Human Focus Return to Work Ltd) was in the market for providing rehabilitation to injured people. It is clear that during the latter part of 2005 significant discussions occurred between representatives of the Claimant and Human Focus with a view to the Claimant acquiring the assets of that organisation. At a meeting which took place on 14 November 2005 and attended by MB, EB and the First Defendant it was agreed that an attempt would be made to purchase the assets and goodwill of Human Focus. It was also agreed that EB should be at the forefront of the negotiations.[29]The negotiations did not come to fruition. Although there was some debate in evidence about the reasons why, it does not seem to me that such reasons are significant to the issues for my consideration.[30]It was also in the autumn of 2005 that the Claimant attracted the attention of a group of companies known as the Parabis Group (hereinafter referred to as “Parabis”). Parabis is a multi-disciplinary professional services organisation. Companies within Parabis provide a number of different but related services. These services now consist of legal services, claims handling services, liability adjusting services, services in the field of health and safety, management services and rehabilitation. The structure of Parabis is described, in detail, in the evidence of Mr Timothy Roberts but, for present purposes, it suffices that I say that it is owned by a company known as Trilliam LLP and that the four principal shareholders in that company are four solicitors, two of whom are Messrs Timothy Roberts and Timothy Oliver.[31]It is not entirely clear to me which of the services described above was provided by Parabis in the summer and autumn of 2005. It suffices that I record, however, that at that stage it did not provide rehabilitation services.[32]For a significant period of time companies within Parabis have had a business relationship with a major insurer, namely, Royal and Sun Alliance (hereinafter referred to as RSA). Mr Timothy Roberts, personally, has had very significant business dealings with RSA for approximately 20 years.[33]In September 2005 one of the companies in Parabis Ltd, was engaged by RSA to undertake a pilot scheme known as “BIPOC” (Bodily Injury Proof Of Concept). Mr Roberts had been extremely influential in formulating the concept behind this pilot scheme. The details of the scheme are not important but I should record that its core services included rehabilitation, fraud screening, legal expense insurance and medical reporting.[34]BIPOC did not simply contemplate that rehabilitation would be provided to injured persons making a claim against policy holders of RSA. It contemplated that a pro-active team would exist who would make telephone calls to individuals known or suspected to be injured by the actions of a policy holder of RSA. Such individuals would be asked whether they were injured and likely to make a claim and, if so, they would be offered rehabilitation services. The idea was that such individuals would be offered rehabilitation before they instructed lawyers in the hope that(a) the rehabilitation would provide a cure for their injuries and(b) the legal costs which would be incurred if they instructed lawyers would be avoided.[35]As at September 2005 there was no company or organisation within Parabis which could provide rehabilitation services. Accordingly it was necessary for such services to be provided by companies or organisations outside the Group. The Claimant was selected as the only provider under the BIPOC scheme. It seems to be common ground that the Claimant was so appointed in late 2005 and that it began providing work under the scheme from about December 2005 or January 2006. Timothy Roberts was influential in persuading RSA to appoint the Claimant as a provider.[36]It is also common ground that in the same time frame discussions took place which involved, principally, Mr Roberts and EB with a view to ascertaining whether either the Claimant or its assets might be brought into Parabis. There was a dispute in the evidence before me as to why the discussions failed but, in my judgment, it matters not why this occurred. MB, EB and Mr Roberts agree that by March 2006 it was clear that the Claimant would not become part of Parabis.[37]It is also important to note, however, that it was not just the Claimant which was the object of possible acquisition into Parabis. From late 2005 Mr Roberts and Mr Oliver had been engaged in discussions with representatives of Human Focus. In January 2006 Human Focus became part of Parabis. At that stage, therefore, there arose, for the first time, at least the possibility that a company within Parabis could provide rehabilitation services to those customers of the Group which required that service.[38]By April 2006 MB and EB considered that the Claimant had achieved its first strategic objective. It was, in the words of MB, “a profitable rehabilitation business based on the insurance market.” Not unnaturally this led to discussions as to the future. EB, in particular, was very keen to expand the activities of the Claimant into the public sector. The alternative possible strategy was to sell the Claimant.[39]Discussions about these alternatives took place between MB and EB, in particular, although, on any view, the First Defendant was involved to a substantial extent. The result was that an agreement was reached that the Claimant would expand into the public sector. That would involve raising money to promote this expansion. At this early stage the First Defendant was, in my judgment, in agreement with this proposal although it is also correct that he never shared the same enthusiasm for an expansion into the public sector as EB.[40]In May 2006 MB began the formal process of developing a new strategic plan for the Claimant. He considered that the Claimant should have two operating divisions selling the same services but to different market sectors. As I have said, however, it was necessary to an expansion in the public sector that there would be further funding of the Claimant. In the ensuing months it is clear that EB pursued, with vigour, his goal of an expansion of the Claimant’s activities into the public sector. It seems equally clear that First Defendant became less and less enthusiastic about that prospect.[41]The evidence before me dealt with many aspects of the history of the Claimant during 2006. In my judgment, the detail of the events which occurred between the Spring to the Autumn in the main throws little light upon the issues for my determination. It is worth recording, however, that in the summer the Second Defendant took up more share options, acquired more shares when a rights issue took place and was promoted within the Claimant to be Head of Business Development. Her promotion dispelled any lingering doubt, if any such doubt existed, that the Second Defendant was an extremely important employee of the Claimant and a person who was held in very high esteem by MB and EB.[42]In the autumn of 2006 the possibility of a sale of the Claimant was being considered quite carefully. In September 2006 Kroll Corporate Finance was appointed as an advisor. At that stage there were potential purchasers of the Claimant. One was an organisation known as HCML; the other an organisation known as Corpore Ltd. At about this time, however, there was a downturn in the Claimant’s trading fortunes. Since April 2006 the Claimant had been trading at a loss and by September 2006 “the situation was becoming very tight” adopting the words used by MB in his witness statement.It was also at about this time that MB concluded that further funding of the Claimant was not feasible.[43]In mid-October 2006 the accounts for September 2006 were published and it became clear that the Claimant had suffered a very poor month financially. The First Defendant offered an explanation for this performance which MB, in particular, rightly or wrongly, found unacceptable.[44]It was the First Defendant’s responsibility to provide a report to the Board on the accounts and he duly did so. It is dated 27 October 2006. MB considered that some aspects of this report were unduly alarming and, accordingly, on 30 October 2006 MB sent an email to the First Defendant to which he attached what he described as “my slightly amended version of your report …………” The First Defendant did not respond to the email before MB took the decision to amend the report in accordance with his own draft and it was the report as amended by MB which was circulated to the Claimant’s Board.[45]By an email dated 1 November 2006 the First Defendant did respond. What he said was as follows: - “I have read your version of my report and I am disappointed with the changes that you have made. I have to say that I am not used to having my work checked and edited without having discussed it before it goes out.”[46]In his evidence to me the First Defendant explained that during the course of 2006 he had, increasingly, considered whether or not he should resign his directorship of the Claimant and also give up his employment. In short he had become disillusioned with his involvement with the Claimant. By November 2006 he was concerned about the plans for an expansion into the public sector and he was concerned about such plans for a sale of the Claimant as existed. The First Defendant told me that it was after MB had altered his report to the Board without consultation that he resolved that he would resign as a Director and an employee. It was, so he said, “the last straw.”[47]During the course of the evidence there was a heated dispute about precisely when it was that the First Defendant resigned. The date when he actually ceased to work for the Claimant and ceased to be a director was not in dispute. What was disputed was when he first gave notice of his intention to resign as an employee and director. As will become apparent pinpointing this date is not important to a resolution of the central issues for my determination. However I should say that it seems clear that, at the very latest, in November 2006 the First Defendant had resolved, in his own mind, that he would leave the Claimant. It also seems probable that he had communicated the possibility of his leaving at the latest by the Board meeting which took place on 20 November 2007 and that MB and EB would have been under no illusions that the possibility was becoming a probability within days thereof.[48]Three other events which occurred in the autumn of 2006 are of importance. Two of these events concern the relationship between RSA and Human Focus. In or about September 2006 Mr. Roberts persuaded RSA to involve Human Focus in BIPOC. By September 2006 Human Focus had developed a rehabilitation product known as “physio-lite” which, essentially, was a process by which persons suffering from minor injury could engage in rehabilitation activities by following a programme on the internet. In that same time period Mr. Roberts persuaded RSA to instruct the three firms of solicitors which undertook work for injured people who were policy holders with RSA and whose claims were therefore being funded by RSA to use the services of Human Focus if there was a requirement for rehabilitation.[49]The third event of importance was the incorporation of a company known as Flexsure Ltd. This step was taken by the First Defendant with the agreement of the Second Defendant. The First and Second Defendant told me that this step was taken because they had become concerned about the potential sale of the Claimant to competitors. In short they were concerned that they would be surplus to requirements in the event of the Claimant becoming part of a competitor organisation. That was so, in particular, according to the First Defendant in the event of an acquisition by HCML. Flexsure was incorporated so as to protect the First and Second Defendant in the event of their redundancy since it could be used as a vehicle to promote such business as they determined was desirable.[50]In their oral evidence the First and Second Defendants asserted, unequivocally, that Flexure Limited had never traded; it had never had a bank account and it did nothing (and they did nothing in relation to it) which was possibly or conceivably in conflict with the Claimant or any duties which the First and Second Defendants owed to the Claimant.[51]The events of November and December 2006 and January to May 2007 are crucial to the resolution of many of the issues between the Claimant and the Defendants. Some of the evidence about the relevant events in that time-scale will be considered in detail later in this judgment. In this section of my judgment it is sufficient that I record the following undisputed facts.[52]Each of the Defendants ceased to work for the Claimant and commenced working for Scion Management Limited (hereinafter referred to as “Scion”), one of the companies within Parabis. The First Defendant ceased to work for the Claimant on 16 March 2007. Until that date he had remained a director of the Claimant and its Chief Operating Officer. He had concluded a contract with Scion before that date. His contract with Scion is dated 12 February 2007 and it was sent by the First Defendant to Scion on or about that date. He had indicated his intention to resign, of course, in November 2006; his letter of resignation is dated 9 March 2007. The Third Defendant ceased working for the Claimant on 5 April 2007 (having resigned on 14 March) and her contract of employment with Scion is dated 19 March 2007. It was delivered to Scion on or about that date. The Second Defendant ceased working for the Claimant on 27 April 2007 (having resigned by letter dated 3 February 2007). Her contract with Scion is dated 28 February 2007 but she alleges that she did not deliver to Scion until many days after that.[53]The First Defendant began working for Scion on 19 March 2007. The Second and Third Defendants began their employment with Scion on 8 May 2007. Following the departure of the First Defendant, the Second Defendant was appointed Chairman of a Business Continuity Committee which was constituted by the Claimant to smooth the transition which was inevitable given the actual departure of the First Defendant and the imminent departure of the Second and Third Defendant.[54]At no time did the Defendants inform the Claimant that they intended to work for Scion and at no time after their departure from the Claimant did they volunteer the fact that they had gone to work for Scion.[55]On 16 May 2007 the Claimant discovered that the Third Defendant was working within Parabis. It was not until 25 May 2007 that it discovered that the First and Second Defendant were also employed within the Group.

(a) The First Defendant

[56]The First Defendant admits that he is bound by the SPTC signed by him and those parts of the Handbook which impose obligations upon him.[57]The Claimant asserts, however, that the First Defendant is also bound by the shareholder agreement. That assertion is vigorously disputed by the First Defendant and I turn to deal with this issue in detail.[58]The earliest point in time at which the Claimant asserts that the First Defendant was aware of the existence of the shareholder agreement is December 2004. It was in that month that the Claimant was giving consideration to appointing the First Defendant (through his company Kewferry Limited) as the chief operating officer of the Claimant. Both MB and EB assert in their evidence that the projected role of the chief operating officer included responsibility for compliance with corporate policies and, so they say, it was in this context that the First Defendant was required to familiarise himself with corporate policy. Both MB and EB say that it was inevitable that in order to familiarise himself with such policy the First Defendant would have to obtain and understand the shareholder agreement.[59]It is to be noted that neither MB nor EB assert in their witness statements that they gave the First Defendant a copy of the shareholder agreement at this stage. Both, however, assert that in meetings in December 2004 the First Defendant was made aware of its existence and its general thrust.[60]In his witness statement the First Defendant does not deal, in detail, with the events of December 2004. In his oral evidence, however, he was not disposed to accept that any significant information was given to him in December 2004 about the shareholder agreement and he asserted, unequivocally, that he did not have a copy of the document at that stage.[61]As I have said earlier in this judgment it seems likely that the existence of the shareholder agreement was made known to the First Defendant in December 2004. I doubt, however, whether its contents were explained to the First Defendant at any meeting either with MB or EB in anything other than the most generalised way.[62]The First Defendant’s main account of the events leading him to becoming a director, shareholder and employee of the Claimant is set out in paragraphs 16 to 25 of his witness statement. As can be gleaned from paragraph 23 of that witness statement the First Defendant suggests that underpinning the various discussions he had with MB and EB in the summer of 2005 was an acceptance by all three men that the insurance business of the Claimant would be sold by June 2006. The First Defendant was at pains to point out to me that his wish and understanding was that he would be involved as an employee or director of the Claimant for a comparatively limited period and that the aim as of the summer of 2005 was to build the Claimant’s business to a point which would allow of a profitable sale in a timescale of about 12 months.[63]It seems to me that the most reliable guide to the content of the negotiations and discussions between MB and EB and the First Defendant from the summer of 2005 to late 2005 (which is the relevant time period in relation to the issue under consideration) is the documentation which was generated in that period.[64]By early July 2005 it is clear that discussions about the First Defendant assuming a central role within the Claimant had taken place. I say that by virtue of the terms of an email sent by MB to EB on 6 July 2005. The first paragraph of that email reads as follows: - “I think we can easily achieve what you want for Martin as long as he is willing to buy some shares. The Shareholder Agreement allows us under Clause 11.2 to assign the benefit of the deed “to any person”. As we have exercised our rights under the agreement with respect to David’s shares we can now assign those to Martin – he would thus have a core share holding to compensate him in the event that any sale is made. We then also assign him the share option released by David’s departure under the revised condition that they vest at capital valuations of £6M, £8M, £10M, £12M, £14M and £16M. This would give him about £220,000 at the bottom end and around about £1.2m at the top of the range with a little over £500,000 at £10m. This is slightly more generous than he has suggested. You can do the precise calculations.” According to a note prepared by EB on 13 July 2005 it was proposed to the Remuneration Committee of the Claimant (and thereafter the Board) that the First Defendant should be allowed to purchase from MB and EB shares which they had acquired from Mr Imber; that the First Defendant be appointed as a Director of the Claimant and he should become an employee of the Claimant at a salary of £40,000 per annum. The minutes for the Board Meeting which took place on 13 July 2005 show that the Board did appoint the First Defendant as a Director from that date. The minutes are silent as to the proposal that the First Defendant should become an employee at a salary of £40,000 per annum.[65]On 21 July 2005 EB sent an email to Mr Ian Murphie to the effect that he had now finalised the share option which was to be granted to the First Defendant and this email was copied to the First Defendant and MB.[66]On 22 July 2005 MB sent an email to First Defendant and the relevant part of the email for present purposes is as follows: - “I assume you were now becoming an employee? If not, we may have a problem with the share options, so if think not please let me know so we can discuss.” On 26 July 2005 the First Defendant replied indicating that he agreed that it would be necessary for him to be an employee.[67]Between 22 August 2005 and 24 August 2005 there was a flurry of emails relating to the First Defendant’s acquisition of shares in the Claimant. It is to be recalled that these shares were formerly owned by Mr Imber but, by this time, they had been purchased from him by MB and EB. MB had purchased 10,648 shares and EB had purchased 43,986. Each Stock Transfer Form is dated 23 June 2005 and the price paid was 15p per share. A very important email in this chain is one sent by EB to the First Defendant in the evening of 22 August 2005. It reads as follows: - “Martin When Mike and I sell the shares we bought from David to you we will be required to get you to sign a Deed of Adherence to Shareholder Agreement, possibly two, one for each transaction. Naturally you will need to read the Agreement before doing this. Chris will be able to let you to have a copy of it (though there is one in my desk drawer if that it is easier for you) and the appropriate forms. Regards Ed” The reference to Chris in that email is a reference to Mr Langford. Regards Ed”[68]Documentation produced during the course of the trial shows that on that same date, 22 August 2005, both MB and EB signed share transfer forms. Each was a transfer of the shares they had acquired from Mr Imber to the First Defendant. There was also produced in evidence a share certificate dated 22 August 2005. That showed the First Defendant to be the registered proprietor of the shares in question.[69]No evidence was adduced before me as to whether the transfers and the share certificate were signed before or after EB sent the email to the First Defendant and copied it to both Mr Langford and MB.[70]On 23 August 2005 Mr Langford sent an email to EB to the effect that he assumed that the First Defendant would need to sign a revised or new copy of the shareholder agreement which would be provided by the Claimant’s solicitors. On 24 August 2005 MB replied to Mr. Langford The relevant part of his email reads: - “Chris Martin needs only to sign the Deed of Adherence that was included in the original Shareholder Agreement as Schedule 2. I have attached a copy for reference, you will have to insert the relevant dates and details. Martin should of course be supplied with a copy of the original Shareholder Agreement and satisfy himself that he is happy to be party to the Agreement…….” MB copied this email to the First Defendant.[71]On 25 August 2005 Mr Murphie sent to MB the relevant documentation relating to the share option. By an email of 26 August 2005 EB informed the First Defendant of the fact that the paper work in relation to the share option was ready for review and signature and continued: - “Also I have signed a Deed of Transfer in respect of the shares I am selling to you and I anticipate Mike will also have signed one. I have returned mine to Chris so that he can put together the new share certificate.”[72]On 7 September 2005 EB sent an email to the First Defendant in which he explained the number of shares that the First Defendant was purchasing, respectively, from MB and himself and the price payable to each of them in respect of those shares. He concluded the email by informing the First Defendant that: - “Chris has sent the paperwork to the stamping office and will be issuing you a certificate for the total 54,634 shares in the next couple of days” On 16 September 2005 EB sent an email to Mr Langford. That email makes it clear that the First Defendant had received no share certificate and that he had not paid either EB or MB for the shares to be purchased. An email from EB to the First Defendant dated 26 September 2005 makes a further enquiry as to whether or not the First Defendant had received a share certificate. In my judgment the email carries with it the implication that EB and MB had yet to be paid for the shares. It also suggested that the share option should be signed before a Board meeting which was due to take place on 19 October 2005.[73]On 18 October 2005 EB sent a reminder to the First Defendant that the share option was to be signed on the following day.[74]There exists a note made by EB of an apparent discussion between the First Defendant and EB on 20 October 2005. So far as relevant to the issue presently being considered the note reads: - “Share options MH to take me through Articles of Association and to Shareholder Agreement Explain alternative ways to creating a market in the shares. Negotiate conditions upon which options vest.” It is unlikely that this discussion actually took place. I say that since on 23 October 2005 EB sent an email to the First Defendant which clearly proceeded on the basis of a meeting to take place in the future and which anticipated that at such a meeting the First Defendant would discuss with EB the Articles of Association, the shareholder agreement and the principle of a market for the shares. The First Defendant replied to that email on 25 October 2005. It is necessary to quote the email in full. “ED Looks fine by me. As we briefly discussed I am not certain how easy it will be to make a market in the shares as the business is currently constituted, but we can discuss it with David McGurk. I think it worthwhile putting down what the basics of the agreement were that we arrived at in July this year. My package then was £5500 per month (including VAT) for approx 3 days work per week + the commission deal. The objective had been to principally bring the business to profitability and improve sales. In July we agreed that the objective was to drive the business on as much as we could over a one year period and then step out. Since we felt Sarah Preston was key to this we also agreed this with her. Since I expressed that I did not wish to be tied to Kynixa for a number of years I agreed that this could be sensible arrangement on the basis that I would earn a minimum capital sum of around £100,000 + the potential to achieve a lot more if certain valuations were achieved via share option package. We did discuss at the time that a sale may not be made, but you may decide to continue going if that was deemed to be appropriate. We agreed that I would take a reduction in salary to £4000 per month (coming onto the company payroll) and increase my hours to that which would be necessary to move the business forward as we agreed. The commission deal would be waived as part of this arrangement. As we discussed last week in the evening, the way the option agreement is constructed, the options only vest when the business is sold; not when certain valuations are achieved. This is not in line with what we agreed since, again as we discussed, it may be that you do not wish to sell out in June of next year and therefore the options would vest. In particular, the development of the DWP strategy and the probability of raising a block of money for implementing it in the new year makes it highly unlikely that a sale would be achieved in the period we originally talked about. The objective was to have a pot of money that was realizable in this time frame, but which could continue to be invested if I wished. If we can not achieve this with the shares and options as was originally discussed then my original pay package would seem the more appropriate since it may not deliver as much potential upside, but would at least be within my control and would deliver the cash element. Regards” Regards”[75]It is clear that a meeting took place between the First Defendant and MB on 16 November 2006. This meeting was wide-ranging but it also dealt with the issue under consideration. On 17 November 2005 the First Defendant sent an email to MB in which he set out what he claimed had been agreed between EB and himself in the discussions which had taken place in July. In many ways this email reiterated that which had been set out in his email of 25 October 2005. Nonetheless given the importance attached to the email by Mr. Bacon for the First Defendant I reproduce the relevant parts in full: - “Mike I thought yesterday was very useful, thanks for the meeting. As we discussed I have set out below the original agreement that I had with Ed and the subsequent one that was supposed to take it’s place from Aug 1st. The agreement from 1st Jan was relatively simple and consisted of a package as follows. Basic monthly retainer of £5500 incl VAT for 3 days+ of work. MH to cover all expenses inside that figure. + The commission deal as per letter of 29th Sept 2004. This covered the following companies to start with – RSA, RBS, Allianz/Cornhill, Groupama, Link, Wren and Equity Redstar. The idea was each INA £100 + Vat + £100 for conversion to case management. + £20 for each Solutions product. In addition, any other pieces of business that I brought in would have the same commissions. These terms to run for 3 years from my initial involvement. The idea then became to replace this arrangement with me committing more time to the business and coming onto the Board. The specific timeframe agreed with Sarah, Ed and myself was to “go for it” over the course of the year to July 31 2006 with an exit of some sort or other. I explained that I was happy to take a salary reduction, work more hours etc at the expense of my other interests, but only if there was a guaranteed minimum payout of £100,000 at that time with a large upside to offset what I was foregoing with the commission and the extra hours needed at Kynixa away from my other interests. The payout of the £100k and the upside would be provided by shares which I would purchase and options exercisable on meeting certain valuations, we agreed that a sale may not be appropriate, but there would be a mechanism to achieve value for us both. As has become apparent over the last few months, the way the various agreements are structured means delivery of the July agreement is very difficult to make happen. I thought it might be interesting to run these figures against the first year of RSA, using the figures that David McGurk is using. I have attached the model. I look forward to seeing you tomorrow Regards Martin.” I look forward to seeing you tomorrow Regards Martin.”

Regards

[76]It is common ground that the First Defendant did become a shareholder in the Claimant by acquiring shares from MB and EB which were formerly owned by Mr. Imber. The witness statements of MB, EB and the First Defendant do not disclose when the First Defendant paid for the shares and when a share certificate was delivered to him. The emails to which I have referred above suggest that the share option was executed on or about 19 October 2005 although as I have said the share option signed by MB, EB and the First Defendant is dated 22 September 2005.[77]What does seem to me to be crystal clear, however, is that no transfer of the shares took place prior to the email sent by EB to the First Defendant on 22 August 2005. I appreciate that the share transfer forms and the share certificate is dated 22 August 2005. It is clear, however, that the consideration payable by the First Defendant to MB and EB was not paid until many weeks later and it is very unlikely that the share certificate was handed over before the price for the shares was paid.[78]The Claimant does not assert that the First Defendant signed the Deed of Adherence which would have bound him to the terms of the shareholder agreement. Equally it does not suggest that the First Defendant either in writing or orally expressly agreed to be bound by the agreement. Nonetheless, Mr Duggan, for the Claimant, submits that the shareholder agreement became binding upon the First Defendant as a consequence of the following chain of events. Firstly, and crucially, he submits that the effect of the email of 22 August 2005 from EB to the First Defendant was to make the offer to sell shares to the First Defendant conditional upon his agreement to be bound by the shareholder agreement by signing the Deed of Adherence. In that same email, submits Mr Duggan, the Claimant informed the First Defendant of the need to understand the shareholder agreement before signing the Deed of Adherence and (by implication) before acquiring the shares and it informed him of how he could obtain a copy of the agreement and the Deed of Adherence. Mr Duggan submits that in the aftermath of that email the First Defendant did or said nothing prior to purchasing the shares to suggest that he did not wish to be bound by the shareholder agreement. In those circumstances, submits Mr Duggan, upon purchase of the shares he became bound by the shareholder agreement.[79]An issue of fact arises as to whether or not it is correct that the First Defendant did nothing in relation to the shareholder agreement and the Deed of Adherence after 22 August. The email of 24 August 2005 sent by MB to Mr Langford was copied to the First Defendant. The email had attached to it a Deed of Adherence which had not been completed. It was the oral evidence of the First Defendant that upon receipt of that email he made it clear that he could not sign a Deed of Adherence until it was properly completed.[80]This suggestion appeared first in the Defence of the First Defendant. At paragraph 21(1) of the Defence the following allegation is pleaded: - “It is admitted that there was correspondence with Mr Hynes regarding the Deed of Adherence and Shareholders Agreement and that an incomplete draft Deed of Adherence was sent to him. On receipt, Mr Hynes made it clear that he could not sign it since it was incomplete in many respects. He asked for a complete version to be sent to him for his consideration, but this never happened. He was never provided with a copy of the Shareholders Agreement.”[81]It is to be observed that the First Defendant did not plead the identity of the person, on behalf of the Claimant, to whom he “complained” about the Deed of Adherence.[82]The First Defendant deals with this issue in paragraph 18 of his witness statement. The relevant sentences read: - “I was asked to sign a Deed of Adherence to the Shareholders Agreement. After I bought the shares (but not before this time), I was emailed a copy. It had not been completed in any shape or form and I distinctly recall saying to Ed that I could not sign until it had been completed and that, if he wish me to sign it, then he needed to get me a proper copy. The copy of the Deed of Adherence was exactly of the same format as it can be seen in Exhibit EB1 (page 4474 – 4475).”[83]The Deed of Adherence which appears at page 4474 of the Trial Bundles is indeed incomplete. It is incomplete, however, only to the extent that the date of signing is not included and the party and his/her address who is to sign the Deed is not included.[84]In the specific case of the First Defendant, therefore, the only missing part of the Deed of Adherence sent to him was his own name and address and the date when the Deed was to be executed.[85]In those circumstances it seems to me to be highly unlikely that the First Defendant would have raised with EB those details as reasons why he could not sign the Deed. Further, EB does not accept that the First Defendant raised with him the fact that there were missing parts to the Deed of Adherence.[86]It also to be observed that the First Defendant, in his witness statement, suggests that the Deed of Adherence sent to him arrived after he had bought the shares. Although it is correct that the Share Certificate is dated 22 August 2005 it is obviously not correct that the shares had been purchased on that date. As I have said it is clear that the consideration was paid by the First Defendant to MB and EB many weeks after that.[87]On this factual issue I do not accept that the First Defendant raised the incomplete nature of the Deed of Adherence as a reason why he could not sign it. I am fortified in that conclusion by my assessment of EB. I simply do not accept that he is the sort of man who would have ignored what the First Defendant had to say about the Deed of Adherence if the Deed had been raised with him. Yet, in reality, that is what must have occurred if the First Defendant’s evidence is accurate.[88]In my judgment what occurred was that MB and EB made an assumption that a Deed of Adherence had been signed at the time they accepted the purchase monies for the shares. Thereafter, they had no reason to think about it until this litigation came into existence.[89]I do not necessarily ascribe any sinister motive to the First Defendant in not signing the Deed of Adherence. I am satisfied, however, that he said or did nothing between the email of 22 August 2005 and his paying for the shares and receiving the Share Certificate which suggested that he was not prepared to sign the Deed of Adherence or that he had not, in fact, done so.[90]This finding of fact, however, does not impact upon the principal point taken by Mr Bacon as to why the First Defendant is not bound by the shareholder agreement. In summary, Mr Bacon submits that a proper interpretation of shareholder agreement, itself precludes anyone becoming bound by it unless the person in question is a signatory either to the agreement itself or to the Deed of Adherence.[91]Mr Bacon relies for that submission principally upon Clause 11 of the Agreement. This Clause is headed “Assignment” and it is necessary to set out the whole of the Clause so as to understands the point taken by Mr Bacon. “Assignment11.1 This deed shall be binding upon and shall enure for the benefit of each party to it and its personal representatives, permitted assigns and successors in title (as the case may be) but shall not be assignable save as provided in this clause 10.11.2 Each Shareholder may assign the benefit of this deed to any person to whom it transfers any Ordinary Shares pursuant to the Articles of Association, in which case such transferee shall execute a deed of adherence substantially in the form set out in Schedule 2 and subject to executing such deed of adherence, such assignee shall be entitled, and shall be assumed to have, all the benefits of this deed which would have been conferred on it if it had been a Shareholder at the date hereof and thereafter all references to the Shareholders in this deed shall be read and construed as including such person as if it had been an original party hereto.11.3 All deeds of adherence executed pursuant to clause 11.2 shall be executed by the Company for itself and as attorney for all those persons who are then parties to this deed. Such parties hereby (or, as the case may be, by executing a deed of adherence) appoint the Company as its attorney for such purpose and warrant and undertake that they shall confirm and ratify and be bound by all lawful acts of the Company made as their attorney pursuant to the power contained in this clause 11.3 and such authority and appointment shall take effect as an irrevocable appointment pursuant to section 4 of the Powers of Attorney Act 1971.11.4 Each of the Company and the Shareholders undertake to each other that they will procure to the extent of their respective rights (whether as Directors or Shareholders or otherwise) that:-11.4.1 no person is registered as the holder of any Shares (whether upon transfer or transmission or by issue) except in accordance with the Articles of Association and this deed;11.4.2 no person shall be so registered unless he has previously entered into a deed of adherence in substantially the form set out in Schedule 2; and11.4.3 no transfer of any interest in Shares is permitted or made except in accordance with the provisions of the Articles of Association.” 11.4.1 no person is registered as the holder of any Shares (whether upon transfer or transmission or by issue) except in accordance with the Articles of Association and this deed; 11.4.2 no person shall be so registered unless he has previously entered into a deed of adherence in substantially the form set out in Schedule 2; and 11.4.3 no transfer of any interest in Shares is permitted or made except in accordance with the provisions of the Articles of Association.”[92]In his Written Closing Submissions Mr Bacon makes the following points about the interpretation of the agreement. He submits that the agreement makes it clear that there is no obligation on a shareholder who transfers shares to assign the benefit and burden of the agreement. It is a matter of choice for that shareholder. That being so it is plainly possible, so he submits, for a transferee shareholder not to be bound by any of the terms of the shareholder agreement. Mr Bacon’s second proposition, however, is that if it is intended to assign the benefit of the Deed and (by implication) the burden, the Deed of Adherence must be signed.[93]Mr Bacon derives his first proposition from the use of the word “may” in the first line of Clause 11.2. He derives his second proposition from the remainder of Clause 11.2.[94]In my judgment his first proposition is not well founded. Clause 11.2 cannot be read in isolation. It must be read in the context of the whole of the agreement and, of course, in particular, Clause 11. In those circumstances it seems to be to be very unlikely, as a matter of objective interpretation, that the parties to the shareholder agreement intended that a shareholder bound by the agreement could sell his or her shares to a person who would not become so bound. That, as it seems to me, is wholly inconsistent with Clause 11.4 and although the provisions of the Articles of Association in relation to transfer of shares are detailed and complex there is nothing in those provisions which is inconsistent with the plain meaning of Clause 11 4. In my judgment the proper interpretation of Clause 11 read as a whole is that the parties to the shareholder agreement intended and agreed that any transferee of shares should become bound by the shareholder agreement.[95]It is also the case, in my judgment, that the parties to the shareholder agreement intended and agreed that a person acquiring shares in the Claimant would become bound to it by signing the Deed of Adherence. Indeed the shareholder agreement imposes obligations upon the parties to the agreement to ensure that the Deed is signed. It does not seem to me, however, that this uncontroversial proposition leads to the conclusion that a person acquiring shares cannot be bound by the terms of the shareholder agreement unless he/she signs the Deed of Adherence. No principle of the common law or statutory provision was advanced to support that conclusion. Such a conclusion flies in the face of the well established principle of the law of contract which is to the effect that contracts can be made without the need for formality (in the absence of any statutory provision to the contrary) provided the essential rules relating to offer, acceptance, the intention to create legal relations and the provision of consideration are met.[96]In the instant case there was clearly an offer by EB and MB to sell the First Defendant shares in the Claimant at the price of 15p per share. In my judgment the offer carried with it a condition which had to be fulfilled in order that the offer could be accepted. The condition was that the First Defendant would upon acquisition of the shares become bound by the shareholder agreement. By the email of 22 August 2005 that condition was made plain. The First Defendant was informed how he could obtain a copy of the shareholder agreement. It was not incumbent upon MB and EB to provide him with a copy of the agreement in those circumstances. Thereafter, as I have said, without raising any issue of any kind about the shareholder agreement (or for that matter the Deed of Adherence) the First Defendant purchased the shares. In my judgment, at that point in time he became subject to the terms of the shareholder agreement. It may be that, thereafter, the Claimant or MB and EB could have insisted that he signed a Deed of Adherence. In my judgment, however, that is academic since, as I have said, I consider that he became bound by the shareholder agreement upon purchase of the shares.[97]During the course of oral submissions Mr Bacon raised the fact that an aspect of the oral agreement reached in discussions in July 2005 had not been honoured. He sought to suggest that this might be a reason why the First Defendant was not bound by the shareholder agreement.[98]In his evidence, MB conceded that in November 2005 he had discussions with the First Defendant about the First Defendant’s salary and that an adjustment was made to his salary following those discussions since the salary paid to the First Defendant between July and November had apparently not accorded with what had been discussed in July. I have no reason to doubt what MB said about this. However, I cannot see how this in some way meant that the First Defendant was not bound by the shareholder agreement upon purchase of the shares. The terms upon which he was to purchase had been made clear and there is no evidence that the First Defendant considered at any time that the failure to pay an agreed rate of pay was a reason why he was some how in a position to purchase shares but on terms different from those offered by MB and EB.[99]It is clear, too, that the First Defendant raised issues in October and November 2005 about the terms of the share option agreement. The best evidence of the First Defendant’s “complaints” in this respect are, of course, the emails which he sent, respectively, on the 25 October and 17 November which are set out at paragraphs 69 and 70 above. In those emails he was complaining, in effect, that the share option agreement did not represent, in its written form, what had been discussed.[100]I have no reason to suppose that the First Defendant’s complaints about the share option agreement were not genuine. It seems to me, however, that those complaints cannot possibly be a reason why he would not be bound by the shareholder agreement. The first and most obvious reason is that prior to these complaints the First Defendant had signed the share option agreement and, therefore, became bound by its terms. Further, of course, he had purchased the shares and, on my analysis, had become bound by the shareholder agreement before he made the complaints. I simply do not see how complaints, subsequently, can relieve him of the contractual obligation under the shareholder agreement which I have held he had already assumed.[101]It follows that I have reached the clear conclusion that the shareholder agreement binds the First Defendant.[102]The First Defendant acknowledges that he was subject to an implied duty of fidelity by virtue of his employment by the Claimant. Both Mr Duggan and Mr Bacon acknowledge that the scope of such a duty is difficult to describe in the abstract. They both urged me to the view that the appropriate course is to consider the factual complaints made by the Claimants; to decide whether or not the complaints are well founded and then consider whether in the context of the First Defendant’s employment his proved acts or omissions constitute a breach of his duty of fidelity. That being so I do not propose to attempt any exposition of the scope of the duty. Rather I will consider whether or not the First Defendant was in breach of his duty when I consider the Claimant’s allegations against him later in this judgment.

(b) The Second Defendant

[103]The Second Defendant admits that she is bound by the shareholder agreement subject only to her contention that some of its provisions are unenforceable.[104]The Second Defendant also admits that she is bound by the SPTC and the Handbook and that she is subject to an implied duty of fidelity. In relation to this latter duty I will adopt the same approach for the Second Defendant (and indeed the Third Defendant) as I propose for the First Defendant.[105]The Claimant contends that the Second Defendant is also bound by the contract of employment which she signed on 13 February 2002. The Second Defendant accepts that she was bound by that contract from the commencement of her employment until she signed the SPTC. She contends, however, that the SPTC superseded her earlier contract so that its terms ceased to bind her. The point is of some importance only because the contract signed on 13 February 2002 contains covenants in restraint of trade whereas the SPTC does not.[106]During the course of the closing submissions I made it crystal clear that my provisional view was that the earlier contract ceased to have effect once the SPTC had been signed. It did not seem to me that Mr Duggan strenuously argued the contrary. Nonetheless, it is important that I deal with this issue in some detail.[107]In about July 2004 MB approached Mr David Mattinson who is the Managing Consultant of the company known as Partners in People Limited (hereinafter referred to as PP). PP is a company which provides a range of human resources and personnel management consultancy services to employers, managers and personnel professionals. Following discussions between MB and Mr Mattinson, PP produced to the Claimant a detailed document in which it set out the services it might provide in respect of “employment advice and support” to the Claimant. On 1 September 2004 PP and the Claimant entered into a written agreement. The agreement contemplated that PP would provide advice and support to the Claimant on a wide range of employment matters which included: - “The production of document packs for new employees, consisting of two copies of individual Statement of Principal Terms and Conditions and the Employee Handbook…..” There was specifically excluded from the scope of the service to be provided by PP. “Contracts for Directors or Senior Managers”[108]Although the initial contact was between MB and Mr Mattinson it is common ground that once the agreement had been signed between PP and the Claimant it was the Second Defendant who was the point of contact on behalf of the Claimant.[109]Her evidence has always been that she understood that PP had been appointed to provide revised contracts of employment for all of the Claimant’s employees save for those who were subject to a service agreement. It is not fruitful to dwell upon whether or not the Second Defendant had understood her instructions about this issue correctly. It is common ground that such instructions as she received came from MB and both MB and the Second Defendant, in their oral evidence, were disposed to accept that there could easily have been a misunderstanding between MB and the Second Defendant about the category of employees whose contracts were to be reviewed.[110]MB’s stance at trial was that by the Autumn of 2004 the Second Defendant was a senior manager so that the contract of employment which she had signed in February 2002 was not intended to be the subject of review. To repeat, the Second Defendant’s understanding was different and, as I have said, ultimately the Claimant does not suggest that the Second Defendant was wilfully misunderstanding her instructions.[111]Whatever the state of mind as between the Second Defendant and MB it is clear that Mr Mattinson understood that his task was to produce the SPTC and the Handbook and that these documents were intended to supersede the contracts of employment of all employees to whom the SPTC and handbook were issued. It is to be observed that neither Mr Mattinson nor the Second Defendant produced any notes of the discussions between them and no letters or emails was sent between the two in the period between 1 September 2004 and the production of the SPTC and handbook which throws any particular light upon how Mr. Mattinson came to that understanding.[112]In order that Mr Mattinson could review existing contracts of employment it was obviously necessary that he should be provided with examples. Although the evidence about what was provided to Mr Mattinson is not entirely clear the likelihood is that he was simply given a copy of the Second Defendant’s then existing contract of employment.[113]As I have said the then existing contract of employment of the Second Defendant contained restrictive covenants. In a letter which Mr Mattinson wrote to the Claimant’s Solicitors in December 2007 he asserted that it was at the Second Defendant’s suggestion that the SPTC should not include restrictive covenants. In paragraph 16 of his witness statement dated 10 January 2008 he makes the same point.[114]The Claimant makes no complaint about the fact that the SPTC contains no restrictive covenants. It’s stance in these proceedings, to repeat, is that its senior employees (if any) who had signed contracts of employment in similar form to that which was signed by the Second Defendant in February 2002 remained bound by the covenants within those contracts.[115]I should also record that the SPTC was approved by the Board of the Claimant before it was rolled out.[116]Mr Mattinson was unequivocal in his evidence as to his understanding of the status of SPTC and the Handbook. He understood that these documents would become the contractual terms upon which any person to whom they were issued was employed.[117]The SPTC issued to the Second Defendant contains the following provisions: - “The Company provides you with this Statement of your Principal Terms and Conditions of Employment, which complies with the Employment Rights Act 1996. It should be read in conjunction with the Company’s Employee Handbook, a copy of which has been given to your with the Statement. This Statement and the Handbook (except where otherwise indicated) form the basis of your contract of employment with the Company”. It suffices for me to say that neither that SPTC nor Handbook contained any hint or suggestion that the earlier contract of employment remained extant in any material way. I should also record that the SPTC is signed by EB on behalf of the Claimant.[118]In my judgment any objective reader of the SPTC and the Handbook in the position of an employee of the Second Defendant would consider that the SPTC and the Handbook constituted the terms upon which he or she was employed by the Claimant as from the date specified by the SPTC. It is inconceivable, in my judgment, that any employee who signed the SPTC and received the Handbook would think that discrete parts of an earlier contract of employment survived and bound him or her.[119]In the case of the Second Defendant there is no evidence whatsoever to suggest that she was informed, either orally or in writing, that the contract of employment signed by her in February 2002 survived in any material form following her signing of the SPTC. In the absence of a clear communication to that effect I simply do not see how she could remain bound by it.[120]There is this further point. The SPTC undoubtedly sets out what are intended to be the principal terms of the Second Defendant’s employment. It is silent about covenants in restraint of trade. On any rational basis such covenants are principal terms in a person’s contract of employment. The failure to include any such covenant within the SPTC, in my judgment, further supports the view that the terms of the earlier contract of employment were intended to be discharged upon the signing of the SPTC.

(c) The Third Defendant

[121]The Third Defendant accepts that she is bound by the SPTC and the Handbook. She also accepts that she was subject to a duty of fidelity.[122]In these proceedings, the Claimant seeks to assert that the Third Defendant is bound by the contract of employment which she signed on 12 August 2004. It contains restrictive covenants in identical form to those within the contract of employment signed by the Second Defendant in February 2002.[123]All the reasons why I have concluded that the Second Defendant was not bound by the contract which she signed in February 2002 once she had signed the SPTC apply with equal force to the Third Defendant. I unhesitatingly hold that she is not bound by the contract which she signed on 12 August 2004.[124]In her case there are two additional reasons why I come to that conclusion. The first is that the Third Defendant’s evidence was to the effect that at some stage before she signed the SPTC the Second Defendant told her that it superseded the contract of employment which she signed in August 2004. I accept that evidence. The second reason is that on 23 December 2004 the Second Defendant wrote to the Third Defendant about her contract of employment. That letter, which appears at Bundle 12 at page 4442 should be read as if incorporated fully into this judgment. It suffices that I say that any employee who received such a letter and who was considering its contents objectively would, in my judgment, understand that his/her existing contract was to cease to have effect once he/she had signed the SPTC.[125]I should add for completeness that Mr Bacon urges me to accept that such a letter would have been received by the Second Defendant and that this was also a reason why she was not bound by her contract of February 2002. I do not accept that submission for the simple reason that it is hardly likely that the Second Defendant had sent a letter to herself and if another person had sent it to her a copy would have surfaced in the course of disclosure and just as likely the Second Defendant would have produced the letter sent to her or given evidence that she received such letter.[126]It follows from the preceding paragraphs of this section of my judgment that none of the Defendants were subject to covenants in restrain of trade by virtue of their contracts of employment. However, the First and Second Defendant were subject to the provisions of the shareholder agreement. It therefore becomes necessary to consider whether the covenants admittedly in restraint of trade which are contained within that agreement are enforceable. It is to that issue which I now turn. The Covenants in Restraints of Trade contained within the shareholder agreement[127]The covenants in question are to be found in Clause 7 of the agreement. They read as follows: - “7.1 Each Shareholder who is at any time connected with the Company undertakes with the Company that he shall not at any time whilst he is connected with the Company or for a period of 12 months from the date on which he ceases to be connected with the Company, do or permit any of the following without the prior approval of the Board:-7.1.1 either solely or jointly with or on behalf of any person directly or indirectly carry on or be engaged or interested (except as the holder for investment of securities dealt in on a recognised stock exchange) in any business competing with the Business;7.1.2 solicit the custom of any person who is, or has been at any time, in the previous 6 months, a customer of the Business for the purpose of offering to such customer goods or services similar to or competing with those of the Business;7.1.3 solicit or entice away or endeavour to solicit or entice away any consultant, Director or employee of the Group engaged in the Business; or7.1.4 cause or permit any of their connected persons or any person (other than a member of the Group) directly or indirectly under his control or of which he is an employee, officer or partner to do any of the foregoing acts or things; PROVIDED ALWAYS that in this clause7.1 the Business shall mean the business of the Group as carried on at the date when the Director ceased to be connected with the Company and the reference in sub-clause 7.1.2 to the previous six months shall be to the 6 month period prior to that date.” 7.2. Without prejudice to their duties and obligations under common law, each Shareholder undertakes with the Company that they shall not at any time whilst they are interested in Shares or for a period of 12 months from the date on which they cease to be interested in Shares, do or permit any of the following without the prior written consent of the Board:- 7.2.1. divulge to any third party whatsoever (save to the extent required by law or any regulatory authority having jurisdiction over the Shareholder) or use, take away, conceal, destroy or retain for his own or another’s advantage or to the detriment of any Group member any intellectual property, accounts, financial or trading information or other confidential informationof whatsoever nature which they may receive or obtain in relation to the business, finances, dealings or affairs of any Group member or the Business including, without limitation to the foregoing, any confidential information concerning products, processes, customers, suppliers, staff or plans of any Group member or the Business; or 7.2.2. say or do anything which is or is intended or likely to be harmful to the reputation or goodwill of the Company or any other member of the Group. 7.3 Nothing contained in clauses 7.1 or7.2 shall prevent any Shareholder who has ceased to be connected with the Company or any of their connected persons from being the holder or beneficial owner of any class of securities in any company if such class of securities is listed on a recognised stock exchange, and he or she (either singularly or together with his or her connected persons) neither holds nor is beneficially interested in more than a total of 3 per cent of any class of the securities in that company. 7.4. Each undertaking contained in clauses 7.1. and 7.2. shall be, and is, a separate undertaking by the Shareholder expressed as giving it and shall be enforceable by the Company separately and independently of the right of the Company to enforce any one or more of the other undertakings contained in this clause 5 and in the event that any of such undertakings shall be found to be void but would be valid if some part thereof were deleted then such undertaking shall apply with such deletion as may be necessary to make it valid and effective.”[128]It is to be observed that the covenant set out at Clause 7.1 is a covenant on the part of a shareholder who is “connected with the company”. That phrase is defined within the shareholder agreement to mean: - “An individual being an employee, officer or consultant of any member of the Group” (See Clause 1.2.5)[129]Put shortly, Mr Bacon submits that all of the covenants contained in Clause 7.1 are unenforceable. He makes that submission on the basis that each is to bind the shareholder in question for a period of 12 months after he or she has ceased to be connected with the company. He submits that such a period of time is too long. He also submits that Clause 7.1.1 is unenforceable since there is no justification for an anti-competition clause.[130]Before turning to deal in detail with these submissions I set out the relevant principles of law which are to be applied. I am most grateful for the researches of Counsel which resulted in a comprehensive volume of relevant authorities. It seems to me, however, that my starting point (and virtual end point) is to adopt, gratefully, the exposition of the law by Gloster J in Brake Brothers Limited v Ungless [2004] EWHC 2799. Her exposition is to the following effect. “(1) Covenants in Restraint of Trade are prima-facie unlawful and accordingly are “to be treated with suspicion”see per Laddie J in Countrywide Assured Financial Services Limited v Smart ChD 7 May 2004. (2) It is for the covenantee to identify a legitimate business interest that is capable of protection. (3) It is for the covenantee to show that the covenant extends no further than is reasonably necessary to protect that interest and the court will enforce the covenant only if it goes no further than is reasonably necessary to protect the trade interest or other legitimate interest of the previous employer: see, for example Scott LJ (as he then was) in Scully UK Limited v Lee [1998] 1 ICR 259 (4) The Court will scrutinise more carefully covenants in employment contracts, as opposed to ordinary commercial contracts where it will more readily uphold the covenant as being agreed between parties of assumed equal bargaining power. (5) A covenant should be assessed for its validity at the date upon which the contract was made. (6) A covenant will be upheld if the employer can show that it has been designed to protect his legitimate interests that, properly construed, the covenant extends no further than is reasonable necessary to protect those interests: see Mason v Provident Clothing Supplies Limited [1913] AC 724; Herbert Morris v Saxelby [1916] 1 AC 688. (7) If a covenant can be construed in two ways, one of which leads to its invalidity, then the Court should prefer the alternative construction: see Turner v Commonwealth and British Minerals Limited [2000] 1 IRLR 114 at para. 14. (8) A covenant should be interpreted in the context of the agreement as a whole so as to give effect to the intention of the parties. (9) The legitimate interests which justify the imposition of a covenant in restraint of trade are(i) trade connection,(ii) trade secrets or confidential information akin to a trade secret;(iii) staff stability. (10) Trade connection is established where it can be shown, by virtue of his position with the employer, the employee will have recurrent contact with customers or, as in this case, suppliers, such that the employee is likely to acquire knowledge of and influence over the customers or suppliers. (11) An employer has a legitimate interest in maintaining the stability of his workforce. (12) In order to determine whether an item of information is a trade secret or confidential information akin to a trade secret, the Court should have regard to a number of factors as described by the Court of Appeal in Faccenda Chickens v Fowler [1987] 1 Ch 117 at pages 137B to 138H, including the nature of the employment and the nature of the information itself. It is clear that this must be a trade secret or information of such a highly confidential nature as to require the same protection. This was explained by Lord Shaw in Herbert Morris v Saxelby (supra) at page 714 as follows: - ‘Trade secrets, the names of customers, all such things which in sound philosophical language are denominated objective knowledge - these may not be given away by a servant; they are his master's property, and there is no rule of public interest which prevents a transfer of them against the master's will being restrained. On the other hand, a man's aptitudes, his skill, his dexterity, his manual or mental ability - all those things which in sound philosophical language are not objective, but subjective - they may and they ought not to be relinquished by a servant; they are not his master's property; they are his own property; they are himself. There is no public interest which compels the rendering of those things dormant or sterile or unavailing; on the contrary, the right to use and expand his powers is advantageous to every citizen, and may be highly so for the country at large. This distinction, which was also questioned in argument, is just as plain as the other. An excellent concrete example of the latter point may be found in the present case. The second head of the injunction claimed is “from divulging or communicating . . . information as to the customers or affairs of the plaintiff company and from otherwise divulging or using such information”. This [is] purely objective, and it was with exact correctness made the subject of a separate claim’ A trade secret has also been defined as information used in a business, the disclosure of which to a competitor would be liable to cause real or significant harm to the owner of the information and the dissemination of which has either been limited or not encouraged: see Lansing Linde v Kerr[1991] 1 WLR 251 at 260B to D per Staughton LJ. Other factors include whether the employer impressed upon the employee the confidentiality of the information (the attitude of the employer towards the information provides evidence which may assist in determining whether the information can properly be regarded as a trade secret); whether the relevant information can be easily isolated from information which the employee is free to use; and whether it is information, the use of which a man of average intelligence and honesty would regard as improper. (13) It is clear that an area or non-competition covenant may be justified where the interest to be protected is trade secrets or confidential information akin to a trade secret, notwithstanding that there is an obligation present in the contract not to divulge confidential information post termination. Such a covenant, the authorities show, may be justified because it can be difficult for a former employer to police compliance with an obligation relating to trade secrets or confidential information akin to a trade secret. In addition, such a covenant can be justified by the fact that there are serious difficulties in identifying precisely what is, or what is not, a trade secret, or confidential information akin to a trade secret; see Littlewoods Organisation v Harris [1997] 1 WLR 1472 at pages 1479A-E, where Lord Denning said:
“But experience has shown that it is not satisfactory to have simply a covenant against disclosing confidential information. The reason is because it is so difficult to draw the line between information which is confidential and information which is not: and it is very difficult to prove a breach when the information is of such a character that a servant can carry it away in his head. The difficulties are such that the only practicable solution is to take a covenant from the servant by which he is not to go to work for a rival in trade. Such a covenant may well be held to be reasonable if limited to a short period.”
Likewise in CR Smith Glaziers Limited v Greenan (1993) SLT 1221, the court said at page 1223F:
“. . . it is well established that a prohibition against disclosing trade secrets is practically worthless unless it is accompanied by a restriction upon the employee possessed of secrets against entering the employment of competitors.”
See also Printers & Finishers Limited v Holloway [1965] 1 WLR 1 at page 6; Faccenda Chicken Limited v Fowler [1987] 1 Ch 117 at pages 137G-138G; Turner v Commonwealth & British Minerals Limited [2000] IRLR 114 at para 18; Kall-Kwik Printing v Rush [1996] FSR 114 at page 124. However, the courts will scrutinise their covenants with particular care because of their broad anti-competition effect, enquiring whether a lesser form of restriction (for example a non-solicitation clause) might not have given the employer sufficient protection and have been a more proportionate form of embargo than one which bars out competitive employment in the whole of the United Kingdom; see Office Angels Limited v Rainer-Thomas [1991] IRLR 214 paragraphs 45-58 and Countrywide Assured Financial Services Limited v Smart (supra). In any event, a balance has to be struck between the degree of protection legitimately required by the Claimant (which is permissible) and the degree of restriction or legitimate use of skill and knowledge and legitimate competition (which is impermissible); see Office Angels (supra) at para 58. In considering the anti-competitive effect of the area covenant, the court should consider whether the existence of the provision would diminish the Defendant's prospects of employment; Stenhouse Australia Limited v Phillips [1974] AC 391 at page 124C-D. In cases where a restrictive covenant is sought to be enforced the trade secret (or confidential information akin to a trade secret) must be particularised sufficiently to enable the court to be satisfied that the employer has a legitimate interest to protect, but no more than that; see Scully UK Limited v Lee (supra) [1998] IRLR 259 at para 23. The covenant to protect the use or disclosure of trade secrets (or confidential information akin to a trade secret) does not depend upon the employee taking documents or memorising the contents of documents. It can properly apply to trade secrets (or confidential information akin to a trade secret) which the employee may carry away in his head; see, eg, Polly Lina Limited v Finch [1995] FSR 751 at page 757.” ‘Trade secrets, the names of customers, all such things which in sound philosophical language are denominated objective knowledge - these may not be given away by a servant; they are his master's property, and there is no rule of public interest which prevents a transfer of them against the master's will being restrained. On the other hand, a man's aptitudes, his skill, his dexterity, his manual or mental ability - all those things which in sound philosophical language are not objective, but subjective - they may and they ought not to be relinquished by a servant; they are not his master's property; they are his own property; they are himself. There is no public interest which compels the rendering of those things dormant or sterile or unavailing; on the contrary, the right to use and expand his powers is advantageous to every citizen, and may be highly so for the country at large. This distinction, which was also questioned in argument, is just as plain as the other. An excellent concrete example of the latter point may be found in the present case. The second head of the injunction claimed is “from divulging or communicating . . . information as to the customers or affairs of the plaintiff company and from otherwise divulging or using such information”. This [is] purely objective, and it was with exact correctness made the subject of a separate claim’ “But experience has shown that it is not satisfactory to have simply a covenant against disclosing confidential information. The reason is because it is so difficult to draw the line between information which is confidential and information which is not: and it is very difficult to prove a breach when the information is of such a character that a servant can carry it away in his head. The difficulties are such that the only practicable solution is to take a covenant from the servant by which he is not to go to work for a rival in trade. Such a covenant may well be held to be reasonable if limited to a short period.” “. . . it is well established that a prohibition against disclosing trade secrets is practically worthless unless it is accompanied by a restriction upon the employee possessed of secrets against entering the employment of competitors.”[131]Mr. Duggan for the Claimant invites me to place considerable reliance upon the decision in Thomas v Farr Plc [2007] IRLR 419. In that case the Claimant (who was also the Appellant in the Court of Appeal) had held a number of posts, culminating in that of managing director of the Defendant, which was an insurance broker specialising in services for social housing, in particular housing associations. The Claimant’s contract of employment contained a non-competition clause under which he covenanted not to, without written consent, directly or indirectly:
“………at any time during the restriction period …….. to be engaged or concerned or interested or participate in any business which is the same as or in competition with the business or relevant part thereof anywhere in any restricted territory provided always that this paragraph shall not restrain [the Claimant] from being engaged or concerned in any business concern in so far as the [Claimant’s] duty or work shall relate solely to: (a) geographical areas where the business concern is not in competition with the business; or (b) services or activities with which the [Claimant] was not concerned to a material extent during the twelve months prior to the termination date ……….”
The “restriction period” was twelve months from the date of termination.[132]The issue of whether or not the non-competition clause was enforceable was decided as a preliminary issue by Ramsey J who held that the clause was enforceable. The Court of Appeal upheld the decision of Ramsey J. Mr. Duggan urges me to the view that the factors which influenced the Court in Thomas to uphold the covenant were factors which were also of considerable importance in the instant case. Those were(a) the fact that the Claimant was employed in a very senior position;(b) the fact that he had been exposed to information which the Defendant was entitled to require to be kept confidential after the termination of his employment;(c) the fact that there would be difficulty in policing the non-solicitation and confidentiality clauses which also bound the Claimant and(d) the fact that it was very difficult in cases such as Farr (and in the instant case according to Mr. Duggan) to know where exactly the line might lie between the information which remained confidential after the end of employment and information which did not.[133]The other point of some importance which emerges from the decision in Thomas is that the court makes it clear that the reasonableness of the restraint is to be judged at the time when the employee is promoted to the most senior position he/she achieves with the employer. Indeed, there was no issue about it between the parties. In the case of the Claimant in Thomas he was first made the subject of the restraint in issue when he started employment with the Defendant. In due course he was promoted and eventually reached the position of managing director. The Court of Appeal endorsed the approach of the Trial judge who had considered the issue of whether the restraint was enforceable at the time when the Claimant became managing director. This point is of some significance to the position of the Second Defendant.[134]I should also mention one other authority upon which Mr. Duggan relies. In SystemsReliability Holdings Plc v Smith [1990] IRLR 377 the Defendant began working for a company (ECS) as a computer engineer engaged in the reconfiguration of IBM main frame computers. He became highly skilled in the modification and rebuilding of the latest generation of IBM’s 3090 computer and was instrumental in making ECS a leading company in computer services. He was dismissed on grounds of misconduct on 1 February 1990. During the course of his employment with ECS the Defendant had purchased shares totalling 1.6% of the holding in the company. After his dismissal the Plaintiffs acquired all the shares in ECS and the Defendant received £247,000 for his 1.6% holding. The share sale agreement contained a restrictive covenant under which “none of the specifically restricted vendors [would] during the restricted period directly or indirectly carry on or be engaged or interested …….. in any business which [competed] with any business carried on at that date of this agreement …… by the company or any of its subsidiaries”. The Defendant was one of the specifically restricted vendors and the restricted period was in effect one of 17 months from the date of the sale. There was also a restriction upon the use of confidential information. A short time after his dismissal and the sale of his shares in ECS the Defendant set up his own business supplying computer services. The Claimant sought and obtained an injunction retraining the Defendant from acting in breach of the covenants restricting competition and restraining the use of confidential information. During the course of his judgment Harman J said this:- “54. The position in this case is that [the Defendant] was selling his fraction – a small fraction but nonetheless his fraction of the company. He was getting for that a very substantial sum of money, £247,000. He was being paid a price no different from the price paid to other vendors. He got it in a different make-up of consideration because he received it all in cash and none in shares and with no deferred buy-out. But his price was no different from the price paid to others. It seems to me that in those circumstances it is right, and the courts should allow, covenants in restraint of trade as between vendor and purchaser to be reasonable when a vendor sells and a purchaser buys the whole of a business from a number of vendors, some of whom have only small participations in the goodwill and business which is being sold. In my belief the courts would be stultifying themselves to hold that only what were called controlling shareholders or persons having major interests can be bound.55. It is quite true that the restrictions in this agreement apply in part to persons who seem to have no likelihood of detailed knowledge of the business being sold nor conceivable prospect of competition. There are included, for example, two persons who are trustees of a settlement for the benefit of grandchildren of one of the founders…… whom I have previously mentioned. Those trustees plainly have never been in the business as trustees, have plainly no prospect as trustees of entering into a competing business and a covenant really is utterly inappropriate to them. There are also three children of Mr Ingle – one of them plainly a married woman, one of them his son and another an unmarried daughter – who may or may not have anything to do with competition but who are there because they are shareholders. It may well be that if the Court were asked to enforce a covenant against those persons it would say that it was not reasonable so to do because they had never in any way engaged (if that were the proved fact, which it is not before me but I am assuming) in the business being sold and to have no prospect of effectively competing on the back of the knowledge they had obtained in the business being sold.56. In my judgment Mr. Serota’s argument is entirely correct when he says that the fact that the covenant may have been taken from some persons against whom it cannot be enforced does not mean that the same covenant cannot be taken from persons who have all those knowledges and interests and against whom it is reasonable to enforce it. In my view the prime argument by Mr Hoyle that this was in truth a covenant to be looked at in the light of the severe restrictions on reasonableness to be adopted from master and servant type cases is not the appropriate basis. This is a true vendor and purchaser and there is no public policy that I can see that should prevent [the Defendant] taking himself out of competition for a comparatively limited time – 17 months in the upshot; a time which on the evidence in this case I find as a fact to be entirely reasonable and sensible……….”[135]It is to be observed at the outset that the restrictive covenants under consideration in this case (clause 7.1) are contained within an agreement between shareholders. To that extent they arise in a different context from that in which such covenants have normally been considered by the courts. Almost without exception (on the basis of the authorities provided to me) covenants in restraint of trade have been considered in the context of contracts of employment and in the context of contracts for the sale of a business.[136]It is of importance to note, however, that the covenants impugned in this case apply only to shareholders who are connected with the Claimant as defined. As is obvious, employees of the Claimant who are shareholders are within the category of persons to whom the covenants apply. In my judgment, therefore, the principles set out above are those upon which I should determine whether or not these covenants are enforceable. In reaching my conclusion upon enforceability, however, it is clear that the emphasis to be given to one relevant factor over another needs to reflect the fact that the persons against whom the restraint are sought to be enforced are both employees and shareholders.[137]Clause 7.1.1 is, in my judgment, widely drawn. It restrains the persons to whom it applies from carrying on either directly or indirectly any business which competes with the business of the Claimant; it restrains a person from being interested in any such business and, importantly in the context of this case, it restrains a person from being engaged in any business. The phrase “engaged in any business” is apt to cover employees of that business but is obviously intended cover a wider category of persons than that.[138]It is also the case, in my judgment, that Clause 7.1.1 restrains the persons to whom it applies from being engaged in any activity in a competing business even though the activity in which the person is engaged may bear little relation to the activity in which the person was engaged when he or she was employed by the Claimant.[139]At first blush the Clause applies to any employee who is a shareholder. It applies regardless of the seniority of the employee and it applies regardless of the extent of his or her shareholding. I deal with this point more fully in a moment.[140]To repeat, in my judgment, this Clause is of an ambit which is very wide.[141]During the course of closing submissions I suggested that the likelihood was that if Clause 7.1.1 was enforceable against the First Defendant it was enforceable against the Second Defendant and vice-versa. Mr Bacon did not accede to that proposition and I can understand why that is so. I turn next, therefore, to deal with the circumstances in which each became bound by the shareholder agreement and the features of the employment of each with the Claimant which are relevant to the issue of whether Clause 7.1.1 is enforceable against them. The First Defendant[142]The First Defendant became bound by the shareholder agreement when he purchased shares from MB and EB in September 2005. He purchased the shares in question at a beneficial price and his purchase of the shares was very much linked to his aspirations in relation to the Claimant. The First Defendant made no secret of the fact and, indeed, it was his positive case, that by the summer/autumn 2005 he envisaged that he would be engaged with the Claimant for no more than about one more year. His goal was to promote the Claimant’s business so as to facilitate a profitable sale of the business of the Claimant in or about the summer of 2006. By purchasing shares, as he did, in 2005 the First Defendant hoped and anticipated that approximately one year later he would sell them at a very substantial profit. At or about the same time as he purchased his shares the First Defendant entered into the share option agreement. No doubt, he hoped that by so doing and in the event of a sale of the Claimant his profit would be enhanced. In my judgment, the First Defendant’s decision to acquire the shares was a calculated commercial decision carrying with it the prospect of very substantial profit.[143]At the time the First Defendant entered into the shareholder agreement he was either the most senior or a very senior employee of the Claimant. He was the Chief Operating Officer. He enjoyed the complete confidence of the Claimant’s Board of Directors and he had very substantial autonomy in how the business of the Claimant was conducted. He was privy to every scrap of information (confidential or otherwise) which was relevant to the running of the Claimant’s business. He was also privy, in large measure, if not completely, to the hopes and aspirations which MB and EB held for the Claimant. There can be no doubt that if the Claimant had confidential information which was worthy of protection (as to which see below) the First Defendant was wholly familiar with it.[144]It also seems to me to be an obvious conclusion that the First Defendant was known to and knew many of the personnel who constituted the Claimant’s major customers. In the summer/autumn 2005 all the Claimant’s major customers were insurers or solicitors and there can be no doubt that the First Defendant knew many of the people within the insurers and solicitors who were responsible for providing work to the Claimant. The Second Defendant[145]As I said earlier in this judgment the Second Defendant first became a shareholder of the Claimant in 2003. As I understand it she acquired her shares on or about the first anniversary of her commencing her employment with the Claimant. She purchased 36 shares (later these shares were converted to 3600 in number). According to the Second Defendant the Claimant made shares available to her in lieu of a bonus although this is disputed. MB’s evidence was that it was the policy of MB and EB to encourage senior employees and staff to participate in share owning and even at this stage it was obvious that the Second Defendant was a valuable employee.[146]At or about the same time the Second Defendant was given a 3% pay increase (so that her annual salary became £41,200) and she was given a bonus of £4,000 according to the Claimant (although as I have said this may be a matter of dispute). The Second Defendant was the first employee of the Claimant who was not also a director to become a shareholder. At the time when she acquired these shares, of course, the shareholder agreement did not exist.[147]Her account of her signing the shareholder agreement is contained in paragraph 13 of her principal witness statement. She says that in November 2003 there was a rights issue and as a shareholder she was entitled to subscribe for some shares. She chose to take up the offer and paid some £2000 of her own money for 1334 shares. That meant that she was then the owner of 4934 shares in the company but, on any view, that was a very small proportion of the company’s shareholding. Coincidental with her acquiring the shares she was given a shareholder agreement to sign and she accepts that MB spoke to her about the agreement although she has no recollection of what he said. It was in these circumstances that the Second Defendant became bound by the shareholder agreement.[148]One thing that the Second Defendant says in her witness statement which I do not accept is that she considered the shareholder agreement not to be material because her shareholding was so tiny. I do not think that the Second Defendant is the sort of person who signs a legal document without giving it her full attention. I have no doubt that when she signed the shareholder agreement she knew that it contained covenants in restraints of trade which were more onerous than the covenants within her contract of employment and that she took a deliberate decision to accept the restraints in return for a greater number of shares.[149]In my judgment the Second Defendant, just like the First Defendant but in different circumstances, took a reasoned decision to acquire a small shareholding in the Claimant in the hope that this would provide monetary gain in due course. My view as to that is reinforced by the fact that the Second Defendant, in 2006, again subscribed for shares when the opportunity arose and, of course, she entered into a share option agreement in 2005.[150]As of November 2003, as I have said, the Second Defendant was clearly a valued employee. However, on the evidence, it is not entirely straight forward to pinpoint the nature of the work which the Second Defendant was undertaking at about that time. It seems to me, however, that MB’s evidence about her work in the early years of her employment is likely to be accurate at least in general terms. Her job description was the clinical services manager. She engaged in work which involved formalising and documenting the Claimant’s internal procedures, documenting processes and procedures which were intended to give the Claimant a competitive advantage over its customers, organising case management delivery following the undertaking of clinical assessments, carrying out case management herself and negotiating with insurers to fund the work. Nothing in the Second Defendant’s own evidence contradicts this assessment of the work which she did between June 2002 and about November 2003 when she became bound by the shareholder agreement.[151]Subsequent to the signing of the Shareholder Agreement it is common ground that the Second Defendant became increasingly important to the business of the Claimant. In the years between 2003 and January 2007 her salary rose to £75,000 per annum. At the time when she tended her resignation she was, without doubt, crucial to the success of the business of the Claimant. Her job description from 17 July 2006 onwards was Head of Business Development. It suffices that I say that she was intimately connected with all the important aspects of the Claimant’s business. She does not seek to assert otherwise.[152]I next turn to deal with the evidence adduced as to the information which was known to both the First and Second Defendant and which the Claimant asserts it was necessary to protect by imposing upon the First and Second Defendants the restraints which appear in the shareholder agreement.[153]It is not disputed that the First and Second Defendant had access to all the important information about the Claimant’s business activities. That was so when they became bound by the shareholder agreement and it continued to be so. It may be that the Second Defendant was not informed about some aspects of the proposals to sell the Claimant or acquire an interest in some of its competitors or their assets but, to repeat, it is clear that the First and Second Defendant knew of or had access to all relevant information about the Claimant’s business activities.[154]The Claimant’s case has proceeded on the basis that some, at least, of this information must have been confidential and was worthy of protection. Mr Duggan submits that much of the information to which the First and Second Defendant were privy would, for example, properly be categorised as trade secrets in the sense that the disclosure of such information to a competitor would be liable to cause real or significant harm to the Claimant.[155]At first blush, however, there has been little attempt, expressly, in this case to identify precisely the information owned by the Claimant which falls into that category.[156]In part, that may be because the First and Second Defendant have not, in reality, suggested that none of the information to which they had access and about which they knew could be regarded as confidential and did not amount to trade secrets. Nonetheless, it seems to me that it is necessary that I should scrutinise the evidence with some care to satisfy myself, if it be the case, that the First and Second Defendant had knowledge of information which is properly to be regarded as confidential and worthy of protection.[157]The starting point, of course, is the definition of confidential information contained within the shareholder agreement (supra paragraph 19). There can be no doubt that much of the information to which the First and Second Defendant were privy satisfied that definition. It seems to me, also, that there is a comparatively easy and fruitful way of undertaking an analysis of whether the Claimant owned information which was confidential and worthy of protection. It is to consider the information which the First Defendant admits he sent to his home email address during the last months of his employment with the Claimant. I stress that at this stage of my judgment I am not considering whether the sending of that information to the First Defendant’s own email address and any use made of it thereafter was in breach of contract or a breach of the Defendant’s fiduciary duty to the Claimant as a director. To repeat, I consider the material sent simply so as to make a judgment about whether or not it was confidential and worthy of protection.[158]One of the Appendices to Mr Duggan’s Opening was a list of the documents which the First Defendant emailed to his home address between 3 October 2006 and 12 March 2007. Mr Duggan listed those documents in reverse date order. There were twenty seven items sent within the time frame specified and having considered that documentation in detail it seems to me that many of those documents can properly be categorised as documents which contain confidential information or trade secrets. I highlight those documents about which I am confident that conclusion is justified.[159]On 18 January 2007 the First Defendant emailed to his home a document entitled Report on Northern Operations for November 2006. The Claimant asserts that the report describes plans for continued development of the Claimant’s presence in the north of England. On 22 January 2007 the First Defendant emailed a number of documents to his home address which contained actual historical financial performance data and the financial forecast for 2007/2009. On 30 January 2007 the First Defendant emailed to his home address an email which is described by the Claimant as a dialogue between the First Defendant and MB about short term cash flow pressures within the Claimant. On 8 February 2007 the First Defendant emailed two documents to his home address. The first document contained part of an analysis of the Claimant’s financial performance prepared by MB. The second was a copy of a financial model which was being used for forecasting in the period up to March 2010. On the same day the First Defendant emailed a document described as a discounting model which contained a financial model of the Claimant’s potential use of an invoice discounting facility in the period 2007/2009. On 12 March 2007 the First Defendant emailed two documents, a company report for the period April 2006 to 22 February 2007 and a Quality Team Structure. The Company Report contained a full list of all the Claimant’s customers (then 96 in total) and how much they were billed during the period both for the Claimant’s services directly and indirectly for the services of third parties working on the Claimant’s rehabilitation programme. The Quality Team Structure was a document prepared by an employee of the Claimant called Mandy Kelly on 15 February 2007 in which she describes in detail her role as quality assurance lead, the structure of the Claimant as it related to this role, the Claimant’s specific aims on quality, the roles of others within the quality team, a quality assistant, clinical/vocational auditors, clinical/vocational supervisors, trainers and process auditors. This document is described as being critical to maintain the Claimant’s position (as it perceives it to be) as a leading edge innovator in the industry. It represented many years evolution based on experience.[160]As I have said I am quite satisfied that both First and Second Defendants had access to the sort of information which I have described in the preceding paragraph. I should say for the avoidance of doubt that although it was the First Defendant who had emailed the documentation which I have highlighted to his home address there can be no doubt that the Second Defendant, also, had access to and knowledge of such information.[161]It is also worth noting, in my judgment, that the Second Defendant, in particular, had been highly instrumental in devising information technology systems throughout her employment with the Claimant. Indeed, in her evidence, she was at pains to point out that MB’s role in devising these systems was overstated by him.[162]While it is correct that the Claimant sought to justify Clause 7.1.1 in the shareholder agreement by reference to the protection of confidential information it is not irrelevant that the First and Second Defendants were very well known by the relevant personnel within the Claimant’s customers as its senior managers. This point is best illustrated by the stance which Mr Timothy Roberts wished to adopt about announcing to the outside world their arrival, together with that of the Third Defendant, as employees of Scion. His plan was to announce that “the entire Kynixa Management team” had joined. (Bundle 17 page 6192).[163]Mr Bacon urges upon me the view that in judging the reasonableness of the covenants in restraint of trade contained within the shareholder agreement I should have particular regard to the covenants in restraints of trade which were contained within the contract of employment signed by the Second Defendant in February 2002. In particular Mr Bacon relies upon Clauses 14.2 and 14.3 of that contract. Clause 14.2 reads : - “The Employee shall not without the prior written approval of the Company, which will not be unreasonably withheld, so as to compete with the Group Company or so as to harm the goodwill of the Group Company during the period of 6 months after the Termination Date, directly or indirectly, and whether as principal or otherwise, canvass or solicit business from any Restricted Person with whom he was directly dealing in the course of his obligations hereunder in the Relevant Period.” Clause 14.3 reads:- “The Employee shall not without the prior written approval of the Company, which will not be unreasonably withheld, so as to compete with the Company or so as to harm the goodwill of the Company during the period of 6 months after the Termination Date, directly or indirectly, and whether as principal or otherwise, negotiate or enter into any contract of employment with any Restricted Company.” Mr Bacon draws attention to these two clauses to highlight the fact that the post termination restraint is for a period of six months as opposed to the twelve month period within the shareholder agreement.[164]The other factor which needs to be considered in assessing whether or not the restraints in the shareholder agreement are reasonable is the nature of the Claimant’s business and the market in which it operates. There is no dispute about the nature of the Claimant’s business. The Claimant is a provider of rehabilitation and case management services to injured people. It operates in a market in which the principal customers are insurers and solicitors. I have been given no precise information about the number of organisations which provide rehabilitation and case management services to these customers but I was left with the clear impression that the number is comparatively small. In my judgment, the likelihood is that the providers and customers are very well known to each other and it is a fiercely competitive market.[165]The only basis upon which Mr Bacon submits that the restraints imposed by Clauses 7.1.2, 7.1.3 and 7.1.4 of the shareholder agreement are unreasonable is that they subsist for twelve months after any employment with the Claimant has terminated.[166]I do not accept that such a period is unreasonable in respect of the restraints specified in these clauses.[167]I reach this conclusion for the following principal reasons. The Claimant clearly had a legitimate interest in seeking to prevent the solicitation of its customers. Equally it had a legitimate interest in seeking to prevent solicitation of the category of persons specified in Clause 7.1.3. Given the nature of its business, the competitive nature of the market in which it operated, the fact that the First and Second Defendant were well known to the customers of the Claimant and the fact that with some customers, at least, arrangements for the provision of services by the Claimant between the it and the customer would remain in place for a fixed period time (measured often in two year periods) but then be reviewed I consider that a restraint lasting twelve months was entirely reasonable. In making this judgment I have also had regard to the fact that the First and Second Defendants had a choice about whether or not to enter the shareholder agreement and in each case they chose to do so for (potentially) substantial gain.[168]I appreciate, of course, that the non-solicitation restraint in the Second Defendant’s contract of employment of February 2002 was to subsist only for 6 months. However the circumstances in which the Second Defendant was employed in 2002 were wholly different from those which existed(a) by the time she signed the shareholder agreement and, more importantly,(b) by the time she became Head of Business Development. In February 2002 the Claimant was a fledgling business. Its turnover then bears no relation to the turnover which it had achieved, in particular, by the summer of 2006. In 2002 the Second Defendant was one of a handful of people working for the Claimant. Although the Second Defendant was always an important employee for the Claimant her importance grew and grew so that her role within the Claimant and her knowledge of the Claimant and its customers increased year by year. Her appointment as Head of Business Development was clear recognition of just how important she was. Although I do not ignore the period of restraint which was imposed in her contract of employment it does not seem to me that this factor is as important as the others which I have identified in deciding whether or not the restraints on solicitation in the shareholder agreement were justified in her case.[169]I do not see how the period of restraint contained within the Second Defendant’s contract of employment can have any relevance to the issue of whether the restraints against solicitation are enforceable against the First Defendant. If the period is relevant at all it must be marginal, at best. After all, at the time the First Defendant became subject to the restraints against solicitation he was the Chief Operating Officer of the Claimant; he had intimate knowledge of all its business; substantial knowledge of many of its customers and their personnel and he had voluntarily entered into the shareholder agreement with a view to making a substantial profit.[170]I turn to consider the anti-competition provisions of Clause 7.1.1. The first issue is whether or not any such clause was justified given that both the First and Second Defendants are subject to enforceable non-solicitation covenants and also subject to a covenant which restrains the use of confidential information. (I here refer to Clause 7.2.1.) In my judgment an anti-competition clause was justified. At the risk of being repetitive the First and Second Defendants were very senior employees; they were privy to confidential information which the Claimant was justified in seeking to protect. As shareholders they had a clear interest in the well-being of the Claimant and in the taking of necessary steps to protect it from its competitors so far as that was legitimate. I accept that in many instances it would be difficult to decide whether information was genuinely confidential and worthy of protection. In the context of a business such as that operated by the Claimant it seems to me to be obvious that potential exists for significant debates about what may or may not be confidential.[171]I also take the view that the policing of the restraint on divulging or using confidential information would be extremely difficult. In the case of the First and Second Defendants there can be no doubt that much of the relevant confidential information would be firmly lodged in their memory. How would the Claimant know if they simply spoke about it?[172]Similarly there would be endless opportunities for the Defendants to meet the relevant employees of the Claimant’s major customers. How would the Claimants know whether or not they were being solicited?[173]In relation to clause 7.1.1, therefore, the issue becomes whether or not its width and the fact that the restraint subsists for twelve months makes it unenforceable.[174]In relation to the interpretation of the covenant, I bear in mind the principle that where a covenant is capable of being interpreted in one of two ways the interpretation to be adopted is the one which allows the covenant to be enforceable.[175]The phrase “connected with the company” is defined by the shareholder agreement to mean an individual who is an employee, officer, or consultant of any member of the group. “Group” means the Claimant and its subsidiaries (if any) from time to time. The potential difficulty is that the word “employee” is capable of applying to the lowliest paid person carrying out the most menial duties within the Claimant’s employment, as well as senior personnel.[176]When interpreting Clause 7 one cannot divorce the expression “connected with the company” from the word “shareholder”. It is only a shareholder who is also an employee who is caught by Clause 7. The reality is that the prospect of any employee obtaining shares in the Claimant who is not a senior employee was at the time of the conclusion of the shareholder agreement and is, even now, remote so far as I can see. It was also remote in 2006. The Claimant is a private company. Without specifying in detail the circumstances in which shares in the Claimant might be acquired in accordance with the shareholder agreement and the Articles of Association it is clear that shares can be acquired only in strictly defined circumstances. It does not seem to me to be real to think that an employee would acquire shares unless he or she was an important employee in terms of the role he or she had in the business of the Claimant. In these circumstances it is tempting to seek to put a gloss on the natural meaning to be given to the word employee and to confine its meaning to something akin to senior employee.[177]On reflection, however, I do not think that is permissible. I simply do not see how any cannon of interpretation can lead to the view that the word “employee” should be interpreted other than as any person who has a contract of employment with the Claimant.[178]It does not seem to me, however, that the width of the clause is, of itself, necessarily fatal to its enforceability. In reality, the persons who are bound by the shareholder agreement fall into different categories – employees being one category. It seems to me that in deciding whether or not the non-competition clause in the shareholder agreement is enforceable one has to look at the particular status of the person against whom the covenant is sought to be enforced. It would offend most people’s sense of what was reasonable if a court were to hold that, for example, a cleaner employed by the Claimant who had been granted a right to buy a modest amount of shares on account of long service and had done so should be restrained from working for anyone in the event of his employment with the Claimant being terminated. If, however, a restraint against the Claimant’s Chief Operating Officer or Head of Business Development is otherwise justified it would be seem to be wholly wrong that it should be become unenforceable simply because the wording of the restraint is apposite to include within its ambit the cleaner to whom I have referred. In taking this approach I am doing no more than following the approach of Harman J in the Systems Reliabilitycase (supra)[179]Be that as it may, it seems to me that on any view the correct approach for me to adopt is encapsulated in a passage from the judgment of Mance J (as he then was) in Skipsredittforeningen v Emperor Navigation SA [1997] 2 BCL 398. At page 413 the Learned Judge in a passage of his judgment dealing with the requirement of reasonableness in the context of an exclusion against misrepresentation said: - “The consequence of the approach adopted in Stuart Gill [1992] 1 QB 600 is (as the present case shows) that the Court may hear arguments that the term is or may be unreasonable (and so wholly void in relation to misrepresentation or breach of contract claims, as the case may be) for reasons or in respect that have nothing to do with the facts of the actual case. Assuming that the whole term invalid in this way if it fails the requirement of reasonableness, the Court should, I think, take care to consider the clause as a whole in the light of the circumstances when the contract was made, in order to judging around whether it satisfies the requirement of reasonableness. The Court should not be too ready to focus on remote possibilities or accept arguments that the clause fails the test by reference to relatively uncommon or likely situations.”[180]In my judgment, as I have indicated the chances of an employee who is also a shareholder becoming bound by the shareholder agreement and yet not holding a very responsible post with the Claimant is and has been at all material times remote. In judging the reasonableness of the restraints, therefore, it seems to me to be permissible to give very little weight to the fact that, theoretically, an employee/shareholder might become bound by this Agreement when there could be no justification for him being so bound.[181]I have reached the conclusion, therefore, that the words of the restraints in so far they appear to include all classes of the Claimant’s employees who are shareholders are not a bar to its enforceability. In reaching that conclusion I also bear in mind that the restraint prohibits conduct which is indirect as well as direct.[182]I do not consider that the length of the restraint is unreasonable. Essentially I have reached that conclusion for the same reasons which persuaded me that the restraints against solicitation were not for too long a period.[183]I should record that Mr Bacon’s submissions about the length of this restraint essentially boiled down to a submission that if a six months period in the Second Defendant’s contract of employment of February 2002 was thought appropriate there could be no basis for a longer period in the shareholder agreement. Mr. Bacon asks the question what can it be about the status of shareholding which would justify doubling the period of restraint and answers this question with the word “nothing.” In my judgment that is not the correct approach. The proper approach is to consider the fact that the restraint applies to a person who is both an employee and a shareholder and then evaluate all the factors which are relevant to a determination of whether the restraint is a reasonable one.[184]Having set out in some detail (I hope) the factors which I consider to be relevant in assessing whether or not the restraints under consideration are reasonable I have reached the clear conclusion that the Claimant has established that the covenants in restraints of trade in the shareholder agreement are reasonable and enforceable both against the First and Second Defendant. Fiduciary Duties[185]As a Director of the Claimant the First Defendant owed to it a fiduciary duty. About that there is no dispute.[186]The Second Defendant concedes that she became subject to a fiduciary duty. She did not concede, necessarily, that she was subject to such a duty from the commencement of her employment, but, in my judgment, nothing turns upon whether or not she was subject to such a duty between the commencement of her employment and late 2006. By late 2006, in my judgment, she was subject to a fiduciary duty by virtue of the senior status which she had achieved within the Claimant. I do not understand this finding to be controversial but, in summary, I make it because by late 2006 the Second Defendant was the Head of Business Development; she was responsible for and/or party to very many important business decisions and she was privy to all aspects of the Claimant’s business.[187]It is not suggested that the Third Defendant was subject to a fiduciary duty.[188]Many of the aspects of the fiduciary duty to which the First and Second Defendants were subject are not contentious. They accept the following aspects of the duty:• A duty not to make a profit out of the position of trust in which they were placed.• A duty not to place themselves in a position where their duties towards the Claimant and their personal interest conflicted.• A duty not to make a secret profit from their position within the Claimant.• A duty to respect the Claimant’s confidential information.[189]The Claimant contends that the fiduciary duty imposed upon the First and Second Defendants carried with it a duty to disclose activities of themselves or on the part of other employees which might not be in the interest of the Claimant. In support of this proposition Mr Duggan relied, particularly, upon the decision of Hart J in British Midlands Tool Limited v The Midland International Tools Making Limited [2003] EWHC 466 (Ch). It is sufficient to quote two passages from the judgment of Hart J: - “[81] It is a fundamental duty of the director of a limited company to ‘do his best to promote its business and to act with complete good faith towards it’: …………..On the face of it, therefore, one might think it a simple proposition that a director would be under a duty to alert his fellow board members to a nascent commercial threat to the future prospects of the company, and that the duty would be all the greater (and certainly no less) when he himself was planning to be part of that threat. [82] It is clear, however, that that simple proposition cannot be sustained in the light of the authorities……………. [83] …….. it was held in Balston Limited v Headline Filters Limited [1990] FSR 385 (Falconer J) that an intention by a Director to set up business in competition with the company after his directorship has ceased is not to be regarded as an interest which conflicts with his duty to the company; that the taking of preliminary steps during the directorship to investigate or forward that intention while he remains the director is also not to be so regarded so long as there is no actual competitive activity; and that a director who is contemplating resignation and subsequent competitive activity, and is taking such preliminary steps is under no duty to disclose those facts to the company. ……… [85] At its widest, the decision in Balston’s case is authority for the proposition both(a) that the forming of the competitive intention and the taking of the preliminary steps is not itself a breach of duty by a director/employee and(b) that even it were, the director/employee would be under no duty to disclose the same to the company/employer. So far as the second of these propositions is concerned Balston’s case is clearly distinguishable from the present case. Balston’s case was concerned with the duty of the director/employee to disclose his own conduct. Falconer J does not seem to me to have dealt explicitly with the general submission made by Counsel for the Plaintiff ([1990] FSR 385 at 403) that, as a director, the Defendant was under a duty to report any knowledge he has acquired concerning competition. He had in fact accepted the second defendant’s evidence (see [1990] FSR 385 at 392) that he had made no decision on whether or not to compete prior to his resignation as a director, so that the point strictly did not arise. What the case does not deal with is the duty of a director, or an employee, to report the misconduct of a fellow director/employee. …….” 191. [88] This line of authority (with the exception of Balston Limited v Headline Filters Limited [1990] FSR 385 which does not appear to have been cited to him) has recently received further consideration in a recent decision of Mr Nicholas Strauss QC sitting as deputy high court judge in this division in Items Software (UK Limited) v Fassihi [2003] 2BCLC 1. In that case the leaned deputy judge, after a penetrating examination of the authorities, identified certain circumstances in which an employee/ director (not there acting in concert with other employees or directors) might come under a duty to disclose his own misconduct. For present purposes the decision is relevant for the distinction it draws between the position of an employee and an employee who is also a director. On that issue (in the context of a failure to disclose an earlier breach of fiduciary duty as director on the validity of a contract terminating a service agreement), different views had been expressed, obiter, by Glidewell J, at first instance, and Robert Goff LJ, on appeal in Horcal Limited v Gatland [1983] BCLC 60 (ChD); [1984] BCLC 549 (CA). While accepting that the position of a director should be the same as that of an employee in relation to the duty to disclose his own past breaches when negotiating an agreement to vary or terminate his service contract, Mr Strauss QC’s view was that in the case of a present breach, which it is in the interests of the company to know for the protection of its business, a distinction should be drawn. 192. [89] On this issue (which is unnecessary to decide here where the threatened activities were not those of one director alone) I agree with the view expressed by Mr Strauss QC. A director’s duty to act so as to promote the best interests of his company prima facie includes a duty to inform the company of any activity, actual or threatened, which damages those interests. The fact that the activity is contemplated by himself is, on the authority of Balston’s case, a circumstance which may excuse him from the latter aspect of the duty. But where the activity involves both himself and others, there is nothing in the authorities which excuses him from it. This applies, in my judgment, whether or not the activity itself would constitute a breach by anyone of any relevant duty owed to the company. It does not, furthermore, seem to me that the public policy of favouring competitive business activity should lead to a different conclusion. A director is free to resign from his directorship at any time notwithstanding the damage the resignation may itself cause the company: see CMS Dolphin Limited v Simonet [2001] 2BCLC 704 [95] per Lawrence Collins J. By resigning his directorship he will put an end to his fiduciary obligations to the company so far as concerns any future activity by himself (provided that it does not involve the exploitation of confidential information or business opportunities available to him by virtue of his directorship). A director who wishes to engage in a competing business and not disclose his intentions to the company ought, in my judgement, to resign his office as soon as his intention has been irrevocably formed and he has launched himself in the actual taking of preparatory steps. Although this might seem inconsistent with the wide statement of principle involved in Balston’s case, it is not inconsistent with the decision in that case on its particular facts: as already noted …… the intention to compete does not appear to have been formed prior to the resignation as a director.”[190]I have focused on these passages because, in the case before me, the Claimant puts its case very much on the basis that one aspect of the First and Second Defendants breach of fiduciary duty was their failure to inform the Claimant of the real possibility that they and the Third Defendant would take up employment with Scion in circumstances where that meant that they would work for a competitor of the Claimant. As will become apparent, it is also the case for the Claimant that there came a point in time when the First and Second Defendants knew that the possibility was to come to fruition and yet still refrained from informing the Claimant. In these circumstances, submits Mr. Duggan, I do not have to decide whether or not the failure of an individual director or employee to disclose alleged damaging conduct on his or her own part can amount to a breach of fiduciary duty. In this case, submits Mr. Duggan, that factual scenario simply does not arise for consideration.[191]I should record that Mr Bacon does not submit that the analysis of Hart J in British Midlands Tools Limited was in any way erroneous on the basis that it applies to the duty of a director/employee who is acting in concert with others.[192]For reasons which will become apparent I accept that it is unnecessary for me to look at the position of the First and Second Defendants as if each was acting without knowledge of each other’s intentions in relation to Scion. Accordingly, whether or not they were in breach of duty must be judged on this aspect of the case by reference to the principles enunciated by Hart J.[193]Having said all that I have in relation to the scope of fiduciary duty, it is nonetheless clear that the scope of the duty in any particular case will depend upon the duties undertaken by the particular employee. In the later sections of this judgment which deal with the allegations of breach of fiduciary duty I will expand upon that issue, where necessary.[194]I should also say that I have not forgotten that I should scrutinise with care any suggestion that what may be termed “preparatory acts” amount to a breach of duty. Again, in due course, where necessary, I will expand upon this issue. The Defendants Contacts with Roberts/Oliver[195]As I have said Messrs Roberts and Oliver, together with other colleagues, controlled the activities of Parabis. In the months leading to late 2005, Mr Roberts, in particular, had significant dealings with the Claimant both in relation to BIPOC and in relation to the possibility that Parabis would acquire the Claimant. In the course of these dealings Mr Roberts came to know the First and Second Defendants. The Third Defendant had been employed by RSA for a period approaching 20 years by 2004. At some point in time during that period she had got to know Mr. Roberts.[196]One of the Third Defendant’s colleagues at RSA was a woman called Mrs. Kath Newton. The Third Defendant and she became friends and they remained in contact after the Third Defendant became an employee of the Claimant in September 2004. In fact, the two women maintained their contact during 2006 and after Mrs. Newton had ceased to work for RSA and commenced employment with Parabis Limited.[197]I have no doubt that Mr. Roberts was impressed by what he knew of the work undertaken by the three Defendants for the Claimant. Even in the context of a trial where extremely detailed evidence was provided, it is difficult to judge just how much Mr Roberts did know of their work. The probability is, however, that he had a good idea about what each did for the Claimant and about their value to the Claimant. He would have gained such knowledge, primarily, by virtue of his dealings with the Claimant from late 2005 onwards in relation to BIPOC. However, as the growth of Parabis demonstrates, Mr Roberts and his colleagues who control it are shrewd businessmen. I have little doubt that from late 2005 onwards Mr Roberts’ interest in the Claimant was not confined to the fact that it was one of the service providers under BIPOC. He was also interested in its senior employees and probably made it his business to keep his ear to the ground about them.[198]In my judgment that conclusion is amply justified by Mr Roberts’ own evidence as to how it came to be that he first made contact with the First Defendant with a view to the First Defendant being employed within Parabis. Mr Roberts’ account was that a senior employee (an employee of Scion) resigned in November 2006.He apparently thought the First Defendant might be a possible replacement very soon thereafter. It cannot be coincidence, in my judgment, that the approach of Mr. Roberts came so soon after the First Defendant had indicated his intention to leave the Claimant. My conclusion is further justified by the fact that on the very first occasion that Mr Roberts met the First Defendant the two men discussed the Second Defendant. According to the First Defendant, Mr Roberts raised with him whether or not she was happy working for the Claimant. Mr. Roberts’ account was that the position of the Second Defendant was raised by the First Defendant. Whatever the true position the Second Defendant was undoubtedly discussed and I am confident that Mr. Roberts was interested in receiving information about her.[199]During the course of the evidence, the three Defendants and Mr Roberts detailed the occasions when the Defendants met either Mr Roberts or Mr Oliver in the period leading to the Defendants becoming employees of Scion. Mr Duggan does not suggest that the Defendants or Mr Roberts were untruthful or inaccurate in detailing the occasions of the meetings and I see no reason to doubt what they told me about when face to face meetings took place.[200]Such meetings began with a meeting between Mr Roberts and the First Defendant in early to mid-December 2006. That meeting came about according to both the First Defendant and Mr Roberts because on 1 December 2006 Mr Roberts telephoned the First Defendant. No discussion took place between the two men on that day. However, in the course of the next day or two the two men did speak on the telephone and a meeting was arranged as I have indicated.[201]In his witness statement the First Defendant describes what occurred in this way:- “We met and I explained that his call had been fortuitous because I had in fact recently resigned from Kynixa. We discussed the various businesses inside Parabis and the insurance service business they were building. At the meeting, Tim Roberts asked whether Sarah was happy at Kynixa. My reply was that I did not think that Sarah was happy.” (See Paragraph 93)[202]The next face to face meeting between the First Defendant and Mr Roberts took place on 21 December 2006. In their witness statements Mr Roberts and the First Defendant assert that Mr Oliver was also present although Mr. Roberts doubted that having refreshed his memory from his notes of the meeting. At the meeting, according to the First Defendant, the men discussed various aspects of the business – by which the First Defendant meant the business of Parabis. The First Defendant says that there was also a discussion about his background and employment history and what it might be that he could bring to the business of Parabis. He could not recall any particular discussion about Human Focus but he accepted that it was probably discussed. He told me that he was attracted to working within Parabis in some central role since that provided to him with an opportunity of working in a much bigger business than that of the Claimant and he was impressed with both Mr Oliver and Mr Roberts.[203]In January 2007 the First Defendant met Mr Oliver. Some days later – on 25 January 2007 – an offer was made to him of employment as Group Operations Director for Scion. That post, according to the First Defendant, involved helping to pull together into a coherent structure the many parts of the non-legal side of the businesses undertaken by Parabis, namely health and safety, loss adjusting, claim handling, travel insurance, sickness absence management and the provision of rehabilitation. The task in relation to the provision of rehabilitation was specifically to integrate the processes into the group law firms to make them more efficient.[204]The First Defendant received a proposed contract of employment on 5 February 2007 and he signed that document and returned it on 12 February 2007.[205]The Second Defendant asserts in her witness statement that it was in about the middle of January that she received a call from Mr Roberts. She says that Mr Roberts and she arranged a meeting and that it took place at the Petersham Hotel in Richmond in mid-January 2007. At the point in time when the meeting took place, the Second Defendant had not resigned although she had indicated to MB that she might do so (as to which see below). At the first meeting between the Second Defendant and Mr Roberts he told her that Parabis had many opportunities for her. He indicated that she could be employed by Scion and that she would not work in competition with the Claimant. That point came up because the Second Defendant disclosed to Mr. Roberts that she was subject to the restraints within the shareholder agreement.[206]At the meeting between the Second Defendant and Mr Roberts he told her that he was in discussion with the First Defendant with a view to him joining Parabis. According to the Second Defendant they did not discuss any details relating to such discussions as were occurring with the First Defendant but, to repeat, it was clear to her that discussions were taking place with a view to the First Defendant joining Parabis.[207]Although the Second Defendant’s witness statement indicates that this meeting took place in the middle of January the Second Defendant accepted, when cross-examined, that it was in fact in early January that the meeting took place.[208]Following the meeting with Mr Roberts, the Second Defendant met Mr Oliver. In her witness statement she says that this was “later in January 2007”. This meeting, according to the Second Defendant, appeared to her to be much like a job interview.[209]On the time scale suggested by the Second Defendant it must have been a few days only, thereafter, that she discovered that the Third Defendant was also in discussion with Mr Roberts. I say that since she accepts that all three Defendants were present in a café near the premises of the Claimant in late January and on that occasion they revealed to each other that they were in discussions with Mr Roberts.[210]The Third Defendant told me that in late November 2006 her partner and she visited Mrs. Newton and her husband for the week-end. During the course of that week-end Mrs Newton asked the Third Defendant whether she was happy in her work with the Claimant and whether she had thought about joining the Parabis Group.[211]In mid-December 2006 Mrs Newton again raised the subject during a conversation with the Third Defendant. She told the Third Defendant that Mr Roberts would like to “chat” to her. The probability is that Mrs Newton gave Mr Roberts’ mobile telephone number to the Third Defendant.[212]According to the Third Defendant at the beginning of January 2007 she began to re-evaluate her personal circumstances and in the light of that she decided to telephone Mr Roberts.[213]In her witness statement the Third Defendant says that her recollection of her first call to Mr Roberts is that it was after 22 January 2007 – probably in the few days after that date. She says that there was then further contact leading to an agreement to meet on 1 February 2007. It is common ground that the meeting took place. In the course of the meeting, according to the Third Defendant, Mr Roberts told her that he wanted to build the rehabilitation side of the business and would be interested in her background in claims and customer relationship management. He also asked her whether she was subject to any restrictions (by which he meant covenants in restraints of trade) and what period of notice she would have to give.[214]On the basis of the foregoing account I have reached the clear conclusion that Mr Roberts set out to recruit the three Defendants. After all, there is no dispute that he directly contacted the First and Second Defendants and it is equally clear that he made contact with the Third Defendant via her friend Mrs Newton.[215]Given the time scale during which this contact occurred it also seems an inescapable conclusion that he was seeking to recruit all three together. In reaching that conclusion I do not mean to suggest that his state of mind was that all three should be recruited or none. I am clear, however, in my view that his aim was to recruit all three.[216]I am also completely satisfied that each of the Defendants knew that this was his aim at the latest at the time that they met in the café near the Claimant’s premises. All three Defendants are intelligent, resourceful and worldly wise. They cannot have thought other than that Mr Roberts wished to recruit them together given his approaches to them and the time scale in which they were made.[217]For the avoidance of any doubt that does not mean that I have reached the conclusion that at this stage the Defendants’ state of mind was that they were definitely moving as a team to Parabis. The evidence, in reality, demonstrates that that is not so. It is clear, for example, that the Second Defendant, in particular, entertained various possible sources of alternative employment. She attended one interview some weeks after the meeting with the other Defendants in the café. To repeat, however, there seems to me to be no escaping the conclusion that each Defendant knew in late January that Mr Roberts’ aim was to recruit them all if he could.[218]MB has undertaken an exhaustive analysis of the telephone records of the Defendants in attempt to demonstrate, in effect, that all three of them – or at least the First and Second Defendant – knew the intimate details of what was transpiring between Mr Roberts and each of them from the moment Mr Roberts first made contact with the First Defendant. Essentially the analysis of telephone records undertaken by MB demonstrates, so it is submitted, substantially more telephone calls and messages between the Defendants than one would reasonably expect in the context of work colleagues – even work colleagues who are friends and that the proper inference to draw from that is that there were telephone calls in which the move to Parabis was being discussed. I should say that the analysis relates to the period December 2006 to March 2007.[219]The Defendants, in effect, assert that they did not discuss Mr Roberts’ approaches until the day they met in the café near the Claimant’s premises. It is clear that after that time the Second and Third Defendants discussed the approaches of Mr Roberts’ to some extent and, indeed, as I have understood it, they admit that they went together for a meeting with him at the end of February 2007 before they signed their contracts of employment with Scion.[220]Given the way in which the Defendants hid from the Claimant the fact of Mr Roberts’ approaches it is easy to be sceptical about their denials that they were discussing his approaches between themselves before the meeting in late January 2006. It does not seem to me to be fruitful, however, to analyse, from which precise date they discussed his approaches. I think that the probability is that the First and Second Defendants had discussions about Mr Roberts’ approaches before that date. I say that, principally, because they were obviously very close work colleagues and, of course, they were instrumental together in the incorporation of Flexsure. Indeed, the Second Defendant describes the First Defendant as her mentor and friend. That being so, it seems very likely that some discussion of the approaches of Mr. Roberts took place quite shortly after they occurred. There is less reason to suppose that the Third Defendant told the other Defendants of the approaches of Mrs Newton and, in effect, she accepts that once she has made contact with Mr Roberts himself she told the other two of that contact within days of its occurring.[221]Ultimately, in my judgment, the real issue is what each should have disclosed to the Claimant once it had become clear to them that there was a real possibility that each would join Parabis (as to which see below).[222]It is for this reason that it does not seem to me to be necessary to resolve the precise date when the meeting at the café took place. There was a great deal of heated discussion about whether it was 23 January 2007 or 26 January 2007. The point of the heated discussion was to undermine the credibility of the Defendants. As I have said, however, the central issue for my determination is what the Defendants should have said or done once each was aware of the approach not just to himself/herself but to the other Defendants. The Defendants’ resignations, the reasons given to the Claimant and the Claimants’ reaction[223]As I said earlier in this judgment, I accept, as the Claimant was also inclined to do, that the First Defendant made it clear that he was likely to leave Claimant at or about the time of the Board Meeting in November 2006.[224]Nothing turns on the date when he gave his notice of intention to resign since it is common ground that he remained a director of the Claimant and its Chief Operating Officer until the date of his departure. Nonetheless it is necessary to describe what happened as between the First Defendant, the Claimant, MB and EB in the period from late November 2006 to his departure.[225]In late November/December 2006 MB and EB harboured hopes that despite the First Defendant’s indication that he wished to leave the Claimant at the end of March 2007 he would not do so. With that in mind and with the agreement of EB a meeting took place between MB and the First Defendant on 8 December. MB accepted that in that meeting the First Defendant made it clear that he was likely to leave the Claimant. The First Defendant told him that he wanted to set a deadline but was willing to assist in any way that he could with a handover. MB alleges that during the course of the meeting the First Defendant told him that he had no plans for his future and that he was open to proposal from MB if there was one to make. As I understand the evidence of the First Defendant he did not dispute that he said something along those lines. He also accepted the evidence of MB that the two men left the meeting on the basis that the First Defendant would leave at the end of March 2007 unless MB made an offer to First Defendant which attracted him to stay.[226]It is also common ground that during the course of that meeting MB asked the First Defendant to keep his intentions away from the remainder of the staff since it might unsettle them and, in particular, it might unsettle the Second Defendant. By this stage MB was of the view that there was a clear risk that a departure by the First Defendant would unsettle the Second Defendant. Consequently, he sought to arrange a meeting with her and this took place on 12 December 2006. I will deal with this meeting shortly.[227]At the end of the week in which the meeting with the Second Defendant took place MB and the First Defendant met again. MB asserted that he asked the First Defendant what he intended to do if he left and he received the reply that the First Defendant had not decided finally but that he had a number of options which included an offer in the salvage business, expansion of his car trading company and the development of a commercial property which he owned. The First Defendant accepts that this was the substance of his reply when asked about his future intentions. He also accepts that he assured MB that he would assist in any way that he could with a hand-over.[228]After this meeting (according to them both) MB and EB decided that no further attempts would be made to persuade the First Defendant to remain with the Claimant. That does not quite square with the evidence also given by MB that at a Board Meeting on 20 December 2006 a plan was approved to commit to the sale of the Claimant during 2007 and that after that Board Meeting MB informed the First Defendant that he hoped he would stay with the Claimant until a sale was completed. In any event both the First Defendant and MB were agreed that the First Defendant was sceptical about the prospects of a sale reasoning that EB would not agree to a sale since the price at which a sale might be agreed would not match his expectations.[229]MB returned to work with the Claimant after the Christmas and New Year and began to work on a new financial plan for the calendar year. He did this so that the plan might be the basis for managing the business and form the basis for a sale prospectus in due course. The First Defendant produced a first draft. It was also the case that from January 2007 EB ceased to act as if he was Chief Executive Officer and MB began to operate in that role. According to MB, from January onwards the First Defendant appeared polite and apparently helpful but in truth he had become disengaged from the business. MB said that the First Defendant spent much of his time working from home and that his visits to the Claimant’s office reduced in length and duration.[230]MB was working for the Claimant in the period 9 January to 26 January 2007. Thereafter he went to France to join his wife since, as I understand it, he intended to remain there for a substantial part of the winter. It was while he was in France that he received an email from the Second Defendant which suggested that she too was going to leave the Claimant. The next day MB’s wife had a skiing accident which had the effect of delaying any possible return to the UK until 12 February 2007. He wanted to speak to the Second Defendant and, by this time EB had made good progress in identifying a Chief Executive Officer who would be appointed after the departure of the First Defendant. That person was Mr Ray Shannon.[231]In this same time scale the possibility of a management buyout by existing employees was raised. The First Defendant told MB that he was not interested in such a buyout.[232]At some stage in February 2007 MB agreed with the First Defendant that he would permit him to leave the Claimant as soon as that was possible in March. Probably shortly thereafter the men agreed that the First Defendant would be permitted to leave on 16 March 2007 following a Board Meeting on 15 March.[233]In his evidence MB was at pains to point out that during the period December 2006 to 16 March 2007 the First Defendant was less than committed to his work with the Claimant. The only specific allegation of breach of contract levelled against the First Defendant in relation to his performance at work in that period is the very general one of failing to take adequate steps in relation to protecting the business of the Claimant. The particulars given are that the Second Defendant was in breach of her contract of employment during this period and that the First Defendant is liable in respect of these breaches. This allegation is made in paragraph 52.5 of the Particulars of Claim but is not repeated in the Voluntary Further and Better Particulars of Alleged Breaches which the Claimant subsequently served.[234]The First Defendant denies the allegation that he underperformed in the months leading to his departure absolutely. He describes these months as some of the busiest of his time working for the Claimant. It does not appear to me to be appropriate, however, to delve into a detailed consideration of this issue when, as I have said, it forms no real part of the Claimant’s pleaded case.[235]What is strikingly obvious, however, is that from a date very soon after the First Defendant first indicated his intention to resign he was in active discussion with Mr Roberts about employment with Scion and he did not once disclose that those discussions were occurring or had occurred. Rather it seems to me that the First Defendant positively mislead the Claimant as to his true intentions in the period early December 2006 to 16 March 2007.[236]As soon as the meeting between MB and the First Defendant had taken place on 8 December 2007 MB realised that there was a risk that the Second Defendant would depart as well. Accordingly he arranged a meeting with the Second Defendant which took place on 12 December 2006. At the meeting MB disclosed to the Second Defendant that the First Defendant was going to leave the Claimant by the end of March 2007. Her immediate reaction, apparently, was to say that if the First Defendant was leaving she was not sure that she wanted to stay. She immediately volunteered to MB, according to him, that she had recently met someone whom she had known in her days working in the NHS and they had discussed the Second Defendant returning to the NHS. She volunteered that she was unhappy with EB’s personal style of management and she made various criticisms of his behaviour.[237]There is some suggestion in the evidence of the Second Defendant that the possibility of her leaving was raised before this date. This is a matter which is disputed and, so far as I can see, nothing turns on it.[238]MB said that he sought to reassure the Second Defendant at the meeting on 8 December 2006 – he told her that she was a valuable member of the Claimant and he wanted to keep her in the business. He asked her to keep him informed of her thoughts and she promised that she would.[239]MB told me that he did not disclose to EB the critical comments which the Second Defendant had made about him. Rather the two men worked on the basis that it was very important to retain the Second Defendant in the business of the Claimant if that was possible. MB’s evidence was that EB suggested that she should be offered the position of Director of Business Development and that she should be made a Director of the Claimant. MB passed that proposal on to the Second Defendant in a telephone call but, apparently, the Second Defendant did not wish to accept it.[240]In an attempt to devise a working environment which would attract the Second Defendant to stay, MB and EB agreed on a plan to restructure the hierarchy of employees within the Claimant. They decided that it was a good opportunity to recruit a Chief Executive Officer who would replace both the First Defendant and EB and that in the interim MB should act as CEO. The idea was that MB and EB, effectively, would swap roles. This was approved by the Board on 20 December 2006 at the same time as the proposal to commit to a sale in 2007 was also approved. In the aftermath MB informed the Second Defendant of the changed role of EB and himself. She expressed doubt about whether EB would be willing to take a backseat in the business and at this point told MB that she was not happy to be sold (with the business). The Second Defendant also told MB during this conversation that she would keep him informed of her intentions and that she had held conversations with personnel in the NHS with regard to a post at the New Finchley Hospital. She explained her willingness to return to the NHS on the basis that if she returned at a comparable salary to that which she was then earning it would have a very favourable impact upon her pension rights since, presumably, her previous years of service would count in the calculation as well as her current level of salary.[241]Upon his return to work in January, as I have said, MB began working upon a financial plan for the year 2007. He also began to work on the new structure within the Claimant which involved the appointment of a group CEO, a Divisional Managing Director for the Insurance Services and both he and EB becoming non-executive Directors with no day to day involvement with the running of the business. This structure was agreed by the Board in January 2007. It is not entirely clear, on the evidence, to what extent the structure was discussed with the Second Defendant but matters with her were brought to a head as a consequence of an email she sent to MB on 31 January 2007. It reads as follows:- “Dear Mike I have now come to the end of play on the last day of Jan which was my own personal timescale for making decisions regarding our pre Christmas conversation. I am sitting with opportunities, in fact offers, to explore re health service and service re-design there, Tony has started his new job – so financially we are settled and I can take a risk and make a change. I do understand that things must be happening behind the scenes, however, Martin has taken the 5th amendment on me so I feel I am running out of options and I must make a proactive move. I would really like to talk with you because I am reluctant to put notice in writing since I feel this could jeopardised any current deals. I know that you are away in France and hope you will pick this up – Governor Technology permitting. My home email is ……… in case you need that. Look forward to hearing from you as now must dash to get my tax return in!!! Sarah” Sarah”[242]MB said that this was the first he had heard about any deadline. He wished urgently to contact the Second Defendant but failed to contact her on the telephone. On the next day his wife had an accident skiing and it was not until 2 or 3 February 2007 that the Second Defendant told him in a telephone call that she had decided to leave and was going to write a letter of resignation. In this telephone call with the Second Defendant he expressed his disappointment although he indicated that the Claimant would accept her decision if that was her settled intention. The relevant part of his witness statement in relation to this telephone call then continues:- “……. I asked if she had committed to an offer and she said no, Finchley Hospital was still trying to decide on the best role as they had two vacancies. I asked her not to commit to them until after I returned. I told her there had been developments and I wanted to make her an offer first as I was confident Kynixa could offer her something very interesting when I come back to England. She agreed not to accept her offer until then but said she would want to write me a letter of resignation just in case, so that she could protect her leaving date of the end of April as that was when Finchley wanted her to start.” (paragraph 7.4.10)[243]The Second Defendant’s witness statement does not deal specifically with this conversation but nothing was said in oral evidence which leads me to doubt that it occurred. MB returned to the UK after his wife’s accident on 12 February 2007. In the days immediately following Mr Shannon was recruited as the Chief Executive Officer. It was decided to create the position of Managing Director of Insurance Services and MB proposed to EB that this post be offered to the Second Defendant.[244]In his witness statement MB suggests that the idea was floated to her in an email of 16 February 2007. The email appears at page 5776 of the Trial Bundles. It floated two possibilities one of which was that the Second Defendant should run the insurance side of the Claimant’s business (it being assumed that EB would run that part of the Claimant which was concerned with the public sector. It also disclosed the possibility that a person called Liam Bowes would be Head of Business Development. The email did not descend to any detail as to the precise relationship between Mr Bowes and the Second Defendant.[245]It suffices that I say that during the course of a subsequent face to face meeting between MB and the Second Defendant she rejected the possibility of remaining an employee of the First Defendant. MB says that this meeting occurred on 21 February 2007 and there is no reason to doubt his accuracy on that point. The explanation which the Second Defendant gave for rejecting MB’s suggestions was that she did not wish to commit to the Claimant and she felt that she really “belonged in the NHS”. On this occasion the Second Defendant assured MB that she would do everything to smooth her departure and ensure the future success of the Claimant. MB said that he was very disappointed by the stance adopted by the Second Defendant but he respected it and, in particular, he accepted her explanation as to why she was leaving.[246]It was at this stage that MB and EB realised that the very great likelihood was that the First and Second Defendant would leave the Claimant and, indeed, that they would leave within the space of about 6 weeks of each other. Obviously, it was a matter of some urgency to ensure that suitable employees were engaged in senior positions and, accordingly, according to MB steps were taken, immediately, to ensure that Mr Bowes accepted employment with the Claimant.[247]As I understand it on 8 March 2007 Mr Shannon signed an agreement to act as a consultant for the Claimant. Schedule A to that Agreement makes it clear that Mr Shannon’s consultancy role involved acting as Chief Executive Officer.[248]On the same date Mr Bowes signed a SPTC. The SPTC specified his employment as Business Development Manager. I should add for completeness that as well as recruiting Messrs Shannon and Bowes a person named David McGurk signed a consultancy agreement which gave him a the role of acting chief accountant to the Claimant. As I understand it the first time that members of staff were told, expressly, of the intended arrival of Messrs Shannon and Bowes (by either MB or EB) was on 13 March 2007. On that same day Mr Bowes and Second and Third Defendants met together at the Second Defendant’s home. About one thing there was no dispute. This was a meeting in which Mr Bowes on the one hand and the Second Defendant and Third Defendant on the other formed a view which was wholly negative of each other’s attributes.[249]Despite his signing a consultancy agreement on 8 March 2007, Mr Shannon was not actively engaged with the Claimant until April 2007. As I have said the First Defendant left the Claimant on 16 March 2007. Although Mr Bowes had considerable experience of sales, he had no experience of the business of the Claimant. Obviously there was a clear need for the Claimant’s business to run as smoothly as possible in what were difficult circumstances. These circumstances, of course, were made more difficult by the fact that the Third Defendant gave notice that she was leaving the Claimant on 14 March 2007 (as to which see below).[250]One of the decisions taken so as to facilitate as smooth a transition as possible was to set up a Business Continuity Committee. Apparently this suggestion came from Mr Shannon and it was decided that the Second Defendant would be asked to chair this committee. This decision was taken on or about 15 or 16 March 2007 and the plan was that she should remained as chair of the committee at least until Mr Shannon took up his duties and possibly until her own departure in late April 2007. As I understand it the Second Defendant chaired such meetings of the Business Continuity Committee as took place before she left her employment with the Claimant.[251]At no stage after her appointment as chair of the Committee did she disclose to the Claimant the fact that she had already signed a contract of employment with Scion and that she intended to take up a post with Scion shortly after leaving the Claimant at the end of April 2007.[252]So far as I am aware MB and EB had no idea that the Third Defendant was contemplating leaving until she tendered her resignation on 14 March 2007. In her witness statement the Third Defendant says that she spoke to EB on 14 March and told him that she thought that the new management team needed to “steer the company in a fresh direction” but that she did not wish to be part of this process. She also told EB that she was considering several job options and that she was intending to take some time out.[253]The Third Defendant says that this was true and that she did not lie to EB as the Claimant alleges. However she goes on to say in the very next paragraph of her witness statement that although she had not accepted a position with Scion on 14 March she had “pretty much made up [her] mind that [she] would join the company”. In those circumstances, in my judgment, such information as the Third Defendant gave to EB as to her reasons for resigning and future intentions were, clearly, highly misleading.[254]On 19 March 2007 the Third Defendant signed her contract of employment with Scion and at no stage between that date and her departure from the Claimant did she volunteer to anyone (apart from the Second Defendant who knew) that she was to take up employment with Scion. Breaches of Fiduciary Duty/Breaches of Contract during the course of the Defendants’ employment with the Claimant[255]The central theme of the Claimant’s case is that the three Defendants acted together (colluded) in hiding from the Claimant the approaches of Mr Roberts and their decision to take up employment with Scion. The Claimant’s case is that by so doing the First and Second Defendants were in breach of their fiduciary duty to the Claimant and also the implied duty of fidelity which they owed to the Claimant under their contract of employment. As I have said it is not alleged that the Third Defendant owed to the Claimant a fiduciary duty but it is alleged that her conduct was a breach of her implied duty of fidelity. I propose to deal with this central issue first as it applies to all of the Defendants. It is necessary, however, to analyse the position of each Defendant carefully and separately. The First Defendant[256]In his closing submissions Mr. Duggan deals with two aspects in particular. They are that the First Defendant did not inform the Claimant of the steps he was taking to work for a company within Parabis and he did not inform it of the approaches made to him and the other Defendants by Mr. Roberts.[257]There can be no doubt that the First Defendant was taking active steps to explore the possibility of working within Parabis during December 2006 and January 2007. This culminated in his signing a contract of employment with Scion on 12 February. The First Defendant said nothing in his evidence which suggested the contrary. That is not surprising. His own case is that he wanted to leave the employment of the Claimant from November 2006 onwards. There is nothing surprising about him taking Mr. Roberts’ overtures seriously.[258]The First Defendant knew from the very first meeting with Mr Roberts that Mr Roberts was showing an interest in whether or not the Second Defendant was content in her employment with the Second Claimant. In my judgment, it is very likely that the First and Second Defendant discussed Mr Roberts’ approach to him during the course of December. After all, the Second Defendant was told on 12 December that the First Defendant was likely to leave the Claimant and on any view of the evidence her immediate reaction was to question her own future with the Claimant. It is inconceivable to me that she did not discuss the issue of her future employment with the First Defendant after the meeting between MB and herself on 12 December 2006 and it is very likely that in the course of such a discussion the First Defendant disclosed to the Second Defendant the approach by Mr. Roberts and the interest Mr. Roberts had shown in her.[259]On 21 December 2006 a significant meeting took place between the First Defendant and Mr Roberts. If there had been any doubt, previously, in my judgment it was clear at this meeting that Mr. Roberts was very interested in securing the services of the First Defendant. Equally, in my judgment, by this date First Defendant was actively considering the possibility of employment within Parabis.[260]Prior to 21 December 2006 the First Defendant had given to MB and EB information about his intentions should he cease to work for the Claimant in March 2007.In my judgment, therefore, as of about 21 December 2006 the position of the First Defendant was that he knew that he was seriously considering a move to work within Parabis, he knew that he had given information to MB and EB which gave no hint of that possibility and he knew that Mr. Roberts had shown interest in the Second Defendant. I accept, however, that he had no real means of knowing at this point whether or not Mr. Roberts would make an approach to the Second Defendant. In my judgment all that the evidence establishes clearly is the likelihood that the First Defendant knew that the Second Defendant would actively consider her own future. That much, of course was known to the Claimant.[261]I should also say that I have reached the conclusion that the evidence does not support the conclusion that the First Defendant knew of Mrs Newton’s approaches to the Third Defendant. Both the First Defendant and the Third Defendant deny discussing these approaches with each other and I am not prepared to find that these denials are, in effect, bare faced lies.[262]In early January 2007 Mr. Roberts made his approach to the Second Defendant. Given the closeness of the working relationship between the First and Second Defendant I consider it much more likely than not that the two of them discussed this approach shortly after it occurred. I cannot pin point when, not least because the First and Second Defendant deny that any discussion did take place, but I am satisfied it would have taken place within a few days at most. At that point in time, in my judgment, the First Defendant’s fiduciary duty to the Claimant obliged him to disclose the fact of his discussions with Mr. Roberts and the fact of an approach by Mr. Roberts to the Second Defendant. In my judgment such a conclusion is completely consistent with the approach of Hart J in British Midland Tool Limited (supra).[263]I reach that conclusion for the following principal reasons. Firstly, the First Defendant was a director, a shareholder and a very senior employee. Secondly, by virtue of those positions, he was the recipient of all the relevant confidential information relating to the Claimant’s business. Thirdly he knew that the Claimant, through its controlling personnel MB and EB, would regard the Parabis Group as a competitor by virtue of its control of Human Focus. Fourthly, and for reasons I now develop, Human Focus was in fact a competitor of the Claimant.[264]I reach the conclusion that Human Focus was a competitor of the Claimant as of December 2006 essentially on the basis of uncontroversial evidence. In or about January 2006 the Claimant became a provider for RSA under the BIPOC scheme. In the same month, or thereabouts, Human Focus became part of Parabis. In my judgment its acquisition by Parabis is consistent only with an intention on the part of Parabis to provide rehabilitation services through Human Focus. By September 2006 Mr Roberts had persuaded RSA to involve Human Focus in BIPOC. Further Human Focus had developed “physio-lite”. In his witness statement of 8 January 2008 Mr Roberts describes events in September 2006 as follows:- (paragraph 26):
“1. Firstly, David and Jacqui McNeilly from RSA and myself agreed a variation to the Kynixa BIPOC extension contract (covering the period September 2006…… 2. ……….I obtained RSA’s agreement to undertake a pilot of the Human Focus “physio-lite” internet product which we ran alongside the Kynixa service……… 3. As it turned out the product was successful in reducing the rehab elapsed time within Human Focus (compared with Kynixa and their sub-contracted physio-network). 4. As part of the deal to bring in Physio-lite I agreed not to charge for physio-lite within BIPOC if RSA rolled the service across their own policy holders who made a claim stating they were injured but that the injury was caused by somebody else …………. RSA already had a “claimant” solution for their non-fault policy holders which was known as the “alliance” which I had in fact designed for them in 2001. In short it involve the referral of claimants to 3 law firms who shared all referrals equally, namely Lyons Davidson, DWF, and Rymills (which was our firm – part of Parabis Law LLP). Each of the Alliance firms used their own rehab supplier, which we also did. Accordingly RSA required the 3 firms to use Human Focus as they wanted to ensure that their open policy holders had exactly the same physio service delivered to them as those individuals injured by their policy holders. This was communicated ……….. to each firm at an alliance meeting at RSA’s Horsham Office on 23 January 2007. In the case of DWF it meant that they had to stop using Kynixa (as they had used them on RSA work) and use Human Focus instead. In return physio-lite was delivered free of charge within BIPOC. I must stress that this was agreed as part of a variation which I agreed with RSA on the BIPOC contract and had nothing at all to do with Kynixa or any of the Defendants.”
[265]In my judgment and accepting what Mr. Roberts has to say about the Defendants in sub-paragraph 26(4) at face value this description is consistent only with competitive activity by Human Focus as against the Claimant. As of early January 2007, of course, RTW Plus (another rehabilitation service provider) had not been acquired by Parabis. In May 2007 RTW Plus did become part of Parabis (as to which see below). Nonetheless, it is hard to avoid the conclusion that that from the moment that Human Focus was acquired by Parabis the intention on the part of the owners of Parabis was to set up in competition with other providers of rehabilitation services. In my judgment the acquisition of RTW Plus is an event which further supports that conclusion.[266]I should make it clear that my finding of a breach of duty as from early January 2007 on the part of the First Defendant is predicated on the basis that he did not then know of approaches to the Third Defendant. It seems clear that any discussion between the Third Defendant and Mr. Roberts had yet to take place at this point. It is of course possible that the Third Defendant and the Second Defendant had discussed the approaches of Mrs. Newton and the Second Defendant had passed that information on to the First Defendant. It may even be likely that this occurred. However, to repeat I do not find my conclusion of breach of duty on this basis.[267]I appreciate, of course, that Mr Bacon, on behalf of the First Defendant, does not accept that there was any breach of fiduciary duty on the part of the First Defendant as early as the beginning of January 2007. In putting it in this way I do not intend to convey the impression that Mr Bacon concedes any breach of fiduciary duty on the part of the First Defendant at any time. It has to be said, however, that Mr Bacon struggled to find any proper basis upon which he could oppose a finding of breach of duty once the meeting had taken place in the café between all three Defendants at the end of January 2007.[268]I make this point since if I am wrong in my conclusion that the First Defendant was in breach of his duty in early 2007 I am satisfied beyond any shadow of doubt that he became in breach of duty in late January 2007. At that point in time he knew that it was very likely that he would become an employee of Scion; (he was no more than days away from signing a contract of employment with that company) he knew that the Second and Third Defendants had been approached and that there was a real possibility that they, too, would become employees of Scion Further, I am quite satisfied that he knew full well that Human Focus was a competitor of the Claimant.[269]Once the First Defendant’s breach of duty began it continued throughout the remainder of the period that he remained a director and an employee of the Claimant. Assuming a proper finding of breach, Mr. Bacon does not and could not dispute that proposition.[270]I do not consider it necessary to consider in detail whether the First Defendant was also in breach of the implied duty of fidelity as a consequence of his failures as discussed above. It seems to me, however, that it is an inevitable conclusion that he was. The Second Defendant[271]The Claimant alleges that the Second Defendant was in breach of her duty to the Claimant by lying about her intentions about what she would do should she cease to work for the Claimant; by failing to report the steps she was taking to work for a competitor; and associated therewith failing to report the activities of the First Defendant and Third Defendant in that regard.[272]As I have said I am not satisfied that the evidence shows that the Second Defendant was taking any step during December 2006 to explore the possibility of working with Parabis. It is true that I have found that the First and Second Defendant were probably in discussion about Mr Roberts’ approach to the First Defendant but, to repeat, in my judgment the evidence does not establish that Mr Roberts approached the Second Defendant or that she approached him (or anyone else) with a view to her being employed within Parabis during December 2006. In my judgment, it is not established that the Second Defendant lied to or mislead MB or EB as to her future intentions in December 2006.[273]That said, the Second Defendant knew that the First Defendant was a target of Mr. Roberts and probably knew as from 21 December 2006 or shortly thereafter that there was a real possibility that the First Defendant would take up employment within the Parabis Group. It is worth remembering that on 12 December 2006 the Second Defendant had a meeting with MB at which he made it clear to her that she was an extremely valued and trusted employee of the Claimant and that, in effect, the Claimant would do its utmost to retain her within its employment. Once Mr Roberts contacted her, as he did, in early January 2007, it was Second Defendant’s duty, in my judgment, to report to the Claimant the fact of Mr Roberts’ approach and all that she knew of his approach to the First Defendant. In reaching this conclusion I am not seeking to resile from my earlier finding that the Second Defendant probably did consider different employment options in the weeks that followed Mr. Roberts’ approach. It is hard to believe, however, other than that employment within Parabis was a serious possibility throughout this period.[274]If I am wrong in concluding that the Second Defendant was in breach of her fiduciary duty in failing to report the approach to her and the approach to the First Defendant as from early January 2007 it is certainly the case, in my judgment, that she became in breach following the meeting with the other Defendants in late January 2007. After all, it was within days, literally, of that meeting that the Second Defendant sent the email of 31 January 2007 and followed it up with a letter of resignation.[275]There is no dispute but that the Second Defendant either lied to MB and EB or misled them at all times when she spoke of her future intentions after the approach by Mr. Roberts in early January 2007. On each occasion that she did so, in my judgment, she was in breach of her fiduciary duty. I simply do not see how any other conclusion is possible given what she knew of her own intentions, the approaches to the First Defendant and, as from late January at the latest the approaches to the Third Defendant.[276]As with the First Defendant the conduct of the Second Defendant was a continuing breach from either early or late January 2007 and it was also a breach of her implied duty of fidelity. The Third Defendant[277]The Claimant does not allege that the Third Defendant owed it a fiduciary duty. It is conceded, however, that by late 2006 onwards, at the very latest, the Third Defendant owed to the Claimant a duty of fidelity. What are the facts which help define the scope of that duty and the facts upon which her alleged breach of that duty is predicated.[278]In my judgment the evidence establishes that by late 2006 all three Defendants worked very closely together within the Claimant’s business. As I have said, Mr Roberts was happy to describe them as the Claimant’s senior management team. There can be no doubt that the Third Defendant had access to and knew of all the important information which made the Claimant’s business a success. She was a very important employee.[279]The Third Defendant had a very flexible working arrangement with the Claimant. A lot of her work was done at home and, as it seems to me, the supervision of her work was minimal. That, no doubt, was a state of affairs which was acceptable by virtue of the expertise of the Third Defendant and her apparent trustworthiness.[280]The approaches to her came from Mrs Newton. But, of course, they started as early, if not earlier, than the approaches to the First Defendant. Mrs Newton raised the possibility of the Third Defendant working within Parabis in late November 2006 and it was she who told the Third Defendant in mid December that Mr Roberts wished to speak with her[281]There is no direct evidence that the Third Defendant knew of the approach to the First Defendant in December 2006. Similarly, there is no direct evidence that she knew of the approach to the Second Defendant in early January 2007.[282]A cynical view, of course, is that the Third Defendant’s decision to re-evaluate her own personal circumstances (as she puts it in her witness statement) in early January 2007 was not coincidental with the approaches to the other two Defendants. However I am prepared to accept that the evidence does not justify a conclusion that she knew of the approaches to the other Defendants before late January 2007 when the discussion between all three Defendants occurred. I say that for this principal reason. The Third Defendant knew Mrs Newton very well. She also knew Mr Roberts. Given her own background in RSA it was quite conceivable and understandable that she may have been a target on her own. Certainly she may have thought that given her friendship with Mrs Newton and her knowledge of Mr Roberts. Accordingly, in my judgment, it would not be safe to conclude that the Third Defendant was party to any discussions about a move to Parabis until the discussion which took place in late January.[283]I am quite satisfied, however, that once she knew of the fact that approaches had been made to the other Defendants as well as herself her duty of fidelity was such that she should have informed the Claimant of the approaches. Her failure to do so was, in my judgment a breach of her duty. A crucial aspect of the implied duty of fidelity is the concept of loyalty. The Third Defendant’s actions were not consistent with that concept. I simply do not see how one can be acting as a loyal employee when one knows that three senior employees (including oneself) may transfer their allegiance to a group of companies which includes a competitor and yet not only fail to divulge that knowledge but also say things which would have the effect of positively misleading the employer about that possibility.[284]It follows from the above that all three Defendants were in breach of duty from late January 2007 at the latest in the manner described above. From this point in time onwards I am quite satisfied that they did, together, deliberately decide to hide from the Claimant the real possibility, which became in time the actuality, that they would all take up employment within Parabis. As I have said, however, it is also my view that the First and Second Defendant were in breach from an earlier point in time, namely early January 2007.[285]However, I reject the more extreme version of the Claimant’s case which is, at is seems to me, that all three Defendants were actively colluding together to join the Parabis Group from early December 2006 or even earlier. Despite the dark suspicions of MB and EB the direct evidence does not support that view and I am not prepared to make such adverse findings on the basis of inference. In my judgment, it is more likely that the collusive aspects of all three Defendants’ behaviour came about only after the meeting in late January 2007.[286]As I have said, Mr. Bacon struggled to find a basis for submitting that the First Defendant was not in breach of duty after late January 2007. The same was also true in respect of the other Defendants. However, Mr. Bacon strongly urges me to the view that the Defendants failures had no ultimate effect since he argues that even if the Defendants had reported what they were doing vis-à-vis Mr. Roberts and then Scion to the Claimant the events of say February, March and April would have remained the same. I deal with this submission discretely at the end of my judgment and after I have considered the other respects in which the Defendants are said to be in breach of duty/breach of contract. The Incorporation of Flexsure[287]The Claimant alleges that the First and Second Defendant were in breach of their fiduciary duty by causing Flexsure to be incorporated, becoming directors thereof and failing to report those facts to the Claimant.[288]The core facts are not in dispute. Flexsure was incorporated on 4 October 2006. The First and Second Defendant became directors shortly after a Board Meeting of the Directors of the Claimant on 20 November 2006. At no stage did they report these facts to the Claimant.[289]In summary the First and Second Defendant assert that Flexsure was incorporated very much in the context that MB and EB were giving active consideration to a sale of the Claimant. In the event of a sale the First and Second Defendant could not be sure about their future and one option was for them to work together in a business. The Second Defendant coined the graphic phrase that she was reluctant to be sold “like a camel” with the Claimant. Flexsure would provide the corporate vehicle for such business enterprise as the First Defendant and she might light upon.[290]Both Defendants were at pains to point out that Flexsure has never traded; it has never had a bank account and no step of any kind has been taken to “activate” it following its incorporation save for the appointment of the Defendants as directors.[291]Mr Bacon submits that the allegation in respect of Flexsure is “hopeless”. He submits that the Defendants were not prevented by their fiduciary duty from causing Flexsure to be incorporated and even becoming directors and he submits that no duty to report the existence of these facts arose since, in reality, no actual or potential situation of conflict arose between the Claimant and Flexsure.[292]In my judgment Mr Bacon is correct. There can be no doubt that if either the First or Second Defendant had acted alone they would not be in breach of duty. That seems to me to be an inevitable conclusion when the principles laid down in Balston’s case (supra) as explained in British Midlands Tool Limited (supra) are applied. In the instant case the Defendants had not agreed upon a likely business enterprise for Flexsure. Such discussions as took place between them had not resulted in an agreed course of action. In those circumstances I am not persuaded that the First and Second Defendant stepped over the line between acts which were purely preparatory (and which, in consequence, are held not to be in breach of duty) and acts which actually constitute a breach of duty.[293]In the context of the case as a whole, in any event, it is very likely that nothing turns upon whether or not the actions of the First and Second Defendant did or did not amount to a breach of duty. It is inconceivable that any loss to the Claimant flowed or now flows from this discrete allegation. It is equally very difficult to imagine that any other form of relief would now be granted to the Claimant on the basis of this discrete allegation.[294]It seems to me that the true significance of this episode is that it reinforces the likelihood that the First and Second Defendant were in discussion about the approaches of Mr Roberts (as I have found them to be) and their reaction to those approaches. The fact of their collusion over Flexsure makes it more likely that the First and Second Defendant behaved as I have described in relation to Mr Roberts and their eventual employment by Scion. Other Breaches[295]I deal with the remaining alleged breaches as they concern the Defendants individually. The First Defendant[296]The Claimant alleges that during the course of his employment the First Defendant emailed to himself confidential information and, thereafter, kept the same. It is asserted that such conduct was in breach of an express provision of the Handbook and, in consequence, a breach of the First Defendant’s contract of employment. I should say at the outset that no distinction is drawn, quite rightly, between files in electronic form as opposed to “hard copies” thereof in determining whether breaches, as alleged, are established[297]The relevant provisions of the Handbook appear under the heading “Confidentiality” and reads as follows:- “Documents, files and other items may be removed from the company’s premises only if required for your work and with the prior authority of your manager. All such documents, including any copies taken, must be returned when requested and when you leave the company. Employees, who are authorised to take information off site in any form, should ensure that they are conversant with the company’s Data Protection Policy. Any Company information held by you on an organiser, computer, or similar device that is owned by you, must be deleted prior to the termination of your employment.”[298]During the course of the evidence MB and EB sought to maintain the position that the emailing of confidential information to the First Defendant’s personal computer at home was a breach of the terms of his contract regardless of whether or not that step was undertaken for a legitimate business purpose. To be fair, both MB and EB softened that stance as their cross-examination proceeded. Whatever the stance ultimately adopted by MB and EB, however, I am clear that the First Defendant would not be in breach of contract simply by emailing confidential information to his personal computer provided he did that to facilitate a proper business purpose.[299]When the case was opened to me it was asserted that the First Defendant had sent “vast amounts” of confidential information to himself in the weeks leading up to him leaving the employment of the Claimant. The items sent were set out in a schedule attached to Mr Duggan’s Opening and ran to 26 or 28 items (depending on the version of the schedule considered). The occasions when information was sent by the First Defendant to his own personal computer spanned the period between 3 October 2006 and 12 March 2007.[300]The First Defendant has always asserted that his sole purpose in emailing all this documentation to himself was to facilitate a business purpose of the Claimant.[301]In his cross-examination it became clear that EB was unable to contradict this assertion in respect of many of the occasions when documentation was emailed by the First Defendant to himself. However EB persisted in his view that there was no legitimate business purpose served when the First Defendant emailed certain items to his home computer in the weeks immediately prior to his departure. The documents focused upon by EB were documents which the First Defendant emailed to himself in the period spanning 8 February 2007 to his departure from the Claimant. It is worth remembering that the Claimant received his proposed contract of employment from Scion on or about 5 February 2007 and he signed it on 12 February 2007.[302]The first document identified by EB is a document which was prepared by Mr McGurk and which contained a financial model of the Claimant’s potential use of an invoice discounting facility in the period 2007 to 2009. This document was sent by Mr McGurk to MB, EB and the First Defendant attached to an email of 8 February 2007. In the body of the email from Mr McGurk he invited comments. (see Bundle 15 page 5627).[303]The email from Mr McGurk was sent at 12:10 on 8 February 2007; at 12:45 that same day the First Defendant emailed it to himself. His explanation for so doing was quite simple. He wanted to consider the document in depth and make comments upon it.[304]Clearly, this was a document which the First Defendant was intended to see and appraise. I was given no credible explanation by him, however, about why there was a need to email the document to his personal computer before he could consider it and comment upon it.[305]The next document focussed upon by EB is a document which emanated from AXA Insurance. It was issued by AXA to all its existing rehabilitation service providers and the providers were asked to price for the provision of the services outlined within it. At 16:04 on 12 February 2007 the Second Defendant emailed this document to the First Defendant and at 16:12 on the same date he emailed it himself.[306]I can well understand why the Second Defendant sent this document to the First Defendant. No doubt she would have been remiss in her duty had she not done so. However, I received no plausible explanation as to why the First Defendant felt the need to email it to his personal computer more or less immediately.[307]Later that same day – at 16:41 – Sarah Masterson of AXA emailed to the Second and Third Defendants a request for information which she had tried to send to EB earlier. The request contained commercially sensitive information. At 16:59 the Second Defendant emailed the request to the First Defendant. He emailed it to himself immediately. Again, no plausible explanation was offered as to why he did that.[308]The next document about which the Claimant complains is a document which was sent by Emma Jackson (an employee of the Claimant) to the First Defendant by email on 21 February 2007. The document is headed “Company Billed Report” and it contains a list of the Claimant’s customers during the period 1st April 2006 to the date of Ms Jackson’s email. In this instance the First Defendant did not emailed the document to himself immediately. Rather he emailed it to himself on 12 March 2007 just after 12:00.[309]In his evidence the First Defendant asserted that sent the document to himself because he might need the information contained within it for a sales meeting which was due to take place on 13 March 2007. That possibility arose, so he said, because of a conversation which he was having with the Third Defendant on 12 March 2007.[310]There was, indeed, a sales meeting on 13 March 2007. What I cannot understand, however, is why the First Defendant needed to email this information to his home computer so as to facilitate his participation in the sales meeting.[311]One minute before the First Defendant emailed this document to himself he emailed another document entitled “Quality Team Structure” and it described in detail the role within the Claimant of a person called Mandy Kelly as Quality Assurance lead. (It contained much more information than that but it is not necessary to describe it.) This document had been emailed to the First Defendant by Mandy Kelly on 15 February 2007.[312]The First Defendant’s explanation for emailing this document to himself on 12 March 2007 was that he was due to meet Mandy Kelly to discuss it the following day.[313]In his submissions Mr Bacon points out with some force that it was open to the Claimant to check whether or not a meeting was scheduled between Mandy Kelly and the First Defendant on 13 March 2007. Mandy Kelly is still an employee of the Claimant and, presumably, is in a position either to confirm or rebut the First Defendant’s assertion or at least give some evidence which throws light upon the First Defendant’s account. However, at the risk of repetition, I do not see how the fact of a meeting on 13 March 2007 necessitated the First Defendant emailing the document to his personal computer – particularly since he had been “in possession” the document on his business computer since 15 February 2007.[314]At 12:04 on 12 March 2007 the First Defendant emailed to his personal computer a mathematical model of how the Claimant was expected to grow throughout 2007 month by month. It may be that in the voluminous papers in this case there is a trail to show when it was that the First Defendant was first provided with this document. If such a trail exists I have failed to follow it. However, there was no suggestion in evidence that this document first came into existence only very shortly before the First Defendant emailed it to himself.[315]The First Defendant’s explanation for emailing this document was that he might have needed to speak to Mr Shannon about some of its contents. It is to be recalled that the First Defendant was departing from the employment of the Claimant on 16 March 2007. Mr Shannon had barely commenced his duties on 12 March 2007 and was due to depart for a holiday shortly thereafter. There is no suggestion that Mr Shannon did in fact seek information from the First Defendant about this document and, at the risk of repetition, I simply do not see how the possibility that Mr Shannon would ask for information about it leads to a justification for the First Defendant emailing this document to his personal computer.[316]I am quite satisfied that in relation to the documents identified in the preceding paragraphs the First Defendant did not email them to himself for any legitimate purpose connected with his work for the Claimant. It seems to me to be an irresistible inference that he emailed this information to himself with the possibility in mind that he might, thereafter, use it during the course of his work with Scion.[317]That inference is supported by the fact that the First Defendant did not return this material to the Claimant prior to his leaving. His obligation under the provisions of the Handbook set out above was to return all documentation to the Claimant either when requested so to do or when he left his employment. There is no suggestion, of course, that anyone requested the First Defendant to return this documentation but he was obliged to return it when he left. It is common ground that he did not do so.[318]I should also say that I have taken into account the following further factors in reaching what is, in effect, an adverse conclusion on the First Defendant’s credibility on this issue. Firstly, I accept that it was reasonably common for the First Defendant to work from home and that in relation to some of the documents discussed above he may have been at home when he received them and then emailed them to his personal computer. It does not seem to me, however, that the mere fact of working at home explains why he needed to email documents to his personal computer and then keep them. Secondly, it is impossible to view this particular allegation made against the First Defendant in a vacuum. The First Defendant’s credibility is inevitably affected by his disingenuous behaviour towards the Claimant in the period January 2007 to 16 March 2007 and my findings (set out below) about what the First Defendant said and did when he went to work for Scion.[319]It seems to me, therefore, that the First Defendant was in breach of his contractual obligations in respect of the documents identified above. He should not have emailed them to himself and he should have returned them prior to his departure.[320]I stress, however, that despite this adverse conclusion there is no evidence to support the suggestion that the First Defendant made any improper use of the information contained within these documents while he was still employed by the Claimant. Failing to take adequate steps to protect the business[321]In his Closing Submissions Mr Duggan submits that the First Defendant was in breach of duty and/or contract in failing to take adequate steps to protect the business. However it is clear that this is intended to be no more and no less than a different formulation of the breach of duty on the part of the First Defendant in failing to report the approaches of Mr Roberts to himself and the other Defendants and his hiding from the Claimant the fact of their intention to become employees of Scion. The Second Defendant Failing to keep appropriate records relating to the Claimant’s customers; failing to effect a proper “handover”; deleting her business emails[322]A significant part of the cross-examination in this case related to the issues summarised above. Although in some ways these allegations are capable of being considered discreetly it seems to me that the reality of this case is that they are put forward as ways in which the Second Defendant was in breach of her implied duty of fidelity towards the Claimant. I say that since there is nothing in her SPTC or the Handbook which required her to keep proper records or effect or participate in a proper handover of the business in the event that she gave notice of termination of her employment. She was under an express duty to preserve the Claimant’s confidential information and, of course, that would include emails and attachments falling into that category.[323]In the Particulars of Claim (paragraph 25.3) the Claimant alleges that the Second Defendant’s implied duty of fidelity included a duty to act in the best interests of the Claimant at all times during her employment. In my judgment this assertion is plainly correct and is apt to encapsulate a duty to keep records when appropriate to assist in a handover and to preserve email communications which related to the Claimant’s business.[324]The Second Defendant admits that at the conclusion of her employment with the Claimant she deleted all the emails sent to her computer. In her oral evidence, however, she said (for the first time) that before deleting the emails she transferred any information which they contained which was useful to the Claimant’s business to customer files. She vehemently denied that she failed in her duty to keep proper records or that she failed to cooperate in any way in the handover of the business in the weeks leading up to her leaving the Claimant.[325]In relation to the keeping of records it is worth pointing out at the outset that this allegation, as formulated, is an allegation that the Second Defendant, personally, failed in her duty of keeping records. It is not being suggested, for example, that she failed to supervise other employees in that task.[326]The Claimant’s case is that the Second Defendant deliberately failed to keep proper records and that she deliberately failed to engage in a proper hand over of the business once Mr. Shannon and Mr. Bowes started their employment. That case is put forward since it is also alleged that the Second Defendant was deliberately engaged in damaging the Claimant’s business and/or helping to attract customers of the Claimant to Parabis.[327]As I have said the Second Defendant vehemently denies these suggestions. She was adamant in her evidence that she had recorded any relevant information either in customer files or two other classes of documents. One such class was the minutes of sales and marketing meetings which took place regularly with those employees of the Claimant who were engaged in that aspect of the Claimant’s business. The Second Defendant suggested that information about customers and business opportunity with customers would be recorded in the minutes since, inevitably, customers and opportunities for business with such customers were discussed at meetings. The second class of documents were those known as “hot, warm and cold lists.” As their names imply these were lists compiled by reference to whether at the time of compilation any customer was important, less so or comparatively unimportant. She was completely indignant about the suggestion that she was acting deliberately to damage the Claimant by failing to make proper records or engage in a proper handover.[328]In my judgment it is necessary to consider these allegations with particular care. I say that for these principal reasons. During the period of the “overlap” between Messrs Shannon and Bowes and the Second Defendant there was no complaint to the Second Defendant by either of those men about any inadequacy of records or the manner in which she was undertaking the task of handing over the business. Further, neither, Mr. Shannon nor Mr Bowes complained to MB or EB about these matters. Perhaps more importantly, in the period between the Second Defendant’s ceasing work for the Claimant and the Claimant’s discovery of her employment with Scion there was not one contact between employees of the Claimant and the Second Defendant to query an absence of proper records or to complain about any aspect of her work before she left.[329]The allegation of failing to keep proper records has come to feature in this case only as a consequence of the most detailed investigation of the records undertaken by EB for the purposes of this litigation. In his witness statement EB asserts that he undertook an analysis of file notes for a number of customers between January and April 2006 and then a separate analysis of file notes for the same customers in the period January to April 2007. The customers in question were AXA insurance, RSA, Allianz, AXA Corporate Solutions, Britt, Ecclesiastical, Hastings, Norwich Union, Highway and RBS Direct Line. The word count in the file notes for January to April 2006 was 9355 whereas it was 2738 for the same period in 2007. He was able to undertake this task, of course, since the files are kept electronically. In his opening submissions Mr. Duggan referred to a document entitled “Summary of Breaches.” It contains the allegation that in relation to no less than 22 customers there was a failure to keep proper records.[330]In the context of this case, at least, whether or not a failure to record information can sensibly amount to an actionable breach of contract depends, in my judgment, upon whether or not the failure related to important information about a business opportunity. The mere failure to record every scrap of information, the date of the last telephone call or meeting with a customer, for example, would not amount to an actionable breach. The Claimant’s customer base was extremely well known to all the employees of the Claimant who dealt with customers. No harm would be caused to the Claimant by a failure to record information unless it really was important that it be recorded so that all employees who might deal with the particular customer would be kept up to date.[331]It seems to me, therefore, that I have to consider two questions in relation to the alleged failure to record information. Has the Claimant proved that the Second Defendant failed to record information in customer records or in any other document in which it was reasonable to record such information? If so, was that failure a failure to record information which was important in the sense that its absence from records or documents was capable of damaging the business of the Claimant?[332]In seeking to answer those questions it is of some importance, in my judgment, that the Claimant adduced no evidence from any of its customers. Its explanation for that was it did not wish to involve its customers in this bitterly fought litigation. That is an understandable point of view. Nonetheless, one of the easiest ways to demonstrate that important information had not been recorded and that this failure had impacted adversely upon the Claimant’s business would be to call evidence from the customer in question. The Defendant did adduce evidence from at least a few of the Claimant’s customers. They were Mr David Fisher, of AXA Insurance, Mr Paul Berry of David Wallis Foyster, Mr David Frost of RSA and Mr Francis of St Paul’s Travellers. They also adduced evidence from Mr Hobbs of Car Crash Line who, although not a customer, was an important contact. I do not need to describe the evidence of those persons in detail. It is clear from what they said that there was nothing which occurred between them and the Second Defendant in the last months of her employment which, if she had recorded it in documentary form, would have created a business opportunity for the Claimant which it missed.[333]The Second Defendant’s own evidence about her workload in this period was detailed and, in my judgment, convincing. At paragraph 68-71 of her witness statement, she describes in some detail what she did in the period January 2007 to 27 April 2007. She was not challenged to any substantial extent, if at all, about her description. It goes without saying that it was not possible for Mr. Duggan (or for that matter Mr. Bacon) to challenge every point of detail. Had it been the case that the Claimant genuinely disputed the workload which the Second Defendant undertook, however, I would have expected that issue to have been explored. In any event, I remind myself that it is the case for the Claimant that between 16 March 2007 and 27 April 2007 the Second Defendant was essentially the person who controlled the day to day activities of the Claimant with all that this entailed.[334]I make allowances for the undoubted fact that the Second Defendant is resourceful and energetic and, further, that she engaged, as I have found, in a deliberate deception upon the Claimant as to her future employment intentions. Nonetheless, I cannot accept that she was able to do all the work that she undoubtedly did for the Claimant and yet, at the same time, so conduct herself so as to deliberately fail to record important information about customers with a view to damaging the Claimant’s business. Further, the Claimant has not proved, in my judgment that, deliberate or not, there was a failure by the Second Defendant to record important information.[335]I am equally unconvinced that the Claimant has proved that there was a failure by the Second Defendant which is an actionable breach of the implied duty of fidelity to engage in a proper handover of the business.[336]The Second Defendant (together with the Third Defendant) met Mr Bowes on 13 March 2008. From the outset there was a clear difference of approach between Mr Bowes on the one hand and the Second and Third Defendant on the other as to the appropriate marketing of the Claimant’s business. When they gave their evidence Mr Bowes, the Second Defendant and the Third Defendant made no secret of this fact. Although the Second Defendant and Mr Bowes were on reasonable terms, personally, it is obvious that they were like chalk and cheese so far as the marketing of the Claimant’s business was concerned.[337]It is common ground that there was approximately six weeks when both the Second Defendant and Mr Bowes worked for the Claimant. However, during this period each took a holiday for one week. Consequently the period of overlap was about four weeks. In paragraphs 73 to 81 of her witness statement the Second Defendant deals in detail with her work and responsibilities during the period in question. It is obvious that she was fully stretched.[338]In his witness statement Mr Bowes complains that he received no proper introduction to the Claimant’s business from the Second Defendant (or for that matter the Third Defendant). He says in terms that he spent very little time with the Second Defendant and that she made no attempt to work through sales records with him or go through customers with him in detail. Mr Bowes suggests that he expected there to be a detailed induction from both the Second and Third Defendants about sales and the Claimant’s key customers.[339]In paragraph 21 of his witness statement Mr Bowes says that at the time he did not question this other than to himself because he was new to the Claimant.[340]I find this a surprising suggestion and I am not prepared to accept it. Mr Bowes is a forthright individual. It is my impression that he would not be shy in coming forward if he wanted to obtain information.[341]On more than one occasion in his evidence Mr Bowes asserted that from the commencement of his employment with the Claimant he was inundated with information. At many points in his evidence he seemed to be complaining not about a lack of information but, rather about any attempt to provide it to him in a structured manner.[342]In relation to what was or was not done in the period of overlap between Mr Bowes and the Second Defendant I found the evidence of Ms Claire Eastmond helpful. Mr Eastmond joined the Claimant in September 2006 as a part-time marketing manager. She had known the Second Defendant for many years previously and regarded her as a friend. Her role as part-time marketing manager was to report to the Second Defendant. Her description of the hand-over period begins at paragraph 22 of her witness statement and continues until paragraph 32. In my judgment that description is accurate and reliable and it is inconsistent with the picture painted by the Claimant of the alleged deficiencies of the Second Defendant in relation to a hand over. I appreciate of course that Ms Eastmond is a friend of the Second Defendant. I also appreciate that Mr Duggan asked me to reject her evidence completely in the light of her description of how it came to be that she discovered that the Second and Third Defendants were leaving the Claimant and her apparent willingness to change that evidence to suit the case of the Second and Third Defendants. I also take into account the fact that she openly admitted that she ceased to work for the Claimant since she realised Mr Bowes and she were completely different in character. All that said, there is no real reason to reject her description of what went on in the hand over period.[343]In his witness statement Mr Bowes explains what was done (or not done) to introduce him to the significant clients of the Claimant. In many instances Mr Bowes complains that he was not introduced to a particular client and/or no meeting was arranged in which he could introduce himself. As a pure matter of fact Mr Bowes may be right in many instances about whether or not meetings were arranged or introductions made. However, this must be seen in context. From my knowledge of the Claimant’s business it would have taken Mr Bowes, literally, no more than a few minutes to ascertain the identity of the Claimant’s main customers. Any request to the Second Defendant, Third Defendant, Claire Eastmond or Emma Jackson – to name just four people – would have elicited that information. Similarly, in my judgment, a discussion with the Second Defendant over a comparatively short period of time would have elicited from her the best way of approaching those customers so as to introduce them to Mr Bowes. Had Mr Bowes thought that such a discussion was essential I have no doubt that it would have happened.[344]There is in any event an easy explanation as to why introductions would be difficult to arrange in the truncated timescale of the hand-over. The appropriate personnel within the Defendant’s customers are, themselves, busy people. Meetings and introductions cannot be arranged at a drop of a hat. The Second Defendant knew that and I have no doubt that Mr Bowes also knew that in the sense that, generally speaking, important providers of work in a service industry cannot be expected to down tools at the drop of a hat simply to meet a new employee of a service provider.[345]In his cross-examination of the Second Defendant and in closing Mr Duggan made much of the fact that at the first Business Continuity Meeting which was chaired by the Second Defendant she apparently tasked Mr Bowes with effecting introductions to customers. This meeting took place on 19 March 2007 and was attended by all the Claimant’s senior personnel apart from MB and EB. In particular, Mr Shannon and Mr. McGurk were present. If what the Second Defendant suggested for Mr. Bowes was inappropriate I would have expected either one of those or Mr Bowes himself to have intervened and pointed that out. There is no suggestion in the evidence, however, that anything like that occurred.[346]Just as with the allegation of a failure to keep appropriate records so, in my judgment, the allegation of failing to engage in a proper hand-over is a product of after the event rationalisation in the context of bitterly fought litigation.[347]There can be no doubt that the Second Defendant deleted the emails from her work computer. There is the curious anomaly that Emma Jackson said that she saw emails on the Second Defendant’s computer after she left. However in the face of the Second Defendant’s clear admission it seems to me to be impossible to proceed on any other basis than that the Second Defendant did delete her emails.[348]I do not accept that she transferred relevant information from those emails to files before the deletion took place. As I have said this evidence only emerged under cross-examination and, in my judgment, it emerged because the Second Defendant realised that she ought not to have deleted her emails.[349]Why she did so is, on the evidence, very difficult to explain. Perhaps the most likely explanation, at this distance, is that there was email traffic which would have alerted the Claimant to the fact that the Second Defendant was going to work for Parabis.[350]As with the allegation of a failure to record information the important issue in relation to the deletion of emails is whether or not business information was lost to the Claimant to its detriment. Quite clearly some information was lost. However I see no reason to adopt a different approach in relation to the loss of this information to the approach which I have adopted in relation to the alleged failure to record important information. I do not accept that the Claimant has proved that the Second Defendant deliberately set out to damage the Claimant by destroying information. Although, therefore, strictly, the Second Defendant should not have deleted emails which were related to the Claimant’s business I do not accept, on balance, that significant information was thereby lost to the Claimant. In short if the Second Defendant had deleted emails containing important business information that would be consistent only with her deliberately trying to damage the Claimant. I do not accept that she has behaved in that fashion. The Use of Memory Sticks[351]The storing of information on memory sticks was a breach of the provisions of the Handbook which I have set out in paragraph 298 above. As I understand it the Second Defendant admits that she stored information, some of which may have been confidential, on memory sticks, during her course of employment with the Claimant. She says that she did so in order to facilitate her work and there is no obvious reason why that is not so. She also says, importantly, that she returned the memory sticks upon which she had stored information to Mr Bowes before she left the Claimant’s employment.[352]During the course of the hearing the Claimant produced a schedule of documents which were stored in the memory sticks which the Second Defendant returned. There is no doubt that there was a very large amount of information contained on the memory sticks. In his written closing submissions Mr Duggan drew attention to the fact that there was a mass of confidential information relating to “clinical governance”. From that he invites me to infer that the Second Defendant has used such knowledge in order to develop governance procedures within Human Focus and RTW Plus.[353]There is no direct evidence that the Second Defendant has used information on the memory stick in this way. Indeed there is no evidence adduced before me to suggest that the Second Defendant kept the information which was upon the memory sticks. It does not seem to me that I can make findings about these aspects of the case. In any event, Mr Duggan does no more than suggest that there are strong grounds for suspecting that the Second Defendant has misused the information. In my judgment strong grounds for suspecting do not equate to a finding on balance of probability.[354]I should not leave the position of the Second Defendant, in particular, without making some reference to the “Business Commentary” prepared by EB. This was a document prepared by EB for the purpose of this litigation and which, in the end became incorporated into the pleadings by amendment. The document is an exhaustive attempt to establish that the Defendants and the Second Defendant in particular set out to damage the Claimant over the last months of their employment. In reality it falls far short of so proving. It is full of supposition and suspicion but it provides no substantial proof of deliberate wrongdoing except in the respects already mentioned in this judgment (and to be mentioned in the case of the Third Defendant). I am afraid that I consider it demonstrates an unrealistic attitude in many respects. I cannot possibly deal with it in detail without making this judgment unacceptably long. I content myself with saying that I have considered the document in detail before reaching the principal conclusions in this judgment about the Defendants’ alleged breaches of contract/duty. The Third Defendant Emailing Documents to herself and retaining the same[355]In his written closing submissions Mr Duggan identifies a number emails which the Third Defendant sent to her home computer between the period 14 March 2007 and 4 April 2007 which attached to them documentation belonging to the Claimant. It is not necessary for me to describe the documents in detail since there was no dispute between the parties that they all related to the Claimant’s business. The Claimant alleges that the Third Defendant behaved in this way because she intended to use the information in her new employment with Scion.[356]Her response is to assert that nothing is further from the truth. The Third Defendant always spent a very significant part of her working life at home. She says that her sole purpose in sending documentation to her personal email address was so that she could work on them for the benefit of the Claimant.[357]As I understand it the Third Defendant would have received the documentation in question via her work laptop. On the face of it, it is not easy to see why she could not have worked upon the documentation at home from her laptop. Her explanation was that she needed, at least on occasions, to print out the documentation and she had no means of printing from her work computer.[358]It may very well be that the Third Defendant was unable to print from her work computer and that on occasions it was necessary for her to email documentation to her personal computer so as to enable her to print out the document. What that does not do, however, is explain why the Third Defendant did not return all the documentation once her employment with the Claimant ceased. It is this aspect, in my judgment, which the Third Defendant has singularly failed to explain.[359]It seems to me that the issue of whether the Third Defendant emailed documentation to her personal computer for a legitimate purpose or not becomes almost irrelevant when, as she accepts, she retained the documentation following the termination of her employment with the Claimant. On any view the Third Defendant knew that she might engage in activities within Parabis in which her knowledge of the Claimant’s business might be advantageous to her new employer. I simply do not see how it can be said that her failure to return the Claimant’s information either in electronic form or hard copy was other than a breach of the terms of the Handbook and, further, a breach of the Third Defendant’s implied duty of fidelity. The Deletion of her Emails[360]My stance in relation to the Third Defendant is identical to that which I have explained in relation to the Second Defendant. In summary although the Third Defendant should not have deleted her emails I am not persuaded that the deletion of the emails caused the Claimant to lose important business information. Just as with the Second Defendant the Claimant knew or should have known of the deletion of the emails very shortly after the Third Defendant’s departure. MB and EB did not complain to her. As far as I am aware they did nothing to retrieve the information in the immediate aftermath of her leaving. What would the Claimant have done if the Defendants had reported their contacts with Mr. Roberts[361]I have no doubt that had MB and EB known of the contact between the Defendants and Mr Roberts they would have done all that they reasonably could to have protected the Claimant from what they would have regarded as a situation fraught with potential danger to the business interests of the Claimant.[362]Under the SPTCs signed by each Defendant, the Claimant and Defendants could terminate the employment in question by the giving of notice. In the case of the First and Second Defendant the period of notice was 3 months. In the case of the Third Defendant her period of notice was 1 month. The Claimant reserved the right in each case to pay wages or salary in lieu of notice. Further, at its option, following the giving of notice it was entitled to require each Defendant to remain at home “on garden leave” for the entirety of the notice period.[363]As I have found the First Defendant gave notice of his intention to terminate his employment with the Claimant in November 2006. Shortly thereafter, as I have also found, contact with Mr Roberts began and by early January 2007 (or at the latest late January 2007) the First Defendant should have reported his contacts with Mr Roberts (and the contact between the Second Defendant and Mr Roberts) to MB or EB. Similarly in early or late January the Second Defendant should have reported the contacts of herself and the First Defendant with Mr Roberts to MB or EB. Finally, in late January the Third Defendant became subject to an obligation to report her contacts and that of the other Defendants.[364]Had any one of the Defendants complied with their obligations I have no doubt that the First Defendant would have been required to cease working for the Claimant. In my judgment this would have inevitably accelerated the process of all the Defendants signing contracts of employment with Scion. As and when they did, they would have been required to serve out their notice but “at home”. Essentially, I entirely accept the evidence of EB at paragraphs 340 and 347 of his witness statement as to how the Claimant would have reacted. I reject, without hesitation, the contention made on behalf of the Defendants that events in January through to the end of April 2007 would have taken an identical or similar course had the Defendants reported their contacts and intentions. Such a scenario, in my judgment, is simply implausible. POST-TERMINATION BREACHES The First Defendant[365]The First Defendant is and has been bound by the shareholder agreement. The Claimant alleges that the First Defendant has either directly or indirectly been engaged in a business which has been and is competing with the Claimant’s business and consequently clause 7.1.1 has been infringed.[366]The First Defendant commenced employment with Scion on 19 March 2007. His contract specifies his job title and duties as:- “Group Operations Director for duties specified by the firm. You will report to Tim Oliver, Managing Partner, who will be your first contact for all queries and matters relating to the firm, our policies and our clients. You will ultimately be responsible to the equity partners. Reporting lines and assigned supervisors may change from time to time.” The word “firm” is a reference to Scion. It is common ground, however, that the First Defendant’s intended duties might involve him in undertaking tasks for any company within Parabis.[367]In his witness statement the First Defendant describes the role which he envisaged performing as follows:- “My role at Scion was originally envisaged to cover all of the non-legal side of the Group, providing a wide-range of different services to the operating companies that are in this side of the business. A job description for the role is attached. The key lines are the main objectives paragraphs, namely:-(1) To provide a range of business planning and operational management advice across the Parabis Group.(2) To undertake designated project management responsibilities.” (1) To provide a range of business planning and operational management advice across the Parabis Group. (2) To undertake designated project management responsibilities.”[368]In fact, as paragraphs 150 to 152 of his witness statement make clear, almost the first task which the First Defendant engaged in was work for Human Focus. As I understand those paragraphs the First Defendant spent a good deal of time between March 19 2007 and the end of June 2007 dealing with various aspects of the business of Human Focus.[369]On or about 2 May 2007 a second rehabilitation service provider, RTW Plus became part of Parabis. Thereafter, the First Defendant was engaged in integrating this business with Human Focus. As I understand it, the First Defendant was engaged in this task during the later months of 2007.[370]I have already found that Human Focus was a competitor of the Claimant. It seems to me to be obvious that RTW Plus was also a competitor. The Second Defendant admits as much in her witness statement[371]On the basis of his own account, therefore, the First Defendant engaged in important work for Human Focus and RTW Plus over a period of many months immediately following the commencement of his employment with Scion.[372]During the course of these proceedings emails sent to and by the First Defendant during the course of his employment with Scion have been disclosed to the Claimant. They are instructive in understanding the role which the First Defendant was performing in the months immediately following the commencement of that employment. I deal with just some to illustrate what I mean.[373]On 23 March 2007 the First Defendant sent an email to Messrs Oliver and Roberts which said: - “I would quite like to understand the rehab from the claims and Defendant lawyers perspectives and so would like to spend a few moments with one of each. Who should I speak to about this?” On 26 March 2007 Mr Oliver’s secretary sent an email to Ms Edwards, a senior employee of RTW Plus, and the First Defendant informing them both that she had booked a table for dinner for them both at a popular bistro. On 2 April 2007 Ms Sally Young, the Operations Director of Human Focus sent documentation to the First Defendant about cases which had been undertaken by Human Focus for Legal & General for which payment was due. On the same day the First Defendant sent documentation to Mr Pemberton in relation to the work of Human Focus.[374]On 4 April 2007 there was an important exchange of emails between Mr Roberts and the First Defendant. At 00:51 on 4 April Mr. Roberts sent an email to the First Defendant and the subject was described as being “David Williams”. David Williams is and was a senior employee of AXA Insurance. The substance of the email sent by Mr Roberts is as follows:- “I am seeing David W at AXA in London at 3.00 pm later today. Anything you would like me to day to him? Where have you got to with AXA/David Fisher/ results on tender? I sent a note on liberty – re Kynixa Can be also catch up on - RSA Warren – have we got that date? Mike and the “Tiger Offer/ Kynixa generally RTW update Remedy matters – D2 experts HF operations Brand Regular catch ups Car crash limited” The First Defendant replied at 08:08 the same day. The relevant parts read:- “AXA know about SP leaving officially. My understanding is that AXA will be letting Kynixa and HCML know the result of the tender tomorrow and that the result will be as is for a period of time. Until tomorrow though I would not take anything for granted! There are elements of business that we will be able to get immediately when Sarah turns up. I have an appointment with Sarah and David in May to move things forward. The Liberty ideas that we have put in there have been generated by Sarah and myself and whilst they like Kynixa, over time we will be able to take that account” Can be also catch up on - Warren – have we got that date? Mike and the “Tiger Offer/ Kynixa generally RTW update Remedy matters – D2 experts HF operations Brand Regular catch ups Car crash limited”

Regular catch ups

[375]On 10 April 2007 Mr Pemberton sent an email to the First Defendant amongst others attaching information about a proposed date for a visit to Morag Heighway a senior employee of Norwich Union. On 10 April 2007 there was an exchange of emails between the First Defendant and Kath Newton about RSA, BIPOC and physio-lite. On 12 April 2007 the First Defendant sent an email to senior employees of Human Focus in which, clearly, he was advising them about the need to set up sales files for each of their customers. He informed them that such files could be updated after every visit and conversation so that a proper record could be kept. The Claimant would no doubt say “shades of Kynixa.” Towards the end of April 2007 a number of emails were sent to the First Defendant about the launch of “Argent Health”. Argent Health was to be a brand name for the activities of the rehabilitation service providers within Parabis.[376]On 1 May 2007 the First Defendant sent an email to Messrs Roberts and Pemberton about the panel of rehabilitation providers which was maintained by Allianz. At about this time Allianz was finalising its panel rehabilitation service providers and, it is clear from the email that the Claimant, Human Focus and RTW Plus were strong candidates for the panel.[377]In my judgment those emails point unequivocally to the First Defendant being engaged, intimately, in the affairs of Human Focus and the proposed acquisition of RTW Plus. Further they demonstrate, again unequivocally, that each of those organisations was in competition with the Claimant. What else is the explanation for the fact that Human Focus, RTW Plus and the Claimant were each striving to be on the panel of rehabilitation providers for Allianz?[378]If there was any doubt about the fact that the First Defendant was intimately connected with RTW Plus that is dispelled by the fact that on the very day that RTW Plus became part of Parabis the First Defendant was appointed as one of its directors.[379]Earlier in this judgment I made reference to an email sent on 8 May 2007 by Mr Roberts to various people including the First Defendant. The email related to advertising the fact of RTW Plus joining Parabis and, further, Mr Roberts’ ideas about how that could be linked to the fact of the Defendants joining Parabis. The substance of Mr Roberts’ email reads: - “…….. looks fine to me [this is a reference to material about RTW Plus] Would like to follow it with the announcement that the entire Kynixa management team has joined Can think about a draft for next week to coincide with post-Mag rehab summit? Can we re-do the slides for the Parabis plan on the PC so that they are full of the right messages regarding RTW joining with the Kynixa team May be some laminated press releases as well? Martin what do you think?” Can think about a draft for next week to coincide with post-Mag rehab summit? May be some laminated press releases as well? Martin what do you think?”

May be some laminated press releases as well?

[380]This email, in my judgment, shows that Mr Roberts considered that the First Defendant (and for that matter the other Defendants) should be portrayed to the outside world as intimately connected with RTW Plus. I can only think that was Mr Roberts’ view because that was the reality. It is also instructive that the First Defendant sought to restrain Mr Roberts from publishing this view of things. In my judgment that is consistent only with the realisation on the part of the First Defendant that he was acting in breach of a legitimate restraint imposed upon him by the shareholder agreement.[381]In the light of the evidence set out above I am left in no doubt that immediately upon the commencement of his employment with Scion the First Defendant both directly and indirectly engaged in substantial work related activity for two businesses, Human Focus and RTW Plus which businesses were in competition with the Claimant. I do not see how any other interpretation of the evidence is possible. That means, of course, that the First Defendant was in breach of clause 7.1.1 of the shareholder agreement more or less from the time he commenced work for Scion.[382]If I am wrong in reaching the conclusion that the First Defendant was in breach of clause 7.1.1 prior to the acquisition of RTW Plus I have no doubt that he became in breach once RTW Plus was acquired and he carried out the work which he himself has described. That view is reinforced by a most telling document apparently published on 10 May 2007 by Parabis. “Parabis Group Continues Expansion with the Merger of Two Leading Rehabilitation and Return to Work Service Providers The Parabis Group is delighted to announce the merger of Human Focus Return to Work and Return to Work Plus Both firms have a reputation for providing the highest quality vocational and medical rehabilitation and return to work solutions to insurers, solicitors and employers as well as the public sector. The two businesses see considerable mutual benefits in coming together to improve standards and further develop and enhance their service proposition to both clients and purchasers. ………….. Speaking about the impending launch, Tim Oliver, Managing Director of the Parabis Group, said:
“Rehabilitation is a core aspect of the developmental thinking of the Parabis Group. Both of these firms complement each other in terms of service offering, highly dedicated and trained personnel and determination to improve standards across the industry. The long term demand for rehabilitation services is clear and by joining together two front runners they will be in an even better position to meet this demand by offering clients the most professional, proactive and productive range of services available in the market.”
Likewise Deborah Edwards, Managing Director of RTW Plus commented:- “RTW Plus is very keen to join with a firm that fits with our profile and shares our goal of delivering the highest rehabilitation and return to work solutions to the market. Clients from both companies will benefit from more expansive vocational and medical case management solutions, and will be able to tap into an unrivalled range of services.”” Speaking about the impending launch, Tim Oliver, Managing Director of the Parabis Group, said:

Likewise Deborah Edwards, Managing Director of RTW Plus commented:-

[383]I appreciate, of course, that the First Defendant denies this breach and has sought to explain the evidence to which I have referred above in his witness statement in a way which would be consistent with there being no breach. I can only say that I find the First Defendant’s explanation of the emails, in particular, to which I have referred to be unconvincing. As I have said, it seems to me that his own witness statement, taken at face value, means that the First Defendant was in breach of Clause 7.1.1.[384]I can deal with the remainder of Clause 7.1 quite quickly. Despite the strongly held suspicion of the Claimant I do not consider there is sufficient direct evidence from which to draw a conclusion that the First Defendant has engaged in soliciting the Claimant’s customers contrary to clause 7.1.2. The email of 4 April 2007, in particular, is highly suggestive of his willingness to engage in such activity but, to repeat, there is no direct evidence that he has done so and the evidence of the Witnesses called on behalf of the Defendant, especially Messrs Fisher and Frost, persuade me that the Claimant has failed to prove a breach of this clause as against the First Defendant.[385]I am conscious that in making that finding I am absolving the First Defendant from any suggestion that he personally solicited work from RSA. It is undoubtedly the case that the Claimant has lost work from RSA. However such is the relationship between Mr. Roberts, in particular, and senior personnel within RSA that it seems more likely, indeed much more likely, that work has gone to Human Focus/RTW Plus Argent Rehabilitation because of that relationship. That does not mean, however, that the work undertaken by the First Defendant for Human Focus/RTW Plus has not facilitated the transfer of such work. That, no doubt, will be explored in due course.[386]The Claimant also sought to demonstrate a breach of Clause 7.1.3 quite apart from the suggestion that the First Defendant had been instrumental in the Second and Third Defendant joining Parabis. However, I cannot accept that social occasions arranged between the First Defendant and various employees of the Claimant in the weeks following the First Defendant’s departure from the Claimant amounted to a breach of this clause and there is certainly no direct evidence of solicitation or enticement. The Defendants called some evidence from former employees of the Claimant and I accept their account that there was no attempt by the First Defendant to solicit them or entice them away from the Claimant.[387]I do find, however, that the First Defendant has been in breach of Clause 7.2.1 of the shareholder agreement since he began his employment with Scion. The First Defendant has never relinquished his shares in the Claimant. That being so there is no dispute that clause 7.2.1 continues to apply to the First Defendant and has applied to him since 19 March 2007. During the course of his employment with the Claimant, as I have found, the First Defendant emailed a number of documents belonging to the Claimant to himself and many of those documents contained confidential information. I have found that he did so because such documentation might be of use during the course of his employment with Scion. That being so I think it appropriate to draw the inference that the First Defendant has disclosed some, at least, of the information within that documentation to personnel within Parabis. The reasons why I draw that inference are easy to state. Firstly, of course, the fact of retaining the information is consistent, sensibly, only with an intention to use it. Secondly, it is clear from the email exchanges between Mr Roberts and the First Defendant that they would be very likely to discuss information concerning the Claimant and owned by the Claimant if it was beneficial so to do in the context of promoting the business activities of Human Focus and RTW Plus.[388]It also the case, of course, that the divulging of confidential information to personnel within Parabis would be a breach of the implied duty of fidelity which the First Defendant owed to the Claimant. As I understand it Mr Bacon accepts that this implied obligation in the First Defendant’s contract of employment with the Claimant would not come to an end simply by virtue of the cessation of the Claimant’s employment. It would certainly be strange if that was so. The Second Defendant[389]In her contract of employment with Scion the Second Defendant is described as a Business Development Manager. She commenced her employment with Scion on 8 May 2007. On 2 May 2007, of course, RTW Plus became part of Parabis and, as I have said, in her witness statement, the Second Defendant acknowledges that RTW Plus is and was at all material times a competitor of the Claimant (see paragraph 89).[390]The Second Defendant describes the work she did upon her arrival at Scion in paragraphs 90 to 96 of her witness statement. The relevant extracts are as follows:- “90. On my arrival at Scion and before this legal action began I was working in a central function in Croydon. My first two weeks were fundamentally induction which I devised myself after the initial HR talks from the Scion team ……… I completed fine-streamed training. I then went on holiday for one week at the end of May 2007. 91. On my return from holiday I was heavily involved in organising IT developments with Nick Adeyman (one of the partners of Trilliam LLP) and spent many hours checking question and answer flows needed to imbed the physio-lite process into the file stream IT system. Throughout this time I worked closely with Sarah Gooding in Human Focus who now does this without my input. I steadily worked through a manual invoicing process. I have to fully understand it to be able to get it automated and again programmed into the IT system ……… Heather and Martin helped me with this and the task was not completed by the time this legal action was taken. I also had two tele-conferences with Bev How from the Cogent Law Office in Leeds regarding the internal process of moving rehabilitation referrals seamlessly within the Parabis Group. I visited offices in Birmingham to investigate the business processes of a firm Parabis were wishing to buy and undertook some associated due diligence work. 92……………. 93. During my first week at Scion, I had also been negotiating with the IT department to develop new invoicing processing within the IT system, negotiating with Royal Mail to bring rehabilitation business in-house from TIWCS, a rival rehabilitation business to Kynixa, and obviously simply finding my feet in the new role at Scion…………… I have never worked directly for RTW Plus, Human Focus or Argent Rehabilitation (a brand name for rehabilitation services within Parabis adopted in late 2007) but obviously came into contact with them as colleagues and when my expertise is required on internal matters. Specifically on IT matters I meet with Mike Lewis. We are developing web interfaces to manage suppliers and the technology is common to rehabilitation and also health and safety. Both companies are branded Argent. I have not used any Kynixa material towards doing any of these works. Files streamed the IT system are unique to the Parabis Group.”[391]Mr Duggan submits that the activities disclosed by these passages in the Second Defendant’s witness statement demonstrate that she has been carrying out work for competitors of the Claimant. He also submits that this is demonstrated by reference to a job description relating to her employment with Scion which the Second Defendant wrote herself in order to seek to resist the claim which was brought by the Claimant for an interim injunction early in these proceedings. (Bundle 7 page 2498). Mr Duggan also points to the fact that the Second Defendant spent time working with personnel of RTW Plus when she first took up her employment with Scion. Finally he submits that the fact that the Second Defendant had a number of email addresses within Parabis (including email addresses which associated her with Human Focus/RTW Plus) demonstrates that she was engaged in work for competitors of the Claimant.[392]I am prepared to accept that the Second Defendant was not as involved in work undertaken by Human Focus or RTW Plus as was the First Defendant. Nonetheless, it seems to me to be an inescapable conclusion that from 8 May 2007 until the Claimant obtained an interim injunction she did work for those organisations which was more than minimal and, in consequence, it seems to me to be equally inescapable that she was in breach of clause 7.1.1 of the shareholder agreement. I base that conclusion, primarily, upon the Second Defendant’s witness statement, her “job description” as prepared by her and her answers in cross-examination when she was called upon to explain the passages in her witness statement and the job description.[393]Mr Duggan also maintains that the Second Defendant was in breach of clause 7.1.1 of the shareholder agreement even after an injunction was granted against her to restrain such a breach. This aspect, in reality, was not explored in any detail during the course of the Second Defendant’s cross-examination. It is hardly touched upon in Mr Duggan’s closing and I would not be prepared to hold that the Second Defendant was in breach of a Court Order which restrained a particular course of conduct without the clearest evidence to that effect. I accept that upon a strict reading of part of paragraph 93 of her witness statement the Second Defendant may be taken to have admitted that she was developing web interfaces to find suppliers both for rehabilitation suppliers and others within Parabis after the grant of the injunction. In my judgment, however, there has to be a degree of realism about what was going on. There was certainly no deliberate flouting of an injunction. The work undertaken by the Second Defendant may have been capable of benefiting the rehabilitation providers within Parabis but only in the sense that her work could have benefited a number of service providers whether or not they were rehabilitation services. I appreciate that clause 7.1.1 is aimed at indirect as well as direct engagement in work for a competitor and, to that extent, what the Second Defendant did may, technically, breach its terms. However, and to repeat, in the context such as the present I would not be prepared to find a breach of an injunction without clear and compelling evidence which justified such a conclusion and, just as importantly justified the imposition of some meaningful sanction.[394]In his written closing submissions Mr Duggan submits that the Claimant has proved that the Second Defendant made use of the Claimant’s confidential information and/or divulged the same to a competitor. He develops this in paragraph 10.18 of those submissions.[395]I do not accept that the Second Defendant removed confidential information from the Claimant which she then retained (except in her head) following her departure from the Claimant. It is true that the Second Defendant copied the Claimant’s information onto memory sticks but, as I have found, she returned the memory sticks upon which such information was retained before she ceased her employment with the Claimant.[396]I appreciate, of course, that the Claimant would have known much information which was confidential to the Claimant and which she must have memorised to some extent. It follows that she was in a position to disclose such information as she had memorised when she took up her work with Scion. There is precious little evidence, however, that she did behave in that way. Of course, there are meetings with personnel to whom such information may have been divulged. I am not satisfied, however, that the Claimant has proved that such information was divulged.[397]Of the three Defendants, I have no doubt that the Second Defendant was the one who was most loyal to the Claimant. In part, of course, that is explicable by the fact that she worked for the Claimant for most of its existence prior to her departure. It is also explicable, in my judgment, because she had done a great deal to ensure the prosperity of the Claimant.I have found that the Second Defendant was in breach of express terms of the shareholder agreement and duties imposed upon her by virtue of her senior status within the Claimant. In my judgment, however, she stopped short of deliberately using information confidential to the Claimant so as to expressly benefit its competitors. It is true that she deliberately misled the Claimant about her intentions after ceasing to work for the Claimant and, further, that she was in breach of the restraint imposed upon her by the shareholder agreement. Nonetheless the evidence does not convince me that she went one step further and used confidential information belonging to the Claimant so as to benefit Parabis. The Third Defendant[398]In the light of my earlier finding that the Third Defendant was not subject to any restriction upon the type of work she engaged in after leaving her employment with the Claimant the only meaningful allegation that can be made against the Third Defendant in respect of her post-termination activities is that she made use of the Claimant’s confidential information.[399]I have already found that the Third Defendant emailed a significant amount of confidential information to herself shortly before she ceased working for the Claimant and, thereafter, retained it. Such conduct by the Third Defendant was consistent only with her willingness to divulge this information to her new employer.[400]In his written closing submissions Mr Duggan sets out a number of instances when, so he says, the Third Defendant was divulging confidential information contained within documents retained by her but owned by the Claimant. Those are set out in paragraph 1025 at pages 115-116. In fact many of the breaches relied upon relate not to the use of confidential information but, rather, to competitive activity. To repeat, the Third Defendant was entitled to engage in competitive activity since she was not restrained from doing so by any contractual provision.[401]I am not convinced that the Claimant has proved that the Third Defendant actually used any of the Claimant’s confidential documentation. I accept that in early June she used a document which belonged to the Claimant. This document was amongst a number emailed by the Third Defendant to the First and Second Defendants in relation to something called “liability splits”. If I have understood the evidence correctly, however, this document was already in the possession of Parabis since it had been produced by the Claimant to Parabis many months earlier during the course of the business relationship between the Claimant and Parabis. I do not intend to address nice issues about whether or not this amounted to use of information which was still confidential. The plain fact is that no loss can have accrued to the Claimant by virtue of the use of this document since, no doubt, Parabis could have used its own version of the document in order to obtain the same information. RELIEF[402]My recollection is that Counsel agreed that the issue of relief was best address at a discrete hearing once the contents of this judgment had been digested. For the avoidance of doubt I have no objection to the lawyers releasing this draft judgment to their clients so that when judgment is handed down relief can be finalised sensibly after the taking of full instructions. I should stress, however, that this departure from the norm should not be taken as some kind of implied invitation for the parties to reargue points in the light of a judgment which is still in draft.[403]Even if I am wrong in my recollection that the parties invited me to consider relief after hearing further submissions upon it as my judgment unfolded it became clear that relief could only be finalised after further submissions after the handing down of this judgment.

Cited in 14 later judgments

and 5 more of the most senior