Rancom Security Limited v Helen Girling & Ors.

Misused confidential information contained on C’s database in order to target C’s customers; and then

Sought to persuade those customers of C to transfer to D3 by making maliciously false statements that –

D1 and D2 were not given access to and never did access C’s database;

They identified and made contact with C’s customers solely as a consequence of the defendants’ own legitimate marketing activities, which included –

It is denied that the defendants made any of the alleged false statements. Rather the customers were motivated to transfer from C to D3 as a result of C having ceased to be regulated such that C was no longer able to offer a police response as part of its service, whereas D3 was able to offer a police response.

“………..

PREFACE

…….

1.2 To enable a security system to be recognised within the Requirements for Security Systems it must comply with the Policy on Police Response to Security Systems and a recognised standard or code of practice controlling manufacture, installation, maintenance and operation. Such standards must be in the public domain and not be product based.

1.3 The installation and services provided by the installing company and an Alarm Receiving Centre (ARC) / monitoring / tracking centre (e.g. RVRC, SOC), shall be certified by a United Kingdom Accreditation Service (UKAS) accredited certification body in accordance with the provisions of the Requirements for Security Systems.

……

GUIDANCE, ADVICE AND PROCEDURES

2.1 Type A - Remote Signalling Systems.

2.1.1 Systems terminating at a recognised ARC, Remote Video Response Centre (RVRC) for CCTV and System Operating Centre (SOC) for vehicle tracking. All centres must conform to BS 5979 (Cat II) or BSEN 50518.

2.1.2 Unique reference numbers (URNs) will be issued to systems at these recognised centres. In the case of stolen vehicle tracking systems the URN will be issued by police forces to the operating company or monitoring centre, not to each vehicle.

…….

2.3. LIST OF COMPLIANT COMPANIES INSTALLING TYPE A SECURITY SYSTEMS

2.3.1 To identify companies conforming to this Policy it is necessary for each Police Force to hold a list of policy compliant companies. Inclusion on the list does not amount to confirmation that the company or its work has been inspected by the Police. Only companies so listed may install, maintain and/or monitor Type A Systems in the particular Police area. Where a company loses police recognition under this policy, its existing customers will have 90 days in which to make alternative maintenance/monitoring arrangements.

……..

3 OPERATIONAL TACTICS

3.1 POLICE ATTENDANCE - Type A Security Systems

For Type A security systems there are two levels of police response.

LEVEL 1 – Immediate

It should be noted that police response is ultimately determined by the nature of demand, priorities and resources which exist at the time a request for police response is received.

LEVEL 3 – Withdrawn

No Police attendance, keyholder response only.

3.1.2 The police service has adopted the use of confirmed alarm technology as part of the effort to reduce false calls.

3.1.3 All new Intruder and Hold up Alarms (HUA) applications will only qualify for a URN and police response if installed to the current required standards...

…….

3.2 INTRUDER ALARM SYSTEMS

3.2.1 Intruder alarm systems (IAS) issued with a URN will receive LEVEL 1 response until three false calls have been received in a rolling 12 month period.

3.2.2 Following two false calls in a rolling 12 month period the customer will be advised, in writing, with a copy being forwarded to the maintaining alarm company informing them of the situation and recommending urgent remedial action.

3.2.3 Following three false calls in a rolling 12 month period LEVEL 3 will apply and police response will be withdrawn, not less than 14 days from the date of the Withdrawal letter. The customer will be advised in writing with a copy to the maintaining company, who will be required to instruct the ARC/RVRC not to pass alarm messages to the police.

……..”

The installation and maintenance of domestic security alarm systems, which included an alarm box control, a bell box and passive infrared sensors;

The 24-hour monitoring of the system through an ARC;

Registration of the system with the Police to obtain a URN such that, on activation of the alarm, the ARC would notify the Police for a “LEVEL 1 – Immediate” response.

The names and contact details of each customer;

The password for the customer’s home security system; and

The dates when the contract commenced and was due for renewal. Renewals were a vitally important source of revenue, since they did not attract the associated cost of supplying/installing equipment.

D1 had access to the Alarm Master Database because she was in charge of the marketing team and needed such access to allow her and her team to contact (a) existing customers for various marketing opportunities including in relation to add-on products and upgrades, and (b) previous customers to attempt to win back their custom; and

D2 had access to the Alarm Master Database because it was part of his job to ensure that the sales team entered the details of all new customers onto the database.

It was the role of D1 and her team to generate new leads, which were then passed to the sales team;

It was the role of D2 and his team to convert those leads into new sales;

When a sales representative sold a contract, the new customer details would be emailed to the admin & accounts team for them to enter those details on the Alarm Master Database;

As neither D1 nor D2 were involved in renewals (only in generating new leads/sales), they had no reason and were not given access to the Alarm Master Database. Without a password, it was not possible for them to access and extract the customer information contained upon the Alarm Master Database; and

When D3 subsequently acquired/licensed its own Alarm Master Database package, D1 and D2 had to request and undergo basic training from the supplier, since they had no prior experience or knowledge of how to use the software.

C’s customers being persuaded to transfer their custom to other service providers (Secure Home Systems Limited, Smart Home Protection Limited, and Protect and Serve Home Security Limited), which were (a) affiliated with C, but (b) not SSAIB registered, such that those customers would no longer be eligible for an automatic police response; and

Those customers being told that the resulting loss of automatic police response was not material, since the police no longer responded to alarm activations in any event.

C had become increasingly frustrated with the approach of the SSAIB, which was based upon information that was factually incorrect; and

The conduct of the SSAIB had merely brought forward a plan already being considered for at least 2 years to provide, at no additional cost to the customer, private guarded services through G4S in place of the police response because –

“…..

The claimants conduct has been marred by duplicity, at the time of their employment and to a degree it has to be said in the way they have given their evidence at this hearing…..

….. I hesitate to do so, but I conclude that at times the claimants have not been completely honest in the way that they’ve engaged with this tribunal…. there has not been complete honesty and integrity in the way that they have presented their cases at the tribunal hearing.

…..

The claimants claims of constructive dismissal I conclude, regretfully but I do, are contrived from a series of events largely, if not manufactured, certainly manipulated by the claimants [f]or their own commercial or financial advantage. They are indeed, and again no criticism [is made of] them, they are indeed unsentimental entrepreneurs…. But unsentimentally in business is no concession to contrive a dismissal for their own commercial and entrepreneurial advantage, and that, I regret, is what has occurred.

Again, to repeat, I am not so naïve as to think either side in this highly competitive, highly emotional toil, are free of criticism on any level…. But also, and more particularly, whatever the conduct of the respondent, the claimants did not respond with their resignations in that context. They responded now I’ll find, a little late, as part of an overall plan to part ways with the respondent, for whom they had worked for some time. The claimants, I conclude resigned their long standing posts with the respondent as a critical step in them developing their own business, [D3], in competition with the respondent. I conclude therefore that the claimants willing severed their relationship with the respondent in circumstances which if not wholly contrived were opportunistic to pursue their fledgling business model and at the same time create an opportunity of the claim we now find before us.

The claimants’ response is not credible, measured against the real circumstances of their employment environment. That is to say the history of their relationship with the respondent amongst it that juxtaposition of basic requirements of their employment, and more particularly the claimants’ manipulation of their own company, [D3], to maximise their financial and business future opportunities. Those I find, were the very personalised bones and for the claimants’ own benefit rather than any accommodation of the respondent’s business.

Whatever the genesis of [D3] as to whether they were asked to set it up or whether it was a mutual decision, I think the claimants knew full well that there were huge advantages for them, sometimes not entirely legal or straightforward. In setting up the company and funnelling their funds and income and resources through it, and also as a platform for development of their own future business goals, namely as an accredited installer of [home] security…..

……..

……. That overall was their strategy, they basically looked for and ultimately gained an opportunity to offer their resignation in circumstances where dare I call it “The Grand Plan” had already been laid. The grand plan which had already been made, and I think had been made some time before either 27^th or the 4^th July, was a plan to leave more or less imminently and to compete directly with the respondent with the advantage of not simply their experience with the respondent’s company, but the knowledge of the respondent’s operations in exactly the same field and also their knowledge of the customer base which of course they had.

That plan I think had been formulated and set in motion well in advance of the final meeting to which I’ve referred, and by the time of Lee Hoskin’s and Ranjit Dhillon‘s pressure on the second claimant, I think there was an element of pressure in the context of negotiation, Mr Ranjit Dhillon unashamedly described himself as a hard negotiator, well he’s a businessman, and that would be part of his stock in trade.

……

…….. The actions and their actions on the 4^th July although I accept not wholly scripted, of course there’s an element of preplanning. It was nevertheless in essence of role-play on their part which I think was well rehearsed in their minds at least, and it wasn’t a genuine response to a fundamental breach of their contract of employment.

……….

I concluded that any perception of threats to life or limb or to general safety from Ranjit Dhillon was imagined rather than real, and think at times deliberately hyped and imagined….

………

……….[RD] was certainly not making death threats or threats of harm to either claimants and there was no basis for the claimants to reasonably perceive that there was any threat to their personal safety or indeed that certain words or actions had been used to convey such a threat. I think they have used that phrase and overall perhaps quite hard-nosed demeanour of Mr Dhillon to conjure up a threat that never really existed at all.

……….

The claimants I think had certainly made a decision well before the final meeting of the 4^th July, to depart the company and to pursue their own business interests….. their resignations were already well calculated I think as part of the joint venture that they now proposed to embark upon, and there was evidence which I have no reason to doubt that the claimants had cleared their desks, there was certain evidence that boxes had been removed by them from the premises……

………

Evasive and argumentative answers;

Tangential speeches avoiding the questions;

Blaming legal advisers for documentation (statements of case and witness statements);

Disclosure and evidence shortcomings;

Self-contradiction;

Internal inconsistency;

Shifting case;

New evidence; and

Selective disclosure.

Interference with memories

“[19.] The process of civil litigation itself subjects the memories of witnesses to powerful biases. The nature of litigation is such that witnesses often have a stake in a particular version of events. This is obvious where the witness is a party or has a tie of loyalty (such as an employment relationship) to a party to the proceedings. Other, more subtle influences include allegiances created by the process of preparing a witness statement and of coming to court to give evidence for one side in the dispute. A desire to assist, or at least not to prejudice, the party who has called the witness or that party's lawyers, as well as a natural desire to give a good impression in a public forum, can be significant motivating forces.

[20.] Considerable interference with memory is also introduced in civil litigation by the procedure of preparing for trial. A witness is asked to make a statement, often (as in the present case) when a long time has already elapsed since the relevant events. The statement is usually drafted for the witness by a lawyer who is inevitably conscious of the significance for the issues in the case of what the witness does nor does not say. The statement is made after the witness's memory has been "refreshed" by reading documents. The documents considered often include statements of case and other argumentative material as well as documents which the witness did not see at the time or which came into existence after the events which he or she is being asked to recall. The statement may go through several iterations before it is finalised. Then, usually months later, the witness will be asked to re-read his or her statement and review documents again before giving evidence in court. The effect of this process is to establish in the mind of the witness the matters recorded in his or her own statement and other written material, whether they be true or false, and to cause the witness's memory of events to be based increasingly on this material and later interpretations of it rather than on the original experience of the events.”

Primary witnesses of fact

LH

At times C experienced resourcing issues with engineers that adversely impacted upon customer service;

In 2017, C was in significant financial trouble;

He “did not like the fact” and was “not happy” that one of C’s customers, Mrs Mellor, was charged so much (£9,702) over such a short period of time (18 April 2019 to 1 July 2020) for service renewals/extended warranty running to 2033;

He did not deal with the administration side of the business, and so he

In 2018, and as a result of the increasing numbers of customer cancellations, C commenced an investigation, which involved taking statements from former customers to establish their reasons for changing alarm provider. C seeks to rely in part upon those statements as evidencing the alleged malicious falsehoods told by D3’s representatives to C’s customers. A significant number of the statements were taken by Karen Armstrong during the period 2018 to 2020. In response, the defendants rely upon the witness statements of Messrs Trueman and Wilby, who were also spoken to by Karen Armstrong, and the covert recordings taken by them of their conversations with Karen Armstrong. The transcripts of those recordings evidence Karen Armstrong seeking to persuade the former customers to return to C and in doing so telling them variously that - D3 had stolen their data; D3 had lost the first court case and its future was uncertain in light of the subsequent ongoing court case; D3 couldn’t even afford lawyers to defend them at the moment; D3 was financially in a lot of trouble; D3 had broken data protection law and was now in trouble with trading standards as well as with the courts; D3 had committed fraud. When taken to those transcripts, LH immediately acknowledged and accepted that the contents were “terrible”; Karen Armstrong had been “misleading customers”; she was “wrong”; and he had “no defence for” her actions; and

It might be said that, faced with such compelling evidence, it was perhaps inevitable that LH would make the concessions that he did regarding Karen Armstrong’s wrongdoing. However, by contrast, C relied upon the live witness evidence of customers of C, who described in troubling and equally compelling detail the pressure selling techniques employed by D3’s representatives. In particular, Trevor Gibson (“ TG ”), aged 85, described how D3’s sales representative, Mr Martyn Wright, arrived at his home at 6pm and did not leave until after 10pm, and only when TG had eventually signed the contract and paid up £1,619 on his bank card. D1, having insisted that D3 does not employ pressurised selling techniques and engages only in ethical marketing, reluctantly accepted that she was shocked by TG’s evidence, although still expressing some scepticism that D3’s representative would have been at TG’s home until 10pm. Ultimately, she said that it was a matter for D2 to address. D2 was somewhat dismissive in his evidence by saying only that he had spoken to D3’s representative shortly after receiving TG’s witness statement.

D1 and D2

Shifting case/new evidence

D1

“[117] …… After 10 years of dealing with postcodes and individuals and marketing and selling [C’s] products, I had an innate knowledge of the postcode areas of England and Wales and their demographics…

Personal Knowledge Gained in the Industry

[118] Accordingly, with this knowledge of the various postcode areas and their demographics of which areas were the most likely to contain more customers than others, I was able to instruct our canvassers on areas that I knew were more profitable than others.”

D2

“[90] ……. I had worked in the industry for many years and had an intimate knowledge of the demographics of many areas in the UK.

Personal Knowledge Gained in the Industry

[91] Accordingly, with this knowledge of the various postcode areas and their demographics and my knowledge of which areas were most likely to contain more customers than others, I was able to instruct our marketing efforts on areas that I knew were more profitable than others.”

D1

“TPS Compliant Databases

[120] In addition to the knowledge which was in my head, I also purchase[d] TPS compliant databases from various agencies specifically requesting those postcodes that were the most promising.

[121] in order for the database companies to provide the information that was required, we had to give them parameters. The parameters which I set for the production of these databases were as follows:

i) Private home owners;

ii) Aged 55 or over;

iii) Home telephone numbers only (rather than simply mobiles);

iv) Has an existing alarm.

[122] It is not therefore surprising that many of the areas that we concentrated on were similar areas to [C], as these were the areas that I worked on during my time with [C]. I knew which areas were the most successful.”

D2

“TPS Compliant Databases

[92] In addition to the knowledge which was in my head, [C] also purchased TPS compliant databases from various agencies specifically requesting those postcodes that were the most promising.

[93] It is not therefore surprising that many of the areas that we concentrated on were similar areas to [C], as these were the areas that I worked on during my time with [C]. I knew which areas were the most successful.”

D1

“Advertising

[123] In addition, [D3] advertised in magazines, online, had an online presence and used social media to obtain customers.

D2

“Advertising

[94] In addition, [D3] advertised in magazines, had an online presence, used Checkatrade, and conducted door to door leaflet delivery. We also had recommendations and referrals from satisfied customers.”

D1

“Leaflet Drops

[124] I knew where the most profitable areas were and so did [D2]. As I was busy trying [to] establish the business, I asked [D2] to facilitate a leaflet campaign promoting [D3]. Leaflets were then delivered to the geographical areas that both myself and [D2] had experience of being of most beneficial.

[125] The process of delivering leaflets was organised by [D2] and assisted by Shirley Maconnell…..

[126] When I began a marketing campaign I knew from my knowledge and experience which areas to concentrate on and would select an area. [D2] and Shirley would concentrate on those areas, look out for monitored alarm boxes. Some may have been [C’s] customers, but this was only because [C] had customers in the areas that I chose. I did not specifically target [C’s] customers. [RD] had already admitted that [C] had not serviced 3000 customers, which was one third of their total customers. So I knew that the service provided by [C] was very poor and that many of the customers would be willing to move to a new provider, but already had police response. Accordingly, [D2] arranged to have leaflets delivered to properties with a monitored alarm bell box within the selected area, together with a number of houses either side of that property.”

D2

“Leaflet Drops

[95] I knew where the most profitable areas were, and so did [D2]. When the business began trading, I organised a leaflet campaign promoting [D3]. Leaflets were then delivered to the geographical areas that both me and [D1] had experience of being the best areas to sell in.

[96] The process of delivering leaflets was organised by [D2] and assisted by Shirley Maconnell.

[97] When I began a marketing campaign, I knew from my knowledge and experience which areas to concentrate on and would select an area. Together with Shirley we would concentrate on those areas and look out for monitored alarm boxes. Some may have been [C’s] customers, but this was only because [C] had customers in the areas that I chose. I did not specifically target [C’s] customers. I knew that the services provided by [C] was very poor and that many of the customers would be willing to move to a new provider, but already had police response. Accordingly, the I arranged to have leaflets delivered to properties with a monitored alarm bell box within the selected area, together with a number of houses either side of that property.”

In their oral evidence D1 and D2 claimed for the first time that D3 had been gifted data by a friend of D3. D1 initially said in her oral evidence regarding this omission that unfortunately not everything was in her witness statement. However, later in her oral evidence, D1 sought somewhat unconvincingly to claim that the earlier reference in her witness statement to having “had meetings with suppliers” under the sub-heading “The Setting up of The New Business” somehow also meant meeting with her friend, who supplied the data. I note that the defendants’ defence also makes no express reference to having been gifted/loaned data, but only refers to “[26] … legitimate data purchases from third parties such as telemarketing information”;

In their written evidence D1 and D2 stated that they decided to target those geographical areas across the country that they knew from working with C were likely to be the most beneficial. However, in her oral evidence, D1 said that initially D3 had only employed one engineer. When asked how that engineer could have covered the whole of the country, D3 said for the first time in her oral evidence that D3 initially (for a couple of months at least) only concentrated on the local market;

In their oral evidence, D1 and D2 admitted for the first time that they had indeed targeted C’s customers, albeit only from late 2018 and after they learnt that C had lost its police response; and

In their oral evidence, D1 and D2 claimed for the first time that they were able successfully to target C’s customers from late 2018 onwards, and despite a large proportion of those customers being TPS registered, by revisiting lead sheets that had been generated by the leaflet campaign in 2017.

Disclosure shortcomings/blaming legal advisers

Prior to being disapplied by the case management order dated 1 July 2021, paragraph 3 of the Practice Direction 51U imposed duties upon the defendants from the time that they knew that they may become parties to the proceedings “to take reasonable steps to preserve documents in [their] control that may be relevant to any issue in the proceedings.” Further, paragraph 4 of the Practice Direction provided that the documents “to be preserved…… include documents which might otherwise be deleted or destroyed in accordance with a document retention policy or in the ordinary course of business.” The letter of claim was sent in March 2019 and yet from that time and even during the course of the proceedings, the defendants have apparently continued with a policy of destroying the lead sheets;

Even if the lead sheets had been destroyed automatically on the signing of contracts with D3 such that they were no longer in the defendants’ control they should still have appeared in their list of documents dated 23 September 2021. In that part of the list marked “List and number here, the documents you once had in your control, but which you no longer have. For each document listed, say when it was last in your control and where it is now.”, it was stated –

It was the evidence of D1 and D2 that James Carr stole the laptop and the box in 2017. It was the evidence of D2 that the lead sheets generated by the 2017 leaflet campaign were, however, kept in another box that was not stolen by James Carr, which was why D3 was then able to use those lead sheets to target C’s customers from late 2018 onwards; and

No explanation was given as to why those lead sheets that had not yet resulted in a sale, and so were not automatically destroyed, had not been disclosed. Indeed, D2 said in evidence that those particular lead sheets were still held back in the office.

Other witnesses on behalf of C

CC

She was employed by C for about 10 – 11 years as a telephone canvasser during which time D1 printed data off the Alarm Mater Database to be used for marketing campaigns. The printed data was stored in boxes, 90% of which were removed from the office prior to D1 leaving. In the weeks prior to their departures, and on a daily basis, she saw D1 and D2 putting boxes of papers in their cars, although she did not know precisely what was in the boxes;

In July 2017, CC joined D3. She left C because she did not like the people, who were put in charge of the marketing team after D1 resigned. Also, she did not like or trust LH and RD;

On joining D3, D1 handed out to the telesales team (comprising between 8 to 10 people including CC) sheets of printed paper with the names, addresses and telephone numbers of current and former customers of C. It was then that CC realised that the boxes of paperwork that had been removed from C’s offices by D1 and D2 contained C’s customer data;

The sales team called all the names on the printed sheets, whether or not they were registered with the Telephone Preference Service (“TPS”), but concentrated primarily on those customers of C, who were coming to the end of their contracts; and

CC eventually resigned from D3 because she became fed up with the way that D1 treated staff. CC had even lent D1 £8,500, but D1 delayed repaying the money and even now still owes the sum of £2,500.

had no involvement with C before he began working with C in about March 2020 following the resignation of RD as a director of C;

was appointed a director of C on 30 March 2021;

jointly owns Oncall Group Security Limited, which, in 2021, became the holding company of several alarm companies that have been acquired, including C; and

denies paying anyone, including CC, to provide false evidence. Exhibited to the witness statement of MV are the text messages exchanged between HK and MV and a transcript of the recording of a subsequent telephone conversation between them, all of which took place in October 2021.

In her written evidence, she stated that when working for MV at Secure Home she was told by a work colleague, Gareth Evans, that he had been paid £2,000 to provide a witness statement. When she saw CC come to the office and give a statement over the phone to the solicitor whilst sitting at the same desk where Gareth Evans had earlier sat when giving his own statement, she realised that CC had also been paid by MV;

In the text messages, HK stated in response to MV’s claims that he had not paid anyone that “I know what I witnessed" and “I DID WITNESS THAT”;

In her oral evidence, she said that she had not seen any cash changing hands, since the money had been paid by bank transfer;

Again in her oral evidence, and when asked why she had said in the telephone conversation with MV that “I met [D2] and he’s trying to fucking put words in my fucking mouth”, HK answered that when going over her draft witness statement she had edited a couple of things, although she could not now remember what they were.

In my assessment, HK’s evidence was riddled with unexplained inconsistencies. I have no reason to doubt MV’s evidence that he did not suborn CC, or indeed anyone else, to provide false evidence in this case.

Lisa Smith

When investigating the switch of C’s customers to D3, Karen Armstrong entered the details into a spreadsheet (“ the Tracker ”), which included any customer comments;

At least 90% of the 350 customers recorded on the Tracker were TPS registered;

In late 2020/early 2021, LS telephoned every single customer on the Tracker to find out why they had moved and what had been said to them. Nearly everyone LS spoke to relayed a conversation with D3 during which D3 told them that C was going out of business, had gone out of business or was not financially stable.

C’s customers

Other witnesses on behalf of the defendants

Derek Whitehouse

After D1 and D2 left C, the volume of customer cancellations began to rise;

The rise in customer cancellations was attributable to dissatisfaction with C’s poor customer service and being continually hounded by C to renew/upgrade contracts, rather than those customers being poached by D3; and

Since joining D3, he has not discovered anything within D3’s operating procedures that gives him cause for concern.

In his written evidence, he stated that “Having read the statements submitted by [D1 and D2 to the Employment Tribunal] I am incensed at the way they were treated and I have had little hesitation in making this statement in support of their case.”;

In his oral evidence, DW was taken to the extracts of the judgment of Employment Judge Lloyd and the adverse findings there made against D1 and D2. DW was either unwilling to accept the findings or sought somewhat bizarrely to argue that the findings had a different meaning to the clear and unambiguous language used by Employment Judge Lloyd; and

DW accepted in his oral evidence that, whilst working for D3, he had been tasked with assisting C’s former customers to make complaints to Trading Standards regarding C.

HK

Defendants’ customers

They were former customers of C, who felt that in 2018 they were misled by C into signing new contracts, which had the effect of replacing the police response that they had previously enjoyed with a private guarded response; and

When subsequently they realised that the change to a private guarded response was not an enhancement, they entered into a contract with D3 in order to regain their police response.

I have already referred earlier to the transcripts exhibited to the witness statements of Messrs Trueman and Wilby.

Lucas direction

Burden and standard of proof

“[117] In general it is legitimate and conventional, and a fair starting point, that fraud and dishonesty are inherently improbable, such that cogent evidence is required for their proof. But that is because, other things being equal, people do not usually act dishonestly, and it can be no more than a starting point. Ultimately, the only question is whether it has been proved that the occurrence of the fact in issue, in this case dishonesty…, was more probable than not . ”

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

“The [defendant] ………….. elected to call no witnesses, thus depriving the court of any positive evidence ……. This is a legitimate tactical move under our adversarial system of litigation. But a defendant who adopts it cannot complain if the court draws from the facts which have been disclosed all reasonable inferences as to what are the facts which the defendant has chosen to withhold.

Adverse Inferences

Absence of contemporaneous documentary evidence

“[14] In my judgment, contemporaneous written documentation is of the very greatest importance in assessing credibility. Moreover, it can be significant not only where it is present and the oral evidence can then be checked against it. It can also be significant if written documentation is absent. For instance, if the judge is satisfied that certain contemporaneous documentation is likely to have existed were the oral evidence correct, and that the party adducing oral evidence is responsible for its non-production, then the documentation may be conspicuous by its absence and the judge may be able to draw inferences from its absence.”

Failure to call a witness of fact to give evidence

“From this line of authority I derive the following principles……

In certain circumstances a court may be entitled to draw adverse inferences from the absence or silence of a witness who might be expected to have material evidence to give on an issue in an action.

If a court is willing to draw such inferences, they may go to strengthen the evidence adduced on that issue by the other party or to weaken the evidence, if any, adduced by the party who might reasonably have been expected to call the witness.

There must, however, have been some evidence, however weak, adduced by the former on the matter in question before the court is entitled to draw the desired inference: in other words, there must be a case to answer on that issue.

If the reason for the witness's absence or silence satisfies the court, then no such adverse inference may be drawn. If, on the other hand, there is some credible explanation given, even if it is not wholly satisfactory, the potentially detrimental effect of his/her absence or silence may be reduced or nullified."

“[41.] The question whether an adverse inference may be drawn from the absence of a witness is sometimes treated as a matter governed by legal criteria, for which the decision of the Court of Appeal in  Wisniewski v Central Manchester Health Authority ….is often cited as authority. Without intending to disparage the sensible statements made in that case, I think there is a risk of making overly legal and technical what really is or ought to be just a matter of ordinary rationality. So far as possible, tribunals should be free to draw, or to decline to draw, inferences from the facts of the case before them using their common sense without the need to consult law books when doing so. Whether any positive significance should be attached to the fact that a person has not given evidence depends entirely on the context and particular circumstances. Relevant considerations will naturally include such matters as whether the witness was available to give evidence, what relevant evidence it is reasonable to expect that the witness would have been able to give, what other relevant evidence there was bearing on the point(s) on which the witness could potentially have given relevant evidence, and the significance of those points in the context of the case as a whole. All these matters are inter-related and how these and any other relevant considerations should be assessed cannot be encapsulated in a set of legal rules.”

Alleged unscrupulous business practices of C

C being involved in “churning”, which was described by D1 and D2 as C having conspired with connected or associated companies (e.g. Storm Security Systems Limited) so that those other companies deliberately lost their accreditation and consequently their ability to provide a police response. C would then contact the other companies’ customers to sell them new contracts with a police response;

Misrepresenting to C’s customers that the switch to a private guarded response was a service enhancement as a result of increasingly poor police response times when in reality it was the result of the SSAIB terminating C’s registration because of their own concerns over C’s business practices;

Encouraging staff at a training meeting held on 28 June 2017 to post fake reviews; and

Unlawfully obtaining confidential customer data from competitor companies e.g. LH paying £5,000 to an employee of Defence Security Systems Limited to enable LH to access their database.

In support of the allegations, the defendants relied in particular upon the evidence from the defendants’ customers (Jane Betts, Kenneth Trueman, Melville Wily, John Winterbottom and Celia Lester). The defendants understandably expressed concern that, because of C’s decision not to challenge that evidence, I was deprived of the opportunity of hearing directly from those witnesses and from seeing for myself how vulnerable those witnesses were.

As to why C switched to a private guarded response, in his oral evidence, IK, a former police officer, said that in his experience a private guard would respond quicker to an alarm activation than the police, who are so stretched. JW, in his oral evidence, said that he had previously had a police response through another provider, but had switched to a bell only system because he had been fined twice when the alarm went off and could not be switched off. On both occasions, the police did not attend until the next day. At trial, MV produced certificates confirming that Secure Homes Systems Limited was accredited at the time the SSAIB was claiming that it was not; and

The training meeting on 28 June 2017 was also covertly recorded by D2. There is no reference in the transcript to staff being encouraged/advised to post fake reviews. Indeed, when the trainer, David Mitchell, warns of the reputational risks arising from posting fake reviews, LH says “No, I don’t want to…… We’ve got enough customers…. When you do your customer service call [say], “…… Are you happy? Oh yeah great. Do me a favour, just pop on Google and do us a review.””

I am otherwise satisfied that, at times, the sales staff of both C and D3 have been guilty of sharp practices and with striking similarities. It is not disputed that customers for domestic alarm systems tend to be older clientele, who are potentially vulnerable –

In any event, this case is not about the ethical standards of C. For the reasons given below, and in accordance with the agreed list of issues at trial, I am entirely satisfied that the central factual dispute in this case is how did D3 manage to make contact with so many of C’s customers and whether by legitimate or illegitimate means? I am not assisted in making that determination by consideration of the wider unscrupulous business practices allegedly adopted by C.

How did D3 make contact with C’s customers?

Access to C’s Alarm Master Database

“included but weren’t limited to, the reporting of the daily figures to the National Manager and Directors including late night sales results, daily staff meetings, training, appraisals, customer telephone confirmations, customer complaints, data management, staff recruitment, department payroll, resolving declined customer card payments, record keeping, marketing strategy, liaising with other departmental managers, reporting to the National Sales Manager, referencing for ex-employees, disciplinary action, liaising with courts when required and many other duties as and when they arose.”

It contained customer information that was integral to the successful operation of the business including (i) recording new sales, and (ii) providing a customer base to market and sell additional products/services, renewals and extended warranties, which were a vitally important revenue stream;

D1 and D2 were not simply employed in marketing and sales, they were C’s most senior employees, who themselves played an integral part in the overall success of the business. They were rewarded for that success by being paid very high levels of commission, and so they had strong personal and vested interests in maintaining the financial health of the business;

It is difficult to see how D1 and D2 could have performed their senior and extended roles properly, or indeed at all, without access to the up to date and detailed information contained on the Alarm Master Database; and

D1 and D2 need and have access to D3’s own Alarm Mater Database in order to perform similar roles to those that they performed at C.

The “Grand Plan”

LH has in the meantime changed his evidence. After the Employment Tribunal had determined as a preliminary issue that D1 and D2 were employees of C, LH provided a witness statement in which he stated that –

RD is not a witness in the present proceedings, but he provided a witness statement to the Employment Tribunal in relation to the preliminary issue which he stated on behalf of C that –

In the present proceedings, C seeks to place reliance upon D1 and D2 having claimed for discrimination in the Employment Tribunal. C argues that they did so because they wanted to ensure that, if the claims were successful, D1 and D2 would then be entitled to receive awards for constructive dismissal not subject to the statutory cap that would otherwise have applied. However, the claim forms filed with the Employment Tribunal make clear that the boxes claiming discrimination were not ticked by D1 or D2.

“Whatever was the genesis of [D3] as to whether they were asked to set it up or whether it was a mutual decision, I think [D1 and D2] knew full well that were huge advantages for them, sometimes not entirely legal or straightforward. In setting up the company and funnelling their funds and income and resources through it, and also as a platform for the development of their own future business goals, namely as an accredited installer of [home] security….”

D3 was incorporated with a name, “Connect 4 Security Limited”, and a logo, which were ideal for trading in home security. In contrast, CC adopted the name “SecurewithCaz Limited” for her personal service company;

On 16 January 2017, D3 paid printers £5,829 for company headed paper;

In early May 2017, D3 applied for accreditation with the SSAIB and created a trading website for the business;

In June 2017, D1 attended for the first time the annual trade show to familiarise herself with new products available on the market. LH was angry about D3’s application for SSAIB accreditation when told about it by David Profit of the SSAIB at the time of the annual trade show;

This was all done in anticipation of D1 and D2 going into business together in competition with C; and

D3 was fully operational by 1 August 2017, within a month of D1 and D2 leaving C, and selling very well with 2 or 3 sales in the first week of business.

D1 claimed that all this admitted preparatory work was done merely as a back-up plan, a “Plan B”, in the event that D2 was sacked by C. However, D1 was not sacked by C, but was found to have left of his own accord. Remarkably, D1 said in evidence, and having conceded that he was bound by the finding of the Employment Judge that no threats had been made against him by DS, that he had no choice but to leave immediately. He was simply unable to accept a pay cut, which would have reduced his earnings from £250,000 to some £200,000 per annum, and notwithstanding that his wife was pregnant at the time with their 4th child and he had a mortgage to pay. D1 later said in evidence that she would have remained working for C had it not been for the fact that C had sought to reduce D1’s salary by £500 per week. In any event, I note that all the above preparatory steps for the new business were in fact taken prior to D1 and D2 attending the meetings on 27 June 2017, when D2 was first asked to take a pay cut, and 4 July 2017, when the alleged threat was made.

D3’s claimed legitimate marketing activities

Prior to leaving C, D1 was earning a total of £130,000 per annum and D2 was earning a total of £250,000 making a combined total of £380,000 per annum. D1 said that D2 was asked to take a pay cut of £500 per week, whereas D2 said it was £750. Even adopting the higher figure, D1 and D2 were, by walking away from C, effectively giving up combined total future earnings of some £340,000 per annum; and

D1 did not dispute CC’s written evidence that when she began working for D3 towards the end of July 2017, D3 already employed some 10 members of staff in the telemarketing team alone, and ignoring the sales team (security advisers) x 2 and the engineer.

“advertising opportunities in consumer directories and magazines”

Only one paid advertisement was placed in a magazine in Solihull;

Only two fee advertisements were placed in directories covering the West Midlands; and

The advertising campaign was not rolled out nationally because the local response had been quite poor generating only 1 or 2 sales, none of which were to C’s customers.

“online marketing/referrals from the SSAIB”

“legitimate data purchases from third parties such as telemarketing information”

From the outset D3 purchased the data;

When it was pointed out that the defendants had not disclosed any invoices for any data purchases before 18 January 2018, D1 changed her evidence to say that she had not purchased data from the outset, but rather D3 had initially used 2^nd party data shared with another organisation;

D1 had stated in her written evidence that the data used by D3 had been both (a) TPS compliant and (b) highly targeted by reference only to private home owners, aged 55 or over and having an existing alarm. However, in her oral evidence, D1 then further explained that by sharing data with another organisation she had in fact meant asking her good friend, Steve, who was involved in a holiday business, to lend her his data. D1 accepted that it would not have been possible to identify who, if anyone, had an existing alarm from what was ultimately holiday marketing data. Whilst consumers, who were TPS registered, were told that the data had been screened by D3, it was Steve, who had cleansed the data to make sure it was TPS compliant before handing it over to D1. There was no written agreement relating to this sharing of personal data and contrary to the ICO’s Code of Practice, which provided that:

As part of gifting the data, Steve handed over to D1 hard copy sheets each including the name, address and telephone number of 60 contacts. When D3 moved premises some 6 months after it started trading, D1 decided not to retain copies of the data sheets, although no reference to them is made in the list of documents as having once existed but no longer being in the defendants’ control;

Any leads generated from the gifted data were not recorded separately, since there was no need to do so. The security advisers, Martyn Wright and Charlie Flint, were simply notified by text of the name and address of the prospective customer and of the time of the arranged appointment. The security advisers did not apparently need also to know in advance why they were attending the appointment and what the identified/expressed needs of the prospective customers actually were e.g. the installation of a new system or the transfer of an existing system from another provider. To do otherwise, D1 claimed, ran the risk that the security adviser would potentially pre-judge the particular sales opportunity; and

In the event that a sale was then secured by the security adviser from any such lead, D1 would text the engineer a list of what work needed to be done. Whilst D1 accepted that it would perhaps have been easier if a standard form work sheet had been completed by the security adviser to be forwarded to the engineer, she preferred texting the engineer herself, who would then source the necessary equipment from a trading warehouse in Birmingham.

“direct marketing by leaflet and doorstep marketing”

The 2017 leaflet was drafted by D2, who then obtained printed copies from a supplier somewhere in Solihull;

Not many people phoned D3 in direct response to the 2017 leaflet campaign;

However, as part of that campaign, D2’s good friend, Shirley, had been tasked with looking out for monitored alarm boxes. By going door-to-door, Shirley was able to harvest invaluable information including the identity of the existing provider from the name displayed on the alarm box. Shirley was also able to obtain from consumers, who were TPS registered, opt-ins to receive marketing calls in relation to D3’s services/products;

Shirley passed her returns to D3’s former employee, James Carr, who inputted the information onto D2’s personal laptop. At some point the consumers’ contact details were printed off the laptop and passed to the telesales team to make the calls;

The 2017 leaflet campaign ceased in November 2017 because, as a result of D3 then securing Checkatrade accreditation, D3 was prohibited from continuing with its door-to-door marketing strategy;

In September 2017, James Carr told D1 that he had been given a memory stick by an IT contractor for C, Adam Horton, which contained C’s customer information. D1 believed that this was an attempt by C to entrap the defendants. D1 sent a text message to Adam Horton on 13 September 2017, a copy of which has been disclosed, stating “I’m using clean data only and don’t want to touch or be associated with that lot. all of them dishonest. Thank you kindly anyway for good intentions.” In addition, James Carr was issued with a final warning regarding his conduct;

Notwithstanding D1’s stated belief that Adam Horton was part of an attempt by C to entrap the defendants, D1 acknowledged in her oral evidence, and by reference to other disclosed text messages sent in July 2017, that Adam Horton was helping D3 to locate offices. He even messaged D1 that “I have more than enough space at mine in Coventry to let you use till u sort something more permanent. Have internet phones computers and setup an sep netword and phone system for u”;

On 2 November 2017, D3 wrote to James Carr inviting him to attend a disciplinary meeting on 6 November 2017 –

On 6 November 2017, D3 sent a further letter to James Carr after he failed to attend the disciplinary meeting on 6 November 2017. The letter terminated James Carr’s employment with D3 on the grounds of his “erratic behaviour, aggressiveness and overall poor professional conduct”. The letter over the course of 4 pages sets out in detail the alleged misconduct relied upon and including –

On 9 November 2017, D3 wrote a final letter to James Carr requesting that he return company property in his possession, including “the three [D3] polo shirts previously issued and worn by you.”

D1 was asked in oral evidence, why the defendants had not disclosed any spare copies of the 2017 leaflet, Shirley’s returns, D2’s laptop, and the printed customer lists. She claimed that they had all been stored in a box, which had been entrusted to James Carr. Further, during the course of a false fire alarm at D3’s then office premises, James Carr was seen stealing the box;

In my judgment it is extraordinary, if true, that D3 decided to entrust the safekeeping of a box containing the personal data of elderly and potentially vulnerable consumers to a known long term drug user, who was exhibiting such erratic, troubling and desperate behaviour. However, even putting that to one side, D1 was simply unable to explain why, if true, there was absolutely no mention in any of the disciplinary letters sent to James Carr of the alleged theft of company property/the box. The only specific reference to company property was the request that James Carr return the 3 polo shirts that he had been issued with;

Notwithstanding the alleged theft of company property by James Carr in 2017, including all the data harvested by Shirley, D3 was nevertheless able, from late 2018 onwards, to target and make contact with C’s customers by revisiting the lead sheets that had been generated by the telecanvassers in 2017 when they first contacted the consumers as part of the leaflet campaign.

He designed the 2017 leaflet on his laptop. He downloaded the design onto a memory stick, which he gave to Staples, who then tidied up the design before printing off the leaflets. He paid Staples £400 in cash for the job;

The 2017 leaflet campaign worked brilliantly, since it was targeted by identifying alarm boxes from a Google Street view of key geographical areas, which had been identified from discussions held with the marketing and sales staff with combined experience of some 80 years working for C. When asked why he had not previously mentioned Google Street view being used to identify alarm boxes, D2 said that it was a deliberate decision in order to protect what he claimed was a commercially valuable and confidential marketing strategy;

Hand written notes detailing this information were passed to Shirley on an ongoing basis to enable her to call at the identified properties and engage directly with the prospective customers;

Shirley’s main income was derived from selling second hand clothes all around the country. She did the leaflet campaign as part of travelling nationally with her own business. D2 paid Shirley cash every so often here and there, £100 at a time, making a total of £3,000;

The company bank statements do not record any payments to Staples or to Shirley in respect of the 2017 leaflet campaign, since they were not company expenses. D2 paid the money personally from cash he had at home and as a favour to D1, who he was then assisting in a purely advisory role as he was unable at that stage to commit to the business for family reasons;

D2’s laptop, the memory stick containing the design for the 2017 leaflet supplied to Staples, the spare 2017 leaflets, the information generated by the Google Street views handed to Shirley and the consumer returns/opt-ins that had been collected by Shirley were all stored in the box stolen by James Carr in 2017;

Initially, D2 said that, in December 2018, after C lost its police response, it was C’s customers, who began contacting D3 because it was accredited. Any such contact generated a lead sheet, but, from either January 2019 or February 2019, the decision was taken to destroy the lead sheet automatically upon a sale being generated and a take-over form being completed. At that point the lead sheet was no longer required and notwithstanding that (a) the take-over form was prepared on legal advice for the purposes of this litigation and (b), unlike the lead sheet, the take-over form failed to identify who contacted who, which D2 accepted was highly relevant to this litigation;

D2 then said that it was D3 that called C’s customers from 2018 onwards, rather than the other way round, by revisiting the leads identified by Shirley in 2017 as part of the leaflet campaign and notwithstanding that the box stolen by James Carr in November 2017 contained the returns/opt-ins collected by Shirley; and

When asked again how D3 had been able to call C’s customers from 2018 onwards, notwithstanding the theft of the box by James Carr, D2 further explained that D3 still possessed the relevant contact details because the information obtained by Shirley had prior to the theft been inputted into a spreadsheet. The details were then printed off and handed to the telecanvassers, who made contact with the prospective customer. If that contact generated any interest, that in turn led to the production of a lead sheet, which was kept in another box, separate to the box that was stolen by James Carr. Once the customer had again been contacted via the lead sheet and a sale secured then the lead sheet was automatically destroyed; and

D2 did not report the theft of his laptop to either the police or the ICO. He then claimed for the first time that the laptop in fact belonged to the company, rather than to him personally, and so he did not think it was worthwhile reporting the alleged theft to the police. However, even if that change of evidence was true, it failed to explain why the theft had not at least been reported by D3, the data controller, to the ICO. The ICO broadly defines a personal data breach, which requires reporting to the ICO, as a security incident that has affected the confidentiality, integrity or availability of personal data. It was of course the defendants’ evidence that the laptop not only contained the personal data of potentially vulnerable consumers, but it had been stolen by someone, who was apparently willing to do whatever was needed to get money to fund his drug addiction. It is hard to imagine a more serious security incident affecting personal data.

The defendants’ missing documents/witnesses

The letter before action was sent in March 2019, and D2 stated in evidence that the Take-Over Forms had been prepared in order to rebut C’s allegations that the defendants “were acting in an unethical manner.”;

Whilst D1 said in her oral evidence that the Fit Books were not prepared for the purposes of the litigation, I note that the relevant columns in the 2019, 2020 and 2021 Fit Books (covering the period when the defendants claim that they were able successfully to target C’s customers as a result of the loss of C’s police response in late 2018) are expressly headed “Documents in Support of Contact completed by client on our Take-Over Form”;

Therefore, it appears that the relevant information inputted into the Fit Books was intended to be a summary of the information provided by the customer in the Take-Over Forms;

However, the Fit Books do not even appear to be an accurate reflection of what is actually contained in the Take-Over Forms. Counsel for C helpfully prepared an analysis in tabular form, which shows that only 59 (out of a total of 709) of the Take-Over Forms actually refer to a leaflet;

Further, D2 admitted in evidence that he completed the majority of the relevant sections in those 59 Take-Over Forms. The relevant section is headed “In your own words, how would you describe the way [D3] has conducted itself during your initial and confirmation calls?”. In his oral evidence, D2 was unable to explain properly why, in response to that specific question, any customer, never mind 59 customers, would have mentioned a leaflet; and

The 59 Take-Over Forms only refer to a leaflet in generic terms such as “leaflet drop”, “leaflet delivered” or simply “leaflet”. If the customer did make reference to a leaflet, the Take-Over-Forms fail to distinguish between a leaflet provided in 2017 and the key facts document which they say was delivered to consumers in 2019.

In all the circumstances, I am unable to attach any weight to the Fit Books/Take-Over Forms, which, like C’s Tracker, I consider to be self-serving and unreliable.

D1 and D2 claimed that the written instructions to Shirley, the spare leaflets, the returns/opt-ins collected by Shirley, the laptop upon which the harvested information was downloaded and the leaflet was designed, the consumer lists printed off the laptop and distributed to the telecanvassers, and the memory stick upon which the leaflet design was downloaded were all stored in a box. That box was entrusted to the care of James Carr, who then stole it; and

D2 claimed that he paid cash out of his own money to Staples to print the 2017 leaflets and to Shirley to distribute the 2017 leaflets such that there were no corroborating bank statements available. There were also no receipts or invoices evidencing such payments.

Due to the high turnover of staff there were no telesales staff still employed by D3 from 2017 other than Jackie Owen;

It was not fair to ask Jackie Owen to be a witness as she had only recently returned to work after a long period of illness;

In light of the years that had now passed, it was not possible to get hold of the other telesales staff employed in 2017; and

Shirley passed away in 2020.

The alleged lead sheets and gifted data never existed; and

The untested evidence of CC is correct in that D3’s telesales staff were directed to work from printed sheets (whether originally printed off C’s Alarm Master Database or subsequently via a USB stick) containing C’s customer information.

“……There are also some things that are important for me to know:

……….”

Your Mother was originally spoken to in 2017 by our company, following a campaign promoting the services of [D3] to homeowners in various areas across the country. As part of our campaign, was a leaflet describing the benefits of our Monitored Alarms services for Home Security purposes. When the leaflets are delivered there was often an opportunity to speak to the occupier and explain the content of the leaflet. If there was any interest shown by the occupier, as your Mother did at the time, they were encouraged to provide their name and telephone number in order for a pre-arranged Home Security consultation to take place. Your Mother said she was already in a contract with her existing alarm company with a couple of years remaining. Therefore, your Mother asked for us to make contact nearer the end of her contract. This is how we first obtained your Mother’s telephone number. We subsequently first made contact with your Mother in 2019.

……..

You state your Mother is TPS registered, however her permission to contact her was given during the original discussion which took place in 2017.

……..”

Conclusion

It is admitted that, from at least 2018, the defendants specifically targeted C’s customers by making telephone contact with them and despite a number of those customers being TPS registered;

It is also admitted that, as a result of that strategy, the majority of D1’s customers are former customers of C;

I have found that the defendants had the opportunity to take C’s customer information as a result of D1 and D2 having had access to the Alarm Master Database during the course of their employment with C; and

The defendants had the motivation to take C’s customer information. Employment Judge Lloyd found that they had a “Grand Plan”, which was in place “some time before” D1 and D2 left their employment with C, “to compete directly with [C] with the advantage of not simply their experience with [C], but the knowledge of [C’s] operations in exactly the same field and also their knowledge of the customer base which of course they had.” I share that view as a result of my own findings that -

they took and used C’s customer information, as claimed by C; or

through the defendants’ “own legitimate marketing activity”, and in particular “direct marketing by leaflet and doorstep marketing”, as claimed by the defendants.

D1’s and D2’s oral evidence on this issue was simply unbelievable;

No satisfactory explanation was given by D1 or D2 for the missing lead sheets and/or witnesses, which/who ought otherwise have been available to corroborate D1’s and D2’s version of events, if true, and rebut the written evidence of CC; and

The adverse inferences reasonably to be drawn from the resulting very significant evidential gaps allowed by the defendants on this issue.

Causes of action

Legal framework

Claims for breach of confidence, database right infringement, inducing/procuring breaches of contract

“[1.] ……….. It is brought by three companies within the Weiss Technik group ……… against four former employees (the individual defendants) and the company SJJ System Services Limited (SJJ), which was set up by one of those employees, Mr Jones, when he left Weiss.

[2.] The claim is, essentially, that Mr Jones established SJJ by taking large swathes of confidential Weiss information and software, which he used to compete with Weiss. The claimants say that the other defendants, i.e. Mr Davies, Mrs Whitfield and Mr Oram, then continued to provide Mr Jones and SJJ with confidential information from Weiss either at Mr Jones' request or voluntarily, before they left Weiss at various different times to work for SJJ. They then (the claimants say) continued to use Weiss's confidential information after they had joined SJJ.”

“Breach of confidence

Legal principles

“written or oral falsehoods, not actionable per se nor even defamatory, where they are maliciously published, where they are calculated in the ordinary course of things to produce, and where they do produce, actual damage.”

“Slander of title, etc.

“[65.]  I have already given most of my reasons for concluding that the Judge was wrong to adopt the historic approach. In summary his decision, that a claimant relying on section 3 must plead and prove a specific mechanism by which the offending statement did on the balance of probabilities cause actual financial loss, flowed from a fallacy that fails to give the statutory language its natural meaning and effect. The authorities, properly understood, do not support this. I add that I think it is also a fallacy to reason from the proposition that malicious falsehood is an economic tort to the conclusion that only proof of actual financial loss will do. “Economic tort” is a label to indicate the nature of the interest protected by the cause of action. On its natural interpretation section 3 is aimed at the protection of financial or economic interests. Parliament provided for a claimant to establish liability on proof that the acts complained of had a natural tendency to cause loss of the type protected by the tort. I can see nothing heterodox in that. Nor do I see force in the supposed paradox that the claimant might establish liability on the basis of an inherent probability of financial loss, even though the defendant has proved as a fact that there was none in the event. This is not an “absurdity” as the defendants have submitted. In my view it is consistent with Parliament's intention and simply an extreme illustration of the occasional side-effect I have described at para  47  above.”

Conspiracy to injure by unlawful means

“[761.] The basic elements of the cause of action in the tort conspiring to injure by unlawful means are set out in  Kuwait Oil Tanker Co SAK v Al Bader (No. 3)  [2002] 2 All ER (Comm) 271 (CA), per Nourse LJ at [108]:

[762.] In addition, the following principles apply:

i) A claimant must establish on the available evidence that there was an agreement or combination with the common design to cause injury to them. This is a question of fact.

ii) Formal agreement is not required and it is sufficient if two or more persons combine with a common intention, or, in other words, that they deliberately combine, albeit tacitly, to achieve a common end: ( Kuwait Oil Tanker   at [111])

iii) In most cases it will be necessary to scrutinise the facts to see what inferences can be drawn as to the existence or otherwise of the alleged conspiracy. In many contexts it will be necessary in order to prove intention to ask the court to infer the relevant intention from the primary facts:  Kuwait Oil Tanker  at [112] and [120].

iv) Nevertheless, it must be shown that the alleged conspirators were sufficiently aware of the relevant circumstances, and had a sufficiently similar objective, before it can be inferred that they were acting in combination: ( Kuwait Oil Tanker  at [111]).

[763.] As to the requirement of intention to harm the parties agreed that the principles are set out in  OBG Ltd v Allan  [2008] 1 AC 1 at [164]-[167]:

i) A defendant may intend to harm the claimant's business either as an end in itself or as a means to an end.

ii) Intentional harm inflicted against a claimant in either of these circumstances satisfies the mental ingredient of this tort, even if the defendant does not wish to harm the claimant in the sense that he would prefer that the claimant were not standing in his way.

iii) Lesser states of mind do not suffice: to establish liability, a high degree of blameworthiness is called for because intention serves as the factor which justifies imposing liability on the defendant for loss caused by a wrong otherwise not actionable by the claimant against the defendant, and the defendant's conduct must be deliberate.

iv) Foresight that conduct may or will probably result in damage to the claimant cannot be equated with intention and this intent must be a cause of the defendant's conduct. The defendant must intend to injure the claimant. This intent must be a cause of the defendant's conduct.

v) If a defendant seeks to advance his own business by pursuing a course of conduct which he knows will, in the very nature of things, necessarily be injurious to the claimant (i.e. the loss to the claimant is the obverse side of the coin from gain to the defendants and the two are, to the defendant's knowledge, inseparably linked and the defendant cannot obtain the one without bringing about the other).

[764.] As to unlawful means and knowledge:

i) The claimant must establish that: (a) the alleged acts were “unlawful” and (b) that they were in fact the means by which injury was inflicted upon them  Digicel (St Lucia) Ltd v Cable & Wireless Plc   [2010] EWHC 774 (Ch)  at Annex I [3]).

ii) The defendant must have knowledge of all of the facts which make the means unlawful:  The Racing Partnership Ltd v Sports Information Services Ltd   [2020] EWCA Civ 1300 ; [2021] Ch 233 at [141].

iii) By a majority decision it has been accepted that knowledge of the unlawfulness of the means employed is not required: see  The Racing Partnership Ltd  at [139] and [171].

iv) The requirement of knowledge is satisfied where the defendant has “blind-eye” knowledge:  The Racing Partnership Ltd  at [159]. That requires a suspicion that certain facts may exist, and a conscious decision to refrain from taking any step to confirm their existence.

v) As to blind eye knowledge see  Group Seven & Ors v Nasir  [2019] EWCA Civ 614: [2020] Ch 129, [59]-[60]:

vi) To be “unlawful”, the actions need not themselves be actionable civil wrongs:  Revenue and Customs Commissioners v Total Network SL   [2008] 1 AC 1174 .

vii) Deceit may constitute the necessary unlawful action ( ERED  at [381]), as may a breach of fiduciary duty ( Fiona Trust & Holding Corp v Privalov   [2010] EWHC 3199 (Comm)  at [69]) .

viii) It may be a defence for the defendant to prove that he believed that the means in question were lawful: obiter, in  The Racing Partnership , Arnold LJ at [146].

Conclusion

The basic equipment installed;

Optional add-on products;

Optional warranty cover;

The prices paid;

When the contract was due for renewal; and

The password for the customer’s home security system.

D1 and D2 breached their contractual obligations of confidentiality;

The breaches by D1 and D2 of their contractual obligations were induced or procured by D3 and (by way of inducing/procuring the contractual breaches of the other) D1 and D2;

The defendants infringed C’s database rights; and

The defendants conspired to injure C by unlawful means. It has been held that a criminal conspiracy between a “one man” company and its sole controller is an impossibility because it is not possible to find an agreement between two minds – R v McDonnell [1966] 1 Q.B. 253 The position in relation to an alleged civil conspiracy is not so clear cut. In the recent case of Raja v McMillan  [2021] EWCA Civ 1103, Nugee LJ noted at [59] that the point remained “one of some difficulty”. Ultimately, I do not need to decide this particular point, and nor would it be proper to do so without having heard argument upon it. Whilst D1 was the sole director of D3 at the material time, I have found that D1 conspired with D2, and D2 conspired with D3.

I have found that D3’s staff, and in particular Martyn Wright, falsely told C’s customers that D was financially in trouble in order to encourage those customers to switch to D3;

It is not claimed that D3 is vicariously liable for the acts of its employees. Rather it is claimed that these maliciously false statements were a deliberate ploy calculated by the defendants to cause pecuniary damage to C;

However, the defendants claim that the maliciously false statements, if made, were not made with their knowledge and approval. The defendants have disclosed a copy of the “Training Record & Code of Conduct Re Previous Provider System Takeover” signed by staff. The sample copy is signed by Martyn Wright and dated 1 May 2019. Martyn Wright inter alia confirms that:

I have found that C’s employee, Karen Armstrong, adopted a similar tactic of making maliciously false statements about D3 in order to seek to persuade customers to switch back to C. LH sought to distance himself from that conduct by claiming that Karen Armstrong “had gone off script”. Having accepted LH’s evidence on that point, it would be unfair and perverse not then to accept the defendants’ evidence that Martyn Wright also went off script.

D1 and D2 breached their contractual obligations of confidentiality;

The breaches by D1 and D2 of their contractual obligations were induced or procured by D3 and (by way of inducing/procuring the contractual breaches of the other) D1 and D2;

The defendants infringed C’s database rights; and

The defendants conspired to injure C by unlawful means.