Baker Tilly (a firm) v Makar

His Honour Judge Richard Seymour Q.C. :

Introduction

“The reduction in cash during the period reflects the increase in working capital requirements created by the rapid growth from the resourcing business, together with slippage in credit collection performance. The auditors have indicated that they are likely to issue an unqualified opinion on the financial statements. Their report will however include a statement regarding accounting control issues in the sales ledger function of the resourcing business for a period of several months during the year and therefore that, in their opinion, proper accounting records as required by section 221 of the Companies Act 1985 have not been kept in all respects.”

“In accordance with Section 394 of the Companies Act 1985, we confirm that there are no circumstances connected with our resignation which we consider should be brought to the notice of the shareholders or creditors of Triad Group plc.”

“Summary of claims

1.1 Unfair dismissal;

a. Dismissal was automatically unfair under section 103A of the Employment Rights Act 1996 (“ERA”), in that the reason or principal reason for the dismissal was that the Claimant had made protected disclosures.

b. Dismissal was automatically unfair under section 98AERA.

c. Dismissal was procedurally and substantively unfair under section 98ERA.

1.2 Detriment other than dismissal on the grounds of protected disclosures (s.47B ERA).

2. For the avoidance of doubt the claim does not include a claim of breach of contract, and the Claimant reserves the right to claim in respect of breach of contract in another forum.

Overview

3. By way of overview, the Claimant was the Chief Executive Officer (“CEO”) of the Respondent company.

4. Towards the end of 2004 she became aware of certain apparent financial irregularities, and engaged two professional firms, including a firm of accountants, to investigate.

5. Shortly after these firms came across evidence of irregular accounting, they were stood down by the Respondent, and the Claimant was suspended in the midst of her investigation.

6. Although the Claimant continued as a main board director, she was denied access to any of the underlying financial accounts.

7. Upon hearing evidence of the problems she had prepared reports for the Respondent’s Audit Committee, who failed to pursue matters appropriately.

8. Consistent with her fiduciary obligations as a director towards shareholders, she sought to brief the Respondent’s stockbrokers so that they could advise the board on whether there was an obligation to communicate the financial uncertainty to the market.

9. During the course of this meeting, she was suspended as Chief Executive and was removed from the room.

10. At the time of her suspension, no specific reason was given for her suspension.

11. She remained suspended for over ten months. Disciplinary hearings were commenced over nine months after she was suspended.

12. Two months after she was suspended, she was told an investigation had been concluded into her suspension. She was not fed back the results of this investigation, and continued to be suspended. No reason was given for her continuing suspension.

13. Because of her continuing legal obligations as a director, the Claimant continued to seek access to underlying financial accounts of the Respondent, without success. Finally, when she commenced litigation seeking an Order for disclosure of documentation to which she was entitled, she was dismissed as an employee and a director. The grounds of dismissal expressly included the fact that she had made disclosures which amount to protected disclosures.”

“2.1 The parties are to agree the identity of a joint expert and the terms of reference for a joint expert by Tuesday 29 August 2006.

2.2 If no such agreement is reached both parties must notify the Tribunal and each other of the identity of there [sic] own expert by 1 September 2006.

2.3 If 2.2 applies the parties are ordered to serve the report of their individual expert, with attached copies of instructions and all letters between the expert and the instructing party, on the Tribunal and the other side by 13 October 2006.

2.4 It is ordered that, in the event of there being two experts, they should meet on a without prejudice basis by 20 October 2006 to agree a schedule of agreed and disagreed points.

2.5 The two experts are to agree the schedule of agreed and/or disagreed points in the experts reports by 27 October 2006.”

“2. Scope of Experts’ Report

It is ordered that the expert evidence of each party is not required where the Respondent has conceded both a qualifying disclosure and reasonable belief. This does not affect the order for expert evidence in relation to market practice.”

“5.1 It is ordered that expert’s reports with attached copies of instructions and all letters between the expert and the instructing party are to be served on the Tribunal and the opposing party by 31 October 2006.

5.2 It is ordered that the experts should meet on a “without prejudice” basis by 7 November 2006 to agree a schedule of the agreed and disagreed points.

5.3 It is ordered that any further expert’s report should be served on the Tribunal and the opposing party by 14 November 2006.”

“7. There are two features of the order. It did not identify the area of expert evidence required. There was a debate about this at the hearing. It also does not provide for live evidence to be given but clearly it was envisaged that there would be live evidence frm [sic] the experts.

…

23.2 It is worth recording the submissions made to the Tribunal in July regarding the need for expert financial evidence. It was said that the financial expert evidence was principally relevant to the third and fourth criteria – the existence of reasonable grounds. Mr. Hochhauser’s skeleton [on behalf of Miss Makar] went on to say that that issue and the issue of good faith have some correlation. In my judgment, Mr. Hochhauser’s skeleton correctly says that financial evidence is principally necessary in relation to the question whether there were reasonable grounds for believing a breach had been committed or would be committed. That does not mean that that is the only area that is relevant. Financial evidence is plainly relevant to other issues but once a concession has been made as to the reasonableness of belief in the truth of certain facts, it is plainly right to reconsider the ambit of expert evidence. The Chairman took the view that the evidence could, to a certain extent, be circumscribed. In my judgment, the Chairman did not err in law in taking that view. I do not think that the Chairman’s reasons betray any error. I do not believe that she misunderstood or thought that reasonable belief was the only issue. It must be borne in mind that the focus was on financial matters.”

The retainers, and when and how they were made

“3. The Claimant seeks fees for its work for the Defendant under 3 retainers; in the sum of £30,000 plus £5,250 VAT plus interest pursuant to statute. The 3 retainers were:-

(1) An oral retainer made on or about 17/10/06 between the Defendant and the Claimant to read into her case in Employment Tribunal proceedings brought by her against Triad. Under this retainer the Claimant claims fees totalling £5,850 plus VAT for work carried out between 19/9/06 and 30/10/06.

(2) A retainer in writing made by letters dated 30 and 31/10/06 … between the Claimant and the Defendant’s solicitors Burges Salmon to prepare an expert report for use in the Tribunal proceedings for a fee (inclusive of the fees incurred pursuant to the oral retainer made on 17/10/06) capped at £30,000 plus VAT down to completion of the report. Such fees totalled £21,767.50 plus VAT, being the Claimant’s time charges between 31/10/06 and 4/11/06 when Burges Salmon informed the Claimant that the proceedings had been compromised and directed the Claimant to cease work on the report.

(3) An implied contract of retainer pursuant to which the Claimant carried out further work between 6/11/06 and 20/11/06 for which its time charges totalled £12,350 plus VAT.”

“8. C’s and D’s accounts of the formation of the contractual retainer between them differ:

a) D says that:

i) it was clearly established from the outset:

(1) that C required both an expert witness to give oral evidence on her behalf and an expert report, firstly for the purposes of the Employment Tribunal and secondly for disclosure to the relevant regulatory authorities;

(2) that the date for exchange of expert evidence was 13 October 2006;

(3) that Mr. Taub was to be C’s expert witness; and

(4) that the key terms of C’s retainer would be agreed directly between C and D (although D’s solicitors would in due course provide C with formal instructions identifying the specific issues that the Employment Tribunal required to be addressed); and

ii) the key terms of C’s retainer were agreed at the meeting and over the next few days (a capped fee for C’s report being agreed over the telephone on about 12 September 2006).”

“Michael Taub has received enquiries regarding a potential engagement involving the following parties:

Triad Group Plc

Vega Group Plc

Mira Makar

PWC (specifically in relation to the above names)

Please let me know as a matter of urgency, if you are aware of any ethical or other professional reason why we should not accept these instructions, or if you have in the past three years had any dealings with, or are otherwise connected with any of the above parties.

Please note that negative responses are not required.”

“We have an appointment scheduled for 11:30 am this Tuesday morning to discuss your assistance as an expert witness in my sister’s court case against Triad Group plc coming to court in November.

Unfortunately we just learned late on Friday afternoon that we will be required to attend in person a Case Management Discussion at the court on Tuesday. I therefore apologise but I will need to reschedule our meeting. We should meet later in the week as we are required to notify the Court by Tuesday week of our choice of expert witness. I will drop you a line to find a new date.

In the meantime, you may find some background to the case by going to the website makar.co.uk which has a link to all the press articles that have appeared.”

“That’s no problem. From our point of view next Monday morning would be ideal as I would like my colleague Ian White (another forensic partner) to attend.

I look forward to hearing from you.”

“Thank you for the documents. I will circulate these to the others involved.”

“1. Makar is considering the appointment of an expert witness in the context of Tribunal Proceedings in which she alleges unfair dismissal, principally on the grounds that she was dismissed for making protected disclosures.

2. The matters she refers to in the brief would amount to serious financial irregularities in Triad, which is a fully listed Plc.

3. It is understood that Makar has referred the matter to the FSA for investigation. What is the status of the investigation?

4. In effect the allegations amount to conspiracy to defraud, as well as breach of a number of sections of the Theft Acts. In spite of this, Alan & Ovary [sic], Evolution and PWC have continued to act (albeit that PWC have now resigned as auditor and have been replaced by BDO).

5. Why would Wooton, of A&O, effectively “change sides” and assist the remaining directors, if he thought that they had acted inappropriately, whether in respect of a cover up or in respect of their treatment of MM.

6. Why would Evolution dismiss MM’s concerns and turn a blind eye to the extraordinary events of 4 February, unless they were completely satisfied that no impropriety had occurred?

7. If the allegations are substantiated, the Bank may be at risk as to the extent of the overdraft which, it is alleged, may have been negotiated under false circumstances.

8. The conduct alleged to have been perpetrated by the remaining directors, Rigg, Fulton and Haynes, would be likely to result in adverse D notices to the DTI in the event of an insolvency.

9. Has anything been done to safeguard audit trails and electronic evidence? The matters first complained of probably date back to 2004, certainly to August 2004, and must be at risk of being contaminated or lost.

10. Is Triad in fact solvent – (it would presumably be supported by Rigg, a wealthy individual).

11. Although Makar had been CEO of Triad for 10 years, her full financial CV is not clear from the papers. It would be relevant to assess this when evaluating the claims.

12. This would appear to be a sizeable piece of litigation: Is Makar wealthy enough to see it through?

13. MM owns 30% of the business: the value of that shareholding has diminished dramatically – party [sic], it would appear, through the fuss caused by MM’s own actions. Is this evidence of her good faith?

14. Why would PWC accept imperfect assurances from some of the directors as audit evidence at the same time as issuing a books and records qualification?

15. When did MM last have a meaningful conversation with the Bank? If she was indeed the main point of contact with the bank, how was this position usurped? ”

“Many thanks to you and Mira for coming in yesterday. We all enjoyed meeting you and would be delighted to assist you.

I look forward to hearing from shortly but please contact me in the meantime if you have any further questions.”

“Reputation – needs vindication – MM was right

“This is v helpful.

Could you please flag those occasions when they have appeared in the witness box?”

“Michael has not appeared in the witness box on any of the cases listed below. [No list appeared below, so the significance of this answer cannot be assessed.] He has appeared in Court on 25 occasions. Ian White has appeared in Court on four occasions in the past three years.

I’m not aware how many times Peter Souster and Barney Whiter have appeared.”

“Thanks. And sorry for asking you this again, because I have a terrible memory for names, can you remind me who each person was. Specifically, I know the specialities of Ian, Peter and Barney are (but not in order) accounting; corporate finance; and responsibilities of directors. Which one is which?”

“Michael Taub – forensic accounting

Ian White – forensic accounting

Peter Souster – Responsibilities of directors

Barney Whiter – Corporate finance.”

“£25 - £38k

But – what would I need to get to a fixed fee quote?

- Agreement on actual scope of instructions, agreed with RJW [a reference to Messrs. Russell Jones & Walker, the solicitors who had been acting on behalf of Miss Makar in the ET Proceedings]”

“Mira Makar –

BT [Baker Tilly] preparing a proposal?

What’s the work and how to do it

MM would offer to help

material & approach

Do we understand

Eade & Roberts (Keith Roberts) helped MM so far volunteered to help

Working presumption – BT not working on facts

MM preparing a dossier

Now job is beyond RJW o/side have stood down A&O employment team

Investment banker barrister

A&O solicitor – barrister in market abuse

MM – RJW out of depth – Burgess Salmon (Bristol)

questions.”

“3.3.1 Evolution Securities [stockbrokers to Triad] should provide the disclosure sought in the Claimant’s letter of 29 August 2005 within seven days of the date of the Order issued against Evolution Securities.

3.3.2 The Bank of Scotland should provide the disclosure sought in the Claimant’s letter of 29 August 2005 on or before a date seven days from the date of the separate order issued against Bank of Scotland.

3.3.3 PWC is ordered to provide the disclosure sought in the Claimant’s letter dated 29 August 2006 within seven days of the date of the Order issued against PWC.”

“Sorry to have missed your telephone call this morning. I hope we can catch up later in the day. I would be grateful if you could confirm that the relevant papers will be arriving at my Old Bailey office (as that’s where I shall be).”

“So that you and your team can begin your reading in, a pack containing the following documents is being sent to you:

1. Case facts dated 8 August 2005 (disclosure to FSA, earlier drafts to PwC);

2. Mira’s witness statement;

3. Instructions to A&O pre 4 February, including:

(a) Suspicion of failure to maintain records under the Act;

(b) Bank representations and consequences of misrepresentations;

(c) Unexplained cash drain, contracts, fee rates;

(d) Conduct, stonewalling; block on information flows;

(e) Standing down of internal auditors who were doing a 100% substantive and compliance audit of sales and debtors;

(f) Ditto Stork, debt collecting after telling Rigg about the heightened risk of fraud;

(g) 2 February prejudice of minorities; and

(h) market abuse, written instructions from 31 January 2005; and

4. Mira’s audit evidence on behalf of the Company under s 389B etc.

The pack will be couriered to your Manchester office along with the next files. The materials will also be sent to Peter and Barney, i.e. 3 of everything.

A log of all documents supplied will be kept and you will be provided with this in soft copy so that it can be appended to your findings report.

This pack of documents is being provided now to enable you to begin your reading in. As you will be aware, the ambit of the expert evidence depends on the outcome of a tribunal hearing tomorrow [in fact the hearing of the appeal against the Fourth Case Management Directions order]. We will send you formal instructions as soon as we are able to after tomorrow’s hearing.”

“Below are the files sent to Ian to be left in the Old Bailey office for you.

Please add the enclosed files to your bundle.

A pack for Peter will follow.

These packs will, hopefully, assist in you forming your views and allow you to input to the instructions …”

“Great.

Tried to stagger so the order warms you up gently.

The items of yesterday “Set 1” are the ones we suggest you start with so as not to drown:

Case facts

Witness statement

Instructions to A&O

Evidence to PwC

The rest of the Manchester boxes are “Set 2”

There is a Set 3 being the rest (other relevant witness statements, finance detail etc) but you should have enough to keep you going while we collate this.

Can you put me in e mail contact with Barney & Peter so I can alert them to shipments? Barney’s are going first if I cannot get both off simultaneously.

I am assuming the files you left in London are allocated to him.

I would also appreciate e mail contact with a secretary in each of Old Bailey/Manchester for logistics.”

“Should our instructions be confirmed, it will of course be necessary to arrange a formal identification of you as a client of Baker Tilly.”

“Matthew Britton

MM [Miss Makar] suggest 2 stage approach.

BT [Baker Tilly] familiarise & suggest instructions

Retainer directly with MM

fee proposals

IDW [Mr. White] – to give quote for 1 ^st phase

and deal with the issues

Letter to MB [Mr. Britton]/MM

Application [i.e. the appeal to His Honour Judge Richardson] dismissed – but helpful comments to benefit

BT’s evidence? Wide scope for everything bar a couple of disclosures accepted as qualifying.”

“Just to confirm the points from our conversation:

1. You are going to speak to Mira about the credit checks you need to do and resolve that with her.

2. The fee arrangement is going to be between Baker Tilly and Mira and you are going to agree a fee with her for stage 1, which will involve you completing your reading in so that you are in a position to input into the formal instructions, which will be stage 2.

3. You are going to send an engagement letter to us, copied to Mira, to reflect this.

4. Once you have completed stage 1, with input from you we will send you a formal letter of instruction for stage 2.

5. You are going to review the attached list of documents and let us know whether or not you are going to need each of the documents identified in the list to complete your report. We really need this information for the Case Management Discussion that is due to take place this Friday and I would be very grateful if you could come back to me on this as soon as possible, by close tomorrow if you can.

As discussed, as a result of the EAT judgment last week, Baker Tilly will not be required to give evidence in relation to certain disclosures in the period before 4 February 2005. The extent of the disclosures that will be excluded from your remit will be clarified when the other side re-amend their pleading, which they should do by this Friday. I mention it now so that you have it in mind when reviewing the list of documents at point 5 above.”

“Could you update me as to whether the Expert has now been instructed and as to when he will be able to say which of the documents on Schedule B he will need to see? I need to know by tomorrow morning at the latest. I also need confirmation that he can hit the existing timetable or else an indication as to what timetable he can hit.

I have described the issues he is entitled to address in my draft Skeleton for Friday.”

“The expert is continuing his reading in. We have not sent him a formal letter of instruction yet but will do so when he has finished familiarising himself with the material. Your skeleton identifying the issues he is able to address would be a great help in formulating the letter of instruction. Please could you send me a copy?

He said he would come back to me quickly on Schedule B and I will chase him on that and for his views on the timetable.

I will update you later on this afternoon.”

“As discussed earlier, the attached is a bullet point note of the reasons why Mira believes you need to see each of the documents in the schedule. The numbers in the note correspond to the numbers in the schedule. Please could you review the note and let me know whether you agree/disagree with these reasons and with any other comments that you may have as soon as possible this afternoon.

As agreed, when you come back to me on this point, you are also going to come back to me with a date by which you believe you will be able to complete the report.”

“5. VARIATION OF EXPERT’S TIMETABLE

It is ordered that the timetable for the expert is varied as follows:-

5.1 It is ordered that expert’s reports with attached copies of instructions and all letters between the expert and the instructing party are to be served on the Tribunal and the opposing party by 8 November 2006.

5.2 It is ordered that the experts should meet on a “without prejudice” basis by 13 November 2006 to agree a schedule of the agreed and disagreed points.

5.3 It is ordered that any further expert’s report should be served on the Tribunal and the opposing party by 17 November 2006.

6. THIRD PARTY DISCLOSURE BY PWC

By consent the tribunal order is varied so as to require disclosure within 10 days of 27 October 2006 of such available documentation falling within the following categories:

6.1 Notes of Fiona Kelsey’s meetings with Mira Makar regarding the alleged protected disclosures from November 2004 to December 2005;

6.2 Notes of Fiona Kelsey’s meetings and communications with John Rigg (non executive chairman of the Respondent) and Mr. Fulton (member of the audit committee of the Respondent) regarding the alleged protected disclosures from November 2004 to December 2005; and

6.3 Any notes of meetings and documents evidencing PwC’s decision to resign as auditors of the Respondent;

in each case to the extent the same are not privileged.

7. THIRD PARTY DISCLOSURE BY BANK OF SCOTLAND

The order is varied so that it is made under rule 10(2)(d) requiring disclosure and not attendance.”

“Please see attached letter of instruction. I would bring your attention particularly to paragraph 1.7 and the need to send a letter to us today indicating whether or not on the basis of these instructions you require sight of the documents in the attached list of documents. Where you believe you require sight of a document, you must give your reasons why.

The other documents identified in the letter as being enclosed will follow under cover of a separate email so as not to hold up this email.”

“We act for Ms Mira Makar. The purpose of this letter is to retain you formally on behalf of Ms Makar in relation to her claim against Triad Group Plc (“Triad”) in the Employment Tribunal to prepare a written independent expert opinion addressed to and for production to the Tribunal and, if required, to give evidence at the hearing in this matter.

…

1 BACKGROUND

…

1.5 It is important for you to appreciate that certain concessions have been made by Triad. Ms Makar has sought clarification of the concessions and their effect and that clarification is still awaited. During the course of his judgment on Ms Makar’s appeal against a case management Order relating to expert evidence on 18 October 2006 (“the Appeal”), His Honour Judge Richardson indicated that Triad needed to clarify the concessions that it was making by re-amending its pleading and answering the Schedule of Protected Disclosures on a disclosure by disclosure basis. Triad’s Counsel at the hearing on 18 October 2006 indicated that Triad would be able to complete these two tasks by Friday, 27 October 2006. We will forward these documents on to you as soon as we receive them and advise you on any resulting alteration to the scope of your instructions.

1.6 Expert reports are due to be served on the Tribunal and the opposing party by Monday, 6 November 2006. The Tribunal has also ordered that the experts should meet on an [sic] without prejudice [sic] to agree a schedule of the agreed and disagreed points. Details of the timetable for the without prejudice meeting and the service of any further expert’s report will be forwarded separately.

1.7 In addition to the preparation of your report, you are required to send a letter to us indicating whether or not on the basis of these instructions you require sight of the documents in the enclosed list of documents headed “Schedule 2 – Company Financial and Other Records required for preparation of Expert Report”. Where you believe you require sight of a document listed in that schedule in order to prepare your report, you must give your reasons why. You must send this letter to us by Monday, 30 October 2006.

2 ORDERS RELATING TO EXPERT EVIDENCE

2.1 The Tribunal has given permission for the appointment of an expert. We enclose copies of the Orders made by the Tribunal in relation to your evidence on 1 August 2006 and 19 September 2006.

2.2 As HHJ Richardson’s judgment on the Appeal is not yet available, we also enclose a copy of our note of HHJ Richardson’s judgment on the appeal, which has been agreed by Triad’s solicitors.

3 INSTRUCTIONS

3.1 In respect of some of the disclosures that Ms Makar alleges were protected disclosures, Triad has conceded that:

(a) the disclosures are qualifying disclosures for the purposes of Section 43B of Employment Rights Act 1996; and

(b) Ms Makar made the disclosures with a reasonable belief in the truth of the information being disclosed.

3.2 Based on Triad’s current Amended ET3, the following disclosures which Triad has conceded are qualifying disclosures and ones in relation to which Ms Makar reasonably believed the information being disclosed to be true:

(a) the disclosures contained in the report compiled by Ms Makar for Triad’s audit committee on 24 January 2005, referred to as the “First Audit Report” (see paragraph 45 of the ET3);

(b) the disclosures made by Ms Makar at the Board Meeting on 24 January 2005, which were based on the disclosures contained in the First Audit Report (see paragraph 47.4 of the ET3);

(c) the disclosures set out in paragraphs 40.1 to 40.3 of the ET1, which were contained in the second report compiled by Ms Makar for Triad’s audit committee on 27 January 2005, referred to as the “Second Audit Report” (see paragraph 50 of the ET3);

(d) the disclosures set out in paragraphs 43.2, 43.3, 43.4 and 43.6 of the ET1, which were contained in the third report compiled by Ms Makar for Triad’s audit committee on 31 January 2005, referred to as the “Third Audit Report” (see paragraph 57 of the ET3);

(e) the disclosures made in the instructions delivered by Ms Makar to Allen & Overy LLP on 3 February 2005 in so far as the instructions referred to matters that were price sensitive (see paragraph 64 of the ET3); and

(f) the disclosures made in the letters from Herbert Smith LLP to Allen & Overy LLP dated 10 February 2005 and 3 March 2005 in so far as they refer to and repeat matters already raised with Triad in the First, Second and Third Reports (see paragraph 79.2 of the ET3).

(together the “Conceded Disclosures”).

3.3 Pursuant to the Order made by the Tribunal on 19 September 2006, when answering the questions posed in these instructions, in relation to the Conceded Disclosures you should only comment on market compliance issues.

3.4 Subject to the proviso in paragraph 3.3 above, please address the following issues in a written report:

(a) The validity of the grounds of Ms Makar’s concerns

In respect of the disclosures that Ms Makar alleges were protected disclosures, were the indicators of irregularities such that Ms Makar had reasonable grounds to suspect that Triad had failed, was failing or was likely to fail to comply with any legal obligation to which it was subject?

(b) Well-foundedness of Ms Makar’s concerns

Which of the concerns that you consider to have been based on reasonable grounds were well-founded?

(c) Required appropriate conduct for Ms Makar

In relation to those matters of concern that you have identified as issues in relation to which there were reasonable grounds for concern:

(i) in your opinion, in relation to each issue, what would a Chief Executive and Finance Director of a Plc, who was also a board director, be expected to do in terms of investigation, disclosure, market notification or other action in order properly to discharge their duties to Triad or other duties as a director; and

(ii) did the conduct of Ms Makar amount to an appropriate response to each of those matters of concerns?

(d) Required appropriate conduct for Triad, its Chairman, its board and its audit committee

In relation to those matters of concern that you have identified as issues in relation to which there were reasonable grounds for concern:

(i) in your opinion, in relation to each issue, what would a public company, its Chairman, its board of directors and/or its audit committee, be expected to do in terms of investigation, disclosure, market notification or other action in order properly to discharge their duties; and

(ii) did the conduct of Triad, its Chairman, its board and its audit committee amount to an appropriate response to the disclosure?

(e) Relevance and implications of the audit

(i) Was the effect of PricewaterhouseCoopers’ assent to Triad’s issuing of the interim statement in July 2005 and/or their audit opinion in September 2005 to demonstrate that any of Ms Makar’s concerns were not well founded or that Ms Makar did not have reasonable grounds for her concerns at the time the disclosures were made?

(ii) Did the scope of PwC’s audit cover all of the issues, Ms Makar disclosed in the Schedule of Protected Disclosures and if not which did the audit not cover?

(iii) Did PwC’s assent to Triad’s issuing of the interim statement and/or audit opinion make it unreasonable for Ms Makar to make any of the further disclosures, including those relating to matters that had been the subject of earlier disclosure?

(iv) Did PwC’s assent to Triad’s issuing of the interim statement and/or audit opinion relieve Ms Makar, Triad’s board of directors and/or its audit committee of its obligations to investigate and/or resolve matters of concern identified before the interim statement; before the audit opinion or thereafter?

…

6 CONFIRMATION OF YOUR ACCEPTANCE OF THIS APPOINTMENT

6.1 If you are willing to accept this appointment as expert please can you confirm this to us in writing….”

“You have instructed me to write to you today, Monday 30 October, setting out, on the basis of your letter of instruction dated 30 October 2006, whether or not I require sight of the documents on the list of documents headed “Schedule 2 – Company Financial and Other Records required for the preparation of the Expert Report”.

I am instructed that, when answering the questions posed in your letter dated 30 October, in relation to the Conceded Disclosures I should only comment on market compliance issues.

At paragraph 3.2 of your letter of instruction dated 30 October, you have informed me that the Conceded Disclosures are the disclosures [which Mr. White then summarised]

At paragraph 3.4 of your letter of instruction dated 30 October, you have instructed me to consider [the headings set out in that part of the Letter of Instruction]

The documents listed in Schedule 2 were identified by Ms Makar and, as I understand it, are documents that she considers essential to the matters upon which I and my colleagues have been instructed to provide opinion evidence.

Market compliance issues need to be considered in context and are to some extent qualitative as well as quantitative in nature. It is therefore necessary to take into account the substance of accounting and business information that was available at the relevant times.

Furthermore, the matters that are the subject of the Conceded Disclosures have to be considered objectively and not simply in the light of Ms Makar’s instructions. We would therefore wish to see the documents in order to form our own independent view as the [sic] appropriateness or otherwise of the assumptions inherent in Ms Makar’s claim.

The remainder of this letter concerns the documents that have been requested by Ms Makar, and my current understanding of their relevance to the work that I have been asked to undertake.

[Mr. White then reproduced Miss Makar’s views as to the reasons for disclosure of each of the 46 categories of document]”

“We understand that you act for Ms Mira Makar (“your Client”), formerly Chief Executive Officer of Triad Group plc (“Triad”). You have informed us that you are currently conducting a claim in the Employment Tribunal against Triad.

This is to confirm our acceptance of your instructions that Ian White, Barney Whiter, Peter Souster and Nigel Tristem act as expert witnesses in relation to the proceedings.

We confirm that Ian White will be the partner responsible for the engagement. We may deploy other staff of this firm where required.

The work to be undertaken by us is summarised below and in the attached Terms and Conditions of Business dated 1 July 2006, which forms part of this Engagement Letter. Our work will be limited to the matters set out in this Engagement Letter.

…

SCOPE

We are to prepare a report for the Employment Tribunal, addressing the questions set out at Section 3 of your letter dated 30 October 2006, subject to the limitations of the information available to us at the current date.

We understand that our report is required to be served on the Tribunal and the opposing party by Monday 6 November 2006.

…

Fees

We have agreed that our costs for the preparation of our report will be capped at £30,000 plus VAT, which will include all work undertaken to that point.

Our fees for any further work that you may require us to undertake in relation to this matter, including attendance at any meetings of experts and attendance at any hearings of the Employment Tribunal, will be charged at the following rates (excluding VAT).

[Rates for Mr. White, Mr. Whiter, Mr. Souster, Mr. Tristem and Mr. Andrew Horner were then set out]

We understand that Ms Mira Makar will be responsible for our fees. We shall address our fee notes to Ms Makar periodically as we see fit.

…

We should be grateful if you would confirm your acceptance of the agreement, by signing and returning the enclosed duplicate of this letter.

Once this letter has been agreed, it will remain effective until it is replaced. ”

“I have read the above letter. I confirm that your understanding of our instructions is correct and that the terms of engagement set out in the letter shall constitute the agreement for you to carry out the engagement.”

“All work by Baker Tilly for the Client Party will be in accordance with the Engagement Letter, of which the Terms and Conditions of Business form an integral part, or any subsequent written variation agreed by an authorised representative of Baker Tilly and the Client Party. You or we may terminate the engagement at any time without penalty. Notice of termination must be given in writing.”

“I enclose Baker Tilly’s letter of engagement together with our terms and conditions.

At this stage, I wish to place on record our concern at the timescales inherent in your instructions. As you are aware, the issues are complex and the available documentation is deficient due to the current position on disclosure. Notwithstanding these concerns, we will of course use our best endeavours to comply with the terms of the Order.

You will note from our terms of engagement that we have decided to involve Nigel Tristem, the partner with overall responsibility for Baker Tilly’s audit practice, to take advantage of his experience in the plc audit environment.

Ms Makar has agreed to present herself at our Old Bailey offices for the purposes of identifying herself formally. She is also to provide us with a letter of comfort as to the source of the funds from which our fees will be paid.

Finally, I take this opportunity to enquire whether Triad have been asked for copies of PWC’s report to the audit committee, and their management letter, following the 2005 audit? Our initial view is that there cannot be many precedents for the change in attitude between interim announcement and final audit sign off, and that it must have been documented somewhere. Mira, however, says that no such documents were produced.”

“For info – Paul Newman and I met Triad as part of an audit pitch some time back. I can’t recall whether we have already chatted to you about this.”

“Mark Harwood is out most of the week – ouch!

This looks like a big job and we are never going to be able to meet the deadline of next Monday … I question whether we should take it on on this basis. I can assist with the Corporate Governance issues etc but have no practical experience in expert witness work … would be happy to learn if someone was leading it however!?

Tried to call …sorry was in a meeting this morning … give me a call when you can.”

“PS –

read Stork & Egan Roberts

& problems at Triad

How much pertinent to PS?

Nigel Tristram [sic] – listed plc directors advice?

Mark Harwood – ex EY [Ernst & Young] London BS – up to speed on plcs

may have more cred[ibility] than PS?

Had a conflict.

Nigel – would deal with it.

Very fundamental concerns.”

Arrows linked the first line beginning “Nigel” with that beginning “Mark”, the line beginning “may” with that beginning “Had”, and the second line beginning “Nigel” and the last line.

“We are in receipt of your letter of 30 October, enclosing a copy of the letter from Ian White of Baker Tilly. We are copying this letter to Mr. White.

Without meaning any disrespect to Mr. White, we found the contents of his letter rather surprising and almost totally devoid of any independent analysis or thinking.

The obligation that Mr. White indirectly was under was to specify the documents he considered would be necessary for him to have sight of or review in order to perform his work, namely to prepare an expert report (which is to be served by 6 November 2006).

We are therefore surprised that Mr. White’s letter (with one exception) effectively requests every document listed in Schedule 2 of the Claimant’s Request for Specific Disclosure (based entirely on the premise that Ms Makar considers the documents essential). You are certainly aware that this comprises a huge amount of documentation. Someone with Mr White’s skill and experience must have at least reached a similar conclusion (if he had not previously been informed of the fact by you).”

“Please find attached two PDF files:

1. Our engagement and covering letter

2. Accompanying terms and conditions of business.

Please arrange for a copy of the engagement letter signed by both you and Ms Makar to be returned to this office at your earliest convenience.

Hard copies of all documents follow by post.”

“3.1 Without admission of liability and subject to the Claimant’s compliance with her obligations under this Agreement the Respondent shall pay the Claimant the sum of … (the “Payment” ) by way of a contribution to the costs incurred by the Claimant in connection with the discharge of her duties as a director and employee of the Respondent within 28 days of the date of this Agreement signed by the Claimant and her legal representative on the terms set out below.

3.2 The arrangements set out in this Agreement are in full and final settlement of the Claim and all other claims accrued or accruing that the Claimant may have against the Respondent or any Group Company (or any officers, employees or agents of the Respondent or any Group Company but only in their capacity as such) arising out of her employment with the Respondent or its termination and any claim arising from the termination of a directorship or her resignation therefrom, any claim arising out of or based on the articles of association of the Respondent and accrued rights (if any) to claim against the Respondent in her capacity as a shareholder of the Respondent. For the avoidance of doubt, nothing in this Agreement is intended to compromise or affect in any way any claim based on facts and matters arising after the date of this Agreement in respect of the Claimant’s capacity as a shareholder in the Respondent.

…

5.1 The Respondent and the Claimant agree that they will not, whether directly or indirectly, make, publish or otherwise communicate any disparaging or derogatory statement(s), whether in writing or otherwise concerning the other including, in the case of the Claimant, any disparaging or derogatory statements concerning the Respondent or any of its Group Companies or any of its or their officers or employees.

5.2 The Respondent and Claimant will as soon as practicable and in any event within 10 working days remove all material from any website they maintain relating to the facts and matters referred to in the Claim, the Claimant’s employment with the Respondent and any dealings between the Claimant and the Respondent, its officers and employees. [A new sentence was added in manuscript at this point, but it was illegible in the copy put in evidence.] The Respondent and the Claimant will maintain links for at least 18 months from the date of this Agreement on their respective websites to the agreed statement attached as Appendix 1.

5.3 Save for the agreed statement attached to [sic] Appendix 1 which shall not be edited, the Respondent and the Claimant agree to keep the circumstances surrounding the termination of the Claimant’s employment and the fact and contents of this Agreement strictly confidential and not to disclose, communicate or otherwise make public the same to anyone (save their professional advisers or otherwise as may be permitted or required by law or by the relevant tax and/or regulatory authorities and, in the case of the Claimant, to her immediate family). The Claimant agrees to use her reasonable endeavours to procure that the members of her immediate family keep the fact and contents of this Agreement strictly confidential. By his counter-signature to this Agreement, Ihab Makar agrees to be bound by these terms of confidentiality.”

“I have been informed by Burges Salmon this morning (Saturday 9 am) that a settlement was reached in this matter at 12.30 am on Friday night/Saturday morning.

No need to work the weekend. Nigel I hope you might be able to resurrect your golfing appointment? Please put your time charges on to ISIS asap, or at least let me know what they are – I need to bill this quickly. 258538 826 is the ISIS code.”

“Mira wants us to complete a prelim report, within budget by, say, Wed?

I said, diff[erent] ballgame – having stood people down.

MB will speak to MM & let her know that I will be in touch today .”

“Audit Ctee [Committee] consider that the B&R [Books and Records] situation was ok.

The Q&A [Questions and Answers]

final report is effectively notes of that meeting

get the high level prelim statements

Audit Ctee not acting as reported.

Rep[resentation] letter

Contingent Liab[ility] – not recognised

No valid meeting to approve a/cs [accounts]

Debenture required – dec[laration] to bank

PWC view – will it last 12 months

Fragmented Stork Report – 2 files

Ac reports

Mira said the settlement had left her shell shocked pleased and now able to think constructively

BT report will now be on basis of what we have

30k cap still applies.”

“ Overall Objective

1. Having settled at Employment Tribunal

- What are you[r] objectives now?

- What do you want to achieve?”

“The Employment Tribunal was not an objective in itself. People who win whistle blowing cases are stigmatised as destabilisers.

The original objectives were the turnaround of the Company (March 03 £5m loss to profit March 05); to gert [sic] it back to £200m cash exit valuation within 5 years from my resignation (oct 2002) and positioned with recurring contracts to achieve a £1 billion valuation. The conduct of Rigg Wootton Fulton Haynes PwC and A&O from January 2005 has prevented this from happening: I considered that without disclosure the risk management of the Company could not be restored and the turnaround completed.

This objective can no longer be achieved. Investor confidence in me can only be fully restored when there is some form of public censure and some blood letting. It is more likely to be effective if A&O and PwC are criticised, since the directors have lost market credibility. Other objectives are personal.

Baker Tilly’s terms of ref are unchanged although the addressee of the report may have changed. The conduct of the respective parties in response to my disclosures is important. (cover up/denial/misrepresentations).”

“Nigel and Peter, thank you both for your attendance at the meeting with the Makars.

I attach my contemporaneous note – apologies for any typos and shortcuts.

I am grateful for your input in this and I will be interested to see what the Makars come back with in the nature of further instructions. In the meantime I will now render a fee note and would be grateful if you would arrange for your time charges to be posted to ISIS asap.

The ISIS code is, of course, 258538 826 001.”

“No, at that stage I thought, oh, they are trying to clear out the inventory and they have just sent out the bill; people often do.

…

They had said they wanted to wait for the next set of results and I don’t know when the next set of results came out. From memory, I think it was on or around 19 December, but is that only memory.”

“I refer to your letter dated 5 February 2007 and other reminders. The above invoice relates to a contract to provide a report which has not yet been prepared (to my belief) or received by me.

I believe the invoice was raised in error. Please refer any further queries to Ian White of your Manchester office.”

“29/3 Spoke IW. Report was delivered verbally after the case. No point in written report as costs already overrun by £11k – Told him that someone needs to respond with an explanation, will speak Souster/Tristem.”

“I refer to the work BT agreed to undertake for me at the latter end of 2006. As you were aware I obtained agreement from my trustees for a fee for BT of up to £30k plus VAT (your figure) for the production of a report, the “high level requirements” for which were set out in instructions from Burges Salmon, and the details of which were for you to determine.

This report has not been produced to my belief, even in draft. I have to say I was astounded to receive any bill from you as were my trustees (Royal Bank of Canada) and Burges Salmon (BS), my instructing solicitors. My initial reaction on receiving it, was that you had sent it in advance of your (draft) report, having said in our last meeting that you wished to wait for the company’s September 2006 results published on or around 19 December 2006 before finalizing your team’s collective thoughts.

…

I had understood from your team and our meeting shortly after the settlement on 4 November 2006 that you preferred to wait for the December (2006) results announcement from the company (for the 6 months to September 2006) before continuing your work. I have not heard further from you.

In these circumstances, which are very disappointing, especially given the collosal[sic] effort my team put in at a time we were already regularly working formidable hours against crippling dead lines, I feel I have no choice but to offer you an alternative to producing a report. This is the option of “walking away”, ie drawing a line, my files returned to me, no report and no bill. In making this offer I would like to put on record my appreciation for your own personal interest. It goes without saying that neither I nor my trustees will be able to approve a bill for payment without a satisfactory report which adds value.”

“12.1 The settlement of the Tribunal proceedings did not mean that the need for the report had vanished. As agreed at our meeting of 7 September 2006, the Report was to be produced in any case to be used with the regulatory authorities. I understood from my sister that the periodic updates she was receiving from Ian White indicated progress was being made towards completion of the report. I believe he reported that this would be done for the original fee of £30,000, and would be completed quickly after a “Q&A session” to pin down specific facts, which was scheduled for 20 November 2006.

12.2 We met the team from Baker Tilly on 20 November 2006 for what had been billed as a “Q&A session” to pin down financial questions before finalising the report.

12.3 To our surprise, neither of the two principal expected participants, being Mr. Taub (the Expert Witness) and Mr. Whiter (the contributor on stock market issues) were present at the meeting on 20 November 2006.

12.4 The second surprise was more unexpected and less palatable. The Baker Tilly team opened by saying that, now that the Tribunal proceedings had settled, their position had effectively shifted and they were no longer prepared to prepare a report based on the questions laid out by the Tribunal, as originally agreed.

12.5 They explained this by saying that the “risk profile” of preparing such a report had now changed; that whilst preparing a report for a court or Tribunal gave them certain legal protection, for example from risk of being sued for defamation, if they finalised the report now they would have now [sic] such protection.

12.6 My sister made it clear that, be that as it may, what had been agreed had been agreed; and the agreement as clearly made in the meeting of 7 September was for a Report to be used after the Tribunal case, irrespective of its outcome or settlement, to be taken to the financial authorities. This was an agreement that could not now be reneged upon.

12.7 The Baker Tilly team emphasised what they felt the risk to them in completing such a report would be, and made clear they would be unwilling to do so.

12.8 As an “alternative”, they proposed a much more “bland” report commenting on certain corporate governance issues at Triad. My sister was clear that this was not what she wanted nor what had been agreed. The Baker Tilly team asked us to think about their proposed amendment to the mandate. We said that if we changed our mind we would let them know.

12.9 We did not subsequently contact them in the following days to say so, and awaited receipt of the originally agreed report. It never arrived, and no satisfactory explanation has arrived either.”

“8.1 As agreed, on 7 September 2006 we met with Mr. Taub and his associates to assess their suitability for the task, and having the meetings with Mr. Michael Ellison of [sic, but I think Mr. Makar meant “and” rather than “of”] Alix partners as benchmarks.

8.2 This meeting was to be the single most important event of the entire engagement. It was a long in-depth discussion of what the engagement involved, and what each side expected of the other.

8.3 Present at the meeting were Mr. Michael Taub, and three other Baker Tilly partners, whom he introduced as Mr. Peter Souster, who had corporate governance experience, particularly of private companies; Mr. Ian White, a general forensic partner based in Manchester who would act as the interface between the parties; and Mr. Barney Whiter, a partner with experience of the stock exchange requirements of quoted companies and the associated issues of market abuse.

8.4 Mr. Taub opened the meeting by confirming that, as he had stated to me on the telephone, he would be the named Expert who would take the witness stand; whilst his colleagues would each contribute to the report from their respective areas of expertise. He stated that, as was their normal method of operating, they would do much of the spadework, and then “they will brief me before I go into the witness box, and I will give the witness box testimony”. As the named Expert, the Report would naturally go out in his name.

8.5 Of his colleagues, Mr. Whiter’s experience seemed most useful in supporting Mr. Taub’s since it was based around issues of Market Abuse and Stock Exchange requirements. After some discussion, we agreed that Mr. Whiter’s input would be critical to Mr. Taub’s Report.

8.6 Notwithstanding the presence and input of his colleagues, we stated on a number of occasions that, if we were selecting Mr. Taub, it would be on the basis of his personal witness-box experience. This was particularly relevant given the experience of Mr. Ellison, the nearest “competitor”, who had considerable experience and credibility. Mr. Taub assured us not to worry, that it would certainly be he himself would be taking the witness box stand, whilst the others were “contributors”. He repeated this assurance a number of times during the meeting.

8.7 We also raised the issue that a report would be needed for the regulatory authorities, irrespective of the outcome or settlement of the Tribunal case. We described what the FSA and DTI had said they required, and why an Expert report for them would be valuable. Mr. Taub said he understood fully the issue. We added that the fact that, being part of a Tribunal process, Baker Tilly would be in a particularly strong position to ask for disclosures from PwC and Triad which other experts could not.

8.8 At a number of different points in the discussion we repeated that we expected the deliverable of the Report for use with the regulatory authorities, the FSA and DTI, to be an important part of the assignment. At no point did Mr. Taub or any of his colleagues demur. It was therefore understood that this was a central part of the deliverable we were agreeing upon.

8.9 Finally we mentioned to the group that the requirement that Ms Lewzey, the Tribunal Chairman had laid out, which was for the Expert’s name to be submitted at the next case management conference, and for the draft reports of both sides’ experts to be ready on 31 October 2006, in advance of the hearing beginning on 8 November 2006. These facts were noted and agreed.

8.10 We finished by saying that, based on Mr. Taub’s witness box experience and the range of skills his supporting team had, we felt we would probably choose them, and name him to Ms Lewzey. Both sides were happy with the positive tone of this outcome. We agreed the only remaining factor to our agreement were the fees, which would be agreed in the next few days.

8.11 We agreed that two separate documents would define the mandate.

(A) A formal letter from the solicitors, Burgess Salmon, limited to relaying the exact questions laid out in order of the Employment Tribunal. This would not be a commercial agreement.

(B) A commercial agreement between ourselves as clients and Baker Tilly, detailing fees, deliverables, dates of deliverables and terms and conditions. The solicitors would play no role in the commercial agreement and had not been authorised to do so.

8.12 The Baker Tilly team said they fully understood. It was standard practice in the industry for an initial meeting such as we had had to be followed by a commercial “proposal”, addressed to us as clients, and the commercial agreement we were referring to would be exactly that.

8.13 We had received such a proposal from Martin Hall of Alix Partners after our meeting with him, and assumed Baker Tilly would be following normal practice.

8.14 Much later, I saw a subsequent internal note disclosed by Baker Tilly written by Ian White stating the need to write us a proposal. No such proposal was ever sent or agreed.

8.15 In the following few days, my sister spoke with Ian White of Baker Tilly and agreed fees “capped at £30,000” for the deliverables agreed at the 7 September meeting.

8.16 As stated earlier at paragraph 8.2, this meeting was to be the single most important event of the entire engagement. A number of commitments and representations were made here that are no where else recorded, since we were told by Baker Tilly’s solicitors (RPC) that all meeting notes from the four Baker Tilly partners “no longer exist”, presumably having been shredded, destroyed or otherwise disposed of. RPC also informed us that all emails associated with that meeting had subsequently been deleted “for reasons of cost”, even though the matter was one on ongoing litigation. In the absence of a signed proposal or signed engagement letter, it appears the discussions in that meeting constitute the only mutually-agreed agreement between the two parties.

9. The naming of Mr. Taub to the Tribunal

9.1 Following the agreement with Mr. Taub, his understood track record of witness-box experiences, and the agreement of fees, my sister and I agreed to select Mr. Taub over Mr. Ellison and Mr. Hall. My sister’s counsel was informed, and attended the following case management conference before the Tribunal, and this information was relayed to the Tribunal Chairman. The Respondent in the case also named their expert witness.

9.2 I was surprised some time later, in the context of this action, to learn that (unbeknown to us) Baker Tilly had switched Mr. Tristem for Michael Taub as the proposed Expert Witness. Not only had the agreement been for Mr. Taub as an individual to be the expert, based on his individual witness box record, and he been named to the Tribunal Chairman, but also Mr. Tristem did not even appear as a recognised expert witness in any of the directories of expert witnesses I had consulted. For example, in the most authoritative guide (Sweet and Maxwell’s guide to Legal Expert Witnesses 2006), Baker Tilly name five Expert Witnesses, of which Mr. Tristem is not one. I have also seen an email from Mr. Tristem to Mr. Souster dated 31 October 2006 (timed at 12:40) in which he describes himself as having “no practical experience in expert witness work [although he would be] … happy to learn if someone was leading it”. This was not the highly experienced witness-box expert we had contracted for. ”

“40. As agreed, we met with Michael Taub and his supporting team of three other partners, invited by him, on 7 September 2006 to discuss and agree the mandate.

41. We agreed that there were essentially two key outputs that Baker Tilly would be contributing: firstly, the expert witnesses himself [sic], who would take the witness box; and secondly, the expert financial Report into the financial affairs of the Company.

…

43. Michael Taub confirmed to me he understood the court instructions that only one person was allowed by the court to be nominated to take to the witness box, and Michael Taub confirmed several times during the course of the meeting to me that that individual would be he, himself. The disclosures and time records (February 2009) provided to me confirm that Peter Souster, at least, a fellow partner, attended this meeting with a view to selling the services of Michael Taub himself. [I think that that reference is to the time record of Mr. Souster describing his time spent preparing for the meeting on 7 September 2006 as “proposal re: M Taub”]

…

63. At the meeting on 7 September 2006, it had been agreed that two documents would be exchanged to define the mandate:

(a) (Formal CPR Terms of Reference) the first, the court-mandated list of questions that the expert witnesses were required to address in their Report, which would come from our solicitors on the record;

(b) (Commercial Agreement) the second, and wholly separate document, would be a commercial agreement between me and Baker Tilly regarding the terms of the engagement. This second document, would set out the agreement of the firm to undertake the engagement; the outputs agreed and respective dates; the fees for the work, and the terms and conditions. This agreement was be [sic] directly between the firm and me as the client, not involving the solicitors, and confidential to us. I expected such a commercial agreement would take the form of a proposal from Baker Tilly, which I as client would counter-sign and accept. Baker Tilly’s expectation was the same as mine, so this approach did not take long to agree. On disclosure I have been provided with an undated file note written by Ian White, I am told, recording “BT are preparing a proposal”.

64. In the event and subsequent to the meeting on 7 September 2006, although Baker Tilly verbally accepted the mandate, made the offer formally on 8 September 2006 by email from Michael Taub and began work, I never received a written proposal from Baker Tilly. Therefore no written commercial agreement exists between us. In its absence the effective commercial agreement is therefore the verbal agreement that was agreed at the meeting of 7 September, where the work and outputs were agreed; together with certain subsequent telephone calls (see below) with me, in which the fees for the report and the witness testimony were agreed. Baker Tilly has a number of relevant file notes written by Ian White that I have seen on disclosure such as “Retainer directly with MM”; “£30k cap still applies” (6 November 2006); and a confirmatory email (24 October) when, much later, Burges Salmon, came on the record “the fee arrangement directly between Baker Tilly and Mira.”

65. After some discussion of the details, my brother and I concluded the meeting by saying that I was happy to proceed as discussed, with Michael Taub as expert witness and his team to assist him to produce the Report discussed to be used with the regulatory authorities.

…

73. Given that the meeting on 7 September 2006 was the formative and sole meeting between me and Baker Tilly before the court case and before the draft Report was produced, and at which the terms of reference, goal, outputs and fundamental agreement was reached, the records of this meeting are clearly of great importance. In particular it was the one and only chance the Baker Tilly partners had to question me to obtain clarifications they required. I have been shown a record dated 6 September 2006 in preparation for the meeting on 7 September 2006, headed “matters to be established”. Although I took no notes (as I was answering questions mainly) I recognise the questions and issues on the document and can confirm that the meeting did not end until all Baker Tilly’s questions were answered.

…

77. On 8 September 2006 Michael Taub wrote following the meeting, expressed delight at the opportunity and offered to do the work. His email thanked me and my brother on behalf of him and his team for attending. We stood down or did not pursue the other tenderers; John Ellison of KPMG and Alix Partners and did not pursue Grant Thornton. I was given to understand that work started promptly on 8 September 2006 and it was my belief, based on what I was told, that it had done. I have been provided with a file note written by Ian White dated 8 September 2006 which sets out precisely the areas on which I would have expected the Report to focus. This never changed, including according to the other Baker Tilly file notes from disclosure.

78. Over the next few days a number of telephone calls were made between me and Ian White on behalf of Baker Tilly regarding the fee for the work to be undertaken. It was agreed specifically that the price of the Report would be subject to a maximum “cap” of £30k plus VAT. It was confirmed as agreed in the 7 September meeting that the Report would be produced, irrespective of settlement of proceedings in Court, so as to take to regulatory authorities as agreed. Ian White told me he thought that £30k would give Baker Tilly “plenty of headroom” (8-9 days of senior partner time, I calculated, when I first saw the rates in the December bill), as the matter had been well documented (there is a file note I have seen on disclosure) and Baker Tilly were not required to find on facts (there is a file note I have seen on disclosure). It seemed to me that he had spoken to someone else before proposing this capped fee (he went off and said he would revert to me before he made the suggestion) and I presumed it was Michael Taub, whose assistant he had been presented as being dealing with liaison with me and project logistics.

…

79. After the extensive meeting on 7 September 2006, we speedily conferred with our counsel and confirmed with Baker Tilly that we would engage them and confirmed that we accepted the proposal of Michael Taub as our expert witness. I do not now recollect which day each communication was precisely but I believe they were 7 September after the meeting and 8 September. This information was relayed to our counsel, Andrew Hochhauser Q.C. When the tribunal chairman asked him our choice of expert witness, he confirmed that it would be Mr. Taub.”

“Having discussed the mode of payment, Ian White postponed a decision until after seeking authority for agreement of the terms of payment. Thereafter and by 12 September 2006, Ian White telephoned the Defendant and stated that the report ought to be relatively easy and quick to prepare and that the total cost would fall well short of £30,000 plus VAT. Accordingly and in any event Ian White on behalf of the Claimant offered to provide a completed report at a capped total charge of not more than the sum of £30,000 plus VAT and/or such said report to be available and ready as soon as possible after 15 October 2006 and in any event by 31 October 2006 as the Defendant’s said expert report for the trial commencing on 6 November 2006.”

“I attended this meeting together with Mr. Taub, Mr. Souster and Mr. Whiter. As I recall, Mr. Makar arrived on time and the meeting began without Miss Makar, who was detained elsewhere. The meeting was very long. Mr. Souster left the meeting part-way through and returned to it following a lunch engagement and Mr. Taub left the meeting early.”

“21. I have read Ms Makar’s Defence to Baker Tilly’s claim and note that she claims that she made clear at this meeting that any “report was for the express purpose as evidence pursuant to the Order of the Employment Tribunal and/or it was further to be for use of [Ms Makar] to demonstrate to UK Listing Authority and/or the Regulators that they should re-open their inquiry relating to Triad”. This was not the case. The Makars explained to us that they had made approaches to various regulators following Ms Makar’s investigations into Triad, but at that stage we were told that she wanted an expert to give evidence to the Employment Tribunal. We were participating in a competitive tender process to be appointed as such an expert.

22. During the course of the meeting, all of the Baker Tilly attendees provided the Makars with information about our own respective practice areas and expertise. It would have been apparent to the Makars that if they were to instruct us following the meeting (which, we understood, was not certain as they were meeting with other accountancy firms), any technical analysis would have been provided by Mr. Souster and/or Mr. Whiter, but not either Mr. Taub or myself.

23. No instructions were received from the Makars during the meeting, nor was there any indication that instructions would follow shortly. I have seen Ms Makar’s Counterclaim in which she alleges that we agreed a two stage approach to preparing the report during this meeting. We might well have suggested such an approach in the context of a very broad discussion on our general approach to expert reports, as this was our normal way of working. However, we did not agree that we would work on this basis for Ms Makar. Matters did not progress that far. We did not know if we would even be instructed to act on Ms Makar’s behalf.

24. I note from her Defence that Ms Makar alleges that Baker Tilly were made aware during this initial meeting that the report was to be crucial to the success of her claim and her exoneration. This may have been mentioned by Ms Makar, when she explained that she required expert evidence for the purposes of the Employment Tribunal. We were unable to say at that stage whether our evidence, were we to be appointed as Ms Makar’s expert, would vindicate her case. At that stage, there was no discussion that the report would be used for another, wider purpose.

25. Following the meeting, on 8 September 2006 I spoke with Ms Makar and there is an attendance note of our discussion … Ms Makar had telephoned me to provide me with some further information. She confirmed that there was an indemnity for directors’ costs in place, up to £1 million. She also discussed again the investigations she had carried out on account of the financial irregularities within Generic. Her primary concern was clearly PwC’s role, given the auditors’ statement in July 2005 to the signed off accounts. As I recall her concern was how PwC had signed off an unqualified audit opinion when the Chairman’s statement had suggested there may be a qualification. She thought that perhaps they could have come under some pressure from the other directors of Triad to give an unqualified opinion. Essentially, Ms Makar considered that the other directors, Allen & Overy and PwC were all involved in a cover-up and she needed to prove that she was right. I did not provide any advice to Ms Makar during this telephone conversation or agree to undertake any work on her behalf.

26. I see from Ms Makar’s Reply that she alleges that I accepted the instruction on behalf of Baker Tilly on 12 September 2006. I have no record of a telephone call between us on this date. If such a call did take place I believe I would simply have reiterated to Ms Makar that Baker Tilly would be pleased to assist her with her case, subject to engagement terms being agreed. There were, at this time, no instructions to accept.

27. My notes indicate that I did not speak to either Ms Makar or her brother again until 25 September 2006. On that date, Mr. Makar telephoned me to discuss Baker Tilly’s likely fees in the event we were instructed to carry out work on their behalf. I made a note of our telephone conversation…. I advised Mr. Makar that the fees for the assignment were likely to be in the range of £25,000 to £38,000, based on hourly rates. In response, Mr. Makar asked what documents I would need to see or receive in order to provide a fixed fee quote. I advised that I could only provide a fixed fee quote once there was agreement on the actual scope of our instructions with Ms Makar’s then solicitors, Russell Jones & Walker. In addition, I would need to obtain approval for the fixed fee from my fellow partners.

28. Following this call, I had a discussion with Ms Makar which I believe also took place on or around 25 September 2006. I made a note of our discussion … Ms Makar asked if we were preparing a proposal for the work, setting out what the work involved and how we proposed to carry it out. She offered to assist by providing materials (from which I assumed she meant documents) and her suggestions on the approach we should take. She also suggested that Keith Roberts (of Eade & Roberts) could assist as he had helped Ms Makar previously in respect of her own investigations. Ms Makar also advised me that she was preparing a dossier of the facts, so that we would not need to collate these. Ms Makar concluded the conversation by telling me that she had decided to change solicitors from Russell Jones & Walker to Burges Salmon as she considered that Russell Jones & Walker were out of their depth. Again, I do not recall making any comments of substance during the telephone call, and my note reflects this. It was still not clear to me that Ms Makar would actually instruct us to assist her, although it sounded as though she was preparing to instruct some firm of accountants at this time.

29. I did not have any further communication with Ms Makar, her brother or her legal representatives for a further three weeks. Then, on 17 October 2006, I received a telephone call from Ms Makar … She said that she wanted the Baker Tilly team to start reading in to the background. This was the first instruction we had received from Ms Makar to carry out any work on the matter.”

“MR SEMKEN: Mr. White, you were asked yesterday that if you had agreed to a retainer to prepare the report on about 12 September 2006 – that is shortly after the meeting on 7 September – whether you would then set to work. You said you wouldn’t set to work without an engagement letter in place.

What was the significance to you of having an engagement letter in place?

A. The procedures to which I have always worked and which Baker Tilly worked at that stage were that although I hear lawyers speaking about retainers, we would regard ourselves as being at risk as to time costs and at risk as to the number of other risk management matters dealt with in the firm’s terms and conditions, if we embarked on a project which would – without having those contractual terms in place.

So simply it is not something that one would do. One wouldn’t expect to be paid for work done other than on an engagement letter and that is only part of it.

Q. Yet it is your case that you did, in fact, start some work for which you started to record chargeable hours towards the end of October, 17 or 20 October, the reading in work. How does that square with your previous answer?

A. I believe I would have said in answer to that – I hope I would have said in answer to that question that there is a problem for somebody who is in the position of being an expert witness in that he knows he is going to be instructed to prepare a report to the court. When that becomes likely then he knows that the administration involved in the preparation of an engagement letter and so on sometimes has to follow the event, to a reasonable degree.

So at that stage lawyers were clearly instructed and I was in correspondence with the lawyers and it was the lawyer who was asking me to start reading in. So we did that. At the time it has been – I would have regarded it at the time as being completely at risk in terms of whether we would get paid for that reading in if, subsequently, the instructions weren’t confirmed.”

“If Mr. White himself had no intention of entering into a binding contract but was simply agreeing to work on his own risk, then in my submission it cannot be right that there was a binding contract created on that day. And I emphasise this is the claimants’ own case. It is not consistent with our primary case, my Lord, but it cannot be right that there was a binding agreement entered into that day when the only person who was capable of entering into that contract didn’t intend to do so.”

“… if the claimant’s case is right, there cannot possibly be any charge for fees raised in respect of work after 4 November because if the existing retainer was terminated, it is simply not possible to imply, as a matter of necessity, a further retainer in the circumstances that pertained at the time.”

“But the professional has to make it clear to the client that that is how the professional is treating it.

On the evidence, in my submission, what is established quite clearly is that Ms Makar was making it clear that she expected the report on the basis of the existing retainer.

In those circumstances, if the professional agrees to do work, if the professional doesn’t at that point say, “But hold on, you do appreciate you are going to be charged separately for this”, then it would be monstrous if the professional could turn around afterwards and say, “I never corrected your understanding. I was just going along with the situation and here is my bill for £12,000.””

“Mr. Tristem advised Ms Makar that it would be better for her to wait for the company to publish its interim results before deciding whether to take the matter any further. If there was, for instance, a £5 million write off in those accounts there may be a legitimate concern which could be worth pursuing. If that was the case, Mr. Tristem advised that he may be able to prepare a report considering the corporate governance issues within Triad or commenting on PwC’s conduct. It was left that Ms Makar would wait until the interim results were published and then consider whether she wished to instruct Baker Tilly to carry out any further work.”

“28. Towards the end of the meeting I offered to record in writing that it was odd that PwC had changed their position so quickly from potentially giving a qualified audit opinion to actually giving an unqualified opinion. In addition, I explained that, whilst we could not opine on the accounts themselves, it may be possible for us to review the corporate governance of Triad in line with the best practice guidelines for listed companies set out in the relevant Code of Conduct, provided the Makars gave us further instructions to carry out this work. Whilst it is not clear from Mr. White’s note, I thought that this suggested further work would only be productive in the event that Triad’s interim results did reveal a large “hole” in the accounts. Ms Makar did indicate during the meeting that she might wish us to consider corporate governance issues “the narrow way” (from which I understood her to mean that she may wish us to review the conduct of the directors and not PwC or Allen & Overy); however, this was not a formal instruction. It was clearly left that we would await further instructions from Ms Makar.

29. … Neither I nor any other member of the Baker Tilly team received any further instructions from Ms Makar. As a result I carried out no further work on her behalf.”

“But if for any reason your Lordship were to form the view that actually the time spent by Baker Tilly was chargeable, then my Lord – and it is a small point because Mr. Tristem’s fees were relatively limited – but in our submission, it would be inappropriate to charge my client those fees in circumstances where he wasn’t a satisfactory substitute or an agreed substitute for Mr. Taub. So that is where the argument goes, my Lord.”

The counterclaims of Miss Makar

“D advances the following causes of action against C:

a) C failed in breach of contract to provide its report.

b) C failed in breach of contract to provide its report in time to enable the report to be used at the mediation of D’s dispute with Triad.

c) C, in breach of common law, contractual and/or fiduciary obligations to D, failed to inform D fully of C’s prior dealings with Triad.”

“ 1. Introductions

2. Triad Group: Key business issues for sustainable, profitable growth

3. Key take-on considerations arising from recent Press coverage

i) Alleged financial and accounting irregularities and the resulting independent investigation

ii) Circumstances surrounding Ms Makar’s suspension from the Board and subsequent dismissal

iii) Status of Ms Makar’s legal proceedings against the company

iv) Failure to keep proper accounting records, disclosure within directors’ report and factors that led to a “clean” audit report to be given

v) Outcome of reported FSA enquiry into the company

vi) Discussions with Brokers/Lawyers/PwC

4. Key corporate governance issues

i) Update on intentions to appoint another non-executive director

ii) Splitting the roles of Chairman/Chief Executive

iii) Constituting an appropriate Audit Committee

6. [sic] The Baker Tilly approach

Communication is crucial

- preliminary assessment of the reliability of internal controls

- initial partner-led planning meeting

- preparation of draft audit plan for consideration by those charged with governance

- carry out “early warnings work”

- on-site manager and partner file reviews

- partner-led discussions with management on audit findings

- preparation of draft audit findings report for comment

- circulation of final audit findings report to those charged with governance

- attendance at audit committee meeting

Approval of financial statements/preliminary announcement

Approach and delivery

- focus on key audit risks and controls designed to manage them

- keep business disruption to a minimum

- use your management information/don’t re-invent the wheel

- provide meaningful observations for management

- provide pragmatic support and assistance

- solutions driven

7. Conclusions/next steps ”

“40. Before, at and/or after the March 2006 Meeting, the Claimant proposed to Triad that Triad should retain the Claimant as its auditor in place of PwC, who had resigned as the Claimant’s [sic – presumably “Triad’s” was meant] auditor following their approval of the Claimant’s [sic] accounts for the year 2004/2005.

41. At the time of its proposal to Triad, the Claimant knew (further or alternatively, should have known and/or would have been presumed by Triad to know) of the matters identified in the agenda referred to at paragraph 39 above [that is, the Agenda, in particular section 3], and/or:

a. that PWC had resigned as Triad’s auditor without giving any public reason for their resignation;

b. that Triad was in dispute with the Defendant;

c. that the Defendant alleged, among other things, that:

i. Triad’s financial statements were unreliable and concealed, or failed to disclose, significant financial malpractice;

ii. PwC should not have approved Triad’s financial statements for 2004/2005; and

iii. Triad’s accounting and financial reporting systems were not in a condition that would permit an external auditor properly to commence (let alone to complete) a statutory audit of Triad, without there having first been a full internal “100%” audit in order to reconstitute Triad’s records.

42. Accordingly, by offering to accept office as Triad’s auditor, the Claimant expressly or impliedly represented to Triad that:

a. Triad’s accounting and financial reporting systems were considered by the Claimant to be in a condition that permitted an external auditor properly to commence (and also to complete) an audit of Triad; and

b. the resignation of PwC, the matters identified in the agenda referred to at paragraph 39 above and/or the allegations of the Defendant did not raise such concerns as would deter the Claimant (or indeed any reputable firm of accountants) from accepting an audit retainer from Triad.

43. In the course of carrying out the checks referred to at paragraph 8 above [essentially designed to avoid conflicts of interest], the Claimant discovered or should have discovered (if and to the extent that it was no longer aware of them) both the fact of the March 2006 Meeting and (upon further appropriate internal enquiry) the nature and content of its discussions with Triad. The Claimant should at that point have appreciated (among other things) that the principal issues raised by the Defendant’s instructions included a number of issues which the Claimant had previously discussed with Triad and/or in relation to which the Claimant had already provided an opinion to Triad that was unfavourable to the Defendant’s interests. Thereupon, in accordance with the Claimant’s fiduciary obligations to the Defendant and/or the Claimant’s contractual and common law duties of care, the Claimant:

a. should have declined to act for the Defendant; and/or

b. should have made full disclosure to the Defendant in relation to the March 2006 Meeting. The Defendant will refer in this regard to:

i. the Claimant’s subsequent assertion (in a witness statement by its solicitor dated 27 February 2009) that it received no confidential information from Triad at the March 2006 Meeting; and/or

ii. section 220 of Part B of the ICAEW’s Code of Ethics.

44. Further, in late October 2006 the fact of the March 2006 Meeting again came to the attention of the Claimant. The Defendant will refer to an e-mail sent from Mr. Harwood to Mr. Nigel Tristem, also of the Claimant. At 14.54 on 31 October 2006, which referred expressly to the March 2006 Meeting and the Claimant’s proposal to Triad.

45. The Claimant should at that point have taken steps identified at paragraph 43 above (having failed to take them previously).

46. In breach of the contractual, common law and/or fiduciary duties owed by the Claimant to the Defendant, the Claimant failed at any material time to inform the Defendant of the March 2006 Meeting (let alone to provide full disclosure in relation thereto). By reason of the Claimant’s wrongdoing, the Defendant remained entirely ignorant of the March 2006 Meeting until about early April 2009 (following the Claimant’s belated provision of limited disclosure towards the end of February 2009).

47. If the Defendant had been properly informed of the March 2006 Meeting by the Claimant, the Defendant would not have retained the Claimant, alternatively would have terminated the Claimant’s retainer. The Defendant would instead have retained an alternative firm of accountants to provide her with the expert assistance, advice and/or evidence that she required.”

“17. I attended the meeting with Triad together with Mr. Newman from Baker Tilly. The meeting was attended by Mr. Burrows and also Mr. Rigg of Triad. Mr. Newman took a handwritten note of the issues discussed at the meeting. …

18. The meeting lasted for approximately an hour. I believe that Mr. Newman’s handwritten note accurately summarises the comments made by Mr. Burrows and Mr. Rigg. In essence, the meeting was about the company as a whole. As is apparent from the notes, the situation with Ms Makar was only a small part of the discussion.

19. As Mr. Newman’s note confirms, the meeting began with Mr. Burrows and Mr. Rigg providing us with a brief introduction to Triad, both its history and the type of business it carried out.

20. We then enquired about the concerns raised by Ms Makar in respect of the potential accounting frauds. As recorded in the notes, Mr. Burrows and Mr. Rigg told us that they had got to the bottom of this issue and that there was no cause for concern. They also told us that Ms Makar had wanted to take the matter further and suspend the shares which, in turn, had led to her suspension as Chief Executive on 4 February 2005.

21. Mr. Rigg and Mr. Burrows also mentioned an FSA enquiry in passing, although I cannot recall precisely what was said in respect of this.

22. We, in turn, enquired about the dual role of Mr. Rigg as Chairman and Chief Executive and the limited number of non-executive directors disclosed in the accounts (which were corporate governance issues).

23. As is clear from the note, John Rigg and Nick Burrows provided us with the names of their stockbrokers, Evolution and their lawyers, Allen & Overy. They told us that PwC had resigned.

24. We briefly enquired about Ms Makar’s legal proceedings against the company (as we were aware from the press releases that Ms Makar had brought proceedings to compel access to the company’s records). We were then advised by Mr. Burrows/Mr. Rigg that Ms Makar had commenced an Employment Tribunal claim on the grounds of unfair dismissal and whistle-blowing. They did not provide us with any further information about this. We were not aware of the Tribunal claim prior to the meeting.

25. We also enquired about the company’s current financial position and Mr. Rigg provided us with copies of the year end accounts for 2005 and the interim statements for 2005-2006 (both of which were publicly available) … He did not provide us with any other documents or information.

26. Although we had set out on the agenda Baker Tilly’s general approach to audits, I do not recall that we actually discussed this with Triad during the meeting. We had gone to the meeting with concerns about Triad and neither Mr. Burrows nor Mr. Rigg had yet allayed these concerns sufficiently for us to want to respond to an invitation to pitch for the audit.

27. At the end of the meeting I recall that we asked Mr. Rigg if we could speak with Allen & Overy, Evolution and PwC and it was left that Mr. Rigg would arrange for these discussions to take place.

28. Even in the event that the additional information could have been provided by Evolution, Allen & Overy or PwC, we would have had to have presented our findings to the risk committee at Baker Tilly and obtained their agreement to take the matter forward before progressing to either an audit pitch or taking on Triad as a client.

29. In summary the meeting on 17 March 2006 was only a preliminary meeting arranged for the purpose of gathering general background information about the company and introducing Baker Tilly. As is clear from the note of the meeting, we obtained very little background information and certainly nothing that was not publicly available.

30. For the purposes of making this statement I have been shown paragraph 40 of the Re-amended Defence and Counterclaim. It is not the case, as alleged, that either before at and/or after the March 2006 meeting, we proposed to Triad that Triad should retain Baker Tilly as its auditor.

31. In addition, and in response to paragraph 41 of the Re-amended Defence and Counterclaim, we were not given any specific information regarding the background to PwC’s resignation. In respect of the Employment Tribunal proceedings, all we were told was that Ms Makar had brought Employment Tribunal proceedings alleging whistle-blowing and unfair dismissal.”

“I think it would not be for me to determine whether there was a conflict of interest because obviously I was not aware of the instructions that had been issued or the circumstances relating to them and based on my knowledge of the meeting that Mr. Newman and I had with Triad, I can’t perceive that there could be a situation in which there could actually be a conflict of interest.

But I think I would have been unwilling to get involved, simply because I had met Triad previously and I could see that there might, therefore, be – a situation might arise where it could raise, perhaps, perceptions of unease or perceptions of conflict of interest in third parties. But you know, I would reiterate that I never felt that there was a conflict of interest in terms of either my own involvement or the firm’s involvement as far as I was aware, my Lord, understanding that I was not involved in discussion of the terms or scope of the work.”

“In Rakusen’s case the Court of Appeal founded the jurisdiction on the right of the former client to the protection of his confidential information. This was challenged by counsel for Prince Jefri, who contended for an absolute rule, such as that adopted in the United States, which precludes a solicitor or his firm altogether from acting for a client with an interest adverse to that of the former client in the same or a connected matter. In the course of argument, however, he modified his position, accepting that there was no ground on which the court could properly intervene unless two conditions were satisfied: (i) that the solicitor was in possession of information which was confidential to the former client and (ii) that such information was or might be relevant to the matter on which he was instructed by the second client. This makes the possession of relevant confidential information the test of what is comprehended within the expression “the same or a connected matter”. On this footing the court’s intervention is founded not on the avoidance of any perception of possible impropriety but on the protection of confidential information.

My Lords, I would affirm this as the basis of the court’s jurisdiction to intervene on behalf of a former client. It is otherwise where the court’s intervention is sought by an existing client, for a fiduciary cannot act at the same time both for and against the same client, and his firm is in no better position. A man cannot without the consent of both clients act for one client while his partner is acting for another in the opposite interest. His disqualification has nothing to do with the confidentiality of client information. It is based on the inescapable conflict of interest which is inherent in the situation.

This is not to say that such consent is not sometimes forthcoming, or that in some situations it may not be inferred. There is a clear distinction between the position of a solicitor and an auditor. The large accountancy firms commonly carry out audit of clients who are in competition with one another. The identity of their audit clients is publicly acknowledged. Their clients are taken to consent to their auditors acting for competing clients, though they must of course keep confidential the information obtained from their respective clients. This was the basis on which the Privy Council decided Kelly v. Cooper [1993] AC 205 in relation to estate agents.

Where the court’s intervention is sought by a former client, however, the position is entirely different. The court’s jurisdiction cannot be based on any conflict of interest, real or perceived, for there is none. The fiduciary relationship which subsists between solicitor and client comes to an end with the termination of the retainer. Thereafter the solicitor has no obligation to defend and advance the interests of his former client. The only duty to the former client which survives the termination of the client relationship is a continuing duty to preserve the confidentiality of information imparted during its subsistence.

Accordingly, it is incumbent on a plaintiff who seeks to restrain his former solicitor from acting in a matter for another client to establish (i) that the solicitor is in possession of information which is confidential to him and to the disclosure of which he has not consented and (ii) that the information is or may be relevant to the new matter in which the interest of the other client is or may be adverse to his own. Although the burden of proof is on the plaintiff, it is not a heavy one. The former may readily be inferred; the latter will often be obvious. I do not think that it is necessary to introduce any presumptions, rebuttable or otherwise, in relation to these two matters. But given the basis on which the jurisdiction is exercised, there is no cause to impute or attribute the knowledge of one partner to his fellow partners. Whether a particular individual is in possession of confidential information is a question of fact which must be proved or inferred from the circumstances of the case. In this respect also we ought not in my opinion to follow the jurisprudence of the United States.”

Conclusions