Kieran Corrigan & Co Ltd v OneE Group Limited & Ors

This claim is for misuse of information relating to the creation of a possible tax mitigation scheme by the Claimant, Kieran Corrigan & Co Ltd.

The claim is that in conjunction with experienced tax counsel, Michael Sherry, the Claimant devised a structure with several variants (the “Structure”) using the research and development (“R&D”) relief provisions of the Corporation Tax Act 2009 (the “2009 Act”), that information relating to this structure was confidential, and that the Defendants have misused this information to their advantage to promote a structure of their own, which I shall refer to as the “Nemaura structure”. The Claimant therefore claims relief for (a) breach of confidence, (b) procuring breach of a contract, namely the non-disclosure agreement (“NDA”) between the Claimant and a company in the First Defendant’s group), and (c) unlawful means conspiracy. The relief sought in the Particulars includes a claim for an injunction and an order for delivery up, but they were dropped at trial, leaving a claim for an inquiry as to damages or equitable compensation, or at the Claimant’s option an account of profits, together in either case with an order for payment of all sums found to be due pursuant to the inquiry or account.

Master Clark ordered on 18 November 2021 that there should be a split trial, with liability and quantum being decided separately. The hearing before me, which took place on 12 to 16 December 2022, dealt with liability only. I emphasise that and shall return to that point at the end. I asked during the trial for a number of written documents to be prepared, and the parties provided them to me after the conclusion of the trial, including an 11 January 2023 note on the relevant corporate tax analysis. I have carefully taken account of all the written and oral submissions, including the elegant closing submissions of Mr Budworth.

In my judgment:

I shall deal with the issues in the following order:

The Claimant, Kieran Corrigan & Co Ltd, is an Irish company, incorporated on 23 November 1998, that specialises in accountancy and tax advisory services. Its managing director and majority shareholder is Kieran Corrigan, who is a chartered accountant and barrister. He was a lecturer in tax law at Trinity College, Dublin from 1981 to 2007, established the tax course at University College, Dublin, and has written a two volume book on Irish revenue law.

The First Defendant, OneE Group Ltd (“OneE Group”), is an English company, incorporated on 30 January 1997, that is the parent of a group of companies which collectively develops and markets tax efficient investment products. Three of the subsidiaries of Group, all of which are English companies, are (1) OneE Tax Ltd (“OneE Tax”), incorporated on 1 June 2006, which was a party to the NDA referred to above but entered voluntary liquidation on 10 March 2015, (2) OneE Consulting Ltd (“OneE Consulting”), incorporated on 20 September 2012, which the Defendants allege developed the Nemaura structure, and (3) OneE Investments Ltd (“OneE Investments”), which the Defendants allege promoted the Nemaura structure. Where the evidence does not refer to a specific OneE group company, I shall simply refer to “OneE” in this judgment.

The Second Defendant, Bashir Timol, has been a director of OneE Group from 30 January 2007 to date, was a director of OneE Tax from 1 June 2006, was a director of OneE Consulting from 20 September 2012 to 15 July 2014, and was a director of OneE Investments from 16 August 2013 to 1 June 2015.

The Third Defendant, Dominic Slattery, has been a director of OneE Group from 4 August 2014 to date, was a director of OneE Tax from 23 March 2011, has been a director of OneE Consulting from 20 September 2012 to date, and was a director of OneE Investments from 16 August 2013 to date.

The Fourth Defendant, Timothy Johnson, was a director of OneE Consulting from 1 April 2014 to 15 November 2015, and a director of OneE Investments between the same dates. Mr Johnson was an inhouse tax expert at OneE from before 2014 until 31 July 2022.

Mr Corrigan and the Second to Fourth Defendants all gave evidence before me.

The Claimant called one other witness, Michael Sherry, an experienced tax barrister at Temple Tax Chambers. He referred Mr Corrigan to OneE, provided tax advice to the Claimant, and was also approached by OneE Tax in 2013 to provide advice and OneE Investments in 2014.

The Defendants called two other witnesses:

I shall set out my views on the witness evidence after setting out the relevant factual background.

This is a convenient point to deal with a number of other issues that arose at trial, including in relation to the Defendants’ witness statements. Among other things:

Therefore, I dealt at trial with these and the other issues that arose. Taking the above questions in turn:

Finally, there was also a dispute as to the use of two documents at trial. I deal with that at paragraph 232 below.

It is necessary to outline the relevant tax regime in order to explain the relevant tax planning in the present case. I asked the parties during the trial to prepare an agreed note of the tax background (the “Tax Note”), because it was not dealt with in the written openings. A final version was provided on 11 January 2023. There were a number of differences between the parties’ positions, summarised at the relevant points, and a copy of Schedule 20 to the Finance Act 2000 (“the 2000 Act”) was attached. I have drawn on the Tax Note at appropriate points in the below. Although the legislation is lengthy and fairly complex, it is important to keep one’s eye on the most important features for present purposes, which are the provisions in the 2009 Act dealing with sub-contractors, particularly those who are “unconnected” to the company doing the sub-contracting.

The 2009 Act, the Corporation Tax Act 2010 (the “2010 Act”) and the Taxation (International and Other Provisions) Act 2010 together formed the corporation tax legislation, and were part of the product of the Tax Law Rewrite project. The principal aim of the project was to rewrite tax legislation in a way that was clearer and easier to use. Prior to these acts, there was not a self-contained piece of legislation setting out the corporation tax system. Instead, it was woven into the fabric of the income tax legislation. One of the relevant pieces of predecessor legislation is the 2000 Act, s.69(1) and Schedule 20 of which provided tax relief for expenditure on R&D. I shall return to them in due course as they are relied on by the Defendants in relation to the novelty or otherwise of the work done by Mr Corrigan in relation to the 2009 Act. Given the purpose of the rewrite, the 2009 Act was not intended to make material changes in the law, but the opportunity was taken to make various minor changes. Consistent with this, the preamble to the 2009 Act describes it as “[a]n Act to restate, with minor changes, certain enactments relating to corporation tax; and for connected purposes”.

The basic charge in the 2009 Act is set out in s.2, which charges corporation tax on the profits of companies. The territorial scope of the charge is set out in s.5, which provides in relation to a UK resident company that it is chargeable to corporation tax on income on all its profits wherever arising (subject to the qualifications in Chapter 3A for the profits of foreign permanent establishments, which are not relevant for present purposes).

Part 3 of the Act, which commences at s.34, applies the charge to corporation tax to the profits of a trade. The profits of a trade shall be calculated in accordance with general accepted accounting principles (“GAAP”) subject to any adjustment required or authorised by law in calculation profits for corporation tax purposes: s.46, and the same rules that apply to calculating profits of a trade shall also apply to calculating its losses, subject to express provision to the contrary: s.47. When calculating the profits of a trade, deductions for expenses not incurred wholly or exclusively for the purposes of the trade or losses not connected with or arising out of the trade are prohibited: s.54.

s.87 permits a company carrying on a trade which incurs expenses of a revenue nature on R&D related to the trade and directly undertaken by or on behalf of the company a deduction for the expenses in calculating the profits of the trade. Therefore, a company carrying on a trade could deduct R&D costs so that its profits were reduced by 100% of those R&D costs.

Part 13 of the Act, which commences at section 1039, provides additional relief for expenditure on R&D. These provisions are central to the present case. s.1039(1) provides that Part 13 provides for corporation tax relief for expenditure on research and development, and s.1039(2) provides that any relief available under this Part is in addition to any deduction given under s.87 for the expenditure.

s.1041 defines “research and development” by cross-referring to s.1138 of the 2010 Act, which in turn states that the GAAP definition applies, with certain caveats. s.1042 defines “relevant research and development” as being R&D relevant to a trade or a trade intended to be carried on.

Chapter 2 of Part 13 deals with relief for the costs of R&D incurred by small and medium-sized enterprises (“SMEs”). This is the Chapter that we are concerned with. Other Chapters deal with different reliefs for SMEs, for example in relation to R&D sub-contracted to the SME (Chapter 3), and reliefs for large companies (Chapter 7). Chapter 2, which starts at s.1043, provides for relief for SMEs on expenditure on “(a) in-house direct research and development, or (b) contracted out research and development”: s.1043(1). The reliefs available are “(a) an additional deduction under section 1044, or (b) a deemed trading loss under section 1045”: s.1043(2). The difference is that s.1044 provides a deduction for companies that trade and s.1045 for companies that do not.

s.1044 provides that a company is entitled to an additional deduction of 125% of the “qualifying Chapter 2 expenditure” in calculating the profits of its trade, as long as it satisfies a number of conditions, one of which is obviously that it has qualifying Chapter 2 expenditure, and another of which is that it trades. Added to the 100% deduction under the standard trading rules in s.87, that produces a figure of 225% of the qualifying R&D spend. As enacted the 2009 Act provided for a 75% additional deduction rather than a 125% deduction: the 125% figure was inserted by the Finance Act 2012 in respect of accounting periods ending on or after 1 April 2012.

s.1045 allows an SME which is not conducting a trade to elect to claim a deduction of 225% for pre-trading expenditure on “qualifying Chapter 2 expenditure”. This was originally 175%.

s.1046 requires a company making a claim to relief under s.1044 or s.1045 to be a going concern. It cannot be in administration or liquidation.

A company’s qualifying Chapter 2 expenditure is defined in s.1051 as “(a) its qualifying expenditure on an in-house direct research and development (see section 1052), and (b) its qualifying expenditure on contracted out research and development (see section 1053). Section 1053 is particularly important in the present case.

In order to constitute qualifying expenditure on in-house direct research and development, the expenditure must satisfy each of conditions A, B, D and E set out in s.1052. Those conditions are:

“(2)

Condition A is that the expenditure is—

(a)

incurred on staffing costs (see section 1123),

(b)

incurred on software or consumable items (see section 1125),

(c)

qualifying expenditure on externally provided workers (see section 1127), or

(d)

incurred on relevant payments to the subjects of a clinical trial (see section 1140).

(3)

Condition B is that the expenditure is attributable to relevant research and development undertaken by the company itself.

…

(5)

Condition D is that the expenditure is not incurred by the company in carrying on activities which are contracted out to the company by any person.

(6)

Condition E is that the expenditure is not subsidised (see section 1138).”

s.1052(7) points to ss.1124, 1126 and 1132 for provision about when expenditure within three of the four categories is attributable to relevant research and development.

By s.1053(1), a company’s qualifying expenditure on contracted out R&D is defined as expenditure “(a) which is incurred by it in making the qualifying element of a subcontractor payment (see sections 1134 to 1136), and (b) in relation to which each of conditions A, C and D is met”. I shall return later to requirement (a) in the context of s.1136. Taking first requirement (b), Conditions A, C and D are as follows:

“(2)

Condition A is that the expenditure is attributable to relevant research and development undertaken on behalf of the company.

…

(4)

Condition C is that the expenditure is not incurred by the company in carrying on activities which are contracted out to the company by any person.

(5)

Condition D is that the expenditure is not subsidised (see section 1138).”

s.1053(6) states: “See sections 1124, 1126 and 1132 for provision about when particular kinds of expenditure are attributable to relevant research and development”. I return to this provision below. Subcontractors can be “connected” to the company or “unconnected”. One of the questions on which the Claimant sought advice from Mr Sherry was what expenditure a subcontractor, particularly an unconnected subcontractor, had to undertake in order to meet the requirements of Condition A, and what requirements s.1053(6) imposed in this regard.

s.1124, 1126 and 1132 are in Chapter 9, which is titled “Supplementary”, and they set out when expenditure on staffing costs, software or consumable items, and externally provided workers respectively are “attributable to relevant research and development”. As set out above, Condition A in s.1053(2) requires that the expenditure is “attributable to relevant research and development undertaken on behalf of the company” if the company’s qualifying expenditure on contracted out R&D is to constitute qualifying Chapter 2 expenditure for the purposes of the s.1051 definition and therefore attract the deductions set out in ss.1044 and 1045.

Turning to requirement (a) in s.1053, what constitutes a “qualifying element of a subcontractor payment” is set out in ss.1134 and 1136. s.1134 deals with payments where the company and subcontractor are connected, s.1135 with election to be treated as connected, and s.1136 where they are unconnected. I return to ss.1134 and 1136 below.

Between s.1053 and ss.1134-1136 lie the following relevant provisions: (i) s.1084 contains an anti-avoidance provision dealing with artificially inflated claims for relief or R&D tax credits. It provides that to the extent a transaction is attributable to arrangements entered into wholly or mainly for a disqualifying purpose, it is to be disregarded. Disqualifying purposes include obtaining relief to which the company would not otherwise be entitled or relief of a greater amount than that to which it would otherwise be entitled; (ii) s.1123 defines what costs count as staffing costs; (iii) s.1124 sets out when staffing costs are attributable to relevant research and development; (iv) s.1125 defines what costs count as expenditure on software or consumable items; (iv) s.1126 defines when expenditure on software or consumable items are attributable to relevant research and development; (v) s.1127 defines what counts as qualifying expenditure on externally provided workers; (vi) s.1132 defines when qualifying expenditure on externally provided workers is attribute to relevant research and development.

s.1133 defines what is meant by a subcontractor payment, namely a payment made by a company to another person in respect of research and development contracted out by the company to that person. The section also states that ss.1134-1136 apply if a subcontractor payment is made and that those sections apply for the purposes of determining the qualifying element of the payment for the purposes of s.1053(1)(a), but not s.1053(1)(b).

Under s.1134, the qualifying element of the sub-contractor payment in a case where the company and sub-contractor are connected is “(a) the entire payment, or (b) if less, an amount equal to the sub-contractor’s relevant expenditure”: s.1134(2). To be relevant expenditure of a sub-contractor, the expenditure must satisfy the requirements of s.1134(3)(a)-(d), which include that the expenditure is “incurred by the sub-contractor in carrying on, on behalf of the company, the activities to which the sub-contractor payment relates”, is “incurred on staffing costs, software or consumable items or relevant payments to the subjects of a clinical trial or is qualifying expenditure on externally provided workers” and that the expenditure “is not subsidised” (s.1134(3)(a), (c) and (d)). If the expenditure meets these tests, and the other s.1053 requirements are fulfilled, then the result of this is that 225% relief is obtained on the sub-contractor payment, whether the head company is trading (in which case the 100% deduction in s.87 is added to the 125% provided for by s.1044) or not trading (in which case the full 225% deduction is provided for by s.1045).

s.1135 permits, on specified terms, unconnected companies and sub-contractors to elect to be treated as connected.

In contrast to s.1134, s.1136 provides that the qualifying element of the sub-contractor payment between a company and a sub-contractor which are not connected and have not elected to be connected is 65% of the sub-contractor payment. Importantly, it does not expressly set out any other requirements as to how the money must be spent by the subcontractor to qualify for the relief. This “qualifying element of a sub-contractor payment” then has to be plugged into s.1053(1)(a) before seeing if the conditions in s.1053(1)(b) are met. If the s.1053 requirements are all fulfilled, then the result of this is that if the head company is trading, 181.25% relief is obtained on the sub-contractor payment (namely the 100% deduction in s.87 plus the product of applying the 125% rate provided for by s.1044 to the 65% of the sub-contractor payment that by virtue of s.1136 constitutes the qualifying element of the sub-contractor payment), and if the head company is not trading, then 146.25% relief is obtained on the sub-contractor payment (namely the 225% rate in s.1045 applied to the 65% of the sub-contractor payment that by virtue of s.1136 constitutes the qualifying element of the sub-contractor payment).

s.1140 defines “relevant payments” in relation to subjects of clinical trials.

s.1138 provides what is meant by “research and development” as being activities treated as such under GAAP, subject to caveats.

As I have explained above, the R&D relief regime provided by Sched.20 of the Finance Act 2000 was one part of the corporation tax regime as it stood prior to the passage of the 2009 and 2010 Acts. It featured in submissions at two points, both of which I shall return to in more detail below. First, this was the regime used by the Ultra Green structure, which was an opportunity provided to OneE in 2009 but that did not proceed any further with it. The Ultra Green structure was relied on by the Defendants in support of a submission that they already knew of the relevant aspects of R&D relief. Second, it was one of the points prayed in aid by the Defendants in support of their submission that there was nothing novel in the ideas or structure of Mr Corrigan and that it was obvious that s.1053(6) did not seek to add extra requirements for obtaining the additional R&D relief because such extra requirements did not feature in Sched.20 to the 2000 Act.

I did not receive during the trial any detailed submissions on Schedule 20 to the 2000 Act or other aspects of the pre-2009 and 2010 Act regime and, reflecting that, Schedule 20 was not included in the authorities bundle. I made clear that the Tax Note was not to be used as a vehicle for doing so but rather should set out a neutral background account. Therefore, while the Tax Note provided to me attached Schedule 20 of the 2000 Act and contains at a number of points competing submissions about the interpretation of the 2000 Act and the comparison of the provisions with the 2009 Act, I shall not attempt a detailed examination of the wording of the pre-2009 / 2010 Act position and the position as it stood after the 2009 and 2010 Acts, and it is not necessary to my decision to do so. I focus below on the 2000 Act as it stood immediately before the 2009 Act.

The basic points for present purposes are as follows:

It is common ground that, with the exception of the overview sections in ss.1039 and 1051 of the 2009 Act, the relevant provisions in the 2009 and 2010 Act had predecessor provisions prior to those Acts and that these were largely contained in Schedule 20 to the Finance Act 2000. In the Tax Note, the Defendants maintain that the predecessor provisions were in the same or similar terms, while the Claimant contends that the structure of the 2009 and 2010 Acts is not the same and significant changes in wording were introduced.

In my judgment, while they are similarities between the wording of the two sets of provisions, they are not in the same terms and they are structured in a different way. That is unsurprising given that, as I have explained above, the principal aim of the Tax Law Rewrite Project, of which the 2009 and 2010 Acts formed part, was to rewrite the relevant tax legislation in a way that was clearer and easier to use.

I do not need to conduct a detailed comparison of the earlier provisions with those in the 2009 and 2010 Act. It is common ground that the 2000 Act did not require a subcontractor payment to an unconnected subcontractor to fall within the four categories set out in paragraph 3(4)(a)-(d) and paragraph 10(2)(a)(iii) of Schedule 20. The Defendants contend in the Tax Note that the reference to “relevant research and development” in paragraph 9(2) means that a subcontractor payment to an unconnected subcontractor “must also have regard to the relevant headers (per paragraphs 5(2), 6(4), 6A and 8A(2)- staff costs, software and consumables and externally provided workers) in order to establish what is and what is not relevant R&D”. I do not agree. Paragraph 4 defines relevant research and development in terms that do not refer to these four categories.

In my judgment, the more pertinent point is that, as set out in the Tax Note, paragraph 3(3) provides that the expenditure must be “attributable to relevant research and development (see paragraph 4) directly undertaken by the company or on its behalf” (underlining added) if the expenditure is to constitute qualifying R&D expenditure: paragraph 44(3) above. Therefore, the question that raises is whether the Schedule 20 attributability rules are of relevance in determining whether that requirement is fulfilled, even in cases of an unconnected subcontractor. An analogous question arises in relation to s.1053(6) of the 2009 Act, which I deal with at paragraph 242 below.

The contemporaneous documentary material, particularly that from 2013 to 2014, allows a detailed picture to be built up of the relevant factual background. Therefore, I shall set out the background largely from the contemporaneous documents and the uncontroversial parts of the witness evidence. I shall leave the main factual findings until the following sections.

What has become the OneE group was founded in or around 2006 as 1^st Ethical by Sufyan Ismail. Mr Timol also appears to have been involved in its early days. Mr Ismail was the managing director and 80% shareholder, and Mr Timol the other director and holder of the remaining 20% of the shares. The business provided advice on Sharia-compliant investments and tax advice in relation to the drafting of Sharia-compliant or tax efficient wills. Mr Slattery started work for the business in 2006 as a trainee tax adviser to assist with the drafting of the tax efficient wills.

Within a few years, it was trading as OneE and begun to market tax planning products using employee benefit trusts (“EBTs”) and Employer-Financed Retirement Benefits Scheme (“EFRBs”). The evidence of Mr Slattery before me was that these proved popular and the business turned over a profit of £20m a year at its peak. As a result, by around 2013, the business had grown to around 80 employees in the UK with Bolton and London offices, together with around 10 business development managers who travelled around the UK.

In the meantime, in or around 2007, Mr Ismail and Mr Timol had invested in a company called Nemaura Pharma Ltd (“Nemaura”), founded by Dr Faz Chowdhury. This is the company at the heart of the R&D relief structure that OneE promoted from 2014 using, the Claimant contends, the Claimant’s confidential information. I asked Mr Timol about the relative size of their shareholdings. He could not recall the exact size of either, but thought that he had over 10% and less than 20%, that Mr Ismail had a slightly smaller shareholding, and that the size of their shareholding had been fairly stable over the years. The opportunity came to their attention through one of the accountants who referred them work, who had a client that was looking to raise money to fund some early stage clinical research. Mr Timol’s evidence, which I accept on this point, was that he and Mr Ismail felt that the investment was in light with their intended diversification of the business, but that they held no plans at the time as to why they would ultimately do with the shareholding.

Over the years that followed, Nemaura’s clinical work proceeded in parallel with OneE evolving into a group with various companies: OneE Group at the top, and OneE Tax, OneE Consulting and OneE Investments sitting one rung below in the corporate structure. Between them these companies dealt with tax disputes and investigations, investment, tax avoidance products and consultancy work, with the names of the different subsidiaries indicating the type of work that they did.

Another opportunity which was put to OneE during this period, but which was not taken up by it, was Ultra Green. The Defendants rely on Ultra Green as an example of a similar structure to Nemaura that they already knew of before meeting Mr Corrigan. Therefore, I shall spend a little time dealing with it. The contemporaneous documents record the following:

Returning to the chronological narrative, OneE Tax dealt with, as Mr Slattery put it in evidence, “pretty aggressive forms of tax avoidance”. While HMRC heavily targeted from 2009 tax mitigation structures involving EBTs and EFRBs, OneE Tax continued to promote them for a number of years until July 2013.

What appears to have marked an important turning point for the business generally, which is of particular relevance in this case, was the introduction by the Finance Act 2013, passed on 17 July 2013, of a general-anti-abuse rule (“GAAR”). The draft legislation was published, along with the draft guidance, in December 2012. The GAAR provides a mechanism for HMRC to counteract abusive tax avoidance arrangements. Therefore, it was necessary for the business as a matter of priority to consider what alternative sources of revenue could be provided.

A useful insight into OneE’s thinking at the time can be gained from Mr Ismail’s e-mail to Mr Slattery and Mr Timol on Friday 29 March 2013, which starts:

“As Royal Assent gets closer, notwithstanding my recent e-mail of keeping Lazarus operational alongside TGI, it is dawning on me that we have to get the TGI side in order urgently. I therefore had a chat with Dom on Friday and have listed the 4 key areas we need to create a workable investment offering in…”

One can see from the heading to the e-mail that “TGI” is a reference to Tax Geared Investments, which I understand to refer to investments that aim to provide, whether through the investment being accompanied by a loan from an unconnected lender or otherwise, a tax relief on a greater sum than the investor provides.

The four key areas included Nemaura and “Germany Hotel”, which is a reference to the Rehberg project that I shall mention in a moment. Mr Ismail viewed Nemaura as the easiest of the four, “as we have been financing it for some time, moreover the technology fits well with the TGI concept”. He set out a number of steps to be completed. The third area, “Germany Hotel”, which was termed “Rehberg” by OneE, seemed to Mr Ismail “the least attractive of the options financially as our cut [will] be low. Let’s leave it till stuff above is excavated properly.”

Pausing there, a few days earlier OneE had sent instructions to Mr Sherry about Nemaura, and draft tax advice dated 20 February 2013 had been received on Rehberg from DLA Piper LLP. The intended legal structure of the Rehberg project was that corporate investors would make a capital contribution to a LLP, which would be set up to provide planning, construction, renovation and design services to the Rehberg resort, which was intended to be a 5 star luxury resort and spa in the Harz Mountains in Northern Germany. The intended project timescale was 18 months, allowing the resort to open in 2015, and the operator of the resort was to be Kempinksi hotels.

Returning to Nemaura, given that the compilation of the instructions to Mr Sherry was dealt with in cross-examination of Mr Slattery and submissions, I will set out briefly the relevant contemporaneous documents:

On 25 March 2013, OneE sent the instructions to Mr Sherry. These were provided by Mr Johnson from a OneE Group e-mail but were stated to come from OneE Tax. They asked various questions about the tax analysis of a new investment structure that OneE Tax was considering for corporate clients who wish to become members of a LLP in order to standard to make a return in years to come and reduce their current year liability to corporation tax. The investment opportunity was referred to as Nemaura Pharma, which was stated to be the trading name given to an early stage group of companies which collectively form part of a multi-platform pharmaceutical business focused on developing and manufacturing transdermal drug delivery and diagnostic products.

The instructions contained, among other things, the following information:

It was stated that the aim of the planning was primarily to deliver a return to investors but it will also allow a third party investor to claim that 99% of the LLP’s current year losses (c.10% on fees and 90% on the contract with OneE R&D) against its own current year profits. That would provide corporation tax relief, of up to 24%, notwithstanding the fact that the investor only put up 15% of the investment (paragraph 6 of the instructions).

The tax analysis was stated to be “relatively simple” (paragraph 6.3), namely that “the LLP obtains a current year loss as the tax treatment follows GAAP and [the third party investor] can utilize this loss against its other profits”. The instructions stated that the question was whether there were any other factors, such as the tax legislation, relevant case-law or general anti-abuse rule, could affect the analysis. The instructions then went through those other factors. In its discussion of the legislation, it referred to ss.46 and 54 of the 2009 Act, which deal with the basic calculation of the profits of a trade and the deduction of expenses, but no other provisions. Counsel was asked a number of questions, including whether any of the analysis of the relevant tax legislation was flawed.

By a 12 April 2013 document, Mr Sherry asked for further information. In my judgment, the tenor of his questions was that he was sceptical as to a number of apparent features of the structure. To take the first question as an example, his question in respect of the 90% one-off payment of £X to OneE R&D started as follows: “How will the price of £X be arrived at? Specifically will this be arrived at by a real negotiation between parties acting at arm’s length, or by reference to a formula, or by reference to criteria pre-established?”

By 29 May 2013 e-mail, Mr Timol e-mailed Dr Chowdhury, copying in Mr Slattery. He stated, among other things, that:

“Based on current deal flow, I would imagine we can generate circa £20M of direct investments monies annually God willing into Tax Geared Investments.

…

1.

We are planning on offering a ‘double play’ consisting of pharma via Nemaura and building Kempinski hotels via Taurus Finance who we both met with Dom a few months ago. As such deal flow will be shared between the two offerings.

2.

Our offering are seasonal. Hence we want to push this in the two month window leading up to the Chancellors Autumn Statement in Nov and then in the new year in the run up to the budget normally delivered in March. Legislative uncertainty precludes us planning beyond these two timeframes…”

There are no other documents relating to Nemaura in the trial bundle until May 2014.

Given the importance of the dialogue to the claim, I shall set it out in some detail.

Mr Corrigan stated in his evidence that he developed a R&D corporate taxation structure in 2012-3 with Mr Sherry. This took the form of a number of conversations in person. I accept this. Mr Sherry stated in his oral evidence that to the best of his recollection, the discussions started off at an exploratory level, and that Mr Corrigan was familiar with the use of LLPs and similar structures from film finance projects that he had seen, so given that he had contacts in the pharmaceutical industry, his idea was “Well, why do we not put those two together to see if we can create something which would allow investors to access the enhanced R&D allowances?” As I shall return to later, it is this use of the LLP structure in the context of R&D relief that is central to the Claimant’s structure and the present claim. Mr Sherry explained in oral evidence that the meetings with Mr Corrigan became more particularised, with Mr Corrigan producing more detail. I accept that evidence. Mr Corrigan refers back to the discussions in his 8 January 2014 e-mail to Mr Sherry attaching the draft instructions, and refers back to them in the instructions itself, so it is consistent with the relevant contemporaneous material.

Mr Sherry explained in his witness statement that when the ideas developed by Mr Corrigan with his help reached the point where Mr Corrigan mentioned the marketing of the ideas, Mr Sherry suggested that he talk to OneE. In particular, he mentioned Mr Slattery and Mr Johnson as two people at OneE with whom Mr Sherry had worked and who Mr Sherry considered to have a good technical knowledge of tax generally. Mr Sherry’s evidence on this was that he suggested OneE for two reasons. Firstly, he was aware that OneE marketed tax schemes through accountancy firms widely and had been doing so for some time, so that they had an established route to market. Secondly, Mr Sherry was aware that OneE had at least considered marketing a tax scheme or structure based around pharmaceutical research and development. To Mr Sherry’s mind, Mr Corrigan’s proposed structure was much more robust than the OneE arrangement that Mr Sherry had looked at previously.

I accept this evidence. It was the only explanation put to me of how Mr Corrigan and OneE came to meet, it flowed from the discussions between Mr Corrigan and Mr Sherry referred to above, and it is consistent with Mr Sherry’s e-mail of 18 November 2014 set out below. This suggestion of Mr Sherry must have been made before 4 December 2013, given what followed.

It is common ground between the parties that Mr Corrigan contacted OneE on or around 4 December 2013, and that a meeting took place between Mr Corrigan and Mr Slattery on 10 December 2013 at the Landmark Hotel in London. There is disagreement as to precisely what happened at this meeting, so I shall return to this below. The meeting came about as a result of Mr Corrigan’s 5 December 2013 e-mail to Mr Slattery, which stated:

“I enjoyed our chat yesterday. I will be in London Monday and Tuesday of next week and I will probably also be in London Monday and Tuesday of the following week (16^th and 17^th). It would be great to meet up if that were possible.

I look forward to taking you through where I am on the structure at the moment.”

After the 10 December 2013 meeting, Mr Corrigan e-mailed Mr Slattery on 16 December. The subject of the e-mail was “Follow up” and the e-mail stated:

“I really enjoyed meeting you last week and I look forward to meeting up again in the future to discuss possibilities.

I am also really keen in examining the “Irish option”.

I am in London today and tomorrow. If you were around, we might have a quick further chat. If not, perhaps we could arrange to meet immediately after Christmas.”

On 18 December 2013, Mr Slattery responded by e-mail, copying in Mr Timol and Mr Johnson, suggesting a meeting be arranged in the New Year with Mr Slattery’s fellow director Mr Timol:

“to further explore Joshua as a potential solution for Irish companies. In this regard, if you would be so kind as to sign an NDA (Anne to provide) then Tim (copied) will furnish you with further details (including the counsel opinion via lock lizard) regarding Joshua.

With regards the R&D planning, I think I now understand the logic, my main concern was deal flow; both in terms of R&D and external funding. You mentioned that you are in touch with some Switz firms who have very large capacity as well as Trinity College Dublin who may have some capacity. Could you please furnish me with further information in this regard with a view to discussing further in the new year followed by a meeting with these chaps.

I am keen to progress matters and there appears to be a good fit between our two firms.”

The reference to “Joshua” was a reference to a scheme to seek to extract money from a company without an income tax charge. The “Anne” referred to in Mr Slattery’s e-mail was Anne Toone, PA to the executive directors of OneE, whom Mr Slattery copied in to his e-mail. The footer on the e-mail was that of OneE Group, and Mr Slattery e-mailed from a OneE Group address. However, the website in his signature block referred to the website address as “www.OneEtax.com”.

On 19 December 2013, Mrs Toone responded to that e-mail, copying in Mr Corrigan, Mr Slattery, Mr Timol and Mr Johnson. Like Mr Slattery, she had a OneE Group e-mail address. The e-mail stated:

“Further to Dom’s e-mail below you should have now received our standard NDA via our electronic signature method of Docusign. Should you have any queries with this NDA please let me know. Otherwise, upon signature and return I will ask. Tim to organise the additional Joshua documentation.

In terms of a follow up meeting, due to both Bashir and Dom taking holiday in January, the earliest I am able to offer is week commencing 3 February. However, this week does currently have good availability for them both. Would any day this week suit yourself for a meeting in either London or at our Head Office in Bolton?”

By e-mail later the same day, Tess O’Leary of the Claimant, who appears to have been Mr Corrigan’s PA, responded to Ms Toone, not copying in the other four persons mentioned above, stating:

“Kieran has just reviewed the NDA and would appreciate if the agreement could cover information disclosed in both directions as he will be disclosing information regarding his clients in discussion.

Would it be possible for you to make the necessary amendment and return it for signature?”

Mr Toon responded by e-mail the next day, 20 December 2013, stating:

“I attach an amended NDA as requested. I will void the one we sent via DocuSign. Could you please ask Kieran to review and sign the attached NDA and then return to me initially by scan so we can release the additional information but also with the original to follow in the post? I will ensure signature at this end and a copy returned to you for your files.”

This NDA was signed by Mr Slattery and Mr Corrigan and a copy has been disclosed. It does not bear a particular date as the space for the date to be inserted has not been filled in, but it had been signed by Mr Corrigan by 17:21 on 3 February 2014 and by Mr Slattery by 11:51 on 4 February 2014. It is stated to be between OneE Tax and the Claimant, the latter of whom is defined in the NDA in the description of the parties as the “Recipient”. A number of arguments are run as to its interpretation, so I shall set out the recital and clause 1-4 in full:

“INTRODUCTION

(A)

Each of the Parties to this Agreement (“the Parties”) would like to review certain of the other parties [sic] information so that the Parties may investigate a way to develop future products (the “Purpose”). This will necessitate the disclosure of information which each Party wishes to protect from unauthorised disclosure and use.

IT IS AGREED between the Parties as follows:

1

Information disclosed to the Recipient under this Agreement will include, but not be limited to, tax planning solutions, commercial, financial, operational or other information in whatever form (including information disclosed orally) which concerns the Purpose or the business and affairs of the other Party and is of a confidential nature, including any such information disclosed prior to the date of this Agreement (“Confidential Information”). For the avoidance of doubt, Confidential Information shall include, but not be limited to, all and any analyses, compilations, studies or other documents prepared by the Recipient on the basis of or derived from or otherwise containing the Confidential Information (or any part of it) (“Derived Information”).

2

In consideration of the Parties agreeing to disclose the Confidential Information to each other, each Party (in its capacity as the Recipient) will:

(a)

keep in confidence any Confidential Information disclosed to it by the other Party and will not disclose that Confidential Information to any other person (other than, in accordance with clause 2(c), its employees who need to know the Confidential Information in order to carry out the Purpose) without the written consent of the other Party;

(b)

use the Confidential Information disclosed to it only for the Purpose;

(c)

ensure that all employees (or persons for whom written consent has been obtained in accordance with clause 2(a)) to whom the Confidential Information is disclosed by the Recipient (directly or indirectly) under this Agreement are aware of the terms of this Agreement and shall be responsible to the other Party for any breaches by them of any of the terms of this Agreement;

(d)

keep all Confidential Information in a safe and secure place; and

(e)

not make copies of the Confidential Information without the prior written consent of the other Party.

3

The Recipient will keep the existence, nature and content of this Agreement confidential, together with the fact that work is taking place concerning the Purpose. Any information developed as a result of the Purpose shall also constitute Confidential Information for the purposes of this Agreement.

4

Clauses 2 and 3 will not apply to:

(a)

information which has been published other than through a breach of this Agreement;

(b)

information which the Recipient can prove was lawfully in its possession before its disclosure under this Agreement took place;

(c)

information which the Recipient can prove was obtained from a third Party who was free to disclose it;

(d)

information which the Recipient can prove was independently developed by it;

(e)

information which the Recipient is required by law (including a regulatory body) to disclose PROVIDED THAT the Recipient has, if it ins lawful to do so, given notice to the other Party of any such actual or anticipated requirement promptly upon becoming aware of it and used reasonable endeavours or co-operate with the other Party regarding timing and content of such disclosure or any action which the other Party may reasonably elect to take to challenge the validity of such requirement; and

(f)

information which the other Party agrees in writing that the Recipient may disclose.”

The other provisions of the NDA included that the obligations and restrictions would last indefinitely (clause 6), that the Recipient shall indemnify the other Party from and against any liabilities arising from breaches of the NDA by the Recipient (clause 8), that the Recipient acknowledge that damages would not be an adequate remedy for any breach of the confidentiality provisions of the NDA (clause 9), that no variation shall be effective unless in signed writing (clause 11), that for the purpose of section 1(2) of the Contracts (Rights of Third Parties) Act 1999 the Parties do not intend any provision of the NDA to be enforceable by any third party (clause 14) and that the NDA is governed by English law and subject to the exclusive jurisdiction of the English Courts (clause 15).

On 8 January 2014, Mr Corrigan e-mailed a detailed set of instructions to Mr Sherry, stating:

“I am attaching a draft set of instructions in advance of our meeting on Thursday.

When we meet tomorrow we can discuss them in greater detail and I can complete the draft following our discussions. You will note that there are certain issues that will require some further detailed discussion. Obviously until the structure of the investment is decided upon, we will not have available detailed legal documentation for your review.”

The draft instructions were titled “In the matter of the interpretation and application of Chapter 4 of Part 13 of the Corporation Tax Act 2009 (R&D relief for corporates)”. The introduction is worth setting out in full:

“Counsel is asked to advise on a range of taxation issues involving an investment structure which would enable UK corporate investors to invest in a range of projects requiring significant research and development financing.

It is intended to make the structure accessible to companies in the United Kingdom in a manner that they would be in a position to take advantage of the relief provided for in Part 13 of Chapter 4 of the Corporation Tax Act 2009 in relation to the additional tax relief that is provided therein for expenditure on research and development.

The legislation deals with different situations where R&D relief can be granted and, in particular, distinguishes between ‘large companies’ and ‘SMEs’ in this regard.

However, the structure envisages that the UK investor companies would qualify as SMEs within the meaning of the legislation and not as large companies. Accordingly the “Chapter 2” provisions in the legislation which deal with SMEs are the provisions relevant to these instructions.”

After the introductory section, the instructions were divided into three sections: “LLP Structure”, “Research & Development and Trading” and “Operation of legislative provisions”.

In the first section, the LLP structure was stated to be a UK LLP, which it was intended would invest in a “range of projects, thereby spreading risk and greatly increasing the potential for attractive commercial terms thereof”. It was stated that “[d]iscussions are very advanced with entities which control commercially attractive projects that require R&D finance. Such parties are also prepared to invest alongside these investors in advancing the relevant project. These parties are referred to in this document as ‘promoter investors’”.

The instructions canvassed the possibility of the promoter investor subscribing for capital in the LLP, or to loan money to the LLP or to arrange for a third party financial institution or group to make a loan to the LLP, and stated that a further possibility being considered was establishing a LLP where the future risk was borne entirely by the UK corporate investors.

The questions that Counsel was asked to advise on in relation to “this proposed structure” were as follows:

“1.

That UK corporate investors would be entitled to claim a share of the loss arising in the LLP against the total profits for the relevant corporates. HMRC have issued a guideline, CIRD81220- R&D tax relief: conditions to be satisfied: company as member of partnership, which indicates that this would in face be the position.

2.

Counsel is asked to advise as to whether or not the loss could be carried back against a previous accounting period. It would appear that this would not be possible in respect of a s1045 loss unless additional R&D relief was claimed in that previous accounting period (see s1048(2)). However, a trading loss under 1044 would appear to be capable of being so carried back, provided the company carried on a similar trade in that period.

3.

Given the fact that investors would have an entitlement to a genuine commercial upside in the investment and taking into account that the investors would be asked to subscribe by way of capital in the region of 35% of the total expenditure of the LLP, with the promoter investor lending 65% of the total expenditure of the LLP, that the recently introduced general anti-avoidance rules (GAAR) in the UK would not apply to the transaction in question. If it is considered that GAAR may have application, what key commercial criteria should attach to the transaction to minimise the risk of GAAR application.

4.

A structure may also be considered that would allow the relevant UK investor company contributing a higher percentage as their capital contribution to the project in return for a higher share of profit participation on the exploitation of the project.

5.

Would the making of a non-recourse loan by the promoter might carry implications for tax purposes that would not arise if the technology promoter actually invested capital in the partnership.

6.

What would be the potential implications of the promoter facilitating the non-recourse loan being made to the LLP by a third party financial group?

7.

What would be the apportionment rules that would apply in relation to apportioning a part of the loss of the LLP against the profits of the accounting period of the relevant corporate?

8.

Any other issues that arise out of this structure that may occur to counsel and could have taxation implications for the promoter investor or the relevant corporate investors.”

The second section, “Research & Development and Trading”, asked questions about whether the LLP would be regarded by HMRC as trading. The instructions explained the 225% relief that could be obtained under ss.1044 and 1045 (see paragraphs 26 and 27 above), whether the LLP was trading or not, but explained that “[i]t is conceivable that the distinction between trading and non-trading could be of particular relevance to tax relief if available. This could be of relevance in particular in the context of payments made to subcontractors which is discussed further…below [in the third section of the instructions]. Furthermore, payments made to the manager of the structure would be deductible as a trading expense but would not be deductible as qualifying R&D expenditure. It therefore follows that it may well be important to establish that the LLP is in fact conducting a trade and is not engaged in pre-trading expenditure”. The instructions then explained the activities that the LLP would likely engage in, and a statement issued by HMRC, before asking whether the LLP would be regarding as trading for the purposes of the relevant tax legislation.

The third section of the instructions provided what was described as a “brief synopsis of the main legislative provisions regarding research and development expenditure relief which are directly relevant”. The sections covered were ss.1041, 1042, 1044, 1045, 1051, 1052, 1053, 1134-1136 and the synopsis was approximately 10 sides in length. In relation to s1136 (paragraph 39 above), Mr Corrigan stated, among other things:

“Section 1136- Unconnected parties- ‘the 65% rule’

Section 1136 deals with a situation where the contractor and the subcontractor are not connected and do not elect to be connected.

Section 1136(2) provides that;

“the qualifying element of the subcontractor payment is 65% of the subcontractor payment”.

The interaction of s1053 and sections 1136 is of critical relevance and importance.

Section 1053(1) defines qualifying expenditure in the case of a sub-contracted payment as expenditure on what is defined as the qualifying element (s1053(1)(a)) and in respect of which the conditions of the section are met (s1053(1)(b))

In 1053(2), condition A states that the expenditure must be attributable to relevant research and development expenditure undertaken on behalf of the company.

Section 1053(6) then directs us to ss1124, 1126 and 1132 for provisions about when particular kinds of expenditure are “attributable” to relevant research and development. These three sections essentially provide that expenditure on internal staffing costs is only attributable to directors or employees who are directly and actively engaged in research and development (s1124); software or consumable items are only attributable when they are employed directly in relevant research and development (s1126); expenditure on external workers is only attributable if the workers are directly and actively engaged in relevant research and development (s1132).

A critical issue that arises is to what kinds of expenditure must a subcontractor undertake in order to be qualifying expenditure within the meaning of s1053 and in particular Condition A of s1053(1).

In relation to expenditure between connected parties, as discussed above, it is clear that s1134 requires that the subcontractor must expend the monies on the specific categories of expenditure outlined within the meaning of relevant expenditure in s1134(3) and must also comply with the attribution rules outlined in s1123 and s1127-1131 (as referred to in s1053(6)).

In relation to an unconnected contractor within the meaning of 1136, then it would seem clear that to meet the conditions of 1053, and in particular Condition A, the expenditure must be attributable to relevant research and development, taking into account the attribution rules in 1124, 1126 and 1132 (s1053(6)).

It is interesting that 1053(6) directs that 1124, 1126 and 1132 are provisions concerning when particular kinds of expenditure are attributable to relevant research and development. It does not specifically state that these are the only kinds of expenditure that could be regarded as relevant research and development. Indeed, the meaning of relevant research and development is very broad in that it encapsulates all research and development related to a trade carried out by the company (s1042). In other words, expenditure in relation to internal and external staffing costs and computer software costs must only be expenditure that is direct expenditure and not indirect expenditure but that other kinds of expenditure that could be regarded as attributable in a normal use of that word would still be attributable within the meaning of Condition A of s1053(2).

An alternative interpretation is that the only expenditure that can be regarded as attributable is expenditure coming within the meaning of 1124, 1126 and 1132. It is submitted this would make little sense since for instance that would exclude expenditure on patients taking part in a study which is specifically permitted in the context of 1134 when incurred between connected persons. Such an interpretation would also render the 65% formula largely irrelevant since one would be required to examine each and all of the elements of expenditure of the subcontractor which would mean in essence there would be no distinction between the connected persons provision and the non-connected persons provision.

Indeed it is arguable that this interpretation could mean that even if 100% of the money spent by the subcontractor was on direct salary and direct computer software costs, only 65% would be allowable since 65% could only be the qualifying element within the meaning of 1136(2).” (underlining added where the original contained italics; bold added to emphasise particular points.)

Having completed the synopsis, the instructions asked the following questions of Counsel:

“a)

Is it correct that in the event that a company is connected with a subcontractor, or where a company and the subcontractor elect to be connected, that the legislative requirements are essentially the same as the requirements in relation to in-house expenditure in determining what constitutes qualifying expenditure for the purposes of the relief?

b)

If, however, the company and the subcontractor are unconnected, what would counsel’s view be of how the subcontractor payment would be treated under the legislation? That is to say, must the money be expended in a like manner as if the parties were in fact connected (but excluding payments to patients on a trial) or would 65% of the subcontractor payment be deductible on some other basis? In particular, would it be satisfactory that the subcontractor spent the monies on ‘relevant’ research and development which would include, for instance, patient studies and other attributable research and development but that the attribution rules of ss1124, 1126 and 1132 would apply to certain staffing costs and computer software and consumables.

Alternatively, is Counsel of the view that by electing not to be connected, even if the subcontractor spends 100% of the monies on generally allowable categories of expenditure, the qualifying amount would be restricted to 65% of the subcontractor payment?

c)

Is it Counsel’s view that the accounts of the subcontractor, in the event that the parties elect to be connected, would need to be made available to the Revenue for review and audit in order to ensure that the provisions of the legislation be complied with.

d)

In the event that the subcontractors were not connected or did not elect to be connected, would the subcontractor’s accounts still need to be made available for examination or would invoices issued by the subcontractor to the company which itemise the services provided by the subcontractor be sufficient evidence for relief to be given?

e)

Is the interpretation outlined above in relation to the deductibility of the subcontractor payment correct in that if the payment is made in an accounting period for services provided over a number of future periods that the payment would be deductible in the relevant period provided the subcontractor treated the subcontractor payment as income in its own accounts for the relevant accounting period and also booked relevant expenditure at least equal to the subcontractor payment in its relevant period?

f)

Would the legislative provisions permit a company to deduct payments made to a subcontractor where the subcontractor expended part of the sums received on the acquisition of valuable results and information which would assist it in the research programme undertaken on behalf of the company?”

(bold added to emphasise particular points).

On 4 February 2014, Mr Corrigan met with Mr Slattery, Mr Timol and Mr Johnson at OneE Group’s headquarters in Bolton. As set out below, I consider that the NDA had been signed by Mr Slattery by 11:51 on 4 February, and that Mr Corrigan passed across the draft instructions at this meeting. There was no written note of the meeting before me, so I set out below at paragraph 175 below my findings as to what happened at that meeting.

On 25 February 2014, Mr Johnson e-mailed Mr Corrigan, copying in Mr Slattery, stating as follows:

“Hi Kieran,

I hope you are keeping well and apologise for the delay in reverting back to you.

Further to our meeting, I have now reviewed the instructions and have the following notes / comments:

1.

Virtually all of our clients are SMEs and so there would be very wide appeal for this type of company.

2.

What is the LLP solvency / legal position of having losses that are way in excess of the LLP capital. Have you considered or taken advice on this point?

3.

I believe the same restriction in s.59/s.60 CTA 2010 will apply to this type of LLP and therefore the members would need to remain liable to contributed [sic] additional assets on a winding up. Can you confirm is this is correct [sic] and what the extent of the liability will be?

4.

Trading point. When will the trade commence? What will the timeframes be for expenditure by the sub-contractors? This could make the number of closings easier to manage.

5.

Also re trading, the monitoring / management of the LLP is usually key to this- what is envisaged to ensure this is done?

6.

I note you have laid out your interpretation of the legislation and asked counsel for comment. Have you received the counsel’s opinion now (or do you have a timeframe for the same)? Would you be willing for us to review this once it is available?

Perhaps a call on this would be best? If so please advise of a good time to call.

I also said I would come back to you on the key practical / procedural points that need to be considered for this to work for us. These are:

1.

We would require monthly closes (or at least every other month) to take into account company year ends. This may result in difficulties, particularly from a cash-flow perspective of the R&D companies.

2.

Provided the LLP is trading then the amount of the relief would be £180k for each £100k of LLP expenditure. We discussed that the LLP would loan £75k and the corporates put in £25k. This would result in a loss of £180k for the LLP fully relievable for the corporate members. At 20% CT this is spending £25k to save £36k. We discussed this was the right ratio for us in terms of a balancing point for what clients would be willing to invest. However, if there is a risk that the LLP is not trading, the relief would be restricted to 65% of £225k= £146k. At 20% this would mean £30k tax relief for a £20k investment. An investment somewhere between 20-25% might be best to cover this risk. It would depend on how counsel advises on the trading point and the other areas of interpretation, as to how big we feel the risk is.

3.

The management fees / other expenses will need to be covered only where the LLP has funds.

4.

Regulatory points: this is a UCIS (Kieran to confirm?) and hence we would need to promote carefully and only to the correct people.

From your point of view, I think the action points were:

1.

Obtain additional and revised term sheets from the various companies / investment houses you have been liaising with. Have you had further meetings / progress in this regard?

2.

Revert on how you see us best working together. As we discussed in the meeting we hold the internal resource and expertise from similar structures we are currently operating.

3.

As above, hopefully you have now had the chance to review the documentation / opinion on Joshua? Please do let me know if you have any questions or would like to discuss.

If you are free for a call to go through this I am relatively free today / tomorrow so please let me know.”

Mr Corrigan and Mr Johnson spoke on 28 February 2014. That call is referred to in Mr Slattery’s e-mail to Mr Corrigan of 3 March 2014. That e-mail stated:

“Apologies for the missed calls on Friday. I spoke to Tim today who tells me you spoke on Friday. He mentioned you were still waiting for Sherry.

Did you still need to discuss any updates with me?

From recollection you were:

1.

Looking into the Joshua docs

2.

Speaking with the R&D companies

3.

Finalising with Sherry

We were to:

1.

Review your instructions to Sherry- done

Was there anything else?”

Mr Slattery forwarded his e-mail to Mr Johnson on 7 March 2014 at 12:04. Following a call with him, Mr Corrigan e-mailed Mr Johnson at 13:11 that day, copying in Mr Slattery. I set out the most relevant parts below:

“Dear Tim,

Following our conversation today, I attach a business plan for Morvus which is a biotech company which intends to go the AIM stock market in London by the end of this year or certainly very early in 2015.

…

The structure that we discussed on the phone would be that the new LLP would undertake say £3million worth of research which would be spent on qualifying research expenditure within the meaning of the R&D legislation. This would meant that the LLP would elect to be connected to a company with which it would subcontract the research would probably be a new subsidiary of Morvus and therefore all of the expenditure would qualify for the full 225% relief. This would obviate the subcontracting issues that were discussed in the memorandum I submitted to counsel. As part of the commercial arrangements between the LLP and Morvus, the £3million would be regarded as a loan to Morvus…

A variation on the structure is that we agree a deal with an underwriter via a stockbroker in London to underwrite the purchase of the loan note in, say, two years time via a put option or a put / call option….I am meeting with two stockbroking firms in London next week to discuss this possibility.

…

I am also developing a structure to raise a larger R&D fund within an LLP to invest in a range of companies coming to market, either here or in the United States over the course of the next year. It would then mean that the investors would be able to cross-collateralise their investment in the LLP through a range of projects. It would only require one of these projects to be a flotation success for them to reduce their risk very considerably. If we can attach the underwriting arrangement to it, it would be a very robust structure indeed.

As I say, I will be London during the course of next week, meeting with Morvus and the stockbroking firms and I would be interested in your initial response to this idea.”

As explained in the e-mail, the structure would involve a connected rather than an unconnected subcontractor.

On 11 March, Mr Johnson e-mailed Mr Slattery in the following terms under the subject title “stuff to take a back seat”:

“Hi Dom,

As discussed I have listed some items that I would put on the backburner for the time being:

1.

Instructing on s.175A planning

2.

Kieran Corrigan stuff

3.

S.131 schemes

4.

Drip drop / EBT Extraction

5.

Pension solution

6.

Joshua / Extraction with Marc Ainscough

7.

School fees Planning”

On 13 or 14 March 2014 a meeting took place between Mr Corrigan and Mr Slattery, also attended by Lizanne Senior of the Claimant. The Claimant alleges that the structure and the structure with Morvus were discussed. Mr Corrigan’s notes of the meeting state that the following topics were discussed: (1) “Discussion of upcoming budget issues relevant to business”; (2) “One E have been focused on the Rayburg [sic] deal (Margolies and Taurus)”; (3) The key question regarding DOTAS is whether the tax advantage is the primary driver”; and (4) “KC presented Morvus proposal to DS”.

Expanding on (4), the conclusion was that

“- DS concluded that it would have to be geared in order for him to sell it to clients. The investment must be less than the tax so that it is cash flow rich

- Concern from KC that this would make it more DOTAS-able”

- DS recommends Simon Gough from DLA Piper for seeking opinions…

- KC to send through proposal for further review, and the pending opinion from counsel”

I understand that “DOTAS” refers to the requirements to disclose to HMRC tax avoidance schemes.

Those notes of Mr Corrigan also suggest that a meeting took place with Mr Sherry around that time, seemingly after the meeting with Mr Slattery given that it is later in the notes. These notes include the following:

“- KC outline of structure with [redacted]

- [redacted]

- If 225% relief, split should be 1/3 to 2/3

- If 65% rule: split should be 25% to 75%

- LLP structure for R&D investments (ex: Morvus)

…

- Main query: is the structure impacted by GAAR or DOTAS? Key is if the primary objective is the investment in Bio Tech and NOT the tax advantage.

…

- KC to send MS confirmation of final structure from [redacted]

- Comprehensive view on the commercial arrangements

…

There was also a further meeting with an AIM broker and adviser, where the proposal was put in similar terms to the above.

Mr Corrigan’s notes also refer to a meeting with an investment company at which he “presented [an] opportunity on R&D allowances for corporates” in the following terms:

“- 225% relief on stipulated expenditure

- opinion pending from Michael Sherry, Queen’s Counsel

- New LLP structure: no gearing, only investment, fund listing to AIM

- Example: Bio Tech Co. with 4 cancer drugs (Morvus)

- Right to convert loan in to [sic] equity on flotation

- Estimate initial listing at £40m

- 70% of PAR on a put option

- Proposal: raise fund of £10-20m for a selection of investments and therefore manage risk with a portfolio approach”

On 20 March, Mrs Toone e-mailed Mr Corrigan, stating:

“Further to your meeting with Dom he has asked if you are kindly able to forward the further information about Pre-IPO? ….”

On 2 April, Mr Corrigan met with Mr Gough of DLA Piper as suggested by Mr Slattery, and also met with Morvus and Tim Coffman of ZAI Research. As set out in the e-mail extracted in the next paragraph, ZAI were involved in another project called Fast Track Pharma.

That day, Ms Senior e-mailed Mr Slattery at 14:44, stating that she would be sending through later in the day some documentation from Mr Corrigan regarding a company called Fast Track Pharma. She asked for a meeting for her and Mr Corrigan with Mr Slattery early the following week, saying that “[t]he project is progressing quite quickly and so we want to present the full opportunity to you in good time for your consideration” and offering to travel to Bolton if more convenient. She duly sent across the documentation as an attachment to her 17:30 e-mail, thanking Mr Slattery for agreeing to an appointment at 4pm on Tuesday 8 April and for sending across the appointment details. The e-mail included the following passage:

“As the roadshow will commence with ZAI next week, this is now a straight issue for shares as opposed to the convertible loan note we originally discussed. There can be no differential in the funds being raised concurrently, as I am sure you appreciate. The £1m being raised through the R&D LLP structure will be subject to the enhanced tax relief of 225% which gives a tax benefit of 47.25%.

We strongly believe this is an attractive proposition for One E to pursue and look forward to discussing it with you in further detail.”

By 9 April e-mail, Mr Corrigan e-mailed Mr Slattery, copying in Ms Senior, and reattaching the note that Ms Senior had sent via her second 2 April e-mail, and setting out a number of points about how he saw the Fast Pharma structure as working. They included the following passage:

On 15 April, Mrs O’Leary of the Claimant e-mailed Mr Slattery, saying that Mr Corrigan would like to speak to Mr Slattery at some stage today if possible and asking Mr Slattery to call Mr Corrigan at his convenience. Mr Slattery responded by e-mail the same day, saying that he was on leave that day but would be back the next day and that Mrs Toone, who he copied in, can arrange a suitable time to discuss.

By 28 April e-mail, Mr Slattery forwarded Mr Corrigan’s 9 April 2014 e-mail to Mr Johnson and also to Adam Owens, senior tax consultant at OneE, copying in Mr Corrigan. The e-mail stated:

“TJ / Adam,

As you are aware, I have be wen [sic] speaking with Kieran RE potential planning ideas surrounding R&D reliefs. Some are purely investment based with enhanced tax benefits given the RD credits) and some are to be both enhanced investments AND geared.

The attached is pure investment based with enhanced relief only (no gearing)- Can you please conduct some DD on the attached p provided Kieran confirms the opportunity is still available.

Kieran, please confirm where you are with Sherry opinion, Joshua DD & talks with the Swiss investors?”

By 1 May e-mail, Mr Corrigan e-mailed Mr Slattery, stating that he had tried to get him on the phone earlier and asking whether it would be possible to schedule a catch-up.

On 6 May, Mrs Toone e-mailed Mrs O’Leary of the Claimant contact details for Abby Tax, a provider of fee protection insurance, referring to a conversation between Mr Corrigan and Mr Slattery earlier that day.

The next day, 7 May, Mrs Toone e-mailed Mrs O’Leary again, saying that Mr Slattery had asked her to set up a call with Mr Corrigan, himself and OneE’s contact at DLA Piper, saying that she believed Mr Corrigan and Mr Slattery had discussed this on the telephone the previous day, and asking what time would suit Mr Corrigan best on Friday 9 May after 10am. Mrs O’Leary responded the same day saying that 10am would be best. Mrs Toone responded the next day, 8 May, stating that Mr Slattery “had asked me to put this on hold for now as something has cropped up. I’ll be in touch.” Mrs O’Leary responded later in the day asking whether the call the next day was going ahead, and Mrs Toone responded the same day, saying “Hi Tess, I’m sorry if I wasn’t clear. This call is on hold now. I will let you know if we need to rearrange.”

On 13 May, Mr Slattery e-mailed Mr Johnson and Mr Owens, with the subject line “Instruction to DLA Piper”, stating:

“TJ,

I have very quickly put these instructions together. I have not even proof read them yet but thought I’d get them out to you guys ASAP.

Can you please review and pay close attention to the tax analysis.”

Mr Johnson responded by e-mail on 16 May, stating:

“Hi Dom,

You said you were sending through a revised version of this. I should get round to reviewing this afternoon so will you be sending the revised doc and should I wait for it until reviewing?”

Mr Johnson e-mailed again on 3 June, stating:

“Hi Dom,

See attached with my notes on the instructions. I was going to go through these with Adam but didn’t get chance before his holiday.”

Mr Slattery responded the same day by e-mail, saying that he had further amended the instructions and asking Mr Johnson to have one last reading before sending it off to DLA Piper for a quote.

The instructions were addressed to Mr Gough at DLA Piper. They related to Nemaura. The instructions started by explaining that OneE Investments had previously instructed Mr Gough in relation to the Rehberg investment and that OneE Investments now wished to explore an alternative investment structure, “which shares many of the same concepts as Rehberg”. The sections on the tax structure and analysis included the following. I take this from the first draft of the instructions attached to Mr Slattery’s 13 May e-mail.

“The Tax Structure

14.

It is envisaged that corporate clients of OneE (the Investors), who will all be SMEs, will invest (the Investment Amount) into a UK LLP (the LLP).

15.

The LLP will provide the Investors with both income and caapital rights

16.

An independent investor (Loan co) will then provide a loan to the LLP (the Loan Amount). The Loan will be non-recourse.

17.

Loan co will borrow the Loan Amount from a bank.

18.

The LLP will then make a sub-contractor payment (as defined in s1133(1) CTA 2009) to an SPV (the SPV) controlled by Nemaura.

19.

The SPV will not be connected with the LLP and hence the payment should fall under s1136 CTA 2009.

20.

Although, in accordance with generally accepted accounting principles, the SPV will commit the sum of the Investment Amount and the Loan Amount to ‘Research and Development’ (R&D) as defined by s1138(2) CTA 2009, in the short term, the SPV will make a loan (the Subsequent Loan) to Loan co so that Loan co can repay the bank.

21.

In the short term, the SPV will use the Investment Amount to pursue the R&D. once those funds are exhausted, Loan co will be called upon to repay the Subsequent Loan, thus providing the SPV with the remaining finance to finish the R&D.

22.

It is envisaged that both the Loan Amount and the Subsequent Loan will be on commercial terms.

23.

Should the R&D prove successful, the Loan Amount will be repaid plus a significant windfall. The Investors will, via the LLP agreement, be entitled to the remainder, which nis expected to be very commercial.

24.Should the R&D prove unsuccessful, Loan co will be nothing, as the loan is non recourse and, in turn, the Investors will get nothing.

Tax Analysis

25.

For the purposes of Part 13, Chapter 4 Corporation Tax Act 2009, the LLP will be treated as a company as all its partners are corporate.

26.

The LLP will make a subcontractor payment as defined by s 1133(1) CTA 2009

27.

As the payment is to an unconnected company, one is not required to ‘look through’ to the unconnected company and establish whether that company expends the payment amount in accordance with s1123, 1127-1131 & 1138 CTA 2009.

28.

The payment must simply be made in respect of ‘Research and Development’.

29.

Research and Development is defined in s1138 CTA 20010 [sic] as ‘activities that fall to be treated as research and development in accordance with generally accepted accounting practice’. Thus provided the SPV validly treats the payment as R&D in accordance with GAAP, that is all that is required.

30.

S1136(2) then permits 65% of the usual 125% as an enhanced relief.

Worked Example

31.

The Investors invest £100,000 into the LLP

32.

Loan Co lends £100,000 to the LLP

33.

The LLP makes a subcontractor payment to the SPV of £200,000

34.

The Investors are entitled to 100% relief on the £200,000 PLUS ((65%*125%)*£200,000) providing a total relief of £362,500.

35.

This amount can then be offset against any other profits of the Investors.

Opinion Sought

36.

DLA are requested to provide their view as to the efficiency, or otherwise, of the above structure and tax analysis.

37.

DLA are requested to consider all the potential tax downsides as they did for the Rehberg opinion (e.g. the General Anti-Abuse rule, the Disclosure of Tax Avoidance Scheme rules, relevant case law, etc.)”

Mr Slattery had commented on paragraph 25 that “This requires further research”.

Mr Johnson added his notes on the instructions and returned them on 3 June, and Mr Slattery returned them by e-mail the same day with further amendments, asking Mr Johnson to have one last read and then send them to DLA Piper for a quote.

On 25 June 2014, which was a Wednesday, Mr Johnson e-mailed Mr Corrigan about a missed call from the latter, saying that he was tied up until Tuesday but asked whether they could have a discussion then. Mrs O’Leary of the Claimant responded the same day asking whether 2.30 on Tuesday would suit, but on 30 June, Mr Corrigan e-mailed Mr Johnson, copying in Mrs O’Leary, stating that Mr Corrigan had had to travel to New York urgently so would have to reschedule the call the following day. Mr Johnson replied the next day, 1 July, saying that this was not a problem. The call does not appear to have taken place.

DLA do not appear to have advised on OneE’s instructions set out above. Rather, the instructions were sent by Mr Johnson by 1 August 2014 e-mail to 15 Old Square Chambers for Rory Mullan to provide a quote and timescale to advise on. Mr Johnson e-mailed the same instructions, together with some instructions entitled “A Strategy to Access Cash from a Limited Company”, to Mr Sherry’s clerk at Temple Tax Chambers on 4 August 2014, again asking for a timescale and quote for Mr Sherry to produce the opinions.

Mr Sherry does not appear to have accepted the instructions. He produced for the Claimant a note on Research and Development Reliefs on 28 August 2014. The note stated that Mr Sherry had had the benefit of a number of conferences with Mr Corrigan, during which various structures and arrangements had been discussed, and that the purpose of the note was to deal with four specific key problems that had been identified in those discussions. Those four issues were:

He explained that the exact details of any specific arrangement would be arrived add when particular research and development products were under considerations, but that he understood the likely structure to be as he set out in paragraph 6.1 of his note.

Issue (1) of the above four issues concerned whether the wording in s.1053(6) imposed restrictions on the purposes for which an unconnected subcontractor must use the payment made to it in order for the payment to it to attract R&D relief under s.1035. Mr Sherry explained in the course of his analysis that in his view the apparent reason for the 65% limit was that “the contractor cannot be expected to be able to substantiate how the subcontractor has carried out the research”, so that the legislation did not impose any “explicit requirement that the expenditure falls within the four limited categories mentioned above in relation to in-house expenditure” (paragraph 7.4). Mr Sherry’s conclusion was that s.1053(6) had been included in error and was of no effect. As he put it, “[i]t appears to have been erroneously attached to section 1053 as part of the process of the Tax Law Rewrite project when the relevant provisions from Schedule 20 to the Finance Act 2000 were written as Part 13 of the 2009 Act” (paragraph 7.8). His reasoning was as follows:

In relation to issue (2), he considered that the contractor would incur qualifying expenditure when it rendered itself liable to pay the subcontractor, which would normally be when it entered into a contract with the subcontractor even if the date for payment under that contract fell some time subsequent to the contract (paragraph 8.6).

The conclusion in relation to issue (3) was that what amounts to trading is necessary fact dependant (paragraph 11.3).

In relation to issue (4), Mr Sherry’s conclusion was that “[i]f the arrangements are too aggressive, e.g. they are geared so as to leave investing companies cash positive on their investment after tax relief, they will be within DOTAS and will be vulnerable to GAAR and to recharacterization by reference to their substance, likewise if expenditure is “incurred” too far in advance of payment or of work being done” (paragraph 11.4). He was of the view that “a combination of a high level of gearing taken together with limited recourse will increase risk” in relation to whether the expenditure was incurred by the partnership at all, whether the arrangements were abusive for the purposes of GAAR, and whether they fell within the scope of DOTAS as having tax advantages as a main expected benefit (paragraphs 10.4 to 10.5).

Turning to the advice provided to OneE, following telephone calls with Mr Johnson, Mr Mullan set out in his 5 September 2014 e-mail an outline of what he understood the relevant facts to be on which OneE based their instructions. On 26 September 2014, Mr Mullan provided his first opinion on the Nemaura structure. Among other things:

Despite the less than clean bill of health provided for the proposed structure by Leading Counsel by that point, the structure was promoted by OneE at its 7 October 2014 conference at the Lowry Hotel in Manchester, entitled “Investing in the future of tax planning: what is permissible and what is not?” The papers for the conference included a paper on Nemaura’s business and a presentation on how the structure would work. The latter included a slide “Tax Treatment For Corporates” which stated that:

“- The corporates are entitled to 100% of the 181.25% relief, provided

- The LLP is trading and R&D valued correct:

- all money is spent or will be spent regardless of success,

- the R&D qualifies as R&D under the Guidelines,

- the LLP’s sub-contractor payment is deductible under GAAP,

- qualifies as a sub-contractor payment under s 1133(1) CTA 2009 and

- relief not prevented by s. 1084 CTA 2009 or case law”

A slide entitled “Tax Treatment Legislation” provided among other things “S 1136- additional relief of 81.25%”. The 81.25% represents 65% of 125%.

The same day, Mr Johnson e-mailed Mr Mullan, setting out some points to clarify. In respect of paragraph 139 (one of the paragraphs extracted above), the following comment was made:

“Last sentence of 139- not sure why this is relevant as the LLP and subco are not connected hence there is no need to consider 1124 etc? (falls under 1136- not connected hence 65% but don’t need to consider 1124 etc.)”

Therefore, Mr Johnson was taking what Mr Corrigan had regarded in his draft instructions as the better view on the point.

Mr Mullan dealt with these points through a supplemental opinion of 20 October. In respect of the question on paragraph 139 of his first opinion, he opined as follows:

“Last sentence of paragraph 139- not sure why this is relevant as the LLP and subco are not connected hence there is no need to consider 1124 etc? (falls under 1136- not connected hence 65% but don’t need to consider 1124 etc.)

16.

These provisions are relevant in determining whether expenditure is qualifying expenditure on contracted out R&D for the purposes of section 1053.

17.

Although the fact that the companies are connected is relevant to the calculation of the qualifying element of a sub-contractor payment (section 1053(1)(a) and 1036 CTA 2009) there is an additional requirement that expenditure is “attributable to relevant research and development” in section 1053(2) CTA 2009. It is in determining whether this condition is satisfied that section 1124, 1126 and 1132 are relevant (see in this respect section 1053(6) CTA 2009).

18.

I do not consider that the fact that the parties are connected obviates the need to show that expenditure is attributable to relevant research and development in order to satisfy the conditions in section 1053 CTA 2009.”

I think that the reference to “connected” in paragraph 18 of the supplemental opinion is intended to be a referenced to unconnected parties, because that is the question being asked in the heading to the section.

Mr Johnson e-mailed on the opinion to Mr Slattery on 28 October 2014 with his comments, which included the following on the passage from paragraphs 16-18 extracted above:

“A key component of our original instructions was that where the subcontractor payment was to an unconnected party, there is no need to ‘look through’ to the subcontractor to see whether the money is attributable to relevant R&D. The question is why anyone would not elect to be connected if the same obligation exists to spend the money on relevant R&D. I think the answer might be that we have to show that the LLP payment is attributable to relevant R&D, but the subcontractor does not have to demonstrate the same and also spend the money within a specific timeframe. I will look into this further before our meeting.”

Following a further call with Mr Mullan, Mr Johnson then e-mailed him on 4 November 2014, copying in Mr Slattery, about this point. The e-mail included the following:

“Further to our call, the point we need to get comfortable on is the importance of connection between the LLP and the subcontractor, and what expenditure of the LLP will qualify for enhanced R&D relief.

The starting point is that we have based our previous discussion on the assumption that the LLP and subcontractor will not be connected. That is because we assumed that there would not be as high a threshold compared to when the LLP and subcontractor are connected.

If the LLP and subcontractor are not connected

As summarised in paragraphs 114 to 144 of your opinion, s.1044 gives relief for “Qualifying Chapter 2 Expenditure”. This is then given by s.1051 and s.1053 which ultimately requires us to ensure that the expenditure is “attributable to relevant research and development”, and hence we must consider ss 1124, 1126 and 1132.

For the avoidance of doubt please can you confirm that only expenditure that falls under 1124, 1126 and 1132 will be available for relief for enhanced R&D relief. If this is the case then the contract between the LLP and subcontractor will have to stipulate the relevant R&D being within the categories of staffing costs, software or consumables or external workers. Should this be the case, there may be difficulty in how the licence between Nemaura and the LLP is drafted, because we want to ensure that all expenditure of the LLP qualifies for enhanced R&D relief.

Comparing s.1052(7) and s.1053(6), it may be that s.1053(6) directs us to ss.1124, 1126 and 1132 to make clear when expenditure is attributable to R&D, e.g. expenditure has to be directly applied to relevant R&D and must be apportioned where the expenditure can be split. It may not necessarily be directing us to those specific types of expenditure.

I also note that HMRC imply that the R&D need not necessarily be within these categories CIRD84200. HMRC state that “qualifying expenditure includes payments made to another person subcontracted to carry out activities that are part of the company’s relevant R&D CIRD81400…”

Mr Johnson also explained in the e-mail that they had considered the possibility of the LLP and subcontractor being connected, but that it was not attractive, because the application of s.1134 would mean that (i) the work could not be further subcontracted, whereas OneE intended that the work would be further subcontracted, and (ii) the subcontractor would need to incur the relevant expenditure within 12 months of the end of the LLP’s accounting period, which would not be the case for all the R&D expenditure as the project may last for up to four years. Therefore, Mr Johnson stated, “it seems clear that we will need the subcontractor and LLP to be unconnected”. The e-mail concluded by asking Mr Mullan to comment on the key points in the e-mail, continue to work on the implementation documents to be ready by 20 November, and amend the opinion in line with their discussions and send them a final version.

On 6 November, Mr Johnson e-mailed Mr Slattery asking for a conversation about the e-mail, and Mr Slattery replied that he was in the boardroom. I do not have a copy of any response from Mr Mullan or further e-mails on this point. There is a further e-mail from Mr Johnson to Mr Mullan on 14 November 2014 relating to a different point in Mr Mullan’s opinion, and a dialogue that day between the two of them, but nothing on the unconnected subcontractor points above.

On 20 November, Mr Mullan e-mailed the suite of implementation documents, and stated that he would provide an amended version of his opinion in the next day or two. However, I do not have any further e-mails or documents in the chain that include the revised opinion.

In the meantime, while this dialogue with Mr Mullan was taking place, Mr Corrigan became aware that the Nemaura structure had been presented to investors at the 7 October 2014 event at the Lowry Hotel through a meeting with a Mr Guy Surtees at Taurus, who specialised in raising funds in London and who Mr Corrigan had presented his structure to previously. Mr Surtees subsequently provided Mr Corrigan with a copy of the presentation. Mr Corrigan states in his witness statement that it was very clear to him from the presentation, particularly the overall structure, the subcontractor provisions and the statutory uplift in the relief offered, that OneE had used his structure in that presentation and in the context of Nemaura and had deliberately excluded him from all aspects, so he was extremely shocked and immediately contacted Mr Slattery.

On 23 October 2014, Mr Corrigan e-mailed Mr Slattery asking Mr Slattery to give him a call on his mobile as a matter of urgency. Mr Corrigan appears to have sent a previous message, as Mr Slattery responded the same day saying that they could discuss “our Nemaura R&D planning” properly on Monday and that he was on honeymoon in Dubai, which suggests that he was aware that Mr Corrigan wished to discuss Nemaura. Mr Corrigan responded the same day asking for a copy of the Nemaura structure in advance of the meeting, and Mr Slattery refused by further e-mail the same day, saying “No, let’s discuss first”.

By 27 October 2014 e-mail, Mrs Toone sent from a “1^st ethical” e-mail address to Mr Johnson and Mr Slattery a copy of the NDA, stating:

“Tim, Dom,

Kieran Corrigan signed NDA attached. Please note this was amended from our standard NDA by Richard to cover exchange of information both ways.”

Mr Johnson responded the next day to Mr Slattery, not copying in Mrs Toone, stating:

“Just looking at the attached, the recipient is described as Kieran Corrigan and so it is not very well drafted to cover exchange of information both ways. Is it worth getting Anne to see what exactly was agreed in the e-mails at the time. The trail below just says ‘as discussed’.”

Returning to the dialogue between Mr Corrigan and Mr Slattery, Mr Corrigan sent a further e-mail to Mr Slattery on Tuesday 28 October in the following terms:

“Dear Dominic,

Further to our phone conversation last week, I had hoped that we would speak yesterday but I didn’t hear from you.

I am very anxious to discuss the Nemaura structure with you as a matter of great urgency. I have been working flat out on this project for some months now and have just now finalised our own structure with Michael Sherry.

As you will imagine, I am deeply concerned about the structure you are now marketing in the context of all of our discussions to date.

Will you please let me know when it will be possible to have a call to discuss this. I will be tied up for most of this afternoon but I could speak to you later this morning or tomorrow morning.”

A heated telephone call between the two of them took place on 30 October. Following that, Mr Slattery sent an e-mail later that day saying that had just called and left a message, and Mr Corrigan responded the same day by e-mail apologising that the conversation got so heated, and explaining his extreme disappointment given the time, effort and expense he had put into the project. Mr Slattery in turn responded by e-mail the same day stating that the offer was there for a meeting at their London offices and that he did not want any bad feeling, saying that nothing untoward had happened.

Mr Corrigan e-mailed Mr Slattery on 4 November in the following terms:

“Dear Dominic,

I have to say, I remain deeply disappointed in what has occurred.

I find it extraordinary that, under a confidentiality agreement, I would provide you with every piece of information, including my submission to Counsel and that you are not prepared to provide me with the structure that you are now marketing.

I have reflected on the fact that you may have communicated with Michael Sherry. It is clear that this is really none of my business and none of my concern. What you discuss with Michael is a matter between yourself and Michael.

The issue that arises is a matter between the members of your organisation and the members of my organisation in relation to information flows under the signed confidentiality agreement.

I will obviously be taking advice on my situation and we shall see where we go from there.”

Mr Slattery responded the same day, stating:

“It continues to frustrate me that (1) you seem to believe my company has done anything untoward when I have explained fully the situation and (2) that you continue to say that I am not prepared to show you our structure. I have confirmed both verbally and in writing that I am prepared to show you the details of our structure provided you do so at one of our offices without taking the information away with you.”

On 18 November 2014, Mr Sherry e-mailed Mr Corrigan, having been called by David Wilson, a lawyer who had introduced Mr Corrigan to Mr Sherry in the first place. Mr Sherry reassured Mr Corrigan that he had not advised anyone else on any R&D structure since Mr Corrigan first instructed him, and that the reason he suggested Mr Corrigan talk to OneE was “because I was asked to quote in respect of an R&D scheme last year (before I think the GAAR was introduced). That arrangement was nothing like the arrangement we have bee[n] discussing and developing.”

On 10 March 2015, OneE Tax, the company that was the party to the NDA, entered voluntary liquidation.

The chronological run of documents also included a Nemaura presentation that is described as “March seminars” in the index but undated, so I do not know whether it dates from March 2015 or 2016 but I do not consider that matters for present purposes. It seems unlikely that it dates from March 2017 because the evidence is that Nemaura had been fully subscribed by then. The slide dealing with the “qualifying element of a contractor payment” (for the purposes of s.1053(1)(a) of the 2009 Act) states:

“- If the parties are unconnected, the enhanced R&D relief is 65% of the normal 125%

- Where the parties are connected, the relief is not restricted however only expenditure on staff, software, consumables and externally provided workers will qualify.

- It must also be spent by the sub-contractor within the relevant period- generally 2 months from the end of the accounting period in which the sub-contractor payment is made.

- Where the parties are not connected the above restrictions will not apply.”

On the next slide, under the heading “Attributable to relevant R&D”, the second bullet provides:

“- Does s.1053(6) gives [sic] provision for particular kinds of expenditure being attributable to relevant R&D. This means expenditure on staff, software and consumables must be carefully monitored, but a more general approach will be taken for all other expenditure, provided it qualifies as R&D.”

At a meeting on 8 July 2015 between the two of them, Mr Slattery relayed to Mr Corrigan that he had legal advice from Foot Anstey stating that any claim by Mr Corrigan was unlikely to succeed.

Mr Slattery’s evidence was that at some point after OneE Tax’s entry into liquidation, Mr Ismail retired, and Mr Slattery acquired the shareholding in the group. I do not need to go into the detail of that, because it is not relevant to the matter before me. Similarly, while the cross-examination of Mr Slattery elicited that the OneE directors, including him and Mr Timol, were sued by someone who took an assignment of causes of action from the OneE Tax liquidators, that the basis of the claims was that the schemes they were involved with had caused loss to OneE Tax, and that they each paid various sums under a settlement of that action, I do not see the relevance of that to the present matter.

Mr Corrigan stated in his witness statement that when OneE launched the Nemaura structure, in his view they did significant irreversible damage to his ability to further implement his structure in the UK, because they immediately assumed first mover advantage and anything that he would have done subsequently would have been perceived by the investment community as copying OneE and Nemaura. He amplified this orally by explaining that the Nemaura structure would be more attractive to investors because it claimed to provide via its gearing a higher rate of tax relief. He also referred briefly in his statement to having run his structure past HMRC subsequently to the launching of the Nemaura structure. He was asked about this in cross-examination, He explained that he and Mr Sherry submitted to HMRC what was essentially the Fast Track Pharma structure (which was a structure with a connected subcontractor). He stated that they raised the issue of s.1053(6) (which, as explained above, relates to unconnected subcontractors) and they eventually received confirmation in around January 2017 that HMRC accepted the analysis of s.1053(6) put forward by Mr Sherry, namely that it was a drafting error. When asked why he had continued to engage with HMRC, he stated that he had put a lot of energy into it and was interested by their reaction, and said that “maybe, depending on what ultimately happens with money and HMRC and how that pans out [which I took to be a reference to HMRC inquiries into Nemaura, with its geared structure], there would be room again for something else”. In other words, he considered that there might be room on the market for another R&D relief structure. I do not need for the purposes of this judgment to decide whether Mr Corrigan’s views and evidence set out in this paragraph is correct or not, but I include it to record his view.

There were a number of references in the evidence, both written and oral, to how much money the OneE group and the Defendants had made from Nemaura. Mr Johnson explained in his statement that he had analysed the accounts and considered that OneE Investments received fees for introducing investors of c.£8.7m and OneE Consulting received fees for providing tax advice and defence support of c.£1.4m, but that total direct costs and apportioned overheads of the companies resulted in a net overall upfront profit of c.£329,000. He also asserted that he “earned not a single penny of commission, bonus or benefit from the Nemaura (or Rehberg) structure”. Mr Slattery made the same assertion in his statement in identical language. Again, I do not need to decide for the purposes of this judgment whether this is correct or not.

Mr Corrigan states that funding difficulties prevented him from issuing a claim at that stage. The claim form in the present proceedings was issued on 5 October 2020, just under 6 years from the date of the OneE presentation at the Lowry.

I consider that Mr Corrigan was an honest witness, with a pretty good recollection of the events of 2013-4 given the time that had passed. He had an impressive grasp of the tax legislation and was able to recite a number of the provisions. An important difference of approach from OneE was that he saw his structure as not having to use gearing and non-recourse or limited recourse loans, which were not features that he considered attractive. He evidently felt strongly about what had happened, and had a tendency to argue his case or resist on occasions points that he should have accepted, such as in relation to the features of the Ultra Green material, which, contrary to what he asserted, does deal with the position of an unconnected subcontractor. I have considered carefully the submissions made by Mr Budworth about his evidence. I agree that Mr Corrigan’s witness statement did not mention that Mr Slattery wished there to be a NDA and that the first mention of it in the e-mails came from OneE, so in my judgment the witness statement did not provide the full picture in this regard. Further, Mr Corrigan’s current intentions in relation to his own structure did not come through from his witness statement. However, I reject the broader submission of Mr Budworth that Mr Corrigan should be considered more generally “an unreliable historian” (day 5, page 774 of the transcript):

Mr Sherry’s evidence was careful and measured. He did not have a detailed memory of many of the events, but he answered the questions fully and stated where he did not have a clear recollection. He explained among other things that he had not seen another structure that used a LLP structure to obtained enhanced R&D relief, or any discussion of the merits of seeking to use the 65% unconnected subcontractor relief and whether the underlying expenditure had to relate to the same specific categories as did the expenditure of a connected subcontractor. He had worked for OneE in the past, had made the suggestion that Mr Corrigan speak to OneE, and felt that OneE had, to use the language of his statement, betrayed his integrity by what he understood to be their subsequent actions. I do consider that it would have been better for him to have mentioned that he might receive a proportion of any recoveries in the litigation that Mr Corrigan might make, but his witness statement makes clear that it has been prepared by answering questions presented to him by the Claimant’s solicitors, which I assume did not include such a question. In any event, the Defendants did not argue that his testimony should be disregarded or downgraded on that ground, and had they done so, I would have rejected that submission.

Mr Slattery was central to the dialogue with Mr Corrigan and the development and promotion of Nemaura. He was a fluent and quick witness. The impression I gained of him was that he had at the time of the relevant events a very busy professional life, and perhaps due to that did not have much recollection of the detail of what happened in 2014, as he made clear in his witness statement. Like Mr Corrigan, he tended to argue his case, and mounted a forceful defence of OneE’s position, particularly as to its entitlement to generate a tax mitigation scheme that sought to use the R&D relief expressly provided for in statute.

However, I consider that a number of key elements of the substance of his testimony, which he put forward with some vigour, did not tally with the contemporaneous documents, such as (i) the suggestion that the 2013 instructions to Mr Sherry in relation to Nemaura were simply a cut and paste job from the Rehberg instructions, or (ii) that the draft instructions to DLA Piper in May 2014 were simply the result of him and Mr Johnson sitting down and having time to consider the use of R&D relief themselves, independently from the ideas put to them over the first half of 2014 by Mr Corrigan. I reject those elements of his testimony and deal with them in considerably more detail below in the next section given their importance.

Therefore, taking the above together, I consider that I should exercise significant care before accepting his evidence on factual matters in dispute to the extent that they cannot be verified from the contemporaneous documents.

Mr Johnson was in respect of a significant proportion of his testimony a good witness who listened to the questions put and answered them precisely. He also gave a number of answers against the interests of OneE, such as confirming that after the instructions to Mr Sherry in 2013, as far as he could recall nothing happened internally in relation to Nemaura before the dialogue with Mr Corrigan begun. He made clear in his witness statement that his memory of the relevant events was vague at best and that among other things he could not recall any specific detail of the 4 February 2014 meeting.

However, and this a significant qualification, in relation to the substantive content of his evidence, there are four important areas of his evidence that I found unconvincing and therefore deal with specifically here. His answers on these points in oral evidence were more defensive and vague.

The first is in relation to Ultra Green. His witness statement did not include any first-hand testimony on this point and instead based itself on the documents. The most important passage stated that “it is very clear from the full counsel opinion and bundle of correspondence that OneE had with Ultra Green in 2008 [in fact it was 2009]…that OneE were already fully aware of this type of structure and how it could work to achieve the “tax geared investment” outcome needed for it to be marketable to its clients” (paragraph 36). The implication of this, taken in the context of the statement, was that OneE was fully aware of this at the time of receiving Mr Corrigan’s ideas. However, he accepted in cross-examination that Rehberg, which was in 2012-2013, was the first tax geared investment structure OneE promoted, that he was unable to recall doing any analysis on Ultra Green himself at the time and thought that the reason that OneE probably did not progress with Ultra Green was because they were busy with EBTs. He accepted that he did not remember Ultra Green in 2014, explaining that OneE did not have a central bank of past know-how that they could draw on (day 4, p.558 of the transcript), and accepted that no other R&D relief based structures had been offered to OneE before Mr Corrigan entered the scene. He also stated that, putting to one side the scheme in the Vaccine Research case ([2012] UKFTT 073 (TC)), which did not involve R&D sub-contractor relief, the only R&D relief based structure he was aware of now was Nemaura. When pushed in cross-examination on whether he was really aware of how R&D tax-geared investment structures would work prior to Mr Corrigan’s approach, his answer was far from emphatic, and he ultimately stated that he would not necessarily agree that he was not personally aware. In light of the points mentioned above in this paragraph and for the reasons explained in the next section, I reject the suggestion in his witness statement that OneE were “already fully aware of this type of structure” in the sense of having to mind at the time that Mr Corrigan approached them a LLP structure that used sub-contractor R&D relief.

Second, and tied to that, I reject the assertion in his witness statement that “there is no evidence…that the brief correspondence we had with Kieran Corrigan in early 2014 had any connection with the development of the Nemaura structure in mid to late 2014” (paragraph 27). I shall deal below with the question of where the inspiration for the use of subcontractor R&D relief in the May 2014 instructions came from. In my judgment, it came from Mr Corrigan’s communications to OneE.

The third area was in relation to the preparation of the 2013 instructions to Mr Sherry. His answer as to why those instructions made no mention of subcontractor R&D relief was that they were trying to deal with the basics of how such a structure would work before coming onto the details of the R&D relief. Again, I reject that, for the reasons set out in the next section.

Finally, Mr Johnson was also questioned at some length about the interactions with Mr Mullan and the tone of them. His responses suggested that he did not see a particular problem with what he considered to be Mr Mullan’s interpretation of s.1053(6). However, his 28 October and 4 November 2014 e-mails mentioned above (at paragraphs 136 and 138) suggest that there was concern on his part about the construction being adopted. Therefore, I shall proceed on the basis of the contemporaneous documents in this regard.

The general conclusion I took from the four points above was that Mr Johnson lacked independent recollection of the detail of the dialogue in 2014 or development of Nemaura and that I should not, in light of the contemporaneous material and Mr Corrigan’s testimony, accept his assertions about how the use of unconnected sub-contractor R&D relief in the Nemaura structure came about.

Mr Freeman was a straightforward witness who answered the questions put to him clearly. He accepted in his statement that he did not have a clear recollection of the events from 2013-4. Given this and that he left OneE in April 2014 before the events complained of, I consider that his witness evidence is of limited relevance to the case. The research he did in March 2013 is of relevance to the genesis of the 2013 instructions to Mr Sherry in relation to Nemaura, but that evidence comes from the written documents rather than his witness evidence. He accepted orally that the wording of the points in the first three of the four subparagraphs in the main paragraph of his witness statement (paragraph 8) had originally been put to him, rather than being a reflection of his own words, but stated that he had read them carefully and amended them as appropriate.

Similarly, I consider that Mr Owens answered the questions honestly and, with one exception relating to paragraph 11.3 of his statement, directly. In relation to the documents mentioned in his statement, he was copied in on the product of Mr Freeman’s research in 2013 but did not add to it, and did not comment on the draft instructions to DLA Piper in 2014 because he was going on holiday, so in my judgment his evidence is of limited relevance. He was asked in cross-examination about the wording of one of the sub-paragraphs of the main paragraph of his statement (paragraph 11.3), which stated that had OneE decided to copy third party intellectual property, there would have been little need for him to be instructed to undertake the independent research that he was instructed to and ultimately did conduct. He accepted that the original wording had been put to him by Mr Slattery, but stated that he thought he had changed it to his own wording. He queried whether the paragraph was important and stated that the work he did was a long time ago. It was put to him that he had not in fact produced any work product in relation to the matters referred to in the exhibited documents, and his answer was that he believed that he probably did some work on Nemaura at some point but he did not appear to me to be certain and he was unable to pinpoint when. Therefore, while, unlike Mr Freeman, he was working for OneE in May 2014 and for a number of years after that, I do not consider that he has any reliable first-hand evidence to give of what happened in May 2014.

Mr Timol made clear in his statement that he had no recollection of having liaised directly with Mr Corrigan. He was not a technical expert, and left detailed tax matters to his colleagues. I found him a straightforward and direct witness.

Finally, I make two more general points. First, particularly on the Defendants’ side, the witnesses had little detailed first hand recollection of the relevant even so given that and the time that has passed since the relevant events, I will naturally give heavy weight to the documents in establishing what has happened. Second, I was concerned, particularly in light of the breaches of PD57AC in their preparation, by the fact that a number of the statements contain identical or similar passages at important junctures. I return to this at the end of the judgment in relation to the costs of the application to adduce the re-amended witness statements. The important point for now is that I have treated the common paragraphs with particular care in evaluating the weight to be given to them.

Before dealing with the relevant legal principles, it is helpful to deal with a key factual dispute, which was where the inspiration for the Defendants’ use of sub-contractor R&D relief in the Nemaura structure came from. In my judgment, it is clear that it came from Mr Corrigan on behalf of the Claimant, rather than being something that the Defendants reached themselves, for the following reasons:

I have taken carefully into account all points that could be argued to point the other way. These include: (i) the expertise of Mr Johnson and Mr Slattery in tax matters, (ii) Mr Johnson’s testimony that OneE were busy dealing with the official ceasing of EBT business in mind-2013 and that this continued into 2014, which tallies with Mr Slattery’s suggestion that they did not have time at that stage to turn back to Nemaura, (iii) what the Defendants contend is the obviousness of the availability of subcontractor R&D relief, and (iv) the fact that the May 2014 instructions prepared by OneE Investments did not specifically mention the competing arguments that Mr Corrigan had raised on s.1053(6) of the 2009 Act. However, in my judgment they are clearly outweighed by the above. I will return in a little more detail to point (iii) below in the context of whether the information provided by Mr Corrigan was confidential. For present purposes, it suffices to say that OneE did not see the availability of subcontractor R&D relief in 2013, Mr Corrigan did not think that the operation of s.1053 was straightforward, and the three-stage dialogue with Mr Mullan over his interpretation of s.1053, namely through his initial opinion, his follow-up opinion dealing among other things with a question raised by Mr Johnson about the initial s.1053 reasoning, and then a further e-mail by Mr Johnson about the follow-up opinion, does not suggest that the interpretation of s.1053(6) was straightforward either.

I am not ruling out the possibility that Mr Slattery did some thinking of his own in the days before 13 May 2014 on the R&D relief. However, in my judgment the inspiration and principal thinking behind the use of the sub-contractor R&D relief came from Mr Corrigan.

In relation to the 2013 material, Mr Slattery stated in oral evidence that they were simply a cut and paste from earlier Rehberg instructions because they were very busy working on Rehberg at the time, and that was why he and Mr Johnson “had not sat down and applied ourselves to an R&D based scheme as opposed to a hotel development scheme” like Rehberg (day 3, p.338 of the transcript).

The 2013 instructions are detailed and paragraph 6.3, which sets out the tax analysis, states:

“The tax analysis relatively simple: the LLP obtains a current year loss as the tax treatment follows GAAP and Investor 2 [the corporate investor] can utilize this loss against its other profits (or carry back the loss 12 months, or carry forward the loss against profits of the same trade in future years). The question is whether any other factors could affect this analysis…”

That produces a significantly different calculation of what amount the investor could set off against his profits to if sub-contractor R&D relief is used.

There is therefore no hint of the possibility of sub-contractor R&D relief in the instructions, and on the contrary the instructions that the relief that OneE have in mind is a simple trading deduction. Accordingly, prior to their dealings with Mr Corrigan, there is no sign of the Defendants having considered sub-contractor R&D relief for Nemaura.

Further, while I do not have the Rehberg instructions themselves before me, I firmly reject the contention that the March 2013 instructions were just a cut and paste from the Rehberg ones. This is inconsistent with Mr Slattery’s own 12 March 2013 e-mail of 19:10, in which he says that one of his remaining tasks is to “[a]dd to the Case Law, Ramsay and GAAR points”. He then commissioned Mr Freeman to do this work. Mr Freeman, who led the OneE technical team at the time, duly researched on 12 and 13 March a number of the cases that were dealt with in some detail in the March 2013 instructions. Consistent with this, Mr Slattery stated in evidence that he had asked Mr Freeman to look into some cases as part of other team members “do[in]g some research on R&D” for him (day 3, p.341 transcript). Therefore, the instructions were the product of some work on OneE’s part, rather than just being a cut and paste.

In closing, Mr Budworth submitted that Mr Slattery’s evidence was that there was no point asking Counsel what was already known about subcontractor R&D relief (day 45, p.790 transcript), and that therefore the instructions focused on seeking to understand the implications of the recent case-law like the Vaccine Research case. I reject that explanation, because the instructions were clear at paragraph 6.3 what the intended relief was, and that it was intended to use a simple trading deduction, coupled with gearing, to obtain the relief.

Similarly, in my judgment, the substance of Ultra Green was not recalled or used by Mr Slattery or Mr Johnson at the time of preparing the May 2014 instructions. As explained above, Mr Johnston accepted this in cross-examination (day 4, p.558 transcript). He said “that is not how we operated. We did not have a sort of bank of all the many…structures that we had been sent over the years and we did not develop things using…those structures”. It was Mr Johnson in 2009 who was asked to do the detailed work on Ultra Green.

One question that arose in cross-examination was whether Mr Slattery had seen Mr Corrigan’s draft instructions to Mr Sherry. While Mr Slattery was candid in his witness statement that his recollection of 2014 eight years on was not clear, he suggested in his oral evidence that he had not think that he had seen Mr Corrigan’s instructions before these proceedings. This is not central to the questions above, because in my judgment he was aware of the points that Mr Corrigan had made orally how the structure worked. However, in my judgment he would have seen them at the 4 February 2014 meeting, for the following reasons:

Consistent with my findings in paragraph 165 above, I also find that Mr Corrigan’s general account of the 4 February 2014 meeting was an accurate one. The following are the important aspects for present purposes:

I do not need to get into precisely what discussion there was at the meeting of other issues discussed in the dialogue between Mr Corrigan and OneE like “Joshua”, a tax mitigation structure that OneE had been marketing in England, because they are not directly relevant to the present point.

I shall set these out in outline, and deal with any more detailed legal points in the course of applying the law to the facts. I shall leave the principles governing limitation to that section.

The basic requirements were not in dispute.

The requirements of breach of confidence are:

As Arnold LJ explained in Racing Partnership Ltd v Done Bros Ltd [2021] Ch 233 (CA) at [46], the doctrine of misuse of confidential information concerns the control of information and misuse of confidential information is a species of unfair competition. The basic attribute which information must possess before it can be considered confidential is inaccessibility: [48]. Specifically, “the claimant in a case of this kind must demonstrate that it has sufficient control over the information to render it relevantly inaccessible”: [72]. While Arnold LJ was in the minority on the result of the appeal, there is nothing in the other judgments that casts doubt on these principles.

On the contrary, the principles were put in similar terms in CF Partners (UK) LLP v Barclays Bank plc [2014] EWHC 3049 at [124], where Hildyard J explained that:

“The basic attribute or quality which must be shown to attach to the information for it to be treated as confidential is inaccessibility: the information cannot be treated as confidential if it is common knowledge or generally accessible and in the public domain. Whether the information is so generally accessible is a question of degree depending on the particular case. It is not necessary for a claimant to show that no one else knew of or had access to the information.”

Reference was made in submission to the decision of HHJ Hacon in Trailfinders Ltd v Travel Counsellors Ltd [2020] EWHC 591. The Judge explained that in his view the best guide to the distinction between information that is confidential and that which is not is now to be found in the definition of trade secrets in regulation 2(1) of the Trade Secrets (Enforcement, etc.) Regulations 2018 (the “2018 Regulations”): [29]. The definition is:

“…information which-

(a)

is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among, or readily accessible to, persons within the circles that normally deal with the kind of information in question,

(b)

has commercial value because it is secret, and

(c)

has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret”

I consider that a little care is needed with the proposition put forward by the Judge. First, as HHJ Hacon explained at [8], the Government considered that English law already provided through the doctrine of breach of confidence the substantive protection required by the Trade Secrets Directive on the protection of trade secrets (2016/943/EU) (the “Trade Secrets Directive”) so that it was unnecessary to implement through the 2018 Regulations those provisions granting such protection. Rather the provisions implemented through the 2018 Regulations were those relating to remedies. Reg.3 of the 2018 Regulations accordingly makes clear that the protection offered by that doctrine is maintained. Therefore, the law of breach of confidence as it stood in English law prior to the 2018 Regulations is expressly and deliberately retained, so the previous cases retain their relevance. Indeed, in Trailfinders the Judge went on to consider the relevant case-law.

Second, it does not seem to me that the commercial value requirement in limb (b) of the definition is necessary for breach of confidence. CF Partners explains at [123] that while confidentiality does not attach to trivial or useless information, “the measure is not its commercial value”. Similarly, I do not consider that the requirement in limb (c) is a requirement of a breach of confidence. Therefore, it appears to me that the doctrine of breach of confidence extends beyond circumstances where the information amounts to a trade secret for the purposes of the 2018 Regulations.

Third, consistent with the foregoing, there is no suggestion in the Court of Appeal decision Racing Partnership, which post-dates the first instance decision in Trailfinders, that the test for breach of confidence is now the reg.2(1) trade secret test.

However, I consider that limb (a) is a useful guide, and it was this limb which was relied on by the Defendants in their skeleton. It tallies with the test set out by Arnold LJ and the approach in CF Partners, and helpfully brings out the relevant category of people to which attention is being directed in determining whether the information is readily accessible or not.

In any case, on the present facts, as I shall explain, I consider that the information both amounts to confidential information and a trade secret, so the point is not determinative.

Where there is a contract that places limits on the confidentiality obligations that apply, those limits are normally respected by the doctrine of equitable breach of confidence (Vercoe v Rutland Fund Management Ltd [2010] EWHC 424 (Ch) at [329]-[330]), but not always (CF Partners at [132]-[133]). I shall return below to the relationship between the contractual provisions here and the scope of the equitable duties of confidence on the Defendants.

The test regarding the defendant’s appreciation of whether the information was confidential, is objective in the sense that it requires the claimant to show that the defendant ought to have appreciated that it was confidential, irrespective of her actual state of mind: Trailfinders at [42] at first instance, and [14] in the Court of Appeal ([2021] EWCA Civ 38); Racing Partnership at [79] per Arnold LJ, adopted by Phillips LJ at [170] and Lewison LJ. In applying this, “[i]f the reasonable person would make enquiries, but the recipient abstains from doing so, then an obligation of confidentiality will arise”: Trailfinders CA at [28], although this may only apply in cases of primary rather than secondary liability: [29].

A person who owes an equitable obligation of confidence is liable for acting in breach of that obligation even though he is not conscious of doing so: Primary Group (UK) Ltd v Royal Bank of Scotland plc [2014] EWHC 1082 (Ch) at [244], relying on the Court of Appeal decision in Seager v Copydex Ltd [1967] 1 WLR 923.

The 2018 Regulations came into force on 9 June 2018: reg.1(1). They apply to proceedings brought before a court after the coming into force of the Regulations, in respect of a claim for the unlawful acquisition, use or disclosure of a trade secret, and for the application of measures, procedures and remedies provided for under the Regulations: reg.19.

Where the Regulations apply, then on the application of an injured party, a court must order an infringer, who knew or ought to have known that unlawful acquisition, use or disclosure of a trade secret was being engaged in, to pay the trade secret holder damages appropriate to the actual prejudice suffered as a result of the unlawful acquisition, use or disclosure of the trade secret: reg.17(1). A Court may award such damages on the basis of either reg.17(3) or (4): reg.17(2).

The Claimant pleaded that the reg.17 damages regime only applies to breaches of confidence committed from 9 June 2018 onwards (paragraph 61 of the Particulars). The Defendants did not contest this proposition, and I consider it is correct. Reg.17 only applies where the infringer knew or ought to have known that unlawful acquisition, use or disclosure of a trade secret was being engaged in: reg.17(1). Therefore it can only apply to acts after the 2018 Regulations came into force and created the statutory concept of a trade secret for these purposes.

However, the Claimant submitted that the 2018 Regulations impose a specific statutory limitation period for breaches of confidences that amount to unlawful acquisition, use or disclosure of a trade secret, whether or not those breaches occurred on or after 9 June 2018. I shall deal with that submission in the section on limitation below.

The principles governing joint liability, unlawful means conspiracy, and inducing a breach of contract were not in dispute, so I can conveniently take them from the Claimant’s skeleton.

As set out in Fish & Fish Ltd v Sea Shepherd UK [2015] AC 1229, to establish joint liability on this basis, three conditions must be satisfied (see eg at [21], [37], [49], [55], [57], [100]):

While Fish & Fish concerned tortious wrongdoing, the same principles apply to breach of confidence, albeit that the requirement in a claim for breach of confidence that conscience be affected means that the common design must involving sharing that feature of the wrong. See Vestergaard Frandsen v Bestnet [2013] UKSC 31 at [33]-[35].

I shall deal with the position of directors in the course of applying the law to the facts.

The law on unlawful means conspiracy was recently reviewed by the Court of Appeal in Racing Partnership, with Arnold LJ giving the principal judgment for the majority on the issue of conspiracy. In light of that judgment and earlier authority such as Kuwait Oil Tanker Co SAK v Al-Bader [2000] 2 All ER (Comm) 271 (at [108]), the requirements can be summarised as being:

As regards the combination or understanding, this need not amount to an agreement of a contractual kind, but it does require a combination and common intention to carry out the acts complained of. The conspirators need to share a common intention to carry out a particular activity. Given the Court of Appeal’s ruling in The Racing Partnership (at [139] and [171]), they do not need to know that the activity is unlawful to become liable.

Turning to intention to injure, it was held in Lonrho v Fayed [1992] 1 AC 448 that it need not be the alleged wrongdoer’s predominant intention to injure the claimant where the means employed was unlawful. As Lord Nicholls set out in [167] of OBG v Allan where the injury is the obverse side of the coin to the wrongdoer’s gain, such the gain and the loss are inseparably linked, the requisite intention to injure would be present. It is not sufficient that the loss to the claimant is merely foreseeable: OBG at [166] as explained by Briggs J in Bank of Tokyo-Mitsubishi UFJ v Sanayi [2009] EWHC 1276 at [831]-[832]. While OBG was a case about inducing a breach of contract and causing loss by unlawful means, these dicta about intent to injure apply equally to unlawful means conspiracy: Bank of Tokyo-Mitsubishi UFJ at [833].

As for the unlawful means, breach of contract and misuse of confidential information may constitute unlawful acts on which the tort is founded: see The Racing Partnership at [168] and [173].

The last requirement, that loss be caused by the unlawful means, raises the issue of the “instrumentality” of the means. This was discussed by Arnold LJ in The Racing Partnership at [148]-[156]. At [154], after distinguishing the issue from that of the intent to injure, he held that the issue was one of causation, saying that “[t]he unlawful means must have caused loss to the claimant, rather than merely being the occasion of such loss being sustained.”

The requirements of this tort were set out by the House of Lords in OBG Ltd v Allan [2008] 1 AC 1 per Lord Hoffmann at [8] and [39]–[44] and per Lord Nicholls at [168]–[193]. The wrongdoer must knowingly and intentionally procure or induce a third party to break his contract to the damage of the other contracting party without reasonable justification or excuse.

Necessary quality of confidence

The first question to consider is whether the information has the necessary quality of confidence and what information one is considering. The fact that the inspiration for some of the Nemaura structure may have come from Mr Corrigan’s idea does not itself mean that there is specific information that is confidential, imparted in circumstances importing an obligation of confidence and that has been misused so as to satisfy the three-part Coco v Clark. Racing Partnership contains, as Mr Budworth submitted, a salutary warning against finding too readily that broadly or vaguely framed categories of information are confidential.

When one is considering information that is by its very nature confidential, like highly price-sensitive information only known to one person, that it is plainly not information that is “readily accessible” to the relevant category of persons (or to use Arnold LJ’s phrase, “relevantly accessible”). The holder of the information is entitled to control the use of that information.

Where the information contains the explanation of (a) how something in the public domain is made or (b) (as here) is constructed out of materials in the public domain, one needs to look a little more carefully at the information in order to judge whether it satisfies that test, but the test is the same.

For example, in the case of design drawings, which are pieces of information that provide the recipe for how to construct something that is in the public domain and therefore falls within (a) above, the question is, as Arnold J put in Force India [2012] RPC 757 at [222], whether the features could readily be ascertained from publicly accessible examples of the article. This analysis was not disturbed on appeal. That is another way of putting the question of whether the information is readily accessible. Given that the ordinary process of seeking to get to the information involves working out from publicly accessible examples how they are constructed, it is natural to describe this as ascertaining the information in such a context, and one examines how easy or difficult it is to get to that information. A good example of this reasoning in operation is the judgment of Lord Greene MR in Saltman Engineering Company Ltd v Campbell Engineering Company Ltd (1948) 65 RPC 203, one of the cases followed in Coco v Clark in devising the first limb of the three-stage test.

A similar sentiment underlies the springboard doctrine, namely that someone who obtains information from a private source should not be in a better position than someone who obtains it from a public source. As Lord Denning explained in Seager v Copydex [1967] 1 WLR 923 at 931, if someone saves a significant amount of trouble by obtaining information from documents, instead of sourcing the information from public sources, that is enough:

“When the information is mixed, being partly public and partly private, then the recipient must take special care to use only the material which is in the public domain. He should go to the public source and get it: or at any rate, not be in a better position than if he had gone to the public source. He should not get a start over others by using the information which he received in confidence. At any rate, he should not get a start without paying for it.”

Megarry J also explained in Coco v Clark about how to deal with situations in category (b) above, where raw materials in the public domain are combined to produce the information:

Such formulations readily put one in mind of tangible materials in the public domain being combined to create a product, but the same is true of any materials. Such combination is what is being done when a tax scheme is created. One is taking common legal concepts, like trusts, loans, company and LLPs, and using one’s interpretation of another material in the public domain, namely legislation, to generate ideas that lead to towards a product that can be used to save tax. As Mr Hill put it in his skeleton, the fact that the statutory provisions exist is not barrier to confidential information arising. Rather, “it is how to make use of and the analysis of the statutory provisions that constitutes the confidential information”.

The test of ready accessibility focuses attention in such a context to whether these are ideas that others can readily come up with or not, and if so with what degree of effort or expenditure. The concepts of how novel the idea is, what skill it involves to come up with it and, in some cases, how valuable it is may all be relevant to answering how accessible the information is, but they are not tests in themselves.

Taking some examples of this in practice, (a) in Ocular Sciences v Aspect Vision [1997] RPC 289, a booklet setting out the dimensions of contact lenses was held not to be confidential. Laddie held that the compilation of public information did not involve “the product of the skill of the human brain” (374), but was a “mere non-selective list of publicly available information” (375), so that the fact that time and effort had to be expended in producing it was not sufficient; and (b) in Fraser v Thames Television Ltd [1983] 2 All ER 101, which related to an idea for a television series, the Court considered that the content of the idea needed to be “clearly identifiable, original, of potential commercial attractiveness and capable of reaching fruition” (122a-b), and that the on facts before it that test was satisfied.

The fact that others can come up with the idea or product does not prevent it being confidential. There may be a pool of inventors who can invent a particular product, but if one does so and then shares it with someone else to help him market it, who in turn publishes it without the inventor’s consent to make a profit for himself, the marketer cannot answer a breach of confidence claim by saying that it might have been possible with cost and effort to obtain it from another inventor. Nor in my judgment is it itself an answer to say that he could with effort have done it himself, as would be the case where an inventor shares an idea or product with another inventor.

Turning with that all in mind to the present case, the creation of tax planning schemes involves significant skill, such as (i) familiarity with the relevant legal concepts like LLPs, trusts, companies and contracts, (ii) the ability to interpret technical and lengthy legislation, (iii) an appreciation of the relevant accounting principles, (iv) the ability to think creatively to use (i) to (iii) in order to come up with potential structures, and (v) the ability to ascertain whether the product will have appeal in practice to a relevant segment of the population of possible clients. There are therefore a particular group of professionals, such as tax planning silks, solicitors and accountants who operate in that sphere. The skills that they have make their services of financial value.

The need for the application of such skill, combined with the effort to use those skills to generate tax planning ideas and structures, necessarily makes that information far more likely to be confidential than a mere list of publicly available information, or ideas or a combination of ideas that are relatively easy for a member of the public to come up with. It is information which is considerably less accessible than those categories of information.

Consistent with that, the Defendants here plainly regarded the information that they provided to Mr Corrigan in relation to one of their own tax mitigation structures, codenamed “Joshua”, as confidential, because they required him to sign the NDA before they provided details of it to him in February. Similarly, to take an easy example, it is clear that a complex tax scheme involving components that no-one had yet thought of would be a confidential document. Therefore, there is no difficulty with the proposition that a tax planning scheme can be confidential. The question is whether the particular tax planning ideas that Mr Corrigan imparted were.

The first task is to be clear what the relevant information under consideration is.

In my judgment the relevant information comprises, as the Claimant contends, the proposed structure set out in the draft instructions (the Structure referred to in paragraph 2 above), the proposed Morvus structure and the proposed Fast Pharma structure (together the “Information”), for the following reasons:

In my judgment, whether one phrases the touchstone as ready accessibility (the 2018 Regulations) or ascertainability (Arnold J in Force India), relevant accessibility (Arnold LJ in Racing Partnership) or general accessibility (Hildyard J in CF Partners), they all amount to much the same thing and it is clear that the information here was not sufficiently accessible or ascertainable whichever wording is chosen, for the following reasons:

Therefore, it is in my judgment plain that Mr Slattery could not just walk outside the 4 February 2014 meeting and publish the draft instructions that Mr Corrigan had imparted, or a top and tailed version of them. Nor could Mr Corrigan walk out of the meeting and publish the Project Joshua material with which he had been provided.

There was significant focus in all elements of the Defendants’ case on the fact that R&D relief is a widely used statutory relief. However, in my judgment this misses a key point. The possible structure put forward by Mr Corrigan did not involve pharmaceutical or other companies that normally engage in R&D claiming standard R&D tax relief, as I understand Nemaura itself had done before Mr Corrigan met OneE. Rather Mr Corrigan’s possible structure allowed companies who would not otherwise involve themselves with R&D being able to take the advantage of the R&D tax relief regime, using the relief relating to sub-contracted R&D. It combined the use of those provisions with an LLP structure to allow the investors in the LLP to obtain such relief, rather than the person doing the R&D work. By fitting these features together, Mr Corrigan had come up with a possible structure that was not then on the market.

As Mr Sherry put it orally in giving evidence of his explanation to the Revenue of how the structure devised by Mr Corrigan was meant to work, “the point of this was to encourage genuine availability of funds for R&D expenditure and to allow the persons providing the funds or providing the risk finance at the edge to benefit from the reliefs, which in the paradigm case would not be available, would not be something which could be utilised by the enterprise that was actually doing the research” (day 3, p.308 of transcript). Mr Sherry explained in his witness statement that Mr Corrigan was aware that while the statutory R&D tax credits were generous, they could not be used by smaller pharmaceutical enterprises because they had insufficient profits to use up the credits. Therefore the funding of clinical trials, particularly the later stages of such trials, represented a difficulty for such smaller enterprises. Equally many highly profitable small or medium sized enterprises had surplus cash that could be used to finance such research and make use of the enhanced R&D tax deductions.

Mr Corrigan was considering in the draft instructions both variants of the structure that had an unconnected sub-contractor and those that had a connected sub-contractor. He explained in his oral evidence that his view was that smaller schemes, like Fast Pharma, could use the connected provisions, because it was feasible to restrict and monitor the categories of sub-contractor expenditure. However, this would not be feasible for a large fund of say £100m, where the research might for example be carried out all over the world, which would need to use the unconnected sub-contractor provisions. Therefore, it was important to his thinking that the unconnected sub-contractor provisions could operate in a way that would not restrict the categories of intended sub-contractor expenditure, as long as the money was to be expended on R&D.

The next question is whether it makes a difference that (a) the Nemaura structure as it stood prior to OneE meeting Mr Corrigan had a number of the features of the Structure, and (b) OneE added a number of features that Mr Corrigan’s structure did not have. What OneE did was not to seek to use the Structure as a whole but rather to use some components of it.

At my request, Mr Corrigan’s legal team produced a table comparing what they contended were the features of the different relevant tax planning proposals and structures before me that Mr Corrigan and/or OneE were involved in, and the Defendants’ legal team then responded to this by producing an amended table. The two versions are appended to this judgment. The proposals and structures that they compare are (i) Mr Corrigan’s proposals / structure, (ii) the final version of the Nemaura structure (“Nemaura (2014)”), (iii) the Nemaura structure disclosed by the 2013 instructions to DLA Piper (“Nemaura (2013)”), (iv) Rehberg and (v) Ultra Green. I have found this exercise a useful one, because it highlights in an accessible form the features of the different proposals, the differences between them and the aspects that they have in common.

The comparison brings out that the main feature present in the Claimant’s Structure that was not in Nemaura 2013 but which was used in Nemaura 2014 was the R&D sub-contractor relief. Much of the rest of the earlier Nemaura structure was similar to the Structure.

Mr Corrigan also placed some emphasis in his evidence and in the Particulars on the fact that the Structure allowed through the operation of the 2009 Act a payment to an unconnected subcontractor to qualify in full for deduction in the year of payment. Specifically that operated through the use of the word “incurred” in s.1053(1). However, it does not appear to me that Nemaura 2014 used the reasoning in the last sentence, because paragraphs 34 to 41 of the final version of the Nemaura instructions prepared in May 2014 and the 7 October 2014 presentation both suggest that the reasoning used by OneE was that the payment was deductible under GAAP rather than relying on the statutory wording.

Therefore, the most important feature of the Structure for the purposes of the present claim was the use of R&D sub-contractor relief, including the reasoning on s.1053(6). However, as I have explained above, that feature is not to be taken in isolation. Rather Mr Corrigan’s key insight for the purposes of the present claim was that that one could build an R&D sub-contractor structure with an LLP at the top. Further, one could build it in a way that the LLP was unconnected to the subcontractor, which would (if the LLP traded) attract R&D relief of 181.25% on the sub-contractor payment (paragraph 39 above), and would do so without the need for the expenditure of the subcontractor to be limited to the categories of expenditure on staff, software, consumables and externally provided workers that formed the subject matter of ss.1124, 1126 and 1132. Those categories were also reflected in s.1134 in relation to connected subcontractors, together with payments to subjects of clinical trials. As part of the insight above, the Claimant provided legal reasoning for its view that the limits that I have just mentioned did not apply. Mr Corrigan explained in his witness statement the perceived restrictive nature of these categories, because they exclude for example overhead or management costs, the costs of the patenting process and the costs of non-human trials.

The question is whether these elements of the Structure in isolation are sufficient to amount to confidential information. In my judgment, they plainly are. Many of the reasons in paragraph 220 above hold good in relation to this material. Specifically:

The insight about subcontractor R&D relief under the 2009 Act, particularly using unconnected sub-contractors, and using it in a LLP structure that corporates could invest in, could in theory have been achieved by someone else with sufficient time, effort and skill, as evidenced by the opportunity that Ultra Green came up with based on the 2000 Act. That may well be relevant to the remedies for the breach of confidence, but it does not prevent the information being confidential. It is true that in one sense it is a simple idea, and one that under the 2000 Act had been put forward by Ultra Green in their e-mails to OneE, but it is not one that appears on the evidence before me to have previously been done by others or under the 2009 Act. Like many simple ideas, it was the product of significant preparatory work, which in my judgment helps to explain why others had not come up with it.

I was provided with little direct material from which to evaluate how well-known the relevant aspects of the operation of the R&D sub-contractor relief provisions were at 2013-4, particularly those relating to unconnected sub-contractors and particularly their use in an LLP structure, and what discussion they provoked in the area. However, there were two particular documents that were put before me midway through the trial that I need to mention. I do not understand either of the two documents to deal with the question of the use of R&D sub-contractor relief within a LLP structure with corporate investors so as to allow the corporate investors to claim the benefit of the relief, so they do not provide me with evidence of the sort of structure that the Claimant proposed being present in the market. In any event, I reject the Defendants’ submissions as to how I should deal with them, for the detailed reasons below.

I shall deal with the question of what features OneE added in under the heading of misuse, having dealt first with whether the information was imparted in circumstances of confidence.

This is a convenient point at which to deal with the other arguments that the Defendants put against the proposition that the information was confidential.

First, it was argued that clauses 4(a)-(d) of the NDA applied to the information, through a combination of (i) the features of the Rehberg (and Nemaura 2013) structures, and (ii) the presence of the Ultra Green structure. Clauses 4(a)-(d) set out situations in which the confidentiality restrictions in the NDA will not apply.

In my judgment, there is nothing in clause 4 that would allow the Defendants to disregard the confidentiality that would otherwise attach (i) to the Structure as a whole (what I have termed the “Information” above) or (ii) to the more specific insight about the use of sub-contractor relief under the 2009 Act in a LLP structure, particularly using unconnected sub-contractors, that I have set out in more detail at paragraph 231 above. That is unsurprising given that the NDA is intended to protect confidential information. Taking the application of clause 4(b)-(d) to Ultra Green as an example, the information provided in respect of Ultra Green cannot be said to be the same as the information provided by Mr Corrigan, and it was the latter information that the Defendants were using in relation to developing Nemaura, not the former, so clause 4(b)-(d) provide no assistance to the Defendants.

My detailed reasons for the conclusion at the start of the last paragraph are as follows:

Second, it was argued by the Defendants that the category of information was too vaguely identified to constitute confidential information and that the ideas contained it were too inchoate and far from a finished product to be confidential.

I reject both those arguments. The need for particularity in what information is said to be confidential is obviously important, not least because of the practical point that a finding that information is confidential can lead to the grant of an injunction, and the defendant must be able to tell clearly what is and is not permitted by that injunction. However, here:

The different components of the structure are set out in the Appendix and are relatively close to common ground between the parties, as can be seen from a comparison between the left hand column of the Claimant’s and Defendants’ versions. The only substantive differences that the Defendants put forward to the version submitted by the Claimant are as follows.

Subject to the points in (2)-(4), I accept the Claimant’s version of the characteristics of the Structure. The Claimant’s version focuses largely on the draft instructions, but the confidential information also includes the Morvus and Fast Track Pharma e-mails from the Claimant, because these set out specific confidential investment opportunities based on the thinking embodied in the draft instructions.

This is a convenient point at which to deal with the relevance of the slightly different views expressed at different points in the chronology of how s.1053(6) of the 2009 Act worked:

In my view, the above differences do not matter for present purposes. They do not alter the fact that the Claimant had come up with the insight that I have referred to above that a LLP structure could be built with an unconnected sub-contractor that would satisfy the requirements of R&D subcontractor relief, and that it would not be necessary for the sub-contractor’s payments to be limited to the categories in ss.1124, 1126 and 1132. The latter point was part of the reasoning underlying the Nemaura structure.

Finally, the fact that there was in the Defendants’ e-mail records a description of the Ultra Green structure under the 2000 Act does not alter my conclusions on confidentiality, for two reasons, either of which suffices: (i) Ultra Green was disclosed under conditions of confidentiality itself, and (ii) it was not under the 2009 Act.

The question of whether the Defendants could use individual components of the structures necessarily takes one into what the confidentiality status is of structures produced by the Defendants using one or more of those components. I shall deal with that under head (iii) of the Coco v Clark test, namely whether the information was misused.

Whether the Information was imparted in circumstances importing an obligation in confidence

In my judgment, the Information was imparted in circumstances importing an obligation in confidence.

The Information was imparted on a number of occasions:

Care is needed about which of the Defendants it was imparted to and when.

There is also a question as to whether confidential information was imparted at the 10 December 2013 meeting and if so, the consequences of that.

Starting with Mr Slattery, Mr Johnson and Mr Timol, my reasons are as follows in relation to the information imparted at the 4 February 2014 meeting:

Expanding on point (5), Mr Slattery plainly knew of the terms of the NDA. Mr Johnson and Mr Timol were aware, for example from the 18 December 2013 e-mail from Mr Slattery, that an NDA was being signed for the 4 February 2014 meeting. I infer that given their roles in OneE they would know of the contents of the standard OneE NDA and, given that the instructions were handed over at the meeting, and the NDA signed at or shortly before it, they would have appreciated that the information provided by Mr Corrigan at the meeting was pursuant to the NDA. Mr Johnson accepted in cross-examination that he would probably have known at the time that the NDA signed by Mr Corrigan covered information imparted by Mr Corrigan (day 4, p.572 transcript). I would expect Mr Timol to as well, whether because it was signed at the start of the meeting or (if it was signed just before the meeting) it would have been mentioned before or at the start of the meeting. As for OneE Group, I deal below with when the relevant information was passed to it. I consider it was in August 2014. In my judgment, OneE Group also knew at this point of the terms of the NDA and that the information had originally been passed to OneE Tax under it, because Mr Slattery was a director of OneE Group by this point and Mr Timol was too. Therefore, in my judgment, their knowledge can be attributed to OneE Group. In any event, OneE Group plainly had been passed the information by 7 October 2014, when it presented the Nemaura structure at the Lowry, and therefore by this point they had knowledge of the above through Mr Slattery, who knew that the Nemaura structure had been developed using the information provided by the Claimant.

I do not consider that the relevance of the NDA to the basis on which the information was imparted is removed by the fact that Mr Corrigan’s PA Ms O’Leary requested in her 19 December 2013 e-mail that the NDA be amended to cover information flowing in both directions as “he will be disclosing information about his clients in discussion” (underlining added). In my judgment, it is plain that the provision of 17 sides of detailed tax instructions was just the sort of document that was intended to be caught by the NDA and its reference in cl.1 to tax planning solutions.

The Defendants contended that Mr Corrigan provided key material about sub-contractor R&D relief at the 10 December 2013 meeting, that this was not imparted in circumstances of confidence, and that this prevented the information about the relief and its use in the Structure being confidential. The conclusion of this argument was that this stopped the information provided on 4 February 2014 being imparted in circumstances of confidence in the manner that I have suggested above that it was. The way that it was put by Mr Budworth was that the reading down of s.1053(6), which he described as the “kernel of the idea”, must have been volunteered on 10 December because on Mr Corrigan’s case it was that which gave the opportunity to make money, and the information was volunteered between parties with no pre-existing relationship. Mr Corrigan stated in his witness statement that at the 10 December meeting he outlined the Structure to Mr Slattery in very high-level terms, including the statutory uplift, but the detailed technical analysis and instructions to Michael Sherry were not provided until a confidentiality agreement was signed.

I reject the Defendants’ contention that anything said at the 10 December 2013 meeting by Mr Corrigan prevents details of the sub-contractor R&D relief and its use in the Structure being subject to an obligation of confidentiality, for the following reasons:

While Mr Budworth submitted that Mr Slattery’s reference in his 18 December 2013 e-mail to now understanding the logic and deal-flow must be a reference to Mr Slattery understanding Mr Corrigan’s specific reading of s.1053(6), in my judgment this reads far too much into that e-mail. That e-mail simply reflects Mr Slattery understanding the general logic behind the structure. There is no reference to s.1053(6), unconnected sub-contractors or even sub-contractors.

The next question is which OneE company the information was imparted to on 10 December 2013 and 4 February 2014. In my judgment, it was OneE Tax. That was the company that signed the NDA. I consider that to be the surest guide to the capacity in which the OneE attendees at the 4 February meeting were attending and in which Mr Slattery had the 10 December 2013 meeting. That tallies with Mr Slattery referring to Mr Timol as his “fellow Director” in circumstances where Mr Slattery was a director of OneE Tax rather than OneE Group at that time. That also tallies with the fact that while Mr Slattery sent e-mails in December 2013 with a OneE Group heading at the bottom, the fine print stated that “OneE Tax Limited (VAT No. 884 7600 88) is a wholly owned subsidiary for OneE Group Limited” and the website link in the e-mail was to www.OneEtax.com . More broadly, it also makes sense that the OneE entity with “tax” in the title would be the company dealing with tax schemes.

Given that the First Defendant is OneE Group rather than OneE Tax, the question that leads to is whether the information imparted on 10 December 2013 and 4 February 2014 was imparted to OneE Group, and if so when in what circumstances, given that, as explained below, the 7 October 2014 conference at the Lowry at which the Nemaura structure was presented was a OneE Group event. The Claimant contends in its pleaded case that all of the Defendants misused the information in, among other things, developing and taking advice on the Nemaura structure and then disclosing it to investors (paragraph 54 of the Particulars), so it is necessary to analyse when OneE Group received the information.

In my judgment, at some point between 8 and 13 May 2014, the information was passed to OneE Investments:

I consider that it was passed to OneE Group on or around 4 August 2014, but not before, for the following reasons:

I have taken into account the Claimant’s submission that as Mr Timol and Mr Slattery themselves conducted the searches for disclosure purposes rather than lawyers, I should infer that there are internal documents generated by OneE in 2014 discussing the material provided by Mr Corrigan that have not been disclosed. However, in my judgment, there is nothing to suggest that Group was involved in consideration of the material before August 2014, which is the important point for present purposes.

That leaves the information in the Morvus and Fast Track Pharma e-mails. The 17 March e-mail in relation to Morvus was sent to Mr Slattery and Mr Johnson and the 9 April 2014 was copied to Mr Slattery, who in turn passed it to Mr Johnson by 28 April e-mail. In my judgment, the Morvus and Fast Track Pharma information was imparted in such circumstances to them, for reasons (1)-(6) in paragraph 250 above. Both Mr Slattery and Mr Johnson were attendees at the 4 February meeting and should have understood the confidentiality of information about potential tax schemes imparted by Mr Corrigan. I have not seen direct evidence that the information about Morvus and Fast Track Pharma was passed to the Second Defendant Mr Timol, so I find that it was not.

I consider that it was imparted to OneE Group on or around 4 August 2014 for the reasons set out above.

It is pleaded in the Defence that the information was only imparted to the individual defendants as servants and agents and that therefore it is to be treated as imparted to the relevant companies that they were acting on behalf of rather to them individually: paragraph 36(a). I reject that argument. The fact that they received that while acting in the course of their roles in OneE does not absolve from equitable duties of confidence. For example, if Mr Slattery had sought to use the information to generate a scheme himself outside his role at OneE Group and market it himself, that would be plainly be a breach of confidence.

I will deal below with the question of Derived Information and its dissemination.

whether the confidential information was misused by the Defendants

The Claimant alleges that the Defendants breached their equitable duty of confidence in six respects, namely when they (a) developed the Nemaura structure, (b) disclosed the Nemaura structure at the October 2014 conference and distributed the documents at the conference and, it is inferred, on other occasions, (c) provided information regarding the Nemaura structure at other events and on other occasions, (d) disclosed the Nemaura structure to legal advisors when taking advice on its efficacy, (e) disclosed the Nemaura structure to insurers, and (f) implemented the Nemaura structure and conducted fundraising using it. I shall take each in turn.

Taking the matter chronologically, by 13 May 2014 Mr Slattery was using the material in preparing instructions on behalf of OneE Investments. Therefore, at some point between 8 May and 13 May 2014, Mr Slattery misused the confidential information and Mr Johnson first misused it at some point between 16 May and 3 June when he commented on the instructions before returning them to Mr Slattery. Those events are set out in paragraphs 111 to 115 above. The information was used in preparation of the Nemaura Structure without the consent of the Claimant, which was plainly not consistent with the purpose for which it was transmitted by the Claimant to OneE Tax, and Mr Slattery and Mr Johnson should have known that. While the possibility of using such information in relation to Nemaura was canvased at the 4 February 2014 meeting, and Mr Corrigan had no objection to it as long as a suitable fee arrangement was reached, no such agreement was reached on fees.

Further, the preparation of these instructions, which were ultimately sent to Mr Mullan’s clerk on 4 August, itself involved a misuse of confidential information by Mr Slattery and Mr Johnson. Mr Johnson and Mr Slattery were both involved in the development of the Nemaura structure in those instructions and in the lead up to the October presentation at the Lowry.

The remaining alleged breaches concern the disclosure of the Nemaura Structure. Therefore, as foreshadowed at paragraph 233 above, they raise the question of the correct treatment of information produced by using some of the confidential information. The Nemaura Structure used some of the confidential information, such as the information about R&D relief for unconnected subcontractors, but it used it in conjunction with information already held by the Defendants through the previous work done on Nemaura and added to by other features of the structure developed after May 2014. For example, as explained above, OneE had already considered the use of the LLP structure. Similarly, the elements dealing with what happens in the event that the investment is unsuccessful were independently devised by OneE. There were a number of elements that fell into this category.

The Claimant put its argument that the use of the Nemaura structure by any of the Defendants, such as for marketing and fundraising purposes, constituted a breach of confidence in two ways. First, that there is significant confidential information of the Claimant that is reflected in the Nemaura structure. In other words, the Nemaura structure was sufficiently closely related to the structures in the material provided by Mr Corrigan for it to be said that it contains and embodies confidential information and therefore use of it with the Claimant’s permission constitutes misuse of confidential information. Second, the Nemaura Structure was Derived Information for the purposes of clause 1 of the NDA and that this in turn meant that it was binding on the Defendants because of their knowledge of the NDA and its terms.

In my judgment, the Claimant is correct in its first argument, although I do not accept its second.

Taking the first, depending on the extent and importance of the confidential information used in a product, the use of the product can itself constitute a continued misuse of the confidential information. As explained in Ocular Sciences Ltd v Aspect Vision Care Ltd [1997] RPC 289 at 404:

“It is not every derived product, process or business which should be treated as a camouflaged embodiment of the confidential information and not all ongoing exploitation of such products, processes or business should be treated as continued use of the information. It must be a matter of degree whether the extent and importance of the use of the confidential information is such that continued exploitation of the derived matter should be viewed as continued use of the information.”

Here, in my judgment, the use of the Nemaura Structure should be viewed as continued misuse of the information:

As to the second argument:

Turning in light of that to allegations (b) to (f) in paragraph 265 above, I conclude as follows. Taking (b) to (d) first, OneE Group did disclose the Nemaura Structure at the October 2014 conference and distributed documents containing details of it at the conference. I infer that they also disclosed it at other subsequent events and on other subsequent occasions, and distributed documents relating to it at such events occasions. As explained above, I do not consider that the dissemination of the material at the October 2014 conference amounted to publication. The presentation document relating to it expressly states that it is confidential. In relation to (d), the advice in August 2014 was sought by OneE Investments rather than OneE Group. Therefore, OneE Group’s misuse was in relation to (b) and (c).

As for the individuals involved, Mr Slattery was responsible for the acts in (b) and (c). He presented the structure at the October 2014 conference and I infer that the same would have been true of the other events and occasions on which the material was distributed. Mr Johnson thought he (Mr Johnson) was not there, and I accept that evidence. His work lay in assisting in generating the structure in the first place. My impression was that Mr Slattery would front the project by presenting the structure to people outside OneE. As to (d), both Mr Slattery and Mr Johnson were responsible for instructing Mr Mullan. Mr Johnson commented on the instructions and sent the instructions that Mr Slattery had originally produced, and it was Mr Slattery’s name at the bottom of them.

As for (e), I have not seen any evidence of the Nemaura structure being disclosed to insurers, so I reject that allegation.

As for (f), I do not have direct evidence as to who implemented the structure and conducted fundraising using it, other than that it appears that the Nemaura structure has been put into effect through a company called NPL FC Limited. That company was incorporated under the name Nemaura FC Ltd on 5 December 2014 and is registered at OneE’s address. I infer from its role in the October 2014 conference, coupled with the fact that Mr Johnson’s e-mail dialogue over the Mullan advice included e-mails with a Group footer that OneE Group would have been involved in both fundraising and implementing, and Mr Slattery would too. Given his technical expertise and role in the instructions, I infer that Mr Johnson would have been involved in the implementation of the structure but not the fundraising.

The fundraising appears to have ceased in 2017.

Lastly, I deal with Mr Timol’s role in relation to (a) to (f). The Claimant’s case was that, while not as blameworthy as the other Defendants, he was still liable. Mr Timol was on the board of OneE Group, and was one of the two most senior people in the group, along with Mr Ismail. He had attended the 4 February 2014 meeting and therefore, while his expertise was commercial rather than legal, he would have in my judgment understood in broad terms what the structure being put forward by Mr Corrigan was. Mr Timol accepted in evidence that he would have been part of the team of people who would decide whether a particular product should be offered, so I accept the Claimant’s submission that he would have been involved in signing off the decision to implement and market the Nemaura Structure. I do not consider that he would have needed to sign off the work done from May 2014 to obtain Counsel’s opinion. Rather, as he explained in his evidence, he would have had brought to him potential projects, they would have been explained to him in very broad terms, and he would have wished to check that those bringing them to him were satisfied that they were robust.

Mr Hill put to him in cross-examination that Mr Timol would not have known of how Nemaura was, prior to the creation of the Nemaura Structure, actually claiming R&D relief itself, and Mr Timol accepted that he would not profess to know the details of how the relief was claimed (day 4 page 523 of the transcript). His evidence was that the way the Nemaura Structure would have been put to him was that “it is technically viable, it works as per the legislation and it is something that would pass muster” (day 4 page 538 of the transcript). I accept that evidence, which to my mind is consistent with the fact that he would not previously have got into the detail of how Nemaura was claiming R&D relief previously. Given this, I do not consider that he should have realised that the Nemaura Structure contained significant confidential information provided by the Claimant. It was not put to him or suggested that he would have been told explicitly that this was the case, and if it was not, then I do not consider that he should have guessed that.

There is no documentary evidence of what he would have been told at the meeting. Therefore, I must work from what I can safely infer from the circumstances, taking into account my view of his witness evidence generally. He would have signed off the decision six months after the meeting with Mr Corrigan, in circumstances where he had not been involved on the tax side in developing the proposals, and I accept his evidence that his interest would have been in ensuring that the structure was likely to be a commercial success rather than the precise way that it worked from a tax perspective as long as it was considered robust by those with tax expertise in OneE. Therefore, I do not consider that he misused confidential information in signing off the structure. It was submitted by the Claimant that he should have asked sufficient questions to be able to tell that it had been based on Mr Corrigan’s idea, but I do not consider that it was incumbent on him to probe the details of the tax treatment or how they had been arrived at given his role lay on the commercial side.

It was also argued by the Claimant that given that Mr Timol received confidential information at the 4 February 2014 meeting, he would be liable for signing of the use of the Nemaura structure because it contained or had been based on the Claimant’s confidential information, even if he should not have realised that the structure was linked to the Claimant’s confidential information, on the basis that liability for misuse is strict once the defendant should have known that the information was imparted to him in circumstances of confidence. I reject that argument. To found liability, there must be use by the defendant of the information given to him in confidence. By signing off the Nemaura, structure Mr Timol was not using the information given to him personally at the 4 February 2014 meeting. He was unwittingly signing off the use of confidential information that had been given to others and used to develop the Nemaura structure. It is the fact that a defendant should know that particular information given to him is imbued with confidentiality that should cause him to treat that information as such. That is why liability is strict if that information is then used contrary to the purpose for which it was provided.

I have considered carefully the statement in paragraph 17.2 of his witness statement that he “was already well aware of the availability and qualifying requirements for the purposes of taking advantage of R&D relief”. He explained in evidence that what he meant by that was that he was aware that R&D relief existed, that companies conducting R&D could claim a reduction in their corporation tax bill if they applied for the various reliefs, and that there would be certain requirements in place to claim that, but the details of claiming that relief would have been conducted through the relevant finance individual. I accept that evidence. I have also considered whether it is plausible that one of the two senior individuals in the group signing off the project would not ask or be told how the tax relief worked in outline terms or that part of it had come from Mr Corrigan’s information. However, in my judgment I do not have sufficient information that he should have inferred this, and it was not put to him or submitted that he would have been told expressly of this.

As explained above, the 2018 Regulations only apply to breaches of confidence committed from 9 June 2018 onwards. Given that the marketing of the Nemaura Structure stopped before 9 June 2018, once the structure was filled, in my judgment there are not any breaches that fall into this category.

Nevertheless, given that it was argued that the statutory limitation period for unlawful acquisition, use or disclosure of trade secrets applies to proceedings brought before a Court on or after 9 June 2018, whenever those wrongful acts occurred, I will decide whether the breaches of confidence that I have found above constituted the unlawful acquisition, use or disclosure of trade secrets.

In my judgment, they do. I have set out the definition of trade secret in paragraph 182 above. Taking requirements (a), (b) and (c) in turn:

Acquisition, use and disclosure of a trade secret is unlawful where the acquisition, use or disclosure constitutes a breach of confidence in confidential information: regulation 3(1). Therefore, here there was unlawful use and disclosure of a trade secret in respect of each of the breaches of confidence that I have found above.

This, together with the procuring breach of contract and joint liability claims, was shortly pleaded at paragraph 56 of the Particulars and the earlier parts of the pleading referred to in that paragraph.

Mr Hill stated in closing that this element of the claim was not run against Mr Timol, as it was not contended that he had an intention to injure the Claimant. He put his argument against the other Defendants very simply, namely that they had a common design to develop the Nemaura structure, so that it could be marketed and used to generate fees. They had, he submitted, an intention to injure the Claimant because what they were doing was inherently at his expense, as the presence of the Nemaura structure in the market would damage the pitch for him, and in any event it was using his confidential information without charge which is itself a loss, as the case-law on negotiating damages recognises.

I accept Mr Hill’s submissions. In my judgment, Mr Slattery, Mr Johnson and OneE Group are liable for unlawful means conspiracy, subject to any limitation defence. From May 2014, Mr Slattery and Mr Johnson embarked on the development of the Nemaura structure, having turned their attention back to it. There was a common design at this point to do so in order to generate fees from it. It is clear from Mr Slattery’s 13 May 2014 e-mail asking Mr Johnson to comment on the instructions that they must have discussed the instructions previously because the e-mail proceeds on the basis that Mr Johnson will know what Mr Slattery is sending Mr Johnson, and the 16 May 2014 e-mail that follows refers to Mr Slattery having indicated in the interim to Mr Johnson that a revised version would be coming, which confirms that such discussions must have occurred. Mr Johnson would have known from this that they were moving forward with the development of the Nemaura structure. OneE Group only joined the common design from 4 August 2014, when Mr Slattery became a director there and Mr Johnson used their footer in his e-mails. Failing that, they joined the design by 7 October at the latest.

They acted on this common design. OneE Group hosted the 7 October 2014 conference, provided material about the structure to potential investors at that conference, and would have done the same on other occasions. Mr Slattery was involved at all stages: in the generation of the structure, the obtaining of legal advice about it, and its presentation to investors. Mr Johnson was involved in the development of the structure, obtaining legal advice about it and, I find, in implementing it.

In my judgment Mr Slattery and Mr Johnson had an intention to injure the Claimant in the sense that phrase is used for the purposes of unlawful means conspiracy, which is explained at paragraphs 199(2) and 201 above. This is more than a case where loss to the Claimant was merely foreseeable. I shall take in turn the two ways that Mr Hill put the relevant intent to injure. (i) In my judgment they knew that they were using the Claimant’s idea without recompense, to generate fees by developing the product. Use of the Claimant’s idea was part of the means to that end. They knew that the idea for using sub-contractor R&D relief came from Mr Corrigan, so they knew they were using the Claimant’s idea without recompense and therefore necessarily damaging the Claimant in that respect. (ii) They also knew that there was no product on the market that used a LLP structure with sub-contractor R&D relief, so Nemaura would be the first. Therefore, by developing a product that would get there first, they would inevitably be damaging the Claimant’s ability to make money from any similar product he put out. The flipside of getting there first, starting with the instructions rapidly produced by Mr Slattery, was that the Claimant would not there first. Further, they were getting their first with a product that would include non-statutory gearing, and therefore provide if it worked a higher tax saving than the Claimant’s. In relation to both (i) and (ii), I consider that they were developing Nemaura to generate fees. The harm to the Claimant was the inevitable flipside of the fees that would generate from the product. Either of points (i) and (ii) suffice on their own. I emphasise again that I am not finding that loss was caused. That is a matter for the second stage. I am dealing here with the relevant intention to injure.

I have considered particularly carefully whether Mr Johnson shared the intention to injure, given that it was Mr Slattery who dealt with the commercial side. Mr Johnson stated in cross-examination that he did not consider that a relationship with Mr Corrigan was being left to one side in mid-May 2014 because he was not dealing with the commercial relationship with Mr Corrigan, that the fact that OneE was moving forward with Nemaura using sub-contractor R&D relief did not rule out other projects with Mr Corrigan based on his structure, and that he sought to return a call from Mr Corrigan in June 2014 (day 4, pages 582-583 of the transcript). Further, he stated that he was not sure what Mr Corrigan was being “cut…out of” because he did not think that they had discussed what they were going to “cut him in on” (day 4, page 584 of the transcript). However, I have found that Mr Corrigan stated at the 4 February 2014 meeting, which was attended by both Mr Slattery and Mr Johnson, that he was content for the Defendants to use his proposed structure in relation to Nemaura as long as he received a share of the fees generated. Mr Slattery and Mr Johnson both knew this. While Mr Slattery might deal with the commercial side, there was no information that Mr Johnson had which could have led him to conclude in mid May 2014 that Mr Corrigan was going to receive a fee for the development of Nemaura, and I do not consider that Mr Johnson believed that Mr Corrigan was going to receive any such fee. Therefore, as explained above, while no commercial deal had been struck for a particular fee for use of Mr Corrigan’s ideas in Nemaura, I find that Mr Johnson knew that Mr Corrigan’s idea was being used without recompense. Similarly, the absence of any formal deal on this does not affect the potential damage to the Claimant that developing Nemaura would necessarily cause.

I take into account that Mr Johnson was asked in cross-examination what he thought that Mr Corrigan would have said if told on 13 May 2014, when the first draft of the instructions had been prepared for Nemaura, that OneE was going ahead with Nemaura with a structure based on R&D relief using an unconnected sub-contractor, but was doing so without Mr Corrigan. Mr Johnson’s answer as that “[h]e would not have been happy about that” (day 4, page 583 of the transcript). I agree. The reason that he would not have been happy is because he would have considered that he was losing out as a result, and I find that Mr Slattery and Mr Johnson knew that.

It may be that Mr Corrigan was, as the Defendants contended, slow in addressing requests for information and that this formed at least part of the reason for not progressing work together with him. However, that does not prevent the requirements of unlawful means conspiracy being satisfied. Similarly, the focus in oral closing of the substantive counter-argument put in closing by Mr Budworth was they did not recognise that what they were doing was unlawful (day 5, pages 826-827 of the transcript), but that does not provide an answer to an unlawful means conspiracy claim either, as Mr Budworth ultimately accepted in that passage of closing. See the legal principles set out in paragraph 200 above.

Through Mr Slattery’s directorship, the intention to injure is attributable to OneE Group.

The pleaded claim here is that the Defendants, knowing of the terms of the NDA, procured OneE Tax to pass the confidential information to OneE and others for reasons other than the permitted purpose set out in the NDA. As in the case of unlawful means conspiracy, Mr Hill made clear in closing that this head of claim was not pursued against Mr Timol.

I have found above that there was a breach of contract by OneE Tax at some point between 8 and 13 May 2014 by passing the confidential information to OneE Investments.

I have found that this was brought about by Mr Slattery. In my judgment, he knew that this was in breach of OneE Tax’s obligations because he was aware of the terms of the NDA and knew that in compiling the instructions on behalf of OneE Investments he was using information provided under the NDA contrary to the purposes for which it was provided, because it was being used to generate advice for OneE to develop Nemaura. Therefore he knew that transferring that information to OneE Investments was contrary to the NDA. Accordingly, he is liable for inducing a breach of contract, subject to any limitation defence. However, as explained below, I find that this claim is time-barred.

As for OneE Group, in my judgment it is not liable for procuring a breach of contract. It did nothing in May 2014 to bring about a breach by OneE Tax. As I have found above, it was only involved from August 2014.

Similarly, in my judgment Mr Johnson did not procure the breach itself in May 2014. It is true that he commented by 3 June 2014 on the draft instructions prepared by Mr Slattery, but by that time OneE Tax had passed across the information to OneE Investments and so the breach by OneE Tax of the NDA had already occurred.

The joint liability claim was pleaded both in respect of the breach of confidence and inducing a breach of contract: paragraph 57 of the Particulars. However, given that I have found that only Mr Slattery was involved in inducing a breach of contract, it is only joint liability in respect of breach of confidence that is relevant. In my judgment, Mr Slattery, Mr Johnson and OneE Group are jointly liable but Mr Timol is not.

In my judgment there was a common design between the Defendants to produce, implement, and generate fees from, the Nemaura Structure through marketing it. This was signed off by Mr Timol at some point before the October 2014 conference at the Lowry, as explained above.

The First, Third and Fourth Defendants all acted on this common design, as set out above in the section on unlawful means conspiracy, and they knew that the Claimant’s information was being used in this process. While Mr Timol will only have signed off the product part way through the process, namely after it had been developed and legal advice obtained on it, the fact that he only became a party to the common design at that point would not itself prevent him being liable as a joint tortfeasor from that point on.

A director will not be jointly liable if his role was limited to exercising control through the constitutional organs of a company, such as by voting at a board meeting: Lifestyle Equities CV v Ahmed [2021] EWCA Civ 675 at [49]. This is intended to be narrow exception. While a director, Mr Slattery’s role went well beyond a constitutional one and therefore the fact that he is a director does not prevent him being jointly liable. As for Mr Timol, his role extended beyond simply a bare constitutional role. As Mr Hill put it in closing, it is not suggested that he was a merely carrying out the act of a board member in voting at a board meeting. He was actually involved in the executive decision as to whether the product was an appropriate one to sign off. Therefore, I consider that his role as a director would not itself prevent him being liable.

However, I have found above that Mr Timol did not realise that the Nemaura structure was using confidential information of the Claimant and that a reasonable person in his position would not have done so: paragraph 280. Given this, I do not consider that he can be jointly liable either. The requirement in a claim for breach of confidence that conscience be affected means that the common design must involve sharing that feature of the wrong, and here Mr Timol, as was the case with Mr Sig in Vestergaard, lacked the necessary state of knowledge or notice. The doctrine of joint liability may allow liability to attach to a defendant where their acts would otherwise on their own not be sufficient to amount to a wrong, but it does not, at least in the case of breach of confidence, allow a defendant to be found liable where their conscience was insufficiently affected to make them liable on their own. As explained above in relation to the claim for breach of confidence, I do not consider that the fact that he had received confidential information of his own previously changes this analysis: paragraph 282.

The relevance of the limitation period under the 2018 Regulations

The 2018 Regulations introduce a statutory limitation period.

Reg.4(1) provides that “[p]roceedings may not be brought before the court in respect of a claim for the unlawful acquisition, use or disclosure of a trade secret and for the application of measures, procedures and remedies provided for under these Regulations – (a) in England and Wales and Northern Ireland, after the end of the limitation period for the claim” and reg.4(2) provides that the limitation period referred to in reg.4(1)(a) is that determined in accordance with regs.5, 6 and 8. Reg.4(3) provides that s.36 of the Limitation Act 1980 does not apply “in relation to proceedings in respect of a claim for the unlawful acquisition, use or disclosure of a trade secret”.

That limitation period is six years (reg.5(1)), beginning “with the later of (a) the day on which the unlawful acquisition, use or disclosure that is the subject of the claim ceases, and (b) the date of knowledge of the trade secret holder” (reg.6(1)). The date of knowledge of the trade secret holder means that “day on which the trade secret holder first knows or could reasonably be expected to know (a) of the infringer’s activity, (b) that the activity constitutes an unlawful acquisition, use or disclosure of a trade secret, and (c) the identity of the infringer” (reg.6(2)). The 2018 Regulations, and therefore the limitation period in regulations 4-6, applies “only to proceedings (a) brought before a court after the coming into force of these Regulations, (b) in respect of a claim for the unlawful acquisition, use or disclosure of a trade secret, and (c) for the application of measures, procedures and remedies provided for under these Regulations” (reg.19). The 2018 Regulations come into force on 9 June 2018.

Mr Hill submitted that the result of this is that the Regulations impose the six year statutory limitation period for breaches of confidence that amount to unlawful acquisition, use or disclosure of a trade secret (skeleton paragraph 163). I understood that submission to be that this is the case whether or not the breach of confidence occurred on or after 9 June 2018.

It should be recalled that the pleaded claim only seeks remedies under the 2018 Regulations for breaches of confidence committed on or after 9 June 2018 (Particulars paragraph 61). I have found that there were breaches of confidence, that they amounted to unlawful acquisition, use or disclosure of trade secrets, but that all such breaches occurred before 9 June 2018.

In my judgment, the limitation period under the 2018 Regulations only applies to claims “for the application of measures, procedures and remedies provided for under these Regulations”: reg.4(1). That reflects article 8(1) of the Trade Secrets Directive, which provides that “Member States shall, in accordance with this article, lay down rules on the limitation periods applicable to substantive claims and actions for the application of the measures, procedures and remedies provided for in this Directive” (underlining added).

Here, the claim in respect of pre-9 June 2018 breaches of confidence is not for “for the application of measures, procedures and remedies provided for under these Regulations”. Rather it is for an account of profits or damages at common law. The 2018 Regulations do not introduce a statutory limitation period for such claims.

This is as one would expect. Otherwise, the 2018 Regulations would have the effect of barring claims sought for ordinary common law remedies for breach of confidence. I do not think that was intended.

The limitation period for breaches of confidence

Accordingly, it is necessary to consider whether there is a limitation period for breaches of confidence claims outside the 2018 Regulations.

Mr Budworth submitted in his skeleton and orally that the six year period under s.2 of the Limitation Act 1980 should apply to the breach of confidence claim by virtue of s.36 of the Act. There was some suggestion in opening that Mr Budworth was seeking to argue in the alternative that the six year contractual limitation period in s.5 should apply by analogy, but it was clarified in closing that the argument was founded on s.2 (e.g. day 5, p.819 transcript). I pointed out that the defence only referred to s.2 and not s.36. Mr Budworth submitted that this was broad enough to capture his argument, but that if he was wrong on that, he asked for permission to amend to argue for the application of s.2 by analogy, contending that it was a legal argument that did not require any factual evidence to meet. He also appeared at one point in his oral closing to suggest that breach of confidence might be a tort and therefore s.2 capable of applying to it directly, so I shall deal with that submission below.

As to the s.36 argument, I consider that the original defence is not strictly broad enough to capture this argument, because it only refers to s.2, but that permission should be granted to amend to run this defence. I apply the principles set out by Carr J in Quah at [38] (see paragraph 232(iv) above). The reasons for my decision are that (1) it is a pure legal argument, (2) the argument that the s.2 limit applies by analogy is very closely related to an argument that it applies directly, and could on one reading be taken to be included within the pleading that the claim is time-barred by s.2, (3) it does not require any factual evidence to meet, (4) it raises arguable points, and (5) I gave Mr Hill an opportunity to consider which arguments he wished to run in response. Accordingly, I need to deal with the question of whether the six year limitation period for tort in s.2 applies by virtue of s.36 to breach of confidence.

In my judgment, the s.2 limitation period for tort does not apply directly to breach of confidence, or by analogy under s.36.

The starting point is that, while there is some room for debate as to its precise origins and the extent of the role of the Court of Chancery in its development, breach of confidence is treated in the modern case-law as having an equitable basis. Some of the discussion of its nature in the case-law is in the context of explaining that it can arise outside the context of a contract. It is this that explains the doctrine’s application where there is no contractual relationship between the parties or in applying to a third party recipient of information. In Seager v Copydex, Lord Denning MR stated that rather than depending on an implied contract, “[i]t depends on the broad principle of equity that he who has received information in confidence shall not take unfair advantage of it” ([1967] 1 WLR 923, 931E-F). In the Spycatcher decision, Lord Keith termed it “an independent equitable principle of confidence”, Lord Griffiths called it an “equitable remedy” and Lord Goff stated that “it is well settled that a duty of confidence may arise in equity independently of such [contractual] cases” (Attorney General v Guardian Newspapers (No 2) [1990] 1 AC 109 at 255, 268 and 281 respectively).

While the House of Lords in the later decision in Campbell v Mirror Group Newspapers Ltd [2004] 2 AC 457 decided that the wrong of misuse of information, which had developed from breach of confidence, was itself a tort, there was nothing to disturb the equitable basis of breach of confidence. On the contrary, Lord Nicholls for example stated that “[t]he common law, or more precisely, courts of equity have long afforded protection to the wrongful use of private information by means of the cause of action which became known as breach of confidence” (at [13]).While in the minority in the application of the law to the facts in the case, there was no disagreement from the other Law Lords on the legal principles. More recently still, Lord Neuberger described it in OBG Ltd v Allan [2008] 1 AC 1 as an “equitable principle”: [257], Arnold J described it as “not strictly speaking a tort” in Force India at [388] at first instance and Lewison LJ as “[t]he equitable remedy for breach of confidence” at [70] in the Court of Appeal ([2013] RPC 36), and Lord Neuberger, giving the judgment of Court in Vestergaard Frandsen A/S v Bestnet Europe Ltd [2013] UKSC 31, cited with approval the statement of Megarry J in Coco v Clark that “[t]he equitable jurisdiction in cases of breach of confidence is ancient; confidence is the cousin of trust”: [22].

Subject to one qualification, it appeared to be common ground between the parties in oral submission that rather than being a tort for the purpose of s.2 of the Limitation Act, it is a claim for equitable relief. The one qualification is that in closing Mr Budworth contended at one point that it could be a tort, relying on the fact that one chapter of Clerk & Lindsell on Torts (23^rd ed, 2020) has a chapter on breach of confidence and privacy. That is chapter 26. However, while [26-04] states that there is growing judicial support for the recognition of the action for misuse of private information as a tort, it also states that “the most favoured basis for [a non-contractual breach of confidence claim] to date is that of an equitable principle of good faith”, footnoting Seager and Vestergaard. Therefore, I do not consider that Clerk & Lindsell provides support for such a contention, and in any event the case-law provides as set out above.

While it may be regarded as a historical accident, and the phrase “an action founded on tort” in s.2 should be widely construed, the fact remains that breach of confidence is, for the reasons above, not a tort. Therefore, in my judgment a breach of confidence claim does not fall within the wording of s.2, any more than a mortgagee’s equitable duty to obtain proper advice when selling mortgaged property did so in Raja v Lloyds TSB Bank plc (2001) 82 P.&C.R. 191 despite its closeness to the tort of negligence.

Its equitable nature should not mask the fact that breach of confidence is sufficiently close to a tort to command a chapter in Clerk & Lindsell, and, consistent with that, it can attract joint liability in the same way that a tort can: Vestergaard at [33] (Supreme Court), and it sounds in damages as a tort would. Therefore, given my conclusions on s.2, I must examine whether the six year period under s.2 can apply by analogy through the application of s.36.

Under s.36(1), a number of time limits under the 1980 Act, including “(a) the time limit under section for actions founded on tort”, “shall not apply to any claim for specific performance of a contract or for an injunction or for other equitable relief, except in so far as any such time limit may be applied by the court by analogy in like manner as the corresponding time limit under any enactment repealed by the Limitation Act 1939 was applied before 1st July 1940”.

In my judgment, for the reasons set out above, a breach of confidence claim is a claim for “equitable relief” within the terms of s.36(1).

Prior to 1 July 1940 the time limit for tort claims was six years. Therefore, one must ask whether before 1 July 1940 a court of equity would have applied by analogy that six year limitation claim to a claim for breach of confidence not founded on a contract.

In P&O Nedlloyd BV v Arab Metals Co [2007] 1 WLR 2288, Moore-Bick LJ stated, in examining the practice of a court of equity prior to 1 July 1940, that “if a statutory limitation provision, properly interpreted, applies to the claim under consideration, equity will apply it in obedience to the statute, as indeed it must” (at [38]). In other words, if statute sets a limitation period for a claim, then that should be applied whether the remedy sought is equitable or at common law. Here, as breach of confidence is an equitable claim, statute does not apply to the claim under consideration, so this obedience principle does not apply.

That does not, however, exhaust the situations in which equity applied by analogy a statutory limitation period. Waller LJ went on to explain that “even if the limitation period does not apply because the claim is for an exclusively equitable remedy, the court will none the less apply it by analogy if the remedy in equity is “correspondent to the remedy at law”. In other words, where the suit in equity corresponds with an action at law a court of equity adopts the statutory rule as its own rule of procedure” ([38]).

To understand when the Court would regard the remedy in equity as being correspondent to the remedy at law, it is helpful to take some examples from the cases. The cases in (1) and (2) are discussed in P&O Nedlloyd itself from [37]-[43].

In my judgment, the examples above are considerably removed from the present case. The Courts have been reluctant to allow a claimant to use a claim for breach of fiduciary duty to outflank time-bars that would apply to a tort or contract claim based on identical or near identical facts. As Waller LJ put it in Cia de Seguros, “there is no reason why, if the claim for damages for breach of contract and tort are time barred, the claim for damages for breach of fiduciary duty should not be time barred also” because “the relevant equitable rules should accord with the comparable legal rules” (126, extracted in P&O Nedlloyd at [42]). Put in a slightly different way by Moore-Bick LJ in P&O Nedlloyd, commenting on both the breach of fiduciary duty cases and the treatment of claims to an account in Paragon Finance, “[i]n each case the same facts give rise to a claim, whether at law or in equity, and the same kind of relief is obtainable”: [43], and see his further elaboration at [45].

Similarly, where an equitable claim is the equitable analogue of a comparable species of common law claim, even if that common law claim is not available on the facts, the limitation period for the corresponding common law claim should apply. Raja, where the mortgagee’s duty arose in equity alone, is an example of this, as is the analogy drawn in Coulthard between equitable compensation for breach of fiduciary duty and damages for fraudulent breach of contract on the factset before the Judge. There is no requirement that the claim could actually have been brought at common law on the facts, even putting to one side the time bar that would exist to the common law claim.

However, in the matter before me there is no common law claim with which to draw an analogy. There is no corresponding common law claim to the breach of confidence claim that is pleaded or that otherwise exists. While I can see the logic in having a common limitation period for breach of confidence and tort, I do not consider that it is sufficient for the purposes of section 36 that an action of breach of confidence shares similarities with torts generally by virtue of constituting a civil wrong that can generate a damages award. Therefore, in my judgment the statutory time limit for a claim in tort should not apply by analogy.

It is notable that Counsel did not put before me any suggestion in any breach of confidence case to date that a six-year period did apply by analogy with the period for torts.

In any case, had the tort period applied, I would have found that the publishing and marketing of the Nemaura Structure from the 7 October 2014 Lowry conference onwards, were within time.

As explained above, it was not pleaded or argued that the contractual limitation period should apply by analogy with the period that would have applied against OneE Tax for a breach of contract claim. Therefore I do not need to consider it further.

A six year period applies under s.2 of the 1980 Act.

The common design and the acts pursuant to it started well before 5 October 2014. Further, in my judgment, the Claimant started to suffer loss when the act of developing the Nemaura Structure using the Claimant’s confidential information began. At that point, the Claimant’s information was being wrongfully used, and the Claimant was therefore suffering loss, whether one analyses that loss by reference to a reasonable fee for that use under the user principle, or one applies a different measure of loss.

Accordingly, more than six years have passed since that point and the unlawful means conspiracy claim is time-barred in respect of the acts before 5 October 2014, such as the initial disclosure of the material in May 2014 and its use to obtain legal advice, as set out in paragraph 266 and 267 above. However, in my judgment the conspiracy claim is not barred in respect of the unlawful acts after 5 October 2014, such as the dissemination of the Nemaura structure material at the Lowry conference on 7 October 2014. I have not been referred to any authority on the topic, but in my judgment this accords with principle. Those acts are capable of having caused a separate loss, and they are not to be regarded as one combined act or course of conduct for the purpose of limitation. Take the example of an unlawful means conspiracy where the unlawful means was tortious and therefore were a number of successive breaches of duty, some generating losses within the 6 year limitation period. One would not expect the unlawful means conspiracy claim to be barred for all those acts, some of which might have caused loss shortly before the claim form was issued, if a freestanding tort claim for them would be in time.

This is a separate tortious wrong from the breach of contract that is induced. Therefore, again, a six year period applies under s.2 of the 1980 Act.

Here, I have found that the original act of inducing took place well before took place in May 2014, by the dissemination then of information by OneE Tax to OneE Investments. It does not matter for this purpose whether one treats the transfer of information to OneE Group in August 2014 as conducted by OneE Tax or OneE Investments, because in either case it was more than six years before 5 October 2020. In any event, I consider the more natural analysis to be that it was OneE Investments who passed the material to OneE Group in August 2014 because it was OneE Investments who had been dealing with it in preparing instructions, not OneE Tax. Accordingly, the only breach of contract occurred in May 2014.

In my judgment, the Claimant suffered loss at this point through the wrongful dissemination of his information, and through the wrongful consequent use of his information to start developing the Nemaura Structure. For the reasons set out in paragraph 337 above, I considered that the Claimant started to suffer this loss well before 5 October 2014 and accordingly the claim for inducing a breach of contract is time-barred.

A defendant who is jointly liable for assisting in or procuring the wrongful act of the primary actor is liable, not for the act of assistance but for the primary actor’s wrongful act: Fish & Fish at [38] per Lord Sumption. Accordingly, for the purposes of joint liability for breach of confidence, the limitation position is the same as set out above, so the claim is not time-barred.

As explained below, the substantive point underlying this application turns whether an account of profits, coupled with an order for payment of all sums due upon the taking of the account, is a money claim so as to attract a higher court fee than the Claimant has paid to date.

By application notice issued on the afternoon of 12 December 2022, the first day of the trial, the Defendants contended that the claim should be stayed because the Claimant has not paid the necessary Court fee for “proceedings….to recover a sum of money” (a “money claim”) within the meaning of paragraph 1.1 of the table (the “Table”) at Schedule 1 to the Civil Proceedings Fees Order 2008 (the “Fees Order”). The Claimant, they contended, had wrongly proceeded on the basis that its claims are currently “proceedings for any other remedy” under paragraph 1.5 of the Table (a “non-money claim”), which attract a lower Court fee. The Defendants submitted in their application notice that I should stay the claim unless the Claimant paid the higher fee by the close of its evidence, which was due to occur in the afternoon of the second day of the trial, 13 December.

While the Application was made during the trial, the Claimant’s Counsel, Mr Hill, was able to deal with it, and took me through the relevant authorities.

The relevant aspect of the claim seeks an inquiry as to equitable compensation / damages, or at the Claimant’s option an account of profits, and an order for payment of all sums found to be due pursuant to the foregoing inquiry or account.

The Application is put on three alternative bases:

Therefore, the issues on the Application are (i) whether I should entertain it given its lateness, (ii) if so, the answer to the above questions (1)-(3), and (iii) if the Defendants are right on one or more of (1)-(3), what the consequence should be.

On (i), as explained below, despite the lateness, I consider that I should deal with it for the following reasons: (a) the importance of ensuring that the correct Court fee is paid; (b) it could have been raised at a later date, for example if and when the Claimant sought an account of profits (at which stage the Claimant would not on its logic have paid the higher Court fee), so it is sensible to resolve it now given that I have heard substantive argument on it and am in a position to do so; (c) it raises a short legal point and that the Claimant was able to deal with it; and (d) the Claimant indicated through Counsel that it would pay the higher sum if I found it should be paid, so this is not a situation where a judgment that the higher Court fee is payable will lead to the Claimant having the proceedings stayed.

On (ii), in my judgment, the key underlying question is the third: whether a claim for an account of profits and order for payment of sums due on the taking of the account is a money claim, given that it a claim that seeks to obtain the payment of money to the claimant. Hildyard J held in Page v Hewletts Solicitors [2013] EWHC 2845 (Ch) that such a claim was a non-money claim, this was followed by Master Clark in Lifestyles Equities CV v Sportsdirect.com Retail Ltd [2016] EWHC 2902 (Ch), and the Court in Lappet Manufacturing Company Ltd v Basil Ibrahim Rassam [2022] EWHC 1412 (Ch) took this to be a conventional approach.

On (iii), in my judgment, on the authorities, a claim for an account of profits is not a money claim, and I consider that I should follow those decisions.

I explain below how I reach this conclusion and how the question arises in the present case.

By s.92(1) of the Courts Act 2003, the Lord Chancellor may with the consent of the Treasury by order prescribe fees payable in respect of anything dealt with by, among other things, the Senior Courts which include the High Court. An order may contain provision in respect of the scales or rates of fees: s.92(2). Fees payable under this section are recoverable summarily as a civil debt: s.92(8).

The Lord Chancellor made the Fees Order in exercise of his powers under s.92 (together with powers under two provisions of the Insolvency Act 1986 that are not relevant for present purposes).

By article 2, the fees set out in column 2 of Schedule 1 are payable in, among other things, the Senior Courts of England and Wales in respect of the items described in column 1.

The table in Schedule 1 includes the following. I shall use the figures as they stood at the date of issue here, namely 5 October 2020.

The relevant background to the application is as follows:

In Page v Hewetts Solicitors [2013] EWHC 2845 (Ch), the question arose of when a claim against the defendants for dishonestly procuring or assisting in an innocent breach of the trust by the first claimant, an administrator of an estate, in advising him to sell the deceased’s home at an undervalue to an entity associated with the second defendant (the “secret profits claim”), was brought for limitation purposes.

The claim form comprised claims for damages for breach of contract and negligence, and also in equity. The prayer for relief sought damages for the common law claims, equitable compensation for breach of fiduciary duty and/or dishonestly assisting in a breach of trust, and an account of the profits made by the defendants from their retainer over a particular period: [47].

Hildyard J considered that the question of whether the claim had been brought in time turned on whether the correct Court fee had been paid: see [44]. The Court fee originally paid had been calculated on the basis that the claim was simply a claim to recover a sum of money. The damages claim for breach of contract and negligence was plainly a claim to recover a sum of money. However, the Judge considered that the key question was the claims in equity, and especially the claim for an account, were in fact non money claims, because if they were then an additional fee should have been paid to reflect this on top of the fee paid for the money claim: [48]-[49].

The Judge concluded that the claim for included both a claim for money, namely the damages and equitable compensation claims, and an additional non-money claim, namely the claim for an account of profits so that the wrong Court fee had been paid: [54]. His reasons for this conclusion were as follows:

Reason (1) is a reason that focuses on the fact that the claim for an account was quite separate to the damages and equitable compensation claims and therefore added something important to them. That reflects that the question before the Judge was whether there was an additional non-money claim on top of the money claims, which is a slightly different context to the present, which is whether the claimant is seeking a non-money claim as an alternative to a money claim at the election of the claimant. However, the reasoning in (3) is squarely applicable in the present case.

In Lifestyles, the central question before Master Clark was whether the correct court fee had been paid. The claim was for registered trade mark infringement and/or inducement of breach of contract: [2]. The claimants paid the court fee for a non-money claim. The defendants applied to stay the proceedings on the basis that the court fee for a money claim should have been paid instead. Master Clark allowed the application. The following points should be noted:

The final relevant case is Lappet, which concerned a claim for trade mark infringement. In that case, like the present, the claimant sought an inquiry as to damages or in the alternative at the claimant’s election an account of profits: [8]. No objection was taken at the hearing before the Judge to the claimant having paid the court fee for a non-money claim, and the Judge set out at [11] what he understood to be the conventional justification for this approach on the basis of Page and Lifestyles.

The issue before the Judge was whether the action should be transferred from the High Court, Business & Property Courts, Intellectual Property List to the Intellectual Property Enterprise Court: [5]. The defendants made two applications seeking to have it so transferred. The first, which is the relevant one for present purposes, sought a declaration that the High Court did not have jurisdiction over the claim: [6]. The parties agreed in the course of the debate on this application that the claim was not a claim for money: [27]. The Judge dismissed both of the defendants’ applications.

At a consequentials hearing, the defendants sought permission to appeal, by seeking to argue for the first time that a trademark infringement action which includes a claim for an account of profits will invariably be a claim for money, and that Page and Lifestyles had failed to make a distinction between the remedy of an account generally (which may not be a claim for money) and the remedy for an account of profits (which always will be): [2022] EWHC 2158 (Ch) at [23]. The Judge refused permission, because he did not immediately see the validity of the distinction the defendants sought to draw, which was not explored before him, and he did not think it appropriate to give permission in respect of a point which was not, but could have been, argued: [24].

Starting with the Defendants’ first argument, the logic of [15] of Lifestyles is clear: if a claimant states that it claims an account of profits or at the option of the claimant an inquiry as to damages, that is not at that stage a money claim. It is only if and when the claimant elects for an inquiry, that it brings a claim to recover money. This is further made clear by [16], where the Court stated that “[i]f, therefore, this claim has been only for trade mark infringement, then I would have held that the appropriate fee had been paid”. The trade mark infringement claim was the one at sub-para 4 that sought an account of profits or at the claimant’s option an inquiry. The Court was stating that if this sub-para 4 claim had been the only claim brought and there was no freestanding sub para 3 claim, then the lower court fee was payable.

I agree that the mere fact that a monetary remedy is sought as one of the two alternatives does not make the claim a money claim prior to the election between them. It is true that Schedule 1 to the Fees Order states after paragraph 1.5 of the Schedule that where a claim for money is alternative to a non-money claim, only the fee in paragraph 1.1 is payable, and that the fee in paragraph 1.1 is the fee for a money claim. However, the logic of Lifestyles is that where the alternatives are sought at the election of the claimant, this a different matter, because the money claim may never be pursued by the claimant. Therefore, the Defendants’ first argument should be rejected. I leave until later the question of whether it is right that an account of profits is not a money claim.

I also reject the Defendants’ second argument. It is clear from the relief sought in the prayer that a damages remedy under reg.17 of the 2018 Regulations is part of the damages remedy being sought at the Claimant’s election as an alternative to an account of profits, rather than the reg.17 remedy being sought come what may. Mr Hill also made this clear in oral submission.

Therefore, that leaves the third argument, that a claim for an account of profits coupled with an order for payment of all sums found to be due pursuant to such an account, is a money claim for these purposes.

The succinct argument on this point by Mr Budworth was that an account of profits coupled with an order for payment of sums due on the taking of account was a claim that sought one thing, namely the payment of money, so that the only natural reading of the Fees Order was that it was a claim to recover a sum of money. This argument has raised doubts in my mind as to whether the previous decisions referred to above are correct on the point, given the following line of argument against them:

However:

Accordingly, I consider that in the interests of judicial comity and deployment of judicial resources, the appropriate course is for me to conclude that despite my doubts I am not convinced that the previous three cases are wrong, and accordingly I follow those cases on this point.

For these reasons, I dismiss the Defendants’ application.

Had I reached the opposite conclusion, I would have found that the appropriate relief is simply that the Claimant should pay the difference between the fee that it has currently paid and the fee for a non-money claim. There are situations where a failure to pay the Court fee amounts to an abuse of process, such as in Atha & Co Solicitors v Liddle [2018] EWHC 1751 (QB) at [18], where the statement of value used was not a genuine assessment of the value of the claim. However, here the Claimant has followed the guidance in earlier cases and cannot be faulted to do so, and has indicated that it will pay the difference if the Court considers that a higher fee is payable, so unlike in Atha I do not consider that the Claimant could be faulted in any way. Therefore, it is plain to me that the limit of the relief would be as above.

As set out in paragraphs 15(1) and 16(1) above, the costs of the Defendants’ application for relief from sanction in respect of its failure to put in witness statements compliant with PD 57AC fall to be dealt with.

In my judgment, the breaches of the Practice Direction were serious, so the Defendants should pay the Claimant 100% of the Claimant’s costs, to be assessed on the indemnity basis, for the following reasons:

I do not think it is necessary to go through the detailed chronology of dealings over the witness statements, because the above failings are serious ones that merit a 100% costs award on the indemnity basis, as the case is well outside of the norm. I also note and take into account that the Defendants’ suggestion in their 10 November 2022 letter that the replication of text just related to bland factual statements was not correct.

The Defendants’ solicitors ultimately on 1 December 2022 issued an application for relief from sanctions. It was correct to put this matter before the Court so that it could form its own view on how to deal with this witness evidence. As I explained above, I would regard the Court’s jurisdiction engaged here as being that under paragraph 5.2, but the precise way that it was brought before the Court is not critical, and paragraph 5.2 gives the power to make a costs-order against the non-complying party.

The Defendants in their written submissions criticise the Claimant for still contending after submission of the 1 December 2022 application that there were unremedied defects, and submit that this must have given rise to costs that should be awarded against the Defendants. The Claimant’s stance was that they did not oppose the application, but they asked a number of questions and made a number of comments through their solicitors by letter dated 7 December 2022, including asking for disclosure of certain documents relevant to what explanation had been given to the witnesses about the preparation of their evidence by the Defendants’ legal team. However, (a) in my judgment they were fair questions to ask in the circumstances, (b) the Claimant took the pragmatic stance of not opposing admission of the evidence despite the serious failings, and (c) and in any event this point is in my judgment outweighed by those above in deciding whether to make a 100% costs order on the indemnity basis.

In my judgment, the Claimant is entitled to an inquiry as to damages, because there is prima facie evidence of loss here, for the following reasons. First, the Claimant has not received any fee for the use of its confidential information in developing the Nemaura Structure, and therefore has a prima facie argument that it has lost the opportunity to bargain for a reasonable fee for the use of its proposed structure. Second, while I take into account the time that it took the Claimant to run its structure successfully past the Revenue, the Claimant has a prima facie argument that its ability to bring any structure it produces based on R&D subcontractor relief to market in a successful manner has been lost by the Nemaura Structure being brought to market first, or failing that it has been made significantly more difficult for them to do and the money that they might generate from doing so has been restricted by the fact that OneE has got there first.

I have not dealt with in this judgment with whether the Claimant would be able to elect for an account of profits, because beyond brief reference to this in the Claimant’s oral submissions in response to my question I have not heard argument on this, and Vercoe emphasises the importance of carefully evaluating whether the Claimant should be entitled to such an account, particularly in the context of commercial dealings between two parties. Therefore, I will receive written submissions on this and hear oral submission.

The analysis above reflects the wealth of points that each side has prayed in aid against the other at trial. The second stage of the proceedings is likely to be similarly hard fought, with the costs that entails. The Defendants have already laid down a marker that they contend that they have made no profit from the arrangements, and there will no doubt be significant argument at the second stage about how what effort it would take to have come up with Mr Corrigan’s relevant ideas, given that for example the Ultra Green opportunity involved the use of R&D sub-contractor relief under the 2000 Act. Therefore, I would encourage the parties to be realistic in considering their respective positions on the second stage and any scope for narrowing the ground between them.