Halcyon House Ltd v Baines & Ors [2014] EWHC 2216 (QB)

Case No HQ12X04893

[2014] EWHC 2216 (QB)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 11/07/2014

Before

HIS HONOUR JUDGE RICHARD SEYMOUR Q.C.

(sitting as a Judge of the High Court)

Between

HALCYON HOUSE LIMITEDClaimant

CAROLINE BAINESDefendants

SUSAN MOGRIDGEDefendant

MINT LETTINGS AND MANAGEMENT LIMITEDDefendant

Case No. HQ12X03627

Between

SUSAN MOGRIDGE

CAROLINE BAINES Claimants

NICOLA LOW Defendant

Simon Forshaw (instructed by Heckford Norton) for Halcyon House Ltd. and Mrs. Low

James Purnell (instructed by SA Law LLP) for Mrs. Baines, Mrs. Mogridge and Mint Lettings and Management Ltd.

Hearing Hearing dates: 10, 11, 12, 13, 16, 17, 18, 19, 20, 23 and 24 June 2014

Judgment

His Honour Judge Richard Seymour Q.C. :

Introduction

[1]The two actions with which this judgment is concerned arise out of most unhappy family discord. The defendant in action HQ12X03627 (“the Harassment Action”), Mrs. Nicola Low, is the mother of the second claimant in that action, Mrs. Caroline Baines. Mrs. Baines is the first defendant in action HQ12X04893 (“the Halcyon Action”). The claimant in that action, Halcyon House Ltd. (“Halcyon”) was, until June 2010, a company in which Mrs. Baines held 45% of the issued shares, Mrs. Low held 10% of the issued shares and Mr. Jeremy Low, who is the son of Mrs. Low and the brother of Mrs. Baines, held the remaining 45% of the issued shares. As a result of an agreement (“the Compromise Agreement”) in writing made in June 2010 Mrs. Baines ceased to hold any issued shares in Halcyon, her shares being transferred to her mother.

[2]In 2010 Mrs. Low was the postmistress in Knebworth, Hertfordshire and ran the local post office. The business of Halcyon was conducted from offices above the post office.

[3]Halcyon was incorporated on 19 November 2003, apparently to carry on a business originally established in about 1974. Its business, certainly by about December 2003, was that of the letting and management of residential property. Mrs. Low acquired the issued shares of Halcyon in about December 2003, and the shares were then redistributed as between her and her children in the way which I have recorded. In her witness statement dated 7 February 2014 at paragraph 6 Mrs. Low explained that one of the reasons for acquiring Halcyon was to provide for Mrs. Baines “a secure job and reasonable income”. At paragraph 7 of that witness statement Mrs. Low continued, inter alia:- “Caroline was appointed the Managing Director (and was also, in this capacity an employee with a salary). I was the Chairman, and Jeremy was a director. The arrangement was that Caroline would run the business on a day-to-day basis but would provide regular information and reports to me and Jeremy. There would be monthly meetings between the three of us (as the Board of Directors).”

[4]In other words, the business of Halcyon was, essentially, to be run by Mrs. Baines, to provide her with a job and an income, but with her mother and her brother having a financial interest in the business. As I have noted, Mrs. Low had other business interests, not least the post office in Knebworth. Mr. Low also had other business interests. From about the end of 2008 he has been employed as a director by the Royal Bank of Canada Capital Markets department of Royal Bank of Canada Europe Ltd.

[5]In her cross-examination Mrs. Low emphasised on a number of occasions that, until the events giving rise to the claims made in the Halcyon Action, her intention had been that, in the fullness of time (that is to say, after the death of Mrs. Low) Mrs. Baines should acquire all of the shares in Halcyon and conduct its business entirely for her benefit. Mrs. Low envisaged, it seemed, compensating her son for his interest in Halcyon by giving him an interest in a flat owned by Mrs. Low.

[6]Against that background it was difficult to see what was the purpose of the Halcyon Action. As I shall explain, what actually happened was that on 21 April 2010 Mrs. Baines caused Mint Lettings and Management Ltd. (“Mint”), the third defendant in the Halcyon Action, to be incorporated. The business of Mint is the same as the business of Halcyon, residential property letting and management. Mint started to trade in about July 2010. Some 16 individual landlords who, prior to the commencement of the business of Mint, had been clients of Halcyon, thereafter transferred their affections to Mint. Mint also acquired the business of managing three blocks of apartments, respectively called Dunsters Mead, Willowdene and Nursery Gardens, which had previously been managed by Halcyon. Broadly what was contended in the Halcyon Action was that Mint had acquired the business of former clients of Halcyon by misuse of confidential information of Halcyon; in breach of implied terms of the contracts of employment of Mrs. Baines and Mrs. Susan Mogridge, the second defendant in the Halcyon Action and the first claimant in the Harassment Action; in breach of alleged fiduciary duties of Mrs. Baines and Mrs. Mogridge, and so forth. It was contended that an amount of £25,400 which had been paid to Mrs. Baines by Halcyon under the Compromise Agreement was, in the circumstances, repayable by Mrs. Baines. The position of Mrs. Baines was, in essence, that she had caused Mint to be incorporated because she feared that her mother and her brother were trying to force her out of Halcyon, and when it seemed that they were likely to succeed in that objective, she made arrangements to try to carry on the business which she had carried on through Halcyon using the new vehicle Mint. She denied misusing any confidential information of Halcyon. Although Halcyon has continued to trade, with limited success, if it was in fact the case that Mrs. Low acquired Halcyon to provide a job and an income for her daughter, and that she intended that, in due course, the entire benefit of Halcyon would be vested in Mrs. Baines, there was no obvious reason for the commencement of the Halcyon Action other than spite. However, the motivation for the action is not material to the merits of the claims made in it, so in this judgment I address those merits.

[7]Mrs. Mogridge was employed by Halcyon from 10 March 2008 until 15 July 2010. She was one of only two full-time employees, apart from Mrs. Baines, at the end of 2009 and the beginning of 2010. The other full-time employee at that point was Mrs. Elaine Washbrook. Mrs. Mogridge gave notice of resignation of her employment by Halcyon on 16 June 2010, and that notice took effect on 15 July 2010. Mrs. Mogridge was then employed by Mint as from 25 July 2010, and she continues in that employment.

[8]It appeared that the only document produced on behalf of Halcyon which was relevant to the employment of Mrs. Mogridge was a letter dated 12 February 2008 written by Mrs. Baines, which was in these terms:- “To confirm our conversation of this morning, I am pleased to offer you the position of full time administrator here at Halcyon House Ltd. The working hours will be from 9am to 5pm, Monday to Friday, and your starting salary will be GBP 17000.00 per annum. Holiday entitlement is 20 days per annum plus bank holidays and I can confirm that there will not be a problem with you taking time off in May for your friends [sic] wedding. I very much look forward to confirming a starting date with you, and to working together in the near future. Should you have any questions, please do not hesitate to contact me.” Should you have any questions, please do not hesitate to contact me.”

[9]Halcyon was only ever a small business. At paragraph 16 of her witness statement dated 7 February 2014 Mrs. Low explained that in 2009 it had about 140 clients who let out properties and some 180 tenants with which it dealt. The unaudited financial statements of Halcyon for the year ended 30 November 2008, of which a copy was adduced in evidence, recorded a turnover in that year of £159,170 which generated a profit before tax of but £27,367. The balance sheet of Halcyon as at 30 November 2008 recorded total assets less current liabilities of only £13,660. The figures for the next financial year, ending on 30 November 2009, were slightly better in relation to turnover and profit, but worse in relation to net assets. The turnover increased to £178,665, generating a profit before tax of £36,199. However, the balance sheet as at 30 November 2009 showed an excess of assets over current liabilities of but £1,834. The alteration in net assets was largely due to a significant increase in current liabilities and the payment of a dividend of £40,000 out of cash held at bank. Unhappily there was a substantial deterioration in the financial position of Halcyon in the year ended 30 November 2010, according to the unaudited financial statements of which a copy was adduced in evidence. Turnover was down to £150,779, so not much worse than in the year ended 30 November 2008, but there was a loss on ordinary activities before tax of £29,523. This was due to a significant increase in administrative expenses during the year, from £141,682 in the year ended 30 November 2009 to £180,733. That increase was essentially attributable to a payment of £25,400 in that year to Mrs. Baines as compensation for loss of office pursuant to the terms of the Compromise Agreement, and to an increase in legal fees incurred of some £20,000. There was also an increase in net current liabilities, from £30,564 to £48,168, and that had the effect that there was a net deficiency of assets over current liabilities of £22,826. Halcyon was therefore balance sheet insolvent, and that seemed to have continued to be the position from 30 November 2010 until the trial.

[10]To carry on its business Halcyon utilised, in addition to the services of Mrs. Baines and Mrs. Mogridge, those of Mrs. Washbrook and of Mrs. Nicki Payne. Other services which were not provided by Mrs. Baines, Mrs. Mogridge, Mrs. Washbrook or Mrs. Payne, such as preparation of monthly accounts, were supplied by self-employed contractors. One of these was Mr. Andre Harrold, who prepared monthly management accounts and also accounts in respect of the various apartment blocks which Halcyon managed. At paragraph 9(3) of her witness statement dated 7 February 2014 Mrs. Low described the services provided by Mrs. Washbrook (whom she calls in her witness statement Elaine Westbrook) as “dealing with prospective landlords and tenants. For example, she would value new properties and show empty properties to prospective tenants”. Mrs. Washbrook left Halcyon in 2011, but has not become employed by Mint. At paragraph 9(4) of her witness statement dated 7 February 2014 Mrs. Low explained the position of Mrs. Payne:- “Ms. Nicky [sic] Payne was employed by Halcyon as a part-time Client Liaison Officer. Her main duties involved inspecting properties before and after they were let and undertaking inventories in relation to the properties. This was necessary in order to determine whether any damage to properties had been caused by a tenant during the currency of a lease, and to determine the appropriate implications for the tenants deposit (which was securely held by Halcyon during the currency of the lease);”

[11]Mrs. Payne resigned her employment by Halcyon on 17 June 2010, giving one month’s notice. After she left Halcyon she too became employed by Mint, as from 2 August 2010.

[12]Mrs. Mogridge’s own account of the role which she performed at Halcyon was that she was an administrator. I think that it was not really in dispute that her tasks were administrative. However, in her witness statement dated 7 February 2014 Mrs. Low sought to create the impression that Mrs. Mogridge was a senior employee. What Mrs. Low said, at paragraph 9(2), was:- “Mrs. Mogridge was the next most senior employee [after Mrs. Baines]. She had been employed since around March 2008 on a full-time basis. She was effectively the Administration Manager and acted as Caroline’s unofficial deputy. For example, when Caroline was absent from Halcyon’s offices, Ms. Mogridge would take over the day-to-day running of the business and offices. Her duties were wide ranging and included:(i) financial duties such as the preparation of accounting documentation for the business and arranging payment to contractors who had undertaken work at landlords’ premises and chasing tenants for rents when they had not been paid; and

(ii) client landlord duties such as liaising with client landlords in relation to a range of matters such as the payment of rent to client landlords on a monthly basis (once it had been collected by Halcyon), proposed rent increases, making arrangements for repairs to properties as well as day-to-day dealings with client landlords where necessary. Mrs. Mogridge had wide exposure to Halcyon’s clients and would have been on first name terms with quite a few of them;

(iii) office management duties such as the maintenance of a diary to record appointments and reminders in relation to other tasks which need to be undertaken and the giving of instructions to members of staff. Apart from Caroline, Mrs. Mogridge was the only employee who had access to Halcyon’s bank accounts and passwords, and who could effect bank transfers. She would sometimes take substantial cash deposits (over £1,000) from tenants and bank them. All of this required a very high degree of trust from her employer. She may not have been recruited initially as Halcyon’s Administration Manager but that was clearly her actual position in the company.”

[13]A less grandiose explanation of the activities set out in that sub-paragraph might be that Mrs. Mogridge typed out invoices; prepared letters to send payments to contractors; wrote letters to tenants chasing late payments of rent; arranged for payments to be made to clients of sums due to them; monitored when rent reviews might be due; arranged repairs to properties managed by Halcyon; and kept the office diary. It has to be remembered that the total number of full-time employees was only three, one of whom was Mrs. Baines, the managing director. Mrs. Mogridge did not manage anyone. She had no obvious role in the formation of any policy to be adopted by Halcyon for any purpose. The only significance of whether Mrs. Mogridge was in truth a “senior employee” was whether she performed a role of such significance that it was appropriate to impose upon her fiduciary duties owed to Halcyon. Mrs. Low told me in cross-examination that she was aware, no later than March 2010, because they had told her, that neither Mrs. Washbrook nor Mrs. Mogridge had entered into a written contract of employment with Halcyon.

[14]Mrs. Baines also had not entered into a written contract of employment with Halcyon. It was not suggested that either of Mrs. Baines or Mrs. Mogridge had entered into any covenant with Halcyon restricting the scope of her activities after the termination of her employment by Halcyon.

[15]However, as I have indicated, it was the case of Halcyon that Mrs. Mogridge had misused the confidential information of Halcyon and had been in breach of various alleged implied terms of her unwritten contract of employment and in breach of various alleged fiduciary duties by activities in which she had allegedly been engaged both before and after becoming employed by Mint. Mrs. Low had, as to some extent she accepted, taken various steps to convey allegations concerning Mrs. Mogridge to a variety of recipients, including the police. In the Harassment Action Mrs. Mogridge contended that those steps amounted to harassment of her.

[16]On behalf of Mrs. Baines it was contended in the Harassment Action that various steps which it was contended that her mother had taken to manoeuvre Mrs. Baines out of Halcyon also amounted to harassment and that after the making of the Compromise Agreement Mrs. Low had continued to harass her.

[17]While it will be necessary to consider the law to be applied to the facts alleged to give rise to the claims in the Halcyon Action and the Harassment Action, respectively, because the facts relevant to the various claims were so intertwined it is convenient to consider the evidence and to record my findings of basic fact before coming to the law to be applied to those facts and the further findings of fact consequent upon identification of the legal issues to be addressed.

The evidence and findings of basic fact

[18]Although it may have been a coincidence, the matters which were said to have given rise to the claims respectively made in the Halcyon Action and in the Harassment Action commenced at a time when Mrs. Baines had recently married and was expecting her first child. The question arose, in about November 2009, of what was to happen to Halcyon and its business in the future. Following earlier discussions Mrs. Low wrote to her daughter a letter dated 5 November 2009 which was in the following terms:- “Dear Caroline It is I believe essential that I should place on record the bones of our discussions which have recently taken place re Halcyons [sic] future. The business was bought as a “family business” with you to be in charge of the day to day running and to be paid a salary and as has transpired a bonus and dividends. Initially this worked well and we 3 had regular planning meetings and financial information. In the last 2-3 years these meetings have not been continued, financial information is non-existent or very late and no business plans are produced or discussed. In the interests of harmony I allowed this to continue (probably for far too long). In order to resolve this I sought a way to keep both you and your brother happy and treated fairly and devised 2 options both of which required Halcyon to move from the Post Office so that I am free to sell 1/ We should issue the surplus cash in the form of a dividend I would aquire [sic] Jeremys [sic] shares in return for property. You would be given sole managerial authority to run Halcyon I would take some fee/percentage of profits to boost my income as I would be giving away property so that you would have eventually become sole owner 2. Alternatively, bearing in mind your pregnancy and presumed wish to raise a young family, you would re-think your attitude and Halcyon would revert to the family business as originally intended. The surplus cash would not be distributed but be used if possible to help purchase a freehold office to assist in growing the company more quickly. Shareholding to remain unaltered. Originally you decided on option 1 and then apparently changed your mind and went for option 2. In the following period you managed to make it quite clear that you had no intention of sharing information or decision making but expected things to continue as they have been During lunch as [sic] TTewinbury [sic] I asked you if my understanding was correct and you said yes and to quote you “if it ain’t broke why should I fix it” I then made it clear that option 2 was only available as I originally proposed and therefore option1 [sic] would obtain. You appeared to accept this quite readily and I believed you had simply changed your mind again. At no time during this lunch, or in the days before or after was any mention made of you aquiring [sic] Jeremy’s shares and certainly not using Halcyons [sic] surplus cash in this way. I can be absolutely certain that we had no conversation whatsoever in this regard as I would have pointed out to you, as I do now, that 45% of Halcyon which includes this money already belongs to Jeremy. Whoever you did have this discussion with is incredibly ill-informed to think it would be possible. I should of course be interested to know who. As I am writing: there are currently 2 sets of offices available to Halcyon. I understand BBW is not available until at least the end of the year. If you cannot agree a lease with them in the next 2 weeks then re-open negotiations with the others. Please keep me informed/ This is a difficult letter to end as clearly much remains unsaid. I hope you get in touch soon As ever M [presumably meaning “Mum” or “Mummy”, in manuscript, whereas the remainder of the letter was type-written]” You would be given sole managerial authority to run Halcyon

As ever

[19]At that stage, therefore, on the face of it, Mrs. Low was looking for some sort of income out of Halcyon, whether as a “fee/percentage of profits”, if option 1 were adopted, or by participation in the “family business” under option 2.

[20]Mrs. Baines’s understanding of the effect of the conversations which she had had with her mother up to this point seems to have been rather different from the position which was explained in the letter dated 5 November 2009. Mrs. Baines replied in a letter dated 9 November 2009. It was a long letter, but it included these passages:- “Dear Mum, I refer to your letter, posted through Halcyons [sic] letterbox over the weekend. I should like to detail exactly what you have said to me over the past few weeks. Our first discussion on the subject of Halcyon ownership was in the Chequers. This discussion was initiated by you entirely, and I had no idea that it would take place. You said to me that you could not possibly continue with things as they were as you could not cope with it. You said that you were fed up, that you were sick and tired, and that you no longer wanted any involvement with Halcyon. You offered two options:• You and Jeremy take a substantially larger role in the business and how it is run.

• I use the capital in Halcyons [sic] account that we have built up over the past 6 years to buy out Jeremys [sic] shares and possibly yours. You would then give Jeremy a flat to make it ‘fair’. In return for this, you would expect an annual income. I checked with you that it was possible to use the funds in Halcyons [sic] account to purchase the additional shares from Jeremy, and you told me that you had spoken to Mark at CVDFK [the auditors of Halcyon] and he had said that it would be fine. Unsurprisingly, I was delighted at the thought of being able to buy the majority shareholding in the business, and we left it that I would think it over before making a final decision, though my obvious preference was to own the majority stake in Halcyon. Subsequent to that conversation, the option of a freehold office came up in Knebworth. I said to you, quite clearly, that I thought from Halcyons [sic] point of view it would be better to invest in a freehold rather than use the capital to purchase your shares or Jeremys [sic], and that therefore, I was re-considering option one and would not be in a position to give a final answer until the matter of the freehold becoming available was confirmed. … To then receive a telephone call from you stating that you now intended to take the accumulated capital to pay a dividend was a bolt from the blue, completely unexpected and million miles away from what had previously been discussed. … It is quite clear to me now that you were never in a position to enter into the discussions we had, and that you never had the right to offer me the prospect of owning a business which I have worked incredibly hard for over the past six years and am incredibly proud of. Speaking personally, I feel that your actions over the past few weeks have been at best confusing and at worst, simply cruel. I cannot understand why you would want to put me through such emotional upheaval, whether or not I am seven months pregnant. … The options now seem to be limited to: 1) Paying out a large dividend to you and Jeremy. At this point in time, I would not wish to take my dividend, and instead would add it to the value of my Directors [sic] loan. 2) Paying back the loans to all Directors. 3) Leaving it in the bank. …”

• You and Jeremy take a substantially larger role in the business and how it is run.

The options now seem to be limited to:

[21]Following exchanges of e-mails between Mrs. Baines and her brother focused on the wish of Mrs. Baines to acquire her brother’s shares in Halcyon, and his willingness to sell at an appropriate price, a board meeting was held on 21 November 2009 between Mrs. Low and her children. The exchanges between Mrs. Baines and Mr. Low about the price to be paid for his shares were in friendly terms, but in the course of one, sent on 16 November 2009 at 14.46 hours, Mrs. Baines said, amongst other things:- “The money [suggested as available as a dividend] can either be used to buy your shares and /or Mums [sic] (and it should be borne in mind that regardless of what you think the ‘market value’ of the company is now, if I walk over the road and set up on my own and take the clients with me (and there is nothing stopping me at all), it will be worth nothing and your shares will be worth the same – nothing. Halcyon makes a profit because of me, it remains in business because of me, and if I was to do as above, it would go under within 8 – 10 weeks. That is a fact.”

[22]At 14.50 hours on 16 November 2009 Mrs. Baines sent her brother an e-mail in which she asked, “… please keep the bit about me setting up on my own in the last email to yourself and don’t discuss with Mother”. In an e-mail sent at 11.53 hours on 17 November 2009 Mr. Low confirmed, “I did not discuss the bit about you resigning with mum”. Unhappily that confirmation was either untrue when given or was subsequently rendered incorrect. In his witness statement dated 7 February 2014, at paragraph 11, Mr. Low asserted that, “At Mrs. Baines’ [sic] request I did not disclose that email to my mother until after I learned that Mrs. Baines had set up Mint”, that is to say, some time after 21 April 2010. However, in a document entitled “Chairmans [sic] file noted [sic] 6th Feb 2010-02-11” prepared on 11 February 2010 Mrs. Low observed, “1. At next Board Meeting need to formally note that at the meeting in November CB [Mrs. Baines] said would and could leave and take all landlords with her and then the business would fail”. No one asserted in evidence before me that that was something which Mrs. Baines had actually said at a meeting in November 2009. In cross-examination Mr. Low told me that he had probably told his mother about what Mrs. Baines had said in her e-mail sent on 16 November 2009 at 14.46 hours on 5 February 2010.

[23]At paragraph 26 of her witness statement dated 7 February 2014 Mrs. Low said this:- “Caroline, Jeremy and I attended a Halcyon Board Meeting on Saturday 21st November 2009, at which it was agreed that a dividend would be paid to each shareholder in the same proportions as the respective shareholdings. Accordingly Caroline and Jeremy received £18,000 each, while I received £4,000. There was also discussion about Caroline buying Jeremy’s and my shares in the company but this was not agreed. It was however agreed that Caroline would arrange for me to be added as a signatory to the business bank accounts. The minutes of that meeting prepared by me are at page 26 of the bundle.”

[24]The document referred to as included in the bundle was in these terms:- “Minutes of Directors meeting at 10 Long Ridge, Aston, Herts, 21st November 2009 Attendees: Caroline Baines, Nicola Low, Jeremy Low After a brief initial discussion, it was agreed that a dividend of £40,000 would be paid to the Directors – the split to be £18000 each to Jeremy Low and Caroline Baines, and £4000 to Nicola low [sic]. In addition, Halcyon would re-pay the Directors loan of £22500 to Jeremy Low and £5000 to Nicola Low, and in turn Caroline Baines would purchase their shares in the Business (Halcyon House Ltd). In addition, £5000 would be paid by Halcyon House Ltd to Nicola Low to cover the refurbishment of the Offices at 1 St Martins Road, Knebworth upon the relocation of the business (to be arranged as soon as possible). This was agreed by all, and Caroline Baines went to fetch the office cheque book to finalise the arrangements. Upon her return, after a brief discussion over previous conversations, Nicola Low rescinded her agreement to the above and tore up the agreements typed by Jeremy Low in Caroline Baines’ absence. After another brief discussion, it came to light that Jeremy Low had shared a confidential communication between Caroline Baines and himself with Nicola Low, though he had denied previously that he had done so. The majority shareholders (Jeremy and Nicola Low) then instructed Caroline Baines to issue cheques for dividends as outlined above and this was done. Nicola Low then stated that going forward, the profits in the company would be split according to share ownership at the end of each year. Jeremy Low agreed, but added that should an opportunity arise that he and Nicola Low considered worth investing in, then they would do so. Nicola Low then requested that she be added as a signatory to the business bank accounts, and Caroline Baines agreed to arrange for the relevant documents to be sent to her by post directly from the bank. There may be issues with regards to PI/CMP insurance which Caroline Baines will investigate and should there be any problems, she will report them back to the other Directors. There being no other business, the meeting closed at 12 pm.” Attendees: Caroline Baines, Nicola Low, Jeremy Low There being no other business, the meeting closed at 12 pm.”

Attendees: Caroline Baines, Nicola Low, Jeremy Low

[25]Notwithstanding what she had said in her witness statement, when she came to be cross-examined on the apparent minutes of the meeting on 21 November 2009 Mrs. Low told me that she did not think that the minutes had been prepared by her. I asked her whether her evidence was that she had prepared minutes of the meeting, but those presented to her as being her minutes were not the right ones, or whether her evidence was that she had not prepared any minutes. She told me that she did not recollect whether she had written any minutes, although her recollection when she prepared her witness statement dated 7 February 2014 had been that it had been her who had prepared the minutes which I have quoted. It has to be said that the contents and tone of the minutes indicated that it had in fact been Mrs. Baines who had prepared them, and her evidence was that that was so. However, her mother’s evidence in paragraph 26 of her witness statement that she had prepared the minutes, coupled with her answers to me concerning the preparation of minutes, did not encourage confidence in the accuracy of the evidence of Mrs. Low. For reasons which I will elaborate later in this judgment it seemed to me that certainly from about the beginning of February 2010 documents prepared by Mrs. Low which purported to be contemporaneous records of conversations or events were, at best, self-serving, and likely to be half-truths or distortions of the truth. In the course of her oral evidence before me she demonstrated, as it seemed to me, a disregard for the truth which even a seasoned judge of this court found impressive. I reached the conclusion that the evidence of Mrs. Low could not be relied upon in relation to any matter in dispute between the parties in these actions. Her approach to the truth was, quite simply, that “The truth is whatever I choose to say is the truth”.

[26]Although I shall deal with other examples of the approach of Mrs. Low to veracity, at an early stage in her cross-examination she was asked about a passage in paragraph 22 of her witness statement dated 7 February 2014 where she said:- “By the middle of 2009 it had become clear that Caroline regarded Halcyon as hers and that she did not want any input from Jeremy or myself. I was very anxious to avoid a family rift and therefore determined that I would try to resolve the difficulties. In addition, it became obvious to me from what I was hearing from a number of sources that Halcyon’s name was not as good as it should be in the marketplace. Indeed, the company lost some big clients. For example, in August 2009 Caroline used appalling language in an exchange of emails with a client, Mr. Leonard Petts, resulting in the loss of his business. Prints of those e-mails are at pages 7-11 of the Bundle. …”

[27]Anyone reading that passage would suppose that Mrs. Low had either known about the alleged use by her daughter of appalling language in an e-mail exchange with Mr. Petts at about the time it happened, or had at least discovered it at the time of which she appeared to be writing, “the middle of 2009”. That would be a mistake. In cross-examination Mrs. Low accepted that she had not in fact known of what she asserted in the passage which I have quoted in 2009. The relevant e-mails had been recovered by a forensic computer expert, Mr. Andrew Frowen, considerably later, so her evidence actually was that she did not know about the e-mails until they had been discovered by him some time in, I think, in late 2010 or 2011. However, the position was worse than that. She told me, when challenged on the point in cross-examination, that she had simply assumed that her daughter had sent the e-mail which “used appalling language” and that the despatch of the e-mail had caused the loss of the business of Mr. Petts. However, she had to accept, when shown a different version of the e-mail from that recovered by Mr. Frowen, that actually the e-mail was a draft which Mrs. Baines had sent to herself and not to Mr. Petts, consequently the despatch of the e-mail had not resulted in the loss of the business of Mr. Petts.

[28]Mr. Low was also called as a witness on behalf of Halcyon. Unfortunately his cross-examination revealed that his approach to veracity in his evidence was also flexible.

[29]At paragraph 20 b of the Defence in the Halcyon Action it had been pleaded that:- “On 21 November 2009, at a Meeting of Directors at Mrs. Low’s house, the Directors agreed for Mrs. Baines to purchase the shares of Mr. Low and Mrs. Low. Mr. Low committed the terms of agreement to writing, but Mrs. Low later at that meeting tore up the written document and the agreement to sell shares was thereby terminated.”

[30]At paragraph 13(b) of his witness statement dated 7 February 2014 Mr. Low responded to the allegations contained in that sub-paragraph as follows:- “I do not recall Mrs. Low writing out the terms of an agreement and I certainly do not recall her tearing them up at the same meeting. I do recall that we agreed a solution whereby Mrs. Baines would be given the entirety of the business and I would be given a flat (with a mortgage on it) in return. Mrs. Baines reneged on the agreement and was very rude about it.”

[31]On a fair reading, in the context of the allegations actually made at paragraph 20 b of the Defence in the Halcyon Action, what Mr. Low seemed to be asserting was that no agreement had been reduced to writing, that Mrs. Low had not torn up any written document, and that the agreement was ineffective because it was Mrs. Baines who went back on it. Consequently it was surprising that Mr. Low in cross-examination told me that it was correct, as alleged at paragraph 20 b of the Defence in the Halcyon Action, that he had reduced the terms of the agreement into writing. His reference in his witness statement to his mother not having done so was unexplained, that never having been contended on behalf of Mrs. Baines. That he chose to say what he did, however, and not simply to say that it was correct that he had reduced the terms to writing, created the wholly misleading impression that no written version of the agreement had been produced at all. In cross-examination Mr. Low accepted that his mother had seized the documents – three versions of the agreement – which he had caused to be printed off his mother’s computer after he had typed the agreement, and had “scrunched them up”. When asked why he had said that he did not recall his mother “tearing them up”, he professed to believe that the court would not be interested in the semantics of whether the documents had been torn up or scrunched up. Mr. Low struck me as an intelligent man. He understood perfectly well, as I find, that what was of significance as the outcome of the meeting on 21 November 2009 was whether, as was the case for Mrs. Baines, it had been her mother who had frustrated the agreement which had been reached, or whether there was some other circumstance which caused the agreement to be ineffective. Mr. Low’s evidence in his witness statement, creating the impression that his mother had not touched any written documents, not least because there had been no written documents, and asserting that “Mrs. Baines then reneged on the agreement” was grossly misleading.

[32]I have already mentioned Mr. Low’s unsatisfactory evidence concerning when and in what circumstances he breached his promise to his sister not to tell his mother about her observations in her e-mail sent to him on 16 November 2009 at 14.46 hours about leaving Halcyon and setting up in business in competition.

[33]At paragraph 11 of his witness statement dated 7 February 2014 Mr. Low commented on those observations in the e-mail sent at 14.46 hours on 16 November 2009:- “ … I refer again to the email sent to me by Mrs. Baines on 16 November 2009 at 14.46 hours, a copy of which is at page 9 of exhibit “JFGL2”, in which she clearly threatened to set up on her own and take Halcyon’s clients with her, and not just by implication.”

[34]However, in his cross-examination Mr. Low did not feel able to support the case of Halcyon that the passage which I have quoted from Mrs. Baines’s e-mail to him sent at 14.46 hours on 16 November 2009 showed that she had a fixed resolve at that point to set up in competition to the business of Halcyon. He accepted, as was self-evidently the case, that the context of the comment was negotiating a price for the sale of his shares in Halcyon to her, and that the purpose of making it was to identify a point which depressed, rather than increased, the value of those shares. Mr. Low told me that, from his point of view, what the Halcyon Action was all about was that Mrs. Baines had not abided by at least the spirit of the Compromise Agreement because she had attempted to obtain for Mint the business of former clients of Halcyon.

[35]In the result I did not feel any more inclined to accept the evidence of Mr. Low on any contested issue of fact than I was to accept the evidence of his mother.

[36]On 25 December 2009 Mrs. Baines commenced her maternity leave in anticipation of the birth of her child. Her son, Henry, was born on 20 January 2010 by caesarean section. According to the evidence of Mrs. Low, she had a number of concerns about the maternity leave at about the time it began, one being that Mrs. Baines remained the only signatory on the bank accounts of Halcyon. However, Mrs. Low maintained that it was what she found on a visit to the offices of Halcyon on 1 February 2010 which set in train a course of events which resulted in the making of the Compromise Agreement. It was certainly correct that, as from about 1 February 2010 Mrs. Low started to make pompous notes of her dealings with, and about, her daughter and to conduct her business with Mrs. Baines on an extremely formal basis. Similar notes had not been produced by Mrs. Low, for example, after the meeting of 21 November 2009, and I formed the view that the reason for the start of the production of formal-type documents and notes was to assemble evidence against Mrs. Baines with a view to justifying her exclusion from Halcyon. The immediate exclusion of Mrs. Baines was not necessary because she was on maternity leave, but the various documents produced seemed to be intended to provide a foundation for preventing her ever returning after the conclusion of the maternity leave.

[37]It was a feature of apparently contemporaneous notes of events that examination of computer meta-data showed that the documents in some instances had not been produced on the date that they bore, but some days later. The difference between the date recorded on a document and the date of its actual production was sometimes significant. The explanation which Mrs. Low offered for the difference between the recorded date of a document and its date of production was that each typed note was based on contemporaneous manuscript notes. No copy of any manuscript note was adduced in evidence. Mrs. Low asserted that she had destroyed each manuscript note after using it as the basis for a typed note.

[38]The first of Mrs. Low’s notes was entitled “Chairmans [sic] Notes 01/02/2010” and was actually produced just after noon on 4 February 2010. The contents of the note were:- “Called in because I had identified the web-site was not functioning properly. Neither Sue [Mogridge] not [sic] Elaine [Washbrook] knew how to repair it or even who to contact. No-one wanted to phone Caroline as she was on maternity leave. Sue mentioned the following problems 1. French Polish in the form of the son who is now a partner had been identifying work not needed. Sue did not know how to deal with it because of length of association with Tom I instructed her not to continue using them. 2. Payments with Contractors. 3. Elaine has problems with Riversmeet No block figures repaired [sic]. Andre [Harrold] was apparently upset as C[aroline] had cancelled meeting on 4th when he should have prepared all figures. Elaine was also struggling to find appropriate paperwork. 4. Balance in Lloyds Client Account approx 47000 should have been over 100000. Sue does not know where rest is held – neither do I. 5. The office account was down to approx 1900 apparently balance may be in an HSBC account. Details unknown 6. The massage [sic] on the mobile held by Caroline says – phone office and if you leave a message may not get back to you. 7. Sue would welcome someone (me) to whom she could refer matters she was unsure of. Would consider course for ARLA did not want to become “above” oters [sic] preferred flat line. Would be interested in share-holding in the future.”

Sue mentioned the following problems

[39]It was not correct that “No-one wanted to phone Caroline as she was on maternity leave”, if what was sought to be conveyed was that neither Mrs. Mogridge nor Mrs. Washbrook wished to bother Mrs. Baines over business matters. Mrs. Mogridge had written a letter to Mrs. Baines dated 21 January 2010, the day after the birth, congratulating Mrs. Baines on the birth, but also enclosing a new bank mandate for signature and asking Mrs. Baines to send her her marriage certificate. Mrs. Washbrook sent Mrs. Baines an e-mail at 10.05 hours on 25 January 2010 attaching her mileage claim forms. On 1 February 2010 itself, at 10. 53 hours and again at 15.02 hours Mrs. Washbrook sent e-mails to Mrs. Baines concerning the sale of a property, 53 Nursery Gardens. On 2 February 2010 at 9.56 hours Mrs. Washbrook sent Mrs. Baines an e-mail concerning money said to be due from Halcyon to Zoopla. Mrs. Low’s note dated 1 February 2010 was completely inaccurate in relation to contact between Halcyon’s office and Mrs. Baines, but the purpose of noting that “No-one wanted to phone Caroline as she was on maternity leave” seems to have been to provide contemporaneous written evidence that the business of Halcyon was being neglected because it was left to Mrs. Mogridge and Mrs. Washbrook to get on with the business when they were not equipped to do so.

[40]While the use of the expression “called in” at the beginning of Mrs. Low’s note dated 1 February 2010 would ordinarily indicate that she had visited the offices of Halcyon on that day, actually it appears that she did not. In her e-mail sent to Mrs. Baines at 9.56 hours on 2 February 2010 Mrs. Washbrook did mention contact with Mrs. Low on 1 February 2010 concerning problems with the Halcyon website, but in terms which made it plain that Mrs. Low did not visit the office. The material part of the e-mail was:- “2. I cannot upload any more photos to our own website. Don’t know why. I did wonder if there were too many old photos on there that we aren’t using but there doesn’t seem to be any way I can remove any to test this. Nicola rang me yesterday to ask about this (there are a couple of new ones on the website which don’t have photos) and asked me to ring her back if I can’t resolve it.”

[41]One of those whom Mrs. Low purported to record having seen on 1 February 2010 at the offices of Halcyon was Mrs. Mogridge. She was called as a witness at the trial. At paragraph 32 of her witness statement dated 7 February 2014 Mrs. Mogridge gave this account of the first visit of Mrs. Low to the office:- “In February 2010 (I can’t remember an exact date as it didn’t seem that important to me at the time) the office door buzzer went and Nicola Low came into the office. To say that Elaine, Nicki and I were surprised is an understatement. We knew that Caroline was only at the end of a telephone or email so Nicola Low’s visit was totally unexpected. Nicola Low said on her first visit that she had come to ‘make sure everything was alright’ and to see ‘if there were any cheques that needed signing’. Everything was fine and there were no cheques that needed signing. No one had asked her to come, and there were no issues we were not comfortable dealing with.”

[42]In the result I do not accept that the contents of the note dated 1 February 2010 is accurate even at the level of recording a visit by Mrs. Low to the Halcyon offices.

[43]Ostensibly against the background of what she had noted on 1 February 2010, Mrs. Low prepared three documents on 1 February 2010 itself, two of which were dated that day. The documents were delivered to Mrs. Baines by courier on 1 February 2010. One of the documents was a letter in these terms:- “Dear Caroline, As Directors of Halcyon we are calling a General Meeting to be held at the Halcyon Offices at 8 p.m. on Tuesday 2nd February. A copy of the Agenda is enclosed. If you have other matters for discussion that you would like to add please let me know. My computer is currently kaput so if you wish to e-mail please contact Jeremy. We appreciate this may be difficult for you but please consider 1. You may hire a taxi or car at Halcyon’s expense if you wish to attend. 2. We could move the meeting to your house. You may nominate a proxy and they can attend and act on your behalf. Please contact me if you have any queries. Yours sincerely, N.M. Low - Chairman” We appreciate this may be difficult for you but please consider N.M. Low - Chairman”

We appreciate this may be difficult for you but please consider

[44]The document described as “the Agenda” was not dated, but was entitled “NOTIFICATION OF GENERAL MEETING TO BE HELD AT HALCYON OFFICES AT 8P.M. ON 2ND FEBRUARY 2010”. The Agenda items listed were:- “1. Discuss signatories for Halcyon office account cheque book 2. Discuss proposed changes to day to day management for Halcyon together with transfer of information, documents, hardware etc. 3. Any other Business”

[45]The third document, which was also enclosed with the letter dated 1 February 2010 and itself bore that date, was entitled, “FOR DISCUSSION OUTLINE PROPOSAL FOR COPING WITH STAFFING SITUATION AS A RESULT OF MATERNITY LEAVE AND CAESAREAN”. The proposals contained in that document were:- “1. To relieve Caroline of day to day responsibilities. 2. To replace Caroline’s signature for Banks with Chairman’s 3. Caroline will remain a Director and receive maternity pay for appropriate length of time. 4. Chair proposes to hold weekly update meetings with staffat [sic] first. 5. Situation to be reviewed after 3 months. N.M. Low (Mrs.) - Chairman” N.M. Low (Mrs.) - Chairman”

[46]It was plain, as it seems to me, that the proposals set out involved excluding Mrs. Baines from any active executive role in Halcyon, whilst retaining her as a director. Certainly what was indicated as intended was a radically different role from that which Mrs. Baines had undertaken as managing director of Halcyon.

[47]Mrs. Baines responded to receipt of her mother’s letter dated 1 February 2010 and the documents enclosed with it by sending her brother an e-mail at 19.48 hours on 1 February 2010. She wrote:- “Dear Jeremy, In response to documents received this evening, i [sic] object to the proposed meeting tomorrow evening on the grounds of insufficient notice. Aside from the obvious reasons why I cannott [sic] attend, there is insufficient time for me to locate a proxy and ensure that they can attend either. In addition, I see no reason for a meeting to be held at all. The business is running smoothly and there are no issues. Should any issues arise, there are procedures in place to ensure that they are dealt with. I strongly feel that any interference will serve no useful purpose and in fact have a negative effect not only on the staff but on the smooth and efficient running of the company. Should you or your fellow director have had any concerns regarding my maternity leave, you could, and should, have raised them previously. As you are both aware, I have put in place both the staff and the necessary processes to ensure that the company functions more than adequately whilst I am away from the Office. I would be grateful, therefore, if you could advise me of the reasons behind your apparently sudden decision to call a meeting with such obviously inadequate notice. If either of you has reason to believe that I am not fulfilling my duties as Managing Director, I would ask that you put them in writing with examples where possible, to enable me to respond in kind. Yours sincerely, Caroline Baines.” Caroline Baines.”

[48]Mr. Low responded by e-mail at 20.44 hours the same day:- “Further to your request below, we are prepared to postpone the Extraordinary General Meeting to Friday, 5th February 2010. Location and time to remain the same; we are also happy to move the meeting to you if that helps.”

[49]Six minutes later Mrs. Baines replied that the required notice to be given of an extraordinary general meeting was fourteen days. After some further exchanges between Mrs. Baines and her brother her mother wrote a letter dated 3 February 2010 to Mrs. Baines in which she said:- “Dear Caroline, I understand you have already been notified but just to confirm, it is of course a Board Meeting which has been called not a General. Please accept my apologies for any confusion caused. Yours sincerely, Nicola Low - Chairman” Nicola Low - Chairman”

[50]The day before that letter Mrs. Low had written to her daughter in these terms:- “Dear Caroline, I am writing to you in my capacity as Chairman of Halcyon House Ltd and with the agreement of our fellow Director. We are aware that you believe that the arrangements you put in place to run Halcyon in your absence are satisfactory. We disagree. The Company owes you a duty of care and all Directors have responsibilities to the Company. The Company is legally obliged to provide you with Statutory Maternity leave and such leave should generally be free of concerns for the business. Naturally it is anticipated that should there be any matters on which your experience and prior knowledge would be helpful, you would be willing, and indeed it would be in your interests to co-operate. We understand you have taken to your private address a number of items which should rightly be held at Halcyon’s offices. Attached is a list which should cover most business items but please include everything when you arrange for their return. Halcyon will pay for a courier to collect from Marley Road [the residence of Mrs. Baines] and we shall arrange for the collection on Friday between 10-10.30a.m. If this time is not convenient please advise of an alternative by e-mail if you prefer. We propose that I should become a signatory for the cheque books. We are concerned that no trading figures have been made available in the last three months and these together with the block accounts need to be discussed by me with Andre urgently. We shall also need the latest correspondence and any updates on the office move proposal. If you have information which would help in putting the Website back in working order as quickly as possible then that would be appreciated. We hope you understand that these decisions have been made in accordance with our legal responsibilities and with your and the Company’s best interests at heart. Yours sincerely, Nicola Low – Chairman.” Nicola Low – Chairman.”

[51]The list attached to the letter was headed, “Caroline’s list of items to return (02/02/2010 [sic]” and was, save for the heading, written in block capitals:- “IMMEDIATE – URGENT LIST – NOT EXHAUSTIVE – OF DOCUMENTS HARDWARE, INFORMATION ETC WHICH SH;OULD [sic] BE HELD IN HALCYON OFFICE AND WHICH DO NOT BELONG PERSONALLY TO CAROLINE TO INCLUDE: CHEQUE BOOKS FOR ALL BANK ACCOUNTS HGOLDING [sic] ALCYON [sic] MONIES OR MONIES UNDER THEIR CONTROL BUSINESS CREDIT/DEBIT CARDS ALL BANK STATEMENTS FOR BANK ACCOUNTS HOLDING HALCYON MONIES OR MONIES UNDER THEIR CONTROL KEYS INCLUDING OFFICE AND ALARUM [sic] FOB PASSWORDS FOR ALL BANK ACCOUNTS ALL COMPUTER PROGRAMMES SAGE AND WAGES FILES DOCUMENTS OR FILES RELATING TO HALCYON BUSINESS ANY CORRESPONDENCE WITH ANY BUSINESS OR PERSON RELATING TO HALCYON BUSINESS LAPTOP TOGETHER WITH ANY INFORMATION BOOKLETS ETC LATEST PRINTOUT OF ACCOUNTS AND ANY INVOICES OUTSTANDING OR DUE TO BE PAID UP-DATE AND ANY CORRESPONDENCE RE POSSIBLE OFFICE MOVE PLEASE NOTE HALCYON MAY CONTINUE TO USE THE MOBILE AS A CONTACT POINT FOR YOU AND YOU MAY CONTINUE TO USE IT FOR INLAND PERSONAL CALLS HALCYON WILL FUND THE PURCHASE OF A REPLACEMENT LAPTOP COMPUTER UP TO THE VALUE OF £500 ON RECEIPT OF THE ABOVE IN GOOD ORDER” BUSINESS CREDIT/DEBIT CARDS ALL BANK STATEMENTS FOR BANK ACCOUNTS HOLDING HALCYON MONIES OR MONIES UNDER THEIR CONTROL KEYS INCLUDING OFFICE AND ALARUM [sic] FOB ALL COMPUTER PROGRAMMES SAGE AND WAGES FILES ANY CORRESPONDENCE WITH ANY BUSINESS OR PERSON RELATING TO HALCYON BUSINESS LAPTOP TOGETHER WITH ANY INFORMATION BOOKLETS ETC LATEST PRINTOUT OF ACCOUNTS AND ANY INVOICES OUTSTANDING OR DUE TO BE PAID UP-DATE AND ANY CORRESPONDENCE RE POSSIBLE OFFICE MOVE

PLEASE NOTE

[52]What Mrs. Low was in fact requiring her daughter to hand over was all of the material which would have enabled Mrs. Baines to have continued to work as managing director of Halcyon whilst staying at home, together with the means of obtaining access to the offices, namely the keys. I regret to say that I am entirely satisfied that Mrs. Low decided to use apparent concern that her daughter should not be troubled whilst on maternity leave as a pretext for putting her into a position in which she could not perform her role as managing director of Halcyon. If Mrs. Low had a genuine concern in relation to her daughter’s recovery from giving birth and establishing a relationship with her new baby, one would have expected some evidence of that in advance of, or at very least immediately following, the birth. Although the discussion document included with Mrs. Low’s letter dated 1 February 2010 did mention “MATERNITY LEAVE AND CAESAREAN”, it was only in the context of the proposal, inter alia, that Mrs. Baines should be relieved of her day to day responsibilities. Frustrated in achieving that by an extraordinary general meeting to be held on 2 February 2010, Mrs. Low sought to achieve the same practical result by depriving Mrs. Baines of the means of continuing to act as managing director of Halcyon.

[53]So far as material to this judgment two events occurred on 5 February 2010. The first was that Mrs. Low arranged for a courier to attend at her daughter’s residence to collect the items listed in the enclosure to the letter dated 2 February 2010. Mrs. Baines was informed that the courier was to attend at 10.30 a.m. She indicated to her brother that she would not be in at that time. Her evidence to me was that at that time she would be taking her son to a health clinic. Although Mr. Low told me in cross-examination that he thought he had attempted to re-arrange the timing of the visit of the courier, that was not what he said in an e-mail sent to Mrs. Baines at 13.30 hours on 5 February 2010. In that e-mail he asserted that, “The time was not changed”. What actually happened was that the courier did not arrive until midday, by which time Mrs. Baines had returned from the clinic.

[54]The Harassment Action was commenced, in the usual way, by the issue of a claim form under Civil Procedure Rules Part 8. There was served with the claim form a document entitled “Endorsement to Part 8 Claim” (“the Part 8 Endorsement”). The Part 8 Endorsement included only this as an allegation relating to the use of couriers by Mrs. Low as harassment of Mrs. Baines:- “8.2 In or around late January/early February 2010, unnecessarily arranging for couriers to regularly deliver documents to the 2nd Claimant’s address.”

[55]In the usual way with a Part 8 claim, a witness statement made by Mrs. Baines was served with the claim form. The witness statement, dated 16 August 2012, included, at paragraph 3:- “From the beginning of February 2010, just over one week after I had given birth, my mother began to send couriers to my home on a regular basis to deliver letters, notices of meetings and other demands. During the week of February 1st or 5th, they called almost daily. I was not notified of the times or days when they would be arriving (with the exception of one time when they didn’t actually show up), and with a brand new baby to care for, this was extremely distressing and caused me a huge amount of unnecessary upset and stress. There was no reason for my mother to use couriers to call at my home, if she had wanted to communicate with me, she could have used email, the postal service or even picked up the telephone. Her decision to use the most intrusive and disturbing method of delivering her correspondence (none of it wanted and none of it necessary) must have been made in the full knowledge that it would cause me the maximum amount of upset and anxiety at a time when I was recovering from a caesarean section. These courier visits continued for approximately three weeks.”

[56]That was a disturbing passage in a witness statement bearing a statement of truth signed by Mrs. Baines, because it was, to put it kindly, a gross exaggeration. The evidence led before me was that couriers called twice, once on 1 February 2010 and once on 5 February 2010. It may be that a courier also called on 2 February 2010. However, it was, in any event, difficult to see what all the fuss was about, because having someone deliver a document at one’s residence, even if knocking at the door and requiring a response, was not obviously much more exciting than having the postman call.

[57]However, my concerns about that passage were exacerbated by an account wholly unforeshadowed by the allegations in the Part 8 Endorsement, or in the witness statement in support dated 16 August 2012, which Mrs. Baines gave of the visit by a courier on 5 February 2010 in her witness statement dated 7 February 2014:- “121. Given that the courier was due to call at this time [the time when Mrs. Baines was visiting a clinic with her son] on that day, I emailed my brother on February 4th (as requested), to say that I wouldn’t be in for the courier the following morning and could they reschedule for the following Tuesday. My brother completely ignored this as the courier knocked on my door at midday on February 5th when I was in the middle of breastfeeding and quite unprepared for his arrival. Unsurprisingly, I was not able to hand over the items for collection as I had been out most of the morning, had not had time to get everything organised, and in any event was somewhat busy attending to my son. The courier, however, would not take ‘no’ for an answer and attempted to get past me into my house to see if he could see the laptop. Apparently he had been instructed to take that away from me at the very least, whether I agreed or not.122. At this time, I was in a state of only partial dress and was holding my baby son, who by now was screaming. I had changed back into my nightdress when I got home as the ‘normal’ clothes I had worn to the baby clinic were still too uncomfortable to stay in for long. I tried to explain to him that I had told my mother it wasn’t convenient and she should have cancelled his visit. I was so clearly not prepared in any way for his arrival, was increasingly visibly upset and had no intentions of letting him into my home, so eventually he gave up and went away.

123. This unannounced and unexpected attempted intrusion into my home was distressing in the extreme. I have tried to put into writing the effect that that incident had on me, but I simply cannot find the words. I was gripped with anxiety every time there was a knock on the door (and indeed I often simply didn’t answer it at all) and I found it almost impossible to relax when feeding my son just in case the same thing happened again….”

[58]Mrs. Baines did complain to her brother about the arrival of the courier, but not about his behaviour, in an e-mail which she sent to him at 12.59 hours on 5 February 2010:- “I was informed he would call at 10.30 I was out at 10.30 He arrived at midday. I was not informed of the new time. The directors of halcyon [sic] have no right to send anybody to my home without first obtaining my approval. To continue to do so could well constitute harrassment [sic] and I have been advised to inform you that any further callers arriving without a minimum of 48 hours CLEAR notice and without written permission from myself will be turned away.”

I was out at 10.30

[59]It is to be noted that, although Mrs. Baines was in e-mail correspondence about the courier’s visit on 5 February 2010, she said nothing remotely along the lines of what she said in her witness statement dated 7 February 2014 at paragraphs 121 to 123 inclusive. Anyone who had read the Part 8 Endorsement and the witness statement of Mrs. Baines dated 16 August 2012 had no reason to suppose that the account in paragraphs 121 to 123 of the witness statement dated 7 February 2014 would be following.

[60]What, therefore, one had in the Part 8 Endorsement at paragraph 8.2 was a complaint which looked, on its own, unlikely to amount to harassment. That complaint was elaborated in the witness statement dated 16 August 2012 in terms of the substance of the complaint being excessive use of couriers – almost daily for a period of three weeks. By the date of the witness statement of 7 February 2014, the allegations of excessive frequency had disappeared, but a dramatic account of an unhappy incident on 5 February 2010 had appeared for the first time. I regret that I reached the firm conclusion that Mrs. Baines simply fabricated paragraph 3 of her witness statement dated 16 August 2012 and paragraphs 121 to 123 of her witness statement dated 7 February 2014.

[61]Thus I was in the unhappy position that each of the principal protagonists and witnesses in these actions had clearly shown their evidence to be unreliable, at least in some respects. However, those respects amounted to manifesting a cheerful disregard for the truth where it suited them.

[62]Mrs. Low thought that it was necessary, apparently, to prepare a document entitled “CHAIRMANS [sic] FILE NOTE 5TH FEB 2010”. That note was typed at 11.09 hours on 6 February 2010 and was in these terms:- “1. Advised by courier firm J4 that CB [Mrs. Baines] was in but refused to hand over any items for collection. 2 Had phone call from CB who was upset and abusive. J[eremy] had apparently threatened her. I was not privy to the latest exchange of e-mails and said I could not comment. I pointed out that views expressed in my letter to her were unchanged and that there was evidence that HHM [Halcyon] needed someone in authority to make decisions 2. [sic] CB said she would not be sending a representative to the Board Meeting nor would she be attending. 4. CB confirmed she would hand over all office items to courier on Tuesday”

[63]The file note, although apparently recording events prior to the board meeting fixed for 5 February 2010 was, of course, typed after the date of that meeting.

[64]The account of Mrs. Baines of the telephone conversation with her mother on 5 February 2010 was that her mother telephoned her to tell her that there was no point Mrs. Baines attending the board meeting because matters had already been decided and it was a fait accompli. That it was a fait accompli was obvious, for the majority of the directors, Mrs. Low and her son, who also controlled a majority of the issued shares, had decided that they wished to hold a board meeting for the purpose of formally passing the resolutions which they desired.

[65]Mrs. Low prepared what purported to be minutes of the board meeting held at 8.00 p.m. on 5 February 2010. The minutes provided as follows:- “Present Mrs N Low (Chair) and Mr. J. Low Item 1. It was agreed that the Chairman would become an additional signatory on all cheque book accounts. Agreed not necessary to remove Mrs. Baines. RESOLUTION That Mrs N Low should be appointed as signatory to all Bank Accounts controlled by Halcyon. PASSED Item 2 Chair suggested that Sue, Elaine and Nicky [Payne] should continue as they are as they appear very competent and she will go in to the Office for a minimum of day per week to up-date and sort out/advise on any problems She would also make herself available on the phone. Financial records need updating and Chair will meet with Andre to ensure this happens. RESOLUTION That HHM should be run along the lines outlined in Item 2 and Mrs Baines would be bothered as little as possible on business matters. PASSED ANY OTHER BUSINESS It was agreed that Chairman’s letter to Mrs Baines dated and delivered on 2nd Feb be accepted by the Board as representative of their views. It is appropriate to formally record that Mrs Baines failed to hand over Company documents etc as per list to Courier today. This should now take place on Tuesday. Date of Next Meeting to be Notified.” ANY OTHER BUSINESS Date of Next Meeting to be Notified.”

ANY OTHER BUSINESS

[66]There was a degree of mystery surrounding the board meeting ostensibly held on 5 February 2010. The minutes which I have quoted were not signed by anyone. However, there was also put in evidence a document entitled “MINUTES OF BOARD MEETINGS HELD ON 5TH AND 7TH Feb 2010” which were signed both by Mrs. Low and by her son. Those signed minutes were in terms identical to those of the minutes quoted in the previous paragraph of this judgment, save that the words in “Item 1” “Agreed not necessary to remove Mrs Baines” did not appear; the word “very” in the expression “very competent” in “Item 2” was omitted and the first sentence in “Item 2” was broken after “competent”, a new sentence beginning “Chairman” in place of the old sentence continuing “and she”; in the “RESOLUTION” under “Item 2” the words “during the period of her Maternity Leave” were added after the sentence preceding the word “PASSED”; and for the last two sentences of the minutes which I have quoted preceding the words “Date of Next Meeting to be Notified” there were substituted these words:- “The Board formally records that Mrs Baines failed to hand over Company documents etc as per list to Courier today. This should now take place on Tuesday. The Board formally records the exchange of emails the week preceding hereof between Mrs Baines and Mr Low.”

[67]Mrs. Low was asked in cross-examination about the two sets of minutes to which I have referred. Her position was that there had been two separate meetings between herself and her son at which exactly the same matters had been discussed in more or less exactly the same terms. I am afraid that that explanation simply defies credibility, and is a blatant example of Mrs. Low simply making up her evidence during the course of cross-examination. Although it has been done incompetently, the most likely explanation for the two sets of minutes, as it seemed to me, was that actually there was no meeting on 5 February 2010, but Mrs. Low had drawn up in advance of the date of the meeting the minutes recording what she wanted to happen. When she actually saw her son on Sunday, 7 February 2010 and showed him the minutes she had prepared, he thought that they should be modified so that it appeared that the directors were less impressed by the ability of the staff to cope than the first version, that Mrs. Baines was to be bothered as little as possible only while on maternity leave, and there was a reference to exchanges between Mr. Low and his sister by e-mail in the week ending 5 February 2010. If there was a meeting of the board of directors of Halcyon on 7 February 2010, it was clear that Mrs. Baines had neither been notified of it nor invited to attend it.

[68]What did appear clearly to have been done on 7 February 2010 at 16.40 hours, according to meta-data, was the production by Mrs. Low of a “MEMORANDUM TO HALCYON EMPLOYEES 05/02/2010 RE CAROLINE BAINES MATERNITY LEAVE”. That memorandum was in these terms:- “During Caroline’s maternity leave it is necessary that she be free from business concerns in so far as this is possible. If you feel it is necessary to speak to Caroline please consult as below. The day to day running of the business currently appears to be working well and it is the intention and wish of the Board that this should continue. The Chairman Mrs Nicola Low will be available on the telephone and will be calling in to the office regularly to discuss any problems and make any decisions required. It is essential that you keep the Chairman informed of any problems, potential or current, and feel free to approach with any concerns you may have. The Board would wish to express their thanks to you for your cooperation and hard work in growing Halcyon’ [sic] future.”

[69]That memorandum was plainly an instruction not to make contact with Mrs. Baines without telling Mrs. Low first. Interestingly, bearing in mind various criticisms made of the conduct by Mrs. Baines of the business of Halcyon, not only were no existing problems, or possible problems noted in the memorandum, but rather the view was expressed that “the day to day running of the business currently appears to be working well”, possibly because the staff were actually “very competent” and not merely “competent”.

[70]I have already quoted part of Mrs. Low’s file note dated 6 February 2010 but prepared on 11 February 2010. The part which I have not yet quoted said, and the actual typescript is reproduced:- “Saturday 6th Feb called in to Halcyon’s pffoce wotj voew tp familiarising myself.a. Back office virtually swamped by piles of closed files etc etc

b. 4 large (8” high) piles of papers on desk – all appeared to be largely random and found: 1. letter from Lodge accounts which appears not to have been answered. 2. Company appears to have been uspended from ARLA no record of when re-instated 3. Audit of insurance appears to indicate we not doing the job properl y – unclear whether this has been put right 4. Letter to me on open file on computer and the letter from me on the desk = this is a disgrace.”

[71]This note was dated, but not typed, before the memorandum to staff was typed and before the meeting on 7 February 2010 took place. The terms of it are difficult to understand if Mrs. Low had in fact visited the office on 1 February 2010, because, if she had, she would either have seen the state of the back office and four large piles of papers on the desk, or, if the state of the back office and the piles of papers had materialised since a visit on 1 February 2010, she would surely have noted that development. The note is also difficult to reconcile with the commendatory references to the staff in both versions of minutes of 5 and 7 February 2010, unless the intention was to record matters considered to be adverse to Mrs. Baines.

[72]It is fair to say that at this time there were a number of matters which needed to be dealt with by Halcyon in the ordinary course of its business. An example was the preparation of accounts in respect of a block of flats managed by Halcyon called Riversmeet. That example, and others, were seized upon by Mrs. Low as indicative that Halcyon had not been run properly by Mrs. Baines, that her arrangements for conducting the business of Halcyon whilst she was on maternity leave were not satisfactory, and that Mrs. Baines was unhelpful when approached concerning problems occurring in her absence from the office. These features, in the view of Mrs. Low, so she asserted, justified her intervention in the business of Halcyon. The position of Mrs. Baines was, in essence, that everything was under control, that the arrangements which she had made were working effectively, and that any difficulties encountered were in fact the result of her mother’s intervention. It is not necessary, for the purposes of this judgment, to reach any conclusions as to who was right and who was wrong on these questions. Mrs. Baines did accept in cross-examination that administration was not perhaps her forte and that administrative matters were in a mess in about February 2010. Mrs. Low, on the other hand, I find, was looking for things to criticise and seeking to put the worst possible construction, in terms of indicating incompetence or inefficiency on the part of Mrs. Baines, upon any problem which Mrs. Low identified.

[73]Mrs. Low prepared a document entitled “CHAIRMANS [sic] NOTED [sic] 16tH FEB2010 [sic]” which set out a number of other criticisms. A manuscript addition to the document noted that Mrs. Baines had not yet returned to Halcyon her laptop, keys or outstanding paperwork. The typed document itself was shown by meta-data to have been produced at 14.51 hours on 18 February 2010.

[74]There was fairly clear evidence from Mrs. Low’s own document, entitled “CHAIRMANS [sic] NOTES 21ST FEBRUARY”, which meta-data indicated had been produced at 18.51 hours on 22 February 2010, that it was at that stage at the latest that Mrs. Low’s thoughts moved towards forcible removal of Mrs. Baines from her position at Halcyon after she returned from maternity leave, because she recorded consulting ACAS, giving Mrs. Baines a warning and consulting an employment solicitor. The note was in these terms:- “These notes are made following an arranged visit to CB to collect the laptop and keys. This follows the cancellation last week of an agreed day (Thursday) and time to collect. 1. I and others believed the current message on CB mobile was capable of causing offence “I may not get back to you” in an unfortunate tone. I therefore asked CB to remove the message and just use the mobile for friends and the office. CB disagreed and said that would not remove it. We shall see! 2. We had discussed in the office and agreed that it would be friendly, and landlords would appreciate, being advised of the happy arrival of Henry. CB very angry – said we should have consulted her first – no right to contact “her” clients. I fail to see how she could object to this. 3. Can no longer use internet banking. Advised by Lloyds that this is because CB has not advised them correctly about her marriage and she will need to sign another form. When I mentioned this informed she had advised Steve MQeen [sic] the previous manager and he had photo-copied both her marriage licence and the translation months ago and Lloyds were incompetent – not signing again etc etc I refrained from pointing out that had she returned the envelope from Sue when it was due (with the courier) we could have sorted this out long ago. 4. She accused me of removing her as a signatory as someone! Had told her [sic]. This is simply untrue 5. I was asked if I had cancelled her phone with Orange as she was having problems with reception and receiving calls. There was no possible reason to make this assumption which was aggressive and taken with 4 above confrontational 6. CB refused to return the laptop saying she had not uploaded from the demo to the office computer the information needed for Riversmeet leases. This is unacceptable especially given the generous offer in our original letter. 7. I discovered today from Andre that the VAT Return had not been prepared – it is due for payment in 8 days – and a huge amount of entries remained outstanding from December, Andre informed me this morning that he had been unable to arrange a date with CB for him to come into the office to prepare end of month accounts despite her protestations that all had been organised! If I had not phoned him what did CB think was going to happen to the VAT return! I was so distressed as a result of this meeting that I rang ACAS for advice. Apparently Halcyon is in a very precarious position because of the pregnancy and maternity leave. We should hold our counsel until CB returns to work and then hold a performance review detailing everything we have discovered and pointing out how unacceptable it is. Because we have not given previous warnings we should give a formal verbal warning followed up by a letter and giving a time-frame in which to improve. This should be carefully followed up. ACAS recommended we consult an employment solicitor before we take action.”

[75]Rather strangely, Mrs. Low produced a further file note dated the very day that the notes dated 21 February 2010 were typed up in the evening. The file note dated 22 February 2010 was shown by meta-data to have been prepared at 14.31 hours on 28 February 2010. The substance of the notes dated 22 February 2010 was:- “Visited W[elwyn]G[arden]C[ity][a reference to the residence of Mrs. Baines] to pick up laptop and keys by arrangement. 1. CB said she had been told by Lloyds being removed as signatory – on being told I would speak to bank then said a member of the bank had spoken to a member of our staff and had told them this – refused to say who. I then spoke to Sue (Nicky or Elaine would have told her) she thinks C can only be referring to conversation they had back in January when Andrew had phoned to ask her to get change of name mandate from Low to Baines. Sue forwarded this to CB on 12th Jan who appears to have ignored it – hence the recent kerfuffle re passwords etc. C is either very confused or looking to create problems. 2. e-mail from CB to Sue saying “this should be interesting she told me yesterday she couldn’t sign cheques” This e-mail was then deleted by CB using laptop. I explained to Sue the implication was incorrect as I had told CB I could not access the internet bank! I asked Sue if she felt any conflict of interest – she said no only interest was Halcyon. 3. CB said she intended her maternity pay to start from 25th December. She has not been entering this as maternity pay and we have not been reclaiming from Revenue. Will have to sort this out. 4. C said I had agreed she should receive full wageswhilst [sic] on Maternity leave as he [sic] would be working from home. This is not so :[sic] wages were never discussed. Did discuss several months age [sic] the possibility of working from home part-time after the baby was born and a few weeks old. NB we did not speak from late November/early Dec. 5. CB cannot accept I have the best interests of Halcyon at heart and responsibilities as both Chairman and Director. I cannot just give in to her demands .. The backlog and inefficiencies have to be dealt with. Apparently I am destroying any vestige of personal relationship we have left (ie I won’t be allowed to see Henry) Blackmail. Finally collected keys and computer on Wednesday but would not give password to access yougov to make Company returns”

[76]The references to maternity leave foreshadowed the next major cause of friction between Mrs. Low and her daughter. The day after the creation of the note dated 22 February 2010 Mrs. Low wrote a letter dated 1 March 2010 to her daughter. The letter read:- “Dear Caroline, MATERNITY LEAVE/PAY I am writing to regularise the position re your maternity leave and pay. You have said that you wish your leave to start with effect from Friday 25th December – however to keep matters clear and for calculations it means from Monday 28th December is your first full week. Concerning your leave: Halcyon currently has no notification re your planned date of return, whether you intend to take additional maternity leave, or whether you wish to return full or part-time. Please would you give some thought to this and let me know your intentions as soon as possible. By way of calculation your initial 26 weeks of maternity leave will end on Friday 25th June to return on 28th June. You are required to give 8 weeks written notice of the date on which you would like to return to work. Concerning your pay: the situation is that you have received full pay for 9 weeks of your maternity leave to 28th February. From 1st March statutory maternity pay will become payable. We had anticipated that it would by now, no longer be necessary to contact you with work related queries. Regrettably your lack of co-operation in providing critical information regarding Block Accounts, in particular Riversmeet and the passwords for Gateway and the laptop have made this impossible. We are contractually obliged to provide accounts in a timely manner and they are now overdue. The residents are pushing for their Accounts and I instructed Andre to prepare these and make the overdue Government returns. Please make sure that you answer his questions as fully and helpfully as possible and provide the password for the laptop together with any other information you may have which we may need. You have been asked to do this several times. I understand you are the only one who knows what is being stored in the garages for the landlords. It is my intention to clear the garages or at least one of them as I now no longer wish to pay the rent on them. Please can you let me know which landlords/furniture is involved and whether we should contact them to ask them to make other arrangements. Do you have a list somewhere? Towards the end of March someone will contact you to establish approximately how many hours you have spent answering any questions and you will be paid a pro-rata rate in addition to your S[tatutory].M[aternity].P[ay]. I trust you will find this arrangement fair and satisfactory. Yours sincerely N.M. LOW (Mrs)- Chairman ” MATERNITY LEAVE/PAY Yours sincerely N.M. LOW (Mrs)- Chairman ”

Yours sincerely

[77]What Mrs. Low announced in that letter was that her daughter’s income was to be reduced with immediate effect from her ordinary salary as managing director of Halcyon to the Statutory Maternity Pay rate, a dramatic reduction. The matter had not been discussed between Mrs. Low and Mrs. Baines. It was not, for example, recorded in the note dated 22 February 2010 that Mrs. Low had communicated to her daughter on the occasion apparently recorded in the note her thoughts concerning Mrs. Baines’s income in the ensuing weeks. There was no indication that the issue had been discussed at a board meeting, although Mr. Low told me in cross-examination that he agreed with the position of his mother as indicated in the letter dated 1 March 2010. Basically it was Mrs. Low who decided that her daughter should only be entitled to Statutory Maternity Pay as from 1 March 2010, and it was she who sought to impose that reduction in income on Mrs. Baines. Mrs. Baines was far from happy. In the event she helped herself to her full salary in March 2010 and again in May 2010. Those actions on her part led to further friction. Mrs. Baines did reply to the letter dated 1 March 2010 in an e-mail sent from her iPhone. A later reference indicated that the reply was sent on 23 March 2010, although the actual response was undated. The copy of the e-mail as printed out and adduced in evidence was partially incomplete at the ends of lines, but it appeared to say this:- “Dear Mrs. Low, In response to your letter dated 1st March: 1) you are aware of my planned date of return, we have discussed it on nume[rous occasions It] was planned that I would return at the end of June, though with the current situ[ation I may] be forced to return to work much earlier. Possibly within weeks 2) you have no right to change the terms of my leave or my pay. As an employ[ee I am entitled to] my full salary and as a Director i [sic] object in the strongest terms to the pay of an [employee being] changed without formal discussion at an EGM 3) it will always be necessary to contact me on certain issues. I have explaine[d that on] numerous occassions [sic], yet you seem not to be able to understand this. I am th[e most senior] member of staff. There has never been a lack of co-operation on my part, quite the opp[osite]. All information regarding the accounts are on the database. There was only o[….] which needed doing and these have been done. You have no need to access gateway. You have the password for the laptop. You are wrong in your assumption re; the garages. As per our conversation of today, I am formally requesting copies of all corres[pondence sent to] me since December. I shall expect these by the end of the week. In addition, I shall be collecting my full monthly wage from Halcyon, as legally [entitled]. Yours sincerely, Caroline Baines” In response to your letter dated 1st March: Caroline Baines”

In response to your letter dated 1st March:

[78]Mrs. Low replied to Mrs. Baines’s response to the letter dated 1 March 2010 to indicate that she hoped to be able to reply fully early the following week.

[79]According to meta-data, Mrs. Low made a file note which she dated 15 March 2010 at 18.00 hours on 3 April 2010. The note focused on the preparation of accounts for the block called Riversmeet which was managed by Halcyon. Mrs. Low wrote a letter dated 17 March 2010 to Mrs. Baines which was principally about the same matter, but it ended:- “I am proposing hat [sic] the hours expended on Halcyon business by you this month are not in excess of 12. .These will be paid at a rate of £16 in addition to your SMP. Should you wish to discuss this please let me know.”

[80]The next significant note made by Mrs. Low was entitled “NOTES RE CONVERSATION WITH CAROLINE 25/3” which meta-data indicated had been prepared at 11.15 hours on 2 April 2010. In the notes what was recorded was:- “1. SUE LOOKING FOR ANOTHER JOB – SUGGESTS WE SORT 2. WAS SHE BEING FORCED OUT 3. SHOULD SHE RESIGN 4. WOULD GET ANOTHER JOB – NEEDS TO PAY HALF MORTGAGE 5. WOULD SUE US 6. AS DIRECTOR CAN RETURN IMMEDIATELY 7. DID NOT WANT MEETING WITH SOLICITOR PRESENT – SHE WANTS TO WORK FROM HOMEAND [sic] LOOK AFTER H[enry] AND RECEIVE FULL PAY. 8. BANK REC[ord]S FOR CLIENT AC[count] IN BACK OF JEEP WHICH HAS BEEN TOWED TO EDMONTON AS SHE LEFT IT IN PUBLIC ROAD HAVING DECLARED SORN WILL TRY TO RECOVER 9. MEET ON TUESDAY AT 2PM THOUGHTS NOT SURE SENSIBLE TO HAVE MEETING CB TRANSFERRED MONEY TO HER OWN ACCOUNT WITHOUT ASKING OR ADVISING CANCELLED PAYMEN [sic] TO VAT OFFICE VIA BACS WITHOUT ADVISING US. WE HAD INITIATED PAYMENT BY CHEQUE BECAUSE OF SEEING BACS TRANSFER.” THOUGHTS NOT SURE SENSIBLE TO HAVE MEETING

CB TRANSFERRED MONEY TO HER OWN ACCOUNT WITHOUT ASKING OR ADVISING

[81]It was plain from what was recorded that Mrs. Baines had asked her mother in terms whether Mrs. Baines was being forced out of Halcyon and whether she should resign. It was also clear that Mrs. Baines told her mother that she needed to work to contribute towards the cost of her mortgage, that she would get another job if necessary, but that what she wanted was to work for Halcyon from home on full pay. It is, perhaps, unsurprising that Mrs. Baines asked her mother whether her mother was seeking to force her out of Halcyon, given Mrs. Low’s behaviour which I have recorded and the fact that actually Mrs. Low did want to force her out, hence the contact with ACAS.

[82]In that context it is appropriate to consider the “NOTES TUESDAY 30TH MARCH CB” which meta-data indicated had been prepared by Mrs. Low at 11.50 hours on 2 April 2010, in other words soon after the notes dated 25 March 2010 had been typed:- “C WANTED TO KNOW WHAT MY PLANS WERE AND WAS I TRYING TO FORCE HER OUT. I SAID NO AND THAT IN DUE TIME AND TO SORT [sic] HER WE COULD/WOULD HAVE AMEETING [sic] TO SOR [sic] OUT WAY FORWARD BUT I WANTED A SOLICITOR PRESENT AS SHE HAD PREVIOULSY [sic] MIREPRESENTED [sic] ON A NUMB ER [sic] OF OCASIONS [sic] WHAT I HAD SAID. CB SAID SHE HAD ALREDY [sic] APPOINTED A SOLICITOR AND WANTED MEETING THIS WEEK. I AID [sic] THIS WAS NOT POSSIBLEBUT [sic] WOULD ARRANGE AS SOON AS POSSIBLE. CB SAID WOULD SUE FOR CONSTRUCTIVE DISMISSAL AND AS SHE HAD BEEN CONTACTED DURING HER MATERNITY LEAVE RE HER JOB WE WERE AUTOMATICALLY IN THE WRONG. I SAID IN SO FAR AS I WAS AWARE SHE HAD NOT BEEN CONTACTED IN HER CPACITY [sic] AS AN EMPLOYEEONLY [sic] IN HER CPACITY [sic] AS A DIRECTOR TO DISCUSS THE RUNNING OF HALCYON AND EERY [sic] EFFORT HAD BEEN MADE TO ACCOMMODATE HER VERY PERSISTENT [sic] TO KNOW WHAT SHE HAD DONE WRONG. I SAID NOT THE PLACE TO DISCUSS BUT SHE HAD AGREED WITJH [sic] ANDRE TO PAY THE VAT ON LINE: SHE HAD SET THE DATE A MONTH LATE AND THEN CANCELLED HER PAYMENT VIA BACS WITHOUT TELLING ANYONE – MEANWHILE WE HAD CANCELLED THE CHEQUE – CAUSED HAVOC. FURTHERMORE TO ACCECC [sic] THE COMPANYS [sic] BANK ACCOUNTS AN D [sic] HELP HERSELF TO OVER 1000 POUND OF EXTRA PAY COULD POSSIBLE [sic] CONSTITUTE GROSS MISCONDUCT. CB SAID ENTITLED TO DO THIS AS(a) (A) SHE WAS A DIRECTOR

(b) (B) SHE AND JEREMY HAD DISCUSSED AND AGREED HER RECEIVING FULL PAY DURING MATERNITY LEAVE I COULD NOT COMMENT ON THIS. CB SAID SOLICITOR HAD TOLD HER SHE COULD RETURN TO WORK WHEN SHE LIKED ALL WAS WELL WHEN SHE WASTHERE [sic] AND I HAD NOT [sic] RIGHT OR REASON TO INERFERE[sic]. 3 MEMBERS OF STAFF WERE GOING TO HAND IN THEIR NOTICE AND LEAVE IF I STAYED. CB SAID SHE WAS ONLY ONE CPABLE [sic] OF DOING BANK RECS FOR END NOV AS ORIGINAL INPUT HAD BEEN INCORRECT AND SHE HAD TO MAKE VRIOUS [sic] ADJUSTMENTSEACH [sic] TIME – SAID SHE WOULD DO IT IF I PROVIDED TH [sic] ALPTOP [sic] FOR A DAY. AFTER PERSISTENCE I SAID THAT NOTHING WAS WRIT IN TABLETS OF STONE BUT POSSIBLE SHE COULD BECOME PART-TIME SALES/MARKETING DIRECOER [sic] BUT NOT CONTINUEING [sic] TO BE RESONSIBLE [sic] FOR THE ADMIN AND PLANNING SIDE (2-3 DAYS) *********DISCOVERED j KEPT ALL COPIES OF THEIR EXCHANGE OF E-MAILS/TEXTS NOT MENTION OF FULL MATERNITY PAY OR RECOLLECTION ”

[83]The reference to each party having a solicitor at a meeting between them made it fairly plain that each recognised that the relationship between them was very poor.

[84]Although Mrs. Low made a further note dated 31 March 2010, for present purposes the contents were not particularly material. Mrs. Low did, apparently, prepare round about 30 March 2010 a reply to the response which Mrs. Baines had sent on about 23 March 2010 to Mrs. Low’s letter of 1 March 2010, but that letter was not in fact despatched until the beginning of May 2010, being sent with a letter dated 25 April 2010 which arrived with Mrs. Baines on 4 May 2010. The delayed letter of Mrs. Low, which was not dated, was in these terms:- “Dear Caroline, I have as yet not responded in writing to your letter dated 23/3/10 and the response below was not drafted until after our lunch on 30th March as I judged it preferable to wait for the result of that meeting. It is now obvious that a response is required in order to keep the record straight. To respond to your points: 1. We had not discussed either the date or the terms on which you wished to return to work. 2. You have been misinformed. Your terms of employment were and are no different from other employees which were detailed in Contracts issued when Halcyon was purchased. I wrote to you on 1st March to clarify this. 3. The Board does not accept that anyone is or should be indispensable. The rest of the comments demonstrate once again your lack of co-operation and helpfulness and I trust your threat to help yourself to money is simply that. You cannot under any circumstances help yourself to Company money to which you have been formally advised you are not entitled.”

[85]Without having received that letter at the time she wrote, Mrs. Baines did write to her mother an e-mail sent at 11.25 hours on 7 April 2010, which included:- “Dear Nicola, Further to our discussion last Tuesday, I thought it would be a good idea to put some things in writing. … With regards to my employment, I understand that you are reluctant to discuss anything without a third party present, and to this end you said that you would instruct a solicitor so that we could set up a meeting. You have made it clear that you wish for my role in Halcyon to change upon my return, and I am anxious to understand the specifics and the impact that your plans may have not only on me and my new family but on the Business itself. In order for us to keep to point at the above meeting and hopefully resolve this situation as soon as possible, I would like a document from you which specifically sets out how you want my role to change, the commercial reasons for those decisions, and in order for them to have validity, I will also need a signed document from Jeremy to say that he has seen your proposals, supports them, and votes for their implementation. Needless to say that without this, should I disagree with your suggestions, they can not proceed further due to my larger shareholding. …”

[86]The substantive reply to that letter, a letter dated 18 April 2010, was itself sent in advance of the provision of the response to Mrs. Baines’s reply to Mrs. Low’s letter dated 1 March 2010. The reasons for this rather curious way of proceeding did not emerge at the trial. However, before even the letter of 18 April 2010 was received Mrs. Baines had been in contact with Mr. Mike Phoenix, an estate agent with a firm called Brown & Lee (“the Estate Agents”). In an e-mail to Mr. Phoenix sent at 10.30 hours on 13 April 2010 Mrs. Baines wrote, so far as is presently material:- “Thanks for the details of those two Offices any chance I could have a look at them this week? (Moorlands and High St Stevenage) Any day but Thursday is fine, afternoons are best.” Any day but Thursday is fine, afternoons are best.”

[87]Mrs. Baines accepted in cross-examination that the offices she wanted to look at were possible offices to be occupied by herself if she decided to leave Halcyon and set up in business on her own as a letting agent in competition to Halcyon. She also accepted that this e-mail had not been disclosed on her behalf in the Halcyon Action or the Harassment Action. She told me that she could no longer find this e-mail and a later one to Mr. Phoenix sent at 16.30 hours on 20 April 2010. These two e-mails had been obtained by Halcyon from the Estate Agents. Mrs. Baines accepted in cross-examination that she did still have access to later e-mails to or from the Estate Agents in the period up to and including 8 June 2010, but that those e-mails had not been disclosed, despite an order of this court to disclose all relevant documents relating to the negotiation of the lease of the premises occupied by Mint at 162B, High Street, Stevenage, Hertfordshire (“the Mint Premises”). All that had been disclosed pursuant to that order were documents dated on or after 9 June 2010. Mr. Simon Forshaw, who appeared on behalf of Halcyon, submitted that I should conclude that Mrs. Baines had deliberately suppressed documents passing between herself and the Estate Agents prior to 9 June 2010, and that I should infer from that conclusion that Mrs. Baines had recognised those e-mails as harmful to her case. I accept the submissions of Mr. Forshaw. However, none of the relevant documents which Mrs. Baines, I find, suppressed deliberately because she considered them to be harmful to her case, was in fact a “smoking gun”. I shall come to the other relevant exchanges between Mrs. Baines and the Estate Agents at the appropriate chronological points in this narrative, but none of them was in fact inconsistent, as it seemed to me, with Mrs. Baines’s basic position, which was that she was simply taking steps to have a “Plan B” in the event that she was forced out of Halcyon. As Mrs. Baines emphasised in her cross-examination, she was not committed to take any premises until she had actually executed a lease. Up to that point she could simply back out of a transaction. As a letting agent she understood that perfectly well. Apart from the incorporation of Mint, which I have already noted took place on 21 April 2010, no evidence was led before me to suggest that Mrs. Baines took any other steps prior to 8 June 2010 to equip herself to carry on business as a letting agent. There was no evidence, for example, of setting up a website, or obtaining telephones, computers or other office furniture or equipment.

[88]I have already commented that Mrs. Baines fabricated her evidence as to the use by her mother of couriers and as to the alleged behaviour of a particular courier on 5 February 2010. I was disturbed that Mrs. Baines had flouted the order for disclosure to which I have referred. I was not impressed that, during correspondence with solicitors instructed on behalf of Halcyon prior to the commencement of the Halcyon Action, Mrs. Baines was, in particular in relation to alleged contact with the Estate Agents, “economical with the actualites” and at other times took points which she described as being of a “smart arse” nature. Nonetheless I accept that, from her perspective, what Mrs. Baines was doing in approaching the Estate Agents and thereafter in negotiating with them, and in causing Mint to be incorporated, was to have a “Plan B”. That was actually entirely logical. Until the unhappy events which began seriously with the catastrophic family meeting on 21 November 2009 Mrs. Baines had a job as managing director of Halcyon, carrying on a residential letting and management business. If she had been able to continue in that position in that business there was just no point in establishing a similar business to compete with it. Mrs. Baines had nothing to gain from taking such a step. In fact she was likely to be worse off, because it was probable, as in fact happened, that some of the existing clients of Halcyon would continue to patronise the business of Halcyon, and thus not provide business, and income, to any competitor operation.

[89]Mrs. Low replied to Mrs. Baines’s letter dated 7 April 2010 in the letter dated 18 April 2010. That letter was in these terms:- “Dear Caroline, I write with reference to your communication dated 7th April in which you refer to our meeting on 30th March. I made contemporaneous notes after this meeting and they differ somewhat in tone and content. I refer to your paragraph 3 which reads to me as an attempt not only to manipulate but also to misrepresent the facts. There is of course already a Halcyon Employment Contract which was put in place when the Company was purchased. It has been noted that you have not suppliedthe two latest employees with Contracts of Employment as Companies are legally required to do and I shall of course be rectifying this. You have as yet still not replied to my telephone request for information as to whether you signed a formal Contract of Engagement with Riversmeet and if so where it might be found. As a Director you still have a duty to the Halcyon [sic] and I would urge you to respond promptly. Yours sincerely, N.M> [sic] Low - Chairman” N.M> [sic] Low - Chairman”

[90]Mrs. Low appeared, on 18 April 2010, to make up a list of events essentially adverse to Mrs. Baines covering the period 1 February 2010 to 17 April 2010. A copy of that list was adduced in evidence.

[91]Mrs. Baines sent Mr. Phoenix the e-mail which I have mentioned at 16.30 hours on 20 April 2010 about making arrangements to view offices.

[92]On 21 April 2010 Mrs. Baines caused Mint to be incorporated.

[93]At some point, it would seem in about April or May 2010, although in his witness statement put before me Mr. Andre Harrold put the date only as between 22 February 2010 and 9 June 2010, Mrs. Baines wished to prepare a financial forecast in relation to any new business which she might establish. As I have noted, Mr. Harrold provided assistance to Halcyon in relation to preparing management accounts and accounts for blocks of flats which Halcyon managed. Mrs. Baines approached him for help in preparing the financial forecast which she wanted. Mr. Harrold’s evidence was that he simply assembled in an appropriate format information provided by Mrs. Baines. In her cross-examination Mrs. Baines told me that she actually discussed with Mr. Harrold what elements of cost ought to be included in the financial forecast. For present purposes it does not matter which of them was correct. The importance of the financial forecast produced (“the Forecast”) was, first, that it had been produced at all, and, second, what assumptions were included in it in relation to sources of income, identities of staff and when the business was going to start. That the Forecast was produced at all was obviously of some significance. Mrs. Baines was asked about it in cross-examination and said that she wanted it so that she would know what the costs of setting up on her own were likely to be, what income she would need to generate to cover those costs, and to be able to present the document to a bank in support of an application for finance, if matters came to her setting up on her own.

[94]The Forecast identified as the staff to be employed Mrs. Baines herself, Mrs. Mogridge and Mrs. Payne. Mrs. Baines included a low rate of income for herself in the Forecast, a rate per month for Mrs. Mogridge which reflected what she was being paid by Halcyon, but a rate per month for Mrs. Payne which was considerably less than she was paid in the period March to June 2010, although there was not a constant rate each month.

[95]The Forecast assumed commencement of the business on 1 July 2010.

[96]Included in the Forecast as sources of income were three existing clients of Halcyon, namely the blocks of apartments which Halcyon managed called, respectively, Dunsters Mead, Nursery Gardens and Willowdene. In the event the business of managing each of those blocks came to be undertaken by Mint. That was a circumstance heavily relied upon in the Halcyon Action on behalf of Halcyon. However, that reliance, in my judgment was misconceived. The implicit suggestion was that in some way Mrs. Baines or Mint had solicited the business of each of the blocks which I have mentioned prior to the preparation of the Forecast. Not merely was there no evidence in support of any such assertion, but the evidence adduced at the trial showed, at least in relation to Nursery Gardens and Willowdene, that it certainly was not the case that the relevant business had been solicited at any time prior to the departure of Mrs. Baines from Halcyon. Halcyon lost the business of Nursery Gardens because it, acting by Mrs. Low, resigned as managing agent. Mrs. Low actually accepted that at paragraph 113(2) of her witness statement dated 7 February 2014. The Willowdene business was awarded to Mint by a Leasehold Valuation Tribunal, following a contested hearing at which Halcyon sought to retain the business, in 2011. In respect of Dunsters Mead Mr. John Rowland of that block sent an e-mail dated 8 July 2010 to Halcyon indicating a decision to change agent at the end of July.

[97]In my judgment it is obvious from the actual circumstances in which Mint came to acquire the business of Dunsters Mead, Nursery Gardens and Willowdene, respectively, that the inclusion of income in respect of managing those blocks in the Forecast was in the nature of an informed guess on the part of Mrs. Baines that she would be able to obtain for Mint the business of managing each of those blocks.

[98]The start date of the new business supposed, 1 July 2010, was simply the date upon which Mrs. Baines had already indicated to her mother she intended to return to work after maternity leave.

[99]It was suggested to Mrs. Baines in cross-examination that the inclusion of the names of Mrs. Mogridge and Mrs. Payne as employees of a new business indicated that Mrs. Baines had approached them and obtained their agreement to such employment before the Forecast was prepared. The same suggestion was put to Mrs. Mogridge she came to give evidence. She denied it.

[100]There was evidence, in the form of e-mails adduced in evidence, that certainly Mrs. Baines and Mrs. Mogridge had a close working relationship, amounting to a friendship, and that Mrs. Baines was aware, from no later than 25 March 2010, when Mrs. Low recorded, according to her, her “NOTES RE CONVERSATION WITH CAROLINE 25/3”, that Mrs. Mogridge was unhappy at Halcyon working with Mrs. Low, and wished to leave. It was obvious that the work which Mrs. Mogridge had been undertaking at Halcyon would need to be undertaken in any competitor business. Again it is no great leap of imagination to suppose that, at the time she was involved in the preparation of the Forecast, Mrs. Baines supposed that there was a good chance that Mrs. Mogridge would join her in a new business, but that, if not, she would need someone to perform that role, and the salary would be roughly what Mrs. Mogridge was being paid. A similar analysis applied, as it seemed to me, to the case of Mrs. Payne. She had a good relationship with Mrs. Baines and might join her in a new business, but, if not, Mrs. Baines would need someone to perform the tasks which Mrs. Payne had been performing at Halcyon.

[101]Consequently, on analysis, the Forecast did not appear to be anything like as significant a document as was contended on behalf of Halcyon.

[102]For the reasons which I have explained, it is unclear whether the preparation of the Forecast preceded, or succeeded, the writing by Mrs. Low of a letter dated 25 April 2010 to her daughter which Mrs. Baines received on 4 May 2010. That letter was written, on the face of it, after Mrs. Low and her son had held a board meeting of which no notice was given to Mrs. Baines and which she was not invited to attend. Mrs. Low prepared “MIUTES [sic] OF BOARD MEETING 25th April 2010”. They were brief:- “Present: Jeremy Low Director Nicola Low Chairman Mrs. Low formally proposed that 1. Mrs. Caroline Baines be removed as a Director of Halcyon House Ltd and Halcyon House Management Ltd. 2. Mrs. Caroline Baines be removed as signatory on all bank accounts and cheques and removed from access to all internet banking. Both proposals were passed nem con.” Mrs. Low formally proposed that Both proposals were passed nem con.”

Mrs. Low formally proposed that

[103]Both Mrs. Low and her son, when cross-examined, asserted that those resolutions had not been acted upon. The suggestion seemed to be that the resolutions could therefore be ignored. However, the resolutions were never rescinded, and Mrs. Low did write a letter dated 30 April 2010 to Bank of Scotland in which she said:- “In conformation of our telephone conversations Mrs. Caroline Baines nee Low has been removed both as a Director and as signatory to all Bank Accounts connected with the Company. Please find enclosed a copy of the Minutes of Board Meeting from which you will note that Caroline Low married and became Caroline Baines. She is no longer employed by Halcyon. Please also find enclosed a new signature mandate completed from the forms you kindly faxed through. I look forward to receiving your acknowledgement and confirmation of change.”

[104]The copy of that letter adduced in evidence was stamped received by Bank of Scotland on 5 May 2010. That was because it was a copy of the letter received by Bank of Scotland. The letter had not been disclosed on behalf of Halcyon, although obviously it should have been. In other words, suppression of relevant documents was not uniquely the preserve of Mrs. Baines.

[105]The letter to Bank of Scotland was the clearest possible evidence that Mrs. Low, and probably Mr. Low also, had decided on or by 25 April 2010 that Mrs. Baines should be completely ousted from Halcyon, both as a director and as an employee.

[106]All that can really be said about implementation, or not, of the resolutions passed at the board meeting on 25 April 2010 is that not all of those who needed to be notified in order to secure full implementation of those resolutions were then notified. For example, although removed as a signatory of the Bank of Scotland account of Halcyon, Mrs. Baines continued as a signatory of the Lloyds Bank account until September 2010. However, what Mrs. Baines was told in the letter from her mother dated 25 April 2010 was that she had been removed as a signatory of all bank accounts. She was not told that the other directors of Halcyon had removed her as a director, although she could obviously see that the other directors had held a meeting of which she was not notified and to which she was not invited. The letter dated 25 April 2010 was in these terms:- “Dear Caroline, I refer to your letter dated 23rd March to which I drafted a response at the time but which I did not send as I had hoped to avoid the necessity to reply. It now seems to me that was the wrong decision and I therefore enclose a copy. I write now with reference to your communication dated 7th April in which you refer to our meeting on 30th March. I made contemporaneous notes after this meeting and they differ in both tone and content. I refer to your paragraph 3 which reads to me as an attempt not only to manipulate but also to misrepresent the facts. There is of course already a Halcyon Employment Contract which was put in place when the Company was purchased. I have been made aware that you have not supplied the two latest employees with Contracts of Employment as Companies are legally required to do and I shall of course be rectifying this. It was always our intention that your role would remain unchanged after your maternity leave. You were clearly advised that my role was purely to be as an interim manager to allow Halcyon to meet not only its business obligations but also its duties to its employees. Your caesarean merely emphasised the necessity for this and as Directors we take our obligations seriously. You were only contacted in your capacity as a Director and to obtain essential business information which we could not obtain in any other way. Had you been helpful and co-operative we would not have needed to contact you more than once about the same thing. I do not accept you were contacted unnecessarily or that this was in any view harassment. In the meantime despite your lack of co-operation I believe we have reached the stage where your input will no longer be judged to be essential and we shall no longer need to contact you. The fact that you have failed to respond to my phone call and e-mail regarding the Riversmeet Contract would appear to indicate there would be little point in any case. Your comment regarding my wish for your role to change is unfounded. This sort of comment is why I would have preferred a 3rd party to be present so there is no opportunity to misrepresent what is said. There is no “situation” which must be resolved at this time except the matter of your Maternity pay which Jeremy and I believe should be SMP plus a payment for any time you spend assisting There is no record that I can trace – including the e-mails and texts between yourself and Jeremy – which would indicate otherwise. It is with regret however that I have to advise you that our wages clerk noted that you had been credited with full salary last month and thought this had been authorised which of course it had not. The total overpayment you have now rec eived [sic] is considerable and we reserve e [sic] the right to recover in future In order to avoid any problems the Directors have voted to remove you as a signatory to the Bank Accounts and changed passwords. You will of course be re-instated when the issue is resolved and re-imbursed should our decision prove faulty. What has become apparent during the past two and a half months is that further discussion will prove essential. However – Without Prejudice: I believe there is a case to be made to delay any further action on our part until end June To re-iterate: the Directors have tried to act with both your and Halcyons [sic] best interests in mind and in accordance with our duties and responsibilities. Yours sincerely, N.M. Low - Chairman” N.M. Low - Chairman”

[107]In his closing submissions Mr. Forshaw found himself in the unenviable position of having to submit that actually the resolutions passed at the meeting on 25 April 2010 were of no effect in law because proper notice of the meeting had not been given to all directors/shareholders. That is probably correct, but not an answer to the point that, whether lawful or not, the calling of the meeting and the particular resolutions passed indicated a firm intention on the part of Mrs. Low and her son to exclude Mrs. Baines from participating as a director in the operation of Halcyon.

[108]Mrs. Baines replied to that letter in a long letter dated 4 May 2010. That letter included:- “… Firstly, in response to your letter which you say was drafted after our lunch on March 30th: 1) You are aware of the date of my return to work. The terms upon which I returned was what I had wanted to discuss with you, but you refused as you wanted to engage a Solicitor on your behalf before the discussion was held. To date, despite requesting an urgent meeting, I have heard nothing from you. My return date, as you are aware, was to be during the week commencing 28th June, but I am abroad during this week, so will return week commencing 5th July. 2) I have stated my desire to return to work prior to the ‘official’ date, but you have advised me that I would not be welcome, and that if necessary, you would have me removed from the Offices to prevent this taking place. Should this no longer be the case, I shall be happy to return for a few days a week as soon as is practical, even next week. In any event, I intend to spend at least one full day per week (with the exception of the weeks commencing 21st and 28th June) working for Halcyon from the week commencing May 10th. To this end, I will need an alarm fob, a set of keys, and probable access to my laptop, which you removed from me. 3) I have not been ‘misinformed’ by anybody – I am under no contract, I have never been issued with one, and I have never signed any document with regards to my employment terms. 4) I do not understand the reason for this statement, nor can I find one unless it is a direct threat to me and my position upon my return to work. I should appreciate immediate clarification of this and the reasons why you have included it in your letter. I have asked repeatedly what your intentions are with regards to me and my employment upon return, and you have so far refused to answer. This statement, unfortunately, seems to make your intentions all too clear. … Now to your letter dated 25th April: … 2) I note with interest the use of the past tense in your next paragraph. Clearly things have changed, as indicated by your statement of nobody being indispensable in your previous letter. It has been brought to my attention that you have already employed somebody to carry out part of my role without my knowledge or approval. Do you intend to keep this person on after my return? If so, this would constitute a significant change to my role, and is certainly something which should have been discussed with me prior to the appointment. … 6) I was never advised that you had been appointed as an interim manager. You wrote to me before my son was two weeks old demanding that I attend a meeting (firstly it was to be an EGM, but subsequently changed to a Directors [sic] meeting when you realised that the legalities in calling an EGM did not suit your purposes) to discuss these matters. You then informed me by telephone that there was no point in me attending as there was to be no meaningful discussion, and that I was to be presented with a fait accompli. I wrote and expressed my objections to the plans of you and Mr. Low to remove me from my duties in the strongest possible terms, but never received a reply despite requesting one on at least two separate occasions. I was also never sent minutes of this meeting, and was never formally advised of what had taken place, what had been discussed, or whether my written objections had even been raised. … 8) You state that the Directors have voted to remove me as a signatory to the bank accounts. This is manifestly untrue, unless you no longer consider me to be a Director. Once again, these decisions can only be made at an EGM or meeting of the board with all of the notices and other documents which would need to be provided. I have received no such notices, and therefore your decision has no legal basis and should be reversed immediately. In addition, given my imminent return to work and the fact that I shall be working again for Halcyon as outlined above, this course of action is not only going to hamper my ability to do my job, but will merely increase the administrative load upon my return. The actions you have taken seem to be calculated to remove and destroy any mutual trust and confidence. …”

Now to your letter dated 25th April:

[109]Mrs. Low did not reply to Mrs. Baines’s letter, but she did make a note for herself recording her reactions to the points made in that letter. Of point 3 raised by Mrs. Baines concerning the letter which Mrs. Low said had been written after the lunch on 30 March 2010 Mrs. Low wrote in her note, “Open to dispute”. Concerning point 4 in that section of Mrs. Baines’s letter Mrs. Low wrote “Correct”. About point 8 in the section responding to Mrs. Low’s letter dated 25 April 2010 Mrs. Low’s note was, “As majority shareholders and Directors Jeremy and I act in the best interests of the Company”.

[110]According to the meta-data, at 16.16 hours on 9 May 2010 Mrs. Low produced a document entitled “CAROLINE BAINES – LIST FOR DISCUSSION”, which was basically a list of complaints concerning Mrs. Baines, but a recapitulation of matters identified previously, rather than including anything new.

[111]At 10.15 hours on 12 May 2010 Mrs. Baines sent Mr. Phoenix of the Estate Agents an e-mail in which she said:- “I’d very much like to go ahead with renting the offices in Stevenage Old Town, preferably with a lease starting at the beginning of July. Could you let me know what you need so we can get things started?” Could you let me know what you need so we can get things started?”

[112]Although it was suggested to Mrs. Baines in cross-examination that that e-mail indicated a fixed intention to set up in business in competition with Halcyon, she told me, and I accept, that, having in mind that she was not committed unless and until she entered into a lease, she was simply seeking to further her ability to give effect to “Plan B” in the event that it was necessary.

[113]Although there was put in evidence a copy of an e-mail from the Estate Agents to Hilliers HRW Solicitors LLP, acting on behalf of the freehold owner of the Mint Premises, sent at 11.33 hours on 13 May 2010 in which the writer recorded, inter alia:- “… I have spoken to Caroline Baines regarding a lease on 162b High Street and the outcome of our conversation is as follows:- 1. Tenant – Caroline is setting up a new company probably to be called Mint, but has confirmed that she would be prepared to take the lease in her own personal name. 2. She is prepared to pay the asking rental of £4,000 per annum, and indeed would pay this upfront in one go. 3. As it is a new business, she does not want to commit herself for more than a year and has therefore offered a one year lease. … 5. Timing – Caroline has indicated that she would like to start the lease around July this year.”, those comments did not seem to me to be inconsistent with what Mrs. Baines told me.

[114]At about the beginning of May 2010 it seems that Mrs. Low and her son had decided to consult solicitors for advice concerning how to manoeuvre Mrs. Baines out of Halcyon, for in a letter dated 13 May 2010 Clare Waller of HRJ Law LLP (“HRJ”) wrote a letter to Mrs. Baines which began in this way:- “I have been instructed by Mrs. Nicola Low and Mr. Jeremy Low, your fellow directors and shareholders in Halcyon House Limited. I have seen various letters and emails which have passed between the directors since November 2009. Mr. and Mrs. Low have identified concerns which they have about certain acts or omissions on your part which they consider not to have been in the best interests of the business and which could amount to acts of misconduct or gross misconduct. These include:”

[115]There followed seven allegations. Having set the scene Ms Waller went on:- “Having discussed the matter at length with Mrs. Low I wonder whether it more useful to have a round table discussion between the shareholders and directors with a view to resolving the current breakdown in working relationships and seeking an amicable settlement to the situation. Obviously if that cannot be achieved then it may be necessary for a more formal meeting to be held in due course to consider the allegations set out above and for you to have the right to comment on them. I would however very much hope that such an eventuality could be avoided.”

[116]That paragraph was very delicately phrased. However, what it seemed to invite Mrs. Baines to do was to negotiate terms of departure satisfactory to her mother and her brother or face the majority shareholders seeking to utilise their power to achieve their ends. And so it came to pass that the Compromise Agreement was made.

[117]That was not, however, without some initial resistance on the part of Mrs. Baines, who replied to Ms Waller’s letter in a letter dated 17 May 2010.

[118]On 18 May 2010 Mrs. Mogridge printed off, in Excel format, information from the CFP Winman software used by Halcyon giving details of the landlord clients of Halcyon. It was the case for Halcyon that this was a step preparatory to the departure of Mrs. Mogridge to join Mrs. Baines at Mint and was, as it were, a raid upon the confidential information of Halcyon. Mrs. Mogridge told me that in fact she had printed off the information because Mrs. Low had asked her to do so.

[119]In an e-mail to Mr. Phoenix of the Estate Agents sent at 21.01 hours on 3 June 2010 Mrs. Baines said that she was “very happy to go ahead” and asked Mr. Phoenix to send a copy of the lease to Mr. Peter Baines, her father-in-law, who is a solicitor at the limited liability partnership acting for her, Mrs. Mogridge and Mint in the Halcyon Action and the Harassment Action. Mr. Phoenix sent an e-mail to Mrs. Baines at 11.26 hours on 8 June 2010, to which was attached Heads of Terms in relation to a lease of the Mint Premises.

[120]8 June 2010 was also the date upon which a round table meeting between Mrs. Low, Ms Waller, Mrs. Baines and her solicitor, Mounia Le Gaufey, of Messrs. Ewart Price, took place. It was not in dispute that in advance of the meeting Ms Waller had prepared a draft of the Compromise Agreement. Mrs. Baines’s account of the meeting was that she was told when the meeting started that the offer contained in the Compromise Agreement was a take it or leave it offer. After some discussion with her solicitor Mrs. Baines elected to accept it. Albeit not signed by Mrs. Baines until 15 June 2010 and not signed by Mrs. Low on behalf of Halcyon until 25 June 2010, it was agreed in principle at the meeting on 8 June 2010 that Mrs. Baines would depart from Halcyon on the terms set out in the draft Compromise Agreement.

[121]Before coming to the terms incorporated in the Compromise Agreement, one of the remarkable features of it, not least given the reliance placed in the Halcyon Action upon the comments about leaving Halcyon and setting up in opposition made by Mrs. Baines in her e-mail to her brother sent at 14.46 hours on 16 November 2009, was that it contained no restrictive covenants of any kind. Why that should be, it is not necessary to speculate about, but the lack of any sort of restrictive covenant could be an explanation for the bitterness which has characterised the Halcyon Action and the Harassment Action since they were commenced, and the communications between Mrs. Baines and her mother and brother before the litigation commenced.

[122]The terms of the Compromise Agreement which are material to the claims made in the Halcyon Action were these:- “2. The Employee’s employment with the Company will [sic] terminate by mutual agreement on 8th June 2010 (“the Termination Date”). 3. The Company will, within 14 days of the date of this Agreement pay to the Employee:3.1 The balance of Statutory Maternity Pay due to the Employee subject to the usual deductions in respect of tax and national insurance; such payment being strictly conditional upon the Employee providing to the Company Form MATB1

3.2 £25,400 as compensation for the loss of her employment.

3.3 £22,500 in repayment of the Employee’s Director’s Loan Account

3.4 The Company shall be entitled to deduct the sum of £4,623.92 from the monies payable to the Employee under clause 3 being monies which the Employee owes to the Company. … 6. The Employee undertakes to return to the Company no later than the date of this Agreement all property, equipment, records, correspondence, documents, computer disks, files and other information (whether originals, copies, electronic files or extracts) belonging to the Company or any of its Associated Companies save as provided in clause 6.1 below, and confirms that she has not retained and will not retain any copies in any form whether original, copy, electronic or extracts. 6.1 The Employee shall be entitled to retain the mobile telephone handset currently in her possession and to continue using the telephone number currently issued to her, provided that the Employee shall assume responsibility for all costs connected with the mobile telephone from the Termination Date. 7. The Employee shall, at the same time as signing this Agreement, execute the Stock Transfer Forms attached to this Agreement in respect of her shareholding of 45 Ordinary Shares in the Company and in Halcyon House Management Limited to transfer the shares to Nicola Low at par value (“the Purchase Price”) without warranty or representation except as to title. … 9. The Employee represents and warrants that: … 9.7 She is not aware of any matters relating to her employment which, if disclosed to the Company, would or might affect the decision of the Company to enter into this Agreement. 10. The Employee acknowledges that the Company is entering into this Agreement in specific reliance on the representations, warranties and undertakings in this Agreementand that, without prejudice to any other remedy the Company may have, the Company shall be entitled to require the immediate repayment of the sum paid to the Employee under Clause 3.2 above should any of those representations, warranties or undertakings be breached. … 12. The Employee acknowledges that she is bound by an existing duty of confidentiality towards the Company and its Associated Companies and will not at any time in the future divulge to any individual, organisation, firm or company any confidential or sensitive information which was acquired by her in the course of or for the purpose of her employment, without the prior written consent of the Company. 13. Both the Employee and the Company agree that they will not make, publish or otherwise communicate any disparaging or derogatory statement whether in writing or otherwise concerning the other party and in the case of the Employee concerning any Associated Company or any of the officers or employees of the Company or any of its Associated Companies. 14. At the same time as entering into this Agreement the Employee will resign as a Director of the Company and of Halcyon House Management Limited by signing the letter of resignation attached hereto. The Employee agrees to execute any such other documents as may reasonably be required of her in order to give effect to such resignations.”

[123]An issue which arose during the trial was whether Mrs. Low had told the Halcyon staff, and, in particular, Mrs. Mogridge, that Mrs. Baines was not returning to Halcyon on 14 June 2010 or 15 June 2010. It was a minor issue, but the significance of it was said to be that if it had been on 14 June 2010, that was before Mrs. Baines signed the Compromise Agreement. Insofar as it mattered I find that it was on 14 June 2010 that Mrs. Low made her announcement. Mrs. Baines noted in an e-mail sent to Ms Le Gaufey at 10.12 hours on 15 June 2010 that:- “Mother announcedto [sic] staff I wouldn’t be back yesterday …”

[124]In a letter dated 16 June 2010 to Mrs. Low Mrs. Mogridge wrote:- “After a long deliberation, I have come to the unfortunate decision to terminate my employment with Halcyon House Limited due to personal health issues. I have very much enjoyed working at Halcyon for the past two and a half years but feel that having a break in my career at the moment would be beneficial to me. I would expect to leave Halcyon’s employment on 15th July 2010 thereby giving one month’s notice, but if you wish me to leave earlier on 30th June 2010, which coincides with a normal end of month pay transaction, then I would be in agreement with that. I am due 11 days holiday which I would like to have taken into consideration of my notice period so I actually leave on 30th June 2010 and my salary for the month, plus the 11 days holiday taking it to 15th July, can be transferred to my account at the end of June 2010 in the usual manner. My sincere apologies if this is not the news you were expecting to receive but my health is important.”

[125]It was suggested to Mrs. Mogridge in cross-examination that the timing of her resignation was influenced by the date of signature of the Compromise Agreement by Mrs. Baines. Mrs. Mogridge denied that, and it is difficult to understand on any view how the date of Mrs. Baines’s signature on the Compromise Agreement could be relevant to the decision to resign. It was also suggested to Mrs. Mogridge that her resignation was pursuant to a plan concocted with Mrs. Baines at some earlier point in time to leave Halcyon and set up Mint. Significant, it was said, was the suggestion in Mrs. Mogridge’s letter that she would be prepared to leave on 30 June 2010. Mrs. Mogridge denied that. It was also suggested to Mrs. Mogridge that her evidence in her witness statement dated 7 February 2014 that she resigned once she knew that Mrs. Baines was not coming back because she found Mrs. Low difficult to work with was not correct, otherwise it would have been mentioned in the letter of resignation. Although she did not put it in these words, the effect of Mrs. Mogridge’s response to that suggestion was that only a lunatic would suggest to someone with whom she would have to work out a month’s notice that she found her difficult to deal with. I accept the evidence of Mrs. Mogridge as to what prompted her to resign on 16 June 2010. I have to say that I was much impressed by Mrs. Mogridge as a witness. She seemed to me to be entirely straightforward in her evidence, giving, generally, clear, concise and, insofar as one could verify by reference to other evidence, accurate answers. However, there were two matters, to which I shall come, in relation to which I was not persuaded that the evidence of Mrs. Mogridge was correct, whether through misunderstanding of what she was told at the material time, or error in recollection.

[126]Mrs. Low was not, in the event, prepared for Mrs. Mogridge physically to leave the employment of Halcyon until 15 July 2010. Mrs. Mogridge left on that day at about 15.30 hours.

[127]It was inevitably part of the case for Halcyon that the resignation of Mrs. Payne by letter dated 17 June 2010 was also part of the “conspiracy” to set up Mint. Mrs. Payne wrote in her letter:- “I have been working for Halcyon for the past 22 years, the last 6 yrs for you and your family, and after careful consideration I have decided to give my notice of employment. I would like to spend some time with my family and to reconsider my future. I am giving one months notice, but would like to take my holiday entitlement to be considered, I have not taken any holiday days this year to help cover a working colleague’s maternity leave. My last day will be end of June, unless you would like me to leave earlier. I would like to take this opportunity to thank you and your directors for employing me for the past 6 years, and wish you good health and prosperity in the future.”

[128]Mrs. Baines personally entered into a lease of the Mint Premises on 30 June 2010. The lease was for a term of three years from 1 July 2010, but with a right of Mrs. Baines to determine as at 31 December 2011.

[129]As I have already indicated, Mr. John Rowland, finance director of Dunsters Mead Management Ltd., wrote an e-mail to Mrs. Mogridge at Halcyon at 3.22 p.m. on 8 July 2010 in which he said:- “I have to inform you that the Directors of Dunsters Mead Management Limited are preparing to change our Managing Agent from the end of this month. I would like therefore to give you provisional notice to have our accounts and archives together with all relevant documentation ready to be collected before the end July. I anticipate confirming this decision within a few days.” I anticipate confirming this decision within a few days.”

[130]The anticipated confirmation was given in an e-mail which Mr. Rowland sent to Mrs. Mogridge at 10.53 hours on 13 July 2010. It was contended on behalf of Halcyon that Mrs. Mogridge sought to discourage Mrs. Low from seeking some explanation from Mr. Rowland and trying to retain the business of Dunsters Mead Management Ltd. When that was put to Mrs. Mogridge in cross-examination she said that all that Mrs. Low had asked her was what had happened, to which Mrs. Mogridge replied that, “You took the call”. I accept the evidence of Mrs. Mogridge on this point.

[131]A matter which it was asserted on behalf of Halcyon was deeply sinister was an e-mail sent by Mrs. Baines at 13.16 hours on 13 July 2010 to Mr. Dick Chapman. The e-mail was in the following terms:- “This is just a quick email to let you know that I have now left Halcyon and set up a new Agency called Mint (fresh start!) based in Stevenage Old Town. Sue and Nicki will be joining me at the end of July so it’ll very much be the ‘old’ Halcyon but just under a different name. We’ll be charging the same fees as Halcyon, but as we’re a new company, we haven’t yet registered for VAT and don’t anticipate having to do so until July next year, which could save you quite a bit over the next 12 months. Would you consider switching the management of your properties to the new company? Everything would effectively remain the same for you, but just with different contact numbers and we’ll take care of everything with regards to paperwork etc from here. If you want to give me a ring, my mobile number is …, and feel free to call/email Sue also, though please bear in mind that the current manager at Halcyon is not aware that she is leaving to join the new venture so she may not be able to speak as freely as she would like to.”

Would you consider switching the management of your properties to the new company?

[132]What was contended on behalf of Halcyon was that this was an attempt to solicit the business of Mr. Chapman whilst Mrs. Mogridge remained employed by Halcyon and that Mrs. Mogridge must have known about the attempt because Mr. Chapman was invited to make contact with her. That the e-mail was an attempt on the part of Mrs. Baines to solicit the business of Mr. Chapman was obvious. Mrs. Mogridge accepted in cross-examination that by the date of the e-mail she had agreed to accept employment with Mint. What she denied, however, was that she was aware of the e-mail being sent or privy to the attempt to solicit Mr. Chapman’s business. I accept Mrs. Mogridge’s denials. The solicitation was that of Mrs. Baines. The e-mail was not copied to Mrs. Mogridge. There would have been no purpose in Mrs. Mogridge separately seeking to solicit the business of Mr. Chapman. As a matter of common sense the only purpose of Mr. Chapman contacting Mrs. Mogridge, had he chosen to do so, was to confirm with her that she was going to be joining Mint.

[133]In fact Mr. Chapman was initially interested in transferring his business to Mint. Once he had indicated that, Mrs. Baines sent him an e-mail at 9.50 hours on 14 July 2010. She wrote:- “Termination letter for Halcyon attached as discussed – I’d recommend emailing it to Sue as she can set things in motion before she leaves on Friday.”

[134]It is, perhaps, of significance that Mrs. Baines and Mrs. Mogridge seem to have been such close conspirators at this time that Mrs. Baines did not know that Mrs. Mogridge was leaving on Thursday, 15 July 2010, and not on Friday, 16 July 2010.

[135]However, having been given the information which he had, Mr. Chapman wrote an e-mail despatched at 18.58 hours on 15 July 2010 to Mrs. Mogridge in which he said:- “I have received from Caroline a letter to send to Halcyon (addressed to you) in order to transfer my rentals to the new company. I am happy to do this subject to confirmation from you that I will not incur any additional charges and that payments to my account once the transfer has completed will not result in delays in my receiving payment. I would also like to confirm that the payments for Tamar Close in respect of the County Court Judgements against the previous tenants will also get transferred seamlessly. If you are able to confirm this I will send the termination letter immediately on receipt of your confirmation so that you can action it prior to leaving Halcyon.”

[136]What Mrs. Low said she made of this e-mail she explained at paragraph 76 of her witness statement dated 7 February 2014:- “The key ingredients of this e-mail are that Susan Mogridge had told Mr. Chapman that she was leaving Halcyon, that Caroline had drafted and sent to him a letter to send to Halcyon to transfer his rentals to “the new company”, that Susan Mogridge was colluding in this arrangement while she was still an employee of Halcyon, and that indeed she was being encouraged to complete the transfer before she left Halcyon. It is interesting that Mr. Chapman does not state the name of “the new company” in this email. The only reason for this could be that Mr. Chapman and Mrs. Mogridge already knew of the detail of Caroline’ [sic] new company.”

[137]Those observations perhaps indicate how much one can seek to get out of a document if one is looking at it through blinkered eyes. While it was plain from the e-mail that Mr. Chapman knew that Mrs. Mogridge was leaving Halcyon, it did not follow that it was Mrs. Mogridge who had told him, and in fact the evidence made it clear that it was Mrs. Baines who had told him in her e-mail of 13 July 2010. It was correct that Mrs. Baines had drafted and sent to Mr. Chapman a draft letter to send to Halcyon. However, there was no reason whatever to suppose from what Mr. Chapman had written “that Susan Mogridge was colluding in this arrangement”, whatever that form of words was intended to convey. The most that could sensibly be said was that it was possible, but not inevitable, that Mrs. Mogridge was aware in advance of receiving the e-mail that Mr. Chapman would be writing in such terms. Far from Mrs. Mogridge “being encouraged to complete the transfer before she left Halcyon”, she had actually left before the e-mail arrived at Halcyon, as Mrs. Low was constrained in cross-examination to accept.

[138]In a letter of 14 July 2010 to Halcyon one of its clients, Mrs. Anne Hammond, gave one month’s notice that she wished to withdraw from the agreement for Halcyon to manage a property at 73, Augustus Gate. She said in terms that she had decided to transfer the management of that property to Mint. She asked for all keys and documentation to be handed over to Mint as soon as possible. Mrs. Baines accepted in cross-examination that she had solicited the business of Mrs. Hammond for Mint and that she had made use of the contact telephone number for Mrs. Hammond on the mobile telephone which she had been permitted to keep under the Compromise Agreement in order to do so.

[139]Mrs. Baines did not arrange a telephone number and Broadband connection for Mint until about 12 July 2010, as evidenced by an e-mail to her from British Telecommunications Plc sent at 17.20 hours on 15 July 2010. According to that e-mail most of the services to be provided were to commence on 19 July 2010, but Broadband Voice was noted as having commenced on 12 July 2010.

[140]Mrs. Mogridge entered into employment with Mint on 26 July 2010, so she did not join, as one might have expected if her employment was pursuant to some deep laid conspiracy, as soon as she was free of commitments to Halcyon.

[141]However, as soon as Mrs. Low was aware of Mrs. Baines setting up Mint and seeking business she instructed her solicitors, HRJ, to write to Mrs. Baines’s solicitors, Messrs. Ewart Price. Two letters were written dated 19 July 2010. The longer was in these terms:- “We write further to completion of the Compromise Agreement dated 25th June 2010 between our respective clients. It has come to our client’s attention that your client has been in contact with clients of Halcyon House Limited with a view to soliciting their custom for her new business. You will be aware that in clause 6 of the Compromise Agreement Mrs. Baines undertook to return all company property to our client no later than 25th June 2010 and not to keep copies in any format of any information belonging to Halcyon House Limited. By virtue of the fact that your client has been in email communication with Halcyon House Limited’s clients it would appear self evident that, in breach of that undertaking, Mrs. Baines has wrongfully retained confidential client details belonging to our client. It may also be that Mrs. Baines has acted in breach of the obligations imposed on her by clauses 12 and 13 of the Compromise Agreement, namely to keep confidential all confidential or sensitive information acquired by her in the course of or for the purpose of her employment and not to make disparaging or derogatory comments about our client or any offices [sic] or employees of Halcyon House Limited. We would draw your attention to the power in clause 10 for our client to require repayment of £25,400 by Mrs. Baines in the event of her breach of any of the representations, warranties or undertakings contained within the Compromise Agreement, such a claim being entirely without prejudice to any other remedy which our client may have. In the light of the above our client requires full disclosure from your client of: 1. Each and every client of Halcyon House Limited or Halcyon House Management Limited with whom she has been in contact since 8th June 2010. 2. The method of that communication eg telephone, email, text message, letter. 3. The contents of that communication together with copies thereof. 4. All property belonging to Halcyon House Limited which remains in her possession which appears likely to include client lists and contact details. Unless such disclosure and delivery up of all items identified under point 4 above is made by close of business on Wednesday 21st July 2010 our client will consider that Mrs. Baines has acted in breach of representations, warranties and undertakings contained within the Compromise Agreement as set out above and seek immediate repayment of £25,400. Further we anticipate being instructed to make an immediate application for an injunction to prevent further use of our client’s confidential information together with an appropriate award of damages in respect of the advantage obtained by your client’s new business as a result of misuse of our client’s property.”

In the light of the above our client requires full disclosure from your client of:

[142]For good measure, it was asserted in the other letter dated 19 July 2010 that:- “Your client remained an employee and director of our client company until 8th June 2010. It appears self evident that, in breach of her fiduciary duties she prepared to compete and did in fact compete with our client whilst remaining an employee and director.”

[143]It was, as it seemed to me, a classic example of drawing every conceivable adverse inference, and many inconceivable adverse inferences, from the preciously few actual facts known at the time the letters were written.

[144]Mrs. Baines did reply to the longer letter dated 19 July 2010 also on 19 July 2010:- “I refer to your fax sent to Ewart Price this morning and its contents. Ewart Price are no longer instructed by me, so please address future correspondence directly to myself. I am in no way in breach of the compromise agreement as described. I turned over to your Clients all relevant documents, data and related information, as required, during my visit to the Offices to collect my personal items. Indeed, your Client witnessed the return of these items. I did not retain any information such as Client lists in any form. Neither have I said anything disparaging or derogatory about your Clients. As per the terms of the agreement, I have not discussed the contents with anybody, and nor do I intend to do so. However, should Clients learn through their own discovery or by any other means that I have entered into Business for myself and then choose to approach me and make enquiries, this is not in breach of the agreement.”

[145]The last paragraph of that letter was disingenuous, and not a unique example of such disingenuousness on the part of Mrs. Baines in corresponding with HRJ from this time. The truth, as Mrs. Baines accepted in cross-examination, was that she had indeed been soliciting business and had used contact details on her mobile telephone to do so.

[146]Mrs. Baines also replied to the other letter from HRJ dated 19 July 2010 on the same day:- “I refer to your second fax of todays [sic] date to Ewart Price (who are not instructed in this matter). Mint Lettings and Management Ltd. was established in April of this year and until very recently was a dormant enterprise. The name was registered purely as a backup should the situation at Halcyon become irretrievable. Prior to my resignation as director of Halcyon, it did not, nor was it ever intended to trade and it certainly posed no competition.”

[147]In what seems to me to have been a rather vicious and unnecessary move HRJ also wrote on 19 July 2010 to Mrs. Mogridge. The letter began by grossly overstating the capacity in which she had been employed by Halcyon, describing her as Halcyon’s “Administration Manager”, rather than the lady who worked in the office. The letter continued:- “There is implied into every contract of employment a duty on an employee to serve their employer with fidelity and good faith. This obligation continues throughout the period of employment. Included within that obligation are specific duties including: honesty, not to compete with their employer, not to take preparatory steps during employment to complete [sic] with their employer including soliciting the employer’s clients, discussing or accepting offers from clients of the employer or memorising or copying confidential information belonging to the employer. Our client has seen email correspondence sent to your Halcyon House email address at 13.34 on 16th July 2010, whilst you remained in our client’s employment [this, of course, was incorrect], which demonstrates quite clearly that you have, whilst in employment, taken preparatory steps to compete with Halcyon House, have solicited clients of Halcyon House and, it would appear, have memorised or copied confidential information belonging to Halcyon House in order to obtain an unfair advantage on behalf of Mint Lettings and Management Limited, a business in which you appear to have an interest. Further, it would appear that prior to your departure from Halcyon House you deleted a number of incoming and outgoing emails. Our client is currently seeking to recover the information deleted which may result in further wrongdoing being uncovered. [The letter continued by demanding information along the same lines as in the longer letter to Mrs. Baines of 19 July 2010 and to threaten court proceedings and an application for an injunction]”

[148]The e-mail sent at 13.34 hours on 16 July 2010 was in fact from Mr. Chapman giving one month’s notice of termination of the agency agreement with Halcyon. It did not remotely justify the construction placed upon it by HRJ. Mrs. Mogridge replied to the letter from HRJ in a letter dated 20 July 2010 in which she said:- “I write in response to your letter dated 19th July 2010. Firstly, some points for correction: My employment with Halcyon House began on 10th March 2008 and terminated on 15th July 2010, not from July 2008 to 16th July 2008 as you assert. Furthermore, I was not appointed as a ‘Manager’ but an Administrator. Given that my employment terminated on 15th July of this year, as evidenced not only by my letter of resignation but also by the fact that I did not attend the office on 16th July 2010, I have no knowledge of any email received by your Client into my old inbox on that date. Indeed, there may have been several as, pursuant to your Clients [sic] demands, I did not, and have not, told any client (Landlord OR [sic] Tenant) that I was leaving or have left Halcyon House. Given the above, I did not, and cannot possibly have, ‘taken preparatory steps to compete with Halcyon House Limited, solicited Clients of Halcyon House Ltd’ or have ‘discussed or accepted offers by any clients’. I have worked to the best of my ability and with honesty, loyalty and integrity throughout my employment at Halcyon House and it was with regret that I terminated my employment due to stress as per my resignation letter. Indeed, during my last month’s employment, I trained two new members of staff to assist with a smooth transition subsequent to my departure. In addition, I do not have any property of Halcyon House Limited in my possession or in my control.”

[149]Mrs. Low sent, on behalf of Halcyon, a letter, or e-mail, in similar form, dated 20 or 21 July 2010, to existing clients of Halcyon. The letter commenced by announcing that Sharon Lister had been appointed managing director of Halcyon. It went on:- “Whilst delighted to announce the good news we have regretfully become aware that pursuant to the termination of their respective contracts in June and July, Caroline Baines and Susan Mogridge have removed certain personal information with respect to some of our clients and may approach you. [Some versions of the letter then continued, “This is of course in breach of the Data Protection Act and as a result, we shall be pursuing the matter vigorously through all legal means available to us”; others substituted for the words, “clients and may approach you”, the words, “landlords in breach of the Data Protection Act and they may approach you”] Finally we should like to thank you for your continued loyalty and support and in recognition of this we are initiating a 2% rebate on our fees for 6 months from 1st September 2010. Halcyon has over 30 years experience as a Managing Agent for lettings in Hertfordshire and we look forward to continuing to build on this experience as we develop our plans in the coming months. Should you wish to discuss any matters relating to your properties, please do not hesitate to telephone and speak to Sharon, Elaine or myself.”

[150]Copies of a number of e-mails sent on behalf of Mint to various people were put in evidence in order to seek to demonstrate that Mint sought to make contact with various existing clients of Halcyon by tracking them down through publicly available information contact details. On the face of the e-mails they did demonstrate what it was said that they demonstrated. In the course of the cross-examination of Mrs. Mogridge it emerged that there was actually a record on the Mint computer system of how the contact details of each existing client of Halcyon who had been approached on behalf of Mint – said to number 57 – had been obtained. It was surprising that such important evidence had not been disclosed previously. Given the importance of the evidence – which was essentially fatal to the claims of Halcyon based on misuse by Mrs. Baines, Mrs. Mogridge or Mint of confidential information of Halcyon – Mr. Forshaw sought an opportunity to have the records examined in their original electronic form. That examination revealed that, so far as could be ascertained, the entries recording how Mint had obtained the contact details of those existing clients of Halcyon who were approached had, indeed, been made in 2010.

[151]In an e-mail sent to Mrs. Washbrook at Halcyon at 13.10 hours on 3 August 2010 Mrs. Baines asked, amongst other things, that she have ready for collection by Mrs. Baines the keys to the property in Augustus Gate which was owned by Mrs. Hammond.

[152]Mrs. Low sent an e-mail to Mrs. Baines at 17.15 hours on 6 August 2010 in which she said:- “We note that you have removed the keys for properties belonging to Mr. Chapman & Mr. Makulski. You did this without permission or authority. Please acknowledge receipt of this email and return the keys by Monday, 9th August 2010, by 9.30 am. If you have others, please return at the same time.”

[153]Mrs. Baines responded in an e-mail sent at 9.56 hours on 9 August 2010:- “I have not removed any keys at all. If you have keys missing, let me know which properties they relate to and if I can be of help in locating them, I shall let you know. With regards to Mr. Chapmans [sic] keys, for example, I believe his son may be holding a spare set?”

[154]In an e-mail sent the same day at 12.29 hours Mrs. Low asserted:- “Your colleague Susan Mogridge has removed keys and they must be returned by 2.00 pm.”

[155]Mrs. Baines replied at 13.17 hours, so far as presently material:- “I have checked our key cabinet and there is nothing in there which shouldn’t be. I shall have a word with Sue when she returns to the Office, but this will not be before 3 pm.”

[156]In a letter to Mrs. Hammond dated 12 August 2010 concerning the transfer of the management of Mrs. Hammond’s property to Mint Mrs. Low asserted that, “I anticipate that you are aware that the keys were removed by Susan Mogridge whilst she was still employed by Halcyon”. Later in the letter Mrs. Low wrote:- “We must confirm our previous verbal advice to you that your tenants [sic] deposit is held by us under the Tenancy Deposit Scheme and we can only release it on proof of membership of this or an approved alternative scheme to which we may safely pass it.”

[157]Also on 12 August 2010 Mrs. Baines wrote a letter in identical terms to the existing clients of Halcyon whose contact details Mint had been able to obtain and who had not yet transferred their business to Mint. The bulk of the letter was in unobjectionable terms. However, there was a section which began, “Does your current Agent offer you”. Mrs. Baines accepted in cross-examination that the reference was intended to be to Halcyon. In the relevant section were set out a number of points, each followed by a column headed, “Current Agent” and a column headed “Mint”. In respect of each point the answer in the column headed “Current Agent” was “No”, whilst the answer in the column headed “Mint” was “Yes”. The points listed were these:- “ARLA membership Client Money Protection Insurance Over 30 years experience in the industry In depth knowledge of YOUR Property Strong Agent relationship with YOUR tenant Qualified Staff VAT free fees until July 2010! [sic]” Client Money Protection Insurance Over 30 years experience in the industry In depth knowledge of YOUR Property Strong Agent relationship with YOUR tenant Qualified Staff VAT free fees until July 2010! [sic]”

Qualified Staff

[158]In an e-mail sent at 11.58 hours on 13 August 2010 to Mrs. Low Mrs. Hammond asserted that Halcyon held the keys to the property at 73, Augustus Gate and said, “I know nothing at all about your allegation that Sue Moggeridge [sic] and the keys to the property [sic]”.

[159]On 17 August 2010 Mrs. Low wrote a letter to The Tenants Dispute Service contending, in relation to Mint, that, “To my certain knowledge they have taken deposits from 2 tenants and are holding them without being registered. There will be others of which I am not aware”. That allegation was untrue, as Mint was registered with the Tenants Dispute Service. Mrs. Baines pointed that out in an e-mail to, amongst others, her mother, sent at 14.56 hours on 20 August 2010.

[160]In a letter of 19 August 2010 Mrs. Low, writing on behalf of Halcyon, informed Mr. Keith Gifford of Nursery Gardens that it was not in the best interests of Nursery Gardens for Halycon to “continue to work with your Director Mr. Keith Gifford. We have therefore resigned with immediate effect.”

[161]Mrs. Hammond wrote an e-mail to Mrs. Low at 10.42 hours on 21 August 2010 in which she said:- “We were most surprised to hear from the police who visited you yesterday that you have no possession of the original documents and keys relating to 73 Augustus Gate, but had managed to retain copies of the documents for your own use. Can you please explain what you have done with our original documents. Can you please explain what you have done with our keys to the property.” Can you please explain what you have done with our keys to the property.”

[162]The keys in question were in fact held by the tenant, Mr. Robert Barnes, as was confirmed to him by Mrs. Mogridge in a letter dated 26 August 2010, “Thank you for confirming that you have three sets of keys to the property, which I have now logged on our system.” It appears that Mr. Barnes had been given a set of keys which ought to have been held by Halcyon as managing agent in addition to the two sets of keys which would ordinarily have been provided.

[163]Unhappily, on or about 25 August 2010 Mrs. Low saw fit to make a complaint concerning Mrs. Mogridge to Hertfordshire Police. In advance, it seemed, of making the complaint, Mrs. Low completed a document entitled “STATEMENT BY MRS NICOLA MARJORIE ELLEN LOW D.O.B. 20/05/1943” (“the Police Statement”). It was unclear whether Mrs. Low had actually given the Police Statement to the police or whether she used it, as she told me in cross-examination, as an aide-memoire when making her complaint against Mrs. Mogridge. The Police Statement was in these terms:- “I am a director and majority shareholder in HALCYON House Lt [sic] a Residential Letting Agents. On 16th June a Mrs. Susan Mogridge, at that time an employee of Halcyon handed in her notice citing ill-health as the reason. She confirmed undertakings that she had no intention of working for an alternative agent which would have been required by her Contract of Empoyment [sic]. On 23rd July I discovered a copy of an e-mail from one of our landlords proving beyond doubt that she had been colluding with another ex-employee Mrs. Caroline Baines to persuade landlords to leave. I then discovered that a great deal of information had been deleted from our computers (as per statement from Knebworth Computers) and downloads had been taken from her computer listing approximately 300 persons (landlords and tenants) personal details. These include their name and addresses, home telephone numbers, mobile telephone numbers and also the private Bank Account Details. She also removed a number of keys including 1 from Mrs. Hammond (73 Augustus Gate). Initially theft was denied (see-mail [sic]) but two were subsequently returned through our door (confimed [sic] by Sharon Lister) The keys for 2 Saxon House and 20 Tippett Court have also been removed without permission but the landloreds [sic] is I believe aware of this. I was not overly concerned that Hammonds [sic] key remained with Mogrridge [sic] as I had spoken to Hammon [sic] and she confirmed she intended to transfer her property. Hammond is not now happy to confirm this and I must therefore report it as theft. This key for 73 Augus [sic] Gate will also be in Mogridge office. We have received a number of telephone calls from the Landlords and Tenants concerned about the misuse by Baines and Mogridgeof [sic] their confidential information. The proof of these thefts can be obtained by getting lists of Landlords whom they have approached which will be on their computers and records and comparing them with those held by Halcyon… Not only is there clear proof of theft but the removal of information is a breach of section 55 of the Data Protection Act. You should be aware that Mrs. Caroline Baines is my daughter and there are civil actions pending against her. She and Mogridge were clearly acting together and she may therefore be implicated in the thefts.”

[164]The contents of the Police Statement strike me as outrageous. It contained a number of bare-faced lies. Mrs. Mogridge had not ever told Mrs. Low or anyone else at Halcyon when she resigned that she had no intention of working for an alternative agent. Mrs. Low knew perfectly well that Mrs. Mogridge had not entered into any contract of employment requiring that she should not work for an alternative agent after ceasing employment with Halcyon. Mrs. Low had complained about the lack of contracts with full-time staff like Mrs. Mogridge in her letters to Mrs. Baines dated 18 April 2010 and 25 April 2010. There were no civil actions pending against Mrs. Baines as at 25 August 2010. In most of the rest of the contents of the Police Statement what was presented as fact was merely speculation, at best, and has been demonstrated by evidence at this trial to be untrue. The allegations that Mrs. Mogridge had downloaded confidential information from the Halcyon computer systems were abandoned in the light of the examination of the electronic forms of the documents which she produced during the course of her cross-examination. The allegations that Mrs. Mogridge removed keys from Halcyon only made sense on the basis that the keys were to properties of which Mint was to become managing agent in place of Halcyon. Unless it was to be suggested, which it was not, that Mrs. Mogridge had it in mind to develop a new occupation as a burglar, she had no need of the keys to any of the properties which Halcyon had managed. Moreover, the keys did not belong to Halcyon on any view, but to the owners of the relevant properties.

[165]The only conclusion which is possible from the terms of the Police Statement is that Mrs. Low was setting out not merely to be mischievous, but malicious, in making complaints to the police which she must have known were totally without any justification. It reflects further discredit upon her that she was also fairly obviously seeking to implicate her daughter in the allegations of theft against Mrs. Mogridge. The whole stratagem was extremely nasty.

[166]It is obvious that, by making her complaint to the police, Mrs. Low was setting out to cause trouble for Mrs. Mogridge and also, if possible, for Mrs. Baines. Although it may be that Mrs. Low did not hope or expect that the trouble she caused would result in the arrest of Mrs. Mogridge by Hertfordshire Police, that is actually what happened on 27 August 2010. I am confident that when she learned that Mrs. Mogridge had been arrested, that was a source of satisfaction to Mrs. Low and not a matter for regret.

[167]The decision of Hertfordshire Police even to investigate the complaints of Mrs. Low, still less to arrest Mrs. Mogridge, was not a tribute to the intelligence of the officers concerned. It is difficult to see how any competent police officer could have thought that such investigation was an appropriate use of limited police resources.

[168]Mrs. Mogridge was detained for some five hours after her arrest before being released on bail and told to return on 13 September 2010. When she did return she was, she told me, interviewed about the loss of keys relating to 2, Saxon House and 20, Tippett Road, and an allegation was put to her that she had stolen two copies of her contract of employment with Halcyon.

[169]Mrs. Mogridge gave two accounts of what had happened on 13 September 2010. The earlier in time, and shorter, was in her witness statement dated 16 August 2012. There she said:- “20. On 13 September I returned to the Stevenage Police Station and was told I had to be re-interviewed. The interview could go ahead immediately but if I wanted a solicitor present, I was told I would have to be locked in a cell again and await a solicitor’s arrival. I knew I could not face that claustrophobic cell, so I reluctantly agreed to be interviewed without a solicitor present.21. This time I was interviewed by two different officers because I was told that Mrs. Low had made yet another statement saying I had now stolen keys to two other properties, 2 Saxon House and 20 Tippett Court, and had then returned the keys to Halcyon. I was once again in shock and could say nothing except to deny the allegations during the interview, since I had not taken the keys and I had never heard of these allegations before as they had not been mentioned in the first interview. PS Treadwell, one of the police officers indicated that he had spoken to the tenant of Augustus Gate and that the tenant had confirmed the fact that he had all the keys. Both officers agreed that they had done the questions of keys to death and moved the interview on.

22. The police officer then said that Mrs. Low had alleged that I had stolen two copies of my employment contract. In fact, I never had an employment contract. This was not an allegation that had been made in the correspondence from Mrs. Low’s solicitors; in fact Mrs. Low knew that I never had a written employment contract.

23. PS Treadwell said he had also spoken with the owner of the keys for the property at Augustus Gate, Mrs. Hammond. She had informed the police that I was being used by Mrs. Low as a “scapegoat”. The police officer said that after interviewing me he felt the same.”

[170]The second version, in her witness statement dated 7 February 2014, was longer, but not materially different. Mrs. Mogridge’s evidence, therefore, was that she understood from what police officers had said on 13 September 2010 that Mrs. Low had made a second statement. There were obviously three possibilities: that that indeed was what they had said and it was true; that that was what they had said and it was not true; and that they did not actually say that, although Mrs. Mogridge’s recollection afterwards was that they had.

[171]The fact of a second interview did not, in my judgment, justify the conclusion that there must have been a second complaint because Mrs. Mogridge had had to return to the police station by reason of having been bailed to do so after her initial arrest. The Police Statement did mention the removal of the keys of 2 Saxon House and 20 Tippett Court, so the complaints about those keys were made by Mrs. Low on the occasion of the original reference to the police. The issue of the copies of the contract of employment did not appear in the Police Statement. I accept the evidence of Mrs. Mogridge that she was asked about those copies on 13 September 2010. The question which arises is whether I am satisfied that the police only raised the matter of the copies of the contract of employment because Mrs. Low had made a separate complaint. I am not satisfied of that. There was no direct evidence that Mrs. Low had made contact with the police after her initial interview. The allegations concerning the keys of 2 Saxon House and 20 Tippett Court were plainly made on that first occasion. It is possible that, although not covered in her statement, Mrs. Low also told the police on that occasion about the loss of copies of the contract of employment of Mrs. Mogridge. For reasons which I shall explain later in this judgment, it was incumbent upon Mrs. Mogridge to satisfy me on a balance of probabilities that Mrs. Low had made a second complaint to the police, but she failed to discharge that burden. It seems to me that Mrs. Mogridge either misunderstood what she was told on 13 September 2010 by the relevant police officers about there having been a second statement of Mrs. Low, or her recollection after the event was at fault. It is perhaps most likely that the police officers, who knew that only the allegation of theft of the keys of 73, Augustus Gate had been raised at the first interview of Mrs. Mogridge, said, on the occasion of the second interview, after the matter of the alleged theft of the keys had been resolved, that there was “another” or “second” allegation which they wanted to interview her about.

[172]It appears that Mrs. Low was not content with the decision of Hertfordshire Police to take no further action upon her complaints. Her next move was to write a letter to the Compliance department of the National Federation of Property Professionals (“NFOPP”) dated 1 October 2010. What she said in her letter was:- “Thank you for taking the time to speak to me on Wednesday. As discussed my concerns relate to non-compliance by an ARLA member with the law regarding tenants [sic] deposits and acceptable standards of behaviour towards fellow letting agents. The background to my complaints is as follows: Halcyon was purchased as a family business with Caroline Baines MARLA being in charge of day to day running. Two or three years ago Directors stopped getting the regular financial reports and information they had been used to and requests for information were ignored. When Caroline became pregnant and was due to take maternity leave I became concerned re the running of the Company and offered to attend the office on a regular basis until she returned. This suggestion was unwelcome, but on attending the office I became alarmed at the administrative mess the paperwork was in (see correspondence with ARLA re Bank Reconciliations). Following repeated attempts to resolve issues and put in place plans for the future a solicitor was consulted and Caroline was offered a Compromise Agreement which paid her a considerable sum of money if she resigned and it was understood she would stay at home and care for the baby. Caroline breached this Agreement which she signed in bad faith and colluded with a then Halcyon employee Susan Mogridge in removing complete lists of landlords and tenants and a number of keys. This is the subject of civil litigation. When Halcyon were asked to hand over deposits to Mint (Caroline’s new company) for a tenant whose landlord had decided to move it was drawn to my attention that various adjustments and withdrawals had been made to the deposit which meant we could not hand over the full amount. At this time Halcyon is still holding this tenants [sic] remaining deposit until we have advice on what to do. Enclosed please find copies of print-outs which show tenants whose deposits have not been ring-fenced. The “Sue” is Susan Mogridge who removed computer files from our offices (we have and [sic] IT report which proves this) and CJL and CB is Caroline Low now Baines. With regard to unprofessional and improper behaviour by a MARLA member I am enclosing sample copies of letters sent by Mint to our landlords and tenants. I also enclose a copy e-mail from an overseas landlord the dates of which prove collusion by these 2 persons when still employed by Halcyon. Although a number of landlords have been tempted at the prospect of not paying 20% VAT and have been misled by the untrue comparisons in the Mintletter we have also received letters, e-mails and telephone calls of support from landlords and tenants who are appalled at Mints [sic] behaviour. You may wish to know that Halcyon’s new M.D. is a student member of ARLA and we hope to be re-instated by the end of the year. I trust as a professional body you will investigate my complaints and concerns re a MARLA member ad [sic] advise me of your conclusions. Please do telephone me should you require further information.”

[173]In a letter dated 12 October 2010 to a Mr. Phillip Baker Mrs. Low wrote:- “We regret having to contact you to advise that Mint Lettings have instructed your tenant to pay rent to them one month early. Your property was in our care until 12th October and we are due a commission payment of £31.45. Mint are aware of this and should pay it direct to us so that we may transfer your tenants [sic] deposit. Please can you arrange for £31.45 to be forwarded to us at your earliest convenience so that matter can be closed.”

[174]The immediate response to Mrs. Low’s complaint to the Compliance department of NFOPP was that she was invited to complete a complaint form (“the NFOPP Form”). In the section of the NFOPP Form entitled “Description of your complaint” Mrs. Low wrote this:- “1. Improper removal of funds from protected clients [sic] deposits. 2. Using information obtained illegally from Halcyon to solicit landlords to transfer to Mint using false comparisons and language derogatory to another agent. These letters are grossly unprofessional and bring the industry into disrepute. (A number of landlords have written/e-mailed and phoned us to say how disgusted they were)”

[175]In the section of the NFOPP Form asking, “What resolution would you like?” Mrs. Low wrote, “Removal of Caroline Baines as a member of ARLA and Mint removed as a member of the TDS. Any other professional bodies informed.” As completed by Mrs. Low the NFOPP Form was dated 15 October 2010.

[176]Mrs. Baines commented on her mother’s letter dated 12 October 2010 to Mr. Baker in an e-mail sent at 14.37 hours on 22 October 2010 to, amongst others, her mother:- “Mr. Baker has forwarded a letter to you us [sic] which you have written to him. You are correct in your assertion that we took over management of Mr. Bakers [sic] properties from 12th October, and we have not received rent prior to this period. As you will know, Ms Durkins [sic] rent is due on the 12th of each month (and therefore correctly paid to us for the month of October), and Bird and Daines [sic] rent is due on the 30th of each month, the first rent we shall receive from them will be the 30th of October. Should either tenant be in arrears with their rent, please advise us which tenant, which payment was missed, and what steps you have taken to rectify the situation so that we can follow up on behalf of Mr. Baker. In any event, no monies are owed to you.” In any event, no monies are owed to you.”

[177]NFOPP forwarded to Mrs. Baines the letter dated 1 October 2010 written by Mrs. Low and the NFOPP Form. Mrs. Baines responded in a letter to NFOPP dated 26 October 2010. It is not necessary to set out in this judgment the text of the response because NFOPP basically fended off Mrs. Low’s complaints by telling her, in a letter dated 27 October 2010, that it could not look at her complaints until she had been through Mint’s internal complaints procedure.

[178]By an e-mail sent at 18.51 hours on 13 November 2010 Mr. Cy Biggs, a former client of Halcyon, asked Mrs. Mogridge to call him. When she spoke to him, Mrs. Mogridge told me, he told her that Mrs. Low had told him that Mrs. Mogridge had been arrested for theft. I accept that evidence, although Mrs. Low denied saying any such thing.

[179]Mrs. Baines instructed her father-in-law’s firm to write a letter dated 17 November 2010 to Halcyon complaining of Halcyon’s conduct towards her and towards Mint. In the letter various undertakings were sought. SA Law LLP wrote the same day to Mrs. Low seeking undertakings from her. The undertakings sought were not given and in due course first the Halcyon Action and then the Harassment Action were commenced.

[180]The only other matter which is material to notice in this section of this judgment is a letter dated 14 April 2011 which Mrs. Low wrote on behalf of Halcyon to the Leasehold Valuation Tribunal which was concerned with whether Halcyon should continue as receiver and manager of Willowdene or be replaced by Mint. Mr. Kitching, who owned several of the flats at Willowdene, had written to the Tribunal concerning the management of Willowdene. A copy of his letter was sent to Mrs. Low for comment. She responded in the letter dated 14 April 2011, so far as presently material as follows:- “I refer to the letter Mr. Kitching has sent to the tribunal concerning the management of the above and would comment as follows. Mrs. Baines was removed from Halcyon under a compromise agreement necessitated by her administrative incompetence. A writ is in course of preparation which will be served on Mrs. Baines requiring the return of monies paid to her and damages. It may assist the tribunal to know that I have owned and been a Director of several small businesses over the years all of which have been profitable and I have [been] for the past 25 years, and remain, the postmistress of Knebworth with 5 staff and 12 postmen attached (day-to-day management by Chief Clerk). Halcyon House Ltd. employs 2 managers with over 20years [sic] direct experience in property management mainly in the residential sector (some commercial). One of these is an ARLA member, and whilst not holding specific qualifications with ARMA [sic] at this time, are sufficiently aware of the requirements to enable Halcyon to provide the sort of service leaseholders in small blocks are looking for. The “mess and late accounts” were under Mrs. Baines [sic] tenure. The running of Willowdene and the accounts are now under control and operating smoothly with the exception of Mr. Kitching. I am enclosing copies of letters sent to Mr. Kitching asking him to settle his account. Given that the accounts are now accurate and properly annotated I daresay Mr. Kitching is unhappy at being approached for outstanding monies which should have been processed by my predecessor. …”

The allegations made in the Halcyon Action

[181]The allegations contained in the Particulars of Claim in the Halcyon Action fell into three categories. The first was the contention that Mrs. Baines and Mrs. Mogridge had, whilst still employed by Halcyon and, in the case of Mrs. Baines, still a director of Halcyon, been in breach of implied terms of their respective contracts of employment and their alleged fiduciary duties in a number of respects – essentially taking steps to set up Mint and not telling Halcyon what was going on; soliciting staff for Mint; and soliciting business for Mint whilst Mrs. Mogridge was still employed by Halcyon. The second was alleged misuse of a confidential database of Halcyon comprising the address of each property managed by Halcyon; the name, address and contact details of the owner of each such property; the name and contact details of the tenant of such property; and the status of each such property. The misuse alleged of the database was downloading by Mrs. Mogridge of information contained on it and making use of that information to contact existing landlord clients of Halcyon. The third was breaches of the Compromise Agreement.

[182]In the light of the evidence of how it was that Mint had been able to contact those landlord clients of Halcyon which it had contacted which Mrs. Mogridge gave during the course of her cross-examination, and examination of the electronic forms of the documents which supported her evidence, the allegations of downloading information were abandoned by Mr. Forshaw, along with the claims which depended upon there having been downloading. Mr. Forshaw nonetheless sought to contend that the very names of the existing client landlords of Halcyon were confidential and that it was misuse of confidential information for Mrs. Baines, Mrs. Mogridge or Mint to use those names to research how to make contact. Apart from being a rather sporting contention in any event, Mr. Forshaw did not seek to amend the Particulars of Claim to put forward any claim on that basis, and it seemed to me that any such claim was outwith the Particulars of Claim in their existing form. Mr. Forshaw also contended that it was a misuse of confidential information for Mrs. Baines to use, as she had accepted that she had, telephone numbers on the mobile telephone which she had been allowed to retain under the Compromise Agreement, to contact existing clients of Halcyon. However, that contention again seemed to me not to be covered by the allegations in the existing Particulars of Claim.

[183]Mr. Forshaw relied in support of his contentions upon paragraph 40 of the Particulars of Claim:- “In circumstances where Ms. Baines (on behalf of Mint) received the names and addresses of the Claimant’s landlord clients from sources other than as pleaded at paragraphs 32 and 33 above (including by memorising the information), in obtaining and/or making use of the said information to solicit the landlord clients of the Claimant, Ms. Baines was in breach of duty in like form as those breaches of duty pleaded at paragraph 39 above.”

[184]The reference to “paragraphs 32 and 33 above” in paragraph 40 of the Particulars of Claim seemed in fact to be intended to refer to paragraphs 33 and 34. Those paragraphs identified the spreadsheets created by Mrs. Mogridge on 18 May 2010 and a file downloaded by Mrs. Mogridge on 15 July 2010, which were called, together, for the purposes of the Particulars of Claim “the Information”. What was alleged in paragraph 40 was thus related to Mrs. Baines receiving names and addresses of Halcyon’s landlord clients from a source or sources other than “the Information”. That did not obviously refer to simply remembering, without memorising deliberately, the names and addresses of landlord clients. Insofar as Mrs. Baines made use of names and telephone numbers which were in the mobile telephone which she was permitted to keep, in my judgment that was permitted by the terms of clause 6 of the Compromise Agreement. The undertaking there given by Mrs. Baines was “save as provided for by clause 6.1 below”. The exception, retaining the mobile telephone, was not said to be subject to deleting any information from it, so in my judgment the exception applied to the mobile telephone and the information retained in it at the date of the Compromise Agreement. In any event, on the evidence of Mrs. Baines, which I accept on this point, the telephone numbers stored in the mobile telephone were used to contact at most four clients of Halcyon, Mr. Chapman, Mrs. Hammond, Mr. Makulski, and possibly Mr. Gifford, who telephoned Mrs. Baines on a regular basis anyway, and, of these, Mr. Chapman did not, in the event, become a client of Mint.

[185]Despite the valiant efforts of Mr. Forshaw to persuade me, by reference to expressions of opinion of Lord Shaw of Dunfermline in Herbert Morris Ltd. v. Saxelby

[1916] 1 AC 688

at page 714 and of Staughton LJ in Lansing Linde Ltd. v. Kerr

[1991] 1 WLR 251

at page 260, that the name of a customer of Halcyon was either a “trade secret” or akin to a “trade secret”, in my judgment the true position in relation to dealings after the termination of employment by a former employee with customers of the former employer was as explained by Hawkins J in Robb v. Green

[1895] 2 QB 1

at pages 12 – 13:- “Great stress was laid by the learned counsel for the defendant upon the fact that a servant having left his master may, unless restrained by contract, lawfully set up in the same line of business as his late master, and in the same locality; and that he may, without fear of legal consequences, canvass for the custom of his late master’s customers, whose names and addresses he had learned, bona fide accidentally, during the period of his service. I do not suppose that anybody, with any knowledge of the law, would seriously contend the contrary.”

[186]It seems to me that that principle extends to making contact with customers of the former employer whose names the former employee can recall because they have been learned accidentally during the course of the former employment, after having researched their contact details through publicly available information – classically telephone directories or electoral rolls, but now obviously including utilising the resources of the internet.

[187]The result, I think, is that I need not consider further any question of alleged misuse of confidential information.

[188]I have indicated my findings in relation to what steps were taken by whom and when in relation to establishing Mint. The remaining question is whether the steps which were taken at the times they were taken imposed some obligation upon either Mrs. Baines or Mrs. Mogridge. The obligations pleaded on behalf of Halcyon in the Particulars of Claim were:- “6. During the currency of their employment with the Claimant, Ms. Baines and Ms. Mogridge owed to the Claimant the following duties which were implied into their Employment Contract, implied as a matter of law or alternatively by reason of business efficacy or alternatively, because the reasonable bystander would have so implied them:(a) that Ms. Baines and/or Ms. Mogridge would not compete with the Claimant during the currency of the Employment Contracts;

(b) that Ms. Baines and/or Ms. Mogridge would not, during the currency of the Employment Contracts, make unlawful preparations to compete with the Claimant after termination of their respective Employment Contracts;

(c) that Ms. Baines and/or Ms. Mogridge would not, during the currency of the Employment Contracts, copy or memorise the Claimant’s information (including but not limited to the Claimant’s trade secrets and confidential information) in order to use that information other than on behalf of the Claimant;

(d) that Ms. Baines and/or Ms. Mogridge would not, during the currency of the Employment Contracts, recruit or solicit or entice or encourage the Claimant’s employees to leave the Claimant’s employment (whether with a view to join a competitor or otherwise);

(e) that Ms. Baines and/or Ms. Mogridge would not, during the currency of the Employment Contracts, divert business opportunities to any entity other than the Claimant (other than with the permission of the Claimant);

(f) that Ms. Baines and/or Ms. Mogridge would not disclose or use (other than on behalf of the Claimant) the Claimant’s confidential information during the currency of the Employment Contracts and thereafter;

(g) that Ms. Baines and/or Ms. Mogridge would disclose to the Claimant, during the currency of their Employment Contracts, any wrongdoing whether on their own part and/or on the part of others;

(h) that Ms. Baines and/or Ms. Mogridge would not, without reasonable and proper cause, act in a manner calculated or likely to destroy or seriously damage the relationship of trust and confidence enjoyed by the Claimant and each of Ms. Baines and /or Ms. Mogridge. 7. Further or in the alternative, the duty referred to at paragraph 6(f) above, was owed by Ms. Baines and Ms. Mogridge to the Claimant in equity. 8. Further, Ms. Baines and Ms. Mogridge owed fiduciary duties to the Claimant: (a) in the case of Ms. Baines, by reason of her statutory directorship until its termination on or around 15th June, 2010 (b) in the case of both Ms. Baines and Ms. Mogridge during the currency of the Employment Contract because of the seniority of their respective positions within the Claimant and/or the trust and confidence reposed in them by the Claimant by permitting them wide access to the Claimant’s confidential information, including but not limited to lists of the names of the Claimant’s client landlords and the names of tenants residing in the properties owned by those client landlords. 9. The fiduciary duties owed by Ms. Baines and Ms. Mogridge were duties owed by reason of the common law and/or equity and /or by reason of sections 170 to 177 of the Companies Act 2006, the content of which was: (a) a duty to act in the best interests and/or to promote the success of the Claimant; (b) a duty to avoid conflicts of interest as between the Claimant’s best interests and the personal interests of Ms. Baines and Ms. Mogridge and in any event, to disclose such conflicts of interest to the Claimant’s directors where they arose; (c) a duty not to make any unauthorised profit from their position as fiduciaries; (d) a duty to disclose any wrongdoing to the Claimant whether on their own part and/or on the part of others. ”

[189]In the Defence served on behalf of Mrs. Baines, Mrs. Mogridge and Mint there was a lengthy and careful plea to the allegations of implied terms and fiduciary duties:- “Implied duty not to compete11.1 As to paragraph 6(a), it is admitted that the contractual duty of good faith included a requirement for both Mrs. Mogridge and Mrs. Baines not to compete with the Claimant during the currency of their respective Employment Contracts. Implied duty not to make unlawful preparations to compete

11.2 As to paragraph 6(b), it is denied that any such term was implied into the contracts. The alleged implied term is too vague. It is unclear what is meant by the term “unlawful preparations”. Implied duty not to copy or memorise the Claimant’s information

11.3 As to paragraph 6(c), it is denied that any such term was implied into the contracts. The alleged implied term is too vague. It is unclear what is meant by the terms “Claimant’s information”, “trade secrets” or “confidential information”. Implied duty not to recruit or solicit or entice or encourage employees to leave

11.4 As to paragraph 6(d), it is admitted that the contractual duty of good faith included a requirement for both Mrs. Mogridge and Mrs. Baines not to recruit or solicit or entice or encourage the Claimant’s employees to leave the Claimant’s employment during the currency of their respective contracts. Implied duty not to divert business opportunities

11.5 As to paragraph 6(e), it is admitted that the contractual duty of good faith included a requirement for both Mrs. Mogridge and Mrs. Baines not to divert business opportunities to any entity other than the Claimant other than with the permission of the Claimant during the currency of their respective contracts. Implied duty not to disclose or use Claimant’s confidential information and trade secrets

11.6 As to paragraph 6(f), it is admitted that, in abstract, the contractual duty of good faith included a requirement for both Mrs. Mogridge and Mrs. Baines:11.6.1 Not to disclose or use the Claimant’s confidential information during the currency of their respective contracts other than on behalf of the Claimant.

11.6.2 Not to disclose or use the Claimant’s trade secrets during the currency of their respective contracts and thereafter other than on behalf of the Claimant. Implied duty to disclose wrongdoing

11.7 As to paragraph 6(g):11.7.1 It is denied that the contractual duty of good faith included a requirement for Mrs. Mogridge to disclose to the Claimant during the currency of her contract any wrongdoing whether on her own part or on the part of others;

11.7.2 It is admitted that the implied duty of good faith in Mrs. Baines’ [sic] contract would have included such a requirement during the time that she was employed as Managing Director. Thereafter (namely from February 2010), there was no such requirement. Implied duty of mutual trust and confidence

11.8 As to paragraph 6(h), it is admitted that there was a term implied in their respective contracts that Mrs. Mogridge and Mrs. Baines would not, without reasonable and proper cause, act in a manner calculated or likely to destroy or seriously damage the relationship of trust and confidence enjoyed by the Claimant and each of Mrs. Mogridge and Mrs. Baines. 12. As to paragraph 7, it is admitted that, in the abstract, the duty referred to in paragraph 6(f) was capable of being owed by Mrs. Baines and/or Mrs. Mogridge to the Claimant in equity. It is denied that there was any such duty in this case for reasons set out further below. Fiduciary duties 13. As to paragraph 8(a):

13.1 It is averred and admitted that Mrs. Baines owed a fiduciary duty in her capacity as the Managing Director until she was stripped of that role in February 2010 without being given any reason, save that Mrs. Baines notes that it coincided with the birth of her son.

13.2 It is denied that Mrs. Baines owed a fiduciary duty thereafter by reason of her statutory directorship. From February 2010 Mrs. Baines was excluded from the business and never allowed to return. She had her laptop, keys and Office alarm entry fob removed. The other employees and clients were told not to contact her. In the circumstances, any fiduciary duty ceased at that point. 14. Paragraph 8(b) is denied:

14.1 For the reasons set out in the paragraph above, it is denied that Mrs. Baines was in a senior position after February 2010. It is further denied that after February 2010 the Claimant reposed any trust and confidence in Mrs. Baines and/or permitted her any access to the Claimant’s confidential information.

14.2 It is denied that Mrs. Mogridge was ever in a senior position. She was an administrator. It is denied that Mrs. Mogridge was permitted wide access to the Claimant’s confidential information such as to impose upon her a fiduciary duty. The information as to the Claimant’s landlords and their tenants was contained on a software programme which was accessible to every member of staff, including temporary staff and external contractors such as the accountant and bookkeeper. There was no restriction or limit on the access to that software programme at any time. 15. Paragraph 9 is denied:

15.1 Mrs. Mogridge was never a director or in a senior position and owed no fiduciary duties by reason of common law and/or equity and/or by reason of sections 170 to 177 of the Companies Act 2006.

15.2 Mrs. Baines ceased to be a director in all but name from February 2010 for the reasons set out above. For those reasons, the general duties imposed upon a director by reason of common law and/or equity and/or by reasons of sections 170 to 177 of the Companies Act 2006 ceased at that point (subject to s.170(2)).” Implied duty not to make unlawful preparations to compete Implied duty not to copy or memorise the Claimant’s information Implied duty not to recruit or solicit or entice or encourage employees to leave Implied duty not to divert business opportunities Implied duty not to disclose or use Claimant’s confidential information and trade secrets Implied duty to disclose wrongdoing Implied duty of mutual trust and confidence

Fiduciary duties

[190]The breaches alleged of the obligations pleaded in paragraphs 6 to 9 inclusive of the Particulars of Claim were set out at paragraphs 19 to 32 inclusive of the Particulars of Claim:- “Setting up of Mint19. On or around 21st April, 2010, Ms. Baines incorporated Mint. Mint was always intended by Ms. Baines to be a competitor to the business of the Claimant as is evidenced by its name.

20. Thereafter, Ms. Baines telephoned a firm of commercial estate agents (and whom, therefore the Claimant would not have contact with in its ordinary course of business) Brown & Lee on at least 23rd April, 2010, 14th May, 2010, 17th May, 2010, and 18th May 2010. Brown & Lee operate in the Stevenage area of Hertfordshire and Mint has, since it commenced trading, operated from premises at 162B High Street, Stevenage, Hertfordshire SG1 3LL (“the Mint Premises”). Such contact was not on behalf of the Claimant. In the premises, the Court will ask the Court [sic] to draw the inference that Ms. Baines telephoned Brown & Lee on the above dates in order to secure the Mint Premises. Solicitation of the Claimant’s Staff

21. As set out above, the Claimant [sic] received legal advice in relation to the Compromise Agreement on 15th June, 2010.

22. Thereafter: (a) on 16th June, 2010 Ms. Mogridge provided a letter of resignation in relation to her employment with the Claimant to Ms. Low. Ms. Mogridge stated therein:

“After a very long deliberation, I have come to the unfortunate decision to terminate my employment with Halcyon House Limited due to personal health issues”. (b) on 17th June, 2010 one of the Claimant’s other employees, Ms. Nicki Payne (the Claimant’s Client Liaison Officer), resigned from the Claimant’s employment after 22 years of service by letter of the same date. Ms. Payne stated in that letter that: “I would like to spend some time with my family and to reconsider my future”. 23. The reasons given for the resignations of Ms. Mogridge and Ms. Payne in their resignation letters were not true. Both employees resigned to commence work for Mint and did commence work for Mint immediately and in any event in or around July 2010. 24. In the premises: (a) the Claimant will ask the Court to draw the inference that Ms. Baines solicited, enticed or encouraged Ms. Mogridge to commence work for Mint at the expense of the Claimant during the currency of Ms. Baines’ [sic] Employment Contract. The same was in breach of the term of Ms. Baines [sic] Employment Contract pleaded at paragraph 6(d) and/or (h) above; (b) the Claimant will ask the Court to draw the inference that Ms.Baines and/or Ms. Mogridge (with the knowledge of each other) solicited, enticed or encouraged Ms. Payne to commence work for Mint at the expense of the Claimant during the currency of the Employment Contracts. The same was in breach of the term of the Employment Contracts pleaded at paragraph 6(d) and/or (h) above; (c) the Claimant will ask the Court to draw the inference that Ms. Baines and/or Ms. Mogridge (with the knowledge of the other) were placing the interests of Mint before the interests of the Claimant in breach of the fiduciary duties pleaded at paragraph 9 above; (d) at no time during the currency of the Employment Contracts or while Ms. Baines was a statutory director of the Claimant were the matters at paragraph 24(a) to (c) disclosed to the Claimant by either Ms. Baines or Ms. Mogridge in breach of the clauses in the Employment Contracts pleaded at paragraph 6(g) and/or (h) and the fiduciary duties pleaded at paragraph 9(d) above (“the Disclosure Duties”). Solicitation of the Claimant’s Clients on behalf of Mint Mr. Dick Chapman 25. Mr. Dick Chapman was a client of the Claimant. 26. On 15th July, 2010 Ms. Mogridge received the following email from Mr. Chapman: “Hi Sue I have received from Caroline a letter to send to Halcyon (addressed to you) in order to transfer my rentals to the new company. I am happy to do this subject to confirmation from you that I will not incur any additional charges and that payments to my account once the transfer has completed will not result in delays in my receiving payment. I would also like to confirm that the payments for Tamar Close in respect of the County Court Judgements against the previous tenants will also get transferred seamlessly. If you are able to confirm this I will send the termination letter immediately of your confirmation so that you can action it prior to leaving Halcyon. Thanks Dick 27. Thereafter Mr. Chapman notified the Claimant of an intention to transfer his business from the Claimant to Mint on 16th July, 2010. 28. In the premises, during the currency of Ms. Mogridge’s Employment Contract, Ms. Mogridge solicited the business of Mr. Chapman for Mint at the expense of the Claimant and with the knowledge of Ms. Baines. To the best of the Claimant’s current knowledge the same was done by the following acts (prior to 15th July, 2010): (a) Ms. Baines sending a letter to Mr. Chapman soliciting his business on behalf of Mint. The said letter stated that Ms. Baines and Ms. Mogridge were setting up Mint and invited Mr. Chapman to transfer his business to them; and (b) a follow up telephone call from Ms. Mogridge during the course of which Ms. Mogridge solicited the business of Mr. Chapman for Mint at the expense of the Claimant. Dunsters Mead 29. At all material times until June 2010 the Claimant managed a block of flats known as Dunsters Mead. In June 2010 Ms. Mogridge informed Ms. Low that the management of the Dunsters Mead property was to be transferred from the Claimant to “another agent”

. In fact, that other agent was Mint although Ms. Mogridge did not inform Ms. Low of that fact at the time, or at all. 30. Consequently, in June 2010 Ms. Low asked Ms. Mogridge why the Dunsters Mead property had been transferred away from the Claimant to another agent. Ms. Mogridge replied that Ms. Low should not contact anybody at Dunsters Mead because the decision to transfer the property had already been made. 31. In the premises, during the currency of the Employment Contracts and during the currency of Ms. Baines statutory directorship, Ms. Baines and/or Ms. Mogridge (with the knowledge of the other) solicited the business in relation to the Dunsters Mead property for the benefit of Mint and at the expense of the Claimant and concealed the same from Ms. Low and/or the Claimant. Breaches of Duty 32. By reason of the matters set out at paragraphs 19 to 31 above: (a) Ms. Baines and/or Ms. Mogridge were in breach of the clauses of the Employment Contract pleaded at paragraphs 6(a) and/or (e) and/or (g) and/or (h) and/or some one or more of the fiduciary duties pleaded at paragraph 9(a) to (c) above; (b) Neither Ms. Baines nor Ms. Mogridge disclosed their wrongdoing or the wrongdoing of the other to the Claimant during the currency of the Employment Contract (and/or while Ms. Baines was a statutory director) and therefore each of them was in breach of the Disclosure Duties.” Solicitation of the Claimant’s Staff Solicitation of the Claimant’s Clients on behalf of Mint Mr. Dick Chapman Thanks Dick Dunsters Mead

Breaches of Duty

[191]The breaches alleged of the Compromise Agreement in the Particulars of Claim were set out in paragraphs 44 and 45:- “44. Further insofar as the matters pleaded at paragraphs 19 to 43 above [paragraphs 33 to 40 inclusive, and paragraph 43, related to alleged misuse of confidential information, whilst paragraphs 41 and 42 summarised the allegations of breaches the respective contracts of employment of Mrs. Baines and Mrs. Mogridge] occurred before Ms. Baines signed the Compromise Agreement, they were matters which(i) were known to Ms. Baines; and

(ii) related to Ms. Baines’ [sic] employment, because Ms. Baines [sic] actions placed her in breach of duty as pleaded above; and

(iii) if disclosed to the Claimant would or might have affected the decision of the Claimant to enter into the Compromise Agreement, because they related to Ms. Baines’ [sic] setting up of a business in competition with the Claimant’s. Consequently, by her failure to disclose the said matters to the Claimant: (a) the representation made by Ms. Baines and recorded at clause 9.7 of the Compromise Agreement was false in circumstances where Ms. Baines (i) knew that it was false (and therefore it was made fraudulently), or (ii) was reckless in that she did not care whether or not it was true or false (and therefore it was made fraudulently); or (iii) ought to have known that it was false; (b) Ms. Baines was in breach of the warranty set out at clause 9.7 of the Compromise Agreement. 45. Pursuant to clause 10 of the Compromise Agreement, the Claimant has sought, by a letter dated 21st January, 2011, repayment of the sum of £25,400 (alternatively the Claimant does so by service of this pleading). Ms. Baines has declined to repay the sum to the Claimant.”

[192]What the case that Mrs. Baines was in breach of the Compromise Agreement in fact came down to, therefore, was the contention that she ought to have disclosed to Halycon at or before the making of the Compromise Agreement, the breaches alleged against her of her duties as employee and director complained of at paragraphs 19 to 32 inclusive of the Particulars of Claim, and that by reason of her failure to do so she was bound by clause 10 of the Compromise Agreement to refund the sum of £25,400 to Halcyon. That analysis was suggestive of the sum of £25,400 being in the nature of liquidated damages for breach of any representation, warranty or undertaking contained in the Compromise Agreement. Since the respects in which Mrs. Baines could, theoretically, have been in breach of any such representation, warranty or undertaking were infinitely various, that suggested that clause 10 of the Compromise Agreement was not, in truth, a liquidated damages provision, but a penalty. That rather obvious point was not taken in the Defence. An application was made by Mr. James Purnell, immediately before commencing his closing submissions on behalf of Mrs. Baines. Mrs. Mogridge and Mint, to amend the Defence to make the assertion that clause 10 was a penalty. The issue of whether it was a penalty or not had arisen in discussion the working day before the application was made. I rejected the application as made far too late. However, that left the question what was the effect of the warranty in clause 9.7 of the Compromise Agreement.

[193]In his written opening skeleton argument Mr. Forshaw submitted, at paragraph 38 (b), that:- “that warranty was breached when it was given (on 15th June, 2010 when Ms. Baines signed the Compromise Agreement) because Ms. Baines was in breach of contract and knew about the imminent competitive threat of Mint, but had failed to disclose the same to Halcyon.”

[194]It was denied on behalf of Mrs. Baines that she was under any obligation, in the circumstances, to disclose to Halcyon at the time of, or before, entering into the Compromise Agreement that she had caused Mint to be established or taken steps to procure premises from which it could operate or caused the Forecast to be produced. However, Mr. Forshaw’s submission seemed to involve the contention that it was enough for Mrs. Baines to be in breach of the warranty in clause 9.7 of the Compromise Agreement that she knew facts which amounted to her being in breach of her obligations to Halcyon under the terms of her contract of employment and/or in breach of her fiduciary duties, without it being necessary to consider whether Mrs. Baines actually appreciated that the facts which she knew amounted to her being in breach of those terms and those duties. However, in my judgment it is plain that the words, “She is not aware of any matters relating to her employment which, if disclosed to the Company, would or might affect the decision of the Company to enter into this Agreement”, meant that the question to be asked was subjective. In other words, Mrs. Baines was not in breach of the warranty in clause 9.7 of the Compromise Agreement unless she actually was aware not only of the relevant matters, but also that they were matters “which, if disclosed to the Company, would or might affect the decision of the Company to enter into this Agreement”. Thus Mrs. Baines was not in breach of the warranty, notwithstanding that she knew perfectly well that she had caused Mint to be incorporated; that she had prepared, or caused to be prepared, the Forecast; and that she had taken steps to locate and to negotiate for premises from which a new business might be conducted, unless she also appreciated that she should have disclosed those pieces of information to Halcyon. No evidence was led before me to the effect that Mrs. Baines did actually appreciate that she should have disclosed the information to which I have just referred to Halcyon. Her whole case before me was that there was no obligation to make disclosure.

[195]Before leaving the Particulars of Claim it is convenient to deal both with the pleaded basis for the liability of Mint and the loss and damage alleged as a result of the matters set out in the Particulars of Claim.

[196]The alleged basis for the liability of Mint was pleaded at paragraphs 46 to 50 of the Particulars of Claim:- “46. Ms. Mogridge’s breaches of contract and/or fiduciary duty set out above were induced and/or procured and/or facilitated by Ms. Baines acting on behalf of Mint and/or in the case of breaches of fiduciary duty Ms. Baines and/or Mint dishonestly assisted Ms. Mogridge in her breaches of the same. 47. Such inducement and/or procurement and/or facilitation of breach and/or such dishonest assistance was carried out by Ms. Baines, acting as a servant or agent of Mint (such that Mint is vicariously liable for the same), with knowledge of the existence of the contractual or fiduciary duty concerned and intending that the same [sic] or being reckless as to the existence of such duty and intending that the same be breached. Ms. Baines’ [sic] knowledge is to be imputed to Mint because she was the directing mind and will of Mint. 48. The intention pleaded above is to be inferred from the fact that such breaches of duty aforesaid were a necessary means to achieve the objective of securing the Claimant’s staff and/or clients and/or confidential information for the benefit of Mint. 49. In all the premises the behaviour of Ms. Baines and/or Mint as set out in the foregoing fell below the ordinary standards of honest people and Ms. Baines and/or Mint appreciated that their behaviour fell below the ordinary standards of honest people. 50. In addition to the matters pleaded at paragraphs 46 to 49 above, Mint is liable to the Claimant because:(a) as pleaded at paragraphs 33 to 40, Ms. Baines on behalf of Mint received the Claimant’s confidential information and/or trade secrets, namely, the names and addresses of some or all of the Claimant’s client landlords, in the period of around May 2010 to around August 2010;

(b) Mint was aware that the information was the Claimant’s confidential information and/or trade secrets because Ms. Baines’[sic] knowledge is to be imputed to Mint as its directing mind and will;

(c) in the premises, Mint fell under an equitable duty of confidence not to disclose or make use of the said information;

(d) by reason of the matters pleaded at paragraphs 33 to 40, Mint has made use of the Claimant’s confidential information and/or trade secrets in breach of the said equitable duty of confidence by using it to solicit the business of some or all of the Claimant’s client landlords. ”

[197]In the circumstances the liability alleged at paragraph 50 did not require further consideration in this judgment.

[198]The loss and damage which was pleaded in the Particulars of Claim was alleged to have been caused, in an undifferentiated fashion, by all of the matters complained of against all of the defendants in the Halcyon Action. That was not particularly helpful. The particulars of loss and damage pleaded at paragraph 51 of the Particulars of Claim were:- “(a) the sum of £25,400 paid to Ms. Baines pursuant to clause 3.2 of the Compromise Agreement and which would not have been paid to Ms. Baines but for the breaches of the Disclosure Duties by Ms. Baines and/or Ms. Mogridge and/or would not have been paid had the false representation referred to at paragraph 17 not have been made [the latter reference was obscure, as what was pleaded at paragraph 17 of the Particulars of Claim were terms of the Compromise Agreement] (b) alternatively, the sum of £25,400 paid to Ms. Baines pursuant to clause 3.2 of the Compromise Agreement which Ms. Baines is obliged to repay to the Claimant by virtue of clause 10 of the Compromise Agreement but has declined to do so; (c) loss of business arising out of the Claimant’s loss of client landlords to Mint. The Claimant’s current estimate as to its loss of business is approximately £25,000 per annum.”

[199]Although there was also claims, in paragraphs 54 and 55 of the Particulars of Claim, to an account of profits from each of the defendants in the Halcyon Action, it appeared from the particulars pleaded at paragraph 51 that actually the main focus of the relief sought in the Halcyon Action was the repayment by Mrs. Baines of the £25,400 paid to her as compensation for loss of office. On no view was either Mrs. Mogridge or Mint liable to compensate Halcyon in that sum. For the reasons which I have already explained, the question of compensating Halcyon for loss of business did not, by the end of the trial, arise.

[200]As I have already indicated, the essential defence of each of the defendants in the Halcyon Action was that what was alleged against her or it in the Particulars of Claim was either factually or legally incorrect, or sometimes both.

[201]However, there was pleaded in the Defence a Set Off. The Set Off was that of Mrs. Baines only and was based upon the contention that Halcyon had been in breach of the provisions of clause 13 of the Compromise Agreement. The particulars of that allegation pleaded at paragraph 61 of the Defence were:- “a. On or around 20 July 2010, the Claimant’s Mrs. Low wrote to landlords stating that Mrs. Baines had “removed certain personal information with respect to some of our landlords in breach of the Data Protection Act”. b. In or around August 2010, Mrs. Low on behalf of the Claimant stated orally to a landlord, Mrs. Hammond that Mrs. Baines had not ensured that Mint was a member of an approved tenancy deposit scheme. c. On 12 August 2010, Mrs. Low confirming this oral statement (“previous verbal advice”) in a letter to Mrs. Hammond. d. On 1st October 2010, Mrs. Low wrote a letter to Mr. Oliver in the Compliance department of the National Federation of Property Professionals and made the following allegations about Mrs. Baines: i. That she had failed to provide regular financial reports and information to Directors. ii. That she had ignored requests for information from Directors. iii. That she was responsible for leaving the Claimant’s paperwork in an “administrative mess”. iv. That she signed the Compromise Agreement in bad faith and that this was the subject of civil litigation. v. That she was in some way responsible for improper adjustments and withdrawals from the tenants’ deposits. vi. That she had committed “unprofessional and improper behaviour”. e. On 12 October 2010, in a letter to Mr. Baker, the Claimant wrongly alleged that Mint had instructed his tenant to pay rent to them one month early. f. On 15 October 2010, the Claimant’s Mrs. Low made a complaint to the National Federation of Property Professionals describing a complaint about Mrs. Baines as follows: i. “Improper removal of funds from protected clients deposits” ii. “Using information obtained illegally from Halcyon to solicit landlords to transfer to Mint using false comparisons and language derogatory to another agent. These letters are grossly unprofessional and bring the industry into disrepute.” iii. Requesting that the NFOPP should effect the “removal of Caroline Baines as a member of ARLA and Mint removed as a member of TDS. Any other professional bodies informed.” g. On 14 April 2011, the Claimant’s Mrs. Low wrote to the Leasehold Valuation Tribunal stating: i. “Mrs. Baines was removed from Halcyon under a compromise agreement necessitated by her administrative incompetence”. ii. “The “mess and late accounts” were under Mrs. Baines [sic] tenure”. iii. “I daresay Mr. Kitching is unhappy at being approached for outstanding monies which should have been processed by my predecessor”. h. Orally stating to an employee Tracy Querns that Mrs. Baines was sacked because she was not capable of running the company.”

[202]The Set Off as pleaded continued:- “62. Mrs. Baines asks the Court to infer from the above matters that the Claimant has made these and like allegations to all of the Claimant’s landlords and tenants. 63. Insofar as any of the above matters were directed against Mint, Mrs. Baines was at all material times the directing mind and will of Mint and accordingly any statements disparaging and derogatory of Mint are also disparaging and derogatory of Mrs. Baines. 64. … 65 By reason of the above matters, Mrs. Baines has suffered loss and damage. PARTICULARS(a) The behaviour of the Claimant’s Mrs. Low caused Mrs. Baines considerable anxiety at a time when she had only just given birth to a child. The Claimant’s conduct was designed to and did cause Mrs. Baines to suffer considerable anxiety and upset.

(b) Allegations of the utmost seriousness have been made against her personal and professional integrity. The Claimant has made allegations without basis which would have been designed to and have caused Mrs. Baines to suffer considerable anxiety and upset.

(c) The allegations that the Claimant has made have besmirched Mrs. Baines’ [sic] personal and professional character. The Claimant has wrongly alleged that Mrs. Baines is guilty of theft and dishonesty. As a result, the Claimant has destroyed relationships that Mrs. Baines had with clients over the preceding ten years. 66. Mrs. Baines seeks damages in an amount to be assessed for mental distress, loss of reputation and financial loss caused by breach of the Compromise Agreement.”

PARTICULARS

[203]No evidence was adduced at the trial with a view to showing financial loss to Mrs. Baines as a result of the alleged breaches of clause 13 of the Compromise Agreement. It was not alleged that Mrs. Baines had suffered any physical or psychiatric consequences as a result of the breaches pleaded.

[204]A response to the allegations in paragraph 61 of the Defence was given at paragraph 41 of the Reply. The answer to each of the particulars set out at paragraph 61 of the Defence can be summarised as follows:- Particular a:- denied, but in any event not disparaging or derogatory, true, and made by Mrs. Low, not Halcyon. Particular b:- admitted, but not disparaging or derogatory, true, made by Mrs. Low, not Halcyon, and about Mint, not Mrs. Baines Particular c:- denied. The letter in question was not disparaging or derogatory, and was written by Mrs. Low, not Halcyon. Particular d:- admitted, true and written by Mrs. Low, not Halcyon. Particular e:- admitted, save for the word “wrongly”, but not disparaging or derogatory, true and made by Mrs. Low, not Halcyon, about Mint, not Mrs. Baines. Particular f:- admitted, but not disparaging or derogatory, true, and made by Mrs. Low, not Halcyon. Particular g:- admitted, but not disparaging or derogatory, true, and written by Mrs. Low, not Halcyon. Particular h:- denied.

The allegations made in the Harassment Action

[205]The matters pleaded as breaches of clause 13 of the Compromise Agreement in the Set Off in the Halcyon Action were, save c., repeated in the Part 8 Endorsement in the Harassment Action, where they were contended to be acts of harassment of Mrs. Baines by Mrs. Low. However, the Part 8 Endorsement included many more allegations of alleged harassment, all bar one ante-dating the making of the Compromise Agreement. The particulars of harassment pleaded on behalf of Mrs. Baines in the Harassment Action, in addition to the repetition of allegations made in the Set Off in the Halcyon Action, were:- “8.1 On or around 31 January 2010, a mere 11 days after the 2nd Claimant [Mrs. Baines] had given birth to a son, calling an Extraordinary General Meeting and/or a Board Meeting to take place on 2 February 2010 and/or 5 February 2010 for the purpose of removing the 2nd Claimant as Managing Director. 8.2 In or around late January/early February 2010, unnecessarily arranging for couriers to regularly deliver documents to the 2nd Claimant’s address. 8.3 On or around 5 February 2010, removing the 2nd Claimant as Managing Director. 8.4 On or around 5 February 2010, telling Halcyon House’s employees not to contact the 2nd Claimant. 8.5 In or around February 2010, forcing the 2nd Claimant to return her laptop, keys and office alarm fob. 8.6 In or around February 2010, changing the locks at the premise [sic] of Halcyon House to prevent the 2nd Claimant from accessing them. 8.7 In or around April 2010, removing the 2nd Claimant as a signatory to Halcyon House bank accounts and changing account passwords. 8.8 On 13 May 2010, through solicitors HRJ Law, making unfounded allegations of misconduct. 8.9 [The commencement of the repetition of allegations already made in the Set Off, which continued to paragraph 8.16, with the only new allegation being:-] 8.14 In November 2010, writing to landlords that worked with the 2nd Claimant requesting records of their business dealings with Mint including telephone records and emails, and implying that if these were not supplied they might be pursued further.”

[206]I have already observed that I find that the allegations at paragraph 8.2 of the Part 8 Endorsement were fabricated, and they do not need to be considered further.

[207]Mrs. Mogridge was the first claimant in the Harassment Action. The particulars of harassment of her by Mrs. Low alleged in the Part 8 Endorsement were:- “(a) On or around 12th August 2010, stating via letter to a landlord, Mrs. Hammond, that the 1st Claimant had stolen keys to her property. (b) Making an allegation to the police on or around 27 August 2010 that the 1st Claimant had stolen keys for a property at Augustus Gate leading to the 1st Claimant’s arrest. (c) Making a further allegation to the police in or around 13th September 2010 that the 1st Claimant had stolen keys to 2 Saxon House and 20 Tippett Court and two copies of her employment contract. (d) On or around 20 July 2010, writing to landlords stating that the 1st Claimant had “removed certain personal information with respect to some of our landlords in breach of the Data Protection Act”. (e) Making an allegation to the National Federation of Property Professionals on 1st October 2010 that the 1st Claimant had colluded with the 2nd Claimant in removing complete lists of landlords and tenants and a number of keys, and that the 1st Claimant removed computer files from Halcyon offices. (f) Informing a landlord Cy Biggs in or around November 2010 that the 1st Claimant had been arrested for theft.”

[208]Although it was not alleged in the Harassment Action that Mrs. Baines had suffered physical or psychiatric injury as a result of the harassment complained of, that was not the position of Mrs. Mogridge. In the Part 8 Endorsement it was contended that:- “10.1.1 The 1st Claimant was in total shock, stunned and petrified at being arrested on 27 August 2010. She suffered from claustrophobia in the prison cell. 10.1.2 After she was bailed, the 1st Claimant suffered panic attacks and agoraphobic tendencies. She felt that she was not safe and could not be left on her own. These thoughts led to feeling anxious and avoidance behaviour. 10.1.3 The 1st Claimant attended her GP and in October 2010 was referred to the Stevenage Enhanced Primary Mental Health Team. 10.1.4 The Defendant’s harassment has caused or materially contributed to the 1st Claimant suffering a moderate depressive episode which led her to seek therapy and a continued requirement to take medication for stress and depression.”

[209]Mrs. Low responded to the Harassment Action in the fashion necessary in answering a Part 8 claim, by making a witness statement, dated 17 October 2012. The duties owed by Mrs. Baines and Mrs. Mogridge to Halcyon and whether any was infringed

[210]In the circumstances it is convenient next to consider the duties alleged to have been owed by Mrs. Baines and Mrs. Mogridge to Halcyon. Mr. Forshaw, in his submissions, did not generally differentiate between Mrs. Baines and Mrs. Mogridge in relation to the duties which he contended that each owed. That was because he submitted that Mrs. Mogridge was to be treated as a senior employee of Halcyon. In my judgment the submission that Mrs. Mogridge was a senior employee of Halcyon was not well-founded. As I have pointed out, Halcyon was, at all times material to the actions with which this judgment is concerned, a small company. It had only three full-time employees, including Mrs. Baines, and one part-time employee, Mrs. Payne. Although the fashion in these days is to describe any occupation by some grandiose title, what, in my judgment, Mrs. Mogridge actually did at Halcyon, although described as an “administrator” in her letter of appointment, was essentially what in former times would have been described as a clerk/telephonist. She did the paperwork and answered the telephone. I recognise that she also had access to a bank account of Halcyon for the purposes of discharging the liabilities of Halcyon to contractors whom it had engaged. However, the use of the bank account was in a ministerial capacity only – Mrs. Mogridge verified invoices and paid them. She also received money from tenants as deposits and banked those amounts. She did not manage other staff. She was not involved in making strategic decisions concerning the business of Halcyon. She was not consulted in relation to the formulation of any policies of Halcyon. I think that she would accept that her position was a humble one. Certainly that is what I find.

[211]There was no dispute that both Mrs. Baines and Mrs. Mogridge owed a duty to Halcyon, whilst employed, as an aspect of the implied duty of fidelity, not to compete with the business of Halcyon. There was no evidence that either of them did in fact compete with Halcyon whilst still employed. However, Mr. Forshaw invited me to conclude that the evidence justified the inference that each of Mrs. Baines and Mrs. Mogridge had decided to compete with Halcyon whilst still employed and that each, or at any rate Mrs. Baines, had approached existing customers of Halcyon to solicit their custom. In that context Mr. Forshaw relied heavily, as I have said, on the Forecast in which Dunsters Mead, Nursery Gardens and Willowdene were named. He also relied upon the naming of Mrs. Mogridge and Mrs. Payne in the Forecast as justifying the inference that Mrs. Baines had solicited Mrs. Mogridge and Mrs. Payne as employees of Mint whilst employed by Halcyon. Again it was common ground that, as aspects of the implied duty of fidelity, both Mrs. Baines and Mrs. Mogridge owed duties to Halcyon whilst employed by it not to solicit existing customers for a new business and not to solicit employees for a new business. Each of Mrs. Baines and Mrs. Mogridge, however, denied having solicited either customers or employees. In the case of Mrs. Mogridge what was suggested was that she had solicited Mrs. Payne as an employee of Mint. All that was said to justify the inference that such was the case was the fact that Mrs. Payne gave in her notice the day after Mrs. Mogridge.

[212]I am entirely satisfied, as I have indicated, that the inferences which Mr. Forshaw urged upon me based upon the contents of the Forecast were not justified. The material adduced at the trial did not justify the conclusion that Mrs. Baines or Mrs. Mogridge had either solicited existing customers of Halcyon for Mint, or that one or other or both of them had solicited existing employees of Halcyon as employees of Mint, whilst still employed by Halcyon.

[213]The only matter relating to the terms of employment of Mrs. Baines and Mrs. Mogridge, or any fiduciary duties of either of them, which requires further consideration is whether either or both was under an obligation to Halcyon to disclose the incorporation of Mint, the steps taken by Mrs. Baines to obtain premises from which Mint could operate, the production of the Forecast, or that Mrs. Mogridge was intending to go and work for Mint.

[214]Because the application of the relevant law depends critically upon the particular facts of the case, it is convenient before coming to the law to record or recapitulate my findings of fact concerning the intentions of Mrs. Baines and the knowledge of Mrs. Mogridge. As I have indicated, I accept the evidence of Mrs. Baines that the incorporation of Mint, the production of the Forecast, and the steps taken to obtain premises from which Mint could operate were part of “Plan B”, to be activated if she was unable to return to Halcyon as managing director. Those steps were therefore contingent upon Mrs. Baines being excluded from Halcyon and were not plans which Mrs. Baines had resolved to pursue whatever happened. That analysis, as I have indicated, was just common sense. What possible reason could there be for Mrs. Baines, already the managing director of a residential letting agency business, to want to set up in competition to that business if she was still in a position to operate Halcyon as managing director? I find that the decision to activate “Plan B” was taken on 8 June 2010 when Mrs. Baines was presented with the Compromise Agreement and told that it was not subject to negotiation. I find that Mrs. Baines did not tell Mrs. Mogridge that she had established Mint and would be interested in employing Mrs. Mogridge as an administrator until after Mrs. Mogridge had handed in her notice to Mrs. Low on 16 June 2010. I find, as I have indicated, that Mrs. Mogridge handed in her notice because Mrs. Low told her and the other staff on 14 June 2010 that Mrs. Baines was not coming back to Halcyon. I find that Mrs. Mogridge had been approached by Mrs. Baines to work for Mint, and had agreed to do so, no later than 13 July 2010, the date of Mrs. Baines’s e-mail to Mr. Chapman in which she recorded that Mrs. Mogridge and Mrs. Payne would be joining her at the end of July 2010. When exactly Mrs. Baines approached Mrs. Mogridge, and when exactly Mrs. Mogridge became aware of the existence of Mint and of the intention of Mrs. Baines to compete through Mint with Halcyon did not emerge in evidence. What Mrs. Mogridge said about it at paragraph 115 of her witness statement dated 7 February 2014 was:- “I called Caroline and told her that I had resigned. Caroline said she was thinking about setting up a new agency and asked if I would be interested coming on board. I hadn’t heard anything about this before, but was very pleased at the thought I might be able to work with Caroline again. However, by this time my health was not very good, so I told her I would like to, but I wanted some time just for me to relax and unwind. Caroline said this was fine as there was nothing definite about her new venture. She didn’t give me any details or tell me what her plans were. It was only later, after I had left Halcyon, she invited me to her new premises and we agreed my terms and when I would start.”

[215]I accept that evidence, other than the last sentence. As I have said, it was plain from the terms of the e-mail of 13 July 2010 that Mrs. Baines sent to Mr. Chapman that by that date Mrs. Mogridge had agreed to go and work for Mint. Consequently, I find that Mrs. Mogridge made contact with Mrs. Baines fairly immediately after handing in her notice to say what she had done, and was then told that Mrs. Baines was thinking of setting up a new agency, but it was not definite. Plainly Mrs. Mogridge was told thereafter, and before 13 July 2010, that the plans were definite, but it was not possible to conclude exactly when that happened.

[216]In the light of my findings of fact the questions which arise are:(1) was Mrs. Baines under any duty to Halcyon to disclose, prior to signing the Compromise Agreement, the incorporation of Mint, the preparation of the Forecast and the steps taken to obtain premises from which Mint could operate?

(2) was Mrs. Mogridge under any duty to Halcyon to disclose, once she knew on or soon after 16 June 2010, that Mrs. Baines was thinking of setting up a new business in competition with Halcyon, that she had learned that information?

(3) was Mrs. Mogridge under any duty to Halcyon to disclose, after she had decided, on or before 13 July 2010, that she was going to go and work for Mint, which by that time Mrs. Baines had resolved to activate, that that was the case?

[217]I consider first the question of fiduciary duties.

[218]It is, I think, important to remind oneself that what gives rise to fiduciary duties is undertaking to act with single-minded loyalty for another. In some circumstances that single-minded loyalty is imposed upon those in particular positions, of which that of a director of a company is that which is relevant for present purposes. The classic exposition of the nature of a fiduciary is that of Millett LJ in Bristol and West Building Society v. Mothew

[1998] Ch 1

at page 18:- “A fiduciary is someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence. The distinguishing obligation of a fiduciary is the obligation of loyalty. The principal is entitled to the single-minded loyalty of his fiduciary. This core liability has several facets. A fiduciary must act in good faith; he must not make a profit out of his trust; he must not place himself in a position where his duty and his interest conflict; he may not act for his own benefit or the benefit of a third person without the informed consent of his principal. This is not intended to be an exhaustive list, but it is sufficient to indicate the nature of fiduciary obligations. They are the defining characteristics of the fiduciary.”

[219]Other than in the case of an employee of a limited liability company who is also a director of the company, there are only limited circumstances in which an employee owes fiduciary duties to his employer. The position was explained by Elias J in University of Nottingham v. Fishel

[2000] ICR 1462

at pages 1490 – 1493:- “It is important to recognise that the mere fact that Dr. Fishel is an employee does not mean that he owes the range of fiduciary duties referred to above. It is true that in Attorney-General v. Blake

[1998] Ch 439

Lord Woolf MR, giving judgment for the Court of Appeal, said that the employer-employee relationship is a fiduciary one. But plainly the court was not thereby intending to indicate that the whole range of fiduciary obligations was engaged in every employment relationship. This would be revolutionary indeed, transforming the contract of employment beyond all recognition and transmuting contractual duties into fiduciary ones. In my opinion the court was merely indicating that circumstances may arise in the context of an employment relationship, or arise out of it, which, when they occur, will place the employee in the position of a fiduciary. In Attorney-General v. Blake itself, as I have indicated, it was the receipt of confidential information. There are other examples. Thus every employee is subject to the principle that he should not accept a bribe and he will have to account for it (and possibly any profits derived from it) to his employer. Again, as Fletcher-Moulton LJ observed in In re Coomber; Coomber v. Coomber

[1911] 1 Ch 723

, 728, even an errand boy is obliged to bring back my change, and “is in fiduciary relations with me.” But his fiduciary obligations are limited and arise out of the particular circumstances, namely that he is put in a position where he is obliged to account to me for the change he has received. In that case the obligation arises out of the employment relationship but it is not inherent in the nature of the relationship itself. As these examples all illustrate, simply labelling the relationship as fiduciary tells us nothing about which particular fiduciary duties will arise. As Lord Browne-Wilkinson has recently observed in Henderson v. Merrett Syndicates Ltd.

[1995] 2 AC 145

, 206A:

“The phrase “fiduciary duties” is a dangerous one, giving rise to a mistaken assumption that all fiduciaries owe the same duties in all circumstances. That is not the case.”

This is particularly true in the employment context. The employment relationship is obviously not a fiduciary relationship in the classic sense. It is to be contrasted with a number of other relationships which can readily and universally be recognised as “fiduciary relationships” because the very essence of the relationship is that one party must exercise his powers for the benefit of another. Trustees, company directors and liquidators classically fall into this category which Dr. P.D. Finn, in his seminal work on fiduciaries, Fiduciary Obligations (1977), has termed “fiduciary offices”. As he has pointed out, typically there are two characteristics of these relationships, apart from the duty on the office holder to act in the interests of another. The first is that the powers are conferred by someone other than the beneficiaries in whose interests the fiduciary must act, and the second is that these fiduciaries have considerable autonomy over decision making and are not subject to the control of the beneficiaries. By contrast, the essence of the employment relationship is not typically fiduciary at all. Its purpose is not to place the employee in a position where he is obliged to pursue his employer’s interests at the expense of his own. The relationship is a contractual one and the powers imposed on the employee are conferred by the employer himself. The employee’s freedom of action is regulated by the contract, the scope of his powers is determined by the terms (express or implied) of the contract, and as a consequence the employer can exercise (or at least he can place himself in a position where he has the opportunity to exercise) considerable control over the employee’s decision making powers. This is not to say that fiduciary duties cannot arise out of the employment relationship itself. But they arise not as a result of the mere fact that within a particular contractual relationship there are specific contractual obligations which the employee has undertaken which have placed him in a situation where equity imposes these rigorous duties in addition to the contractual obligations. Where this occurs, the scope of the fiduciary obligations both arises out of, and is circumscribed by, the contractual terms; it is circumscribed because equity cannot alter the terms of the contract validly undertaken. The position was succinctly expressed by Mason J in the High Court of Australia in Hospital Products Ltd. v. United States Surgical Corporation

(1984) 156 CLR 41

, 97 as follows:

“That contractual and fiduciary relationships may co-exist between the same parties has never been doubted. Indeed, the existence of a basic contractual relationship has in many situations provided a foundation for the erection of a fiduciary relationship. In these situations it is the contractual foundation which is all important because it is the contract that regulates the basic rights and liabilities of the parties. The fiduciary relationship, if it is to exist at all, must accommodate itself to the terms of the contract so that it is consistent with, and conforms to, them. The fiduciary relationship cannot be superimposed upon the contract in such a way as to alter the operation which the contract was intended to have according to its true construction.”

The problem of identifying the scope of any fiduciary duties arising out of the relationship is particularly acute in the case of employees. This is because of the use of potentially ambiguous terminology in describing an employee’s obligations, which use may prove a trap for the unwary. There are many cases which have recognised the existence of the employee’s duty of good faith, or loyalty, or the mutual duty of trust and confidence – concepts which tend to shade into one another. As I have already indicated, Lord Millett has used precisely this language when describing the characteristic features which trigger fiduciary obligations. But he was not using the concepts in quite the same sense as they tend to be used in the employment field. Lord Millett was applying the concepts of loyalty and good faith to circumstances where a person undertakes to act solely in the interests of another. Unfortunately, these concepts are frequently used in the employment context to describe situations where a party merely has to take into consideration the interests of another, but does not have to act in the interests of that other. This narrower concept of good faith is graphically demonstrated by the decision of Sir Nicolas Browne-Wilkinson V-C in Imperial Group Pension Trust Ltd. v. Imperial Tobacco Ltd.

[1991] ICR 524

. The case concerned the nature of the employer’s power in a pension scheme to give or withhold consent to proposed pension increases. The Vice-Chancellor expressly agreed with the concession that this was not a fiduciary power, observing, t p. 532:

“if this were a fiduciary power the company would have to decide whether or not to consent by reference only to the interests of the members, disregarding its own interests. This plainly was not the intention. However, he then went on to consider the nature of the term and analysed it as follows, at p. 533: “In every contract of employment there is an implied term: ‘that the employers will not, without reasonable and proper cause, conduct themselves in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee:’ Woods v. W.M. Car Services (Peterborough) Ltd. [1981] ICR 666, 670, approved by the Court of Appeal in Lewis v. Motorworld Garages Ltd. [1986] ICR 157. I will call this implied term ‘the implied obligation of good faith’”

. His Lordship held that, whilst it was legitimate for the company to look after its own interests in the operation of the scheme, it could not do so for a collateral purpose detrimental to the employees. It is plain that here the implied duty of good faith is being used in circumstances where no fiduciary obligation arises at all. Similarly, in Mahmud v. Bank of Credit and Commerce International SA

[1997] ICR 606

, the House of Lords confirmed the existence of the term relied upon by Sir Nicolas Browne-Wilkinson V-C although describing it as the duty of trust and confidence. In that particular context it was held to be a breach of the term for an employer to conduct a dishonest business. Clearly, however, the employer does not have to run his business solely by reference to the interests of the employees. Indeed, as Lord Steyn commented, the origin of the term is probably the duty of co-operation between the contracting parties. This is consistent with the recognition that the duty is one where each party must have regard to the interests of the other, but not that either must subjugate his interests to those of the other. The duty of trust and confidence limits the employer’s powers, but it does not require him to act as a fiduciary. It is a contractual but not a fiduciary obligation. Accordingly, in analysing the employment cases in this field, care must be taken not automatically to equate the duties of good faith and loyalty, or trust and confidence, with fiduciary obligations. Very often in such cases the court has simply been concerned with the question whether the employee’s conduct has been such as to justify summary dismissal, and there has been no need to decide whether the duties infringed, properly analysed, are contractual or fiduciary obligations. As a consequence, the two are sometimes wrongly treated as identical: see Neary v. Dean of Westminster

[1999] IRLR 288

, 290 where the mutual duty of trust and confidence was described as constituting a “fiduciary relationship”. Accordingly, in determining whether a fiduciary relationship arises in the context of an employment relationship, it is necessary to identify with care the particular duties undertaken by the employee, and to ask whether in all the circumstances he has placed himself in a position where he must act solely in the interests of his employer. It is only once those duties have been identified that it is possible to determine whether any fiduciary duty has been breached, as Lord Upjohn commented in Phipps v. Boardman

[1967] 2 AC 46

, 127:

“Having defined the scope of [the] duties one must see whether he has committed some breach thereof and by placing himself within the scope and ambit of those duties in a position where his duty and interest may possibly conflict. It is only at this stage that any question of accountability arises.”

It follows that fiduciary duties may be engaged in respect of only part of the employment relationship, as was recognised by Lord Wilberforce, giving judgment for the Privy Council in New Zealand Netherlands Society “Oranje” Inc. v. Kuys

[1973] 1 WLR 1126

, 1130c:

“A person … may be in a fiduciary position quoad a part of his activities but not quoad other parts; each transaction, or group of transactions, must be looked at.””

[220]A convenient statement of the fiduciary duties of company directors was set out at paragraph 8 of the judgment of Rix LJ in Foster Bryant Surveying Ltd. v. Bryant

[2007] BCC 804

at pages 810 – 811:- “At trial it was common ground between the parties that the synthesis of principles expounded by Mr. Livesey Q.C., sitting as a deputy judge of the High Court, in Hunter Kane Ltd. v. Watkins

[2003] EWHC 186 (Ch)

, which Mr. Livesey had himself taken largely from the judgment of Lawrence Collins J in CMS Dolphin Ltd. v. Simonet

[2002] BCC 600

and the authorities there cited and discussed, accurately stated the law. In this court in In Plus Group Ltd. v. Pyke

[2002] EWCA Civ 370

;

[2003] BCC 332

Brooke LJ described the Simonet analysis as “valuable” (at [71]). Mr. Livesey said:

“1. A director, while acting as such, has a fiduciary relationship with his company. That is he has an obligation to deal towards it with loyalty, good faith and avoidance of the conflict of duty and self-interest. 2. A requirement to avoid a conflict of duty and self-interest means that a director is precluded from obtaining for himself, either secretly or without the informed approval of the company, any property or business advantage either belonging to the company or for which it has been negotiating, especially where the director or officer is a participant in the negotiations. 3. A director’s power to resign from office is not a fiduciary power. He is entitled to resign even if his resignation might have a disastrous effect on the business or reputation of the company. 4. A fiduciary relationship does not continue after the determination of the relationship which gives rise to it. After the relationship is determined the director is in general not under the continuing obligations which are the feature of the fiduciary relationship. 5. Acts done by the directors while the contract of employment subsists but which are preparatory to competition after it terminates are not necessarily in themselves a breach of the implied term as to loyalty and fidelity. 6. Directors, no less than employees, acquire a general fund of skill, knowledge and expertise in the course of their work, which is plainly in the public interest that they should be free to exploit it in a new position. After ceasing the relationship by resignation or otherwise a director is in general (and subject of course to any terms of the contract of employment) not prohibited from using his general fund of skill and knowledge, the ‘stock in trade’ of the knowledge he has acquired while a director, even including such things as business contacts and personal connections made as a result of his directorship. 7. A director is however precluded from acting in breach of the requirement at 2 above, even after his resignation where the resignation may fairly be said to have been prompted or influenced by a wish to acquire for himself any maturing business opportunities sought by the company and where it was his position with the company rather than a fresh initiative that led him to the opportunity which he later acquired. 8. In considering whether an act of a director breaches the preceding principle the factors to take into account will include the factor of position or office held, the nature of the corporate opportunity, its ripeness, its specificness and the director’s relation to it, the amount of knowledge possessed, the circumstances in which it was obtained and whether it was special or indeed even private, the factor of time in the continuation of the fiduciary duty where the alleged breach occurs after termination of the relationship with the company and the circumstances under which the breach was terminated, that is whether by retirement or resignation or discharge. 9. The underlying basis of the liability of a director who exploits after his resignation a maturing business opportunity ‘of the company’ is that the opportunity is to be treated as if it were the property of the company in relation to which the director had fiduciary duties. By seeking the [sic – probably “to” was meant] exploit the opportunity after resignation he is appropriating to himself that property. He is just as accountable as a trustee who retires without properly accounting for trust property. 10. It follows that a director will not be in breach of the principle set out as point 7 above where either the company’s hope of obtaining the contract was not a ‘maturing business opportunity’ and it was not pursuing further business orders nor where the director’s resignation was not itself prompted or influenced by a wish to acquire the business for himself. 11. As regards breach of confidence, although while the contract of employment subsists a director or other employee may not use confidential information to the detriment of his employer, after it ceases the director/employee may compete and may use know-how acquired in the course of his employment (as distinct from trade secrets – although the distinction is sometimes difficult to apply in practice)””

[221]About that summary Rix LJ said at paragraph 10 on page 811 of the report:- “It seems to me that this restatement, as to which the parties are in agreement, will suffice at present to form the legal background to my consideration of the facts, which I will take very largely from the judgment of the judge. …”

[222]Not all of the principles enunciated by Mr. Livesey and approved by the Court of Appeal in Foster Bryant Surveying Ltd. v. Bryant, supra, are material to the questions which I need to decide, but principle 5 is particularly significant.

[223]In Balston Ltd. v. Headline Filters Ltd.

[1990] FSR 385

Falconer J at page 412 said:- “In my judgment an intention by a director of a company to set up business in competition with the company after his directorship has ceased is not to be regarded as a conflict of interest within the context of the principle, having regard to the rules of public policy as to restraint of trade, nor is the taking of any preliminary steps to investigate or forward that intention so long as there is no actual competitive activity, such as, for instance, competitive tendering or actual trading, while he remains a director. It follows, in my judgment, that Mr. Head was not in breach of his fiduciary duty owed to Balston as a director of the company in not disclosing to Balston his intention to set up a business in competition, whether as a dealer in filter products or as a manufacturer of micro-fibre tubes or in taking such steps as he did to forward that intention prior to 18 April 1986.”

[224]In British Midland Tool Ltd. v. Midland International Tooling Ltd.

[2003] 2 BCLC 523

Hart J did not dissent from the decision of Falconer J on its facts, but distinguished it in this way, at paragraph 89 on pages 560 – 561:- “On this issue (which it 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 Q.C. 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 in 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 his directorship at any time notwithstanding the damage that the resignation may itself cause to the company: see CMS Dolphin Ltd. v. Simonet

[2001] 2 BCLC 704

at [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 to disclose his intentions to the company ought, in my judgment, 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 in Balston’s case, it is not inconsistent with the decision in that case on its particular facts: as already noted (see [86] above) the intention to compete does not appear to have been formed prior to the resignation as a director.”

[225]On my findings of fact in the present case, whether one follows the judgment of Falconer J in Balston Ltd. v. Headline Filters Ltd., supra, or the judgment of Hart J in British Midland Tool Ltd. v. Midland International Tooling Ltd., the conclusion is the same, that Mrs. Baines was not in breach of any fiduciary duty owed to Halcyon in causing Mint to be incorporated; in preparing or causing to be prepared the Forecast; in taking steps to obtain premises from which Mint could operate; or in not informing Halcyon of any of those circumstances. Analysed in terms of the judgment of Falconer J the steps taken were insufficiently proximate to competing with Halcyon to amount themselves to breaches of fiduciary duty, and therefore did not need to be reported. Analysed in terms of the judgment of Hart J, on the evidence Mrs. Baines had not been in breach of fiduciary duty because until being presented with the Compromise Agreement she had not “irrevocably formed” an intention to compete with Halcyon through Mint. I do not have to express any preference as between the approach of Falconer J and that of Hart J. Other judges in other cases at first instance have commented on each of those approaches. What is important in the present case, as it seems to me, is that the intention to compete was, and remained, contingent upon being excluded as managing director of Halcyon. The present is an exceptional case. Similar circumstances may never arise in any future case. However, on the facts of the present case it is plain that Mrs. Baines did not breach her admitted fiduciary duties.

[226]A wrinkle is that, notwithstanding the conclusion which I have expressed, Mrs. Baines’s case, whilst including the point which I have just determined, was focused on the proposition that the admitted fiduciary duties had ceased to be owed well before 8 June 2010 because of the effective expulsion of Mrs. Baines as a director of Halcyon. I was reminded of some observations of Sedley LJ in In Plus Group Ltd. v. Pyke

[2003] BCC 332

in paragraph 90 on page 351 of the report:- “Every decision of this kind, within the principle discussed above, is fact-specific. The judge’s first proposition is critical because it is factually correct and it eliminates the duality of interest or duty which the law seeks to guard against. For reasons given by my Lords, however, it is impossible to divorce the acquisition of Constructive’s work by Mr. Pyke and his new company from the cessation of Constructive’s relationship with the claimants. The judge’s second proposition is therefore factually incorrect. I express no view as to its legal effect had it been factually correct. But when this element is severed, as it therefore has to be, from the judge’s conclusion, the conclusion remains correct within the framework of duty which the law lays down. Quite exceptionally, the defendant’s duty to the claimants had been reduced to vanishing point by the acts (explicable and even justifiable though they may have been) of his sole fellow director and fellow shareholder Mr. Plank. Accepting as I do that the claimants’ relationship with Constructive was consistent with successful poaching on Mr. Pyke’s part, the critical fact is that it was done in a situation in which the dual role which is the necessary predicate of Mr. Yell’s case is absent. The defendant’s role as a director of the claimants was throughout the relevant period entirely nominal, not in the sense in which a non-executive director’s position might (probably wrongly) be called nominal but in the concrete sense that he was entirely excluded from all decision-making and all participation in the claimant company’s affairs. For all the influence he had, he might as well have resigned.”

[227]On the facts of the present case it seems to me that there is much to support the analysis that, from the board meeting at the beginning of February 2010, Mrs. Low and her son had resolved to impose their views upon the management of the business of Halcyon and to ignore the position of Mrs. Baines, whom they were seeking to dislodge from Halcyon. I am inclined to the view that, certainly by no later than the board meeting on 25 April 2010, any fiduciary duty owed by Mrs. Baines to Halcyon had ceased. However, since, even if there were continuing fiduciary duties, Mrs. Baines was not in breach of them, I prefer to base my conclusion on that ground.

[228]There was no real attempt, beyond the assertion that Mrs. Mogridge occupied a senior position in Halcyon, to establish the proposition that she owed fiduciary duties to Halcyon. The submissions rather drifted into submissions that she owed like duties to the duties as to disclosure which were said to be fiduciary duties as an employee any way, as an aspect of the duty of good faith. In particular, I was reminded of the decision of the Court of Appeal in Sybron Corporation v. Rochem Ltd.

[1983] ICR 801

. The leading judgment in that case was that of Stephenson LJ. At page 815 he said this:- “It follows from that decision [Swain v. West (Butchers) Ltd], which is consistent with Bell v. Lever Bros. Ltd.

[1932] AC 161

and is binding upon us, that there is no general duty to report a fellow-servant’s misconduct or breach of contract; whether there is such a duty depends on the contract and on the terms of employment of the particular servant. He may be so placed in the hierarchy as to have a duty to report either the misconduct of his superior, as in Swain v. West (Butchers) Ltd.

[1936] 3 All ER 261

, or the misconduct of his inferiors, as in this case.”

[229]As was made clear in Sybron Corporation v. Rochem Ltd., supra, if there was a contractual duty upon the employee to report the misconduct of inferiors, it was not an answer to that duty that by performing it one would disclose one’s own misconduct.

[230]Mr. Forshaw also relied upon the application of the principle to be derived from the decision in Sybron Corporation v. Rochem Ltd. in Tesco Stores Ltd. v. Pook

[2004] IRLR 618

by Peter Smith J in holding that a senior employee was under a duty to disclose to his employer that he had taken a bribe.

[231]The answer to the alleged fiduciary duties of Mrs. Mogridge, as it seemed to me, was that she simply did not owe the duties contended for, and therefore could not have been in breach. I am not persuaded, in the light of the most helpful analysis of Elias J in University of Nottingham v. Fishel, supra, that any employee, however senior, unless a director, owes a fiduciary duty, as opposed to a contractual duty, to disclose anything to his employer. I accept that there are circumstances in which senior employees do owe a contractual duty to disclose the misconduct of others, and that the performance of that duty may not be avoided if the effect is also to disclose the misconduct of the employee himself. However, Stephenson LJ in Sybron Corporation v. Rochem Ltd., supra, at page 811 observed:- “I accept, as I must accept, that by a majority the House of Lords [in Bell v. Lever Bros. Ltd.] were saying that a contract of employment, though often described as creating a relationship of trust between master and servant, is not a contract uberrimae fidei so as to require disclosure by the servant of his own misconduct, either before he is taken into employment as in Fletcher v. Krell

(1873) 28 LT 105

or during the course of his employment as in Healey’s or Bell’s case.”

[232]I turn to the question whether either Mrs. Baines or Mrs. Mogridge or both owed a contractual duty to Halcyon to disclose anything.

[233]If Mrs. Baines, owing relevant fiduciary duties as a director, was under no obligation to disclose what she had been doing, it is wildly improbable that she would have owed such a duty as a matter of contract. I hold that she did not. The cases which Mr. Forshaw relied upon as supporting the analysis that disclosure was required as an aspect of the duty of good faith were both decisions of this court in the context of what are usually called “team moves”.

[234]In Kynixa Ltd. v. Hynes

[2008] EWHC 1495 (QB)

Wyn Williams J said, at paragraph 283:- “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.”

[235]In a slightly later case, UBS Wealth Management (UK) Ltd. v. Vestra Wealth Ltd.

[2008] IRLR 965

Openshaw J said, at paragraph 24 on page 968:- “I cannot accept that employees, in particular senior managers, can keep silent when they know of planned poaching raids upon the company’s existing staff or client base and when these are encouraged and facilitated from within the company itself, the more so when they are themselves party to these plots and plans. It seems to me that that would be an obvious breach of their duties of loyalty and fidelity to UBS.”

[236]There is, perhaps, a degree of tension between those expressions of view and the decision of the House of Lords in Bell v. Lever Bros. Ltd., supra, certainly if what was to be contended was that an individual was bound, in due performance of the duty of good faith, to inform his employer of his plans to compete with the employer in the future. That is even more so if the plans were not themselves unlawful, but were of the nature contemplated by Hawkins J in Robb v. Green in the passage cited earlier in this judgment. However, assuming that the individual was planning unlawful competition, for example by stealing a list of customers, as it seems to me the decision in Bell v. Lever Bros. Ltd., supra, is positive authority against there being any duty of disclosure. The relevant principles can be found in a delightfully picturesque passage from the speech of Lord Atkin, complete with colourful analogies from a bygone age, at pages 227 – 228 of the report:- “It now becomes necessary to deal with the second point of the plaintiffs – namely, that the contract of March 19, 1929, could be avoided by them in consequence of the non-disclosure by Bell of his misconduct as to the cocoa dealings. Fraudulent concealment has been negatived by the jury; this claim is based upon the contention that Bell owed a duty to Levers to disclose his misconduct, and that in default of disclosure the contract was voidable. Ordinarily the failure to disclose a material fact which might influence the mind of a prudent contractor does not give the right to avoid the contract. The principle of caveat emptor applies outside contracts of sale. There are certain contracts expressed by the law to be contracts of the utmost good faith, where material facts must be disclosed; if not, the contract is voidable. Apart from special fiduciary relationships, contracts for partnership and contracts of insurance are the leading instances. In such cases the duty does not arise out of contract; the duty of a person proposing an insurance arises before the contract is made, so of an intending partner. Unless this contract can be brought within the limited category of contracts uberrimae fidei it appears to me that this ground of defence must fail. I see nothing to differentiate this agreement from the ordinary contract of service; and I am aware of no authority which places contracts of service within the limited category I have mentioned. It seems to me clear that master and man negotiating for an agreement of service are as unfettered as in any other negotiations. Nor can I find anything in the relation of master and servant, when established, that places agreements between them within the protected category. It is said that there is a contractual duty of the servant to disclose his past faults. I agree that the duty in the servant to protect his master’s property may involve the duty to report a fellow servant whom he knows to be wrongfully dealing with that property. The servant owes a duty not to steal, but, having stolen, is there a superadded duty to confess that he has stolen? I am satisfied that to imply such a duty would be a departure from the well established usage of mankind and would be to create obligations entirely outside the normal contemplation of the parties concerned. If a man agrees to raise his butler’s wages, must the butler disclose that two years ago he received a secret commission from the wine merchant; and if the master discovers it, can he, without dismissal or after the servant has left, avoid the agreement for the increase in salary and recover back the extra wages paid? If he gives his cook a month’s wages in lieu of notice can he, on discovering that the cook has been pilfering the tea and sugar, claim the return of the month’s wages? I think not. He takes the risk; if he wishes to protect himself he can question the servant, and will then be protected by the truth or otherwise of the answers.”

[237]In the result I find that Mrs. Baines owed no contractual duty to Halcyon to disclose that she had caused Mint to be incorporated; had produced, or caused to be produced, the Forecast; or had taken steps to obtain premises from which Mint would be able to operate.

[238]It seems to me that Mrs. Mogridge was not of sufficiently senior status to owe any disclosure obligations to Halcyon as a matter of contract. If she did owe any disclosure obligations, they certainly did not extend to passing on tittle-tattle, such as Mrs. Baines’s thoughts that she might set up in competition with Halcyon, or Mrs. Mogridge’s own plans, having given notice to Mint. The question whether Mrs. Mogridge owed a contractual obligation to pass on to Halcyon information of commercial value, like the knowledge, once Mrs. Baines had decided to activate Mint, that there was a new competitor about to enter the market may be more debatable, but in my judgment Mrs. Mogridge, as essentially a clerical employee, rather than, for example, a saleswoman, owed no such duty.

[239]In the result the claims of Halcyon based on alleged breaches of fiduciary duty or alleged breaches of contractual duties on the part of Mrs. Baines and Mrs. Mogridge all fail. It follows that the claims for breaches of the Compromise Agreement also fail.

The Set Off

[240]In the circumstances it is strictly unnecessary to consider the alleged breaches of clause 13 of the Compromise Agreement pleaded in the Set Off. However, an interesting question of law arose, namely whether it was possible in any event to recover damages for breach of the obligation not to make disparaging or derogatory statements about the other party to the Compromise Agreement. That seemed an important point, because terms like clause 13 of the Compromise Agreement are not uncommon in settlement agreements, and if the contention that damages could not be recovered for breach were correct, it followed that including such clauses in settlement agreements could be of little practical value. Mr. Forshaw submitted that the commission of breaches of such a clause might lead to the grant of an injunction. Possibly so, but there would be no recompense for so much of the horse as had bolted before any injunction had been obtained.

[241]Mr. Forshaw submitted that, on proper construction, clause 13 of the Compromise Agreement was a mutual stipulation, in the sense that one party could only complain of breach of its provisions if not itself in breach. Consequently, contended Mr. Forshaw, as Mrs. Baines’s letter dated 12 August 2010 to existing landlord clients of Halcyon was disparaging and derogatory, Mrs. Baines could not succeed in her Set Off. I reject that submission. In my judgment the effect of clause 13 was to impose obligations on each party which were not contingent upon the other party not being in breach. In the event of any breach by either party the innocent party was, in principle, entitled to a remedy.

[242]The question of the possibility of an award of damages would not arise unless some one or more of the alleged disparaging or derogatory statements had in fact been made by Halcyon about Mrs. Baines. One of the points deployed on behalf of Halcyon by Mr. Forshaw was the contention that what was allegedly said, where admitted, by and large was true. That, in my judgment, was not an answer. “Disparage” and “derogatory” are ordinary English words. In The New Shorter Oxford English Dictionary, 4th edition, one of the meanings of “disparage” is “Speak of or treat slightingly or critically; vilify; undervalue; depreciate”. In the same workone of the meanings of “derogatory” is “Lowering in honour or estimation; unsuited to one’s dignity or position; depreciatory, disrespectful, disparaging”. If something is said which lowers the person spoken about in honour or estimation, or is critical, it is disparaging and derogatory whether or not it is true.

[243]I reject the assertion, insofar as made, that the comments complained of were made not by Halcyon, but by Mrs. Low. True it is that the human agent producing the comments was Mrs. Low, but she was always acting, as it seems to me, both on her own behalf and on behalf of Halcyon. Where Mrs. Low produced a written document including the matter complained of, the document was sent on behalf of Halcyon, on the headed stationery of Halcyon.

[244]It is, as it seems to me, obvious that Mrs. Low and Halcyon were disparaging Mrs. Baines in the communications to landlord clients of Halcyon sent on 20 or 21 July 2010 and in which it was asserted that Mrs. Baines had “removed certain personal information with respect to some of our landlords in breach of the Data Protection Act”. The allegation of removal per se was an allegation of misconduct, and the misconduct element was emphasised in those versions which included the reference to breach of Data Protection Act 1998.

[245]I accept the evidence of Mrs. Baines that her mother did say to Mrs. Hammond that Mrs. Baines had not ensured that Mint was a member of an approved tenancy deposit scheme. That was an allegation of incompetence at very least, or possibly of operating the business of Mint irregularly. It was disparaging and derogatory.

[246]I do not accept that the oral statement alleged was repeated in the letter dated 12 August 2010 which Mrs. Low wrote to Mrs. Hammond. I have quoted the terms of the letter earlier in this judgment and it contained no assertion about Mrs. Baines.

[247]The terms of the letter dated 1 October 2010 to NFOPP seem to me to have been seriously disparaging and derogatory of Mrs. Baines.

[248]I have quoted earlier in this judgment the terms of the letter dated 12 October 2010 to Mr. Baker. It made no reference to Mrs. Baines. I reject the assertion pleaded in paragraph 63 of the Defence that, in effect, any reference in a comment complained of to Mint should be interpreted as a reference to Mrs. Baines.

[249]The terms of Mrs. Low’s complaint to NFOPP dated 15 October 2010 were also seriously disparaging and derogatory of Mrs. Baines.

[250]The terms of Mrs. Low’s letter dated 14 April 2011 to the Leasehold Valuation Tribunal were again seriously disparaging and derogatory of Mrs. Baines, but the issue arose whether that communication was the subject of immunity as a communication made in the course of judicial proceedings. I accept the submission of Mr. Forshaw that absolute immunity can be relied upon as an answer to what would otherwise have amounted to a breach of clause 13, for the reasons which I explain in the section of this judgment dealing with the claims in the Harassment Action.

[251]I accept the evidence of Mrs. Baines that Mrs. Low told Tracy Querns that Mrs. Baines had been sacked because she was not capable of running Halcyon, and that comment was disparaging and derogatory.

[252]The submissions of Mr. Forshaw that no damages were recoverable in respect of those breaches of clause 13 of the Compromise Agreement which I have found proved focused on the explanation of Bingham LJ in Watts v. Morrow

[1991] 1 WLR 1421

at page 1445 of the circumstances in which damages for distress or inconvenience are recoverable as damages for breach of contract. What Bingham LJ said was:- “A contract-breaker is not in general liable for any distress, frustration, anxiety, displeasure, vexation, tension or aggravation which his breach of contract may cause the innocent party. This rule is not, I think, founded on the assumption that such reactions are not foreseeable, which they surely are or may be, but on considerations of policy. But the rule is not absolute. Where the very object of a contract is to provide pleasure, relaxation, peace of mind or freedom from molestation, damages will be awarded if the fruit of the contract is not provided or if the contrary result is procured instead. If the law did not cater for this exceptional category of case it would be defective. A contract to survey the condition of a house for a prospective purchaser does not, however, fall within this exceptional category. In cases not falling within this exceptional category, damages are in my view recoverable for physical inconvenience and discomfort caused by the breach and mental suffering directly related to that inconvenience and discomfort. If those effects are foreseeably suffered during a period when defects are repaired I am prepared to accept that they sound in damages even though the cost of the repairs is not recoverable as such. But I also agree that awards should be restrained, and that the awards in this case far exceeded a reasonable award for the injury shown to have been suffered. ”

[253]Mr. Forshaw’s submission was, in effect, that the purpose of the Compromise Agreement was not pleasure, relaxation, peace of mind or freedom from molestation, so damages were not recoverable whatever breaches of clause 13 there may have been.

[254]There are, I think, two answers to that. One is a broad one. Surely the object of a settlement agreement is to provide peace of mind? The reason for which it is made is to compromise disputes, and thus to eliminate from the minds of those involved in the disputes the need to trouble about them and their resolution.

[255]The narrower one is perhaps also obvious, but illuminated by the decision of the House of Lords in Farley v. Skinner

[2002] 2 AC 732

. The leading speech was that of Lord Steyn. At page 746 of the report he commented on the passage of the judgment of Bingham LJ which I have quoted:- “Bingham LJ would have had this truth about judicial decision making well in mind. So interpreted the passage cited is a helpful point of departure for the examination of the issues in this case. Specifically, it is important to bear in mind that Watts v. Morrow

[1991] 1 WLR 1421

was a case where a surveyor negligently failed to discover defects in a property. The claim was not for breach of a specific undertaking to investigate a matter important for the buyer’s peace of mind. It was a claim for damages for inconvenience and discomfort resulting from the breach. In Watts v. Morrow therefore there was no reason to consider the case where a surveyor is in breach of a distinct and important contractual obligation which was intended to afford the buyer information confirming the presence or absence of an intrusive element before he committed himself to the purchase.”

[256]The House of Lords went on to hold that damages in respect of discomfort could be recovered if there was a provision in the contract in question for the achievement of a particular benefit in the nature of pleasure, relaxation, peace of mind or freedom from molestation, and that provision had been an important part of the contract – it was not necessary that the sole purpose of the contract be pleasure, relaxation, peace of mind or freedom from molestation. It is helpful to see how Lord Scott of Foscote, with whose speech Lord Browne-Wilkinson agreed, explained the correct approach, at paragraphs 105 to 108, inclusive, of his speech at pages 771 – 772 of the report:- “105. It is time for me to turn to the present case and apply the principles expressed in Ruxley Electronics and Construction Ltd. v. Forsyth

[1996] AC 344

and Watts v. Morrow

[1991] 1 WLR 1421

. In my judgment, Mr. Farley is entitled to be compensated for the “real discomfort” that the judge found that he suffered. He is so entitled on either of two alternative bases.106. First, he was deprived of the contractual benefit to which he was entitled. He was entitled to information about the aircraft noise from Gatwick-bound aircraft that Mr. Skinner, through negligence, had failed to supply him with. If Mr. Farley had, in the event, decided not to purchase Riverside House, the value to him of the contractual benefit of which he had been deprived would have been nil. But he did buy the property. And he took his decision to do so without the advantage of being able to take into account the information to which he was contractually entitled. If he had had that information he would not have bought. So the information clearly would have had a value to him. Prima facie, in my opinion, he is entitled to be compensated accordingly.

107. In these circumstances, it seems to me, it is open to the court to adopt a Ruxley Electronics and Construction Ltd. v. Forsyth

[1996] AC 344

approach and place a value on the contractual benefit of which Mr. Farley has been deprived. In deciding on the amount, the discomfort experienced by Mr. Farley can, in my view, properly be taken into account. If he had had the aircraft noise information he would not have bought Riverside House and would not have had that discomfort.

108. Alternatively, Mr. Farley can, in my opinion, claim compensation for the discomfort as consequential loss. Had it not been for the breach of contract, he would not have suffered the discomfort. It was caused by the breach of contract in a causa sine qua non sense. Was the discomfort a consequence that should reasonably have been contemplated by the parties at the time of contract as liable to result from the breach? In my opinion, it was. It was obviously within the reasonable contemplation of the parties that, deprived of the information about aircraft noise that he ought to have had, Mr. Farley would make a decision to purchase that he would not otherwise have made. Having purchased, he would, having become aware of the noise, either sell – in which case at least the expenses of the resale would have been recoverable as damages – or he would keep the property and put up with the noise. In the latter event, it was within the reasonable contemplation of the parties that he would experience discomfort from the noise of the aircraft. And the discomfort was “physical” in the sense that Bingham LJ in Watts v. Morrow

[1991] 1 WLR 1421

, 1445 had in mind. In my opinion, the application of Watts v. Morrow principles entitles Mr. Farley to damages for discomfort caused by the aircraft noise.”

[257]Essentially, therefore, the first necessity is to identify a provision in the contract by which a contracting party agreed to perform a service of value to the other party. Clause 13 of the Compromise Agreement was such a provision. Because it was an express term of the Compromise Agreement it more or less followed that that provision was an important term, such that in principle damages were recoverable for breach of it. That was the analysis of Lord Scott at paragraph 106 of his speech. The alternative analysis at paragraph 108 is not material to the circumstances of the present case.

[258]Had it been necessary to assess the damages to be set off against an award in favour of Halcyon, it would have been appropriate, as it seems to me, to recognise that the disparaging and derogatory statements which I have found proved were all made in the context of competition between Halcyon and Mrs. Baines’s business. It would also have been appropriate to take into account that, as I find, the comments in the comparison in Mint’s letters dated 12 August 2010 to existing clients of Halcyon were themselves disparaging, denigrating the services provided by Halcyon in comparison to those provided by Mint. Moreover, it would have been necessary to take into account that the breaches of clause 13 of the Compromise Agreement of which Mrs. Baines complained had not, so far as the evidence went, produced financial loss, or any real harm to the standing or reputation of Mrs. Baines. The statements which seemed to me to be the most disparaging, those to NFOPP and those to the Leasehold Valuation Tribunal, even if it were permissible to take the latter into account, produced no adverse consequences. NFOPP essentially expressed profound disinterest in the allegations made by Mrs. Low, while the observations which she made to the Leasehold Valuation Tribunal did not affect a result in favour of Mint.

[259]In the result I should have allowed Mrs. Baines a sum of £2,000 by way of deduction from any sum which I had found that Halcyon was entitled to as against her.

The issues in the Harassment Action

[260]It is important, I think, to remind oneself not only of the relevant statutory provisions in Protection from Harassment Act 1997, but also of some of the relevant authorities in relation to those provisions.

[261]By Protection from Harassment Act 1997 s.1 as amended, it is provided, so far as presently material, that:- “(1) A person must not pursue a course of conduct –(a) which amounts to harassment of another, and

(b) which he knows or ought to know amounts to harassment of the other. … (2) For the purposes of this section …, the person whose course of conduct is in question ought to know that it amounts to or involves harassment of another if a reasonable person in possession of the same information would think the course of conduct amounted to or involved harassment of the other. (3) Subsection (1) or (1A) does not apply to a course of conduct if the person who pursued it shows – (a) that it was pursued for the purposes of preventing or detecting crime, (b) …

[262]The 1997 Act contains no definition of “harassment”, but it creates, in s.2, a criminal offence in circumstances in which there has been a breach of the provisions of s.1(1). The closest one gets to a definition in the Act itself is in s.7(2):- “References to harassing a person include alarming the person or causing the person distress.”

[263]In Protection from Harassment Act 1997 s.7(3) it is provided, so far as is presently material, that:- “A “course of conduct” must involve – (a) in the case of conduct in relation to a single person (see section 1(1)), conduct on at least two occasions in relation to that person,”

[264]Some guidance as to what amounts to harassment for the purposes of Protection from Harassment Act 1997 s.1(1) was provided by the House of Lords in Majrowski v. Guy’s and St. Thomas’s NHS Trust

[2007] 1 AC 224

. The leading speech was that of Lord Nicholls of Birkenhead. At paragraph 30 of his speech, page 234 of the report, he said, amongst other things:- “Where … the quality of the conduct said to constitute harassment is being examined, courts will have in mind that irritations, annoyances, even a measure of upset, arise at times in everybody’s day-to-day dealings with other people. Courts are well able to recognise the boundary between conduct which is unattractive, even unreasonable, and conduct which is oppressive and unacceptable. To cross the boundary from the regrettable to the unacceptable the gravity of the misconduct must be of an order which would sustain criminal liability under section 2.”

[265]In the same case Baroness Hale of Richmond said at paragraphs 65 and 66, pages 244 – 245 of the report:- “65. They [the legislators] might have considered that the principal purpose of the Act was prevention and protection rather than compensation. It begins with the prohibition of harassment in section 1. This is then made a criminal offence in section 2. Civil remedies, including damages and injunctions are provided for in section 3. The aim, it might be thought, was to deter, to punish or to encourage the perpetrator to mend his ways by the wide range of criminal disposals available on summary conviction, including the restraining orders provided for in section 5, or by the sort of specific prohibitions which may be helpfully contained in an injunction. 66. If this was the aim, it is easy to see why the definition of harassment was left deliberately wide and open-ended. It does require a course of conduct, but this can be shown by conduct on at least two occasions (or since 2005 by conduct on one occasion to each of two or more people): section 7(3). All sorts of conduct may amount to harassment. It includes alarming a person or causing her distress: section 7(2). But conduct might be harassment even if no alarm or distress were in fact caused. A great deal is left to the wisdom of the courts to draw sensible lines between the ordinary banter and badinage of life and genuinely offensive and unacceptable behaviour.”

[266]In Sunderland City Council v. Conn

[2008] IRLR 324

Gage LJ said, at paragraph 12 of his judgment, page 326 of the report:- “It seems to me that what, in the words of Lord Nicholls in Majrowski, crosses the boundary between unattractive and even unreasonable conduct and conduct which is oppressive and unacceptable, may well depend on the context in which the conduct occurs. What might not be harassment on the factory floor or in the barrack room might well be harassment in the hospital ward and vice versa. In my judgment the touchstone for recognising what is not harassment for the purposes of ss. 1 and 3 will be whether the conduct is of such gravity as to justify the sanctions of the criminal law.”

[267]The relevance of the criminal law aspect of harassment was considered by the Court of Appeal in Ferguson v. British Gas Trading Ltd.

[2009] EWCA Civ 46

. In his judgment at paragraphs 17 and 18 Jacob LJ said:- “17. I accept that a course of conduct must be grave before the offence or tort of harassment is proved. And that, as Mr. Porter accepted after some discussion, the only real difference between the crime of s.2 and the tort of s.3 is standard of proof. To prove the civil wrong of harassment it is necessary to prove the case on the balance of probabilities, to prove the crime, the standard is the usual criminal one of beyond a reasonable doubt. 18. In so accepting I would just add this word of caution: the fact of parallel criminal and civil liability is not generally, outside the particular context of harassment, of significance in considering civil liability. There are a number of other civil wrongs which are also crimes. Perhaps the most common would be breaches of the Trade Descriptions Act 1968 as amended. In the field of intellectual property both trade mark and copyright infringement, and the common law tort of passing off (which generally involves deception), may all amount to crimes. It has never been suggested generally that the scope of a civil wrong is restricted because it is also a crime. What makes the wrong of harassment different and special is because, as Lord Nicholls and Lady Hale recognised, in life one has to put up with a certain amount of annoyance: things have got to be fairly severe before the law, civil or criminal, will intervene.”

[268]What, I think, one can derive from these expositions, is that it is not enough to constitute harassment merely that conduct is irritating, annoying, unattractive or unreasonable. In order to cross the threshold the conduct must be grave or fairly severe, amounting to oppressive and unacceptable conduct. People are expected to be reasonably robust, because whether conduct amounts to harassment or not falls to be judged objectively, by reason of Protection from Harassment Act s.1(2). Thus the touchstone of harassment is not the alleged impact on the particular individual said to have been harassed. In my judgment it is inherent in the concept of harassment, as expounded in the judgments to which I have referred, that the course of conduct in question must be targeted at the person alleged to have been harassed and undertaken, objectively assessed, with a view to causing alarm, distress or anxiety of more than a minimal level.

[269]It was a feature of the allegations of harassment upon which Mrs. Baines relied that chronologically they fell into two parts, those alleged to have occurred before the presentation on 8 June 2010 of the Compromise Agreement and those alleged to have occurred after that date. Those allegations which related to events before 8 June 2010 were essentially a list of anything which it was said that Mrs. Low had done with a view to displacing Mrs. Baines as managing director of Halcyon which Mrs. Baines did not like. Those allegations which related to events after 8 June 2010 by and large were also said to be disparaging and derogatory comments. None of this looked at all promising as amounting to a course of conduct sufficiently grave to constitute harassment.

[270]I am afraid that the allegations in the period up to 8 June 2010 included many which were, frankly, ludicrous. It was ridiculous to suggest that calling, or attempting to call, an extraordinary general meeting or a board meeting at the beginning of February 2010 amounted to harassment. Similarly, to arrange for couriers to call on Mrs. Baines on, as I find, two occasions, could not conceivably amount to harassment. The allegation at paragraph 8.3 of the Part 8 Endorsement was not made out. The minutes of the meeting on 5 February 2010 did not indicate that Mrs. Baines had been removed as managing director at that time, but, if it had, that would not, in my judgment, have amounted to harassment. Requiring the employees of Halcyon not to contact Mrs. Baines without going through Mrs. Low first, which is the extent to which I find the facts contended for at paragraph 8.4 of the Part 8 Endorsement made out, did not amount to harassment. Neither did requiring Mrs. Baines to return her laptop, keys and office alarm fob. The evidence did not satisfy me that the locks at the premises of Halcyon were changed in February 2010. There was no obvious reason to change locks at that point, not least because Mrs. Baines had surrendered her set of keys. However, as she had surrendered her set of keys, and so could not visit the offices of Halcyon without being admitted on arrival, changing the locks could not possibly have amounted to harassment of Mrs. Baines. Removing Mrs. Baines as a signatory to the bank accounts of Halcyon and changing account passwords was unfriendly, and, as Mr. Forshaw submitted in his closing submissions, probably unlawful and ineffective, but it was not, in my judgment, harassment. To suggest that instructing a solicitor to write a letter was harassment struck me as adventurous, not least because Mrs. Baines accepted in cross-examination that there was some substance in the allegations made.

[271]In the result I dismiss all of the allegations of harassment of Mrs. Baines by Mrs. Low in respect of the period prior to 8 June 2010.

[272]It is in the nature of harassment, if said to have been committed by action taken towards a third party, that the purpose of the action was to provoke the third party to take steps in relation to the person alleged to have been harassed which would be sufficiently grave to cause alarm, distress or anxiety. It followed that manoeuvring for commercial advantage as against a competitor could not amount to harassment, if the object of the exercise was to retain business which the person alleged to have been harassed was seeking to obtain for that person’s business. All of the matters complained of in paragraphs 8.10 to 8.15 of the Part 8 Endorsement seemed to me to fall in that category. However, it was also important to notice that some of the matters alleged related not to Mrs. Baines personally, but to Mint. I reject the plea that references to Mint should be treated as references to Mrs. Baines in the context of the allegations of harassment just as I have in the context of alleged breach of clause 13 of the Compromise Agreement.

[273]It was not harassment of Mrs. Baines for Mrs. Low to inform existing landlord clients of Halcyon, on or about 20 and 21 July 2010, that Mrs. Baines had “removed certain personal information with respect to some of our landlords in breach of the Data Protection Act”.

[274]I have indicated that I accept that Mrs. Low told Mrs. Hammond that Mrs. Baines had not ensured that Mint was a member of an approved tenancy deposit scheme, but by no stretch of the imagination could taking that step be described as harassment.

[275]The making by Mrs. Low of her complaints to NFOPP was undoubtedly influenced by a desire to cause difficulty for Mrs. Baines in conducting the business of Mint. The allegations made were serious, but I accept the submission of Mr. Forshaw that complaining to a professional body about a member of that body is unlikely to amount to harassment, either because it would not, objectively, amount to harassment or because it was a reasonable step to take to ventilate a grievance. It is, perhaps, important to recognise that making such a complaint will be a futile waste of time unless either the complainant believed the complaints to be true, or the complainant thought that the person complained about would be put to considerable trouble, expense, and possibly anxiety in dealing with the complaint. I am not persuaded that Mrs. Low’s complaints to NFOPP amounted to harassment of Mrs. Baines.

[276]I have already pointed out that Mrs. Low’s letter dated 12 October 2010 to Mr. Baker made no reference to Mrs. Baines. It did not amount to harassment of her.

[277]What was complained of at paragraph 8.14 of the Part 8 Endorsement was in fact the writing by those acting as solicitors on behalf of Halcyon and Mrs. Low in the Halcyon Action and the Harassment Action of letters in November 2011, not 2010, to former clients of Halcyon seeking evidence for use at this trial. The writing of those letters could not possibly amount to harassment.

[278]The letter dated 14 April 2011 which Mrs. Low wrote to the Leasehold Valuation Tribunal was written in the context of Mrs. Low seeking to persuade the Tribunal to award that Halcyon should remain receiver and manager of Willowdene and in response to a letter from Mr. Kitching upon which Mrs. Low had been invited to comment. That could not possibly amount to harassment of Mrs. Baines.

[279]Telling Tracy Querns that Mrs. Baines had been sacked because she was not capable of running Halcyon also could not possibly amount to harassment of Mrs. Baines. Although the comment was disparaging, Mrs. Low had no reason to suppose that Tracy Querns would pass the comment on to Mrs. Baines, but in any event merely making derogatory comments about someone to a third party does not, in my judgment, amount to something sufficiently grave to be harassment.

[280]In the result all of the allegations of harassment made on behalf of Mrs. Baines against her mother fail because none of them amounted to harassment. Most of the allegations were of matters which did not even potentially amount to harassment because of their nature, but anything which, if sufficiently serious, might have amounted to harassment, was not sufficiently grave actually to do so.

[281]It appeared that essentially the same approach to identification of alleged events of harassment of Mrs. Mogridge had been adopted in formulating the list in the Part 8 Endorsement as had been adopted in the case of Mrs. Baines – in other words a trawl through events looking for anything which might arguably form a matter of complaint, without any obvious consideration of the requirements to be satisfied if an allegation of harassment was to be made out. This was most obviously the case in the allegations in particular (e) under paragraph 6, which concerned Mrs. Low’s letter dated 1 October 2010 to NFOPP. Although Mrs. Mogridge’s name appeared in the letter, she was not a member of that body and it had no jurisdiction over her. Merely mentioning her name, albeit in an unflattering context, in those circumstances could not conceivably amount to harassment of her. The analysis is similarly in relation to the complaints about Mrs. Low’s communications with landlord clients of Halcyon on or about 20 or 21 July 2010. Mrs. Mogridge’s name was mentioned in an unflattering context, but it was not remotely possible that the recipients would be able to produce any adverse consequences for Mrs. Mogridge.

[282]There were six allegations of harassment by Mrs. Low of Mrs. Mogridge. I have disposed of two. Two others also merit little consideration. The allegation at particular (a) under paragraph 6 of the Part 8 Endorsement was factually incorrect. Mrs. Low had not said in her letter dated 12 August 2010 to Mrs. Hammond that Mrs. Mogridge had stolen Mrs. Hammond’s keys, only that she had removed them. As Mrs. Hammond was in the process of transferring her affections to Mint that allegation was not even disparaging. It was merely an explanation as to why Halcyon was not able to return the keys to Mrs. Hammond. The allegation that Mrs. Low had told Mr. Biggs that Mrs. Mogridge had been arrested for theft I find proved, on the evidence of Mrs. Mogridge, as I have said. However, that information was correct, albeit possibly misleading without the additional information that no further action had been taken following the arrest. That notwithstanding, Mrs. Low had no reason to suppose that Mr. Biggs would report to Mrs. Mogridge what Mrs. Low had said, and Mr. Biggs was not in a position to take any adverse steps against Mrs. Mogridge in the light of what he had been told. This was not an act of harassment.

[283]On the other hand, I am entirely satisfied that Mrs. Low maliciously, and with a view to causing alarm, distress and anxiety to Mrs. Mogridge, made her complaint to the police on about 25 August 2010. Mr. Forshaw submitted that it was not open to Mrs. Mogridge to complain about that matter because absolute immunity applied to complaints to the police. That is a question to which I shall shortly turn. However, my decision on that point is not crucial to my ultimate conclusion that Mrs. Mogridge’s claim for damages for harassment fails. That is because I have already indicated that Mrs. Mogridge has failed to discharge the burden upon her of satisfying me that it has been proved, as alleged at particular (c) of paragraph 6 of the Part 8 Endorsement, that Mrs. Low was guilty of:- “Making a further allegation to the police in or around 13th September 2010 that the 1st Claimant had stolen keys to 2 Saxon House and 20 Tippett Court and two copies of her employment contract.”

[284]The result is that Mrs. Mogridge’s claim for damages for harassment fails because there was, on any view, only one incident of harassment, and not a course of conduct.

[285]Had I been satisfied that there had been at least two instances of harassment of Mrs. Mogridge, including the complaint by Mrs. Low to the police made on about 25 August 2010, it would have been necessary to consider Mr. Forshaw’s submission based on absolute immunity. Actually I do still need to consider that point because of its relevance to the claim of Mrs. Baines that Halcyon was in breach of clause 13 of the Compromise Agreement by reason of the letter dated 14 April 2011 written by Halcyon to the Leasehold Valuation Tribunal.

[286]There exists a principle that, in the interests of justice, there is an absolute immunity against liability in defamation and many, but not all, other claims in respect of statements made in the course of judicial proceedings. A broad explanation of the principle can be found in the judgment of Auld LJ in Heath v. Commissioner of Police for the Metropolis

[2005] IRLR 270

at paragraph 17 on page 274 of the report:- “Mr. Hand submitted, and I agree, that there is no basis for the proposition that the absolute immunity rule only attaches to defamatory statements. As the employment tribunal well described in paragraphs 9(o) to (q) of its extended reasons, and as the Employment Appeal Tribunal also found, it attaches to anything said or done by anybody in the course of judicial proceedings whatever the nature of the claim made in respect of such behaviour or statement, except suits for malicious prosecution and prosecution for perjury and proceedings for contempt of court. That is because the rule is there, not to protect the person whose conduct in court might prompt such a claim, but to protect the integrity of the judicial process and hence the public interest. Given the rationale for the rule, there can be no logical basis for differentiating between different types of claim in its application. The width of its application in this respect has been judicially stated many times, most notably in: Munster v. Lamb

(1883) 11 QBD 588

CA per Fry LJ at 607 – 608; Marrinan v. Vibart

[1963] 1 QB 528

, per Sellers LJ at per 535 and per Diplock LJ at 538 – 539.”

[287]A fuller explanation of the rationale for the rule can be found in the speech of Lord Hoffmann in Taylor v. Serious Fraud Office

[1999] 2 AC 177

at page 215:- “… I therefore agree with the test proposed by Drake J in Evans v. London Hospital Medical College (University of London)

[1981] 1 WLR 184

, 192:

“the protection exists only where the statement or conduct is such that it can fairly be said to be part of the process of investigating a crime or a possible crime with a view to a prosecution or a possible prosecution in respect of the matter being investigated.”

This formulation excludes statements which are wholly extraneous to the investigation – irrelevant and gratuitous libels – but applies equally to statements made by persons assisting the inquiry to investigators and by investigators to those persons or to each other. As the policy of the immunity is to encourage freedom of expression, it is limited to actions in which the alleged statement constitutes the cause of action. In Marrinan v. Vibart

[1963] 1 QB 528

the Court of Appeal held that the immunity in respect of statements made in court or with a view to a prosecution could not be circumvented by alleging that it formed part of a conspiracy with other witnesses to give false evidence. That seems to me to be right. On the other hand, the immunity does not apply to actions for malicious prosecution where the cause of action consists in abusing legal process by maliciously and without reasonable cause setting the law in motion against the plaintiff. It does not matter that an essential step in setting the law in motion was a statement made by the defendant to a prosecuting authority or even the court: see Roy v. Prior

[1971] AC 470

. Actions for defamation and for conspiracy to give false evidence plainly fall within the policy of immunity and actions for malicious prosecution fall outside it. In between, there is some disputed ground. …”

[288]In Westcott v. Westcott

[2009] QB 407

the Court of Appeal determined that the immunity extended as far as complaints to the police. The leading judgment was that of Ward LJ. At paragraph 34 of his judgment, at pages 422 – 423 of the report, he said:- “In my judgment the answer is to be found in the Taylor case

[1999] 2 AC 177

. That establishes that immunity for out of court statements is not confined to persons who are subsequently called as witnesses. The policy being to enable people to speak freely, without inhibition and without fear of being sued, the person in question must know at the time he speaks whether or not the immunity will attach. Because society expects that criminal activity will be reported and when reported investigated and, when appropriate, prosecuted, all those who participate in a criminal investigation are entitled to the benefit of absolute privilege in respect of statements which they make. That applies whether they are informants, investigators, or prosecutors. The answer to the argument that immunity should not give protection to a malicious informer was tellingly given by Lord Simon of Glaisdale in D v. National Society for the Prevention of Cruelty to Children

[1978] AC 171

, 233:

“I cannot leave this particular class of relevant evidence withheld from the court [sc the identity of the informant who gave information of ill treatment of children to the NSPCC] without noting, in view of an argument for the respondent, that the rule can operate to the advantage of the untruthful or malicious or revengeful or self-interested or even demented police informant as much as of one who brings information from a high-minded sense of civic duty. Experience seems to have shown that though the resulting immunity from disclosure can be abused the balance of public interest lies in generally respecting it.”

[289]Mr. Forshaw submitted that the decision of the Court of Appeal in Westcott v. Westcott, supra, was to the effect that, save in cases of malicious prosecution, perjury and contempt of court, the law provided no remedy for a statement made to the police, no matter how malicious or lacking in any justification. Mr. Purnell submitted that that submission was not well-founded and that the true principle, as explained by Lord Hoffmann in Taylor v. Serious Fraud Office, supra, was that it was not open to a party to base a claim on a statement to the police if the cause of action depended on the statement. Mr. Purnell submitted that that was not the case where the making of a complaint to the police was relied upon as an act of harassment, or, I think, as a breach of a contractual stipulation like clause 13 of the Compromise Agreement.

[290]It is striking, as it seems to me, that Protection from Harassment Act 1997 s.1(3)(a) was directed specifically at protecting from exposure to liability for harassment taking steps which were “pursued for the purpose of preventing or detecting crime”. Moreover Protection from Harassment Act 1997 s.1(3)(c) provides protection against exposure to liability for harassment if “in the particular circumstances the pursuit of the course of conduct was reasonable”. Certainly the provisions of Protection from Harassment Act 1997 s.1(3)(a) were unnecessary unless Parliament contemplated that there could be liability for harassment for making complaints to the police. On the face of it, the statutory protection is not absolute, but depends upon whether the genuine reason for making a complaint to the police was “for the purpose of preventing or detecting crime”. As for allegations in other types of proceeding – for example, in proceedings before a Leasehold Valuation Tribunal – the statutory protection depended upon the conduct in question being “reasonable”. It would ordinarily appear reasonable to seek to advance one’s own case or to resist the case of an opposite party in litigation by deploying any point which was reasonably available, whatever its prospects of success.

[291]I am persuaded that the submissions of Mr. Purnell in relation to harassment are sound. It seems to me that, in principle, claims of harassment based on the making of complaints to the police are not within the scope of absolute immunity from suit because the cause of action depends not on the particular statement made to the police, but on the fact that the making of a complaint to the police is an act in a course of conduct amounting to harassment. If I were wrong in that analysis, then I am persuaded that, by making the provision which it has in Protection from Harassment Act 1997 s.1(3)(a), Parliament has implicitly ordained that making a complaint to the police can be an act of harassment unless genuinely made “for the purpose of preventing or detecting crime”.

[292]However, I am not persuaded that the general rule of absolute immunity in respect of statements made in judicial proceedings should not apply to disparaging or derogatory statements made to a Leasehold Valuation Tribunal.

[293]There remains one aspect of Mrs. Mogridge’s claim for harassment which merits attention. As I have indicated, her case was that she had suffered psychiatric damage as a result of the harassment alleged. Appropriate experts, Dr. Waguih Guirguis and Dr. Christopher McAllister, were instructed on behalf of Mrs. Low and Mrs. Mogridge, respectively, to consider the alleged psychiatric damage to Mrs. Mogridge. Dr. Guirguis and Dr. McAllister were instructed, in the usual way, to prepare a joint statement as to the matters about which they were in agreement and those about which they did not agree. Happily they were in agreement about all relevant matters. They recorded their agreement in a joint statement signed in November 2013. The joint statement included:- “1. We agree that Mrs. Mogridge had a past history of panic attacks, recurrent episodes of anxiety and depressed mood, sufficiently severe for her to seek medical help and receive treatment by both betablockers and anti-depressants. Mrs. Mogridge was, in our agreed opinion, particularly vulnerable to react to further life stressors with similar symptoms. We also note that she had some chronic health problems which pre-dated the index events and continued since then. 2. We agree that Mrs. Mogridge suffered recurrence of her panic disorder soon after she was released from police confinement that lasted until she completed a successful course of therapy in February 2011. We believe that this episode was directly related to her experience of being arrested and locked up in solitary confinement, as she claims. 3. … 4. We also agree that she had a recurrence of her previous episodes of anxiety and depressed mood, consistent with an adjustment disorder of mild to moderate severity. We believe that this episode started soon after the charges against her were dropped and her feeling that she was falsely and unfairly accused of theft. 5. We appreciate that the legal process that ensued since then was inherently stressful and agree that this episode of adjustment disorder was the outcome of interaction between pre-accident vulnerability, residual symptoms of panic disorder and the stress of pursuing this case against her ex-employer, with added contribution from pre-accident health problems. 6. When we both saw Mrs. Mogridge (Dr. Guirguis in July 2013 and Dr. McAllister in April 2012) she was intermittently experiencing some residual symptoms of adjustment disorder, triggered mainly by the stress and reminding effect of this litigation. 7. We agree that Mrs. Mogridge’s psychological problems since her release from police confinement did not impair her ability to work, from the psychiatric point of view, and are not likely to do so from now until normal retirement age. 8. The short term prognosis is quite good with any residual symptoms she may still be experiencing resolving almost completely once the stress, reminding and holding back effects of this litigation are removed. …”

[294]The effect of the joint statement seems to have been that what prompted the onset of psychiatric damage was being confined in the cell at Stevenage Police Station on 27 August 2010. That occasion, on my findings, was a result of a first act of harassment. Had I found that Mrs. Mogridge had proved that Mrs. Low had made a second statement to the police, so as to constitute a course of conduct completing a cause of action in harassment, it seems to me that I should, in assessing damages, have had to discount the effect upon Mrs. Mogridge of the first incident because at that stage there was no completed cause of action, and the psychiatric damage could not be said to be a consequence of the totality of the acts of harassment which had been proved.

Conclusion

[295]In the result the claims of Halcyon in the Halcyon Action fail and are dismissed and the claims of Mrs. Mogridge and Mrs. Baines in the Harassment Action fail and are dismissed.

Halcyon House Ltd v Baines & Ors [2014] EWHC 2216 (QB)

The evidence and findings of basic fact

As ever

The options now seem to be limited to:

Attendees: Caroline Baines, Nicola Low, Jeremy Low

Sue mentioned the following problems

We appreciate this may be difficult for you but please consider

PLEASE NOTE

I was out at 10.30

ANY OTHER BUSINESS

Yours sincerely

In response to your letter dated 1st March:

CB TRANSFERRED MONEY TO HER OWN ACCOUNT WITHOUT ASKING OR ADVISING

Mrs. Low formally proposed that

Now to your letter dated 25th April:

Would you consider switching the management of your properties to the new company?

In the light of the above our client requires full disclosure from your client of:

Qualified Staff

The allegations made in the Halcyon Action

Fiduciary duties

Breaches of Duty

PARTICULARS

The allegations made in the Harassment Action

The Set Off

The issues in the Harassment Action

Conclusion

Cited in 3 later judgments