IS Innovative Software Ltd v Howes

J U D G M E N T

Thursday, 19 February 2004

1. LORD JUSTICE NEUBERGER: This is the judgment of the court on an appeal from a decision of His Honour Judge Yelton, sitting as a Deputy High Court Judge, who, on 16th April 2003, dismissed a claim brought by IS Innovative Software ("the company") against Mr Robert Howes. The claim had also been brought against five other defendants, but the company settled with four of them, and there is no appeal against the dismissal of the company's claim against the fifth defendant, because it is in insolvent liquidation.

2. Although there were other issues before the judge, the issues in this appeal arise from the fact that the company claimed damages from Mr Howes for two alleged torts. The first was based on an agreement, to which Mr Howes was party, by which contracts of employment of four employees of the company (including the second and sixth defendants), were executed after Mr Howes had ceased to be managing director of the company, and were backdated to a time when he was the managing director. The second tort alleged against Mr Howes is based on the contention that he induced two other employees of the company (the third and fourth defendants), to breach their respective contracts of employment with the company by persuading them to provide technical assistance and services to him and his new company (the fifth defendant) in connection with a proposed business which would have competed with that of the company. This second claim was not only advanced on the basis of inducing breach of contract, but also on the basis of conspiracy.

The first issue

3. The basic facts, as agreed between the parties or found by the judge, are as follows. The company was an English subsidiary of a Frankfurt-based company ("the parent company"), and carried on the business of the development and marketing of computer software, specialising in providing financial information websites. Mr Howes became managing director of the company when it took over his business in October 1998. His contract of employment, dated 16th October 1998, provided for termination by three months' notice either way, but, if notice was given by him, it could only take effect on the quarter day next after the expiry of that three-month period. (In this connection, the quarter days were agreed as being the last day of March, June, September and December each year).

4. As was common in this field of business, the company seemed to be doing well during the two years following October 1998. In the summer of 2000, the parent company agreed with Mr Howes that he would become head of international development of the group, and would cease the day-to-day running of the company, while remaining its sole director.

5. This decision involved imposing substantially greater responsibilities on four senior employees of the company, Mr Gorst, Miss Barker, Mr Cowling and Miss Kelleher ("the four employees"). On 8th September 2000, the company held a meeting to explain its expansion and restructuring plans. The meeting was held in Cheltenham Town Hall, and was principally addressed by Mr Stephan Wolf of the parent company.

6. Immediately after the meeting of 8 September 2000, the four employees were told by Mr Wolf, in the presence of Mr Howes, that their responsibilities would expand, that their pay would increase and that they were "key employees". Mr Wolf accepted in cross-examination that following those discussions, each of the four employees was "entitled to rely on the fact that they were key employees". The judge held that this would have been understood by all of them to mean that they were entitled to three months' notice from the company if they were to be dismissed, and that they were obliged to give three months' notice to the company if they wished to terminate their respective employments, but that the employee's notice had to expire on a quarter day, whereas the company's did not.

7. Prior to the meeting, the terms of employment of the four employees insofar as they related to notice appear to have been as follows. Miss Kelleher was entitled to (and obliged to give) one month's notice. Mr Gorst’s position was unclear. Miss Barker’s contract entitled her to three months’ notice. Mr Cowling’s written contract of employment, dated 20 February 2000, stated that he was entitled to one month’s notice. However, he said in evidence that, in July 2000 his position had been upgraded and that he had been given "key employee" status. He told the judge that he understood this to mean that, as a result, he was entitled to three months’ notice, and, as mentioned above, the judge accepted that this was understood among employees of the company to be the effect of being given “key employee" status.

8. On 8 September 2000, following the meeting, Mr Wolf had dinner with Mr Howes, Mr Gorst, Miss Barker and another employee of the company. After dinner, Mr Wolf dropped off the others at their respective homes and, while in the car and in the presence of Mr Howes, told Miss Barker that he wished to “bind” the four employees to the company, and, to that end, their respective contracts of employment would provide for three months’ notice.

9. Although Miss Barker had been told by Mr Wolf to prepare amended contracts for the four employees promptly, and this instruction was repeated by Mr Thomas Rebel of the parent company shortly afterwards, she failed to do so because of pressure of work.

10. By December 2000 the heady atmosphere and optimistic ambitions which were still prevailing at the time of the September meeting had evaporated. On 21st December 2000, Mr Howes resigned from the company, and had discussions with Mr Wolf. As a result of those discussions, the judge concluded that he was treated as having been made redundant on 31st December 2000. Mr Wolf visited the company on 4th January 2001, and, as the judge found, within a day or so of that visit, the existence of what had been termed the “hit list" of those to be made redundant was generally known among the staff, as were the names on it. Among those names were Mr Gorst and Miss Barker.

11. Around this time it occurred to Miss Barker that she had not drawn up formal contracts for the four employees providing for notice periods of three months, and she discussed the matter with Mr Cowling. It seems pretty clear from the evidence that they agreed that backdated contracts of employment would be drawn up for each of the four employees, which would then be presented to Mr Howes for signature. The arrangement was instigated by Miss Barker and Mr Cowling, and it was only after they had decided on this course of action that they approached Mr Howes at home to ask if he would be prepared to sign such contracts, on the basis that they would be backdated to a date when he was still managing director of the company.

12. Accordingly, it was agreed that, to quote the judge, “new contracts of employment would be prepared for the four [employees] and would be clandestinely backdated to November 2000”. The two necessary parties to this arrangement were Mr Cowling and Mr Howes. Mr Cowling appears to have been the only party to the arrangement who had the technical expertise necessary to alter the dates on the computer, and Mr Howes’ involvement was to sign the backdated contracts as he would have been the managing director at the date the contracts were to bear.

13. The documents which Mr Howes signed in respect of each of the four employees were backdated letters in respect of each of the four employees confirming the terms and conditions on which they were to be employed from the date of the letters. These letters constituted offers of employment which did not contain all the terms and conditions. In relation to termination, the judge accepted Mr Howes’ evidence that “he thought that what was being done was simply to bring the notice periods into line with those in his own contract”.

14. The backdated letters signed by Mr Howes in relation to each of the four employees were on company writing paper and were dated 1st November 2000. They were headed “Revised Terms of Employment”, and began by offering the relevant employee the post which had been indicated in the September meeting. It continued:

"This position is subject to the terms set out in the Statement of Main Terms and Conditions of Employment except where varied or amended by this document."

The letter then went on to describe some of the essential features of the post, including the remuneration, hours of work, and “employee status” which was in these terms:

"You have the privilege from October 2000 of being key employee status and these terms are laid out in your Statement of Terms and Conditions."

15. There was no specific mention of the period of notice in the backdated letter. The backdated letters were duly countersigned by the four employees on or shortly after 7th January 2001.

16. At the same time as each of the four employees countersigned the backdated letters, they each also signed a backdated “Statement of Main Terms and Conditions of Employment” (“Main Terms”) which set out the terms of their respective employment in greater detail. Under the heading “Termination”, it was provided that termination of the employment could only be effected by the company or the employee giving the other three months’ notice to run from a quarter day, “unless stated otherwise in your letter of offer”. These backdated Main Terms were only signed by the employee.

17. For the purpose of this first issue, it is important to emphasise the distinction between the termination provision in the backdated Main Terms and those in the standard Main Terms for key employees. While they both provided for three months’ notice by the company, the backdated version required the notice to expire on a quarter day, whereas the standard version permitted the expiry to be at any time. Accordingly, the backdated Main Terms were, in this respect, more beneficial to the employee, and concomitantly more onerous on the company.

18. The company’s case is that:

i) by agreeing with Miss Barker and Mr Cowling to execute the backdated letters, Mr Howes entered into an arrangement which amounted to a conspiracy;

ii) because the conspiracy involved an agreement to execute the four backdated letters, it was an unlawful means conspiracy;

iii) although Mr Howes may have been principally concerned to assist the four employees, he nonetheless must have intended to harm the company;

iv) as a result of the conspiracy, the company was induced to pay, and indeed did pay, Miss Barker and Miss Kelleher substantially more money than they would have paid in respect of their respective redundancy and retirement.

19. The judge found that there was an agreement between Mr Howes, Miss Barker and Mr Cowling in early January 2001 to execute contracts of employment backdated to 1st November 2000 in respect of the four employees, but that Mr Howes did not intend to alter the notice provisions from what had been understood to have been agreed in respect of each of the four employees at the September meeting.

20. The judge dismissed the claim because:

i) Mr Howes did not have the requisite intention to injure the company; and

ii) in any event, the company suffered no damage as a result of the conspiracy.

21. On behalf of the company Mr Guy Tritton contends that neither of these grounds can be justified.

22. In relation to the first ground, he contends, first, that the judge went wrong on the facts, second, that he went wrong on the law, and, third, that it was not open to the judge to make the finding that he did in light of the state of the pleadings.

23. The first point, namely that the judge went wrong on the facts, involves considering his conclusion that the four employees, and in particular Miss Kelleher, were entitled to three months’ notice as a result of what happened on the day of the September meeting. In this connection the judge effectively found: (a) that each of the four employees were told by Mr Wolf on the day of the September meeting that he/she was a “key employee”; (b) that this involved each of them being entitled to a three month notice period; and (c) that by the end of 2000 this arrangement had become contractually binding between the company and each of the four employees. As to the company’s argument that the three-month period of notice put forward at the September meeting in relation to each of the four employees was “negotiable”, the judge said this:

“The surrounding circumstances in this case lead us to the view that none of [the four employees] did wish to negotiate on that point: they were no doubt pleased at their elevation and the consequent increase in salary.”

24. Despite Mr Tritton’s argument to the contrary, we consider that this was a conclusion which the judge was entitled to reach. The specific proposed variations to their respective contracts of employment which were put forward to each of the four employees on the day of the September meeting were that:

i) as a result of Mr Howes’ ceasing to run the company full time, their responsibilities would be greater;

ii) their salaries would increase;

iii) they would become “key employees”, with (as the judge found consistently with the evidence) the consequence that the period of notice in respect of their employment would increase to three months on either side.

25. If what was put forward by Mr Wolf on the day of the September meeting can be construed as an offer, then it seems to us that the judge was entitled to conclude that the offer was accepted by the conduct of each of the four employees, albeit that it is fair to say that the judge expressed that more in the negative than in the positive in the passage we have quoted. It would appear that they accepted the greater responsibility involved in each of their roles as a result of the September meeting, and, not surprisingly, that they accepted the concomitant higher salary they were paid. In these circumstances, it seems to us that if, as we think must be correct, what was put forward by Mr Wolf on 8th September constituted an offer to each of the four employees, they subsequently accepted that offer by their conduct. Indeed, it was not unreasonable for the judge to express that conclusion in the negative: by hearing the company’s proposals, and letting the company put those proposals into effect, and indeed in taking part in those proposals, without in any way indicating dissatisfaction, it can fairly be said that, at any rate by the end of 2000, it was too late for any of the employees to go back on what any reasonable employer would have understood they had agreed to.

26. The fact that each employee already had a written contract of employment does not, to our mind, point to an opposite conclusion. There is nothing which prevents a written contract of employment being varied by oral agreement, or even by unequivocal conduct; there is no reason why the normal rules of varying contracts by subsequent oral agreement or conduct should not apply. If Mr Tritton’s argument is correct, it would have been open to the company to go back on the increased payments of salary to the four employees. Given that that cannot be right (as Mr Tritton realistically accepts), then it seems to us that the judge’s conclusion with regard to the variation of the notice provisions in the respective contracts also applies: the increases in salary and the changes in the notice provisions were part and parcel of the same overall variation involving the three components we have mentioned.

27. It is not irrelevant to note in this connection that the evidence of Mr Cowling (called as a witness on behalf of the company) was consistent with the notion, contrary to the argument put forward by Mr Tritton, that the company was prepared to agree oral variations to written contracts of employment. Some five months after he had signed his written contract of employment, he regarded himself as having key employee status, with the consequence of a longer, three-month period of notice, quite possibly as a result of an oral discussion. Indeed, it seems to have been largely as a result of unilateral decision by the company which he effectively accepted.

28. In his submissions, Mr Tritton relies on evidence from Mr Howes to rebut the proposition that there was a contract. First, he points out that Mr Howes was prepared to accept that if one of the four employees had been presented with a written contract which provided for three months’ notice and he had objected, there would have been a negotiation. Secondly, he relies on the fact that Mr Howes said in cross-examination that he did not believe that the 8 September proposals gave rise to a contract. We do not find either of those points persuasive.

29. Mr Howes’ evidence in cross-examination as to what he believed on this point was equivocal, especially in the light of the fact that he was quite clear in his witness statement that there was contractual variation in the employment contracts of the four employees. In any event, the fact that a party believes that there was or was not a contract is not conclusive of the issue whether or not there is a contract. Indeed, that is putting it too low: such evidence may not be merely of little weight, but positively inadmissible save in exceptional circumstances. In any event, the fact that the company might have been prepared to negotiate the three-month notice period, if one or more of the four employees had requested it, is probative of nothing, other than being consistent with Mr Wolf’s keenness to ensure, so far as possible, that the four employees remained with the company.

30. We have not so far dealt with Mr Tritton’s contention that the existence of an oral contract effectively extending Miss Kelleher’s period of notice to three months was not pleaded. This is perfectly true. However, there is no doubt that all the basic facts upon which such a contention relied were clearly set out in the witness statements served on behalf of Mr Howes and the other defendants well in advance of the hearing. Indeed, the clearest piece of evidence in this connection was in the third witness statement of Mr Cowling, prepared and served on behalf of the company, where, as we have mentioned, he specifically stated that “we understood the new status [sc that of key employee entitled to three months’ notice applicable to all four employees] to be effective immediately”. As to the specific contention that there was a contract, such an allegation was to be found in the second witness statement of Mr Howes, where in similar terms he referred to Mr Wolf making the four employees “an offer” which they “accepted” because they “began providing the services of key employees” and the company “increased their salaries” which, according to Mr Howes “means that there was a contract already in place between [the company] and [the four employees]”.

31. Although we accept that the oral contract found by the judge was not expressly contained in the pleadings, it was common ground on the pleadings that Mr Wolf told the four employees on 8th September 2000 that "they were all key employees".

32. In all these circumstances, it appears to us that it was not unfair on the company for the judge to have concluded that there was a contract between the company and the four employees involving a variation to their respective contracts of employment to bring them into line with what was generally understood to be “key employee” status. Indeed, bearing in mind the state of the pleadings and what was in the witness statements, if, as the judge found, there was such a contractual variation, we believe that it would have been unfair on Mr Howes for the judge to have refused to give effect to his conclusion that there was a contractual variation, simply because it was not specifically pleaded. It appears to us that this was a point which the company and its legal advisers had every opportunity to deal with. Quite apart from what was in the witness statements, it was an issue which the company could and did raise in evidence, cross-examination and argument.

33. However, that is not the end of the first issue on this appeal. As already mentioned, there is a subtle but important distinction between the requirement with regard to the notice of termination to be given by the company under the standard Main Terms for a key employee, namely three months at any time, and that to be given by the company under the backdated Main Terms signed by the four employees at the same time as the backdated letters, namely three months expiring on one of the quarter days.

34. It therefore seems to us to follow that, insofar as it could be shown that anything in the backdated letters themselves was relied on by the company as representing the terms upon which any of the four employees was employed, Mr Howes would be potentially liable. Thus, if, as was not the case, the salary recorded in the backdated letter had been higher than the salary proposed on 8th September, the company would have been in a strong position to claim damages from Mr Howes if it had paid sums to one of the four employees based on the rate recorded in the backdated letter, in the belief that it was bound to do so because it was bound by the backdated letter. However, that is not the basis upon which this claim was, or indeed could be, mounted against Mr Howes.

35. The company’s case is that because the backdated Main Terms, also dated 1st November 2000, and referred to in the backdated letters signed by Mr Howes, provided for more generous notice provisions than those to which the four employees were entitled, the company paid significantly more money to Miss Barker and Miss Kelleher that it would have done.

36. That contention raises the question whether Mr Howes can be held responsible for the fact that the backdated Main Terms, which he never saw, included an unwarranted purported variation to the company’s disadvantage in the notice provisions of each employee’s contract. The judge concluded that Mr Howes was not so liable. Not only did the judge find that Mr Howes did not see the backdated Main Terms, but he accepted that, in relation to termination, Mr Howes "thought that what was being done [by signing the backdated letters] was simply to bring the notice periods [for the four employees] into line with those in his own contract". He also held that an intention to injure the company "did not exist in the minds either of Mr Cowling or Mr Howes". He described their intention as being "to make good an omission which had occurred and not to commit [the company] to anything to which they had not agreed".

37. Of the three conspirators, namely Mr Howes, Mr Cowling and Miss Barker, the judge found that it was only Miss Barker who was responsible for, indeed that it was only Miss Barker who knew of, the subtle variation to the notice terms contained in the backdated Main Terms, whereby the three months' notice to be given by the company had to expire on a quarter day. The reasonableness of Mr Howes' belief is reinforced by the fact that a “Main Terms” was attached to his contract of employment, and indeed to every contract of employment that was provided to the judge in the voluminous documentation in this case. Insofar as they related to key employees, all the “Main Terms” contained the termination provisions which Mr Howes enjoyed, and which he said (and the judge accepted) he believed to have been agreed. On this point of law Mr Tritton contends the judge went wrong.

38. The law on unlawful means conspiracy was stated by Lord Denning MR in Lonrho Limited -v- Shell Petroleum Limited (No 2 ) (unreported: Court of Appeal (Civil Division) Transcript No 51/1981), in a passage cited with approval by Lord Bridge of Harwich in the main speech in the unanimous decision of the House of Lords in Lonrho Limited -v- Fayed [1992] 1 AC 448 at 468, after quoting the relevant passage at 467. Having referred to the proper approach where the claim is based on a lawful means conspiracy, Lord Denning MR said this:

“Here we are concerned with a different problem altogether. It is an agreement by two or more to an unlawful act. ... we think there is a cause of action when it is remembered that the tort is a conspiracy to injure. We would suggest that a conspiracy to do an unlawful act - when there is no intent to injure the plaintiff and it is not aimed or directed at him - is not actionable even though he is damaged thereby. But if there is an intent to injure him then it is actionable. The intent to injure may not be the predominant motive. It may be mixed with other motives. In this context, when the agreement is to do an unlawful act, we do not get into the ‘quagmire of mixed motives’ as Lord Simon LC described them …. It is sufficient that the conspiracy is aimed or directed at the plaintiff, and it can reasonably be foreseen that it may injure him, and does in fact injure him.”

39. In Kuwait Oil Tanker -v- Al Bader [2000] 2 All ER (Comm) 271, Nourse LJ, giving the judgment of the Court of Appeal, said this at paragraphs 120 - 121:

“[I]n the case of most conspiracies to injure by tortious means it will be clear from the acts of the conspirators that they must have intended to injure the claimant. ... An example of such an inference being drawn in a similar field is in Bourgoin SA -v- Ministry of Agriculture, Fisheries and Food [1986] QB 716 at 777 [where] Oliver LJ said...:

‘If an act is done deliberately and with

knowledge of its consequences, we do not think

that the actor can sensibly say that he did not

“intend” the consequences or that the act was not

“aimed” at the person who, it is known, will

suffer them.’”

40. Mr Tritton contends that the effect of Lord Denning’s statement of the law is that, once a claimant establishes (i) that the defendant has been involved in an unlawful means conspiracy and (ii) the claimant has suffered as a result of that conspiracy, the claimant will be able to recover those damages from the defendant, irrespective of the defendant’s intention or, even, his knowledge. Accordingly, he argues that, if the company suffered damage as a result of relying on the periods of notice contained in the backdated Main Terms in relation to any of the four employees, it would be entitled to recover those damages from Mr Howes.

41. We do not consider that that approach is justified. It is clear from what Lord Denning MR said in the passage to which we have referred, namely that “the intent to injure may not be the predominant motive”, that before a claim in unlawful means conspiracy can succeed, an intention to injure must be established. As Mr Tritton effectively accepts, that proposition is also implicit in the passage we have quoted from the judgment of the Court of Appeal in Kuwait. Indeed, it is explicit in a sentence in paragraph 118 of that judgment:

“In our view, the effect of the two Lonrho cases is simply that, in order to establish an unlawful means conspiracy, it is necessary to establish an intention to injure the claimant but not a predominant intention or purpose to do so.”

42. However, what is also apparent from the passage at paragraph 120-121 in Kuwait is that, where the facts justify it, a party to an unlawful means conspiracy may not avoid liability, if the facts of the case justify the inevitable inference that one of the purposes of the conspiracy was to harm the claimant, or, to adopt Lord Denning’s words, it is clear that the conspiracy was aimed at the claimant, even if it had other aims as well. That, however, is a matter of evidence rather than a matter concerned with the ingredients of the tort as a matter of principle.

43. The approach adopted by Hart J in British Midland Tool Limited -v- Midland International Tooling [2003] 2 BCLC 523 was relied on by Mr Tritton. In that case four employees, known as the Tamworth Four, had agreed to use unlawful means to set up a competing business. Hart J said this at paragraph 78:

“The claimant undoubtedly suffered some damage in the present case as a result of the secession of the Tamworth Four together with a large part of the workforce. There is also no doubt, in our judgment, that such damage was not only foreseeable but actually foreseen ... By virtue of that fact they may be said, for the purpose of the tort, to have intended that damage.” (emphasis added)

44. In this case, Mr Howes agreed to sign the backdated letters, thereby appearing to give each of the four employees written contractual rights backdated to 1st November 2000, whereas, in fact they had no such written contractual rights. Accordingly, as the judge found, he was party to an unlawful means conspiracy. We would also accept that it can fairly be said that this conspiracy, and in particular the signing of the backdated letters, was “directed to” the company, in the sense that the purpose of executing the letters in a backdated form was to induce the company to believe that they had been signed by Mr Howes at a time when he had power to bind the company.

45. However, in terms of moral culpability, and, more importantly for the purpose of the present appeal, for the purpose of identifying the ambit of the conspiracy and wrong-doing, it is important to identify precisely what Mr Howes actually did, and what he did not do. What he did was to sign the backdated letters in the belief, which was reasonable, indeed correct, that those letters did nothing more than set out the terms under which each of the four employees was actually employed. Thus, the backdated letters identified each employee’s position, salary level, hours of work and status, namely key employee. This status, as we have mentioned, carried with it the crucial implication of a right to three months’ notice from the company, but not expiring at any particular time. Mr Howes was in no way party to the fact that there were to be new backdated Main Terms which included a wholly new, and unjustifiable, provision requiring the company’s notice to expire on a quarter day. Indeed, he had no reason whatever to know of or even suspect that this might happen. Mr Tritton suggests that Mr Howes could and should have expected such a provision because he had discussed it with Miss Barker; but the only evidence to this effect was in a witness statement provided by Miss Barker, who had an obvious interest in justifying what she had wrongly done on her own, and, as she was not called to give evidence and the judge did not make any findings in this connection, we do not think it is a factor which can properly be prayed in aid by the company.

46. Mr Tritton also suggests that Mr Howes cannot have believed that the terms of employment he was purporting to agree were limited to what was in the backdated letters, because he knew that Miss Barker was already a key employee. There are three answers to that. First, this is a point which should have been (and presumably was) addressed to the judge: on its own it cannot begin to justify overturning his essential conclusion that Mr Howes knew nothing of the backdated Main Terms. Second, the transcript shows that Mr Howes said he may well have forgotten Miss Barker already held key employee status. Third, Mr Gorst, Mr Cowling and Miss Kelleher had not been given written confirmation of their key employee status and Miss Barker had not received written confirmation of her increased salary.

47. The Main Terms referred to in each backdated letter would, as we see it, have been naturally read by anyone signing the letter (even in the unattractive circumstances of 7th January 2001) as being a reference either to the Main Terms which were appended to the written contracts of employment which each of the four employees already had with the company, or to the standard Main Terms for all key employees. It is true that there could be a tension between the reference in the backdated letter to “key employee” and the reference in the Main Terms of any employee whose contract at that time provided for one month’s notice. However, in our judgment, any apparent inconsistency would be resolved the reference in the backdated letter to the position being “subject to the terms set out in the Statement of Main Terms... except where varied or amended by this document ” (emphasis added), and by the standard reference in all the Main Terms (including the backdated Main Terms) that the period of notice prescribed therein was “unless stated otherwise in your letter of offer”.

48. Mr Howes believed, and reasonably believed, that the effect of the backdated letters, even together with the Statement of Main Terms, would entitle each of the four employees to three months’ notice from the company expiring at any time. First, the backdated letter referred to key employee status, which would have meant, as the judge found, an entitlement to three months’ notice expiring at any time, unless something different was agreed. Secondly, Mr Howes’ own Statement of Main Terms had entitled him only to three months’ notice expiring at any time, and his departure from the company as managing director had been very recent indeed. Thirdly, at least so far as the documents reveal, all key employees would have enjoyed similar termination rights and Mr Howes would have known of this, again because of his having so very recently been managing director. Fourthly, Mr Howes actually had no reason to think that the Main Terms, referred to in the backdated letter, would have been different from that with which each of the four employees had been supplied when he or she was first employed, or the Main Terms appropriate for a key employee. Fifthly, he had no reason to believe that Miss Barker, who had been with the company for a substantial time, and with whom he was close, would have unjustifiably introduced a wholly new, if subtly new, termination right in favour of each of the four employees. In all the circumstances, he could not have anticipated, let alone intended, any harm to the company to arise from the conspiracy.

49. The reasonableness of Mr Howes’ understanding is reinforced by the fact that, as the judge found, Mr Cowling, who, unlike Mr Howes, had been involved in the conspiracy from the beginning, was wholly unaware of the alteration made by Miss Barker to the termination provisions. One is, therefore, a long way away from the facts of a case such as British Midland : the damage allegedly suffered by the company was not merely not “foreseen”; it was not even reasonably “foreseeable”.

50. Accordingly, in light of the facts of this case, we think that the judge was entitled, indeed correct, to conclude that Mr Howes should not be liable for the damages suffered by the company as a result of the unlawful means conspiracy, because the nature of the damage suffered arose from a provision not contained in the backdated letter wrongly executed by Mr Howes, but from a document which he did not know was going to be brought into existence, whose terms he did not know, and the existence of the particular term (which actually caused the damage to the company) he had no reason to know of or even to suspect.

51. The essential point is that he honestly believed that the terms of employment which were described in the backdated letters were to be the terms of employment which each of the four employees already had. That belief was not even mistaken: it was correct. In other words, although Mr Howes was dishonestly taking part in an arrangement involving a backdating of the letters so that they would apparently be binding on the company, because they would have been signed by him at a time when he was still managing director, he rightly and reasonably believed that those written terms were terms which were binding on the company in any event. Insofar as further terms and different terms were included in the backdated Main Terms, Mr Howes knew nothing of them and no reason to know of them.

52. In these circumstances, it is unnecessary to deal with the judge’s conclusion as to the damage suffered by the company as a result of the conspiracy. For the reasons given, we would dismiss the company’s appeal insofar as it relates to the backdating of the employment contracts.

The second issue

53. We now turn to the second issue raised against Mr Howes on this appeal. The company had developed what was pleaded as “a new concept for the provision of a low-cost prefabricated financial information website capable of being customised by a client” which was known as “Site in a Box”. Mr Howes set up the fifth defendant company, Accquiant Limited (“Accquiant”) for the purposes of developing and marketing a similar concept known as the IFS program, which involved trying to bring the IFS project to the market in a short period of time.

54. In light of the criticisms of the judgment below, it is appropriate to summarise the company’s pleaded case in connection with this second claim. The second, third and fourth defendants, Mr Gorst, Mr Laurent and Mr Thomas, were respectively employed by the company, as at the beginning of 2001, as head of project management, a programmer and a software engineer. Each of them had a written contract with the company which provided that, during the period of employment with the company, he was “to devote his efforts exclusively to the company”, and which prevented him from engaging in any occupational sideline, or working, or participating in, any other business whatsoever without the written consent of the company. Each employee was, in the normal way, also subject to an implied obligation to serve the company loyally and faithfully during the course of his employment, and not to do anything (or indeed fail to do anything) which was likely to undermine the relationship of trust and confidence between the employee and the company.

55. The pleaded case (insofar as it related to what is now the second issue) against Mr Gorst, Mr Laurent and Mr Thomas, in a nutshell was that, in breach of the express and implied terms of the respective contracts of employment, during the time of their employment with the company, and without the knowledge of the company:

i) they, and in particular Mr Laurent and Mr Thomas, provided Mr Howes and Accquiant with technical assistance in the development of the IFS project; and

ii) they, and particularly Mr Gorst, provided services, in the form of storing documents relating to the IFS project on a company laptop and provision of general assistance to Accquiant between January and March 2001.

56. As against Mr Howes, it was contended that he knew of the terms of his co-defendants’ contracts of employment, having offered Messrs Gorst, Laurent and Thomas (“the three defendants”) their employment with the company (when he was managing director) and having signed their letters and terms of employment. Accordingly, it was alleged that he “wrongfully induced and procured” the breaches of contract of which it was said that the three defendants were guilty, and alternatively that Mr Howes and Accquiant unlawfully conspired to injure the company by procuring such breaches of contract.

57. The damages arising under this head of claim were based on the loss suffered as a result of the company having to dismiss Mr Thomas and Mr Laurent summarily. No losses were claimed in respect of Mr Gorst’s dismissal.

58. The judge rightly accepted the principle upon which this claim was based, in these terms:

“It needs no long discussion to say that to work for a potential rival while employed by another is a breach of the terms of a contract of employment.”

59. However, the judge rejected the claim on the facts. Having referred to the evidence of Mr Laurent and Mr Thomas, he said “they neither agreed to nor actually carried out any programming work for Accquiant while they were employed by [the company]”. He said that Mr Gorst’s behaviour "came closer to the line of misconduct". However the judge concluded that "he did not overstep it". His conclusion was in these terms:

"Mr Howes did not procure or encourage the second to fourth defendants to breach their contacts with [the company]. We find that he encouraged them to work for his new company but never sought from them any confidential information or asked them to work for that new company whilst still employed by [the company]."

60. Accordingly, he dismissed the company’s claim on the second issue.

61. These are clear findings of fact from a judge who heard oral evidence from all the witnesses involved. Accordingly, any attempt to overturn them on appeal involves an uphill task, albeit not an impossible one.

62. In order to support the company’s appeal, Mr Tritton has helpfully summarised the facts which were either uncontentious or were found by the judge. First, it appears that Mr Howes approached the three defendants for some assistance or advice in relation to the IFS project, and, in this connection, Mr Laurent and Mr Thomas were “programmers with considerable technical skill who were much in demand”. Secondly, by an e-mail dated 13th January 2001, Mr Howes approached Mr Thomas asking him for "a little techie advice". He said, “we've a business concept similar to the IS model which we believe will be very successful", and, "we need a good programmer to advise us now and then if we can reach a deal to develop stuff for the project”. While saying that he did not want to “put” Mr Thomas “in a difficult position”, he went on immediately to ask Mr Thomas whether he had “another e-mail we could talk on”. In reply, on 15 January, Mr Thomas said to Mr Howes that he was “more than happy to offer any technical advice you need, obviously off the record, and obviously with anonymity in mind”.

63. Third, Mr Thomas met Mr Howes on 15th January and, as the judge found “gave him some general ideas for development” in relation to the IFS project. According to Mr Howes, they discussed the database language to be used on the project, and it clearly helped him to have the advice of Mr Thomas “to look at sales manual and technical documentation”. Mr Thomas accepted in cross-examination that Mr Howes wanted his “technical advice” at that lunch. Fourth, also in January, Mr Howes was in contact with Mr Gorst and even permitted Mr Gorst to use an e-mail connected with Accquiant, namely john.gorst@accquiant.co.uk, so that Mr Gorst could discuss with third party providers technical solutions for the IFS project.

64. Fifth, on 30th January 2001, as the judge found, Mr Howes and the three defendants met to discuss various ideas, with a view to helping Mr Howes crystallise the notion of using Sinara, a third-party software product, in relation to the software written for the IFP project. At the meeting the three defendants were all offered jobs by Mr Howes with Accquiant.

65. Sixth, during the two weeks following that meeting there were a number of e-mails passing between the three defendants and Mr Howes, to which the judge made only a passing reference. It is necessary briefly to refer to some of these e-mails.

66. On 30th January - and it may have been before the meeting - Mr Howes sent to the three defendants an e-mail with the subject “IFS Documents”, but it is not wholly clear whether any documents were attached. On the same day, Mr Howes sent an e-mail to the three defendants with the subject “Techie stuff” and beginning “Herewith the technical documentation re the back end”. It then set out the “spec for the site”, and said “we would like to have a demo we can presell to customers available by the end of Feb but we don’t need the real thing until March 29th which is our launch date”. This e-mail ends “so please look at the enclosed and let us know your thoughts”.

67. On the same date Mr Thomas replied identifying “the best resource for any PHP development you want to do”, observing that “layout and design shouldn't be a problem”, and saying that he would “get back with [his] initial thoughts after we have read the docs and spoken with Mark [sc Mr Laurent]”. On 1st February Mr Laurent e-mailed Mr Howes and the other two defendants describing the documentation which Mr Howes had sent two days earlier as “very interesting and promising”, and asking whether “we will be using the back end”. He also explained that “for the current phase, access to the intermix database … and chartserver is all that is necessary” and that there was nothing “in the spec that should cause any headaches but the games will need plenty of lead time”. The e-mail ended by saying “page layout/designs are most welcome”, and asked "how quickly can the hardware be in place?"

68. On 3rd February Mr Howes replied to Mr Laurent confirming Mr Laurent’s understanding in relation to the use of the back end, informing him that Mr Howes had arranged for Mr Laurent to speak to tech support at Sinara and S&P (another supplier) and explaining how the hosting of the IFS system was intended to take place.

69. On 13th February Mr Gorst e-mailed Mr Laurent stating that since last “chatting” they had “had time to research and find out a bit more about the technicalities of our solution” and attaching “a technical document” which “outline[d] the requirements of the software”. He also said that “while discussing this with S&P we said that we’d like the Oracle database rather than the SQL simply because we prefer a Unix platform”. The e-mail also referred to the fact that a contract would begin with S&P “at the start of April” by which time hopefully the database would be “up and running”. The e-mail made reference to the fact that some designs were being “done now” and would be “available in a day or two”. The e-mail asked Mr Laurent “what spec do you need for the front end machines” and ended by saying “I’m walking a tightrope at the moment! I’m sure you’ll both be discreet”.

70. Seventh, during the course of these e-mail exchanges, Mr Gorst, on behalf of Accquiant, and Mr Howes, e-mailed Mr Laurent and Mr Thomas requesting them to “sign a non-disclosure agreement”, which Mr Laurent and Mr Thomas signed, although Mr Gorst did not.

71. Eighth, on 13th February “the documentary trail runs cold”, to use Mr Tritton’s expression. On 19th February, the company received a tip-off as a result of which it investigated Mr Thomas’ computer. No further e-mails were produced on disclosure by any of the defendants. The company’s case was that it was inconceivable that there were no other e-mails passing between Mr Howes and the three defendants after 15th February, and that examination of Mr Gorst’s computer records strongly suggested that there had been other such documents which he had destroyed.

72. After the company was “tipped off”, it monitored Mr Thomas’ computer (which was his only computer). On 28th February the company suspended the three defendants, interviewed them and dismissed them on 18th March. The e-mails we have quoted from were obtained from Mr Thomas’ computer.

73. In the context of the evidence we have so far set out, the judge’s conclusions that none of the three defendants did anything inconsistent with their express and implied contractual obligations as employees of the company could fairly be said to be surprising. It may appear hard to resist the conclusion that, at a time when they were still employed by the company, each of the three defendants was giving advice to, and doing work for, Accquiant, in connection with a proposed product, namely the IFS project, which was intended to compete with the product being produced by their employer, the company, namely the Site in a Box. The notion that the e-mails were merely “partly helping Mr Howes and partly exploring an opportunity of different employment”, as the judge held, can be said to carry with it the conclusion that the “helping” went along the lines of giving or seeking to give technical advice to, and doing work on behalf of, Accquiant in connection with the IFS project, in which case the breaches of contract on the part of the three defendants are established. Alternatively, it involves a finding which is very hard to reconcile with the contents of the e-mails. Indeed, as Mr Tritton points out, none of the e-mails appear to mention anything about the job which any of the three defendants would or might have with Accquiant.

74. The force of the company’s case is said by Mr Tritton to be supported by some of the oral evidence. In cross-examination, Mr Howes said:

"Either we had got to hire consultants, and this kind of consultant is expensive … or we could simply ask somebody like David Thomas, which is what we chose to do."

75. Mr Howes also accepted that he “wanted [Mr Thomas] to provide [him] with technical assistance in relation to [the IFS project]”.

76. After he had reached the conclusion that none of the three defendants had been in breach of their contracts with the company, the judge said this:

"I appreciate that that general conclusion may not appear obvious to those who, unlike me, have not had the opportunity of seeing and hearing the witnesses. However, having had that benefit (which was of great assistance in this particular case) we came to that conclusion without any great hesitation."

77. It is plainly the duty of this court to pay great respect to any finding of fact, and indeed any inference from any finding of fact, made by a judge at first instance, particularly where, as here, he has not only heard detailed cross-examination, but has delivered what appears to be a full and careful judgment. However, it is equally plainly the duty of this court not to let a decision stand in circumstances where, after looking at the evidence, it seems clear that the judge has gone wrong and has reached a conclusion which cannot be warranted on the evidence.

78. Where, as here, the appellant has advanced reasons which, at least taken at face value, appear to support a powerful case for contending that the judge’s conclusions were wrong, this court must carefully examine the judge’s reasons, as expressed in his judgment, for reaching those conclusions. In that connection, it is important for this court to bear in mind that it is the trial judge, and not this court, who is the primary fact-finder. To justify overturning the judge, it is not enough for this court, after considering all the facts, to think that it would have reached a different conclusion from that reached by the judge. Where the judge has not misunderstood or ignored some plainly important piece of evidence, this court, before it can interfere, really has to be satisfied that the judge reached a conclusion on the facts which a reasonable and fair fact-finding judge could not have reached. In this connection we would refer to the analysis of Clarke LJ in Assicurazioni General SpA -v- Arab Insurance Group (BSC) [2003] 1 WLR 577 at paragraph 12, and reiterated in Niru Battery Manufacturing Co -v- Milestone Trading Ltd [2004] 1 All ER (Comm) 193 at paragraphs 98-102, as well as what was said by Lord Hutton in Twinsectra Limited -v- Yardley [2002] 2 AC 164 at paragraphs 43-51.

79. This obviously sets a high hurdle for any appellant seeking to overturn a judge’s finding of fact, unless that appellant can show a plain mistake or oversight on the part of the judge. However, it does not set a hurdle which can never be crossed: judging is a human activity, and there will inevitably be cases where, for one reason or another, even the most careful judge will come to a conclusion which cannot be justified. The question for us is whether the judge here made such an error in this case.

80. In summary, the judge’s express findings were as follows:

i) Mr Thomas was “clear, sensible and honest” as a witness, and the judge believed what he said;

ii) the judge accepted the “substance of what Mr Laurent said”;

iii) he believed that neither of them “agreed or actually carried out any programming work for Accquiant while they were employed by [the company]”;

iv) the work required to program the front end for the IFS project was “more than could physically be done while they were working at [the company]”;

v) although Mr Gorst once “went so far as to suggest that the programmers could use [the company’s] machines in their spare time” this was “a suggestion ... made in a moment of temper with [the company]”, and “was not approved or agreed by any of the others and ... it was never acted upon”;

vi) on the balance of probabilities there were “no other e-mails referring to Accquiant which have not been disclosed and the absence of which might lead us to draw adverse conclusions against the defendants”;

vii) he accepted “the evidence of Mr Thomas and Mr Laurent that they never agreed to do anything which was inimical to the interests of [the company]”, and, indeed “they did not want to leave [the company] and … had done nothing to justify dismissal”;

viii) Mr Gorst’s “behaviour came closer to the line” but “did not overstep it”;

ix) "Because information which was confidential to [Accquiant] was disclosed to [the three defendants, Mr Howes] required them to sign non-disclosure agreements". The evidence of Mr Thomas and Mr Laurent “that they regarded it as perfectly normal to sign such an agreement if a rival was trying to get them to work for them” was also accepted by the judge.

81. We have been provided not only with the witness statements of Mr Howes and the three defendants, but also with the transcripts of their respective cross-examinations before the judge. Mr Howes was cross-examined for about 1½ days, Mr Gorst for about half a day, and Mr Thomas and Mr Laurent were each cross-examined for about an hour.

82. Each of them was, perfectly properly, cross-examined in relation to the various points which Mr Tritton says, particularly when taken together, justify concluding that the judge was wrong in rejecting the company’s case on this second issue.

83. In general terms, the evidence given by Mr Howes and the three defendants amounted to this. There were discussions between them, because Mr Howes wished each of the three defendants to work for him at Accquiant on a full-time basis. In other words, he was hoping to persuade them to move employment from the company to Accquiant. Further, insofar as information was being sought, or given by, the three defendants, it was mostly for the purpose of enabling them to decide on the technical and commercial feasibility of the IFS project, which was obviously of crucial importance to the future of Accquiant, and therefore to the attraction of possible employment with Accquiant.

84. To the extent that Mr Howes asked for information and assistance, this was, according to Mr Howes, either of a very general nature, of the sort one might discuss in a wholly innocent friendly way, or with regard to the future, if and when the three defendants came to be employed. So far as the three defendants were concerned, they agreed that there were some general discussions on two occasions, but that none of those discussions involved their working for Accquiant or given information to Accquiant which was in any way inimical to the company’s interests. Mr Thomas said he saw the discussions as “nothing more than giving my advice and the benefit of my ten years in the IT industry to a friend”, and that the advice he gave Mr Howes was “exactly the type of help I would give a friend”. Insofar as they were being asked to do further work for Accquiant, Mr Thomas and Mr Laurent were adamant that they had not done any such work, at least until after March 2001, when they ceased to be employed by the company.

85. Because it is argued on behalf of the company that the judge reached a conclusion which is effectively indefensible, it has been necessary for us to go through the transcripts of evidence. In summary, Mr Howes and the three defendants were saying that, because the defendants had been offered employment with Accquiant, and wished to investigate its prospects, and, as Mr Howes had insufficient technical knowledge to provide the requisite information, he arranged for them to contact the providers of the relevant information, and in particular Sinara and S&P direct. As Mr Howes put it, he was “not asking Dave Thomas to do anything such as coding or development or anything, any substantial arrangements whatever, while he’s employed by [the company]”.

86. The picture painted by Mr Laurent in his cross-examination was arguably a little different, but more in emphasis than in essence. He suggested that Mr Howes wanted the IFS project to “go live as of 1st April” as Mr Tritton put it or, as Mr Laurent put it “if he could have had it the same night he would have taken it the same night”. However, Mr Laurent went on to explain that he was “just trying to illustrate that [Mr Howes] is a sales guy ... he wants ... everything yesterday”, a view very similar to that expressed by Mr Thomas.

87. Mr Laurent and Mr Thomas were quite clear in their evidence in cross-examination in saying that, whatever Mr Howes wanted, or may have wanted, they were not prepared to work for him or for Accquiant during the period that they were employed with the company. Mr Laurent also said that it would have been physically impossible in any event for the work to have been done by the end of March, because it would have taken two people a month working full-time on the project to achieve that end.

88. Like Mr Howes and Mr Gorst, Mr Laurent was clear in his evidence that there were no relevant e-mails after 15th February 2001. The point was put fair and square to them that this was not true, but the judge accepted their evidence. It is fair to the judge to mention that his view was supported by the fact that, although the company monitored Mr Thomas’ only computer from 19th February to 28th February, the surveillance revealed no relevant e-mail.

89. Mr Howes also explained that his reference to discretion and embarrassment in his e-mail to Mr Thomas was because he "did not want it to be known by other employees of [the company] that I was considering starting a new venture." He said that his discussions with the defendants on 30th January with regard to the merits of the IFS project were expressed in general terms. In this connection, Mr Thomas confirmed that Mr Howes did not ask him to divulge any information which was confidential to the company, and that all Mr Thomas gave to Mr Howes was "the benefit of [his] many years of industrial experience so that he could make decisions about various ideas he was pursuing”.

90. In cross-examination of Mr Howes and the defendants, Mr Tritton investigated certain other matters which he understandably contended went to their credibility, and, indeed, more directly, to the issues involved in the case. In particular, there was the fact that Mr Howes, Mr Laurent and Mr Gorst had not disclosed any of the e-mails between 13 January and 13 February, which had been revealed by the investigation of the contents of Mr Thomas’s computer. The record of those e-mails may have been intentionally removed from their respective computers but that was very much a matter for the judge.

91. There was also the e-mail from Mr Gorst which encouraged Mr Thomas and Mr Laurent to use the company’s computers for the purpose of carrying out work for Accquiant at a time when the three defendants were still employed by the company. This was clearly a wholly improper instruction, but Mr Gorst’s evidence was that it was given in a fit of temper with the company, and Messrs Thomas and Laurent said that they did not act on it, and, indeed, that Mr Gorst countermanded the instruction - according to Mr Howes, on his initiative. Once again, this was a topic on which it was very much for the judge to decide where he considered the truth lay.

92. The basis of the company’s appeal against the judge’s decision on the second issue seemed to change somewhat. In his skeleton argument, it appeared to us that Mr Tritton was contending that this court should overturn the judge’s finding that Mr Thomas and Mr Laurent, and indeed Mr Howes and Mr Gorst, had told the truth. Fastening, not unreasonably, on the fact that there were no e-mails after 15th February, coupled with the fact that Mr Gorst’s computer records suggested that further e-mails probably had existed but had been scrambled or deleted, together with the other factors which we have mentioned, the argument which was presaged seemed to be as follows. The judge reached conclusions as to the honesty of Mr Howes and the three defendants on this issue which no reasonable judge could have reached, and that, in particular, he failed to take into account properly, when considering whether to believe their evidence, the fact that they had destroyed all records of e-mails which would almost certainly have been incriminating. In that connection, Mr Tritton relied on the principle omnia praesumuntur contra spoliatorem.

93. However, when presenting the company’s case orally, Mr Tritton, at least initially, said that he was not challenging the judge’s primary findings, and that, even on the defendants’ version of the facts, he should have found that they had put themselves in breach of their respective contracts of employment with the company, and that accordingly Mr Howes should be liable for damages for inducing breach of contract. As his argument developed, it appeared to us that Mr Tritton was adopting something of a half-way house, in the sense that he was still inviting us to disagree with the judge’s conclusion that there were “no other e-mails referring to Accquiant”.

94. We are of the view that it is fair neither on an appellate court, nor on the respondent to an appeal, if an appellant fails to make it clear, or changes its position, on the issue of whether or not a first instance finding of fact, particularly when that fact involves the honesty of a respondent, is being challenged, and, if it is being challenged, the respect in which, and the grounds on which, it is being so challenged. Much of the benefit of the Court of Appeal reading papers in advance is destroyed if the grounds of the appeal, particularly when they relate to a judge’s findings of fact, and above all when they relate to a judge’s findings in relation to the honesty of a witness or a party, are unclear or changes. Further, it is unfair on a respondent, particularly in a case such as this where the respondent is in person, if it is not made clear to him whether a finding by the judge that he was honest is under challenge or not.

95. If, as appeared to be the case during most of Mr Tritton’s oral submissions, the judge’s conclusion that witnesses were telling the truth is not under challenge, then it is plainly unsatisfactory that the contrary is stated in the appellant’s skeleton argument. It would obviously be even worse if the skeleton indicated that the judge’s findings were not under attack, and they were then subject to attack in the oral submissions on behalf of the appellant.

96. The half-way basis upon which Mr Tritton appeared ultimately to put his case is, we think, plainly unsatisfactory. On the one hand he was saying that the judge’s primary findings that the three defendants and Mr Howes were telling the truth was not under attack; on the other hand he was suggesting that there must have been other e-mails passing between Mr Howes and the three defendants on the basis of the records of destroyed or scrambled e-mails in Mr Gorst’s computer. At best, that submission involved trying to wound while refusing to strike. In our view, it is an impossible position to have taken. If we had accepted that there were other e-mails which had been destroyed, that would not merely have involved overturning the judge’s primary finding of fact that there were no such e-mails; there would also have been no point in reaching such conclusion unless it was for the purpose of overturning the judge’s further findings as to the honesty of the evidence of the three defendants and Mr Howes as to the contents of their discussions.

97. In all the circumstances, it seems to us that the only sensible basis upon which we can consider the company’s appeal on this second issue is on the two alternative bases which appear to have been raised: first, on the assumption that the judge’s primary findings as to the honesty of the witnesses are under attack, and, second, on the basis that the judge’s primary findings are not under attack. So far as the first basis is concerned, Mr Tritton’s primary point was, as we have mentioned, based on the contents of the e-mails and on the unlikelihood of there not having been further e-mails which had been destroyed.

98. As to the judge’s findings of primary fact, it is fair to say that the e-mails which have been produced and the reasons for thinking that there may well have been other e-mails which have been destroyed, lead to the inevitable acknowledgment that the company had a well arguable case for contending before the judge that the three defendants and Mr Howes were not telling the truth as to the purpose and ambit of the discussions which took place between them. However, the judge heard the three defendants and Mr Howes cross-examined in some detail. In these circumstances, unless it can be shown that the judge misunderstood or failed to take into account some plainly significant evidence, only very exceptionally would this court be prepared, in effect, to make a finding approaching dishonesty against a party who has given evidence and been cross-examined, and whom the judge believed. It would not merely be a question of this court reversing the judge on a finding of fact, and as to whether to believe a witness or not: it would involve reversing a decision of a judge who had acquitted a party (who had given evidence) of dishonesty, or at any rate untrustworthiness, disloyalty and under-handedness, all of which are implicit (indeed probably explicit) in the company’s case against each of the defendants. The cases already referred to show how difficult it is for such an appeal to succeed.

99. So far as the judge’s conclusion on the destroyed e-mails is concerned we would make three points. First, he had the benefit of evidence from all the four parties involved in sending the e-mails, and each of them gave the same explanation, assuring him that there had been no other e-mails above those which had been disclosed. Secondly, the only person against whom the company could say that relevant e-mails had probably been destroyed, on the basis of computer records, was Mr Gorst. We do not see on what basis it could be said that it must follow that Mr Laurent and Mr Thomas had sent or received (and therefore destroyed) the e-mails which Mr Gorst had, on this hypothesis, destroyed. Accordingly, the presumption could not be invoked against Mr Thomas and Mr Laurent, and if this court concluded that Mr Gorst had breached his contract but that Mr Thomas and Mr Laurent had not, that would not assist the company on this appeal, because damages are claimed only in relation to the summary dismissal of Mr Thomas and Mr Laurent. This point is reinforced by the fact, already mentioned, that, although the company monitored Mr Thomas’s only computer from 19th to 28th February, no incriminating e-mails were apparently sent or received by him in that period.

100. Third, the presumption, as one would expect, is not to be applied in an absolute way. In Malhotra -v- Dhawan [1997] 8 Med LR at 319, the principle as laid down by the Court of Appeal was accurately summarised in the head note to this effect:

"If it were found that the destruction of the evidence was carried out deliberately so as to hinder the proof of the plaintiff’s claim, then such finding would obviously reflect on the credibility of the destroyer. In such circumstances it would enable the court to disregard the evidence of the destroyer in the application of the principle."

101. In this case, the judge considered the contention that relevant e-mails had been dishonestly deleted or scrambled, and he rejected it. That was a view he was entitled to take. As to the other ground for challenging the judge’s primary findings of fact, we do not think that they take matters further.

102. As to the alternative basis upon which Mr Tritton puts the company’s case, namely that, on the uncontested evidence and on the judge’s findings, the three defendants were each in breach of contract, our views are as follows. In relation to Mr Gorst there is, in light of the e-mail of 13 February, a fairly powerful case for saying he had become so closely identified with Accquiant’s interests, and was seeking information and assistance on behalf of Accquiant, that he had crossed the line. However, it is not necessary to make a finding on that, because, as we have said, it is not suggested on behalf of the company that any damages flowed from any breach of his contract of employment by Mr Gorst, and consequently no claim can be made against Mr Howes in that connection.

103. So far as Mr Thomas and Mr Laurent are concerned, we do not consider that it is open to this court to interfere with the judge’s conclusion that, on the admitted facts and facts found by the judge, they were not in breach of their respective contracts of employment. Plainly, there was nothing in their contracts of employment which prevented them from seeking or negotiating alternative employment. Furthermore, it would be quite wrong to construe their contracts as preventing them from making inquiries about the nature of their possible future employment, and, particularly where the business of the prospective employer was at a very early stage, investigating the nature and prospects of that business. It would be unrealistic to hold that Mr Thomas and Mr Laurent could not investigate the technical and commercial feasibility of the IFS project, on which the whole basis of their employment and pay at Accquiant was likely to rest, so as to be able to make an informed judgment before deciding whether to leave the company and start working for Accquiant. Particularly as Mr Howes was not well versed in technical matters, it is by no means unlikely that Mr Thomas and Mr Laurent would have made contact with prospective suppliers or clients of Accquiant in order to test out the feasibility of the whole IFS project.

104. Similarly, it appears to us that for Mr Thomas and Mr Laurent between them to have spent a few hours at the most, spread over a couple of informal meetings, discussing technical aspects of the IFS project with Mr Howes would by no means necessarily involve breaches of any of the terms of their contracts. Obviously, a great deal depends on precisely what was discussed at such meetings. In the same way as the sort of contractual terms upon which Mr Tritton relies in the present case cannot prevent an employee of the company carrying out investigations into, and seeking advice about, a prospective future employer’s business, so they cannot prevent any technical discussions whatsoever between an employee and a third party in the same line of business. Such investigations and such discussions will inevitably involve a certain amount of general information passing, and where, as here, there is no question of the information being confidential, it would be most unfortunate if contractual terms of employment prevented friends and acquaintances in the same line of business exchanging thoughts and experiences. That is one of the ways in which technical progress, and indeed other sorts of progress, are achieved. Equally, when making inquiries about the feasibility of the business of a prospective employer, a prospective employee may sometimes have to give a little information in order to investigate what he wants to find out.

105. Where, as here, it is alleged by the employer that in making the investigations, or in having the discussions, the employee has gone further than he is entitled to go, it must be very much a matter for the primary fact-finding tribunal as to whether the employee has indeed overstepped the mark. Although we accept that criticisms can be made of the precise way in which the judge expresses some of his findings (for instance in relation to Mr Thomas and Mr Laurent not having done any programming for Accquiant when there was no question of that being alleged) it appears to us that, in clear and ringing tones, the judge concluded that neither Mr Thomas and Mr Laurent overstepped the mark, either in relation to their investigations of possible future employment with Accquiant or in their discussions with Mr Howes.

106. It is fair to say that the second issue in this case was considerably clouded at first instance by the fact that the company was contending that Mr Thomas and Mr Laurent, and indeed Mr Gorst, had vouchsafed information to Mr Howes which was confidential to the company. The judge rejected that contention, and no appeal has been permitted in respect of it. The reason we mention this is that it appears to us that what is in fact the second issue on this appeal was something of a “longstop” raised by the company against Mr Howes, in case the claim based on confidential information failed. We raise this point in fairness to the judge, as much as anything else. It made his task in resolving the various issues raised before him rather difficult, a point which will be appreciated by anyone who had to read the voluminous Amended Particulars of Claim in this case; they raise a very substantial number of allegations against Mr Howes and the three defendants. In fairness to Mr Tritton, it is right to say that the company had formed a very strong and unfavourable view as to the conduct of Mr Howes in the first three months of 2001, and that that view was, even on the facts found by the judge, justified to the extent of his involvement in the backdating of the contracts of employment.

107. Having rejected the company’s case insofar as it was based on inducing breach of contract, there is no need to consider the alternative basis of the appeal on the second issue, namely conspiracy. Mr Tritton rightly accepted that, if he failed on the former basis, he could not succeed on the latter.

108. Accordingly, we would dismiss the company’s appeal on this second issue too.

(Appeal dismissed; Appellant do pay Respondent's costs of the appeal, such costs to be the subject of a detailed assessment).