Towry EJ Ltd v Bennett & Ors

That there was no repudiatory breach by the Claimant of the contracts of employment of the Individual Defendants

That the Claimant has not proved the allegations of wrongful conduct against the Defendants

Introduction and Preliminary matters 1 - 32

The Facts: From events before the Acquisition to individual

Issue A.1: Repudiatory Breach 277 – 395

Issue A.2: Reasons for Resignation

Issue C.1: Effect of Restructuring 405 – 415

Issue D.7: Confidential Information 416 – 431

Issues E.8 – E.11 Alleged wrongful conduct

At the start of October 2009 the seven, individual Defendants were all employed by Edward Jones Limited. The Company’s business was the provision of financial advice to investors, for which authorisation was given by the Financial Services Authority (FSA) in December 2001. The job title in their contracts of employment was “investment representative”. The Defendants state that they were working as financial advisers and stockbrokers. They were all based in different offices situated throughout the UK.

The American parent company, Edward D Jones, decided to sell Edward Jones Ltd to Towry Law Finance Co. Ltd, one of the companies in the Towry Law Group. The acquisition, in the form of a share sale, was agreed on 22 October 2009 and completed, following FSA approval, on 12 November 2009. Edward Jones Ltd subsequently changed its name to Towry EJ Ltd, the Claimant in this case (hereafter referred to as Towry).

News of the acquisition was not greeted with universal enthusiasm. To many employees it came as a shock. Over the weeks that followed many of the financial advisers who were offered contracts by Towry, including the individual Defendants, either resigned or were dismissed for redundancy.

Each of these Defendants joined the corporate Defendant, Raymond James Investment Services Ltd, where they now work. Towry then received requests from a large number of clients, whose financial adviser had been one of the individual Defendants, to transfer their investments to Raymond James.

Those transfer requests, and the consequent loss of investment business for Towry, have led to this litigation. Towry’s case, in summary, is that the individual Defendants, with the assistance and encouragement of Raymond James, persuaded many of the clients, whom they had formally advised, to transfer their investments to Raymond James. It is alleged that this conduct amounted, in the case of the individual Defendants, to breaches of their contractual post-termination restrictions, operative for a period of 12 months, prohibiting both the soliciting of clients, in competition with the business of Towry, and the misuse of Towry’s confidential information. Raymond James’ involvement in the matter is said to be such that the company is liable for procuring or inducing the breach of contract by the individual Defendants, and for conspiracy. It is alleged that there were unlawful means conspiracies between Raymond James and each of the individual Defendants, using the unlawful means of breach of contract and breach of confidence.

Towry claims thereby to have suffered loss, which is to be measured either by reference to loss of the value represented by those clients who were unlawfully solicited to transfer their business and investments, or on the basis of loss of a realistic and substantial chance that the clients would have been retained, but for the Defendants’ unlawful conduct. Alternatively, Towry seeks an account of profits made by the Defendants. The total loss suffered is said to be almost £6 million.

The Defendants deny all these allegations, which they contend are being advanced by a rival organisation with a reputation in the industry as an aggressive litigator, and who is pursuing in this case a grossly inflated claim for damages on the basis of serious but wholly unsustainable allegations. In summary, Raymond James state that they proceeded cautiously at all times, being well aware of the contractual restrictions and of Towry’s reputation, obtaining legal advice and taking considerable care in respect of both the recruitment of individual, Edward Jones’ advisers and their compliance with the relevant restrictive covenants. The transfer of assets by such large numbers of clients is indicative of the significant disconnect between the business models of Towry and Edward Jones and the similarity of the models offered by Edward Jones and Raymond James, which enabled both advisers and clients to continue to operate in the way they wished.

The individual Defendants state that they understood and fully complied with their legal obligations at all times; that they were long-standing and trusted financial advisers to their clients, many of whom were friends; and that the clients who transferred their investments chose freely and voluntarily to follow them to Raymond James without any element of persuasion or influence on the part of any Defendant, and without any breach of confidentiality. Further, Towry’s treatment of the Defendants, after the acquisition, is said to constitute a clear breach of the implied duty of trust and confidence owed to them by their employer, amounting to a repudiatory breach of contract, which they accepted. The Defendants therefore contend that this claim should be dismissed in its entirety.

Towry’s case is based entirely upon inferences that they submit should be drawn from the facts demonstrated by the evidence. The Defendants’ case is that the evidence discloses no wrongdoing whatsoever on their part; and that Towry’s version of the facts, and of the inferences to be drawn, has been advanced to fit the erroneous hypothesis that, because so many clients asked for their investments to be transferred, there must have been solicitation or misuse of confidential information.

Against that introductory background a number of preliminary, procedural matters arose at the hearing, as follows.

Disclosure

In my view there is no value in endeavouring to resolve these, now sterile disputes. The extent of the factual dispute and of issues of credibility in this case led to the Court adopting a generous approach to both sides in relation to their exploration of the facts in cross-examination of the witnesses, both as to the extent of that exploration and the time it took. Requests by the Defendants for specific disclosure were responded to and the documents inserted in the bundles appropriately, as were a number of documents requested of the Defendants. I decide this case on all the oral and documentary evidence now before me and without regard to the allegations and counter-allegations as to the adequacy of pre-trial disclosure. I was not persuaded on the material before me that there had been any deliberate withholding of documentation on either side.

Rulings at the Outset

At the beginning of the trial, on 7 June 2011, two matters remained in dispute: (a) Towry’s specific request for disclosure of the legal advice referred to in passages of the witness statements served by the Defendants (save the second, fifth and eighth Defendants); and (b) the Defendants’ application, under CPR 33.4, for permission to call a number of the clients referred to in some of the statements served by Towry’s witnesses and to cross-examine them as though they had been called by Towry.

Legal Advice: Waiver of Privilege

The essential issue was whether the Defendants had waived the privilege that would otherwise shield these documents from disclosure. Having regard to the authorities it was common ground that, if a party sought positively to rely on the substance of legal advice obtained in support of his case, rather than merely the fact of obtaining it, then fairness required that enough of that advice should be disclosed, to enable the opposing party to challenge the evidence as appropriate, and to enable the Court to be sure that it had been presented with the complete picture and was not misled, (see Dunlop Slazenger International Ltd v Joe Bloggs Sports Ltd [2003] EWCA Civ 901, CA and Brennan v Sunderland City Council [2009] ICR 479 EAT).

Having read the relevant passages in the statements I indicated to Mr Quinn, counsel for all the Defendants, that I considered the relevant Defendants to have crossed the line and that there should, in fairness, be sufficient disclosure to enable the full picture to be clear. Mr Quinn did not thereafter pursue any further objection to disclosure and the parties agreed an appropriate form of words in the Order dated 8 June 2011.

The CPR 33.4 Application

Under this Rule, where a party proposes to rely on hearsay evidence and does not propose to call the person who made the original statement to give oral evidence, the Court may, on the application of any other party, permit that party to call the maker of the statement to be cross-examined on the contents of the statement.

The Defendants had applied on 10 May 2011 for an order under this Rule permitting them to call and cross-examine eight clients, but by the first day of the trial that number was reduced to six. The subject matter of this evidence was a number of conversations said to have taken place between a wealth adviser employed by Towry and former clients of Edward Jones, during the adviser’s attempts to retain those clients. The two issues were: (i) whether the evidence which the Towry witnesses proposed to give in this respect constituted hearsay within the meaning of CPR 33.4; and (ii) even if it did, whether the Court in the exercise of its discretion should make such an order in all the circumstances.

Mr Tolley, representing Towry together with Ms Butler, submitted first that the power to call witnesses for cross-examination in hearsay evidence was not engaged on the facts of this case. Each of the relevant Towry advisers (Sally Burn Jones, James Johnson, Lee MacDonald and Howard Pykett) was a party to the conversation in question and had personal knowledge of the facts about which he or she proposed to give evidence.

Having considered the various passages in the witness statements and the reliance that Towry sought to place upon them, I did not accept this submission. Lee MacDonald, for example, referred to being told by clients that they had spoken to Thomas Spain and said that, in one case, the client “was likely to transfer his investments to Raymond James”. Howard Pykett stated that he was told by the client, John Williamson, that James Chandler “had contacted him … with a view to having him transfer his account to Mr Chandler”. James Johnson, similarly, stated that the client David Hillam had informed him that Stuart Hutton “had contacted him” and that he had agreed to meet Mr Hutton “to discuss the service offered by Raymond James”.

In my view, the Claimant was in these respects proposing to rely on hearsay as defined by CPR 33.1(a), namely “A statement made otherwise than by a person while giving oral evidence in proceedings, which is tendered as evidence of the matters stated”.

In submitting that I should not, in any event, make an order in the terms sought Mr Tolley said that the Defendants could give evidence about their dealings with the clients in question; that the Defendants could themselves have sought and obtained statements from these clients and applied for permission to call them, in addition to the 14 clients already to be called; and that the clients concerned were mostly of retirement age and lived a considerable distance from London.

Weighing these considerations in the balance, however, in the circumstances of this case I considered that I should make the Order sought. The nature and extent of the contact between the clients and the individual Defendants, how and by whom it was initiated, in what circumstances, and what was said all lie at the heart of Towry’s allegations of unlawful solicitation in this case, which Mr Tolley identified in opening the case as “the key underlying issue”. I therefore made an Order in the terms sought in respect of five of the six client witnesses (excluding Mr Williamson, who was to be called by the Defendants in any event).

During the trial I heard oral evidence from four of these clients, who were described as “the hearsay witnesses”, namely Peter Elphick, David Hillam, John Skinner and Garry Elliott.

When opposing the Defendants’ application Mr Tolley submitted that, if I were to grant the application, I nevertheless retained an inherent discretion to impose a condition that Towry should not be treated as being bound by the oral evidence given by the hearsay witnesses. I agreed to consider that submission at the conclusion of all the evidence.

Mr Tolley submitted, correctly, that pursuant to CPR 33.4 it was the Defendants who should be treated as calling the witnesses, albeit that they are permitted to cross-examine them as to their evidence. A consequence of this, as the author of Phipson on Evidence observes, is that:

“… the party who puts in the evidence may be bound by the rule that he cannot disavow the evidence he has led, even though he has deliberately not called the witness to give oral evidence.”

(17^th Edition, para. 29.05, footnote 24).

The author goes on to suggest that, in the light of that:

“It might be a condition for the Court giving leave to the party not putting in the evidence to call the witness to cross-examine, that the party adducing the evidence is not bound by his evidence in this way.”

Given the extensive factual disputes in this case, in particular as to the key issue of solicitation, the fact that counsel for the Defendants carefully limited the questions put to the hearsay witnesses and that counsel for Towry was unable to test the evidence they gave in cross-examination, I consider that Towry should not be treated as bound by that evidence. I agree with Mr Tolley that, in these circumstances, such evidence falls to be weighed in the balance along with all the other evidence in the case.

Agreed Issues

As will appear from the various headings set out below, the parties helpfully agreed a total list of 13 issues to be determined, depending on my findings on individual issues.

The Trial

Towry called 26 witnesses. I also heard evidence from the 7 individual Defendants and 3 witnesses from Raymond James. In addition to the “hearsay” clients, the Defendants called 13 clients to give oral evidence and, by agreement, I read the witness statement of another, David Lobley, who was unable to attend and was therefore not cross-examined on behalf of Towry.

The trial began on 7 June 2011. By the end of 15 July, the final day that could be allocated for this trial, all the evidence had been concluded. However, it proved difficult to arrange a further date for oral, closing submissions within a reasonable time frame. The parties therefore provided detailed and lengthy closing submissions and supplemental submissions in response. I am grateful to counsel on both sides, for their assistance in this respect and indeed during the trial.

Having considered all the evidence and counsels’ submissions with care, the facts I find in this case are set out below. I add the following observations in relation to my approach to the evidence in this case. First, in view of the exceptionally detailed factual analysis undertaken in closing submissions, in particular by counsel for Towry, I emphasise that I shall not be referring to all the evidence to which counsel have referred. I concentrate on those facts which I consider are relevant to the issues to be determined. They are inevitably of some length. Omission of a particular piece of evidence does not mean, however, that I have not taken it into account.

Secondly, this being a case which, so far as Towry’s case against the Defendants is concerned, is based entirely upon the inferences it is submitted should be drawn from the facts, Mr Tolley invited me to undertake an “appropriately intensive forensic approach to the evidence”. I have done so, considering each Defendant’s case separately. In this respect I agree with Mr Tolley that contemporaneous written documentation is important in assessing credibility. Much of his cross-examination of the Defendants was based upon the contents of contemporaneous documentation, upon which Towry place considerable reliance, and which is said to demonstrate that all the individual Defendants were in clear breach of their restrictive covenants, that Raymond James induced that breach and that there were unlawful means conspiracies.

However, the oral evidence of the Defendants, both in general and in relation to the documents explored with them in the course of lengthy and probing cross-examination, is clearly relevant in deciding whether the interpretation placed upon the documents by Towry is sustainable. There is much evidence contained in the Defendants’ witness statements, adopted as their evidence in chief, which was not the subject of challenge at trial and which is clearly relevant to a proper determination of the issues. I also had the advantage in this case of hearing oral evidence, thoroughly tested in cross-examination, from a number of the former clients of Edward Jones. The facts I find therefore follow a review of all the evidence in this case, both oral and documentary.

Thirdly, the extent of the factual dispute in this case has resulted in allegations on both sides being expressed in robust language. Mr Tolley complained about the numerous and “extravagant” allegations of dishonesty and impropriety by Towry senior managers contained in the written closing submissions presented on behalf of the Defendants. Mr Quinn complained about inappropriate and wholly unjustified allegations levelled against the Defendants, who are said to have deliberately concocted allegations of repudiatory breach and to have manufactured contrived defences; and also against the clients who gave evidence, in referring to them as “partisan”, and therefore as effectively telling untruths in order to stand by their trusted advisers. Such allegations are indicative of the strength of feeling on both sides in this case, which was clear to see during the trial. However, the Court is well able to withstand florid language and robustly expressed submissions of counsel in assessing all the evidence dispassionately and in adopting the intensive, forensic approach that this case requires.

The individual Defendants all commenced employment with Edward Jones between 2005 and 2007. The nature of the Edward Jones business model and the entrepreneurial skills of the individual Defendants are important features of this case, being relevant to the allegations of both repudiatory breach of contract and solicitation.

In August 1999 a report about Edward Jones in the Sunday Times referred to the Company “targeting Britain as a growth area” and as offering “the mom and pop style investment office that has populated small-town mainstreets in America for decades”. The report described the Company’s “unusual approach to selling stocks and shares”, with each office housing “a single investment adviser, usually backed up by an administration assistant”. The tagline of Edward Jones in America is “Bringing Wall Street to the Mainstreet”.

The encouragement Edward Jones gave to their financial advisers, to become as much a part of the local community as possible, was explained by the view that, “… if you have to meet your customers at church or sports you are going to think twice about what advice you give them”. The focus for the future was said to be on “selling stocks and shares” with its financial advisers being “registered with the Securities and Futures Authority, the requirement for stockbrokers, and authorised practice as IFAs”. A number of business cards of the individual Defendants and other former Edward Jones advisers, printed and distributed centrally by their former employer, described each of them as a financial adviser and stockbroker.

The Edward Jones model, succinctly described in this newspaper article, has been and remains very successful in America. Between 1999 and 2009 the model was implemented in the UK. By the time of the acquisition in October 2009 Edward Jones had approximately 317 offices in 240 cities and towns throughout the UK. The advisers employed there enjoyed a large degree of autonomy as to how they managed their work, including the freedom to choose the hours they worked and when to take holidays.

The contracts of employment of the individual Defendants were in standard form. Clause 4, dealing with remuneration, entitled them to a remuneration package consisting of a salary, commission, or bonus, or a combination, as set out in Appendix A3. The package showed a low and gradually diminishing salary over the 12 months following their graduation or qualification, and an entitlement to earn commission on transactions, at the rates published from time to time on the Company’s intranet. There was additional provision for payment of new account bonuses and milestone bonuses in accordance with the relevant performance criteria, again as detailed on the intranet. Remuneration levels for successful advisers were high.

Clause 3.7 and Appendix 1 described their normal place of work as the Company’s main office in Canary Wharf, or “such other place of business of the Group within the United Kingdom which the Company may require for the proper performance and exercise of your duties”. It is clear, however, that the Edward Jones’ policy was, in fact, for all financial advisers to work and build up their businesses in their local communities, through personal and regular face-to-face contact with clients.

Recruitment advertisements in the spring of 2009 stated, amongst other things, the following:

“As a Financial Adviser with Edward Jones, you will spend much more of your time doing exactly what you do best – building relationships with clients face-to-face and helping them reach their financial goals … we’ll even provide you with your own dedicated assistant and a high street office … you’ll have more time to devote to meeting the needs of your clients and building a successful business. We’ll also train you as a Stockbroker as soon as you join us, allowing you to offer clients a more diversified and comprehensive range of services than you would be able to as a traditional IFA. Beyond that, you can look forward to moving towards Chartered Financial Planner status.

As one of our Financial Advisers you will receive a unique combination of top quality, award winning-training, as well as a role where you’ll be based in your local community. You’ll find yourself in control of your own earning potential and able to take advantage of an excellent package that includes a starting salary, funded initial and ongoing training, commissions and bonuses, along with the opportunity to become a partner …

Become qualified as a Financial Adviser and Stockbroker …

Based in your chosen location … you’ll focus all your energies on developing and building a client base, using a personal, face-to-face approach. From the word go, you’ll be very much responsible for your own success – but you won’t be on your own. We’ll support you every step of the way, with ongoing training, mentoring and development opportunities.”

James Chandler began his employment with Edward Jones on 14 March 2005, signing his first service agreement on 1 March and then a second agreement on 8 November 2005. For him this was an entirely new career because he is a qualified engineer and he had previously worked in the aircraft industry. He joined Edward Jones because he saw it as an opportunity and because investments, for him, had always been a passion. He considered there was “… no other company and probably isn’t now that will take you on from scratch and train you up the way they did”.

He stated that he was trained to be a stockbroker and financial adviser. Initially he worked from home. He sold his house and kept equity in the bank “in case I had a quiet month”. He moved into a permanent office in Swanland, East Yorkshire in February 2007. His starting salary was £15,000.00 pa and it reduced periodically until it was assumed that, if he were hitting his targets, the salary would have been replaced with commission. On 8 August 2008 he became qualified as a whole of market stockbroker and financial adviser.

One of the main attractions of work with Edward Jones for him was that he would be able to build a business in his local community. He lives in Kirk Ella, a village about two miles from Swanland, and has close connections with the general area, having lived there all his life. He described it as a “very tight community” where “lots of people know each other …” Mr Chandler knew many people in the area through his own local sporting activities and family connections.

For the first two years he worked extremely long hours. Many clients were secured through knocking on doors. He advertised in all the local magazines and attended Chamber of Commerce and Rotary Club meetings. He created his own networking events, known as the “Advisory Board”, which involved monthly meetings with individuals from linked industries including solicitors, accountants, mortgage brokers and bankers. Although it was hard work the personal contact was extremely rewarding, both professionally and personally.

At Edward Jones Mr Chandler described there being a culture of volunteering, camaraderie and loyalty. He stayed, even though he knew that he could earn more elsewhere, where the percentage commission retained was higher. His hard work led to success. He was recognised on a number of occasions as a “top account opener”. Between March 2005 and October 2009 he built a substantial business. He stated that the most enjoyable element of his job was “constructing portfolios for clients’ funds”.

The vast majority of his clients lived locally, in and around the villages of East Riding. Swanland was on the outskirts of Hull and clients would regularly visit his office, or just drop in without an appointment when they were in the area. A number of the clients he gained moved to him from other, larger organisations, which did not have a local presence. Personal contact was important to him and to them and he attributed much of his success to the fact that he was a visible presence in the area and was able to develop close relationships. Many clients became personal friends and he retained social contact with many of them, often running into them in shops or local restaurants.

His targets at Edward Jones required him to make twenty-five cold calls and two appointments per day. He was also trained to conduct two to three appointments per day and to call clients every two months.

He described the typical profile of an average client as being “retired, with a liquid net worth of £100,000.00”. Few of his clients used email to contact him and most preferred a personal, face-to-face service. The relationship he had with his clients and the trust they held in him was therefore built up over time.

Pieter Burger started work with Edward Jones on 3 October 2005, signing his first service agreement in August and his new contract on 7 November 2005. He carried out his training in London and at home in Devon. From December 2005 he was based permanently at the Edward Jones office in Honiton.

He had worked in the financial services industry in the Exeter area since 1998, working for Pearl Assurance Ltd and then as a financial adviser for Lloyds TSB, before joining Edward Jones. He had moved to financial services from the food retail industry after being made redundant, because he wanted a career where he could control his personal and professional development.

He described the mantra at Edward Jones as being “Where are you building your business?” He too was encouraged to build his business within his local community and to become part of that community. From the outset Edward Jones instilled the value of regular and personal contact with clients. He therefore built his business in Devon. He lives 13 miles from Honiton and has close connections with the town, being a committee member of the Honiton and District Chamber of Commerce and Industry, and a member of various business working clubs. Before the acquisition he was a member of the local Rotary Club. He has long-term relationships with local solicitors and accountants and is well-known to many business leaders in the area.

The vast majority of his clients lived locally and would regularly visit his office in the town centre. A number of these clients had followed him, originally from Pearl Assurance and then again from Lloyds TSB to Edward Jones. He had always encouraged clients to call him at any time and he maintained regular contact with them, instilling both friendship and loyalty. During the financial crisis of 2008 he spoke to every client, to reassure them and offer advice.

His clients fell typically into two groups, namely retired people and business owners. The retired clients appreciated the personal contact and advice and would regularly call to see him at the office or telephone him. Those who held equities tended to have a life-long experience of equity ownership, appreciating the rising dividends and the reduced cost of holding direct shares over collective funds. Some were in nursing homes and had corporate bond ladders to help pay the fees.

The business clients were more entrepreneurial and liked owning shares. Regular meetings with those in the business networking circle resulted in lasting friendships and further referrals to friends and family members.

Typically, Mr Burger would carry out portfolio reviews three or four times a year, with clients investing between £3,000 and £5,000 each time, so that he gradually developed their portfolios, matching the exact needs of each individual client.

At Edward Jones Mr Burger had the freedom to conduct his business in a way that suited both him and the clients. He had personal freedom, with no annual holiday limits. Providing that he was profitable, he could work as and when his business demanded it.

He had also continued his own personal, professional development. By October 2009 he was working towards Chartered Financial Planner status. He was mentor to three trainees and he ran three or four seminars in his office each year. By October 2009 his income had steadily improved each year and he was building a successful business.

Thomas Spain commenced employment with Edward Jones on 5 June 2006. He had previously worked as a Youth Minister in a church and therefore had no background in financial services. He was attracted by the “Edward Jones model of combining financial planning with stockbroking and the whole of market advice they offered”. He was looking for “a long-term opportunity with a cautious investment firm”. After passing the relevant examinations he was asked to establish an office in Market Harborough, where he has lived since childhood.

Over the following months he set about building his business from scratch by day to day work in the local community, knocking on doors and introducing himself to many people on their doorsteps or in offices. He was required to make a minimum of twenty-five “real contacts” per day, with individuals to whom he had introduced himself, face-to-face, who had either expressed an interest in the services he could provide or had an immediate financial need. This regular and personal interaction formed the main part of his daily activities throughout his time at Edward Jones and made him a recognisable figure in the town. He already had strong links with the Christian community and he became a member of the local Chamber of Commerce, establishing good relationships with other professionals in the town.

This opportunity to live and work in the same town enabled him to build lasting relationships with the clients he met, many of whom became friends. He was able to provide recommendations on individual shares, corporate bonds and Government gilts and he developed many bespoke investment plans. He gained clients’ trust by constantly making himself available and easily accessible.

Wayne Hayhurst commenced employment at Edward Jones as a trainee financial adviser on 22 June 2006 and qualified on 12 December 2006. Before then he had worked for eight years at BAE Systems in the logistics and information systems department. He had gained an honours degree in computer science whilst working there.

He had always been interested in financial markets and he had built up his own stock portfolio. Whilst browsing the internet he found Edward Jones, who were then recruiting people to become stockbrokers and financial advisers. They offered him full training and support and, after qualification, he could set up an office in a place of his choosing, with a branch office administrator for support, earning a salary for the first 12 months while the business took off. Further research on the internet suggested to him that Edward Jones were highly regarded by both employees and clients. Before applying for the job he sought and obtained feedback from Edward Jones advisers in various branches. It was all positive.

The Hayhurst family is a large farming family, with the family farm just outside Longridge in Lancashire. The family has spanned many generations and is well known in the area. At first Mr Hayhurst worked for Edward Jones from his home in Thornley, near Longridge. In late 2007 he secured a branch office in Longridge, where he stayed until his departure.

He could work the hours he chose and was able to build up his own client bank from his own contacts. Longridge has a population of around 7,500 and is eight miles from Preston. Mr Hayhurst had long been involved with the local Rotary Club and with various business and football clubs. Many of his clients came from these relationships, with people who already knew him or his family well and who had his personal contact details. Many of them lived locally.

The majority of his clients were local business owners, aged between 45 and 55 and with assets worth between £50,000.00 and £300,000.00. They would have individual equities and corporate bonds in their portfolio because they liked to track performance and understand exactly how their investments were performing.

He would tend to spend most of his time with those clients who had the largest portfolios, a factor that was common to the other Defendants. The system at Edward Jones coded clients green, yellow or red, the wealthiest clients being coded green, holding the most assets and requiring more contact. They would regularly ring him on his mobile and he encouraged “any time contact”.

Email contact was discouraged. Edward Jones did not offer any online valuations and investment instructions were not permitted to be given via email. His clients would therefore invariably contact him by visiting his office or by telephoning him there or on his mobile. In interviews he conducted with clients as to what they regarded as important, the availability of a local office, contact with someone who is part of the local community and continuity offered by a long-term relationship were frequently cited as requirements or preferences.

Barry Bennett commenced employment with Edward Jones on 4 June 2007. After 20 years as an army officer he had worked in the financial services industry from 1993. Working on a self employed basis he had spent the next twelve years building his own business with Allied Dunbar in his local community in Devon, where he lived with his family.

In 2005 he sold his business, by which time he had between 300 and 400 clients and enjoyed high earnings. He joined Edward Jones because he wanted to focus more on investments, enhance his investment proposition and act as a stockbroker in the local community. He too had spoken to a number of Edward Jones advisers in the south west and had received positive feedback about the company and the work.

Mr Bennett joined Edward Jones as an experienced financial adviser, but he was responsible for building his own business in the Tavistock area where he lived. Initially he worked from home, moving to a transitional office in Tavistock after four months. By mid-2008 he was on track to move to a permanent office in Tavistock High Street.

Whilst Edward Jones provided all the office support, administration back up and equipment, they were “hands off” so far as work with the clients was concerned. With Mr Bennett’s background this way of working was particularly attractive to him. The culture was that “I was building my business branded as Edward Jones in my local community”. The whole ethos was client centric, with bespoke advice and presence in the locality. He was totally responsible for marketing and for gaining new clients.

By October 2009 he had around 130 clients and was bringing in approximately eight to ten clients each month. Approximately 60 of the 130 clients had come back to him from his previous business and contacts. He had known many of them for 10 or 15 years and they were friends or referrals from friends. A number of them were elderly.

He was by this time waiting to move into a permanent office in the High Street, which would have given him an even greater visibility in the area. He had joined Edward Jones in the belief that this was a job that would see him through to his eventual retirement.

Stuart Hutton began work at Edward Jones on 12 March 2007 and, from July that year, worked at the Edward Jones office in Winchcombe, Gloucestershire. He had previously worked as a quantity surveyor, running a multi-site retail business. In 2006 a friend was sitting exams with Edward Jones in order to build a local financial advice and stockbroking business. Mr Hutton became interested and decided to apply for a position himself.

He regarded the opportunity on offer as one which rewarded tenacity and hard work, and which enabled the employee to apply his own personal stamp on the business, whilst simultaneously developing skills that would also benefit the company. Clients could develop a relationship with him personally and he valued this and the way in which Edward Jones operated on a “self-management” basis. He understood that, right from the outset, he would be accountable for his results and responsible for his performance. It was a wholly commission-paid environment that required business acumen and planning. He was able to offer, and did offer whole of market advice.

Mr Hutton was at that time a Conservative councillor in Cheltenham and lived 9 miles from Winchcombe, having close connections with the town. He was a member of various business and social groups and he had a fairly high profile in the area. The vast majority of his clients lived locally. When he commenced employment he would knock on doors, introducing himself and his work. Clients regularly called in at the office to see him with a query or a proposal and face-to-face or telephone contact was a constant feature of his work. His clients were individuals, rather than businesses, and many of them had almost all their savings invested with Edward Jones under his service. He developed strong personal relationships with them and would see them or their families regularly around the town.

Tracey Simpson commenced employment with Edward Jones on 10 September 2007 and qualified in March 2008. Initially she had wanted to become a police officer, but asthma put an end to that ambition. She then worked for the Civil Service for four years before moving to Barclays Bank as a personal banker. She became interested in the role of financial adviser and discovered the Edward Jones proposition on the internet. She was attracted by the opportunity to be based in the local community, to be whole of market and to be trained in stockbroking. After researching the role she successfully applied for a job.

At this time she had just moved with her partner to the village of Whalley in Lancashire, moving from a town nearby. Working from home she set about building her business from scratch, knocking on doors and building relationships with key referral groups, such as accountants or solicitors. She subscribed to the local Chamber of Trade and became its secretary, involving herself in local village activities and social events. She developed close links with the Chamber in Longridge, where Wayne Hayhurst worked. As a result of her success in securing clients she opened a temporary office in Whalley in January 2009, whilst looking for permanent premises. The office was a short walk from her house.

The vast majority of her clients lived locally in Whalley and the surrounding area. All of them had her personal mobile number and would call her or visit her at the office. Most of her clients were retired people seeking to consolidate their savings and investments to make them more manageable. They held investments of between £40,000.00 and £200,000.00. Many clients liked individual corporate bonds. After the financial crisis in 2008 she spent considerable time nurturing the relationships with clients and seeing or speaking to them more regularly than usual.

Notwithstanding the Defendants’ evidence as to the nature of their work, and the wording of the various Edward Jones recruitment advertisements, a dispute arose at trial as to whether the Defendants were right to describe themselves as “stockbrokers” or as having a “stockbroker licence”.

Nicholas Anderson, Head of Risk and Compliance at Towry, pointed out that the term “stockbroker” in fact has no regulatory meaning and that there is no such thing as a “stockbroker licence” from an FSA perspective. Nor is there any UK regulatory definition of a stockbroking firm.

The term “stockbroker” is nevertheless, as Mr Anderson acknowledged, a well understood and well recognised name used to describe someone who is involved in the buying or selling of shares for clients, their ability to do so being set by their FSA permissions.

On the evidence before me I am satisfied that each individual Defendant was able to and did, in fact, advise clients, on behalf of Edward Jones, on the buying and selling of individual equities from extensive, approved Edward Jones advisory lists; that there has never been any suggestion that any Defendant was acting outside his or her FSA authorisations; and that Edward Jones was authorised by the FSA to advise on the buying and selling of equities and the Defendants were able to act as they did as a result of that authorisation. Clearly, Edward Jones sought actively to recruit people to be stockbrokers and financial advisers, trained them in that role and authorised them so to describe themselves. Sally Burn Jones, now a Towry wealth adviser in the Exeter office, said that she had enjoyed being a stockbroker, stating “I felt it was my USP”.

I therefore found the evidence on this point from Andrew Fisher, CEO for the Towry Group, to be unnecessarily intransigent. His insistence in cross-examination, for example, that “no client of Edward Jones ever conducted stockbroking activities with advisers from Edward Jones”; that “they didn’t have business cards describing themselves as stockbrokers”; and that “I, at no point thought that they were doing stockbroking … I don’t think, for one moment, that the Company felt, at any time, that they were in the business of stockbroking” failed to recognise the reality of the work these Defendants were doing, and were being authorised and encouraged to do by their former employer. It appeared to be designed to denigrate the Defendants’ work and I found it unhelpful.

There was ample evidence before me that the Defendants were at all times carrying out, to varying degrees, stockbroking activities within the commonly understood meaning of that term; and that those activities were regarded by the Defendants, and by their former employer, as an important and valuable part of the work that they did.

All the Defendants’ contracts of employment contained post-termination, restrictive covenants by which they were bound and of which they were well aware, providing so far as material as follows:

“16.3

You acknowledge that the obligations set out in this Agreement are reasonable and necessary in order to protect the Company’s legitimate business interests.

16.4

You agree that for the period of 12 months after the termination of your employment under this Agreement, you will not directly or indirectly:-

16.4.1

solicit, canvas or endeavour to solicit or canvas in any capacity whatsoever, by post, phone, electronic communication, personal contact, or by any other means, any business, orders or custom which is in competition with any restricted Business from any Active Customer;

16.4.2

solicit, canvas or endeavour to solicit or canvas in any capacity whatsoever, by post, phone, electronic communication, personal contact, or by any other means, any business, orders or custom which is in competition with any Restricted Business from any Passive Customer;

16.4.3

induce or attempt to persuade any Employee to leave employment or engagement by the Company or any Group Company or offer employment or engagement to any Employee.

16.5

You will not at any time after the termination of your employment under this Agreement, directly or indirectly:-

16.5.1

induce or seek to induce, by any means, involving the disclosure or use of Confidential Information, any Active Customer to cease dealing with the Company or any Group Company or to restrict or vary the terms upon which it deals with the Company or any Group Company;

16.5.2

induce or seek to induce, by any means, involving the disclosure or use of Confidential Information, any Passive Customer to cease dealing with the Company or any Group Company or to restrict or vary the terms upon which it deals with the Company or any Group Company;

16.5.3

make use of or disclose to any third party including, but without limitation any prospective or future employer, and Confidential Information;

16.5.4

represent yourself or permit yourself to be held out as having any connection with or interest in the Company or any Group Company;

16.5.5

solicit or recommend the makings of unwarranted claims against the Company.”

For the purposes of clause 16.5, “confidential information” was defined as follows at clause 17.2:

“‘Confidential Information’ means all and any information (whether or not recorded in documentary form or on computer, lap top, hard drive, zip drive, software (including programmes) disk or tape) of the Company, any Group Company or any of its or their customers, suppliers or agents which the Company or the relevant Group Company regards as confidential or in respect of which it owes an obligation of confidentiality to a third party which is not part of your own stock in trade and which is not readily ascertainable to persons not connected with the Company either at all or without a significant expenditure of labour, skill or money. The following is a non-exhaustive list of matters, which are considered confidential:

(a)

any trade secrets of the Company and the Group for example, but not limited to the following: customer lists, customer contact details, contacts with or requirements of customers pricing strategies, investment and development strategies and objectives;

(b)

any information in respect of which the Company or any Group Company is bound by an obligation of confidence to any third party;

(c)

unpublished and price sensitive information relating to securities listed on any recognised stock exchange;

(d)

the movements and whereabouts and all personal or private matters concerning senior employees and directors;

(e)

marketing strategies and plans:

(f)

discount rates and sales figures;

(g)

lists of suppliers and rates of charge;

(h)

information which has been supplied in confidence by clients, customers or suppliers;

(i)

information and details of and concerning the engagement, employment and termination of employment of any investment Representative and any other personnel;

(j)

information concerning any litigation proposed in progress or settled;

(k)

any invention, technical data, know-how or other manufacturing secrets of the group and their clients/customers;

(l)

any other information made available to you, which is identified to you as being of a confidential nature. …”

All the Defendants also signed an “Information Security Agreement” agreeing to abide by the Edward Jones’ information system security policy and associated guidelines.

The Defendants were all aware of these covenants and agreements. I shall return to them when considering the question of compliance and Towry’s allegations of unlawful conduct.

By the summer of 2009, notwithstanding the success of the Edward Jones model in America and its popularity with its employees, Edward Jones in the UK was incurring substantial, operational losses. Storm clouds were gathering, of which most of the advisers were at that stage unaware.

The Company’s overhead costs were extremely high. First and foremost, there were the high costs of premium retail space for offices on UK high streets. Council tax and local charges added to the bill. Most of these offices were staffed by a single adviser and an administrator. In some localities, Norwich and Bedford for example, there was more than one office in the same town. In addition to the 317 offices around the country, Edward Jones occupied three floors of a prestigious building in Canary Wharf.

Further, since Edward Jones frequently recruited advisers without the relevant qualifications, they ran extensive and expensive training programmes. There were significant sums spent, in addition, in relation to the UK’s more rigorous regulatory system, with FSA levies and levies for the Financial Ombudsman Service and compensation schemes. The model also had certain limitations in relation to revenue, given the large number of small accounts held for individual investors of modest wealth.

At the time of the acquisition Edward Jones was sustaining losses of approximately £3 million per month and, over the previous decade, had made losses of approximately £260 million. The parent company had enabled Edward Jones in the UK to survive, by contributing regular monthly payments, but their business model had not generated a profit. Without fundamental and, to the parent company, unpalatable changes it could not continue to function in the UK.

Further difficulties for the Edward Jones model lay ahead. The regulation of wealth advice was changing. The FSA had been conducting a Retail Distribution Review (RDR) since June 2006 and, by October 2009, had begun to implement the recommendations arising from that Review. The new rules, which are to be in place by the end of 2012, are designed to bolster consumer confidence and improve the level of expertise in the industry. To this end, all financial advisers in the UK will be required to have a Level 4 Office of Qualifications and Examinations Regulation Diploma. Further, the FSA proposes, amongst other things, to,

“end the current commission-based system of adviser remuneration: we propose to ban product providers from offering amounts of commission to secure sales from adviser firms and, in turn to ban adviser firms from recommending products that automatically pay commission.”

The whole Edward Jones remuneration model would therefore require reform. Further training costs would be required, to ensure that all their advisers had the Level 4 Diploma by the end of 2012. As at October 2009, whilst 62% of Edward Jones’ advisers had attained the Level 3 Diploma, less than 5% had achieved Level 4.

The combination of unprofitability and the requirement for fundamental changes proved a step too far. Edward D. Jones decided to sell its UK business.

Towry’s business is the provision of what Mr Fisher describes as “holistic financial planning and wealth management services”. It offers fee-based, independent financial advice and independent investment management services to private individuals with investible assets in excess of £100,000.00, and to small and medium sized enterprises. Mr Fisher’s firmly held view has always been that financial advice should be charged for on a fee basis rather than a commission basis, in order to ensure that the advice given to clients is genuinely independent and in their best interests, and that it is not affected by the level of commission available from product providers.

In 2005 the firm John Scott and Partners, where Andrew Fisher was Chairman and CEO, had purchased Towry, with the merged business being re-launched in 2007. It was known at this time as Towry Law, but will be referred to as Towry, for consistency, save where it is necessary to refer to another company in the group.

From 2006 onwards Towry were actively looking to grow by means of acquisition, both in terms of clients, to increase its assets under management (AUM) and its assets under advice (AUA), and in terms of employees and support staff. As a result, in 2007 Towry acquired a number of financial companies, including Baker Tilly Financial Services Ltd, all of which moved from commission-based models to the Towry fee-earning model.

In cross-examination Mr Fisher stated that, on each acquisition, Towry had managed to retain the majority of the advisers employed by the acquired organisation. He attributed any loss of advisers to Towry’s exacting qualification and exam requirements or to unwillingness, on the part of the advisers, to accept the loss of commission.

As at August 2009 growth by way of acquisition remained an important part of Towry’s strategy. Towry was profitable and experiencing a significant growth in the amount of AUM. Mr Fisher described Towry’s clients as “high net worth” or “super high net worth” individuals, with assets worth tens of millions. In addition Towry were already RDR compliant.

In August 2009 KPMG approached Towry to advise them of the potential opportunity to buy Edward Jones. Following agreement as to confidentiality in early September 2009 the due diligence process commenced. Terms were negotiated quickly and, on 22 October 2009, pursuant to a Share Purchase Agreement signed on that date, Towry Law Finance Co Ltd acquired, for the price of £1, the entire issued share capital of Edward Jones, subject to regulatory approval. This was given by the FSA on 12 November 2009, on which date the acquisition was completed.

Also on 22 October, a six-month transitional services agreement was entered into, to preserve the infrastructure and facilitate the continuing operation of the business. Meanwhile, Towry had to establish a platform to hold the advisory assets. Subsequently, on 7 May 2010, Edward Jones changed its name to Towry EJ Ltd (the Claimant).

The evidence shows that the Towry business model is very different from that of Edward Jones. Customers are charged a fee for advice sought and services provided, calculated on the basis of the time spent on the work and the appropriate charging rate. That rate depends in turn upon the complexity of the task and the seniority, qualification and experience of the adviser.

Towry’s advisers, in ascending level of seniority with current numbers employed, are wealth advisers (220) senior wealth advisers (20-30) and senior client partners (10). Of Towry’s total workforce therefore (approximately 750 employees), less than 250 are front-line advisers. The Towry business model operates on the basis that their front-line advisers have access to substantial back-line and specialist assistance in financial market research, rather than conducting their own researches and associated activities. Wealth advisers therefore go for assistance on investments to Towry employees working in the investment management team, the advice policy team and in the product, marketing and compliance teams. Towry wealth advisers to do not manage the client’s individual discretionary portfolios. Their primary responsibility, as described by David Middleton, Head of Client Proposition at Towry, is to “manage the client relationship”.

This, in the view of Mr Fisher and the other senior managers called on behalf of Towry, gives their clients the best service possible, and is vastly superior to the “sub-optimal” advisory service offered by advisers at Edward Jones. The Defendants strongly disagree with that assessment and opinion. Fortunately, it is no part of my task to decide which model offers the best service to clients. There is no evidence before me, in any event, showing that any client of the Defendants was in any way disadvantaged by the service being provided for them at Edward Jones, or that any client would have been better off with Towry. It is sufficient, for the purposes of this case, to record the fact that the Edward Jones model and the Towry model were very different; and that there are strongly held views on both sides as to which offered the optimal service to clients.

In practical terms, as at October 2009, Towry had just ten regional offices throughout the UK, in which all their wealth advisers were based, along with an administrative support team. Towry wealth advisers spend about half their time on the road visiting clients, meeting approximately ten to twenty clients per month. Clients rarely come to Towry’s offices for a meeting.

In general all Towry wealth advisers are salaried employees, with their bonuses being dependent upon their personal performance and the achievement of their targets, and upon the Company’s own performance. There is investment in training through qualification and professional development programmes.

Essentially, the way in which the Towry model works is that the initial meeting with a client is free. Subsequently, if the client wished to obtain Towry’s services, he/she would be required to sign a fee agreement. Thereafter, all work would be charged for on an appropriate hourly basis. Before undertaking any work the adviser would provide a “scope of work” note setting out what it was that the client wanted, the work that was going to be done and how much it would cost. The work would then be done and the client billed. Towry would be paid for time spent in the provision of advice irrespective of the particular outcome. The Towry wealth advice services are targeted at relatively affluent clients, defined as those with investible assets in excess of £100,000.00.

Mr Fisher described Towry’s “core proposition” as the Independent Investment Management Service (IIM), an independent, risk-managed discretionary portfolio management service. Clients’ funds, once in the IIM following a suitability assessment, are actively managed in accordance with their requirements and risk profiles.

Much of the witness statement of David Middleton was devoted to the advantages, in his view, of the approach to investment management at the heart of the IIM and to the benefits of such a service, to be contrasted with the management of an advisory portfolio and with what are said to be the limitations of the Edward Jones’ proposition. Mr Middleton and the other senior managers at Towry, in particular Mr Fisher, are firm believers in the merits of the IIM and in the weaknesses of the “key offering” by Edward Jones, described by Mr Middleton in disparaging terms as a “transactional service offered by predominantly non-salaried advisers … with little or no investment expertise”.

The Defendants, and some of the former Edward Jones’ clients who gave evidence at trial, strongly disagree with the opinions advanced by Mr Middleton and Mr Fisher in this respect. Further, some of the media coverage concerning the claimed benefits of Towry’s core proposition was critical of it in a number of respects. I accept that other coverage expressed a contrary view, but some of the reports in evidence before me, from reputable journalists with relevant expertise, were less than complimentary. In addition, for example, to concerns raised by Janet Walford, editor of the specialist monthly publication, Money Matters, a report in The Times Online for 16 January 2010 raised a number of questions concerning discretionary investment schemes in general; their impact on choice and whole of market access; and the difficulties in obtaining performance data. Towry was criticised for encouraging its advisers to recommend its in-house investment scheme (the IIM).

It is unnecessary to descend into any further detail, or to refer to the reasoned response to The Times article, submitted on behalf of Towry by Andrew Cowan, Head of Wealth Advice. There is doubtless a debate to be had on the advantages and disadvantages of discretionary investment management, as compared with the advisory service carried out at Edward Jones, but here is not the place to rehearse it. The important fact, as it seems to me, is that while both companies were providers of financial advice and services, the Towry proposition was very different from that offered by Edward Jones; and that reasoned criticisms of the Towry proposition were in the public arena.

In contrast to the work of the Edward Jones’ advisers, no investment decisions or recommendations are made by the Towry wealth advisers, who report to their clients on the activities and research results of the specialist teams employed backstage. The advisers employed by Edward Jones were themselves the specialists.

On all the evidence before me I reject any suggestion that these Defendants lacked the skills or expertise necessary to carry out the investment management advisory service required of them by their former employer. Indeed, Mr Fisher gave as one of his reasons for Towry’s decision to acquire Edward Jones, the fact that Towry would gain access to the Edward Jones employees, with “all the expertise and experience that went with them”. The minutes of the Towry Executive Committee (ExCo) meeting for 16 September 2009 include a reference to Mr Fisher’s description of the Edward Jones advisers as appearing to be “highly ethical, motivated, well-trained and already operating in accordance with many of Towry Law’s values”. Further, as I have already indicated, there is no evidence before me that any individual client of any of these Defendants would in fact have been better off with their funds invested in the IIM, rather than using the advisory and stockbroking services offered by the advisers at Edward Jones.

Given the extent of the differences between the two propositions, referred to in the witness statements of both David Middleton and Andrew Fisher and adopted as their evidence in chief, Mr Fisher’s description in cross-examination of the two businesses in fact being “incredibly similar” and his statement that “… the differences in the two propositions, actually, other than regulatory permissions were very, very small” were inconsistent with this evidence and with the other evidence in the case, including evidence from other witnesses called by Towry. It appeared to be unnecessarily argumentative and I did not find his evidence on this matter helpful.

In his witness statement Mr Fisher gave three reasons for Towry’s decision to acquire Edward Jones, notwithstanding the differences between their propositions and the obvious challenges to integration that these differences would cause.

First, what Towry was buying was “in a very large part, access to the details of the Edward Jones’ clients”, including in particular how much they had by way of investible assets. The acquisition would “substantially increase the total AUA with the opportunity to convert them over to AUM”. This he described as the primary reason for the acquisition.

The second reason was that Towry would gain access to the expertise and experience of the Edward Jones employees, even though Towry would clearly not be in a position to offer jobs to all of them. Mr Fisher stated that there were “many extremely experienced and successful people amongst the Edward Jones personnel” and Towry wanted to retain them.

Thirdly, Towry would be able to use Edward Jones’ quarter of a billion pounds of accumulated tax losses to its legitimate advantage, together with some of the capital in the business. Profits derived from the Edward Jones’ business (i.e. income from dealings with individuals who had been clients of Edward Jones) could legitimately be set off by Towry against the accumulated losses incurred by Edward Jones prior to the acquisition.

It is clear from the minutes of Towry’s ExCo meetings, in the weeks before the acquisition, both that major changes to the way of life at Edward Jones were anticipated and agreed and, significantly, that there was agreement that all Edward Jones’ clients’ assets should be “migrated” to the IIM.

At the meeting of 23 September 2009 Paul Wright, Towry’s Finance Director, stated that of the approximately 300 Edward Jones office locations, only 10 were likely to be retained. At the meeting on 14 October, the ExCo agreed that “notice would be served in respect of [Edward Jones] office premises at the earliest possible opportunity, regardless of location, on the basis that premium rents were likely to have been agreed at the time the various leases were negotiated”. Alex Rickard, Head of Employee Proposition at Towry, stated that the high rent liabilities to which Edward Jones were exposed were one of the most serious, contributory factors to the substantial losses being incurred. Closing most of these local offices was therefore a high priority.

It was also acknowledged at this meeting that it was going to be important to win “the hearts and minds of [Edward Jones] employees”. It was agreed that focus should be given to direct communications with the “top advisers” from 22 October onwards, no doubt to help in winning the hearts and minds of the others. Miss Rickard is also noted to have advised that an Edward Jones “Works Council” would need to be set up.

So far as the migration of clients’ assets was concerned, the minutes show that the ExCo agreed at this meeting that all Edward Jones client assets “were to be migrated to the IIM”. When he was cross-examined Mr Middleton described it as a “reasonable project assumption” that all clients’ investible assets would be migrated to the IIM and it is clear on the evidence that this was Towry’s aim. The Project Brief, approved at the ExCo meeting on 21 October, confirmed the assumption that there would be a “Client by Client Migration of all [Edward Jones] Investment Holdings (£1.3 BN) to IIM” to be completed by the end of Phase 2, namely 30 April 2010. Indeed it was considered that the “inflow to IIM” would take place “as soon as [the] advisers are trained”.

Whilst acknowledging that the IIM might not be suitable for everyone, and that no-one would be required to migrate to the IIM the assets of those clients for whom it would be unsuitable, it is clear on the evidence from Towry’s senior managers that total migration of assets was a key objective for Towry, both at the time of the acquisition and in the months that followed. The training programme for all the Edward Jones’ advisers was devised so as to be in two stages, with training on migration of assets to the IIM as the first, priority stage, to be carried out in December 2009, and more general training on the Towry model not to be provided until the summer of 2010.

The first issue to be determined in this case is whether, as the Defendants allege, the termination of their contracts of employment was due to repudiatory breach by Towry, in relation both to the fundamental changes sought to be imposed upon them and the way in which Towry proceeded in this respect. Towry’s conduct is said to be such as to amount, in each case, to a breach of the implied term of trust and confidence and thereby to constitute a repudiatory breach of contract. It is therefore necessary to set out in some detail the events that followed Towry’s acquisition of Edward Jones on 22 October 2009, so far as they are relevant to this issue.

As soon as the acquisition was agreed in October, Mr Fisher stated that Towry had to take action swiftly for three reasons: to start reducing the “massive and crippling” cost base; to ensure that Towry “secured the best employees”; and to ensure that Towry “provided reassurance” to the clients.

To those ends the action taken included the following. The starting point, as Mr Fisher described it, was to get rid of a large number of the Edward Jones’ offices. The offices were therefore closed in phases, commencing immediately, with the understanding that each adviser who took up the offer of alternative employment as a Towry wealth adviser would either be allocated an interim office, or remain at their existing office until their base was moved to a permanent office elsewhere. It was envisaged that the advisers would be relocated to a permanent Towry office within six months from the start of their new contract and, therefore, by approximately May 2010.

Secondly, Towry immediately embarked upon what Paul Wright described as an enormous communications drive, in order to engage with the Edward Jones’ employees and to seek to persuade those who met the Towry criteria to stay. The starting point was that on 23 October, on the same day as a press release was issued about the acquisition, two letters were sent to all Edward Jones’ advisers and posted on the intranet (JonesLink), firstly from Tim Kirley (Principal of Edward Jones) and Jim Weddle (Managing Partner) and, secondly, from Mr Fisher himself.

Mr Wright stated that those advisers who had a monthly sales rate of £90,000.00 or above in new investments per selling month, or who had more than £3 million total assets under advice, automatically met the Towry criteria for retention and qualified to be offered a new contract. These were the “group 1” or “top tier” advisers. There was then a further pool of less experienced or less qualified advisers, who would need to be interviewed and assessed before a decision could be taken whether or not to offer a contract to any of them.

Mr Wright described there being “a certain time pressure on things, as uncertainty tends to breed unhappiness”. Pending regulatory approval the purchaser does not legally own the business and there is therefore inevitably a period of uncertainty and difficulty for employees. Additional time pressure existed because, in the usual way and as Towry were well aware, competitors and recruitment agencies would be “looking to pick off the best people”, as Mr Wright succinctly expressed it. Mr Fisher’s description of rival organisations “circling, trying to poach our employees” made the same point. Notwithstanding this obvious concern, it is nevertheless accepted by Towry that, in the financial services sector, as indeed in other sectors, employees are free to decide where, with whom and upon what terms they wish to carry out their work.

Howard Goodship, now senior client partner in wealth advice with Towry and a former Edward Jones’ employee, called to give evidence on behalf of Towry, stated that following the acquisition he decided to keep his options open and to consider what alternative opportunities were available to him within the financial adviser field. He said that he wanted to be sure he had explored other possible employment options before deciding whether to accept Towry’s offer of employment. He was approached by a large number of financial adviser firms and recruitment agencies, including Raymond James, with whom Mr Goodship had a meeting on 4 November 2009, before eventually deciding to accept Towry’s offer.

Alan Stone, another former Edward Jones’ adviser giving evidence on behalf of Towry, also described his decision, following the acquisition, to explore what other opportunities might be available for him as a financial adviser, being keen to ensure that he explored all possible employment options before deciding, as he ultimately did, to accept Towry’s offer of employment. He recalled being approached by seventeen different financial advice firms and agencies, including Raymond James, with whom he attended the same meeting on 4 November before deciding ultimately to stay with Towry.

I shall deal with Towry’s communications drive with the Edward Jones’ advisers in more detail shortly, but I refer to this evidence at this stage because it demonstrates the commercial realities and the usual pattern of events following mergers and acquisitions of this kind; and the fact that Towry were well aware that such contacts and meetings, between advisers and competitors or recruitment consultants, were likely to be taking place as soon as news of the acquisition broke.

The third reason given for swift action, namely the need for client reassurance, led to two other letters being written on 23 October, from Tim Kirley and Andrew Fisher, to the Edward Jones’ clients, informing them of the acquisition. I shall deal with Towry’s engagement with the Edward Jones’ clients post acquisition later on in this judgment. At this point it is important to record that, in his letter, Tim Kirley informed clients, amongst other things, (a) that once the acquisition was complete following FSA approval “your financial adviser and branch office administrator will become part of Towry Law and your client accounts will be served by them” and (b) that following completion “we believe that nothing will change. Your adviser will continue to advise you and your assets will continue to be looked after as they are now. It is very much business as usual”.

Mr Fisher, in his letter, reiterated the fact that “nothing changes” and referred to his belief that Towry and Edward Jones would be the “leading provider of Wealth Advice in the UK”. No reference was made in these letters to the extensive programme of local office closures about to be rolled out, or to Towry’s aim of securing the migration of all clients’ assets to the IIM.

At the time of the acquisition there were approximately 1,000 employees working for Edward Jones throughout the UK, including 459 advisers, some of whom were still trainees. Towry had just 10 offices and employed a smaller workforce.

Following the acquisition Mrs Rickard stated that the ExCo took on the enormous task of assessing the respective abilities and performance records of all the Edwards Jones’ advisers, which included discussions with senior members of Edward Jones with a view to identifying the “most talented” advisers. The initial phase, discussing the merits and formulating the qualification criteria, took place over approximately three weeks. Financial performance indicators were identified using the “Financial Advice Performance Summary” in respect of each adviser. The criteria then had to be applied and the “top” advisers selected.

The key criteria for selection were those described by Paul Wright, referred to above. As David Middleton and Andrew Cowan confirmed, Towry regarded the most talented or the highest performing advisers as those who had either a total AUA figure of £3 million or more, or a monthly sales rate of £90,000 or more in new investments. Those who were identified as the top performers numbered 234 (this number appears elsewhere as 227, but I accept Mrs Rickard’s evidence that the number was 234) and they were known as the group 1 advisers. All the individual Defendants, save Tracey Simpson, were in this group. They were therefore advisers who were regarded as qualifying automatically for offers of new contracts of employment with Towry.

There were many other advisers, including Tracey Simpson, who were in group 2 or in other groups below that, whose future employment position was contingent upon the outcome of the first set of offers to the group 1 advisers. Towry therefore wanted to identify, and make offers of employment to the group 1 advisers as soon as possible, in order both to ensure continuity of service to clients and to reduce uncertainty for other employees in group 2 and other categories.

A programme of presentations and meetings began, with attendance at such events in the different regions being divided up amongst members of ExCo, the aim of which was to try and secure the group 1 advisers’ renewed employment with Towry as wealth advisers. There were regular meetings of the Integration Project Team, which included ExCo members and senior Edward Jones’ advisers, to discuss how each member of the team was progressing with their allocated list of group 1 advisers. At the same time, work was being done to put together the employment “package” that Towry considered could, financially, and should, strategically, be offered to those advisers they wished to retain. The presentations, to large groups of advisers at various Towry regional centres, were designed to cover an overview of the wealth management advice marketplace and the necessity to move away from commission to a fee-based model; a critique of the Edward Jones’ investment management advisory proposition and why Towry’s discretionary proposition was superior; and the nature of Towry’s employment proposition to the advisers.

After each presentation there was a Q&A session and, on occasion, less formal meetings, sometimes taking place just in the corridors at the offices where the sessions had been held. The intention was for financial advisers to be offered, in addition, one-to-one meetings with other members of management if they wished to have them. There were also a number of more informal group meetings held at local Edward Jones’ offices, attended by representatives of Towry and Edward Jones’ management, who would try to answer advisers’ questions.

As the above summary indicates, the period that followed 22 October required extensive work to be done by everyone involved at Towry, all within the shortest possible time scale and in an atmosphere of uncertainty and in some cases, as will appear, of unhappiness and mistrust. The conditions for winning hearts and minds were not ideal.

The very first communications by Towry with the Edward Jones’ advisers were, as referred to above, the two letters sent on 23 October from Tim Kirley and Andrew Fisher.

In his letter Tim Kirley introduced Towry; indicated that both Towry and Edward Jones intended “to maintain open communication” with all of the advisers; referred them to answers to a number of “Frequently Asked Questions” (FAQs) available on JonesLink; and stated as follows:

“It is important to continue to provide the advice and service our clients expect and deserve. We remain committed to serving their needs and will work to make the process as seamless as possible for them. Please reassure our clients that they are important to us, and that Edward Jones Ltd and Towry Law are fully committed to looking after their needs for the long term. …

For the moment it is very much business as usual.”

Mr Fisher reiterated in his letter that in the meantime it is “business as usual”; and emphasised the importance of continuing to talk to clients.

The Answers to the FAQs included the statement that Edward Jones could not “dictate the terms of employment after the acquisition is complete” and that additional information would be provided following completion. Employees were also informed that “not everyone at Edward Jones Ltd will be retained”.

Meanwhile, advisers were referred to a “client script” setting out the steps they should take with regard to communicating the acquisition to their clients. This script included the giving of information that the decision to sell Edward Jones to Towry would not “impact the assets in your accounts”; the giving of encouragement to clients to “stay invested”; and the need for advisers to stress to their clients that it would be business as usual and that they would “continue to serve your account as we have in the past”.

The reaction of many Edward Jones employees to news of the acquisition was one of complete surprise. Wayne Hayhurst described it as “gut-wrenching” because Edward Jones was, to him, not just a job but a way of life. In her email sent at lunchtime on 23 October, to another financial adviser at Edward Jones, Tracey Simpson said as follows:

“Oh my Lord, what on earth is happening!! I just can’t believe it, I know I’m probably going to be out of a job by 4pm but to tell you the truth my primary concern is for my clients, the clients that have trusted me with their money and the clients I have brought into the Jones model … please tell me what you know so I can tell them.”

Having built up substantial, apparently successful and individually profitable businesses in their own area, and without the global picture of the Company’s finances, a number of the individual Defendants could not understand why Edward Jones had been sold.

Amongst the individual Defendants, feelings of shock and anxiety mingled, in some cases, with anger and resentment towards the senior management of Edward Jones. Pieter Burger described the earlier announcement made by the company, in January 2009, that they were still expanding and that they were hoping to recruit thirty financial advisers per month throughout the year. James Chandler, on discovering in September 2009 that KPMG were “in the building”, had expressed concerns at that point and had been contacted personally by Brian Donaldson, a General Partner at Edward Jones, and told how well both he and Edward Jones were doing. Just two weeks before the acquisition was announced, during a business update conference call, Tim Kirley said that KPMG had been advising the Company on profitability and on how to take the business to the next level. A number of Defendants considered that they had been deliberately misled. Barry Bennett spoke of “betrayal”.

Such emotions were intensified by the large number of negative blogs appearing on Citywire and other financial websites, referring to Towry in derogatory terms, as being “ruthless” or a “big churning machine”.

Notwithstanding the Defendants’ concerns, however, I accept their evidence that none of them decided immediately that they would leave. Wayne Hayhurst acknowledged that much of the criticism of Towry on the websites was coming from former, disaffected employees following previous acquisitions and he resolved to keep an open mind. He, like the others, wanted to find out what Towry’s plans were.

Thomas Spain spoke to Brian Donaldson, who repeated the information given in the two letters of 23 October, telling him that, despite the acquisition, clients and employees would be looked after and that there would be little difference to clients and little change to the investment management of their accounts. Mr Spain, like the others, decided to let the dust settle and to wait and see. Since they had been told expressly that nothing would change he accepted that statement at face value.

Pieter Burger considered that Towry would be likely to buy into Edward Jones’ “great client offering and great reputation” and build on it. Stuart Hutton hoped that there might be merely a name change above his door and that there might even be an enhancement of his business. If the business model suited him he would stay, if a job were to be offered to him. He too considered it important to keep an open mind, and his contemporaneous emails sent to other Edward Jones’ advisers over the weekend confirmed that this was his initial reaction. In addition, after the initial shock and notwithstanding her concerns, Tracey Simpson also considered that the acquisition might yet improve the service that she offered, and she too retained an open mind.

Tracey Simpson also stated that at this early stage she put a positive spin on the takeover to her clients, telling them that nothing was going to change for them and that, if anything, it would improve the service they offered. Stuart Hutton and Barry Bennett stated that they were telephoned or visited in the office by a number of clients, as a result of the letters they had received from Tim Kirley and Andrew Fisher, and that they reassured the clients that nothing would change and that their assets were safe. Pieter Burger stated that, as soon as the shock wore off, he got on the telephone “in typical Edward Jones’ style” to tell clients that everything would stay the same. James Chandler, Thomas Spain and Wayne Hayhurst also referred to reassuring clients, in the initial period after acquisition, that business would continue as usual. I accept that evidence.

As anticipated, soon after the news of the acquisition, competitor and recruitment organisations began to contact Edward Jones’ advisers, including the individual Defendants. This started, though not for any of these Defendants, as early as 23 October, and it continued throughout the weeks that followed. These organisations included, for example, Carter Dawes, Burns Andersen, Positive Solutions, Brewin Dolphin, Charles Stanley and St James’ Place. Meetings or telephone discussions with a number of Edward Jones’ advisers, including the Defendants, were arranged and held during this period.

The corporate Defendant, Raymond James, was another competitor organisation. Jason Cherriman had been employed as their Business Development Consultant since January 2009. His role was to recruit financial advisers, investment managers and stockbrokers who were suitable to work with Raymond James as independent branch principals. Generally he did this by directly approaching such advisers through “cold-calling”, attending networking events or using various websites. Sometimes there were recommendations or referrals. His aim was to make initial contact with potential candidates and to “get them through the door” so that Raymond James could assess them.

The Raymond James business model is very similar to that of Edward Jones, save that the financial advisers are not employees. In summary, the main way in which a financial adviser works with the company is through their independent contracting model. Financial advisers and investment managers are able to manage clients’ funds through authorisation via the FSA, if certain strict criteria are met. Through their affiliation with Raymond James those who join essentially run their own businesses, but with the necessary resources to do so, including front office and IT systems, provided by Raymond James. The main difference is therefore that those recruited are self-employed, working under a contract for services. They run their own profit and loss and are in complete control of their own earnings. The candidates Mr Cherriman seeks to recruit as branch principals, working in locations throughout the UK, are those who demonstrate entrepreneurial skills and a desire to run their own business, and who Raymond James considers are likely to be successful.

On 23 October 2009 Mr Cherriman regarded Towry’s acquisition of Edward Jones as a big opportunity for Raymond James. He considered, correctly, that there were likely to be many unsettled employees. He immediately contacted six or seven Edward Jones’ advisers (none of the Defendants) to see whether there was any interest in Raymond James and he booked meetings with them. He had, in fact, already been speaking to these advisers informally, prior to the news of the acquisition.

By Monday 26 October Mr Cherriman realised that it would no longer be necessary to continue approaching any Edward Jones’ advisers himself because, by then, Raymond James were being inundated with calls from them. Generally, when Edward Jones’ employees telephoned Raymond James, they spoke either to Mr Cherriman or to David Hazelton, Head of the Business Development Team, or Tamsin Potter, his PA. Following these calls an introductory email would be sent to the employees and, if it looked as if she/he was a potential candidate, a meeting was organised.

David Hazelton described being contacted by virtually every headhunter in the business during the first couple of weeks following the acquisition, and being inundated with inquiries from Edward Jones’ advisers who were looking at their business model. Simultaneously, as he was aware, other stockbroking firms were also approaching the same advisers.

In the days and weeks following 23 October there was therefore a period of considerable activity and uncertainty, during which many advisers, including the individual Defendants, were considering whether to stay with Towry and what their other employment options were.

Mr Cowan frankly acknowledged the “enormous and difficult task” Towry had in communicating to the Edward Jones’ advisers the unwelcome fact and effects of the acquisition, whilst simultaneously seeking to persuade them to “share our vision” for Towry’s development, and to explain the nuts and bolts of their new terms of employment.

Mr Cowan delivered a number of the presentations, together with David Middleton, at various Towry regional centres and on various dates over the weeks that followed. The same presentations were being delivered simultaneously, at centres in different regions, by other members of ExCo. Mr Cowan described the atmosphere at these presentations as being “sometimes quite challenging”.

On the morning of 26 October Andrew Fisher and Tim Kirley gave a Towry presentation in Bath. Amongst those attending were Barry Bennett, Pieter Burger and Stuart Hutton. Mr Fisher and Mr Kirley gave a similar presentation in Norwich on 27 October, attended by Thomas Spain. In evidence Mr Fisher stated that, at these presentations, he set out Towry’s vision for the future and explained the plans to understand Edward Jones’ business, to develop and implement a plan to make it profitable and RDR compliant, to consult and be open about any redundancies and office consolidations and to build a hugely successful business.

I have no doubt that these points were covered. On the evidence, however, I find that Mr Fisher’s presentation was unlikely to win hearts and minds. Even allowing for an element of mistrust, or even hostility on the part of some of those attending, I accept the evidence of the Defendants that its content and abrasive style of delivery did nothing to reassure them. Further, it completely undermined the earlier message that nothing would change.

Mr Fisher accepted that the Bath meeting was “very difficult” and stated that it was one of several, difficult meetings he had. He suggested that the reason for this was that those Edward Jones’ advisers who were present were all in a “very very emotional state” and still in a state of shock, after being orphaned off by Edward Jones for £1. He also referred to them as demonstrating a complete lack of understanding. I find that Mr Fisher’s high degree of self confidence and, on his own admission, his passionate belief in the superiority of the Towry business model and his zealous approach to bringing the advisers across, failed to reap the benefits he hoped for. For those Defendants attending, at least, it had the opposite effect.

I find that Mr Fisher referred in blunt and derogatory terms to the extraordinary mismanagement of Edward Jones in the UK which, given the presence of Tim Kirley, was regarded by those present as highly insensitive. Mr Fisher also told the advisers that there was no money to be made in stockbroking; that there had not been any money to be made in stockbroking for twenty years; that stockbroking was not a service which was going to be offered by Towry; that the Edward Jones’ model was broken and unprofitable; and that individual shares were never appropriate for clients’ portfolios. In advocating the Towry core proposition (the IIM) he conveyed the message that the Towry way was the only way, that the FSA considered Towry’s business to be the best, and that everyone else in the industry was not up to the task.

Further, in the Q&A session that followed I find that there were no clear answers given to questions from advisers about the closure of their offices. No doubt this was due to the fact that the deal was still subject to FSA approval, but the uncertainty created added to the concerns. In addition, whilst many of those present were asking for more details about the IIM, such details were not forthcoming. The line being taken was that all would be explained at the two-day training course fixed to take place in December 2009, which would be after the advisers had signed their new contracts of employment. In that respect Mr Fisher informed the group that Towry would be looking to take on no more than 200-300 advisers. He referred to advisers as preferring to work in teams and to a collective office environment and to Towry having only ten offices.

Described variously by the Defendants as “patronising”, “aggressive and opinionated” or “offensive”, Pieter Burger summarised this presentation as a giant kick in the teeth. To an audience, many of whom were self-driven, entrepreneurial advisers who had built up their businesses by knocking on doors in their local communities, the message that the Towry model was the only way and that everyone else needed to catch up and come into line was not regarded as reassuring. Nor was it consistent with the statement that “nothing would change.”

At the conclusion of the Bath meeting the advisers all went their own way, as some had appointments to go to. Mr Fisher told them that he was setting up an “Ask Andrew” website, so that advisers could post questions and receive further information. He also agreed to send some of the management team to the regional meeting in Taunton, arranged for 28 October. However, the general feeling of at least the three Defendants who were present was that, despite the statement in the letters of 23 October sent to both advisers and clients that nothing would change, this was in reality not the case.

At the presentation in Batley, West Yorkshire, on 28 October, James Chandler described Mr Fisher as someone who came across as both very knowledgeable and very opinionated. Asked by someone whether they would be able to keep their stockbroker licences, Mr Fisher responded abruptly that none of them was a stockbroker and that they could place trades only as a conduit through Edward Jones. He told them that stockbroking had died when insider trading was stopped.

At this time there were also a large number of blogs being posted on Citywire and other financial websites about life at Towry, and in particular about Andrew Fisher. Many of them were produced in evidence and they were almost entirely negative in tone and content. It is not suggested that any of these blogs was posted by any of the Defendants, but the blogs were undoubtedly fuelling the flames already lit by the nature and style of Mr Fisher’s presentations. They were also providing material that formed the subject of questions at the presentations. When asked at the Batley meeting why Towry had lost advisers after previous acquisitions Mr Fisher responded that it was because the advisers could not pass exams. When he was asked why no Towry advisers had had a pay rise in two years, he replied that it was because of the state of the economy. To those Edward Jones’ advisers who, despite the state of the economy, had nevertheless been receiving an increase in their individual earnings, the responses from Mr Fisher suggested that both a loss of income and a loss of autonomy were on the horizon.

This, unfavourable impression of Mr Fisher and Towry was gained by Wayne Hayhurst and Tracey Simpson in addition, at the presentation held at Manchester Airport, also on 28 October. Another aspect of Mr Fisher’s remarks that caused concern at the various presentations was his reference to the many firms who, as Towry were aware, were now trying to recruit Edward Jones’ advisers. He warned them, for example, of “the odious St James’ Place” and referred to “commission hungry advisers” who were not qualified to make investment decisions. He spoke in stark terms of the debts the advisers would incur if they went to work for those organisations and of the possibility that they would lose their home. Mr Burger considered that these remarks were unprofessional and inappropriate coming, as they did, from the CEO of the acquiring organisation.

It is not in dispute that, at the same time as these meetings and presentations were taking place, some of the Defendants were communicating with other organisations, including Raymond James. Pieter Burger, Wayne Hayhurst and James Chandler were some of the advisers who contacted Raymond James on 26 October, to find out if they had any vacancies and make some general inquiries. Stuart Hutton also made inquiries with them on 27 October and attended a meeting on 5 November. A meeting took place between Raymond James and Tom Spain on 28 October, and a meeting with Pieter Burger on 4 November. A meeting with James Chandler and Wayne Hayhurst took place on 6 November. Barry Bennett first made contact with Raymond James on 15 November, attending a meeting on 24 November. A meeting with Tracey Simpson did not take place until much later, in January 2010.

At this stage I find on all the evidence I heard that these communications with Raymond James, in October and November, formed part of a general intention by the Defendants, as in the case of other Edward Jones’ advisers, to investigate what other employment options were open to them should they decide not to stay with Towry. The evidence shows that other organisations, apart from Raymond James, were also in communication with the Defendants. Such communications were anticipated, and were acknowledged by Towry as one of the consequences of an acquisition of this kind. I shall deal in more detail with the contact between Raymond James and the individual Defendants when I deal with Towry’s allegations of wrongful conduct, but I have had regard to all of this evidence in arriving at these conclusions, and it is important to understand the context in which this contact was being made.

Howard Goodship was, at the time of the acquisition, an adviser and regional leader with Edward Jones for the south of England. As set out above, he too attended a meeting with Raymond James on 4 November, seeking at that stage to do no more than keep his options open. Before that date, and assisted by Stuart Hutton, he arranged and attended the regional meeting in Taunton on 28 October at which Barry Bennett, Pieter Burger and Stuart Hutton were among the fifty advisers who were present. The aim of that meeting was to enable advisers to ask any questions of the Towry senior managers present, who included David Middleton and Graeme Creavy.

Barry Bennett referred to there being both positives and negatives at this meeting. One of the positives, he thought, was the greater emphasis Towry would put on education and qualification. On the negative side he considered that there remained a general reluctance to provide details as to the nature and fund performance of the IIM, as opposed to generalised statements about the better service that the IIM would provide to clients and about how clients should be encouraged to move their funds into it. Statements about Towry’s success and profitability were repeated, their key aim being said to be an IPO in 18 months to three years, and they were on track to achieve this. Further, whilst it was clear that local offices would close, there were at this stage no details provided as to the precise role of a Towry adviser, or as to where they would be working, their salaries or their targets.

The notes relating to this meeting, provided by Howard Goodship, summarised the concerns that were held and expressed by a number of the Edward Jones’ advisers.

“ – A big fear for many advisers is becoming managed again. Some have had past experience of this (that was poor) from previous employers … they do believe in management, but not micro-management …

The transition from 300 offices to 20 or 30 will not be easy … the overriding consideration is the client experience and ensuring it is a positive one. BOAs will be needed in admin roles although the number is not currently known.

- All employees are owners of the business with share options. Their stated aim is to float in the next couple of years. This gives potential for employees (including Jones’ advisers and associates) to benefit financially and have an ongoing interest in the success of the business. Becoming a public company is also great PR if the company is well run and professional. This in turn attracts more business.

Once FSA approval has been given, more specifics will be covered. I know everyone is keen to view in detail the investment proposition and the income situation as well as know they have employment moving forward. This should start in earnest once approval is given.

Thank you for your questions. I appreciate not all have answers yet … thank you for you patience at a difficult time …”

Stuart Hutton stated that the differences between the Towry and Edward Jones’ models were becoming clearer by this stage. Essentially, as it appeared to him, Towry advisers worked in a very different world, only offering Towry’s IIM service and placing the individual client within the appropriate risk profile. This, in his view, removed the scope he had as an Edward Jones’ financial adviser and stockbroker, to be able to be whole of market and give independent advice. His summary of the situation was expressed as follows:

“It does not mean that I thought what Towry was offering was not any good, however, it would mean that my current clients would no longer be able to be advised by me on their investments, unless they switched into the Towry discretionary managed fund. I had joined Edward Jones so that I could have the freedom to make my own choices, work closely with clients and develop a strong and trusting relationship. This change had the potential to undermine that trust and relationship if I stayed and was not how I wanted to work with my clients. ”

By the end of October 2009, as a result of the presentations and meetings attended by the various Defendants, I am entirely satisfied on the evidence that this was a genuinely held view amongst a substantial number of Edward Jones’ advisers, including the Defendants in this case.

Wayne Hayhurst attended a further lunchtime meeting in Bolton on 29 October, as did Tracey Simpson, and a third meeting in Leeds on 4 November, which was attended also by James Chandler. Mr Hayhurst was concerned at the prospect of change, from running his own successful branch to being, as he saw it, micro-managed by a supervisor, reporting each month on numbers of appointments booked and prospective business. Although the meeting on 4 November was meant to provide further information about Towry’s proposition and the remuneration package, he stated that he came away from it with more questions than he had when he arrived.

On hearing, at the 4 November meeting, how Towry’s contracts would be structured and remuneration calculated, James Chandler’s swift calculation of what he then understood he would receive produced, in his mind, a significant step backwards. After several years of pay rises, this was unattractive. This information, now combined with confirmation that most of the local offices would be closing, that they would be relocated to regional offices and that targets would be set for moving funds to the IIM, all combined to increase his concerns as to employment with Towry.

At this meeting Brian Innes of the Inverness/Aberdeen branch was asked by an Edward Jones’ adviser how much of the £75 million he had under management was in the IIM. His response “all of it” resulted in a general gasp of astonishment around the room. Despite Andy Cowan’s explanation that there was no pressure to put all of their clients’ funds into the IIM, and that this particular adviser had funds under management which were not in fact within the IIM, the impression that the advisers were expected to move all the funds had been created. The migration of all the clients’ assets into the IIM was, in any event, the “reasonable project assumption” of Towry’s senior management.

Nevertheless, whilst some Edward Jones’ advisers left the meeting before the end, James Chandler stayed. It is accepted that he engaged with the process throughout and I accept his evidence that, notwithstanding his concerns, he still wanted to explore all the options. Mr Chandler was unable to attend a further meeting on 19 November, but he did attend the presentation on 25 November, when the contractual offers were made.

Tracey Simpson recalled the confirmation, on 29 October, that a number of local offices would be closed and that some people would lose their jobs, although they were told that in this respect there would be a fair process and a level playing field. The Towry advisers who spoke at the meeting described in terms how they were managed, how they were paid for their time and how they had to account for their movements. Further, they explained that they did not themselves become involved in the investment side, but that there were four to five risk profiles for clients and that clients were fitted into one of them according to their profile.

On 13 November Ms Simpson attended a further meeting in Leeds, after which she retained concerns as to the changes in the work she had been doing. She stated “I really didn’t want to be a sales person, I wanted to give advice. I enjoyed making decisions and I was also interested in the stockbroking side of things”. She described being bombarded with calls from recruitment agencies and other financial services firms at this time.

It is correct that, after 28 October, Stuart Hutton did not attend a number of meetings in November to which he was invited, taking place in Bath and also in London. However, on each occasion, he emailed his apologies, expressed concern at the short, and sometimes very short notice he had been given, explained that he had work, childcare or other commitments that he could not rearrange and indicated his willingness to hear more about the Towry model.

On the evidence I reject any suggestion that he was deliberately stonewalling Towry in the weeks running up to 25 November, when the individual offers of employment were made. He clearly had concerns about the different world in which the Towry advisers worked and as to the likely changes for him in terms of culture and ethos. He was also in touch with other organisations, along with many other Edward Jones’ advisers. However, I accept his evidence that throughout this process he retained an open mind. As he expressed it, his concerns did not mean that he thought what Towry was offering was not any good. Rather, his concern was that he would no longer have the freedom to make his own choices and to develop strong relationships with clients. He did accept an invitation to the meeting in Exeter on 25 November, when the individual contracts on offer were given to the advisers to consider.

Thomas Spain also emailed his apologies for being unable to attend the meeting in Leeds on 5 November, having been invited on 2 November. He asked for possible future dates and times, which would enable him to plan in advance and attend, without experiencing the problems caused by short notice.

On 10 November Barry Bennett and Pieter Burger attended a further meeting in Exeter, at which a number of Edward Jones’ advisers voiced their concerns to Tim Niemann (Edward Jones’ general partner). Tim Niemann spoke to both of them and referred to the fact that there would be many companies chasing experienced people like them. Mr Burger thought he was fishing to find out if he would stay or go but, since he did not yet have a clear understanding of the Towry offer, he could give no indication at this stage as to his future plans.

Barry Bennett had the impression that Tim Niemann was encouraging him to look elsewhere, on the basis that Towry were not looking for entrepreneurs. At the leadership meeting he attended in Alan Stone’s office in Exeter on 19 November, there was still much disquiet among the Edward Jones’ advisers. There were still unanswered questions concerning the terms of any contract to be offered, the apparent lack of independence for them in the new Towry world and the movement of funds to the IIM. It was now clear that it would not be business as usual, as they had initially been led to believe. Details confirming the asserted superiority of the IIM were not forthcoming.

At this meeting Howard Goodship announced that he was staying with Towry. He explained his reasons for doing so, stating that he had not yet seen his new contract, but that he was taking a “leap of faith”. He asked those attending to do the same, given that Towry was effectively taking a leap of faith with all of them. This suggestion did not reassure Mr Bennett as to his future, but he too, as I find, wanted to see the Towry offer in detail before he made a final decision. I accept his evidence that he had not made up his mind to leave at this stage.

On 20 November Pieter Burger attended the London presentation given by Andy Cowan, David Middleton and Andrew Wilson. At that presentation, whilst there was still great emphasis on the benefits of the Towry investment proposition, Mr Burger remained concerned by the refusal to provide any details of past performance. Mr Cowan spoke about the charges to clients and review arrangements but, when pressed on the underlying fund charges, such as the fund providers’ management costs, there was no elaboration. The exchanges between them clearly became heated. Mr Cowan was critical of the fact that the Edward Jones’ SIPP charged trustee fees, stating that the Towry SIPP had no charges. Mr Burger challenged this, emphatically, at which point Mr Cowan became agitated. Mr Burger described Mr Cowan as jumping out of his seat at this point and shouting words to the effect that he did not know what he was talking about.

Mr Cowan frankly accepted that, although he does not normally shout, he may at this point have been “overly stressing the point”. I find that voices were probably raised on both sides, by Mr Burger because he considered that the information being given was inadequate and inaccurate, and by Mr Cowan because the workload by this point had been immense and there had been a succession of challenging and difficult meetings. In any event, the effect of this outburst was that few other questions were asked at this meeting. Mr Burger was left with the clear impression that this was a company in which questions were discouraged and where advisers were expected to do as they were told. He now regarded it as less likely that he would stay with Towry, yet he too decided to wait and see the detailed offer from them before making a final decision.

One of the reasons for the lack of detailed, concrete information being provided in the weeks following 23 October was the need to secure FSA approval for the acquisition. This came on 12 November, following which Andrew Fisher posted a letter on the Towry portal to all Edward Jones’ employees informing them that the deal had been completed. In the short-term the advisers were asked to direct any questions to their regional leaders and to use the Ask Andrew facility on the intranet for any additional information.

The need to await FSA approval also meant that Towry had not yet commenced the formal, 90-day collective consultation period with Edward Jones’ employees, given the proposed redundancies and the potential TUPE (Transfer of Undertakings (Protection of Employment) Regulations 2006) transfer of employees. Following FSA approval, a committee of twenty Edward Jones’ employees (eight advisers, eight BOAs and four senior staff from Head Office) was appointed.

Their first meeting was held on 20 November. Mr Fisher described it as a very positive and supportive meeting, as a result of which Towry and the EJCC were in a position to advise Edward Jones’ employees in detail of the integration plans.

In fact, the role played by the EJCC appears to have been a very limited one, at any rate before the new contracts of employment were offered on 25 November. By the meeting of ExCo on 18 November, as the minutes confirm, the 234 group 1 advisers, which it was proposed would be confirmed into role, had by then already been identified by reference to the criteria provisionally selected by Towry, and had been split into seven regions. Further, the terms and conditions of employment to be offered by Towry had all been worked out and were to be the subject of one-to-one meetings with the advisers on 25 November.

The timing was very tight. It is apparent from Alex Rickard’s report to the meeting that the new EJCC appointees would, in fact, only be receiving appropriate training on their role as EJCC members on the morning of 20 November, the date set for their first meeting. Immediately after being trained they were then to be asked to approve a “measures letter”, setting out Towry’s plans for the next two months and, in particular, the selection criteria for advisers. Once the criteria were approved by the EJCC they would then be formally applied. The group 1 advisers identified would then be invited to attend one-to-one interviews on 25 November, when each adviser would be handed a personalised pack including the terms and conditions of the contract of employment on offer.

The measures letter, so far as it related to the redundancy selection, referred to the selection criteria for the group 1 advisers and stated: (1) that any adviser who met the criteria would be confirmed into a suitable alternative role as a Towry wealth adviser; (2) that the adviser would be given seven days to accept the new terms and conditions; and (3) that, if acceptance was not received within that time-scale, it would be treated as a refusal of suitable alternative employment, at which point Towry would deregister the adviser.

The minutes of the meeting held on 20 November show that the collective redundancy and TUPE consultation commenced with the members of the EJCC in the afternoon of that day, after completion of their training in the morning. The outcome, in what was on any view a very short time given the importance of the matters raised, was that all recommendations in the measures letter were accepted.

There was no consultation with the EJCC, however, as to the closure of any of the Edward Jones’ offices. Mrs Rickard confirmed that a “commercial decision” had already been taken by ExCo that the local offices would have to close. It would have been wholly inappropriate to retain them and the decision to close them was therefore taken without consultation with the EJCC.

Nor was there any consultation with the EJCC as to any of the proposed changes to the terms and conditions of employment offered to the individual Edward Jones’ advisers. Mrs Rickard stated that Towry did not need to consult on the terms and conditions being offered to them because the role of “financial adviser” with Edward Jones no longer existed. Consultation with the EJCC was “at a higher level”, relating to the changes in the organisation, the proposed number of redundancies and the potential TUPE transfer. In the circumstances she considered that there was meaningful consultation.

The newly appointed EJCC therefore approved the measures letter on 20 November, enabling Towry formally to confirm the group 1 advisers already identified via provisional application of the criteria, and to make arrangements for the contractual offers to be made at interviews on 25 November.

By this time, I find that significant pressure was mounting for Towry to try and secure the services of those advisers in group 1. A month had already passed since the acquisition had been announced. The various meetings and presentations had taken place in an atmosphere which was often challenging or hostile. Questions about office closures and IIM performance had been asked but not answered in detail. Competitor organisations were already communicating with the most skilled Edward Jones’ advisers, with a view to recruiting them.

Against this background Mrs Rickard acknowledged that, by 20 November, there was a need to offer jobs to the group 1 advisers as soon as possible, with the aim of calming things down. In this context the seven day deadline for acceptance of the new terms and conditions was considered necessary, as part of this process. Decisions on the group 1 advisers had to be made before the position of employees in the lower groups could even be considered.

On 23 November Andrew Fisher posted an announcement on the Towry portal and emailed all Edward Jones’ employees, informing them of the positive meeting of the EJCC on 20 November; of the need to remove costs; and of the need to take action to tackle the current losses of approximately £36 million per annum.

His announcement continued as follows:

“The first area of focus is roles within the enlarged Towry Law Group. We have been very open with you from the beginning that we will not have roles for everybody in the company. We will hold individual discussions with you to discuss your future. Our communication programme starts this week on Wednesday with FAs. Advisers will be asked to one or more meetings during the period 25 Nov to 9 Dec. At those meetings we will discuss with you your individual position. Similar meetings will take place for BOAs during the period 30 Nov to 11 Dec and for home office staff between 2 Dec and 18 Dec. We appreciate that you all want certainty on your position as soon as possible. However we want to meet everybody to understand the roles that you have the potential and interest to undertake. Our plan is that everybody knows where they stand by the Christmas holiday period.

The second area of focus is the 300 offices. Our rent roll is a huge drain on our financial resources and we need to move to a position where we have about 30 offices in total. This number will probably increase over time. We will not be able to move to 30 offices immediately so we will initially consolidate into about 100 offices. We will talk to you over the next few weeks about what this means for you and your office as we develop our plans.

On Friday the collective consultation process started with the EJCC, where we are consulting under redundancy legislation and TUPE regulations. I have answered a question previously regarding TUPE. My response was directly linked to the transaction, which was that it was not a TUPE transfer. However, because EJ and TL are so alike, we are able to integrate the two businesses almost immediately, and this constitutes a TUPE transfer. This has no downsides, and protects your terms and conditions of employment, and previous years’ service. It is however discrete from redundancy legislation.”

The offer letters to the individual Defendants were signed by Alex Rickard. The alternative role offered, of Towry wealth adviser, would have taken effect immediately, although the terms and conditions of employment attached to that role were to take effect as from 1 January 2010. All the relevant offers were dated 25 November 2009, save in the case of James Chandler whose offer (after negotiated revisions), was dated 2 December; and Tracey Simpson (a group 2 adviser), whose offer was dated 11 December. The new contracts were distributed to the group 1 advisers who attended the presentations on 25 November. Arrangements were made to send copies of the offers to those who were unable to attend the presentations on that date.

In fact the Defendants had only two days’ notice of the 25 November presentations. On 23 November David Middleton emailed Edward Jones’ advisers, including James Chandler and Wayne Hayhurst, inviting them to the presentation in Manchester on 25 November, conducted by Andy Cowan and David Middleton. James Chandler accepted and attended. Wayne Hayhurst accepted the invitation, but was unwell on the day and sent a text message to the regional leader, Fraser Irvine, explaining that he was unable to attend due to illness. He was then invited, on 26 November, to a presentation in London on the following day, but had to email his apologies to Nicky Greening because of prearranged meetings on that day. He asked if his contract could be forwarded to him. On 30 November he emailed Nicky Greening again because he had not yet received his contract. He received it on 1 December and had a telephone conversation about it on that day with Andy Cowan.

Barry Bennett, Pieter Burger and Stuart Hutton were amongst those invited to the presentation in Exeter on 25 November, conducted by Rob Chandler and John Bowes. Pieter Burger and Stuart Hutton attended but Barry Bennett was unable to and replied accordingly. On 26 November Mr Bennett was invited to attend the presentation in London on 27 November, but he emailed his apologies and asked if the details of the offer could be forwarded to him. Arrangements were made for this to be done. Thomas Spain was invited to a presentation in Leicester on 25 November. He responded that he was moving house at the end of the week and asked for another date the following week. I will return later on to the circumstances in which the offer to this Defendant was made.

The standard covering letter attached to the offers referred to the fact that the current infrastructure at Edward Jones was not sustainable and did not match Towry’s strategic aims, so that rationalisation was necessary. Each group 1 adviser was notified of his interim office location and told that he should expect to relocate permanently within the next six months. The terms and conditions enclosed, together with the contractual sections of the Policies and Procedures Guide made up the contract of employment being offered.

Clause 19 of the Towry contract, headed “Post-termination restrictions”, provided as follows:

“The covenants contained in Appendix 3 to these terms and conditions form part of your contract of employment and are of a continuing nature and shall remain in full force and effect notwithstanding the termination of your employment and maybe enforced against you accordingly.”

Paragraphs 3-9 of Appendix 3 provided:

“3.

You will not directly or indirectly, for a period of 12 months after the Relevant Date, solicit or seek to entice away from the Company or any Group Company the business or trade of a Relevant Customer or relevant Prospective Customer with the intention of supplying or providing goods or services to that Relevant Customer or Relevant Prospective Customer so as to compete or seek to compete with any Relevant Business.

4.

You will not directly or indirectly, for a period of 12 months after the Relevant Date, in competition with any Relevant Business deal with or supply or provide goods or services or accept business from any Relevant Customer or Relevant Prospective Customer.

5.

You will not directly or indirectly, for a period of 12 months after the Relevant Date, for your benefit or on behalf of any business which is in competition with any Relevant Business, offer employment or engagement to a Relevant Employee from the Company or any Group Company, whether or not this would be a breach of contract on the part of that employee.

6.

You will not directly or indirectly, for a period of 12 months after the Relevant Date, for your benefit or on behalf of any business which is in competition with any Relevant Business, persuade or encourage or attempt to persuade or encourage a Relevant Employee to leave the employment of the Company or any Group Company, whether or not this would be a breach of contract on the part of that employee.

7.

Following termination of your employment, you shall not in any way hold yourself out or permit yourself to be held out as continuing to be connected with the business of any Group Company.

Nothing in this clause shall prevent you from being engaged in or by, or participating in any business or entity to the extent that any of its or your activities for such business or entity shall relate solely to:

a)

geographical locations in which the business or entity does not compete or seek to compete with a Relevant Business; or

b)

business or matters of a type with which you were not materially concerned in the 12 months immediately preceding the Relevant Date; or

c)

customers or prospective customers of the Company with whom you had no dealings or confidential information as defined;

8.

The restrictions set out in this clause apply whether you act for your own benefit or on behalf of any company, other organisation or person and whether you act directly or indirectly. You acknowledge and agree that each of the restrictions contained in the above sub clauses are intended to be separate and severable. If any of the restrictions are held to be void, this will not affect the enforceability of the remaining restrictions, and if any restriction is held to be void but would be valid if part of the wording in the restriction was deleted such restriction will apply with such deletion as may be necessary to make it valid and effective.

9.

In the event that you leave the employment of the Company you agree to provide a copy of these post-termination restrictions to any prospective Company before accepting any employment or engagement with them.”

The Relevant Date was defined as the earlier of the termination date or the commencement of any period of garden leave. “Relevant Business” meant any commercial business undertaken by Towry and any Towry Group Company at the Relevant Date with which the employee was involved to a material degree in the 12 months immediately preceding such date.

The terms “Relevant Customer” and “Relevant Prospective Customer” were defined as follows:

“‘Relevant Customer’ means any person, company or other organisations

For the purposes of this litigation the material difference between these restrictions and those contained in clause 16.4 of the Edward Jones’ contracts of employment, referred to above, was the additional provision at paragraph 4 of Appendix 3, hereafter referred to as the “non-dealing” clause.

A dispute arose as to whether Towry were aware of this difference between the restrictive covenants in the two contracts. As early as 28 October the following Q&A appeared on the “Ask Andrew” facility on the Towry website:

“The ‘blogs’ on the internet suggest that there is nothing to stop the EJ advisers walking off with their clients. There are no restrictions in their contracts. Is this true?

- All Edward Jones’ advisers have employment contracts that include appropriate restrictive covenants prohibiting them from soliciting or dealing with clients if they leave Edward Jones.”

Mr Fisher said in cross-examination that he had read the Edward Jones’ advisers’ contracts and was aware that there was no non-dealing clause in them. The answer he gave to this question was an “honest mistake” in circumstances where he was having to provide answers to a large number of questions which were all coming in very quickly. I find that he was mistaken about this and that his answer was therefore inaccurate.

Mr Quinn pointed out that the presence of a non-dealing clause in the Towry contracts was not flagged up in any of the meetings or presentations conducted by senior Towry personnel. This was accepted. Nor was it referred to at any of the ExCo meetings during this period, because it did not appear anywhere in the minutes which have been disclosed.

Further, some advisers were clearly raising queries about this because, in an email sent to ExCo and others on 1 December, Andy Cowan said as follows:

“A query is coming up constantly now around restrictive covenants. Some EJ advisers are saying that their covenant is a non-solicitation clause only without a ‘no dealing’ element. The problem as they see it is that ours is both non-solicitation and no deal. Here are the key points in addressing this objection –

•

Our covenant is industry standard

•

It is no deal and no solicitation

•

EJ’s covenant is now the same – no deal, no solicitation

•

However, some EJ advisers have an old ‘non-solicitation only’ covenant

•

EJ would have moved to harmonise these contracts at some point

•

Any covenant in the industry will now be the same as ours and EJ’s

•

We will not amend our contract to reflect outdated terms”

When cross-examined Mr Cowan stated that he understood from Alex Rickard and Nicholas Anderson that Towry’s non-dealing covenant was standard in the industry, and that he thought Edward Jones had changed their contracts to be the same as Towry’s, but that some had fallen through the net. There is no evidence before me, however, that any Edward Jones adviser in fact had a non-dealing clause in his/her contract of employment at this time and certainly none of the Defendants did. Further, Mr Cowan said that Towry would not change their contracts so as to prevent only solicitation. In the event, although he recognised that Clause 16.4 of the Edward Jones’ contract and Appendix 3 of the Towry contract did reflect a difference, he considered that it was “not a hugely material difference”. He also hoped that any perceived negative would be outweighed by the other “hugely important benefits” Towry were offering.

Alex Rickard similarly saw “no major issue” in relation to the different restrictive covenants. She considered it fair and reasonable to require the Edward Jones advisers to agree to the non-dealing clause, in circumstances where Towry were seeking to harmonise the contracts of all their employees and when such a covenant is not unusual in the industry.

Nicholas Anderson recalled informing the other senior Towry managers that there were valid, non-solicitation clauses in the Edward Jones contract and that every adviser had the same contractual terms. He had encountered similar non-solicitation clauses in the contracts of Baker Tilly employees when Towry acquired that company. In his view, however, there was no real difference between the clauses in the two contracts, in terms of the protection they afforded. He considered that “non-dealing is just an easier way of proving solicitation”.

Mr Anderson developed these views in cross-examination, stating:

“Most clients will not give execution-only instructions to their advisers. They will not say: I wish to buy this, sell this, transfer this, and be that specific. Effectively what you find with most advisers, because they cannot help themselves, is they will give advice or promote their new business or recommend a transfer. And solicitation prevents all of those matters.

So all non-dealing does is to operate to reduce the legal burden of proving solicitation by making it much, much easier and much, much clearer to prove.”

A little later on he described how he had explained the effect of the non-solicitation clauses to Andrew Fisher in the following exchange:

“I would have explained the effect of the non-solicitation clauses, in terms of not allowing the advisers, if they left, to solicit and deal with those clients. And in terms of the expression ‘dealing’ in this regard, dealing is ongoing interactions with the client once you have solicited them so the clauses were rather effective …

The effect of the non-solicitation clauses is that the adviser cannot solicit or, in fact, deal with the client in those terms, because in giving advice to the client and recommending they transfer to a new business, they are soliciting that client. So the effect of a non-dealing clause is just to amplify the solicitation and to make it easier to prove. So from having reviewed the contracts in the due diligence process, I had no concerns about the effect of the contractual clauses at all.

Q: So what you’re saying is that there is no difference as to the legal obligation between a non-solicitation covenant and a non-dealing covenant?

A. No. There is a difference in operation. But in terms of financial advice when clients seek advice and require advice and want advice, this manifests itself in making a non-dealing clause easier to prove than a non-solicitation clause for the same breach of contract. If there was a relationship that did not involve advice, say a commercial salesman of, I don’t know, photocopiers for example, clients do not require advice. He is merely selling products to them. In those terms a non-dealing clause may be more onerous because he could not contact those people or they could not contact him and deal. In terms of financial advice, the advice is key … most financial advisers will give advice, recommendations, canvass or solicit a client or their former clients and attempt to transfer them to their new business. So the non-dealing clause effectively makes the evidence easier to find …

Q. With a non-dealing covenant any relationship that an employee and a client have will necessarily come to an abrupt halt. They simply cannot deal with each other, for the period of the restraint, regardless of the wishes of either of them, can they?

A. No they can’t. I wouldn’t say that the wishes of the adviser are relevant, because the adviser is an employee of the company. The client relationship is actually with the company. And the employee is merely an agent of the company. The employee does not own the relationship with the client or control that relationship with the client. So it’s a perfectly reasonable commercial contract and commercial clause to protect the legitimate interests of the employer.

Q. With a non-solicitation covenant, on the other hand, it is open to them to continue dealing with each other so long as this is at the behest of the client and not due to the persuasion of the employee.

A. Is there a question in that statement?

Q. Do you agree? That is what is fundamentally different ---

A. Hypothetically ---

Q. --- in a non-solicitation covenant?

A. Hypothetically, if the specific facts of the circumstances allow. But, again, I repeat, in my experience involving financial advisers, it is very rare for a client to give a range of specific instructions to that adviser in terms of their investments and arrangements.”

Mr Anderson considered that restrictive covenants had evolved over time and that, by late 2009, a non-dealing clause was industry standard “for the obvious reason that it allowed solicitation to be proved much more easily”.

I shall return to this point when considering the parties’ submissions on repudiatory breach of contract, and on solicitation. For present purposes, in terms of the contractual obligation upon the Edward Jones’ advisers, what seems to me to be missing from Mr Anderson’s analysis of the respective clauses is the necessity, in relation to solicitation, for advisers not to persuade clients to deal with them and to transfer their business. He appeared to conflate the giving of advice to clients with the soliciting of them. I do not accept his evidence that a non-dealing clause simply amplifies the solicitation and makes it easier to prove. Nor do I accept that there was no material difference between the restrictive covenants in play in this case.

The Defendants were all aware that their obligation under their contracts with Edward Jones was not to solicit clients for a period of 12 months after termination. As Mr Anderson accepted, if clients chose freely and voluntarily, without any element of persuasion, to follow their adviser and transfer their business, then there would be no breach of that clause. He is of course entitled to his view that, in terms of financial advice, that is unlikely to occur, but that is a different question. Whether that is what occurred is a question of fact to be determined on the evidence. However, a non-dealing clause of the kind in the Towry contract prevents advice being given even to those clients who wish, freely and voluntarily and with no element of persuasion, to transfer. That is the material difference and, in my judgment, it is a significant difference in terms of the contractual obligation owed by the adviser.

Each adviser’s “Total Reward” package was attached to the contract offered. The focus at the presentations on 25 November was, unsurprisingly, the terms of the remuneration package on offer. Mr Cowan described these terms as comprising the following.

(1) A fixed annual salary, payable monthly. This, he considered, would provide advisers with the security of a fixed monthly income, in place of the variable and fluctuating returns generated by commission driven rewards. Salary reviews would be linked to performance indicators, including financial objectives. During the 2010 transition period this represented an opportunity for advisers to increase their basic salary further, as Towry wealth advisers. If an adviser was meeting his personal targets after six months his salary would rise to 80% of his “current EJ earnings” (CEJE), with his guaranteed bonus reducing to a sum equivalent to 10% of CEJE. CEJE was calculated so as to include all the advisers’ commission or bonuses, holiday pay, cash value of “diversification trips” (paid holidays as a form of bonus), sick pay and any other financial benefits received.

The guaranteed bonus element of their remuneration would fall away in 2011 as they moved towards earning 100% of CEJE over the course of the year. However, the core proposition to the advisers was that, if they accepted the new terms, their minimum 2010 financial earnings would be guaranteed at not less than 90% of their CEJE. This global guarantee remained in place at all times regardless of productivity performance through 2010. If, by the end of 2010, the wealth adviser had met his personal targets his basic salary would be increased to between 90% and 100% of CEJE.

(2) Regular bonuses based on both corporate performance and individual attainment. The discretionary bonus structure had two components: (i) a non-recurring income (NRI) linked bonus, calculated at quarterly intervals and paid at 20% of the total NRI achieved in excess of the adviser’s NRI target. NRI comprised a combination of commission earned whilst in the transition to Towry, time based hourly rate fees and initial fees generated where clients were introduced to and transferred assets to the IIM service; (ii) an Asset Accelerator Bonus (AUM) awarded for outperforming an adviser’s IIM target. For each 10% increment by which the adviser exceeded their target, they would be paid a 2% of year end salary bonus, payable at year end. Furthermore, if 60% or more of any such over-performance came within the first six months of 2010, that 60% or more would attract an additional 3% of year end salary as a further year end bonus, again payable at the year’s end.

Mr Cowan acknowledged that the AUM bonus was designed to incentivise the advisers to identify those clients suitable for IIM as quickly as possible. The advisers’ targets were structured so as to be based both on a target quantity of transfers into IIM and on a target for generation of NRI.

In calculating the targets for the group 1 advisers, including the individual Defendants, Towry considered the adviser’s client book, length of service and average monthly assets, split between on book and off book. The targets set also factored in the amount of new business which Towry wealth advisers, with their particular attributes, had historically brought to the IIM.

(3) Various “highly competitive” benefits, including a pension, life assurance, income protection insurance, gym membership, long-service awards and an employee assistance programme.

(4) 28 days holiday per annum, plus public holidays.

(5) Access to Towry’s specialist training programme and extensive professional development. This initially comprised training in the operation of the IIM, prioritised for December 2009. Further financial planning training was scheduled for the spring and summer of 2010. All wealth advisers would need to achieve a Level 4 OfQual diploma by the end of 2012.

(6) A gift of 3,000 shares in Towry Holdings Ltd, with other share options available, based on performance and contribution to the development of the company. At the time of these offers it was anticipated that Towry would float by the end of 2011, which would crystallise the Defendants’ benefits.

Having been unable to attend the meetings in Exeter on 25 November or in London on 27 November, Mr Bennett asked for his offer to be sent to him by post. By the time he received it he had less than the seven days allowed for signing it.

Essentially, however, and against the background of the earlier meetings that he had attended, Mr Bennett’s reaction to this offer was that it amounted to a contract to churn clients’ assets into the IIM, with the sanction that if the targets identified were not met, advisers would be “managed out”, a term he had heard at the 19 November meeting. Mr Bennett acknowledged that the Towry contract offered short-term, financial security and that there were some positive features, in particular the emphasis on professional qualifications and the move to fee-based remuneration, which he considered was long overdue. However, it was not a contract that he felt he could sign. He realised that he would have to relocate twice in a matter of months and he considered that the total salary on offer (£43,939.00 and with guaranteed bonus total pay of £56,493.00) undervalued him. Further, it contained a non-dealing restrictive covenant, which he regarded as a highly significant change and which had not previously been brought to his attention.

The new contract seemed to him therefore to impose a significant change in terms of pay, the nature of the remuneration and of client relationships, the loss of stockbroking and investment decision-making, and the nature of the restrictive covenants. Further, he was being asked to sign it before receiving any training or details concerning the operation of the IIM. Mr Bennett considered it to be a “take it or leave it” offer, which he regarded as unreasonable. He also felt that it was too much to digest and think about in the short time allowed. He took legal advice and understood that he could claim unfair dismissal, but he decided not to go down that route.

He considered his options. Both St James’ Place and Positive Solutions were keen for him to move to them. He had also initiated contact with Raymond James on 15 November. He had attended meetings in London on 24 November with a number of companies, including Raymond James, and considered Raymond James to offer the closest match with the Edward Jones’ model.

Since Mr Bennett did not accept and sign the new contract he was notified, by letter of 7 December, that he should treat that letter as notice of termination of his contract by reason of redundancy on 18 February 2010. He was informed that, in accordance with the terms of his contract, he was not required to perform any of his duties during his notice period and that he would be on garden leave with immediate effect. His actions were said to amount to an unreasonable refusal of suitable alternative employment and he thereby lost the right to a redundancy payment. His attention was drawn to the terms of the restrictive covenants in his contract, which was the position in relation to all the other Defendants.

By handwritten fax, dated 9 December, Mr Bennett then resigned from Edward Jones with immediate effect. He was contractually obliged to give two weeks’ notice of termination and, on 14 December, he was notified, pursuant to his resignation, that his last day with Edward Jones would be 23 December 2009.

The proposed salary offered to Mr Burger on 25 November was £31,811.00 and the NRI target was £101,636.00, with an IIM (assets) target of £8,391,980.00. Notwithstanding the share option and flexible benefits Mr Burger considered that this represented a 29.7% pay cut in real terms. In summary he felt he was being asked to write the same amount of business as in the previous year, to move to an office in Exeter, to transfer all the clients’ assets into the IIM and to be paid less than before.

Mr Burger challenged Rob Chandler to explain the situation in an email of 27 November. Mr Chandler replied on the same day, telling him that he would seek clarification and come back to him. However, no clarification or further reply was sent to Mr Burger before he was sent notification of redundancy by standard form letter of 7 December, written in the same terms as those sent to Mr Bennett. On the same date and before he received that letter he had written to HR in the following terms:

“I have sent an email … to Robert Chandler about the targets and how they relate to my income. As I have not received a reply yet, I am unable to come to a conclusion at this stage until I have received further guidance.

I would add that the contract on offer is significantly different to my current contract in that at the moment I have autonomy in running my business, which allows me to conduct working hours suitable to me subject to satisfactory performance. I also hold a stockbroking licence which I would also lose.

However the main issue is the ability to earn is very significantly impacted by the low salary offered and targets which are 2.5 times higher than colleagues on a higher basic salary. This means I have to work twice as hard to earn a bonus on top of my low salary.”

Mr Burger considered that the brand he had created whilst employed by Edward Jones would disappear, along with his stockbroking activities. The need to transfer assets into the IIM effectively meant there was only one investment choice open to him, about which he had been given no details. His request for further clarification as to his salary and targets was ignored.

Further, the change to a non-dealing covenant in the new contract made it, in his view, commercial suicide. If, after accepting the offer, he then decided that he no longer wished to work for Towry, he considered that he would not be able to work in the same geographical area or conduct similar business, or to deal with people who chose freely to contact him.

He therefore decided not to sign the contract. Further, since the Towry redundancy notice would place him on zero income, garden leave until 18 February 2010 he decided he had no choice but to resign, even though he had no other job offer at the time he resigned. He therefore resigned by letter of 9 December and was notified, by letter of 14 December, that his contract of employment would end accordingly on 6 January 2010.

At the meeting in Manchester on 25 November, which he attended, everyone received their offers and was invited to book a five-minute slot with David Middleton to discuss them. However, Mr Chandler was unable to arrange a slot at that time since all the available slots had been taken.

Mr Chandler’s impression was that the total salary offered, including guaranteed bonus, of £60,000.00 represented a substantial pay cut from his current earnings at Edward Jones of between £70,000.00 and £80,000.00 p.a. Over the days that followed he entered negotiations, through Fraser Irvine and Andy Cowan, to seek to increase this offer. It appears that some queries he raised were not responded to, but in the event the offer made to him was revised and he received an overall offer of £65,000.00, although there was also an increase in his IIM target to £10,900,000.00.

In addition to his concerns as to the level of his salary, however, Mr Chandler was unhappy about a number of other matters arising out of this offer. These included the prospect of relocating, the absence of any guaranteed bonus in the second year, the lack of information and training on the IIM until the contract had been signed, the pressure to transfer clients’ assets into the IIM, and the presence of the non-dealing clause, which he considered would worsen his position if he signed up and then changed his mind. He considered ultimately that he had no option but to leave because he was not prepared to sign what he regarded overall as a much more restrictive and unattractive contract.

Mr Chandler was notified of redundancy by standard form letter of 15 December, giving a termination date of 18 February. He too subsequently resigned and his final day with Edward Jones was notified as 12 January 2010.

After Mr Hayhurst had received his contract, Mr Cowan spoke to him on the telephone on 1 December, noting at the time that Mr Hayhurst had asked for an extension of the deadline to consider it and that he seemed “pretty positive”. An extension was granted initially until Friday 4 December and then, as Mr Cowan’s email of 1 December shows, until Monday 7 December. Mr Cowan’s description of Mr Hayhurst as being pretty positive at this point is consistent with Mr Hayhurst’s own evidence that he still had an open mind at this stage and wished to consider seriously the offer being made.

Katherine Mulvihill, a former Edward Jones’ adviser and now a Towry wealth adviser, referred in her evidence in chief to speaking to Mr Hayhurst on the day that the acquisition was announced. She stated in her witness statement that he informed her he had already decided that he was not prepared to be employed by the Towry Group. This, however, is inconsistent with the evidence of Mr Hayhurst and Mr Cowan and I do not accept it. At that, early stage everyone was being told that nothing would change, and I accept Mr Hayhurst’s evidence that he had made no decision about his future and said nothing to suggest otherwise. In any event, when she was cross-examined about this, Ms Mulvihill was less certain about what he had told her, describing it only as “the gist I got from the conversation” and stating that she had understood that he was not going to stay and was going to look immediately at other options. There is no dispute that Mr Hayhurst looked at other options, as indeed did many other advisers, including Ms Mulvihill herself, and I find that this is what he told her he was going to do.

Nor do I accept Ms Mulvihill’s evidence that Mr Hayhurst told her he had not attended the presentation on 25 November because he had no intention of taking up employment with Towry and that he would be moving to Raymond James. Mr Hayhurst, as I find, was unwell on the day of the 25 November presentation. Further, he was not offered employment by Raymond James until mid-January and was still considering his options with other organisations and indeed with Towry at this stage, as Mr Cowan’s evidence indicates.

No response from him having been received however, Mr Hayhurst was notified of redundancy by letter of 8 December and informed that his contract would end on 18 February. Mr Hayhurst requested that the period of garden leave be shortened. Being advised that the only way to achieve this was for him to resign, he formally resigned on 13 January. He was informed that his last day would be 3 February 2010.

In his telephone conversation with Andy Cowan on 1 December Mr Hayhurst told him that he had expected his remuneration to be higher, but he was told that his salary was non-negotiable. Mr Hayhurst also considered that he was being given insufficient time to consider what he regarded as fundamental changes in the new contract, although the email sent by Mr Cowan on the same date shows that he was in fact given until Monday 7 December to consider the offer.

So far as the offer itself was concerned Mr Hayhurst regarded it as unacceptable, including as it did the loss of his ability to act as an advisory stockbroker, the inclusion of a stricter, more restrictive non-dealing clause, relocation, micro-management and targets he regarded as unachievable. He considered that his targets and “uncapped earnings” were only linked to the amount of funds moved into the IIM and he was unwilling to agree to that investment approach. After conducting his own research on Towry and considering the position carefully Mr Hayhurst decided that he did not want to pursue a career with them.

On 25 November Mr Spain was unable to attend the presentation in Leicester because he was moving house and was on annual leave. Paul Wright told him that, if he could not attend, his contract would be sent to him by post. On his return from annual leave, on 2 December, Paul Wright telephoned him, when Mr Spain told him that he had not yet received his contract.

Mr Wright said that he would arrange for another Adviser Information Pack containing his contract to be sent to him. Discussing the matter further with him Mr Wright said he would immediately email to Mr Spain the financial terms of his offer (the Total Reward package) so that he could start thinking about it. This was sent in the late afternoon of that day. A new deadline for acceptance was fixed for 9 December. Mr Wright did not email the entire contract at this stage because he considered it too bulky to scan or to fax in its entirety. He also considered that the financial rewards on offer would be the most important part of the contract so far as Mr Spain was concerned.

Mr Spain received his full contract on 4 December 2009. He sought a face-to-face meeting, which was held on Friday 11 December in Northampton with the regional manager Andy Springall, after an initial telephone conversation between them on 9 December.

There is a dispute as to what happened at that meeting. Mr Spain stated that Mr Springall did not have answers to his many questions about how the pay structure would work, or about relocation or the changes in service to his clients. By this time he was also aware that many advisers had declined the Towry offer and were leaving and he asked Mr Springall why this was, but received no satisfactory response. After about half an hour Mr Spain was informed that he would not be given any more time to consider his options and that his employment would be terminated if he did not sign immediately, or indicate that he would sign by Monday 14 December at the latest. Mr Springall described Mr Spain’s attitude as belligerent and angry throughout and stated that he gave the impression that he did not want to listen to what he had to say. He was dismissive of the Towry fee-based model and appeared to have a closed mind. The conversation became heated.

The email sent by Thomas Spain to Andy Springall after this meeting included the following:

“… I wanted to confirm in writing my response to Towry Law’s proposition as it was explained to me today.

Firstly, I do not believe that you have given me sufficient time to consider the new contract. I have been put under increasing pressure since returning from leave, highlighted by today’s deadline to sign at my first personal face-to-face consultation.

Secondly, I would like to continue to serve the clients under the old terms and conditions of Edward Jones to the best of my ability.

Thirdly, I understand that you will not provide me with further time to consider my options and therefore you are effectively dismissing me from my current employment forthwith.

I will await to receive confirmation of this in writing, but until such a time will continue to serve the clients of Market Harborough to the best of my ability.”

This prompted Mr Springall to email Andy Cowan and others 10 minutes later as follows:

“I have just got back from a meeting with Tom, he wanted more time to consider, I agreed to let him have the weekend to think it over and come back to us on Monday, he said that was not enough time as his solicitor is on holiday next week.

I suggest we send the letter as soon as we can. It’s a shame as he is a good guy, I tried my best to show how Towry Law would be good for him and his clients.”

The “letter” referred to in that email was the standard letter notifying advisers of termination of their contracts due to redundancy.

On the evidence I find that Mr Spain was genuinely upset and felt that he was being unfairly pressurised. I accept that the discussion became heated and that Mr Springall read this, in my judgment wrongly, as deliberate prevarication on Mr Spain’s part, which is why he sent his email to Mr Cowan in those terms. Mr Springall understood the time pressures and was no doubt frustrated by the situation. He stated that it was neither practical nor commercial to let people have an infinite amount of time to make up their minds and that “we had to get a decision”. By 11 December that was undoubtedly the view held by all the Towry senior managers, even though as Mrs Rickard rightly acknowledged, the advisers were being asked to make a “big decision.”

Lee MacDonald, a former Edward Jones’ adviser and now a Towry wealth adviser, stated in his witness statement that he spoke to Thomas Spain “in around December” when Mr Spain made it quite clear to him that he did not see his future with Towry. He accepted in cross-examination, however, that this conversation took place at about the time Mr Spain left and therefore when his decision not to sign the contract had already been made. It is not supportive, therefore, of deliberate prevarication or of a closed mind on the part of Thomas Spain earlier on in the process.

For several reasons Mr Spain did not agree with the terms of the new contract being offered to him. These were the fact that he would have to relocate away from Market Harborough; the presence of the “non-dealing” restrictive covenant, which would have effectively prevented him from working in the industry for 12 months if he had signed for Towry but then found the arrangement unsuitable; the loss of freedom and control in terms of autonomy, income and earning potential with the Towry business model; the loss of his ability to sell individual equities and corporate bonds, when most of his wealthier clients wanted independent advice in this area; and the risk of being “walked out” of his job if he did not reach what he viewed as unattainable targets.

The standard letter notifying Mr Spain of termination of his contract for redundancy was sent to him on 14 December. Unfortunately, the standard terms were not amended to reflect the correct details as far as he was concerned. He was, therefore, informed incorrectly that he had received an offer of employment on 25 November and that Towry had not heard from him within the seven days permitted for a response. He was told that his last day of employment was 18 February. In subsequent correspondence, his request to be released from his period of garden leave at an earlier point was taken as a request to be released from his contract and his termination date was then brought forward to 4 January 2010.

Mr Hutton attended the presentation in Exeter on 25 November stating, when accepting the invitation, that he was looking forward to hearing more about the opportunities at Towry. Paul Evans, Towry wealth adviser, stated in his witness statement that he distinctly remembered Stuart Hutton attending but not even opening his employment pack and leaving without discussing the terms of his offer with anyone. However, I reject any suggestion that Mr Hutton had a closed mind or that he had already made up his mind to leave. It is correct that Mr Hutton had not attended earlier presentations since the one on 28 October and he accepted that he did not look at his contract at the meeting, but Mr Evans agreed in cross-examination that he saw nothing wrong with that. He had asked Mr Hutton what he thought of his contract. In response Mr Hutton had indicated that it was inside his briefcase and that he would look at it at home. In my view this suggests nothing more than Mr Hutton’s wish to deal with this matter in private and without discussing it with anyone else at that stage.

On reading the contract Mr Hutton understood that the location of his office would change and would cease to be Winchcombe within six months; that the non-dealing restrictive covenant would make it extremely difficult for him if, having signed, he subsequently decided that Towry were not for him; that he would become a salaried employee and would no longer be responsible for the profitability of his own business; that he would no longer be able to advise as a stockbroker on a whole of market basis; that the targets set would be unachievable in the current market; that he was being asked and targeted to switch his clients’ funds into Towry’s IIM; that his potential earnings had been greatly reduced and he would be in a “managed” position, losing the entrepreneurial freedom he had hitherto enjoyed; and that his public roles in local government and other company directorships he held would not fit in with the ethos of the Towry business model.

He also realised that he had only a few days to make a decision that would affect the rest of his life. He too had had meetings with competitor organisations, including Raymond James, but when he finally decided not to accept the new contract he had no alternative job offer on the table. I accept his evidence that he found it a very difficult decision to make. On 10 December he submitted his letter of resignation and, on 14 December, Towry sent a letter accepting this and informing him that his last day of employment would be 24 December.

Ms Simpson was a group 2 adviser. She was informed, by letter dated 1 December, that she was not in group 1 and was therefore at risk of redundancy. On 3 December she applied for the roles of manager, wealth advice and of wealth adviser with Towry. After an interview she was offered a position as a salaried wealth adviser on 11 December and a contract was sent to her on that date. She was offered a salary of £21,000.00 with guaranteed bonus of £6,000.00, but the total of £27,000.00 was subsequently increased to £30,000.00.

By this stage many of the group 1 advisers had not accepted the new contract offered to them, of which more below. Ms. Simpson was also unhappy about being placed in group 2. Until June 2009 she had been exceeding expectations, but tragically she had suffered a miscarriage with complications and, as a result, had been medically certified as unfit to work. At the time she received her offer she had just found out that she was pregnant again and she therefore had to factor a number of matters into her decision-making.

She was very concerned about the prospects of relocation. She was also concerned about her salary and targets and about being expected to move clients’ funds into the Towry IIM. She asked for more time to consider the situation and was told that she could have one week. She decided not to accept the offer and, on 23 December, Mrs Rickard wrote to her notifying her that her employment would terminate on 18 February. Once again the standard form details in the letter had not been amended and the letter she received, therefore, referred incorrectly to the date of 25 November as the date on which the offer of employment to her had been made.

Generally, Towry’s hope that they would rapidly secure the services of many of those classified as group 1 advisers proved to be misplaced. Mrs Rickard stated that Towry had assumed a take-up of 70% to 80%, given the good employee proposition Towry believed they were offering. However, a far lower number than they had hoped for accepted the offer made on 25 November within the seven days allowed. Further, by 11 December, of the 234 advisers in group 1, only 106 of them had signed the new contract.

Ultimately, out of the total number of advisers employed by Edward Jones at the time of the acquisition, only 126 signed Towry contracts. Further, by the time of this trial in June 2011 only approximately 80–90 of those who originally signed were still employed by Towry. Mrs Rickard stated that the majority of those who left had resigned, for a variety of reasons. I accept that evidence.

The first issue to be determined, as agreed, is as follows:

There is no real dispute as the applicable legal principles. The classic statement of the implied term of mutual trust and confidence said to have been breached by Towry is that in Malik v. BCCI [1997] ICR 606 (HL) at 621:

“… the employer shall not, without reasonable and proper cause, conduct itself in a manner calculated and likely to destroy or seriously damage the relationship of confidence and trust between employer and employee.”

This formulation of the term is, as Lord Steyn went on to explain (at 622):

“apt to cover the great diversity of situations in which a balance has to be struck between an employer’s interest in managing his business as he sees fit and the employee’s interest in not being unfairly and improperly exploited.”

It is well established that the test to be applied in determining whether there has been a breach of this term is an objective one. The question is whether, viewing all the circumstances from the perspective of a reasonable person in the position of the innocent party, the contract breaker has clearly shown an intention to abandon and altogether refuse to perform the contract. All the circumstances must be taken into account, in so far as they may be said to bear on an objective assessment of the intention of the contract breaker. Thus, motive may be relevant if it is something or it reflects something of which the innocent party was aware or of which a reasonable person in his or her position would have been aware and it throws light on the way the alleged repudiatory act would be viewed by such a reasonable person (see Tullett Prebon v. BGC Brokers [2011] IRLR 420 (CA)).

There are now some well-recognised limits to the operation of the implied term of mutual trust and confidence. First, as the House of Lords made clear in Johnson v. Unisys Ltd [2001] ICR 480, it cannot apply to the act of dismissal itself. Lord Hoffman made it clear that a claim for wrongful dismissal is limited to the question whether the appropriate notice of termination has been given. He expressed doubt about the use of this implied term in relation to the way in which the employment relationship is terminated; and he rejected the submission that there was any general remedy at common law for unfair circumstances surrounding dismissal, given the existence of the statutory, unfair dismissal regime. This part of the decision was affirmed by the subsequent decision of the House of Lords in Eastwood v. Magnox Electric Plc [2004] ICR 1064.

Secondly, the implied term cannot generally be used so as to contradict the effect of an express term of the contract (see Reda v. Flag Ltd [2002] IRLR 747).

Thirdly, the implied term cannot operate so as to render unlawful the conduct of an employer who gives lawful notice of termination, coupled with an offer of continuous employment on alternative terms and conditions (see Kerry Foods Ltd v. Lynch [2005] IRLR 680).

Notwithstanding suggestions to the contrary in Mr Quinn’s closing submissions, I agree with Mr Tolley that there is no basis for distinguishing between the use of this implied term as a “sword” and as a “shield”. The limits to its operation are established in the authorities to which I have referred and they will apply whether the employee is pursuing a claim for damages or contending that there has been a repudiatory breach entitling him to resign.

In summary the Defendants’ case is that, although there were some further breaches of the implied term after 25 November, it is at this stage that the particular ways in which Towry acted in repudiatory breach of contract fall to be considered, both individually and cumulatively. In the various ways set out in their Defences Towry repudiated the Defendants’ contracts of employment, so as to entitle each of them to treat their contracts as having been terminated.

Towry’s case is that their conduct did not remotely approach the standard necessary to enable the Defendants to complain of a repudiatory breach of contract. This allegation is said to be an entirely manufactured defence, contrived in an attempt to enable the Defendants to escape their contractual obligations and to discredit Towry’s business approach. Whilst there were significant differences between the Edward Jones’ and Towry business models and the Defendants were under no obligation to accept the offer of continuous employment in November 2009, it cannot be said in all the circumstances, viewed objectively, that Towry showed a clear intention to abandon and altogether refuse to perform the Defendants’ contracts of employment, or that the individual Defendants were unfairly and improperly exploited.

I must deal first with Towry’s complaint, made in Mr Tolley’s supplemental closing submissions, that the Defendants are now seeking to rely on further, unpleaded allegations; that they should have applied to amend in order to argue them; and that these further allegations should not be taken into account by the Court in determining repudiatory breach.

The complaint arises because, at the start of the trial, Mr Quinn applied to add a further paragraph to the list of issues, requiring a determination as to whether Towry were in repudiatory breach of contract “in the way that it sought to impose the changes that it did”. Mr Tolley opposed this application, but accepted during the course of argument, that paragraphs 10(1)(a) to (h) of the Amended Defence themselves included complaint as to the manner in which the specific changes complained about had been introduced. Mr Quinn confirmed that his complaints as to process related only to those matters pleaded in paragraph 10(1) and no longer pursued his application to add that as a further issue.

Mr Tolley’s complaint now relates to paragraphs 179–180 of Mr Quinn’s closing submissions, which are said to make a number of new allegations of repudiatory breach in relation to the process followed.

I shall not set them out here. In my view, to omit these allegations from my consideration of repudiatory breach would be unrealistic and unhelpful. In a case, (a) where the facts lie at the heart of this litigation, (b) where much of the evidence relating to these allegations emerged only during the course of the trial and after additional disclosure, (c) where they were addressed thoroughly in evidence on both sides and in counsels’ closing submissions, and (d) when they all seem to me either to add little, or to relate to varying degrees, to the substantive complaints already made at paragraph 10(1), their omission would result in an artificial and unsatisfactory determination of a highly contentious issue between the parties. I have therefore had regard to all these matters in addition, having had the benefit of hearing all the evidence upon them and considering the parties’ detailed submissions. Towry has in no way been disadvantaged in this respect.

Applying the relevant legal principles to the facts I find as follows in relation to the allegations of repudiatory breach.

I accept Mr Tolley’s submission that the context for consideration of the Defendants’ allegations in this respect is important. The context is that Edward Jones UK was in a parlous state, with continuing losses of approximately £3 million per month and total losses over the preceding decade of approximately £260 million. The Company was surviving only as a result of regular financial assistance from its American parent company.

Individual advisers, including some of these Defendants, working successfully and profitably in their own offices up and down the country, found the global reality hard to understand and to digest, when they were made aware of it. Thomas Spain and Wayne Hayhurst in particular regarded the Edward Jones’ model as a good model. Other Defendants acknowledged in their evidence that they were aware at the time that Edward Jones was losing money (Mr Bennett and Mr Chandler) or that, as Mr Burger expressed it “… the system was broken at the end… there is no doubt about that”, although they were unaware, as I find, of the full scale of the losses as at the date of the acquisition, or in the days that followed.

Towry was the only organisation that offered to buy the whole company and I accept that it is a reasonable inference, on the evidence, that, but for Towry’s acquisition of the company in October 2009, Edward Jones UK would have ceased to exist, resulting in the loss of employment for the whole of its workforce.

Fundamental change was therefore inevitable. However, the context for considering the allegations of repudiatory breach also includes Towry’s initial decision to tell both advisers and clients that nothing would change. Whilst this was no doubt a commercial and tactical decision, to try and prevent advisers moving to competitors and to reassure clients, the statement was then exposed as incorrect, as the scale of the changes that were to be made began to surface. Further, the context includes the style and content of Mr Fisher’s presentations, which succeeded in alienating many of those who heard them, including some of the Defendants. In their stated endeavour to win hearts and minds Towry were in my view already on the back foot.

It became clear from the meetings held in October and early November that not every adviser would be retained; that many local offices would close, although the extent of the closures was not initially apparent; and that advisers would no longer be able to act as advisory stockbrokers. The individual Defendants were therefore aware, from early November, that significant changes lay ahead, for them and for their clients. Nevertheless, as competitor organisations and recruitment agencies circled, the Defendants decided to keep their options open and to wait and see what Towry had to offer before deciding whether to stay or go.

Mr Quinn submits that Towry were not genuinely interested in the skills and expertise of the group 1 advisers, including the individual Defendants. Their only interest was in retaining the Edward Jones’ clients and the assets they brought to Towry and the IIM upon the acquisition.

I agree that the clients and their assets were a key objective, if not the primary objective for Towry, in exchange for assuming the liabilities of Edward Jones on acquisition. However, the evidence does not support the submission that Towry had no interest in retaining the services of the individual Defendants.

In particular the minutes of the ExCo and Project Team meetings taking place at the time referred expressly to recognition of the skills and abilities of the Edward Jones advisers, and in my view it was very much in Towry’s interests, as they maintain, to retain the services of the most skilled financial advisers in going forward.

On all the evidence I am satisfied that Towry genuinely wanted to secure the services of those financial advisers who met the selection criteria. Whilst the key criterion was £3 million AUA or a monthly sales rate of £90,000 or above in new investments, that criterion was itself indicative of the level of skill and expertise of the individual adviser, which Towry wished to retain and put to use on their behalf.

In relation to the process adopted generally, I accept Mr Tolley’s submission that a great deal of time and energy was invested by Towry senior management in the communications programme rolled out after acquisition. The evidence establishes that there were numerous presentations and meetings with advisers up and down the country, together with opportunities for them to access a website Q&A facility and to receive email updates, and also to speak to existing Towry wealth advisers.

I do not accept Mr Tolley’s submission that none of the specific complaints made by individual Defendants as to the aggressive attitude and approach of senior Towry managers stands up to scrutiny.

I find that Mr Fisher’s presentations were in a number of respects insensitive and confrontational, for the reasons I have set out above, and I accept the Defendants’ evidence on this point. I also accept Pieter Burger’s evidence that, at the meeting on 20 November, Mr Cowan jumped out of his seat in an aggressive manner and told him that he did not know what he was talking about. This, however, was an isolated incident, which occurred in the circumstances I have set out above, and where voices were probably raised on both sides at a meeting that had become heated and challenging.

It did not help Towry’s efforts in relation to communication that, no doubt for commercial and confidentiality reasons, they would not give any detailed answers to questions from the advisers about the precise nature and operation of the IIM, or about its past performance. To a room of skilled, entrepreneurial advisers, many of whom had been working autonomously as advisory stockbrokers on a whole of market basis, the failure to impart detailed information of this kind before the contracts had been signed was likely to increase their concerns and I find that it did.

Mr Hayhurst complained in his evidence in chief about the lack of time to consider his contract, which he received only on 1 December. He was told initially that he could have until Friday 4 December. However, Mr Tolley points to Mr Hayhurst’s evidence in cross-examination that, when he looked at the contract on 1 December “… the final piece of the jigsaw slotted into place. After I had seen the 50% pay cut and the reductions in other benefits, that was the final piece that I thought: actually I’m definitely not going to be going ahead with the Towry proposition”.

I accept Mr Tolley’s point that the pressure of time did not therefore itself lead to Mr Hayhurst’s decision not to accept the Towry contract, although the “jigsaw” referred to in this answer included the conversation he had with Andy Cowan on 1 December when, on the day he had received his contract, he was told not only that the salary on offer was non-negotiable, but that Mr Cowan wanted the contract signed and sent back by 4 December.

Nevertheless, I do not regard this as a point of substance in the context of this case. Mr Cowan’s email of the same date indicated that he had in fact agreed an extension until Monday 7 December and, given the seven day time limit imposed generally in this case, the time limit imposed in Mr Hayhurst’s case does not in my view add anything of substance to the general case advanced on repudiatory breach.

In relation generally to the seven day deadline for acceptance, notwithstanding that this was, as Mrs Rickard acknowledged, a big decision for the advisers to make, I do not consider that the imposition of a seven day deadline was such as to amount to a repudiatory breach of contract in all the circumstances. Viewed objectively, the position of the other employees in the groups below the top tier advisers was dependent upon the level of acceptance of those in group 1. Competitors were on the scene, and a month had already gone by since the news of the acquisition. Further, in my view the extensive meetings, discussions and presentations had already laid the ground sufficiently to enable the advisers concerned to consider, within the time allowed, what was on offer when the contracts arrived, and to form a view as to whether they wished to accept the terms offered. There was also scope for renegotiation in some cases, as demonstrated by the cases of James Chandler and Tracey Simpson.

So far as Mr Spain’s dealings with Mr Wright and Mr Springall are concerned, it was unfortunate that Mr Wright sent him only the Total Reward Statement, rather than the entire contract, but I find nothing sinister in this. It was not unreasonable for Mr Wright to think that Mr Spain’s immediate interest would be in his potential earnings, rather than in the other terms and conditions of the contract. At the end of their conversation Mr Spain thanked him for the call and told him he looked forward to receiving his contract. He also accepted in cross-examination that he did ultimately understand that he had seven days from 4 December to consider the contract, so that he in fact had the same period of time as others. The unprofitable discussion he then had on Friday 11 December with Mr Springall, who was unaware of the previous involvement of Mr Wright, led to an extension of time until the Monday 14 December for him to consider his position. This therefore adds nothing of substance in his case, so far as the allegation of repudiatory breach is concerned.

It is, I accept, unfortunate that the email of 27 November from Pieter Burger querying his offer was not responded to before he was sent the letter notifying him of termination; and, further, that some specific queries raised by Mr Chandler concerning his salary appear not to have been responded to. Some of the termination letters also contained inaccurate particulars in individual cases. On the evidence however I find that, viewed objectively, these errors and imperfections in the communication process were inadvertent and owed much to the scale of the task facing Towry following the acquisition. They were not acts deliberately directed at the individual Defendants whose services, as I have found, they genuinely hoped to retain.

Another matter raised during the evidence concerned the application of the TUPE Regulations, about which there was and remains a dispute between the parties, yet to be resolved in proceedings currently before the Southampton Employment Tribunal. Mr Quinn suggested to various Towry witnesses that Towry had sought both to conceal the fact of a relevant TUPE transfer and to delay the date of that transfer. However, for two reasons I need consider this point no further. First, the parties eventually agreed, for the purpose of these proceedings only, to proceed on the assumed basis that there was a TUPE transfer of the then employees of Towry Edward Jones Ltd to Towry Services Ltd on 10 May 2010. Secondly, the Defendants themselves adduced no oral or documentary evidence that Towry’s attitude towards the application of TUPE was even considered by them as an issue at the time. The TUPE points raised do not in my view assist in determining the question of repudiatory breach.

Two further “process” points were advanced in support of the allegation of repudiatory breach. First, it was submitted that the implied term required Towry to enter into genuine and meaningful consultation with the EJCC as to the nature of the proposed terms and conditions in the contract to be offered to the advisers. In failing to consult or even to show the EJCC the new terms and conditions, and in failing, further, to consult them as to the closure of the local offices Towry were in repudiatory breach of contract. In reality, it was said, ExCo had made all the relevant decisions long in advance of the first EJCC meeting on 20 November.

It is correct that consultation with the EJCC did not take place, either on the particular terms and conditions of the contract to be offered to the individual Defendants, or on the closure of local offices. It is also correct that the consultation that did take place on the “measures” letter and selection criteria for the group 1 advisers took place on the same day as the newly appointed members of this committee received their induction training.

I accept that this was less than desirable, but I do not consider it to constitute a repudiatory beach of contract. The commercial decision, that the local offices had to close in order to prevent further substantial losses, had already been taken as a matter of priority after the acquisition and this cannot be said to be unreasonable in the circumstances. Further, the EJCC could not be appointed or consulted until the FSA had approved the acquisition and the deal was not completed until 12 November.

Towry then needed to proceed quickly, to try and secure the services of the best performing advisers who, as they were well aware, would have been approached by competitors and recruitment organisations soon after news of the acquisition was announced. In addition offers had to be made to the advisers in group 1 before any offers could be made to other employees in other groups. On the evidence I accept that the ExCo, in furtherance of this aim, had drawn up proposed, selection criteria and had provisionally identified those group 1 advisers who met them. However, I find that no offer of employment was in fact made to any employee in advance of 25 November, or in advance of the EJCC approving the measures letter and the selection criteria, together with the time limits for acceptance, on 20 November. Nor is there any evidence that such considerations played any part in the Defendants’ thinking processes at the time.

I do not consider that these consultation arrangements, or the failure to consult the EJCC as to the particular terms and conditions to be offered to employees, could be said to amount to a repudiatory breach of contract in the circumstances. I accept Alex Rickard’s evidence that the role of the EJCC was a broader one, to consider the selection criteria and time limits for acceptance of offers, collective redundancies and the potential TUPE transfer. Their role was not to consider the particular terms and conditions on offer, in relation to individual advisers’ new roles as Towry wealth advisers.

It is, I accept, regrettable that the advisers were given only two days notice of the meetings to take place on 25 November, when the employment pack and new contracts were to be given to them. This, however, does not amount to a repudiatory breach. After the EJCC meeting on 20 November and after the selection criteria were formally applied and the group 1 advisers identified, these meetings had to be arranged or confirmed, with hotels booked and paperwork prepared in seven regions across the country. I accept Mrs Rickard’s evidence that Towry managers were all working very hard at this point, dealing with a huge amount of detail, and that they were under the time pressures to which I have referred. Further, the Defendants were by now aware, through the earlier presentations or discussions and email/website information, that the contractual offers were imminent.

Finally, and before considering the specific allegations made at paragraph 10(1) of the Amended Defence, a specific complaint made by the Defendants in respect of process related to secret inducements said to have been offered to and received by Howard Goodship and Fraser Irvine, then regional leaders at Edward Jones, in order to persuade them to put improper pressure on the group 1 advisers to sign the new contracts. In the case of Mr Goodship this was said to be in the form of a retention bonus of £32,000.00 and half a million pounds’ worth of share options. In the case of Mr Irvine it was said to be £280,000.00 worth of share options.

It was submitted that this subjected the individual Defendants to pressure from people who had been secretly incentivised to “get advisers on board” and that Towry’s actions, in making undisclosed payments to regional leaders to induce them to pressurise people in this way, amounted to a repudiatory breach of contract.

I have considered the evidence relating to this allegation carefully. Neither Mr Goodship nor Mr Irvine referred to any such payments in their witness statements adopted as their evidence in chief. They were both members of the Towry Project Team and were actively involved in the meetings and discussions with advisers.

In cross-examination Mr Irvine accepted that, at the regional leaders’ meeting with Andy Cowan on 16 November, he became aware that Towry wanted to rely on the regional leaders to help them manage the difficult period of change ahead, although he was never told that his job was “to get people on board”. Further, whilst he did not then know for certain whether he was himself going to be offered a job with Towry, he believed that, if he wanted to stay, there would probably be a job for him, since he had been one of the top Edward Jones’ advisers for some time. He stated that he had not made up his mind to stay, however, and he recognised that Towry was a very different proposition from Edward Jones. I accept that evidence and I find that no job offers or suggestions of job offers were made to regional leaders at that time.

Further, I accept Mr Irvine’s evidence that he was never, in fact, offered any retention bonus or other incentive in order to get financial advisers on board. In cross-examination his attention was drawn to a redacted email from Andy Cowan to Andrew Fisher dated 20 November, in which he said:

“Today was a good day, results at EJCC (go Alex!) and good session in London, continuing the buy-in.

Did a round of calls to RLs, got Howard and [Blank] Left messages with [Blank] Fraser Irvine and [Blank]

Having bounced all our thoughts off Howard in particular, some objectives which would be good to meet next week without delay –

•

Re retention bonus, great! But perhaps give RLs choice of cash or shares

•

Re Howard, base of 160 K pounds, retention shares, options of 75,000, normal transitional adviser bonus scheme (on NRI and AUM), SCP title, interim RL responsibility – all fine

•

In addition RLs get retention bonus (cash or shares), plus normal EJ adviser incentives …”

As far as Mr Irvine is concerned, however, whatever discussions there might have been internally, or with Howard Goodship, and I accept that the documentation indicates that Towry were considering incentives of this kind, I accept his evidence that he knew nothing of them, and that he was never given any share options to incentivise him to persuade advisers to stay. The share options he was offered were the same as those offered to everyone else.

A subsequent email from Andy Cowan to Andrew Fisher, dated 21 November, referred to some further thoughts about this by Mr Cowan concerning Howard Goodship and Fraser Irvine:

“Howard Goodship –

•

SCP with immediate effect, to get contract signed Wednesday

•

Basic 160 K pounds

•

75,000 shares in addition to EBT

•

Retention bonus total 20% of salary (10% for signing in 90% plus of those in his region to be confirmed into role, further 10% for retaining them through 2010, total £32,000.00 – could be payable as shares, say @ £6 conversion rate so 530,000 shares)

•

Adviser bonus plans re NRI and AUM apply but unlikely to cost as much as targets will be high

•

Requirement to get to Chartered in two years

Fraser Irvine (RL)

•

Same as adviser deal except 100% of EJ earnings (I think 96 K pounds)

•

Retention bonus (cash or shares)

•

20,000 shares in addition to EBT in recognition of interim continuing RL responsibilities

•

Normal adviser bonus deals”

I find, however, that none of the payments referred to in any of the bullet points concerning Mr Irvine were actually included in the final offer made to him. Nor did Mr Irvine have any knowledge of these internal discussions, or of the views being expressed by Andy Cowan in his further email of 23 November where he said:

“Under the ‘bonus schemes’ there is a further plan for the current Regional Leaders …

We’d like to offer this small group of key influencers a ‘retention bonus’. This will pay up to 20% of salary as follows –

•

10% for achieving 90% or more sign up of advisers we want to confirm into role in their region

•

A further 10% for retaining at least 90% of this number to 31^st Dec 2010

I suggest this would be payable in shares or as cash (option for each individual) at the end of 2010. It will apply to a very small number i.e.

Howard Goodship

Fraser Irvine”

I accept Mr Irvine’s evidence that, notwithstanding any internal discussions going on within Towry, (this evidence emerged only after Mr Cowan and Mr Fisher had given their evidence and they were not recalled to deal with it) none of this had been discussed with Mr Irvine, none of it in fact happened, and he first saw these figures only two days before he gave evidence at trial. Further the “reasons to stay” document, prepared by Howard Goodship, which Mr Irvine adopted and sent to advisers on 2 December, contained his own, genuinely held views and was not sent as part of any strategy agreed with Towry to get people on board.

Howard Goodship’s position was different from that of Fraser Irvine. Mr Goodship said that there had been no mention of him receiving any retention bonus or other incentive before the meeting of 16 November and I accept that there is no evidence to that effect. As regional leader he considered that his duty was to communicate with the advisers generally and to answer any questions they might have. However, he did recall Mr Cowan raising the prospect of a retention bonus with him on 16 November. He said that he felt uncomfortable about it, because he did not want the lines to be blurred. Further, on 20 November, Mr Cowan called him and said that he would be offered a role in Towry and that there would be some sort of retention bonus scheme put in place. Mr Goodship said that he told him he would be a bit uncomfortable with money and that shares felt more appropriate than cash. His evidence was that he knew nothing of any specific scheme until 25 November, when he received his contract and made up his mind to sign. He then sent his email containing his “reasons to stay” to the advisers on 26 November.

Mr Goodship fairly accepted in the witness box that, although he did not consider he had done anything improper, and stated that it would not have changed and did not change his behaviour, which was consistent throughout, it would have been better to say that he did not want anything by way of an incentive and to have stuck to his “gut instinct”.

I accept his evidence in this respect. I am not persuaded on all the evidence I heard that the retention bonus offered affected either his decision to stay or his conduct and approach towards the advisers. After he signed the contract he had not sought any details concerning this offer and he never raised any questions about it, given that retention such as to activate the bonus did not in fact occur.

In conclusion, whilst I accept Mr Tolley’s submission that there is nothing inherently improper in an employer seeking to incentivise key staff in this way, in the midst of an acquisition of this nature, the way that this emerged in the course of the trial led to an understandable concern by some of the Defendants that something underhand and sinister had occurred, at Towry’s instigation, with a view to applying improper pressure on them to sign the contracts. In the event, however, that concern was fully addressed in the evidence and, in my judgment, proved to be unfounded.

None of the contemporaneous documentation contradicts the oral evidence of either Mr Goodship or Mr Irvine, that there was no change whatsoever in the approach adopted by either of them towards the advisers, or in relation to the information or advice they imparted to them after mid-November. Although Mr Hayhurst and Mr Chandler suggested that they detected a change in attitude on the part of Mr Irvine in late November, I am entirely satisfied on the evidence that Mr Irvine had no knowledge himself of any suggested retention bonus to be paid to him.

On all the evidence I do not consider that this provides any support for the Defendants’ allegations of repudiatory breach. I therefore turn now to the specific allegations made in the Amended Defence.

The Defendants contended that employment at offices within advisers’ local communities was a key aspect of the Edward Jones’ contract; and that the closure of these offices and relocation to regional centres some distance away was a fundamental change to the Defendants’ employment, about which the members of the EJCC were never consulted. A number of advisers were raising concerns about this at the time with both Fraser Irvine and Andy Springall. It is submitted that Towry cannot simply rely on clause 3.7 of the Edward Jones’ contract, providing that it is for the employer to determine the appropriate place of business for performance of the employee’s duties. Exercise of that power was subject to compliance with the implied term of trust and confidence. In informing the Defendants that they were to be relocated Towry acted in repudiatory breach.

It is unnecessary for me to consider the proposed, relocation arrangements for each, individual Defendant because I do not accept this general submission. Clause 3.7 provided:

“Your normal place of work is at the Company’s office at the address specified in Appendix 1 and/or such other place of business of the Group within the United Kingdom, which the Company may require for the proper performance and exercise of your duties. This clause does not provide you with any exclusive right to any particular territory.”

I agree with Mr Tolley that the implied term, that the employer would not without reasonable and proper cause destroy the relationship of trust and confidence between employer and employee, cannot in this case be used to circumscribe the express power enjoyed by the employer to determine the employee’s appropriate place of business for the proper performance of his/her duties with a general requirement of reasonableness (see Reda v. Flagg Ltd at paragraphs 44-45). There was no evidence of any other agreement reached between Edward Jones and any Defendant as to his or her place of work. Whilst it is correct that each Defendant was recruited and required to work pursuant to Edward Jones’ policy of building business in local communities, the terms of clause 3.7 were clear. In its terms no Defendant enjoyed any exclusive right to any particular territory. Clearly, this power should not be exercised irresponsibly or capriciously, but there is, in my judgment, no contractual requirement to act reasonably in the exercise of such an express, contractual power (see also White v. Reflecting Roadstuds Limited [1991] ICR 73).

In any event, however, and notwithstanding the effect of the relocation changes on these Defendants, which I accept on their evidence would have been substantial, I find that the decision by Towry to close the local offices was not unreasonable in the circumstances. The costs of running the 317 local offices and of the additional staff employed there, had materially contributed to the substantial losses being sustained by Edward Jones on an annual basis. Whilst some Defendants were individually profitable in their own branches, the evidence as to the global picture was clear. It was not unreasonable, in my judgment, for Towry to decide as a priority that local offices would have to close; that advisers would have to be relocated; and that this was not a matter that needed to be considered in consultation with the EJCC.

Further, and notwithstanding the terms of clause 3.7, the relocations that were to take place were not to be imposed on the Defendants without notice. The offer letters sent to the Defendants indicated that there would be reasonable notice of each Defendant’s change in office location.

The Defendants complained that the proposed change to the entire basis of their remuneration was a repudiatory breach, entitling them to treat the contract as terminated. The attraction of advisers effectively running their own businesses and being in control of their own earnings potential had been one of the main factors driving Edward Jones’ recruitment policy. Under the Edward Jones contract the actual salary of advisers fell rapidly to minimum wage levels and the whole of their income thereafter was uncapped and dependent upon their performance.

In fundamental contrast to this structure, Towry’s proposed change was to pay them a salary of their 2009 earnings, as annualised, and a limited bonus thereafter, thereby effectively eradicating the whole entrepreneurial foundation of the Edward Jones’ contract. In addition, what was on offer would, in fact, lead to a dramatic fall in their current and potential future uncapped income. In part the reason for this was that the structure proposed made no allowance for the fact that these were financial advisers whose earnings were at the time rising exponentially year on year.

Much time was spent in evidence analysing the Towry Total Reward package, in order to explore these issues. Ultimately, however, and viewed objectively, the financial terms offered were not in my view such as to amount to a repudiatory breach of contract. Indeed, two of the Defendants frankly acknowledged that this offer contained a number of attractive features (Stuart Hutton), or that it was good for a basic wage in this industry (James Chandler).

I accept Mr Cowan’s evidence, assisted by the tabular examples in his witness statement, that the Defendants were offered a guaranteed salary of 70% of their current Edward Jones earnings (CEJE), annualised, thereby providing them with the security of a fixed monthly income in place of the fluctuating returns frequently generated by commission based rewards. That would provide some protection against under-performance in the transition year of 2010. The intention was then to bring all employees back to at least 100% of their CEJE by January 2011. If, however, advisers were meeting their personal targets after six months, their salary would rise to 80% of CEJE.

In addition, for 2010 the Defendants would receive a guaranteed bonus, calculated as an additional 20% of 2009 earnings. There were also a number of benefits, including shares and share options, a pension plan, life insurance, income protection insurance and an extensive CPD programme. There was an annual entitlement to 28 days’ holiday plus public holidays.

The additional, non-guaranteed bonus consisted of two components: a non-recurring income linked bonus (NRI), which paid at 20% of total NRI achieved in excess of the adviser’s target; and an asset accelerator bonus, which was to be awarded when an adviser out-performed his/her IIM target. The bonus was uncapped.

Mr Cowan compared the earnings that five of the Defendants said they had earned at Edward Jones, for the years leading up to and including 2009, with the figures drawn from their payslips and set out in the table of actual earnings at page 68 of Core Bundle 1. None of the figures referred to in Mr Cowan’s evidence was challenged. The table set out at paragraph 47 of his witness statement therefore showed that the guaranteed minimum incomes offered to all the Defendants, save Tracey Simpson, were all equal to or greater than 90% of their CEJE. In respect of Ms Simpson, though she was not in the group 1 category of advisers, the offer made to her on 11 December exceeded her earnings at Edward Jones, representing the minimum sum offered to advisers.

Although Wayne Hayhurst stated in his witness statement that he considered his salary at Edward Jones had increased dramatically over the three years he had been there, by approximately 80% per year, he accepted that the table of actual earnings showed an increase of about 20% between 2007 and 2008. Similarly the table showed that, over the same period, Pieter Burger’s pay had risen from £31,000 to £32,490, which is inconsistent with his understanding that his earnings at Edward Jones were rising by approximately 35% per year.

Further, James Chandler’s evidence that his offer appeared to him to amount to a 50% pay cut is not supported by the unchallenged figures in the table of earnings. There was also some scope for negotiation, given that increased offers were made to Mr Chandler before he finally decided not to accept the contract on offer. These were, on the evidence, frank and forthright negotiations, reflective of the commercial interests on both sides, but hardly consistent with the employer repudiating the contract of employment.

Nor is there merit in Mr Chandler’s suggestion, made in cross-examination (there is no evidence that he made this point at the time), that the guaranteed bonus was not in fact guaranteed by virtue of clause 6 of the contract, providing Towry with the right to “amend, replace or withdraw any bonus or incentive scheme at any time.” This appears to be a standard variation clause, which, as Mr Tolley conceded, could not be used trump the clear, contractual entitlement in the Total Reward statement to a guaranteed bonus of a specific amount in 2010.

Given that there was no cap on the income that the Defendants could generate, I find that the claim that their potential, future income could be reduced has not been made out on the evidence. The limited evidence that there was, from Fraser Irvine and Alan Stone, as to the circumstances of those advisers who had accepted the new contract and stayed with Towry, showed that their earnings typically exceeded those they had earned at Edward Jones.

In reality, the principal objection the Defendants had to the Total Reward package offered was, in my judgment, the move from autonomous and entrepreneurial, commission-based employment, which they had originally applied for and in which they had all been highly successful, to employment on a guaranteed salary. Given their strong preference for the Edward Jones model, this is hardly surprising. Viewed objectively, however, and against the background of the RDR and the reforms on the horizon, the contention that the financial terms offered to these Defendants amounted to a repudiatory breach of contract is unsustainable.

However, I reject entirely Towry’s submission that this complaint was manufactured. I find that the Defendants genuinely believed at the time, and still believe now, that their earnings would have reduced if they had accepted this contract. The detailed cross-examination on the figures has not however demonstrated this to be the case on the evidence before me.

As I have already set out above, I am satisfied on the evidence, (a) that all the Defendants carried out advisory stockbroking at Edward Jones, in the sense that they provided advice to clients on single share or stock execution; and (b) that this was, to them, an important aspect of the job that they did and that their employer asked them to do. Edward Jones recruited and trained them as stockbrokers and represented them as such. There is no dispute that they operated, in this respect, within the parameters of their FSA accreditation. The exercise of this skill formed a valuable and enjoyable part of the Edward Jones advisers’ working lives. Sally Burn Jones regarded it as her “USP”, even though she herself was happy with the changes proposed and accepted the Towry contract.

I reject Mr Fisher’s evidence that these Defendants were not engaged in stockbroking, as that term is commonly understood. Further, Mr Anderson’s observation that it was an “absurd objection” for them to be complaining about loss of their “stockbroking licences” failed to engage with the substantive point being made. The complaint was not that a licence was being withdrawn (there is no such thing as a stockbroking licence, in regulatory terms), but that they were no longer going to be permitted to advise clients in this way under the new contract.

The Towry model, whereby advisers were not permitted to pick stocks or to advise on the sale and purchase of individual equities and corporate bonds, because it was believed to result in “sub-optimal advice and outcomes for clients”, in my view led both Mr Fisher and Mr Anderson to adopt a somewhat derogatory attitude towards the work these Defendants were actually doing in their local communities. The negative views that Mr Fisher expressed about stockbroking, at the initial presentations, not only heightened the concerns of those Defendants who heard them, but also confirmed Mr Fisher’s understanding at the time that he was addressing people who were in fact carrying out stockbroking as that term is commonly understood. His attempts at trial to suggest the opposite rendered his evidence unsatisfactory in this respect.

The question is, however, whether the removal of advisory stockbroking from the duties to be carried out by the Defendants under the Towry contract amounted to a repudiatory breach of contract.

Mr Quinn submitted that it did. Although clause 2 of the Edward Jones contract provided that the Defendants should “….perform such duties as may be assigned to you from time to time by the Company for the benefit of or on behalf of the Company or any Group Company”, this was subject to the implied term of trust and confidence. The key activity of stockbroking, for which they had been recruited, could not be unilaterally removed pursuant to clause 2 in the circumstances.

I cannot accept this submission. None of the Defendants had any contractual right to carry out that particular activity, as opposed to the work of a financial adviser more generally. In addition to clause 2, clause 21.1 of the contract permitted the employer to make reasonable changes to any of the terms and conditions of employment, an enabling provision sufficiently broad, in my view, to encompass the removal of an activity considered by the employer to have become “sub-optimal” for clients. Further, by clause 3.1.1 of the contract, the Defendants were required to “faithfully and diligently carry out such duties as the Company may from time to time direct.”

These clauses, in my judgment, entitled Towry to require their wealth advisers to carry out such duties as were assigned to them. I do not accept the Defendants’ submission, that the Court should read into these provisions an implied restriction, preventing a change to the scope of the Defendant’s duties on the basis that they were employed for a particular purpose (see Nelson v BBC (No 1) [1977] ICR 649 CA at 656E-G) . I accept without hesitation that the Defendants were losing an aspect of their work that they regarded as attractive and rewarding, both for themselves and for the clients they advised. This did not however amount to a repudiatory breach of their contracts of employment.

I deal with all these allegations together because there is an obvious overlap between them.

It is clear on the evidence that Towry’s core proposition was the IIM. Towry senior managers considered it to be superior to the Edward Jones offering and to offer a better standard of investment advice for investors. Plainly that view, in particular as to the benefits it offered to clients, was not shared by the Defendants.

I am entirely satisfied on all the evidence that the Defendants’ concerns about the IIM were genuine concerns, which they held at the time, and that they are not now being advanced in support of a manufactured defence of repudiatory breach. Further, and for the reasons already set out above, their concerns could not be said to be unreasonable in the circumstances.

There is no evidence to support the suggestion, explored by Mr Quinn in cross-examination, that the underlying funds (based in Dublin) are not regulated, leaving clients without the benefit of the UK investor protection scheme, and I reject it. There are clearly views both ways, however, as to the substantive merits or demerits of the IIM, notwithstanding Towry’s strong assertions of confidence in its core service to clients. The debate concerning the advantages or disadvantages of the IIM, or of discretionary investment management in general, compared with the Edward Jones model of financial advice provision, is a debate which, fortunately, it is not for this Court to enter into or to attempt to resolve. As I have already stated, there is, in any event, no evidence showing that any Edward Jones client would in fact have been better off with their money in the IIM.

Mr Quinn submitted, however, that the targets which would have to be met, in order for the Defendants to qualify for the non-guaranteed bonus, were inappropriate and unachievable. They were inappropriate because of their linkage to the IIM, and unachievable because they were premised on the unsustainable assumption that all assets held on the Edward Jones platform would be moved into the IIM.

He further submitted that the offers of employment amounted to an incentive to “churn”, meaning inappropriate trading done purely for the benefit of the adviser, typically in order to generate commissions. Only the IIM, which he submitted was in reality a fund managed by a fund manager, was being sold to advisers at every presentation post acquisition. In the presentations on 25 November the IIM was the only investment choice presented to them. The only training Edward Jones advisers were to receive before the spring or summer of 2010 was training on the IIM. The non-guaranteed bonus schemes offered to them were almost entirely referable to the extent to which they actually transferred clients’ assets into the IIM. There was a total lack of transparency and clarity as to the costs that would be incurred in making the transfer to the IIM. At the presentations, questions as to the profitability and past performance of the IIM went unanswered.

In these circumstances it is submitted that Towry sought, inappropriately, through the remuneration offered to them, to incentivise the Defendants to move all the assets of all their clients into the IIM, without regard to the extent to which, if at all, it would benefit those clients. In so doing Towry acted in repudiatory breach of contract.

Whether the IIM is a discretionary management service, as Towry maintain, or a fund, or a product, as it was variously described by some of the Defendants, does not seem to me to matter very much for the purposes of determining this issue. On the evidence I heard, I consider it is probably more accurate to describe it as a service, and Barry Bennett at least was prepared to accept this in cross-examination. As Mr Middleton explained, typically, within the IIM, no more than 5% of a client’s assets would be invested in any one actively managed fund and no more than 15% in any passively managed fund. The real question however is whether Towry’s offer, and the basis upon which it was made, amounted in these respects to a repudiatory breach of contract.

I am not persuaded on the evidence that any Towry wealth adviser was in fact required to persuade clients to make an investment decision that was inappropriate for them. I accept Mr Middleton’s evidence on this point. There was, demonstrably, a heavy emphasis on the IIM and on the benefits it was said to bring to clients, during Towry’s communication programme with the Edward Jones advisers. It is also clear that Towry’s priority was to train the newly acquired advisers on their core proposition as soon as possible, with the expectation that all clients’ assets would be transferred to the IIM. This is hardly surprising, given that the IIM was Towry’s core proposition. This, combined with the negative views being expressed in blogs and in the financial press, and Towry’s failure to provide detailed answers to questions asked about the IIM at the presentations, led as I find to the Defendants’ belief that, as Towry wealth advisers, they would in reality have only one investment choice.

However, no Defendant stated that he or she was told expressly that they should encourage clients to transfer to the IIM if it was unsuitable for them. The commercial expectation or working assumption, on the part of Towry, that all the assets of the Edward Jones clients would be transferred to the IIM did not equate to a contractual requirement for advisers to recommend transfer for all clients, irrespective of suitability. Use of the word “churning” made pulses race on the Towry side, but I am not persuaded on the evidence that Towry were in fact requiring the Defendants, or indeed any of their wealth advisers, to encourage transfer of a clients’ assets to their IIM when such transfer would not be in that client’s interests. A full suitability assessment would be carried out before any client would be advised to transfer to the IIM, as was spelled out in materials prepared by Towry for the November presentations.

It is correct that the non-guaranteed bonuses offered were, in part, linked to transfers of assets into the IIM. Mr Tolley commented that the Defendants could hardly complain of being incentivised in this way when they had previously been incentivised by raw commission to sell suitable products and, further, were prepared to sign contracts with Raymond James (of which more below), which required them to bring £10 million of assets on to the Raymond James platform within 12 months. Notwithstanding the evidence that no action would have been taken in respect of a failure to achieve this target, if all else was going well, the fact remains that this was a term of the Raymond James contract. Mr Tolley drew attention, in addition, to the high levels of AUA that the Defendants represented themselves as having, in completing the appraisal questionnaires required by Raymond James, which would indicate very little difficulty for any Defendant in reaching the targets set by Towry.

The Defendants’ complaint was essentially that the IIM would not be suitable for every client and that the targets set by Towry in the Total Reward package were set at the level of their assets under advice (AUA) at the time of the acquisition. James Chandler, for example, referred to his asset target being almost identical to his actual assets under management as set out on his FA Performance Summary, which made him feel very uncomfortable, given that the IIM would not be right for every client.

As set out above, when dealing with the allegation of reduced earnings, the non-guaranteed bonuses were based both on a target amount of assets transferred into the IIM and on a target for generation of non-recurring income (NRI). NRI consisted of commission earned whilst in transition to Towry, time based hourly rate fees and initial fees generated when clients transferred assets to the IIM. The asset accelerator bonus would be awarded where the adviser outperformed his/her IIM target.

The target figures were based on each adviser’s client book, his/her length of service and his/her average monthly asset figures (on book and off book). These were collated to produce the relevant figure. Mr Cowan also stated that Towry factored in the amount of new business that advisers with a similar skill set had brought to the IIM historically. Fraser Irvine referred in this respect, in an email sent on 2 December 2009, to the previous experience of advisers who had been integrated into Towry upon an acquisition. They found that, “…on average 182% of on book assets were migrated in year 1 and a further 101% in year 2. Most of us have targets set at around 100% for year 1, in light of what has gone before these targets appear very achievable. Feel free to call any of the advisers on the list….only 7 of the 20 are in the top 25 of TL [Towry] advisers, this is not just a list of the ‘best of the best’!”

In order to reach the IIM target set, and subject, as I accept, to a careful assessment of each client’s individual circumstances, the Defendants could rely, potentially, on their existing “on book” assets, that is those assets of existing clients on the Edward Jones tarot platform; on their existing “off book” assets for existing clients; on new investments from existing clients; and on new assets from new clients which, as Mr Anderson explained, would include clients inherited from those group 1 advisers who left Towry, or from advisers in lower categories who were not offered employment with Towry.

There was no evidence to support the suggestion, explored by Mr Quinn in cross-examination, that former Edward Jones advisers who had stayed with Towry, but who had subsequently been dismissed, had been dismissed for failing to reach their targets. In addition to the evidence of both Alan Stone and Fraser Irvine, that they had earned more with Towry than they did at Edward Jones, Mr Cowan’s unchallenged evidence was that 32% of the former Edward Jones advisers were, in 2010, awarded an additional NRI bonus, 13% of them achieving between 125 and 149.9% of their targets. Further, 39% of those advisers were awarded an additional IIM bonus, with 14% of them achieving the same percentage of their targets.

In the circumstances, I am not persuaded on the evidence before me that the Defendants were offered targets that were in fact inappropriate or unachievable, or that they were required to “churn” all their clients’ assets into the IIM. In my judgment, Towry cannot be said to have repudiated the contract in these respects.

Mr Quinn submitted that these Defendants had entered into an employment relationship with Edward Jones which enabled, and indeed encouraged them actively to build up their own businesses and to develop their own client bases in their local communities. By virtue of the “non-solicitation” covenant in their contracts (clause 16.4) they agreed and understood that, if they were to move to new employment elsewhere, those clients could, if they so wished, choose to stay with them and to continue to deal with them, so long as the Defendants did not act in breach of that covenant. Accordingly they had an entirely legitimate expectation that they would retain those clients with whom they had established a good, personal and/or professional relationship over a period of time.

By seeking to impose a “non-dealing” covenant upon them (clause 19 and clause 4 of Appendix 3), which would prevent the Defendants dealing with any client in any circumstances if they moved as financial advisers elsewhere, Towry were in repudiatory breach of contract. The suggestion that such covenants were the “industry standard” was said to be unsustainable on the evidence, as were Mr Anderson’s ingenious attempts to equate the two covenants. Further, Towry did not even consider that this was a relevant consideration to be taken into account when seeking to secure the Defendants’ services. The change in the restrictive covenants was not even referred to in the presentations on 25 November.

Towry’s attempted justification appears from Mr Cowan’s email of 1 December 2009, subsequently repeated to members of ExCo. However, the evidence did not show the non-dealing covenant to be industry-standard and, even if it did, that is no justification for seeking to impose it on these Defendants, and for making no exception whatsoever for those clients with whom the Defendants had a particularly close and long-standing relationship, even with clients who had come with them to Edward Jones. Nor was there any evidence that the Edward Jones restrictive covenant had changed so that it was, as at December 2009, the same as that contained in the Towry contract. Even if it were the same, that does not justify Towry’s attempt to impose a non-dealing covenant on these Defendants, whose contracts retained the non-solicitation only restriction. The suggestion that Edward Jones would have moved to harmonise their contracts with Towry’s in this respect at some point was also irrelevant, and in any event there was no evidence about this.

It is submitted that Towry’s refusal to amend their contract “to reflect outdated terms” indicated their intransigence and their unwillingness even to engage with the Defendants on this point, in breach of the implied term of trust and confidence. The ExCo minutes show that, when Mr Cowan reported on this point on 2 December, there was no further consideration given to the reasonableness of the non-dealing covenant they were seeking to impose. Nor was the matter considered by the ExCo at their subsequent meetings, on 9 or 16 December.

This allegation, in my view, marked the high point of the Defendants’ case on repudiatory breach and it caused me some difficulty. I do not accept the evidence of Mr Anderson or Mr Cowan, that there is no material difference between the two covenants; or the evidence of Mrs Rickard that this was not a major issue. Whilst the length of the restriction was the same in both contracts (12 months), in my judgment there is a substantial difference, in terms of the obligation owed post termination, between the relevant clauses. For these Defendants, who had developed an impressive client base through knocking on doors and retaining a visible and easily accessible presence in their community, a clause preventing them from dealing with any client in any circumstances, if they moved on to work for another organisation, is plainly more restrictive, with more serious consequences for them, than a clause enabling them to continue to deal with clients so long as they do not solicit them. On the evidence, I find that the Defendants were genuinely concerned as to their future livelihoods if they had signed for Towry, but had then decided that the Towry way of doing business was not for them.

However, the contracts for Towry wealth advisers, from 2006 onwards, all appeared to contain the same terms as those offered to the Defendants, including the non-dealing covenant. There were also references to the need for harmonisation of contractual terms in the minutes of ExCo’s meeting of 14 October. On the evidence I find that the main reason for Towry offering the Defendants this contract was to ensure that all Towry’s wealth advisers were employed on the same, standard terms and conditions, so as to obtain consistency across the board. Towry had done this on the occasion of each previous acquisition, harmonising terms and conditions and integrating each set of new employees. It was therefore legitimate, in my view, for Towry to invite the Edward Jones advisers, including the Defendants, to agree to their standard terms and conditions, which included the non-dealing clause under consideration.

It is, of course, the invitation to the Defendants to accept a contract containing that clause that is said here to constitute a repudiatory breach. Given the nature of the business of Edward Jones, which Towry had acquired, and given the benefits being offered to advisers in other terms of the contract, I am not persuaded that Towry’s invitation to the Defendants to agree to the inclusion of the non-dealing clause was in this case so unreasonable as to entitle them to regard that invitation as amounting to a breach of the implied term of trust and confidence and therefore to a repudiatory breach of contract.

So far as the reasonableness of the non-dealing clause itself is concerned, whilst it is unnecessary for me to decide that issue I make the following observations, given the parties’ submissions on the point.

I accept that both Pieter Burger and James Chandler had originally signed contracts with Edward Jones containing a non-dealing clause, although this was then changed to non-solicitation only in a new contract signed subsequently. I also accept that other financial organisations had this clause in their contracts (e.g. Baker Tilly). However, I consider that there is insufficient evidence before me to permit a finding that such a clause is industry standard, or rather that it was industry standard in December 2009.

Nevertheless, I accept Mr Tolley’s submission that employers are entitled to protect their legitimate business interests in client connection and goodwill, in respect of wealth advisers whose role and position will inevitably result in the development of personal relationships with clients. The reasonableness of a non-dealing clause of this kind will depend upon the nature and specialism of the market in which the employee is engaged. The financial advice sector is one where strong client connections may well be held to justify a post termination restriction of this kind (see for example Beckett Investment Management Group Ltd v Hall [2007] ICR 1539 CA ).

No doubt that is why some organisations offer contracts containing a non-dealing clause, rather than one that prohibits only the solicitation of clients. However, the issue in this case concerned the invitation made to those who had agreed not to solicit any clients, post-termination, to agree to a contract which required them not to deal with any clients if they subsequently moved to a competitor. The focus was therefore different but, for the reasons given above, I do not consider that Towry were in repudiatory breach in the circumstances of this case.

Finally, in this section, whilst Pieter Burger referred in cross-examination to objections he had to clause 7 of Appendix 3, this was not pleaded and no submissions were made about it on behalf of the Defendants. I shall therefore consider it no further.

The collective agreement within the EJCC was that Towry should give notices of termination to expire when the 90 day consultation period expired, namely 18 February 2010. This is what occurred.

The Defendants’ case is that it was a breach of the implied term of trust and confidence to terminate the Defendants’ contracts on longer notice than was contractually necessary (one week’s notice for each complete year of service), and to exercise the garden leave provisions in clause 14.8 of the contract.

The main difficulty with this contention, however, is that there was an express term of the contract permitting Towry to place employees under notice of termination on garden leave. Further, it is well established that the implied term of trust and confidence does not extend to dismissal and the circumstances surrounding dismissal. The evidence also shows that, during the notice period, the Defendants received their notice pay, guaranteed pay and holiday pay, to which they were entitled under clauses 14.9.2 and 14.9.3. None of these entitlements was repaid. I note too that, by clause 14.8, any period of garden leave fell to be deducted from the period covered by the post-termination restriction in clause 16.

The short answer to this question is therefore no. I find that there was no repudiatory breach of contract in these circumstances.

I make the following, general findings in relation to the allegations of repudiatory breach made in this case. All the factors raised in relation to Issue A.1 demonstrate why it was that each of these Defendants decided not to stay with Towry. The views held by each of them as to Towry’s conduct were genuinely held. I reject entirely the submission that the allegation of repudiatory breach was deliberately contrived or manufactured for the purposes of this litigation, and with a view to evading the consequences of the restrictive covenants to which the Defendants had agreed.

When cross-examining David Hazelton, Head of Business Development at Raymond James, Mr Tolley drew attention to a handwritten note he made during a telephone conversation with Wayne Hayhurst on 5 November, stating “leave with constructive dismissal”. I accept that this topic was raised and I shall deal in more detail later on with the discussions between the individual Defendants and Raymond James, all of which I have considered, but I reject without hesitation any suggestion that this is indicative of an agreed approach for advisers to allege constructive dismissal, with a view to evading their contractual obligations.

Mr Hazelton stated that it was clear from the discussions they were having at this time that some of the advisers felt that they were being treated unfairly, and that they might have grounds for constructive dismissal. I accept that evidence and find that these concerns were being expressed. I also find that they were genuine concerns. Mr Hazelton’s response when it was raised, as I find, was that constructive dismissal is “arduous” and “very hard to prove” and that no reliance should be placed upon it.

With regard to Towry’s own conduct, Mr Tolley frankly and realistically acknowledged in his submissions that Towry did not handle all matters well. He was right to do so. Whilst allowance should be made for errors in administration of the kind which will inevitably follow an event of this magnitude and complexity, I find that many of the Edward Jones advisers were alienated from an early stage in this case by the derogatory references made, during the presentations, to Edward Jones and to stockbroking, and by bullish references to the Towry model and the IIM as the only way forward. Such an approach was entirely inconsistent with Towry’s expressed aim of winning hearts and minds.

Notwithstanding the Defendants’ increasing concerns about working for Towry, however, none of them made a final decision to leave until after they had sight of the terms of the Towry contract on offer. That the individual Defendants then lost all confidence in Towry as an employer is clear. However, as Mr Tolley correctly submitted, loss of confidence by an employee is not the same thing as a breach by the employer of the implied term of trust and confidence.

For the reasons I have given ISSUE A. 1 is therefore determined in Towry’s favour. I find that Towry did not act in repudiatory breach of the implied term of trust and confidence in the ways alleged, in respect of any individual Defendant, and that they did not, by their conduct, evince an intention no longer to be bound by the contracts of employment.

ISSUE A. 2, as formulated, requiring determination of the dispute as to the reason for the resignations of Barry Bennett, Pieter Burger, James Chandler, Wayne Hayhurst and Stuart Hutton arises only if there was a repudiatory breach of contract by Towry, in which case it would be necessary to go on to decide whether they resigned in response to that breach.

On the facts I have found the Defendants who resigned did so, as I find, not in response to any repudiatory breach but because, after 25 November, they had lost all confidence in Towry as their employer and they decided to shorten their period of garden leave and to seek other employment. According to the terms of their contracts, the Defendants were required to give one week’s notice for each complete year of employment. Where that notice was given the Claimant accepted it, so that the contracts were brought to an earlier end.

I reject Towry’s submission that the real reason for their resignations was to enable them to join Raymond James earlier than would otherwise have been the case, and that they had been planning this with each other and with Raymond James in order to bring their contractual obligations to an end. In my judgment this is not a case where the employer’s conduct has been used as a pretext or a cover for leaving on other grounds.

Although they had met representatives of Raymond James before resigning, and were hopeful of an offer of employment there, the Defendants had also been approached by other organisations and were considering all their options. No Defendant was certain of a job with Raymond James as at the date of termination. I shall deal in more detail with the contact between all the Defendants when I come to Issue E and Towry’s allegations of wrongful conduct, but I have had regard to all those facts in addition when addressing at this point the reasons for the Defendants’ resignations.

It had been agreed within the EJCC that advisers who did not agree to the Towry contract within the permitted timescale should be given periods of notice of the same length as the 90 day consultation period. This ran to 18 February 2010. These Defendants were therefore given this period of notice, which was longer notice than they were entitled to under their contracts. During that period they remained entitled to receive, and did receive remuneration in accordance with their contracts.

Further, in the cases of the first four named Defendants and Stuart Hutton, their contracts ended as a result of them giving the required notice of termination and Towry accepting that this brought their contracts to an earlier end.

In these circumstances, the submission that Towry wrongfully dismissed the named Defendants is in my view unsustainable.

ISSUE B.4 requires determination of the effect of any repudiatory breach of contract, accepted by the first four Defendants and the sixth Defendant, and the effect on the enforceability of clauses 16.4 and 16.5 in their contracts of employment.

Given my conclusion that there was here no repudiatory breach of contract by Towry, it is unnecessary for me to determine the interesting submissions of the parties on the rule in General Billposting v Atkinson [1909] AC 118, and in particular on whether the time may have come for that rule to be revisited. I therefore say no more on the question whether an employee’s acceptance of the employer’s repudiatory breach of contract has the effect of releasing that employee from restrictive covenants that would otherwise apply.

ISSUE C: Enforceability of the Post-Termination Restrictions

The evidence from Mr Fisher, Mr Anderson and Mr Wright, shows that in May 2010, when the Transitional Agreement expired, there was a restructuring of the Towry group of companies. The Edward Jones model was for the same company to provide the advisory services and to hold the clients’ assets. Towry, however, provides its services through different companies, in order to take account of the different, regulatory capital requirements for each type of service. Therefore, on 10 May 2010, Towry EJ Ltd (the Claimant and the new name for Edward Jones) not only ceased to have any employees, but also ceased to have any customers or to provide any services, transferring all these to Towry Ltd (advisory services) and Towry Investment Management Ltd (investment services). Further, as Mr Anderson explained, the Claimant has no advisers registered with it by the FSA. Mr Quinn submitted that it therefore follows that the Claimant ceased, from May 2010 onwards, to have any legitimate business interest to protect.

He submitted that the general rule is that the appropriate point in time for determining the reasonableness of a contractual, restrictive covenant is the date on which the contract was entered into. However, there is in his submission a “free-standing principle” that a restrictive covenant only remains enforceable for as long as the employer continues to have a legitimate business interest to protect. He cited the speech of Lord Parker in Herbert Morris Ltd v Saxelby [1916] AC 688 HL at 710 as authority for this proposition.

He submitted that reasonableness and continued enforceability are therefore two discrete principles. It has been agreed, solely for the purposes of this litigation that, on 10 May 2010, there was a TUPE transfer of the then employees of Towry EJ Ltd. to Towry Services Ltd. Upon a TUPE transfer, the right to enforce a restrictive covenant passes from the transferor to the transferee. The Court will only give effect to restrictive covenants of the kind in issue in this case where the Claimant can show that it has a continuing legitimate interest to protect. Without that legitimate interest there can be no justification for giving effect to covenants which are, prima facie, in restraint of trade.

It follows that the relevant duration of any claim for loss that this Claimant could sustain must end on the date on which it divested itself of the requisite business interest. In this case, it is not suggested that the Claimant should not have commenced these proceedings. The benefit of the client relationships remained with the Claimant until 10 May 2010. The Claimant does therefore enjoy a cause of action, but that cause of action is limited to an ability to complain about any loss that it suffered whilst it had a legitimate business interest to protect, namely until 10 May 2010.

In considering these submissions I have read again the speech of Lord Parker in Herbert Morris v Saxelby . As Mr Tolley points out, the House of Lords in that case were following the decision in Nordenfelt v Maxim Nordenfelt Co [1894] AC 535 and explaining the principle that any restraint must be reasonable in the interests of both the contracting parties and the public.

At pages 706-710 Lord Parker explained that, in order for a restraint to be reasonable in the interests of the parties, it is necessary for it to afford no more than adequate protection to the party in whose favour it is to be imposed. In cases involving employees and employers, restrictive covenants may be upheld if the circumstances are such that the employee “might obtain such personal knowledge and influence over the customers of his employer, or such an acquaintance with his employer’s trade secrets as would enable him, if competition were allowed, to take advantage of his employer’s trade connection or utilise information confidentially obtained.” However, where a covenant is directed only to “the prevention of competition or against the use of the personal skill and knowledge acquired by the employee in his employer’s business” it will not be upheld.

In my judgment Lord Parker’s speech in this well known case provides no support for Mr Quinn’s submission as to the existence of the free standing principle he suggests. Nor am I aware of any other authority, which would support the suggestion that a Claimant must have a continuing business interest at the time of trial in order to be able to enforce a restrictive covenant. Included in the agreed bundle of authorities were extracts from the leading textbooks, which I have also read and none of which makes any reference to the existence of such a free standing principle.

The analysis of a Claimant’s legitimate interest and the assessment of reasonableness (whether the restrictive covenant provides no greater protection than is reasonably necessary for the protection of that interest) are part of the same overall determination of “reasonable necessity” as explained, for example, in T F S Derivatives v Morgan [2006] IRLR 246 QB. The question of reasonable necessity is to be decided at the date when the contract was entered into. The decision, in appropriate cases, as to whether injunctive relief should be granted is a separate matter, to be considered as part of the exercise of the Court’s discretion. That does not arise in the present case, which is a substantive claim for breach of contract on the basis of enforceable restrictive covenants.

In any event I agree with Mr Tolley that such a free standing principle would not explain the result in a case governed by TUPE, the effect of which is determined only by the terms of the relevant statutory provisions. There is no suggestion that any of the individual Defendants were employed by the Claimant immediately before the transfer, within the meaning of regulation 4(3) of TUPE. All the contracts of employment had been terminated long before 10 May 2010. None was transferred from the Claimant to Towry Services Ltd. Thus, any cause of action arising out of those contracts was retained by the Claimant. If an employee’s contract, containing a post termination restrictive covenant, is terminated and several months later there is a TUPE transfer, it cannot be the case that the original employer is, by reason of the TUPE transfer, prevented from enforcing that covenant. If the employee was not employed in the undertaking immediately before the transfer, his contract would not transfer. Nor would any cause of action arising from it. A TUPE transfer does not extinguish a cause of action for breach of a restrictive covenant or render non-existent the transferor’s legitimate business interest. In my judgment TUPE has no relevance to this case.

It follows that Issue C.5 is determined in Towry’s favour. Issue C.6 is therefore not applicable. The Claimant did not cease to have any legitimate business interest to protect as a result of the company restructuring in May 2010. The Defendants conceded shortly before trial that the relevant restrictive covenants at clauses 16.4 and 16.5 were reasonable. Thus it is accepted that, at the time the Defendants entered into the Edward Jones contracts, the Claimant had legitimate business interests to protect by means of those post termination restrictions; and that such restrictions were no more than reasonably necessary for the protection of those interests.

ISSUE D: Confidential Information

In relation to the first four items in that list, Mr Tolley drew attention to the definition of “Confidential Information” in Clause 17.2 of the contract. It is clear from paragraph (a) that customer lists, customer contact details, contacts with or requirements of customers’ pricing strategies, investment and development strategies and objectives are “trade secrets” and therefore fall within that definition; so too does any information which has been supplied in confidence by clients and customers (paragraph (h)).

This information, he submitted, is exactly the sort of information that the courts have always sought to protect (see, for example, the speech of Lord Parker in Herbert Morris v Saxelby referred to in paragraph 411 above, and more recently SJB Stephenson Ltd v Mandy [2000] IRLR 233 ). In addition, such material readily satisfies the test expounded in Lansing Linde Ltd v Kerr [1991] ICR 428 @437 that it should have been used in a trade or business; that it would, if disclosed to a competitor, be liable to cause real or significant damage to the owner of the information; and that the owner has sought to limit its dissemination, or at any rate has not encouraged or permitted widespread publication.

Mr Tolley’s submission was that the body of clients (or customers) and the details relating to them are the lifeblood of any business involved in the provision of financial advice; and that such details constitute the type of information which such a business needs to protect. I accept that submission. As Mr Anderson stated, “client information in the financial advisory business is the business…obtaining new clients is the most expensive and difficult thing for the company to do.” Upon acquisition, in return for taking on all Edward Jones’ liabilities, Towry expected to gain the Edward Jones clients and their investible assets.

So far as the first four items are concerned, there is no allegation that the Defendants retained or disclosed any client paperwork or documents containing any of these details. Does that mean, however, that the details are not correctly to be categorised as “confidential information”? In his closing submissions Mr Quinn contended that, to the extent that the individual Defendants would have retained these matters in their head, they cannot therefore be said to amount to confidential information.

I understand him to be submitting that such items constitute part of the Defendants’ stock in trade, or of their skill and knowledge, but I do not accept that submission. The fact that a financial adviser may retain such information in his head, without any deliberate effort to do so, does not seem to me to render it any the less confidential. If it were otherwise, an employee who left his employment would then be entirely free to use such client information in any way he chose, and the employer would be unable to rely upon contractual, post-termination clauses preventing the misuse of such information.

The real question in this case is whether the Claimant has satisfied me that the individual Defendants were in breach of clauses 16.5.1 or 16.5.3 in respect of that confidential information, or indeed whether they acted in breach of confidence as a matter of general law (Issues E (1) 8 (2), (3) and (4)).

The position seems to me to be different, however, in respect of the fifth item in the above list, namely the FA Performance Summaries in respect of each Defendant.

This document, as its name suggests, summarised each Defendant’s performance in relation to monthly commissions and new accounts. There is a total figure given in relation to the assets under care, but no clients are identified in any part of the document. Nor are any details given which could lead to the identification of any client. Alex Rickard described it in her evidence in chief as one of the documents that Towry relied upon in determining the respective merits of the financial advisers, and the groups to which each should be allocated for the purposes of deciding who was to be offered employment.

Mr Anderson stated that the information contained in these summaries was confidential information. On the evidence, however, I am not persuaded that it was.

First, the document was not marked “Confidential”, being marked “Internal Use Only – Do not Show or Distribute to the Public”, the third of four tiers of classification for data sensitivity in terms of seriousness, the first and second being “highly restricted” and “sensitive”, respectively. The same classification was given to Towry’s training documents. Secondly, Ms Rickard accepted that it was not possible to identify any clients from it. Taken to Mr Bennett’s FA Performance Summary in cross-examination, she struggled to identify what it was about this document that rendered it confidential, referring only to the naming of Mr Bennett and of his spouse, and of Howard Goodship as his Regional Leader, as indicators of confidentiality. I do not accept that they are.

She accepted both that it told her nothing about Mr Bennett’s clients, and that it contained the sort of information that she would expect to see discussed at a recruitment interview, being a useful indicator of the adviser’s performance in post. This was also accepted by Mr Anderson, who acknowledged that the size of an adviser’s client bank may provide a guide to how well he/she has performed in the past, and therefore to their likely future performance. Previous performance, I agree, is likely to be an essential part of the assessment made by a prospective employer.

Howard Goodship, whilst stating that he understood that it was not to be shown to a third party without permission, accepted that he had taken his own FA Performance Summary with him when he went to the meeting with Raymond James, because “there may have been information that I needed from there” relating, as he accepted, to the numbers of his clients and to his assets. He had not told Raymond James anything that he “wouldn’t have been able to give anybody who inquired really.” Similarly, Alan Stone, whilst he thought he may not have taken his with him, accepted that he may well have quoted from it in relation to the size of his client book. Plainly, neither witness regarded his Performance Summary as containing “confidential information” in this respect, even though Mr Stone had stated in his witness statement that he thought the document itself was confidential and should not be disclosed.

Nor did Jason Cherriman, Business Development Consultant at Raymond James, consider the information contained in these Summaries to be confidential. He has spent many years in the recruitment industry, recruiting financial advisers, stockbrokers and investment managers, and I accept his evidence that most organisations request the information summarised on that document, whether those they are seeking to recruit are employed or self-employed. It is, in this sense, “part and parcel of recruiting to understand what advisers have done…what their performance has been like.” This document provides some proof of their performance and firms recruiting typically ask for such proof. The evidence of David Hazelton, Head of Business Development at Raymond James, was to the same effect.

Mr Anderson’s evidence was that the contractual clauses as to confidentiality were primarily to protect Towry’s main asset, namely the bank of client details, and he accepted that the FA Performance Summaries did not contain a bank of client details. Given its marking, I do not accept his suggestion that it contained sensitive data and should be categorised accordingly. Nor was the FA Performance Summary referred to in the “Compliance Alert” sent to all employees on 4 November 2009, following information that some Edward Jones advisers (none of the Defendants) had emailed client information to themselves.

For all these reasons I am not persuaded that the FA Performance Summaries are Towry’s confidential information within the meaning of the contract. I shall nevertheless consider the use of them made by the Defendants in determining the allegations of wrongful conduct.

ISSUE E: ALLEGED WRONGFUL CONDUCT

Contact between all the Defendants, and between the individual Defendants and their clients, is relevant to all these allegations of wrongful conduct. The evidence and the issues overlap. Whilst it is necessary to deal separately with the case of each individual Defendant, it is important to consider the evidence as a whole, including much of the evidence already set out above, in determining whether Towry have discharged the burden upon them of proving, in any case, the allegations of wrongful conduct to the relevant standard. I set out first the relevant legal principles.

Solicitation

The Law

The use of the word “may” in these passages indicates, as the parties in this case agree, that each case will turn on its own facts and that the fact that the client is the first to initiate contact, whilst clearly a relevant aspect, does not mean that there can be no solicitation. Mr Tolley submits that, in the context of the type of relationship in question in this case, between a financial adviser and his client, in circumstances where the adviser was encouraged to form close relationships with those clients, the question of who made the first contact is of marginal, if any, relevance. In my view that is putting it too high, but that is not to elevate initial contact to such a level that it is determinative, or even highly indicative of an absence of solicitation. Who made the first contact is clearly relevant but the court will need to look at all the circumstances surrounding that contact in order to form a view of its importance in the particular context.

In the textbook “Employment Covenants and Confidential Information: Law, Practice and Technique” (Third edition), the authors Kate Brearley and Selwyn Bloch QC state that it is often assumed that there is no solicitation where it is the customer who first contacted the ex-employee, but point out that “This is not necessarily the case.”

The authors continue with the following, helpful examples:

“…where the customer telephones the ex-employee asking what the ex-employee will be doing after employment, it is questionable whether it would amount to solicitation if the ex-employee informs the customer that he will, for instance, be trading from a particular address in the same line of business as the ex-employer. However, if his response is, for instance, immediately to offer to make a sales presentation, it might be difficult to say that there has been no solicitation. Each case will turn on its own precise facts. If the gist of what the ex-employee says is responsive to the customer’s enquiries, there will be no solicitation. If there is significant use of persuasion by the ex-employee, this is likely to be seen as soliciting. It is often difficult to draw the line.”

After referring to the particular facts in some cases to illustrate this difficulty, the authors add this advice for employers,

“In order to avoid the difficulties of proving customer solicitation by the ex-employee, it is advisable for the employer to seek a non-dealing covenant from the employee.”

The key feature of solicitation, which can occur face to face or by letter, telephone or email, is that, as the authors express it, “An element of persuasion is required.” It is that need to establish the existence of persuasion that distinguishes non-solicitation from non-dealing clauses. In Taylor Stuart & Co v Croft (7 May 1987 unreported) Stanley Burnton QC, sitting as a Deputy High Court Judge, held that “It is of the essence of solicitation and of canvassing…that the client should be requested to transfer his custom.” Further, in a very recent case decided by HHJ Simon Brown QC in the QBD Mercantile Court, Baldwins (Ashby) Ltd v Maidstone (9 June 2011, unreported) the judge held that, “There is solicitation of a client by a former employee if the former employee in substance conveys the message that the former employee is willing to deal with the client and, by whatever means, encourages the client to do so.”

In my judgment a contractual, non-solicitation clause of the kind in this case means that ex-employees must not directly or indirectly request, persuade or encourage clients of their former employer to transfer their business to their new employer. Employers are entitled to prevent ex-employees from exerting influence of this kind over their clients. The question in this case is therefore whether Towry has demonstrated to the civil standard on all the evidence that an individual Defendant’s communications with Towry’s clients, as they became, contained a material element of persuasion, with a view to gaining the business of those clients. Whether there has been persuasion or encouragement will depend, in each case, on all the circumstances. Determination of this issue is clearly fact specific.

Inducing Breach of Contract: The Law

Mr Tolley points out that turning a blind eye to the terms of the contract would be enough for this purpose, the House citing with approval the statement to this effect in Emerald Construction Co Ltd v Lowthian [1966] 1 WLR 691 @ 700: “Even if they did not know the actual terms of the contract, but had the means of knowledge – which they deliberately disregarded – that would be enough. Like the man who turns a blind eye. So here, if the officers deliberately sought to get this contract terminated, heedless of its terms, regardless of whether it was terminated by breach or not, they would do wrong. For it is unlawful for a third person to procure a breach of contract knowingly, or recklessly, indifferent whether it is a breach or not.”

Breach of the contract is an essential ingredient of this tort. So far as inducement is concerned, the question is, “did the defendant’s acts of encouragement, threat, persuasion and so forth have a sufficient causal connection with the breach by the contracting party to attract accessory liability?” ( OBG Ltd @ paragraph 36) Thus, if the defendant’s words were intended to cause, and did cause the contracting party’s breach, they are actionable whatever their form. It is not necessary, in order to establish intention, to show that there was a desire to injure. “It is necessary, for this purpose, to distinguish between ends, means and consequences. If someone knowingly causes a breach of contract, it does not normally matter that it is the means by which he intends to achieve some further end or even that he would rather have been able to achieve that end without causing a breach….On the other hand, if the breach of contract is neither an end in itself nor a means to an end, but merely a foreseeable consequence, then in my opinion it cannot for this purpose be said to have been intended.”

Conspiracy by Unlawful Means: The Law

In Revenue and Customs Commissioners v Total Network SL [2008] 1 AC 1174 the House of Lords held that this conspiracy “…involves an arrangement between two or more parties, whereby they…agree that at least one of them will use ‘unlawful means’ against the claimant, and, although damage to the claimant need not be the predominant intention of any of the parties, the claimant must have suffered loss or damage as a result.” Causing damage to the claimant must have been part of the combiners’ intentions, but it need not be the main or predominant purpose. It is no defence to show that their primary purpose was “to further or protect their own interests, it is sufficient to make their actions tortious that the means used were unlawful” (see Lonrho Plc v Fayed [1992] 1 AC 448 HL). Further, the conspirators need not all join in at the same time. The question is the extent to which the relevant defendant was aware of the plan and joined in its execution, and whether a particular defendant, having regard to his knowledge, utterances and actions, was sufficiently a party to the combination and common design.

In this case, Towry allege, essentially, that Raymond James was a party to a common design with each individual Defendant to breach their Edward Jones/Towry contracts, in circumstances where causing damage to Towry was part of the combiners’ intentions; and where Raymond James, either knowingly or recklessly, procured a breach of the contracts by turning a blind eye as to how the large number of transfer requests from Edward Jones clients had come about. The Defendants contend that the evidence does not begin to prove these, most serious allegations, which have been maintained, even after all the evidence has been heard, in order to increase the pressure on the individual Defendants.

There is no doubt that the individual Defendants were all well aware of the restrictive covenants in their contracts. Apart from their own knowledge Alex Rickard reminded them of the covenants, in particular clause 16, in her letters sent in December confirming the resignations or, in Ms Simpson’s case, giving notice of termination. In addition, on various dates in December or January, all the individual Defendants were sent a letter from Thomas Donlon, General Counsel to Towry, drawing their attention to all their contractual obligations and stating explicitly that they remained bound by them. It was made quite clear to them that Towry would regard any breach of covenant with the utmost seriousness.

Nicholas Anderson stated that part of Mr Donlon’s role was to monitor and investigate any suspected solicitation activity on the part of advisers who left Edward Jones. On 15 January Mr Anderson received an email from Richard Wright, a former Edward Jones adviser, relaying a conversation with one of the clients who had been advised by Barry Bennett and stating “he doesn’t want to meet with any Edward Jones representatives as he will be moving his account to follow Barry in his new business.” As a result Mr Anderson stated that Mr Donlon wrote to Mr Bennett on 25 January “noting that he had been in contact with clients of Edward Jones with the intention of soliciting their business and reminding him again of his contractual obligations.” On 30 January Mr Bennett responded, stating that Mr Donlon’s letter was based on misinformation and that, “I can confirm that as requested I am fully aware of and to date have done and will continue to comply with my Edward Jones contractual obligations.”

It appears from this exchange not only that Towry were on high alert for any sign of client movement of this kind, which was to be expected, but also that, even before any transfer requests from clients were received, the possibility of autonomous decision-making by any client, without any element of persuasion, was not even countenanced. It is hard to understand how Mr Donlon could have “noted”, from the contents of Mr Wright’s email, that Mr Bennett had even been in contact with the relevant client, let alone form a view that Mr Bennett intended to solicit his business.

From 4 February 2010, Towry started to receive requests from Raymond James, on behalf of clients whose financial adviser had been one of the individual Defendants, asking Towry to transfer their investments under management by Edward Jones to the management of Raymond James. Mr Fisher stated that the total loss of clients was unprecedented in terms of both volume and value. Mr Anderson described it as a “tidal wave” of requests, in terms of their numbers and the fact that they were being made at the same time. The requests were being received in big bundles, in identical branded envelopes bearing the name Raymond James. At around the same time as the transfer requests were being received, Towry was also receiving “ISA Consolidation Forms” from Raymond James in respect of each client, identifying one of the Defendants as the client’s adviser, and letters from clients themselves, asking for their investments to be transferred to Raymond James.

As the Table attached to the Amended Particulars of Claim shows, between 4 February and 31 March a total of 296 clients of Edward Jones, who had been advised by the individual Defendants, made 328 transfer requests. On 31 March Towry sought an interim injunction from this Court, which was dealt with by means of appropriate undertakings, the Defendants denying all the allegations of wrongful conduct, and without the need for evidence to be heard. Further transfer requests were made subsequently. The total number of transfer requests between 4 February and 9 July 2010 was 429, made by 388 clients.

In percentage terms the number of Edward Jones clients making transfer requests constituted 44.8% of the total numbers of clients advised by Barry Bennett who had assets in their accounts. The percentage for Pieter Burger was 48%; for James Chandler 41%; for Wayne Hayhurst 52%; for Thomas Spain 65%; for Stuart Hutton 25%; and for Tracey Simpson 52%. Originally, interim relief had not been sought against Tracey Simpson because, at that stage, no transfer requests had been received from any clients who had previously been advised by her while she worked at Edward Jones. After 31 March, however, Towry received transfer requests from five individuals who had formerly been advised by Wayne Hayhurst, where the ISA Consolidation Form recorded that their new adviser was Tracey Simpson. Towry’s case, as articulated by Mr Anderson, is that Ms Simpson was effectively acting on behalf of Mr Hayhurst, with a view to attempting to circumvent the terms of the Order of 31 March.

There is no dispute as to the figures. In comparative terms, the move by the individual Defendants to Raymond James resulted, in relation to the clients whom they had advised whilst at Edward Jones, in a 78.6% drop in AUA at Towry in respect of all accounts; a drop of 79.3% in respect of accounts with an AUA of £10,000 or greater; and a drop of 86.4% in respect of accounts with an AUA of £50,000 or greater. Towry state that those figures should be set against reductions of only:

Towry place considerable reliance on these figures in this case. In support of their case that inferences should be drawn that the individual Defendants were in breach of their covenants, they rely on the number and similarity of the requests received; the short period of time in which the requests were received; the value in relative terms of the relevant investments, indicating that the wealthier clients were targeted for transfer; and the fact that, in Mr Anderson’s opinion, the individual Defendants had not complied with relevant, regulatory requirements in their dealings with clients after they commenced their new roles with Raymond James.

In response the Defendants contend that the fact that the requests were received in an identical, Raymond James format is not probative of solicitation, since the format would be the same whether or not there had been solicitation; that the numbers of requests received reflects the substantial number of advisers who left Towry, which was outside their previous experience, and the significant disconnect between the Towry and the Edward Jones business models; that the Table in fact suggests that the number of clients who have chosen to stay with their individual advisers is consistent, whether those advisers stayed with Towry or went elsewhere; that clients were unhappy about Towry’s acquisition and what was happening at this time; that, in any event, the larger the investments were, the more likely an unhappy client was to contact his adviser and give instructions that he wanted to transfer them, so that neither the value of the investments nor the short period of time in which requests were made is indicative of solicitation; and that even if there were any regulatory failings, which is denied, they are in no way probative of solicitation. Different financial services companies have different methods of compliance and Raymond James do not accept the suggestion that any Defendant was failing to comply with regulatory requirements.

Before considering the case of each individual Defendant, I shall address the evidence as to the role played by Raymond James in these events. There are also a number of matters which are of general relevance, in considering both the issue of solicitation and the other allegations of wrongful conduct against all the Defendants. On all the evidence before me I find the following facts.

First, the fact that the Raymond James independent contracting business model is very similar to that of Edward Jones is, in my view, highly relevant to the decision of the individual Defendants to approach that company after the acquisition. I have referred already to those similarities in earlier paragraphs. Cynthia Poole, Head of Relationship Management at Raymond James referred to Raymond James being known as “the grown up Edward Jones” and to the move to Raymond James from Edward Jones as being a “natural progression” for advisers.

The autonomy afforded to advisers by the Edward Jones model, and their ability to maintain regular contact with clients in their local communities, were features of life at Edward Jones which were important both to the Defendants and to those clients from whom I heard. Mr Goodship’s evidence mirrored that of the Defendants on this point, namely that the Raymond James model looked very similar to the model in place at Edward Jones. Mr Goodship referred specifically to his awareness at the time that Raymond James were looking to expand their business and his own wish to find out more.

A number of the Defendants articulated the reasons why the Raymond James model appealed to them. Their evidence on this issue was unchallenged. The reasons included the freedom to be totally independent and offer independent investments, the ability to work from a local office, control over their working lives without micro-management on the number or timing of appointments made, the ability to continue to carry out advisory stockbroking, the ability to grow a business and have control over the clients taken on, and the ability to maintain close contact with those clients.

Raymond James Investment Services Ltd is a subsidiary of a much larger company based in the US. David Hazelton, Head of Business Development, described the Raymond James independent contracting model as being “decentralised”, in contrast to the centralised investment approach of Towry. The advisers providing services to Raymond James are responsible for giving advice on the ground in their own offices. The advice “happens in the branch”. Financial advisers are signed up to become part of the Raymond James platform, and Raymond James do not themselves deal directly with investors.

Through the independent contracting model Raymond James provides the regulatory umbrella and administrative and operational back up to advisers, in the sense of the administrative platform for advisers to be able to effect their transactions, hold assets in custody and produce reporting for their clients. They also provide research facilities for the advisers, giving them the tools so that they can carry out research and make local decisions about what is appropriate for their clients. But it is the advisers who deliver an investment proposition and give investment advice to clients, with Raymond James providing “…access to the marketplace, to the equity market and to the bond market for direst investments in stocks and shares.” Mr Cherriman, the Business Development Consultant, referred to the opportunity, under this model, for advisers to enter relationships with other advisers so that there can sometimes be two branches within one location and a consequent sharing of operating costs.

In relation to charging clients, under the independent contracting model it is the adviser who charges either fees or commissions to the client and Raymond James takes a share of those fees and commissions. As between the company and the adviser, in practice the fees are charged by Raymond James in the first instance from the assets and then the relevant share of them is passed to the adviser on a quarterly basis.

Whether fees or commissions are charged, Mr Hazelton stated that the assets have to be held on the Raymond James platform in order to run the business in a sensible way. Whilst he accepted that it would be possible, technically, for assets to be held on a third party platform on behalf of the client, and for the adviser to charge the client an hourly rate by way of fees for advice given, in practice this is just not practical. From both the operational and regulatory perspectives the assets need to be on the Raymond James platform, so that they can keep track of what is going on and fulfil their compliance function. To do otherwise would expose them to an unacceptable risk. Raymond James are responsible for the advice given and they have to make sure that the adviser is giving the right advice. I accept that evidence.

Both David Hazelton and Jason Cherriman were surprised by the level of interest that was shown in Raymond James, and by the large number of unsolicited calls that they received from Edward Jones advisers after the news of the acquisition. They normally received only two to three such calls per week but, during the week following 23 October, calls came in from approximately forty to fifty advisers. They had to start turning people away because of the volume of calls. On 28 October, when Mr Hazelton met Gary Hans, one of the Edward Jones advisers, Mr Hans told him that Tim Kirley had informed advisers that Raymond James would be “a good home for them”.

The evidence shows that there was a high level of awareness at Raymond James of the need to proceed cautiously. They had been involved in a number of similar exercises previously and were well aware that financial advisers were bound by restrictive covenants in respect of existing clients, and of the risks involved.

Mr Hazelton referred to having been “burnt” on a previous occasion, when an adviser had moved to them and had breached his restrictive covenants. They had not taken legal advice on that occasion and had not imposed any restrictions on that individual themselves. They were anxious to avoid this happening again.

Jason Cherriman was conscious of potential issues relating to restrictive covenants because Raymond James was “an obvious firm for the financial advisers to move to and therefore an obvious target in potential legal proceedings.”

In addition, both Mr Cherriman and Mr Hazelton referred to Towry’s reputation in the industry as a litigator. Whilst there is no other evidence about that before me, and I make no finding in respect of it, I accept that the risk of litigation being pursued by Towry was another factor influencing their thinking processes at this time. Mr Hazelton stated, “…it was clear that these advisers had pretty strong covenants. And we felt certain, knowing the nature of Towry – and I don’t mean to denigrate them in that, but they’re hard-nosed business people – I felt certain if anything were to transpire then we wanted to make sure that we hadn’t done anything to breach those restrictive covenants.”

Whilst both Mr Cherriman and Mr Hazelton accepted that, in general, it would be much easier to recruit someone who is already self-employed, free from restrictive covenants and with a portable, transferable client base, both stated that in practice this is not what happens. The majority of advisers that they recruit, probably about 80%, are employees working under a contract of employment.

Before beginning the recruitment process in earnest Raymond James took legal advice from their solicitors, Faegre & Benson, in order to understand their obligations and restrictions in respect of such recruitment. A meeting was held with the solicitors on 30 October and there is an attendance note of this meeting, appropriately redacted, which was attended by David Hazelton and Peter Moores (Chief Executive). They took to that meeting a sample Edward Jones contract provided by another adviser, Robert Ward, who had brought it that day to a meeting with Mr Cherriman. They therefore understood, at that early stage, the nature and scope of the relevant, restrictive covenants. There is no dispute that, in that respect, Mr Ward’s contract mirrored those of the Defendants.

There was a lengthy discussion at this meeting about the legal obligations on advisers and on Raymond James. Mr Hazelton recalled being advised that there was no express non-competition clause and no express restriction from dealing with clients, but that there were provisions preventing the direct and indirect solicitation of clients. Solicitation and what amounted to solicitation was explained. In addition, advisers were prohibited from disclosing any confidential information belonging to Edward Jones. They were warned, both at that meeting and throughout the process which followed, that if any advisers breached their contractual obligations and Raymond James were aware of those breaches and colluded in them, there would be a right of action against Raymond James for inducing the advisers to breach their contracts. They were advised that, if the matter were handled carefully and sensitively, it should be possible for the Edward Jones employees and Raymond James to avoid breaches of any post termination restrictions. They were also advised that the Edward Jones advisers should be told to take independent legal advice as to their own positions, not least to avoid any potential conflicts of interest between themselves and Raymond James.

In relation to potential conflicts of interest, Mr Hazelton’s understanding was that, if the matter were to end up in court and the advisers had relied on the advice of Raymond James’ lawyers but had then breached their covenants, a conflict arose because Raymond James might want to take legal action against the advisers themselves for breach of their own agreement with them. I accept that this was his understanding.

I do not accept the submission of Mr Tolley that, throughout this process, Raymond James were more concerned with protecting their own position than worrying about whether the advisers broke their contracts. Certainly, Raymond James wished to protect themselves in case, as Mr Hazelton observed, they might end up in court. However, I do not accept that they were unconcerned about the advisers’ own conduct. The evidence as a whole in this case does not support that suggestion and I reject it.

After this meeting with the lawyers there was an internal meeting on 2 November between Mr Cherriman, Mr Hazelton and Ms Potter, when the legal advice they had received was discussed generally, together with the information that would need to be conveyed to advisers concerning their restrictive covenants in meetings held subsequently. I shall return to this meeting a little later on.

Both Mr Cherriman and Mr Hazelton described the recruitment process adopted in relation to the Edward Jones advisers. They used their standard procedure, monitored via an electronic database called SalesForce, which keeps a record relating to each adviser and the stage he/she has reached in the system. In this case, however, the procedure was compressed because of the sheer numbers involved and the need to act swiftly. The usual process is sequential, with a number of steps that can take up to 10 weeks. That was out of the question here. There were a large number of advisers, who were simultaneously looking at other options with rival organisations, as well as with Towry, and there was an obvious risk that skilled advisers would be lost to Raymond James if there were lengthy delays.

The advisers were asking many questions about the Raymond James proposition and a Frequently Asked Questions document was prepared to assist them. Mr Cherriman accepted that the business development team, comprising himself, Mr Hazelton and Tamsin Potter (Mr Hazelton’s PA), worked closely together, both in general and in relation to this particular recruitment process.

All of the individual Defendants made the initial contact with Raymond James, and they did so independently of each other. During the initial telephone calls with all the advisers who contacted him, Mr Cherriman asked them questions about the value of assets they were looking after on behalf of clients and about their annual revenue. He referred to applying certain “set” or “minimum” criteria as a baseline, which enabled him to decide whether advisers might be suitable for the role of independent branch principal, namely those who individually looked after £10 million on behalf of their clients, and who could bring in annual revenues of £100,000. The annual revenue would typically be made up of fees and commission received during the last 12 months.

However, these baseline criteria were not set in stone and there was some flexibility in relation to recruitment. Raymond James would also look at the account size and whether the advisers were dealing with high net worth individuals. Their charges are such that it makes sense for advisers to build relationships with higher net worth clients. Those that have that experience will also be more likely to succeed in the Raymond James model.

Throughout his evidence Mr Cherriman repeatedly emphasised, as did Mr Hazelton, that these baseline criteria are used, whenever there is an approach from a potential prospect, not because of any strategy or arrangement to ensure that existing clients move their funds to Raymond James, which is the allegation in this case, but because they are assessing an individual’s potential to prosper with the company. A proven track record will show that an individual is capable of building up a client base from scratch, which is what they are looking for, in the sense that they want individuals who can potentially build up a business that has £10 million under management. This “…indicates that they have at least potentially been successful within their previous role. It suggests that they potentially can do the same again and generate a business that is decent quality. And that’s what we’re interested in.”

However, recruitment is also a human process, in the sense that an assessment is made of the particular individual before them, including his or her experience and qualifications and whether he/she has demonstrated good, entrepreneurial skills of the sort they need from people who will be in control of their own business. As Mr Cherriman expressed it, “I’m looking for qualified financial advisers who are grown up and know what they want to do with themselves” and who are “able to stand on their own two feet.”

In cross-examination Mr Tolley explored with both Mr Cherriman and Mr Hazelton, in considerable detail, a number of documents relating to this recruitment process. Before describing how the process evolved, I shall deal with the main points which emerged.

A spreadsheet at bundle F3 1096, emailed by Tamsin Potter to the Chief Financial Officer, Naz Islam, showed adviser signings from Towry as at 19 January 2010. This document contained figures relating, in each case, to the AUM, the HGR (historical gross revenue), both figures reflecting actual figures based on past performance and revenue generated, and the estimated NRG (net realised gross), meaning the revenue that Raymond James estimated receiving annually, as a result of the fees and charges that the advisers would levy to their clients.)

Mr Cherriman’s evidence was that these figures were essentially calculations of potential future revenues for Raymond James, based on a “guesstimate” of what advisers might be able to bring in for the future, in terms of AUM over a period of time, having regard to what they had done before. The expectation was that the advisers would go on generating revenue at the same rate as before. “Past experience, although not necessarily a predictor of future performance, can, indeed, be a good indicator”. But, said Mr Cherriman, Raymond James would not “…hold a gun to their head. We would expect them to get there gradually.” Such calculations amounted only to a “broad expectation of what we hope might happen over a period of time… we have no idea of how successful they’re going to be and the level of fees they will generate under the Raymond James model.”

Mr Cherriman was also taken to an updated version of this document (F3 1176), emailed to Mr Islam on 17 May 2010 and described by Ms Potter as a “Pipeline summary” for April/May. Mr Tolley suggested that the word “pipeline” indicated a clear expectation of income. Mr Cherriman stated that this was Ms Potter’s terminology, and that this summary served exactly the same purpose as the earlier document, indicating only a broad expectation of what might happen in the future.

Consistent with these emails was another email from Ms Potter to Stuart Wright, Head of Operations, dated 18 January 2010, in which she referred to the current account sizes for those advisers who were then undergoing training and attached their appraisal questionnaires, stating, “I believe Anna is getting you a more accurate projection on what to expect first.” The person referred to is Anna Pollins, in the Relationship Management Department.

Mr Hazelton stated that, as Head of Operations, Mr Wright needed to “manage his work flow”, and that “..he has to understand what might happen, whether there would be a trickle or a flood. We didn’t have any idea of that. Because the clients were the ones that had to make the first move. They are the ones who had to say: well, I don’t really want to deal with Towry.” This, he said, was merely a way of enabling Mr Wright to understand what might happen over the course of the next two years and to be prepared for it.

Cynthia Poole also referred to the need to have a better understanding of the work flow and confirmed that no more accurate projection was in fact prepared by Anna Pollins. She explained that Stuart Wright’s team really struggled with estimating account flow. Some method therefore had to be devised, to try and help him to manage it more effectively and to avoid delays in opening accounts. Numbers were therefore taken from the appraisal questionnaires, simply to provide estimates of what his team might expect to see over the next 12 to 24 months. The numbers from the independent contracting model are in any event very small and need to be understood in context. Many more accounts come from the wrap platform firms, with which Raymond James also form relationships.

Mr Hazelton was also questioned closely about his use of the term “pipeline” in his email to Ms Potter of 15 February 2010, at F3 1087 and the attached spreadsheet. He explained that this document was prepared specifically for the parent company in the US, in order to calculate the transition assistance they wished to offer to the advisers. The formula was based on what the advisers had done, historically, and on the revenue they had brought in. Further, the reference to “pipeline”, referring to the AUM, HRG and NRG, denoted the specific formula they had to use, in the report to the parent company, to indicate where they expected the business to be at the end of the next two years. They had to provide this report to the parent company and, Mr Hazelton stated, they could not just pull figures out of the air. They therefore made an estimate of where they thought the advisers would be, based on their past performance. It was, however, only an estimate and it was in no way indicative of an expectation or intention that former Edward Jones clients would in fact move their assets across to Raymond James. It was therefore no more than a working assumption, to monitor overall performance against target. I accept that evidence.

A similar line of enquiry was pursued by Mr Tolley in relation to a number of other documents, in addition to the transition assistance spreadsheet at F3 1088. These included various annotations made on the Defendants’ FA Performance Summaries, which were produced at their meetings with Raymond James, and particular terms used in a PowerPoint presentation delivered to potential advisers. I have considered carefully all the points made but shall not set them all out here.

The purpose of all these questions was to seek to establish that the premise of all these calculations, and of the references to “pipeline” and to “what to expect”, was that the advisers would replicate precisely the performance that they had achieved at Edward Jones; and that premise, as Raymond James well knew and intended to bring about from the outset, would only be fulfilled if the advisers brought clients with them from day one.

Rejecting this suggestion, Mr Cherriman’s evidence was that the figures generated in these documents reflected only what they considered the advisers might get to, in terms of revenue, after a reasonable period of time; that they had regard, in this respect, to what the advisers had achieved before, as a way of anticipating what they would be able to do in the future; that there were always new clients for skilled entrepreneurs to go into relationships with; that the business development team had reporting obligations to Peter Moores, their CEO, and to senior management and shareholders in the US, for whom these internal documents were prepared; that in order to provide some estimate of what they expected the asset levels to be, over a reasonable time frame, “…we have to go on something, and one of those things we look at is what they’ve done in the past.”; but that they can’t guarantee the asset level any adviser will get to so “unfortunately, it is, pretty much, a guesstimate. There’s no better word for it. It is a guesstimate.” Mr Hazelton’s evidence was to the same effect. On all the evidence before me in this case, I find their explanation as to the nature and purpose of these documents compelling and I accept it.

I return to the recruitment exercise undertaken by Raymond James. By way of general observation, it is apparent that only those who survived what is on any view a rigorous selection process would be recruited. Of the forty-seven Edward Jones advisers who initially applied to Raymond James, some of them were apparently offered larger financial sums by rival firms and terminated the process. At least two others, Robert Ward and Allan Ross, pulled out because they felt that Raymond Jones were too cautious or “risk averse”, and that the recruitment process took too long. Of those remaining, Raymond James were able to give preference to those advisers who had previously been successful in generating the larger client bases, demonstrating strong past performance. Only nine advisers progressed to the second stage, consisting of investment knowledge and role-play assessments. Two of them failed those assessments, so that only seven advisers, the individual Defendants in this case, were eventually recruited. Both of the advisers who failed the assessments were in fact looking after higher asset levels on behalf of clients than any of the Defendants.

The recruitment process, which applied to all the advisers, was as follows. After the initial telephone conversation with Mr Cherriman, an introductory email was sent to those advisers who looked as if they might fulfil the relevant criteria, the information given being taken at face value at this stage. A number of those to whom Mr Cherriman spoke were only half way there, in terms of the baseline criteria, but he considered they were “potentially promising” in terms of their entrepreneurial flair. This was the case for Tom Spain and Stuart Hutton, for example.

This introductory email was in the same form as that sent to Stuart Hutton on 27 October, setting out the benefits of working with Raymond James and inviting the adviser to a one to one meeting. At these initial meetings, which were normally with Mr Cherriman, he took them through the PowerPoint presentation of the Raymond James model, referred to above, and questioned them generally about their background, qualifications and revenue levels, about how they generated clients and managed their portfolios, and the types of investments they held and range of asset classes advised on. No confidential information belonging to Edward Jones was either sought or offered at any of these meetings or any subsequent meetings. Owing to the number of enquiries, these initial meetings were sometimes held in groups, with Mr Hazelton attending in addition.

In addition, the FSA “application pack”, the application to enable the adviser to become an independent contractor with Raymond James, was sent out to advisers at this early stage, consistent with the decision to compress the usual, sequential process adopted. A wide range of information and supporting documentation was required for this application, including the previous employment contract, the completed FSA Form A, names of referees, the personal account dealing notice, personal identification and address verification, professional qualifications, personal financial statement, outside business activities and a CV. Assembling all this information and dealing with these matters at this early stage would avoid holding up the process later on, if advisers were successful in progressing through the various recruitment stages.

At his initial meetings with the advisers Mr Cherriman also referred to the restrictive covenants, explaining what Raymond James understood them to mean, namely that they were not to persuade or encourage clients, directly or indirectly, to move with them, but stressing the importance of the adviser getting his/her own legal advice. He also emphasised that any breach of contract would be taken seriously, that the advisers must comply with their contracts and that, if they did not do so, Raymond James would not be prepared to enter into a relationship with them.

With the exception of Tracey Simpson, who was not recruited as a Branch Principal, every adviser was required to sign a non-disclosure agreement (NDA), preventing them from sharing with third parties confidential information about Raymond James, which they learned about or were sent during the recruitment process. Mr Cherriman was aware that a number of the Edward Jones advisers who knew each other, including some of the Defendants, would probably be talking to each other about their various options, including Raymond James. Whilst this made him a little uncomfortable, he was more concerned, adopting a pragmatic approach, that they did not share any information about the company with any other individuals. Mr Hazelton stressed that the real reason for this NDA was because they did not want other people, who had no interest in Raymond James, to see the Service Level Agreement they offered to successful advisers, or to know about the transition assistance being offered to them.

The next stage of the process was an appraisal questionnaire (AQ) meeting, which was generally led by David Hazelton and Cynthia Poole (Director of Relationship Management and Business Support). Advisers, as with any other potential partner or wrap firm with whom a relationship might be established, were asked to complete an appraisal questionnaire regarding their business. However, neither Mr Cherriman nor Mr Hazelton appear to have attached much importance to this document. Mr Cherriman’s understanding was that their main purpose was to help in identifying any particular difficulties, for example if the adviser was trading derivatives which Raymond James were not prepared to hold. Mr Hazelton stated that he regarded the answers to self-appraisal questions as being likely to be “exaggerated”, because in this document people were seeking to sell themselves and their skills. The FSA application form was the document that really mattered, because that was the document that the FSA would rely upon and the contents must therefore be completely accurate and truthful.

At this AQ meeting therefore, there was an opportunity to explore any issues arising out of the FSA process, or the appraisal questionnaire, but the main emphasis was on explaining the next steps, including the Service Level Agreement (SLA) and relationship management requirements. Cynthia Poole gave a presentation covering procedures and in particular the SLA, the FSA application process, the new client sign up process, asset and data transfers and client reporting.

Tamsin Potter was responsible for ensuring that all the necessary information was available in respect of each adviser, using a detailed checklist for this purpose. Mr Hazelton and Ms Poole discussed the “pack” for each adviser and identified anything that looked out of the ordinary. When they were happy with everything there was then a further, internal meeting where Mr Hazelton, Cynthia Poole, Graham Hill, then Head of Compliance, Legal and Regulatory Affairs, and Peter Moores went through all the documentation and ensured that they were all happy with the recruitment of a particular individual. If so, the adviser was “signed off” stage one of the process.

However, those advisers now had to progress to stage two. They had to pass the investment knowledge assessment and then attend role-play training and pass a role play assessment, using actors. The head of compliance or of supervision usually sits in and observes that assessment. The advisers then went before the same team again for a final decision to be taken in each case.

This, extensive process reflects the decentralised nature of the Raymond James model and the need to ensure that those advisers recruited as Branch Principals are sufficiently knowledgeable and experienced to be able to work on their own and unsupervised. The bar is set high because Raymond James need to be able to rely on their competence, their integrity and their honesty. Whilst the process was compressed in this case, because of the special circumstances surrounding it, none of the steps was removed or short-circuited in any way. I accept Ms Poole’s evidence that the recruitment process is extremely thorough and “leaves no room for irregularities”.

In relation to the Edward Jones advisers, the decision was taken in this case to add an additional section to the usual format for the AQ meetings, before Ms Poole arrived, in order to address the question of the restrictive covenants. This applied to all the Defendants who became Branch Principals, save for Tom Spain, with whom Mr Hazelton went through the script at a subsequent meeting.

Mr Hazelton began the AQ meetings with a 30 minute discussion of the implications of those covenants. For this purpose he had prepared, or finalised from some earlier notes (at 1264 Core Bundle 4), a “script” to be used, following advice from their solicitors regarding the conduct of this discussion. This script, which had apparently been in preparation even before the initial meeting with the solicitors on 30 October, was as follows:

Mr Tolley pointed out that this script only emerged in this case when it was attached to Mr Hazelton’s witness statement. Since it is obviously an important, contemporaneous document I agree that this is surprising, but I reject without hesitation any suggestion that the document is a recent fabrication, and Mr Tolley did not put this suggestion to the witness in any event. I accept that the document was in the Edward Jones folder kept electronically by Mr Hazelton and then found when he was making his witness statement, at which point it was printed off and attached. In my view it supports the evidence given as to the importance attached by Raymond James to the way in which this particular recruitment process was handled, and as to the need to take steps to draw the attention of the Edward Jones advisers to the need to comply strictly with their contractual obligations.

The table at F3 1169 “Edward Jones CP advisers data” includes the dates of the AQ meetings with the advisers and states “Script reviewed by DH with each adviser re their obligations”. This record, showing both the fact of going through this script with each adviser and the date upon which he did this, supports Mr Hazelton’s evidence, that he carried out this task and that he regarded it as important to do so. I accept his evidence that he did so.

This is significant evidence, in my view, given the allegations being made against Raymond James in this case. Mr Tolley submitted that the script contained only very general advice but, whilst it was not itself legal advice, I find that Mr Hazelton gave a clear description, in accordance with the legal advice he had been given, of what Raymond James thought the advisers could and could not do. Further, he impressed upon the advisers both the need to get their own legal advice and the message that, if they broke their contracts, they would lose their positions at Raymond James. Mr Hazelton regarded the discussion he had concerning this script, at each meeting, as an essential, formal step to ensure that each adviser was warned appropriately. His intention was to make it completely clear to them that Raymond James were serious about this and that, if they breached their covenants, they would terminate the SLA and let them go. This, I find, was the clear message that was given to all the advisers at these meetings.

Mr Cherriman had not been at the meeting with the solicitors on 30 October and he did not in fact attend any of these AQ meetings. However, during the internal meeting on 2 November with Mr Hazelton and Ms Potter (referred to above), he too made some handwritten notes of that internal discussion. For reasons which will become apparent, Mr Tolley cross-examined him closely on these notes. I accept Mr Cherriman’s evidence that the notes at page 1284 of Core Bundle 4 were notes made by him at that internal meeting, but that he did not use this note when he was speaking to potential prospects subsequently. Some of the notes made by him are similar to notes made by Mr Hazelton, from which he subsequently prepared the “script” referred to above, which was typed up by Ms Potter some time after this meeting.

The notes at 1284 certainly include a summary of the information Mr Cherriman was going to convey, and did in fact convey to advisers concerning their covenants when he had meetings with them. Mr Hazelton’s handwritten notes, at 1264, made reference to some of the same points. These notes included the words “Don’t sign contract with TL”. The view taken by those at the internal meeting was that it would not be in the advisers’ best interests to sign any new contract with Towry. Mr Hazelton referred to them having some insight, at that time, that Towry’s restrictive covenants were “much tighter”, and that unless the advisers were certain they were going to stay with Towry, that could be a problem for them if they subsequently decided to leave. This was plainly a reference to the non-dealing covenant in the Towry contract.

Mr Cherriman’s notes also contained the following: “Resign individually. Shouldn’t tell EJ where they’re going”. Mr Hazelton’s notes contained a similar phrase. This, I find, was a reference to their understanding that some of the advisers knew each other and that, as a matter of “sensible employment advice” advisers should be told not to act collectively and not to resign as a group in these situations. That message was also conveyed to the advisers.

In addition, Mr Cherriman’s notes contained a reference to another matter, internally discussed, but which was not in the event relayed to any of the advisers. When asked about this he stated “There are notes on this page that we subsequently didn’t tell the advisers about because we decided that what we thought we might be able to do would clearly have been encouraging the advisers to breach their covenants, which we knew would be wrong. And so we didn’t do that.”

The relevant note is “subset – plant in the minds of clients EJ has Lloyd’s protection – TL doesn’t have that protection. RJ do”. Mr Tolley suggested to Mr Cherriman that this note showed that Raymond James were proposing to encourage the advisers to tell clients that Edward Jones and Raymond James had more protection for their investments than Towry did.

Mr Cherriman frankly accepted that this was one way of reading of what he himself described as a “horribly incriminating sentence” in the context of this litigation. He denied, however, that he ever conveyed this message to any adviser. Referring to the large numbers of advisers expressing interest in Raymond James and in rival organisations at this time, he stated, “…we were perhaps considering: how can we get a competitive advantage? How can we be attractive? But this is a thought. This is a note within an internal meeting. And it’s something that we didn’t carry through with….we didn’t do that…It looks like we are potentially going to say that, but we didn’t. We decided it would be wrong. It would be encouraging them to do stuff to breach their contracts and we didn’t want that.”

On all the evidence before me, I accept that explanation. I do not consider his account to be one which, as Mr Tolley suggested, was something he had thought of since the proceedings were commenced. The fact that it was not conveyed to advisers, by either Mr Cherriman or Mr Hazelton, is supported by the following; the final contents of the script prepared by Mr Hazelton, prepared expressly for use in the AQ meetings with advisers, which contains no reference to this point; the fact that none of the Defendants recalls it being said; the fact that there is no other oral or documentary evidence to indicate that it was said to advisers, or indeed by the advisers to any clients; the care that Raymond James was taking generally in regard to this recruitment process, their high level of awareness of the risks and of the need for caution, and their regular consultations with their solicitors; and the fact that neither Mr Goodship nor Mr Stone, both called to give evidence on behalf of Towry, referred to it being said to them at their meetings with Raymond James.

That last point is significant in my view. Both these witnesses, called on behalf of Towry, had attended meetings with Raymond James on 4 November, when they too were considering positions with that company as a possible option. Mr Cherriman’s note had been made at an internal meeting just a couple of days before this meeting. Neither of them referred to this being said to them at any stage. Indeed, Mr Goodship accepted in cross-examination that Raymond James had behaved entirely professionally at this meeting and that they did not at any stage put him in an uncomfortable position. He also recalled being advised to seek legal advice on the restrictive covenants in his contract. Mr Stone also accepted in cross-examination that Mr Cherriman may well have told him that he had to respect his covenants or Raymond James simply wouldn’t enter into any relationship with him.

Nor does the evidence as to the approach to recruitment adopted by Raymond James support the suggestion made to Mr Cherriman in cross-examination that the prospect of a personal 10% bonus at the end of the year put him under improper pressure to achieve the targets set for the business development team. The same suggestion, that his personal bonus was measured by reference to the revenue generated by signings made, was made to Mr Hazelton.

Naturally, the targets related to the number of locations signed and the potential revenues generated by new Branch Principal signings, but such targets are part and parcel of the sales arm of many organisations. In the financial services sector, incentivising employees to achieve targets by offering bonuses is deeply embedded in the culture, as Towry’s own contracts demonstrate. No doubt all the members of the business development team wanted to achieve the targets and receive remuneration accordingly, but the evidence as a whole does not support an allegation that there was any improper pressure in this respect, or that members of the team sought to meet their targets by ensuring that existing Edward Jones clients transferred their assets to Raymond James. In any event, Mr Hazelton’s personal bonus was dependent on a number of factors in addition to revenue, including the quality of the advisers recruited and his management of the other members of the team.

The individual Defendants successfully completed all the recruitment steps described (the case of each individual will be considered below) and preliminary offer letters were sent to them, between 11 December and 9 February. These contained warranties confirming the advisers’ awareness of the express obligations owed to Towry and confirmed that the advisers would seek independent legal advice if they had not already done so.

As part of this preliminary offer those who qualified, in terms of past revenue generated, or who successfully negotiated for payments, were offered initial and additional transition assistance, to be repaid over approximately seven years, to assist in respect of start up costs and expenses for the first year. There were two aspects to these payments. The assistance was to support advisers in the early stages, when there may be no revenue coming in. Mr Hazelton stated that they wanted to make sure there was no “undue pressure” on the advisers to breach their covenants and that there was “a cushion for them in that early period.” It was also offered because of the extremely competitive position Raymond James were in with regard to the advisers and their wish to ensure they did not lose any of the best people to rival organisations.

It was offered only after Raymond James had taken legal advice on 8 December, because of concern that such financial assistance might appear to be an inducement to advisers to breach their contract. The attendance note at 917A Core Bundle 3 confirms this advice. Further advice was taken on 11 December re the drafting of these letters, to ensure that the offers of assistance were drafted in such a way as to emphasise the expectation that advisers would build up a new business, and would not be induced to leave their present employment. Transition assistance had not previously been offered by Raymond James in the UK and it was necessary to obtain the go-ahead for these payments from Chet Helck, the Head of Raymond James in the US. Authority for establishing such a system of payments generally, where appropriate, had to be obtained at the highest level. It was being introduced, not only for the Edward Jones advisers, but for others who might come after them in future years.

Once these letters were signed, the final stage of the process was the execution of the Service Level Agreements by those advisers who were going to join. In general terms Raymond James takes responsibility for the advice given in the branches. If there is a problem with advice given by a Branch Principal Raymond James take responsibility for that in respect of the client, and that responsibility is then shared with the adviser through the SLA. Raymond James takes out professional indemnity insurance on behalf of the group as a whole, but in 2009 the adviser was responsible for the first £25,000.

The warranties in the preliminary offer letters sent to the Defendants were strengthened so that, by executing the SLA, the advisers confirmed, by clause 7, that they were not, nor would they be, in breach of any restrictions, obligations or duties owed to any former employer or third party, or under any former employment contracts, including any post-termination restrictive covenants that continued to apply during their engagement with Raymond James. In addition the advisers agreed that they were responsible for seeking appropriate “independent advice, which may include legal advice, including on those matters that are the subject of the above warranties…”

Mr Tolley suggested that, so far as guidance to the advisers was concerned, as to how to ensure that any dealing with clients post termination was done in a way that was in compliance with their covenants, Raymond James understood this to be a matter for the advisers’ own solicitors. Mr Hazelton accepted that. He also accepted that Raymond James should have monitored the situation to ensure that the advisers did actually obtain that legal advice.

He considered that, since the advisers would be submitting an invoice for reimbursement of their legal costs, Raymond James would have been made aware that this had been done. The evidence shows that an invoice for the legal advice was chased, in the case of Tom Spain, but in general the monitoring of receipt of such invoices was, I find, left to Mr Islam to administer and it is unclear on the evidence when or if this was done in relation to the other advisers. Mr Tolley suggested that this was a reckless attitude for Mr Hazelton to adopt, but I do not accept that it was. He had made it very clear to the advisers that they should obtain legal advice and, in my view, he was entitled to assume that the agreement that Raymond James would pay for that advice, on presentation of an invoice, would enable the relevant, internal processes at Raymond James to follow up on this, to ensure that it had been done.

One of the strong features of the evidence in this case, set out in the earlier findings of fact, is the close relationship that the individual Defendants had with many of their clients. Their presence in the local community and the regular, face to face contact encouraged by Edward Jones meant that lasting relationships of trust and confidence were formed. The advisers were encouraged to regard them as their clients and would refer to them as such. They did so when giving evidence.

I do not regard the Defendants’ use of the term “my clients” or “our clients” on occasions as probative of a belief that the clients “belonged to” the individual Defendant, or as supportive of the allegations of breach of the relevant restrictive covenants. I am entirely satisfied that each Defendant understood throughout that at all times the clients remained the clients of Edward Jones. The use of such expressions was no more than shorthand for conveying the undisputed evidence that the client’s day to day relationship was always with a particular adviser. The clients who gave evidence themselves referred to a particular Defendant as his or her adviser. Of greater importance is what actually happened between the advisers and their clients during the weeks that followed the acquisition and during the recruitment by Raymond James of the individual Defendants in this case.

Mr Tolley submits that it is the close nature of the relationship in this case that emphasises the need for financial advisers to adhere strictly to their post-termination obligations, in order to ensure that the intellectual property that comprises the goodwill in the client relationship remains with the employer, to whom it lawfully belongs. This will be especially so when, as in this case, the advisers retain the same mobile numbers as they had when they were working for Edward Jones. I accept that submission. However, as Mr Anderson himself acknowledged on behalf of Towry, “Obviously, if the customer wished to transfer his or her business elsewhere, that is their decision to make, but it should be free of any attempt by the departing employee to encourage the customer to transfer his or her business to the new employee’s new employer venture.” That too is an accurate statement of the position.

There is, in addition, a further consequence of the close relationship that existed between adviser and clients, and it has to be factored into the factual matrix in this case. The adviser is likely to believe that, if he leaves, the clients are likely to follow him, without any element of persuasion on his part. Such a belief was held by the individual Defendants in this case. Mr Goodship similarly accepted that he was aware of the chance, if he left, that some clients would come with him, although he also recognised that he could not rely on that fact. Giving Raymond James information concerning his AUA was, at least in part, because he was wanting to hold out to them the prospect that a proportion of his client base would follow him. Mr Anderson fairly accepted in cross-examination that there is nothing wrong with such a belief, or with an employee telling a prospective employer that is his belief. I accept Mr Quinn’s submission that an adviser’s belief that clients will choose to follow him to his new business, and the fact that he tells a prospective employer he holds that belief, is not in itself indicative of solicitation, or of misuse of confidential information or of participation in a conspiracy.

The same applies, as it seems to me, to the belief held by the prospective “employer” in this case, Raymond James. Whilst assessing an adviser’s suitability for appointment I accept Mr Cherriman’s evidence that he asked about the range of asset classes they advised on in general terms, but that he never asked about, or was given any information about specific clients. In referring to the non-solicitation covenant in their contracts, I also accept that he made it clear to the advisers that they could not “go after” any clients. However, he also stated in evidence that, “…from experience and instinct, I expected that some of the financial advisers’ clients would move with them; this was especially so, as the services offered by Towry following the takeover were so far removed from the services Edward Jones had been providing. However this would not involve any unlawful behaviour on the part of the advisers. So long as there was no breach of the adviser’s covenants then there was nothing to stop the adviser’s clients transferring their investments.”

When cross-examined he stated, in addition, “We would assume that some clients would, indeed, decide to move with advisers, irrespective of whatever restrictive covenants exist. If they’re a good financial adviser and they’ve built up a great deal of trust with their clients and their clients trust them implicitly, see them as the centre of their community, the person they can go to for financial advice, then there’s an assumption there that there will be clients that will move.”

Mr Hazelton also recognised this to be the case, stating, “It seemed to me that if the advisers had such a close relationship with their clients, then it was likely that those clients would want to follow the adviser if they left Edward Jones, particularly as the advisers retained the same personal mobile numbers at Raymond James as had been listed on their Towry business cards.” When cross-examined he acknowledged that, in looking at the prospective advisers, in addition to looking at those who had been able to build up a business quickly or who had reached a reasonable level of assets, he also looked at it on the basis that, given the relationship these advisers had with their clients, “…it’s inevitable that some of their clients will want to deal with them….I thought it’s likely that there would be a small group of clients that would follow them.” As the picture developed, he stated that he became more aware of the precise nature of this relationship, with the local office and clients’ ability to drop in and see advisers, so that when local branches were closed or advisers were dismissed or resigned, Towry “almost cut the umbilical cord to the company. The clients were used to walking past the office and dropping something in.”

In addition, both Mr Hazelton and Ms Poole referred to the fact that it is not uncommon for advisers coming from an employed environment to be able to negotiate with their ex-employer to take a segment of their client base with them when they move to another organisation, particularly family members and close friends, or people whom they have been advising for a long time. In these circumstances the ex-employer will often recognise the reality of the situation and accept that there is no way they will be able to stop these investors from following this adviser, wherever he or she may be going. Ms Poole gave a number of examples of this occurring from her own knowledge. I accept this evidence and, in my view, it is an important part of the context in which the allegations of wrongful conduct in this case fall to be considered.

It was their awareness of these factors that led to Raymond James deciding, after legal advice, to devise forms entitled “How did you hear about Raymond James”, to be completed by all clients for the next twelve months, including any former Edward Jones clients who decided that they wished to move their assets to Raymond James. This form was referred to in the FAQs, circulated in December, as being “good practice for all clients irrespective of whether you have worked with them before. This will allow you to provide documented evidence from the client of how they tracked you down in your new role.”

Such a form was also referred to by Mr Cherriman in his notes of the internal meeting made on 2 November, so a form of this kind was plainly contemplated by Raymond James at a very early stage in the process. A number of these forms, completed by former Edward Jones clients, were included in the trial bundles and I shall consider them in more detail when dealing with the case of each individual Defendant.

Advisers going through the recruitment process with Raymond James were sent a “specimen” SLA in early December. This is the usual procedure, enabling prospective recruits to understand both the support that Raymond James will provide to them and the commitments that are expected from the advisers. The final version of the SLA agreed with Mr Bennett contained, at paragraph (f) of the preliminary paragraphs, the following:

“(f)

The parties envisage that:

Paragraph (f) 2 represented a “softening” of the charges set out in the specimen SLA, where the standard charges were higher, namely £2000 per month within three months. This, I find, was not a concession introduced especially for the Edward Jones advisers but was, as Mr Hazelton explained, the course usually adopted with most advisers recruited, the higher initial charges being deliberately included in the draft SLA to ensure, so far as possible, that advisers will have decided to make the commitment to Raymond James before the final SLA is signed.

In general terms less notice was taken of paragraph (f) 1 in this respect. It was the income generated which Raymond James regarded as the most important aspect and which would have the greatest impact on the adviser, because they were being asked to guarantee a level of income over a period of time. Whilst there is clearly a correlation between the level of assets and the revenue generated, an adviser who had, for example, only £5 million of assets but who generated £3000 of revenue per month from fees and commissions would be, in Mr Hazelton’s words, “a very good fit for us”. So long as the adviser was generating the revenue the company was not so concerned about the asset levels per se. If an adviser raised questions about paragraph (f) 1, prior to entering into the SLA, Mr Hazelton would tell him or her that they were “…not really too bothered about the asset level. The thing that really counts is meeting those revenue levels”.

Once the SLA had been signed, the business development team would generally “back out” of the picture and Ms Poole and her team took over, periodically monitoring the relationship with the adviser, and the income being generated. Mr Hazelton would usually be involved in those discussions. If the take on of clients was slower than an adviser expected, there would be a discussion as to the reasons for that and, if they were doing quite well and the business was growing, the timescale would be deferred or renegotiated.

In relation to entering into the SLA with each adviser and agreeing the charges that each is to pay, Mr Hazelton stated, “When we start off an agreement like this, clients have a choice. We don’t know whether they’re going to move or not. And nor does the adviser. So really...we can’t be absolute about this number. What we want to do is to get the adviser to commit to us that they’re seriously going to undertake this level.” Discussions may subsequently take place as to the figures agreed and the revenue being generated, with a view to renegotiation or deferment.

The existence, in Clause 4(d) of the SLA, of a right to terminate the agreement in the event that the requirements in paragraph (f) are not being met, is, as Mr Hazelton stressed, a right to terminate exercisable by the company. However, whilst it is meant to be taken seriously by the adviser, Raymond James are unlikely to decide to exercise that right where the adviser’s business is nevertheless developing well and she/he is putting in the necessary effort. His evidence that there had never been a case where the SLA was terminated because of the adviser’s failure to meet the minimum charge levels was unchallenged.

Mr Tolley suggested that the only practical way that the advisers were going to be able to comply with the monthly revenue target was by obtaining transfers to Raymond James of investments of clients they had formerly advised at Edward Jones. In rejecting this suggestion, Mr Hazelton emphasised that what Raymond James were looking for from these advisers was “not so much the asset levels ….but evidence that people were able to grow their business quickly.” Some advisers had assets of around £9 million, but it had taken them nine or ten years to build up that level of assets, which was unattractive. Raymond James were more attracted by those advisers who had been able to build up a business quickly and who had got to a reasonable level of assets. He emphasised, as did Mr Cherriman, that the £10 million criterion was a guideline figure in this respect, but it was not “an absolute cut off.”

Challenging this evidence, Mr Tolley pointed to the table of advisers at F3 1050, as at 13 January, where their current status, AUM on and off book and revenues were listed, but where there was no reference to the period of time in which any adviser had reached these levels. The implied suggestion was that Raymond James were in reality interested only in the asset levels each adviser had and not the time it had taken them to get there. I do not accept that suggestion. The purpose of this table was to provide a snapshot of all the information concerning each adviser gathered together in one place. It did not contain any references to the views formed about each adviser’s capabilities and potential after meeting them and discussing their background and work. Mr Hazelton, speaking with some thirty years of recruiting experience, stated, “…recruiting isn’t a science. It is more of an art…you make judgments….I have to look at an individual and say: based on what I know about this individual what do I think that they can do…you build a picture…you have to make a picture as to whether they are entrepreneurial or not…My judgment would be based on having met them, having talked to them, having got a sense of the kind of individual that they are.”

Looking at those advisers, including in Mr Hazelton’s view Wayne Hayhurst, James Chandler and Tom Spain, who had clearly demonstrated this ability to build their business quickly, he thought that, even though he considered it likely that some clients would follow them, “…it was a reasonable expectation that, even if they had to start from scratch, doing it the second time they would be so much better at building their businesses …that they could probably get to the levels of revenue that we were looking for in a reasonable timescale. Even if they had to deal only with new clients.” Even in the case of those advisers with lower asset levels and revenues, Pieter Burger, Barry Bennett and Stuart Hutton, he was confident from what he knew of them that these, “…were people that we would like to work with because they showed the characteristics of people that could build a business from scratch.”

I find that evidence persuasive. I deal with the individual Defendants below but, on all the information which Raymond James had obtained about them, I do not consider it can reasonably be said that any one of these six Defendants was unlikely to achieve the requirements of the SLA, based purely on investments from new clients with whom they had not previously dealt, or that Raymond James knew or believed this to be the case. A number of them had started their careers as financial advisers at Edward Jones from scratch, knowing nothing about the business but knocking on doors, establishing connections within their communities and dealing with large numbers of clients within a relatively short timescale. After two or three years they had developed a presence and a reputation, which led in turn to other referrals and connections with lawyers, accountants and other “introducers” to higher net worth clients.

These were, as I find, energetic, active and effective financial advisers, often making several calls and holding several meetings each day. Their knowledge and experience was such that it was not unreasonable, in my view, for Raymond James to believe, as I find they did, that those advisers, who were also identified by Towry as the top tier, group 1 advisers, whose skills they wished to retain, could generate £4.8 million of assets in the first year, and circa £8 million in the second year, so as to meet the charge requirements under the SLA.

In the email sent to advisers on 5 January by Mr Cherriman, they were advised that it made sense for them to adopt a similar approach to each other, in terms of the charges levied to clients, taking account of the various approaches in the marketplace. I find that the reason for this advice was simply to avoid the “operational complexity” that would result from having many different Schedules of Fees and Commissions (SOFACs). The advisers were, however, still free to develop their own charging structure if they wished and the advice given, if rejected, as it was in some cases, was not imposed on anyone.

Mr Tolley suggested that this was an approach deliberately adopted to enable the advisers to present a proposal that would appear to be competitive with Towry, because the suggestion was based on a review of the approaches of four companies, including Towry. This suggestion was in my view misplaced. The companies referred to were Raymond James, Edward Jones, Towry and Killick & Co, who are not part of the Raymond James group but are minority shareholders only. Edward Jones was the company the advisers had come from. Killick & Co. provided a helpful comparison with Edward Jones. Towry had a wholly different type of investment proposition, so that it made sense to include them for comparison purposes; and Raymond James advisers were operating in the stockbroking market.

This sample of different SOFACs, which were representative of the market the advisers were in, were provided to help them create a charging structure that was competitive. I accept Mr Hazelton’s evidence that this was done because these samples were representative of the market place and not as part of any design to enable clients to be persuaded to move their assets from Towry. The evidence suggests, rather, that Raymond James were helping advisers to develop charging structures that were attractive to all clients, not just clients who might wish to transfer their assets from Edward Jones.

A further recommendation made to the advisers was that “For any former Edward Jones clients that come across you may decide not to levy an initial fee but the ongoing fees would apply.” The suggestion being made was therefore that they should not charge any fees for transfer but could charge the annual management fee on the sum once transferred. Mr Hazelton explained the reasoning behind that advice in this way: “…when clients move assets from one place to another where there’s not much advice to be given then you probably shouldn’t charge the clients for moving those assets. And we certainly don’t – Raymond James doesn’t levy a charge to the client for transferring those assets. There’s a cost to us but we absorb that cost because we think it’s fair to them. So that was a suggestion we put to the advisers.” I accept that explanation and reject the suggestion being made that Raymond James were seeking to persuade the advisers to use this as a means of encouraging clients to move their assets across.

Mr Tolley submitted that Raymond James did not take adequate steps to monitor the advisers’ compliance with their restrictive covenants after they had signed up. Nor did they monitor the number of clients and the number of accounts opened up after the advisers had been recruited and, in particular, the speed at which such a large number of accounts were being opened up and where they were coming from.

Mr Hazelton’s response to this suggestion was to rely, essentially, on the steps that had been taken, throughout the entire recruitment process, to ensure that the advisers were aware of how seriously breaches of their covenants would be taken by Raymond James, and the serious consequences for any adviser who did breach his covenants; on the “How did you Hear about Raymond James’” forms devised (HDYH forms), which they requested that all clients should be asked to complete; and on the internal monitoring procedures adopted thereafter, to ensure that the form had been properly completed and submitted in respect of each client.

The evidence shows that Hayley Smith of the accounting team had responsibility for ensuring that this was done and, more importantly, for checking what each client had stated on the HDYH form, so that any concerns as to non-compliance with the covenants could be raised immediately. In February or March 2010 Stuart Wright checked specifically that these forms were being collected and reviewed. No such concerns were raised. I do not accept the suggestion that this was merely a box-ticking exercise. The evidence shows that the monitoring included a review of the contents of the forms.

Mr Tolley pointed out that the HDYH forms did not in fact ask why the clients came to move their accounts to Raymond James, although in his witness statement Mr Hazelton referred to the advice given to advisers being that clients should complete a form confirming how and why they came to move accounts. Since the format and the wording on the form was put together with input from their solicitors, I accept Mr Hazelton’s evidence that his statement may be inaccurate in this respect. Accepting, in addition, that it might not be “a perfect document”, Mr Hazelton nevertheless regarded it as “an important part of the picture” in that “on its own it doesn’t mean very much but when you put it alongside all of the other things that we had put in place, short of actually going to see every client ourselves to ask them how they’d found out, I don’t think we could have done much more.”

Cynthia Poole explained that when advisers had finally signed the SLA, responsibility for managing the company’s relationship with those advisers then transferred to her department. The advisers were then taken through a highly structured, twelve months transition process to help them get their business up and running, including attendance at a Training and Orientation session. The first three to six months of this process were very intensive. They included help on marketing Raymond James as part of the advisers’ proposition, and the provision of marketing materials for advisers to use with clients if they asked questions. Some investors want to know, for example, who Raymond James is, how safe their assets are, or where the client cash is, and the materials are designed to enable advisers to answer all these queries and to deal with other, general matters. Other investors have no interest in any of this information. These materials are designed to be taken to meetings or to be sent as follow up, where appropriate.

At the AQ meetings when Ms Poole gave her presentation, she explained in general terms, amongst other things, what the contract with the client consisted of, namely the SOFAC, the account form, the ISAT and the terms of business. The client would also be required to sign the client authorisation letter. That is the template that the client would complete in full, based on what the client wanted to do, whether they wanted to transfer their assets in specie, or liquidate everything to cash, or choose a combination of the two. That procedure applies to every kind of account except an ISA, where the rules require a specific ISA consolidation form to be completed.

A summary of the Raymond James service levels appeared in the terms of business, namely the execution only service, the advisory dealing service, the advisory portfolio service and the managed discretionary service.

The first of these, execution only, involved executing the client’s orders without providing any advice on the suitability of the transaction. The advisory portfolio service involved the adviser recommending an overall structure for the portfolio and making proposals from time to time that were considered suitable for the client. The client could have both this service and the execution only service running at the same time if he wanted to separate the service in that way.

I have endeavoured, in the above analysis, to deal with the most important features of Towry’s challenge to the witnesses called on behalf of Raymond James in this case. Mr Tolley’s cross-examination was lengthy and searching but, in my judgment, the evidence they gave was consistent and compelling. I reject without hesitation any suggestion that Raymond James deliberately created a false paper trail to conceal their complicity in the solicitation of clients from Edward Jones. Having regard to the whole of the evidence in this case, the allegations against Raymond James do not withstand scrutiny. I am not persuaded that either Mr Cherriman or Mr Hazelton, who was the only witness from Raymond James to whom the allegations were put specifically, ever intended that the advisers should encourage as many clients as possible to transfer their investments and business from Edward Jones to Raymond James; or that they either knew the advisers were going to solicit their clients or didn’t care one way or the other, because they believed that responsibility could be allocated to the advisers if there was a problem; or that they deliberately closed their eyes to the obvious. The evidence, on analysis, demonstrates in my view entirely the opposite. Whilst, as Mr Hazelton realistically agreed, he was willing to accept the benefits afforded by those transfers, Raymond James, like Towry, is a commercial organization. Failing to turn away business that you genuinely believe has lawfully come your way is an unlikely scenario in the real world.

As set out earlier in this judgment, the clients had originally been sent letters from Andrew Fisher and Tim Kirley in October, at the time of the acquisition, telling them that nothing would change and that their interests would continue to be looked after. After the acquisition was completed, a pro forma letter was posted by Mr Fisher on Joneslink, on 13 November, setting out the text that advisers should use to write to their clients, repeating the advice that “nothing changes” as far as they are concerned, and stating that they would be in touch shortly to introduce them to additional services that might be appropriate for them.

By mid to late November, however, there had been a number of significant developments. First, there had been a number of negative articles about Towry or about the IIM appearing in the media. Secondly, it was clear by now that, contrary to the initial advice that nothing would change, there were in fact to be a number of important changes, not least the closure of most of the local offices. In my view Towry significantly underestimated the impact that these closures would have on clients and advisers alike. The fact that this would end the ability of clients to retain high street access to their advisers in their local communities was not considered by Mr Fisher to be a loss of any real significance. His comment “I’m not familiar with the concept of clients popping in – why would they?” indicated, in my view, his failure to understand the importance of this facility to both advisers and clients, as was clear from a number of those who gave evidence. Mr Hazelton’s graphic observation that closing the local offices was like “severing the umbilical cord” was the more accurate analogy.

Thirdly, despite Towry’s hopes that the group 1 Edward Jones advisers would stay with them, large numbers had decided that they did not like Towry and/or the terms and conditions on offer and had decided to leave. In terms of continuing client communication and reassurance, this created serious problems for Towry.

Following the acquisition, Stephen Ranson was the Manager for Towry’s central region. Part of his job was to help in the re-allocation of clients to new advisers, where their previous adviser left the company. This process was overseen by Kerry Nicholls, Regional Manager for Client Services. It became clear to her in early November that adviser resignations were likely to be higher than anticipated.

The practice initially was to designate each leaver’s clients as “orphaned clients” and to allocate the leaver’s entire client book to another interim adviser immediately. Towry tried to place a client with an adviser who was nearest to them, in terms of office location, and who had appropriate experience for the level of their investments. The aim was for a suitable adviser to contact the clients as soon as possible, to address any concerns they had about the acquisition or about their investments.

As Mr Ranson explained, however, the result was often that an interim adviser was allocated up to 400 clients to contact. Allan Robotham, a Towry wealth adviser in Nottingham, confirmed that in January he was given a list of 300-400 new clients to advise, as a result of the departure of other advisers (not any of the Defendants). Mr Ranson confirmed that this was a much higher number of reallocations than he had expected (he thought 100 to 150 would be typical), and it was plainly not a permanent solution. He accepted in cross-examination that, even allowing three appointments per day (which would be excessive), it would take 6 months for the adviser to see every client. Whilst, as he observed, not every client would decide to realign his investments, the availability of an adviser to give reassurance was not, in my view, dependent upon the value of a client’s assets. Even clients with relatively low value assets may have regarded contact from an adviser at this time as important to them.

Mr Ranson stated that it soon became clear that the clients would have to be split into smaller groups. The system devised was therefore that the adviser initially allocated was to discuss clients’ requirements with their regional manager and they would then identify former Edward Jones advisers who were staying on, who could take permanent responsibility for new clients. The location of an adviser’s office would be taken into account, as well as the value of the client’s investments, in making this permanent allocation. The permanent advisers were all told to contact their new clients as soon as possible and to attempt to visit them in person to review their investments, to reassure them about the acquisition, and to discuss at the same time whether the Towry proposition (the IIM) would be suitable for them.

As Ms Nicholls explained, however, a number of cases arose in which the advisers who had been reallocated client banks in this way subsequently decided themselves to resign and leave Towry to work elsewhere. A number of “Transitional Advisers” were therefore asked to contact clients whose allocated permanent adviser had left, pending the appointment of another, permanent adviser. Holding letters were to be sent out to each client, advising them of their new adviser and contact details.

Problems persisted and, at the end of January 2010, Mr Cowan decided to enlist Towry wealth advisers to be allocated as new advisers to Edward Jones clients. At this point Towry Marketing, with Rebecca Warren as manager, took over responsibility for the allocation strategy, as a result of the pressure of work on the Client Service Team. A letter was created by the marketing department and sent, on 4 March, to 8,624 unallocated clients, giving an update as to the integration process and explaining that details of a new adviser would be given within a month. It is unclear how many of the 388 clients listed in the Table attached to the Amended Particulars of Claim were included amongst that number.

A further letter was sent out on 26 March, to 38,726 clients. Ms Warren also described further mailings being sent out to approximately 32,000 clients between 24 April and 4 June 2010, more than 6 months after the acquisition, informing them of their adviser’s name and new contact details.

As Ms Warren realistically accepted, this was a very unsettling time for Edward Jones clients. “The situation was very fluid, advisers were leaving and client banks were being reallocated constantly throughout that time.” Some clients were reallocated on more than one occasion. On the evidence I find that, notwithstanding Towry’s wish to ensure that advisers communicated with clients as soon as possible, following news of the acquisition, the high numbers of advisers leaving, at different times, over the period from November to May, meant that there were delays, and sometime substantial delays in clients being contacted by a new adviser. As Paul Wright accepted, in general terms the longer the gap in communicating with an “orphaned” client, the more difficult it will be to retain him. Clients with large investments in particular “are likely to feel less well treated”, creating a risk that they would not stay.

The delays in communication after the acquisition were referred to by a number of the clients, formerly with Edward Jones, who gave evidence at trial. I shall deal later on with the contact that each of the clients who gave evidence had with the Defendants, and with their reasons for transferring their assets to Raymond James, but the evidence from some of these clients as to the delays, caused by the large numbers of advisers leaving and the resulting, repeated reallocations by Towry to try to deal with the problem, is revealing.

Christine Ashton, whose adviser at Edward Jones had been Tracey Simpson, recalled receiving a letter from Towry in December, informing her that Kat Mulvihill was now her agent and would be contacting her, but stated that she heard nothing from her. The Preston office was closed and she was first given a Leeds number, but was then told to contact London. She described in frank terms what she regarded as “the complete non-service that we got from Edward Jones/Towry”.

Anne-Marie Bailey, whose adviser had also been Ms Simpson, referred to there being a few months of “radio silence” after the acquisition. No-one contacted her about a new adviser until about six months afterwards. Sylvia Hirst, whose adviser had been Barry Bennett, first heard about the change of adviser when Sally Burn-Jones telephoned her in January 2010 and told her she was her new adviser. Richard Longton, whose adviser had been Wayne Hayhurst, described receiving a letter in early 2010 telling him that his new adviser was Fraser Irvine, who was in Southport, which was “miles away”. In any event nothing happened and no-one contacted him. He waited for his new adviser to get in touch but all he received was a letter and monthly statement.

Margaret Maltman’s adviser had been Pieter Burger. She described having received various letters from Towry telling her that she had a new adviser and that they would be in touch, but stated that no one contacted her at all. Roy Phinn, whose adviser had been Stuart Hutton, stated that Towry were “very slow to react”. It was not until the 4 March that he received a letter regarding the change of his adviser. His new adviser was Rowan Gregory and Mr Phinn arranged to meet him, although this proved very difficult because Mr Gregory was “completely snowed under”. After eventually meeting him, Mr Phinn learned that Mr Gregory had also resigned.

John Williamson, whose adviser had been James Chandler, stated that any communication with Towry was “notable in its absence. In fact there was complete silence. I heard absolutely nothing at all.” Only in February did he receive a telephone call from Howard Pykett, who wanted to meet him as his new adviser. The complete lack of communication between October and February led him to the view that “customer service was not top of Towry Law’s agenda.”

In the light of this evidence, and Towry’s own evidence as to the heavy workload for advisers and problems concerning communication with clients over this period, I find that there was likely to be a substantial number of clients who were not contacted at all by their reallocated advisers, or for whom there were delays in establishing contact, or who were generally unhappy about the level of service being provided at this time.

Barry Bennett

By 15 November, when he made his first inquiry with Raymond James, Mr Bennett was still undecided as to whether he would stay with Towry or go elsewhere. SJP and Positive Solutions had expressed an interest in him joining them, as had an IFA company in Plymouth. He referred to a “general unhappy feeling” around Edward Jones at this time. Several clients had contacted him on hearing of the acquisition to express concern, sometimes about the safety of their investments, and to ask if their money was safe.

In a short email sent to Raymond James on 15 November, he asked for information about their business model opportunities, which he had read about on their website. Jason Cherriman telephoned him on the following day and a first meeting was arranged in London for 24 November. In fact Mr Bennett also arranged meetings in London for that date with other financial organisations he was considering. Overnight accommodation was provided for him by St James’ Place.

At that meeting, in addition to discussing the Raymond James model and his own performance as an adviser, Mr Bennett signed the non-disclosure agreement (NDA). The only documents he provided to Raymond James were his contract of employment and his FA Performance Summary. Mr Cherriman went through the script prepared by David Hazelton as to what an adviser leaving Towry and joining Raymond James could do and could not do so as to comply with the restrictive covenants. He also emphasised that Mr Bennett should obtain his own independent legal advice regarding his contract.

Mr Bennett considered that the meeting went well. Raymond James seemed to fulfil the “key criteria” for him, and he was asked to complete an appraisal questionnaire (AQ), which he did on 27 November.

He was asked to attend the AQ meeting in London on 17 December, which was a week after he resigned from Edward Jones on the 9 December, his contract having been terminated on notice on 7 December. It is clear therefore that, at the time he resigned, he had not even been signed off on stage one of the process for recruitment to Raymond James.

At this meeting another financial adviser was present (not one of the Defendants) together with Mr Hazelton and Ms Poole. The meeting began with Mr Hazelton going through the implications of his restrictive covenants and the need for him to obtain his own legal advice, in accordance with his normal practice for this recruitment process, and as described in detail above.

Brief, handwritten notes of the meetings with both Mr Bennett and other Defendants, taken by Mr Cherriman and Mr Hazelton, were produced at trial. A number of them were completely illegible and others were either unintelligible or abbreviated to such an extent that they were not at all helpful in ascertaining what exactly was said. Of relevance in Mr Bennett’s case is Mr Cherriman’s note that Mr Bennett told him at some stage about the nature of the business he was expecting in the next few months, referring to “several million waiting to invest. 1.2 million SIPPs waiting”. It is not in dispute that this was said. Mr Cherriman described it as information of the kind that advisers will generally speak about at interview.

There is also a note indicating that Mr Bennett referred at some stage to “150 accounts”, and to “clients are being sold – know would follow him”. Mr Cherriman could not recall this being said, or the exact words used, but I find that Mr Bennett did indicate at some point that he knew or believed that clients would follow him. Mr Tolley places some reliance on this note, as indicating an intention on Mr Bennett’s part to solicit clients to come with him, and Mr Cherriman’s intention to encourage this.

It seems to me, however, to be equally consistent with an innocent belief that this is what was likely to happen, without any element of persuasion, as Mr Bennett maintains was the case. The marketing plan that he sent to Raymond James is also consistent with such a belief. A number of the clients he advised at Edward Jones had followed him there from Allied Dunbar and sixteen of them had known him for ten years or more. Nor do I find this note, or the plan, supportive of any encouragement on Mr Cherriman’s part, viewing the evidence as a whole.

After these meetings there was an internal discussion about the merits of Mr Bennett’s application. Mr Cherriman’s initial view had been that they would be turning him down. Mr Hazelton described his asset and revenue levels, as shown in his FA Performance Summary, as being “a little lower than we were looking for.” However, having met him and discovered his full background, he assessed him as someone who was likely to be successful with Raymond James. He had been able to build, successfully, “two books of business”, at Allied Dunbar and then at Edward Jones, and he assessed him as someone who was likely to build a successful business again. Mr Cherriman described Mr Bennett, accurately in my view having heard him give evidence, as someone who “talks a good game”. Mr Hazelton regarded him as being “out of kilter” with the other advisers in this sense because of his previous experience and the fact that he had a number of clients who had dealt with him in the past and who, Mr Bennett believed, would want to continue to deal with him.

Mr Bennett therefore proceeded to the second stage of the process. He passed the knowledge and role-play assessments on 11 and 14 January, after which he was offered an appointment as Branch Principal. He had not generated the revenue that would qualify him for transition assistance from Raymond James and he received a more modest payment (as did Pieter Burger and Stuart Hutton) than those who did qualify (Wayne Hayhurst, Tom Spain and James Chandler), towards his start up and legal costs. His final Service Level Agreement was dated 19 January.

As a result of what had been said to him by Raymond James, Mr Bennett obtained legal advice from Wolferstans in Plymouth, though his evidence is that he was already well aware himself of his contractual restrictions and of the need strictly to comply with them. He had experienced a similar situation when he left Allied Dunbar. He had also noted the warnings that Towry had issued in this respect.

In relation to solicitation, Mr Bennett stated his understanding was that in order to comply with the non-solicitation clause, he must not contact the clients. If, however, they both initiated the contact and wanted him to continue to be their adviser, he was able to do so without breaching his contract. It appears that he sent a formal copy of the legal advice he had received to Mr Hazelton on 16 March and then provided an invoice in order to receive payment for his legal costs. Mr Hazelton reminded him in writing at this point of the terms of the SLA, in respect of the restrictive covenants, and of the need for him to comply with them and to expect Towry to enforce them.

Mr Bennett stated that he complied with his contractual obligations at all times. He never made use of any confidential information belonging to Towry. He never conspired with Raymond James, as alleged, and he never conspired with any other individual Defendant to harm Towry. It was his decision alone to become self-employed again and to work for Raymond James. In this respect, whilst he knew of Stuart Hutton and whilst Pieter Burger was a colleague and friend, it was pure coincidence that they all ultimately decided to move to an organisation that provided the “closest fit” with the Edward Jones model. He had never met or spoken to James Chandler, Wayne Hayhurst, Tom Spain or Tracey Simpson before they joined Raymond James.

So far as the clients were concerned, he stated that he never initiated contact with any former client of Edward Jones. He never solicited any client. The requests for assistance from him were always initiated by the clients themselves and, if it was clear that each client had already made the decision that she/he wanted to continue to deal with him, he dealt with each client as a new client from first principles, as he was required to do.

With regard to the list of clients in the Table, who are alleged to have been solicited by him, he stated that they comprised 28 households, out of the approximately 100 households he had advised when at Edward Jones. Of those 28 households, 16 had known him for ten years or more and the majority of those had followed him to Edward Jones from Allied Dunbar. In addition, of the 28 households, more than 10 of the individuals held less than £30,000 in investments with Edward Jones and a further 9 held less than £100,000. This evidence was unchallenged.

In his witness statement, Mr Bennett described in detail the way in which the clients in each, individual household had contacted him and asked him for help and how he responded, identifying all the documentation relevant to transfer that was completed in each case. The dates of these documents show that they were all completed between February and June 2010, with the majority being completed in May. All the clients completed a HDYH form, as required by Raymond James.

Two of these clients were called to give evidence at trial, namely Richard Bunn and Sylvia Hirst. There were also two “hearsay witnesses”, Garry Elliott and John Skinner, who gave evidence about their contact with Mr Bennett after he left Edward Jones.

Mr Bunn is a retired stockbroker, having been a partner at a leading firm, running the corporate finance department for some fifteen years. He reads the financial press regularly and he stated that he would “never give discretionary management.” He met Mr Bennett at the Kingsbridge show in September 2009, where Edward Jones had a stall. He asked Mr Bennett to come and see him so that he could determine whether he wanted to use his services as his advisory stockbroker. At that point he was managing his investments himself. Having met him and been satisfied as to his expertise and as to the fees and relevant infrastructure at Edward Jones, he decided to invest with that firm. He got on well with Mr Bennett and considered that they had much in common, particularly an interest in sport, and Mr Bennett had knowledge of things that he did not, namely tax and complex investment vehicles. In the relatively short time they had known each other before the acquisition they had had a number of “healthy discussions and debates” and he liked to be actively involved in the investment decisions.

His immediate reaction to the news of the acquisition, which Mr Bennett rang to tell him about, was that it was not a problem, provided Mr Bennett could continue to give him the service he wanted. His reaction changed, however. He discovered that Mr Bennett had left Edward Jones in December, shortly before Christmas Eve, when he received a letter from Towry informing him of this.

Mr Bunn described what happened next, as follows: “I then phoned Barry and…asked him what his plans/hopes were. He told me he hoped to find another firm to work for. He also told me that he was bound not to contact his old clients under the terms of his departure from Edward Jones. I told him that I was aware of the proprieties but that I was perfectly able to contact him and that I had decided, before this phone call, to continue to use his services provided he found a suitable new firm. We agreed he would contact me if and when that happened. There was then a gap of a month or two before he told me of Raymond James and we then had a meeting at my home at which I formally agreed to use his services. He was at pains to stress that this was my decision, which it was, because he was not allowed to solicit his old clients.”

Mr Bunn explained his reasons for leaving Towry in this way, “I decided to stick with Barry provided he found a suitable new employer which Raymond James seemed to be...it was purely based on my personal relationship with my adviser”. Whilst Mr Bennett thought that there were other reasons for his decision to transfer his investments, arising out of negative views Mr Bunn had expressed to him about in house, discretionary management of investments, I accept Mr Bunn’s evidence that in fact the sole reason at the time was his wish to stay with Mr Bennett as his adviser, so long as he found appropriate new employment. He had written to Mr Bennett to this effect on 26 March 2010, when he discovered that legal action was being taken against him.

Mr Bunn had notified Towry by telephone, and then in writing, that he no longer wished to use their services. He has not retained this correspondence but I accept his evidence that this was probably in early 2010. Strangely, it appears that, since he transferred his investments to Raymond James, Towry have continued to write to him, on a number of occasions, as if he remained a client of theirs, giving him the name of his new adviser and, by letter of 30 November 2010, sending a valuation for his custody and dealing service.

Mr Bunn was closely and extensively cross-examined as to the circumstances surrounding the contact he had with Mr Bennett and about their meeting at his home, which took place on 26 February. In the phone call he made, on or around Christmas Eve, Mr Bunn had asked Mr Bennett to contact him when he had found new employment. Mr Bennett’s mobile phone bill for this period indicated that he had made two short calls (lasting only some 40 seconds each) to Mr Bunn on 5 and 6 January and then a longer call (just under 5 minutes) on 22 January. Neither of the witnesses could recall these conversations, or their content.

The first two, very short calls were before Mr Bennett had passed the assessments at the second stage of the recruitment process and they do not appear to me to be of significance. By way of general observation, the phone bills adduced in evidence in this case do not show any incoming calls, which renders the full picture of telephone activity incomplete and potentially misleading. Mr Bennett stated that he may well have been returning calls after messages were left for him and I accept on the evidence I heard that this was likely to be the case. The mobile phone bills of other Defendants were also put to other clients called and, in some cases, their evidence was that a call to them from one of the Defendants was a response to messages that the clients had left themselves, asking him or her to call. The mobile phone bill evidence was not therefore of any real assistance in the circumstances but, in Mr Bennett’s case, I accept that the longer call on 22 January, which was just after he had signed the SLA, was likely to be a call in which Mr Bennett told Mr Bunn about his success in obtaining a position at Raymond James, in accordance with Mr Bunn’s request to him to do so.

At the meeting on 26 February, Mr Bunn had completed the HDYH form, answering the question, “How did you hear about Barry Bennett, a Raymond James adviser” with the words “I contacted Barry Bennett when I learned that his firm was being taken over. He told me he was leaving that firm and I decided I wished him to continue as my adviser.” Mr Bunn’s evidence, which I accept, is that the first sentence was in fact incorrect or, as he described it, “loose phrasing”, because he had contacted Mr Bennett only after he had received the letter from Edward Jones informing him that Mr Bennett had left. Mr Bunn’s evidence that he had phoned Mr Bennett on 24 December was not challenged. He rejected the suggestion that Mr Bennett was indicating the answer he should give to this question, as do I.

There is no dispute in the case of Mr Bennett, as in the case of all the clients called on behalf of the other Defendants, that a number of documents recording Mr Bunn’s instructions and also the instructions of his wife, in connection with the transfer to Raymond James, were brought to this meeting and were completed and/or signed by both of them. The details in some of them were completed by Mr Bennett. This was the case in respect of all the clients listed in the Table. Any notes he recorded at these meetings were made on the forms themselves, which have all been disclosed. In the case of Mr and Mrs Bunn, these forms were the stocks and shares ISA Application form, the ISA Consolidation form, the ISAT (investment strategy) form and the client letter authorising transfer.

Nor is there any dispute that these documents contained information that Mr Bennett discussed with Mr and Mrs Bunn at the meeting on 26 February. The ISA Transfer and Account Transfer request forms sent to Towry by Raymond James were both dated 15 March. The funds held by Mr and Mrs Bunn in two, Edward Jones ISA accounts were transferred “in specie” at no charge.

The ISA Application form referred to Mr Bunn having received and read the Raymond James terms of business and his adviser’s schedule of fees and commissions, which it is accepted he was given at this meeting. Whilst Mr Bunn could not recall it I find that, as part of their discussions, Mr Bennett told him that there would be no charge for the transfer of the accounts to Raymond James. Like Mr Bunn, I do not consider it correct to describe this conversation between them, as Mr Tolley suggested, as a “presentation” given by Mr Bennett, but there is no dispute that he gave Mr Bunn information, probably together with a booklet, as to the fees and charges that would apply at Raymond James.

However, whilst Mr Bunn agreed that he would need to accept the fees and to be sure as to the safety of his funds, he stated that he did not give Mr Bennett a “massive inquisition” on this front, and that he worked “…tremendously much on the question of personal relationship. The fact that there’s a massive or small firm behind him doing all of the background work is, of course, important, but…as far as I’m concerned, Barry is my stockbroker and he works for a firm that does all the background work which I find acceptable.” In his letter of 26 March Mr Bunn stated that, had Mr Bennett not found suitable employment, he would have left Edward Jones/Towry and continued to manage his own investments, as he had done before meeting him.

Subsequently, Mr Bennett sent to Mr and Mrs Bunn a “welcome letter”, dated 19 March, which included the following, “ We have agreed in accordance with the Terms of Business an Advisory Portfolio Management Service in line with the Schedule of Fees and Commissions I gave you…I confirm that your aim for your investments is Growth and Income and your attitude to risk for your investments is “Balanced” with a time horizon of 11-15 years.”

It was put to Mr Bunn that Mr Bennett must have explained what this advisory service meant. His response, “If I needed it explaining. And it’s all in the booklet that Raymond James supply to their clients” indicated in my view that Mr Bunn did not pay close attention to this or consider that he was being advised, or needed advice, in the way that was being suggested. This view was strengthened by his evidence that “We’d been through all this only a few months previously or something very similar with Edward Jones”, and that the important thing to him was the personal relationship with the adviser. In most of the time he had worked as a stockbroker he said that there hadn’t been all these forms and “bumph” now required by the legislation, and that “things were far more relaxed and people worked on a sort of basis of honesty and trust.”

On 6 May 2010 Mr Bennett wrote a pro forma “Suitability Letter” to Mr and Mrs Bunn, formally recording the action being taken with regard to moving both their ISA accounts and stating that its purpose was to “clarify your decision as a result of the advice you have received and to reiterate the reasons why this decision is suitable for you.” Suitability letters were sent, where appropriate, to all the clients who asked him to transfer their investments. Such letters were also sent to clients by Pieter Burger and Stuart Hutton. Mr Bennett agreed that this letter, prepared from a generic template, and any notes he had made on it at the meeting, contained a summary of the discussion he had with the clients when he met them and was a formal record of what was agreed.

Whilst I am dealing at this point with the case of Mr Bennett, I have the following general observations about the nature and focus of the cross-examination of each Defendant, which took a similar form in each case and these observations are therefore of general application.

Letters and documents of the kind referred to in the previous paragraphs, which were pro forma in nature and contained similar phrasing in each case, had been sent to, or completed and signed by many of the clients who had requested a transfer of their investments to Raymond James. They were put to all the Defendants and to the clients in cross-examination and their contents explored in considerable detail.

The relevance of all these documents to Towry’s allegations of solicitation against the Defendants was articulated essentially by Mr Anderson, in giving evidence as to his understanding of what took place at these meetings with clients and of what constituted solicitation. I have referred to this evidence earlier on in this judgment. Mr Anderson considered this whole range of documentation to indicate that the Defendants were giving advice to the clients, promoting Raymond James to them and justifying the clients’ reasons for wishing to transfer. He stated that, in his personal opinion, he had seen “considerable evidence of solicitation of the clients and promotion of Raymond James” and referred to being “perfectly satisfied” from these documents that there had been solicitation. He gave me the benefit of his personal opinion on the strengths of Towry’s case in this respect on a number of occasions.

He referred expressly in his witness statement to the suitability letters sent by Mr Bennett, after Towry had commenced these proceedings, which he regarded as “striking in their pro forma nature”. He also considered that they contained information which was inaccurate, incomplete and misleading in a number of respects, that they were “designed to induce clients into transferring their business”, and that they were “a device to transfer to Raymond James.” I understand his reasoning to be that “a suitability letter is advice and can be nothing else in regulatory terms.” For an execution-only transaction the adviser need not justify suitability but he must do so for an advised transaction. Sending a suitability letter, such as the one sent to Mr and Mrs Bunn on 6 May, indicated in his view that the adviser gave advice to the clients and thereby solicited them in breach of his contract. If this were correct it would also amount to a clear breach of the undertaking given by Mr Bennett to the Court in March 2010, on Towry’s application for interim relief.

The other client called on behalf of Mr Bennett was Sylvia Hirst, who was a client he had known for about ten years and who had followed him from Allied Dunbar to Edward Jones. She is a retired deputy head-teacher. Ms Hirst regarded Mr Bennett as a friend and stated, “There was never any question of me going to anyone else but Barry for financial advice, I trust him and consider myself a client of his as opposed to whatever firm he happens to be working for…I trust his advice and have got used to him. He is always straight with me and I am guided by him… I go wherever Barry goes.” She had a number of different types of investments and would discuss every investment she made with him. Her portfolio had grown under his guidance and she described herself as very happy with what he did. The way that their relationship worked was that she tended to ring him when she wanted to see him about something.

Although she recalled speaking to Mr Bennett at some point before Christmas 2009, or during the Christmas period, she stated that she did not hear about the acquisition from him. Nor did he say anything to her about leaving Edward Jones. She did not recall receiving a letter from Edward Jones notifying her of the acquisition. In fact she said she did not realise that things had changed until, in about January 2010, she received a statement of account and found a phone message from Sally Burn-Jones, informing her that she was now her adviser. This, she said, made her “extremely concerned and angry… because Barry has been my adviser for over 10 years and I had no desire whatsoever to change…” She did not return this call because “there was never any question of me remaining at Edward Jones without Barry.”

She therefore rang Mr Bennett and asked him to come and see her, telling him that she wanted to go with him and nobody else. They arranged an appointment at Ms Hirst’s home for 17 February. It was at this point that she understood he had moved to Raymond James, and she stated that “he helped me with the paperwork to achieve that.” By the time he came to see her on the 17 February, she said “…I was ready to transfer anything I had under his guidance.” She also spoke on the phone to Ms Burn Jones at about this time, making it clear to her that she would be transferring her investments to Raymond James.

Ms Hirst was also cross-examined about the various documents which Mr Bennett took to the meeting and which were completed and signed by her on 17 February. There is no dispute that Mr Bennett would have explained the forms and any terms that she did not understand before she signed them, such as transfer “in specie”, or “advisory portfolio service”, which she indicated on the form was the service she wanted. Nor is it disputed that charges would have been discussed, although she could not recall what was said. Her evidence was that she trusted Mr Bennett implicitly over what charges were involved and had “absolute trust” in him that the charges made would be fair and honest. She had no idea what Towry would have charged her and she had no trust in them. I understood her evidence to mean that it did not really matter to her what the charges would have been and that the charges referred to by Mr Bennett played no part in her decision-making.

The pro forma suitability letter sent to Ms Hirst was also dated 6 May, and she agreed that it recorded the meeting they had had on the 17 February. Asked about the reasons given in that letter for requesting the transfer she agreed that she wanted nothing to do with discretionary management by a company she had no trust in. Rejecting the suggestion that they were Mr Bennett’s reasons, not hers, she stated, “I had no wish to stay with them whatsoever, under any circumstances.”

Ms Hirst also filled in the HDYH form on 17 February, stating, “I have known Barry Bennett for 8 years approximately and he was previously my adviser. I rang him after Edward Jones contacted me to change my adviser to Sally Burn-Jones. This I did not want to do and I stated that I wished to stay with Barry Bennett.” She strongly denied being encouraged by Mr Bennett to answer the question in this way and I accept her evidence on this point. I also accept her evidence that she was very angry to suddenly receive statements from Towry, with no previous communication, and to be told that Ms Burn-Jones was her new adviser. She expressed her views in forthright terms, “I knew nothing about this woman. I had never met her. I had no wish to meet her. And I thought it was an insult.”

Sally Burn-Jones had been told in December, following Mr Bennett’s resignation, that she was to be responsible for contacting all his clients. The letter to clients from Towry, dated 22 December, informed them that he had left and that she was their new adviser, although it seems that Ms Hirst did not receive this letter. Ms Burn-Jones was told to speak to as many of these clients as possible, concentrating on those who held the most high value investments. In two rounds, during December and January, I accept that Ms Burn-Jones made phone calls or left messages for all the clients concerned.

Her evidence was that, whilst both her own clients and Barry Bennett’s clients were initially very interested in Towry’s IIM service, there was then a “marked change” in attitude on the part of Mr Bennett’s clients. By the time she met them on a second occasion to review her recommendations a number of them had “lost all interest” in investing through Towry. The inference I am invited to draw from this evidence is that Mr Bennett had by then encouraged or persuaded his clients to transfer to Raymond James.

For a number of reasons, however, I do not accept Ms Burn-Jones’ evidence as reliable on this point. First, there are no notes of any meetings or conversations she had with Mr Bennett’s clients and no other evidence confirming this to be the case. Secondly, for the reasons already given above when considering Towry’s communication process with clients generally, this was a time of acute pressure for advisers when there must have been many conversations taking place at different times with both her clients and Mr Bennett’s clients. These conversations were mostly on the phone, Ms Burn-Jones stating that she probably had only five meetings with Mr Bennett’s clients, which in my view makes an accurate assessment of a marked change in attitude by one set of clients inherently improbable.

Thirdly, and most significantly, she identified Ms Hirst as an example of this change in attitude. Not only did she accept that she had never met Ms Hirst, but she referred to having had only one substantive conversation with her on the phone, in February, when Towry’s recommendations were discussed. It is correct that, on this occasion, Ms Hirst told her she was not interested in Towry and would be transferring her investments to Raymond James. I am entirely satisfied, however, having heard Ms Hirst’s evidence, that this did not represent any change of attitude by Ms Hirst, whose decision throughout was that she would stay with Mr Bennett wherever he went. I find that she had never said anything to the contrary, or to indicate initial interest in the IIM service, to Ms Burn-Jones at any stage.

Ms Burn-Jones also referred in this respect to having been informed by other clients that Mr Bennett had spoken to them after he had left Towry. She named in particular Garry Elliott, who was interested in meeting her to discuss the Towry proposition when she first spoke to him and agreed to meet her. When she arrived however “he told me he was no longer interested in Towry and that he was transferring his account to Barry Bennett.” She also named William Skinner as a client who told her “that Barry Bennett had telephoned him”. Both clients subsequently transferred their investments to Raymond James.

The inference I am asked to draw from this evidence is the same, but Mr Elliott and Mr Skinner were called as two of the four “hearsay witnesses” in this case and I therefore had the advantage of hearing from them in addition.

Mr Skinner denied telling Ms Burn-Jones that Mr Bennett had telephoned him. His evidence was that he had no dealings at all with Mr Bennett until March 2010. He had last spoken to him just after the news of the acquisition, when he stated that Mr Bennett “was as shocked as I was…and he wasn’t sure what was going to happen…whether he was going to remain in employment or not.” He received the letter of 22 December from Towry, telling him that Mr Bennett had left and he then waited to meet up with Ms Burn-Jones to see what she had to offer. He saw Ms Burn-Jones in January, after she rang him to introduce herself. However, he did not like what she had to offer and he decided to move his assets. He telephoned Mr Bennett in March and asked him if he had now found employment. Mr Bennett told him that he was now with Raymond James. He then asked Mr Bennett to arrange the transfer of his funds from Towry. He had not spoken to Mr Bennett between December and March.

Mr Elliott’s evidence was that he met Ms Burn-Jones and sat through her presentation, after which he decided to think about it. Having done so, he decided that what Towry had to offer was not really what he wanted and that he was more interested in having some control over his pension. At that point, some time in March, he contacted Mr Bennett to arrange an appointment.

Acknowledging the unusual circumstances in which the evidence of Mr Elliott and Mr Skinner was given, and making allowance for the fact that Mr Tolley could not challenge it, I find that all the evidence I heard on this topic renders Ms Burn-Jones’ evidence unreliable. For these reasons I do not accept her evidence, to the same effect, concerning the client Vernon Lewis, from whom I did not hear because he had recently been injured in a fall and could not attend the trial. Whatever Ms Burn-Jones’ impression may have been, as a result of talking to some of the clients whose adviser had been Mr Bennett, I am not persuaded on the evidence that their lack of interest in the Towry proposition and their decision to transfer their assets from Towry to Raymond James was the result of any change of heart due to persuasion or encouragement of them to do so by Mr Bennett.

I have considered carefully, but shall not set out here the evidence given by Mr Bennett as to the circumstances in which all the other clients listed in the Table contacted him and asked him to come and see them and to continue to act for them, together with the transfer and investment documentation and HDYH forms identified. I have referred already to his evidence concerning the 28 households on this list. A clear pattern emerges. Between approximately March and June 2010, his evidence is that all these clients sought him out, in various ways, and asked him to continue to be their adviser. All of them completed a HDYH form to this effect, often identifying the importance of the relationship they had with him as their adviser stating, in one case, that he wanted “continuity of personal contact”. Some clients told him they had had no contact from anyone at Towry, some had been contacted and said they had put Towry off, or that they had declined Towry’s proposal to move into their IIM. In a number of cases Mr Bennett’s unchallenged evidence was that there were severe delays in completing the transfers once the requests were made. Delays in transferring the investments were criticised by a number of the clients called in this case.

In his opening submissions Mr Tolley correctly submitted that each case will turn on its own facts and that much will depend upon the circumstances in which and the reasons why each client contacted the adviser. I acknowledge that all these clients were not called on Mr Bennett’s behalf. Nor did the other Defendants call all the clients on the Table concerning them, each calling only two clients to give evidence on their behalf. However, calling all the clients would not have been proportionate, or realistic, in a case involving seven individual Defendants and over three hundred clients in total.

The Court must proceed, in the case of each Defendant, on the basis of the evidence that was called. The suggestion that the clients who were called on behalf of the Defendants were carefully selected goes nowhere if the evidence they gave is found to be credible and reliable, as I find it is in Mr Bennett’s case, having heard their evidence, thoroughly tested in cross-examination, and having regard to the evidence in the case as a whole. I reject unhesitatingly the suggestion that Mr Bunn or Ms Hirst were partisan, in the sense that their evidence as to what happened was unreliable because it was tainted by a desire to “stand by” Mr Bennett. Neither witness was seeking in any way to mislead the Court and this suggestion, which was not put to either of them, does not withstand scrutiny. On the contrary I find that each was giving a full, frank and entirely honest account of their reasons for deciding to request a transfer of their investments.

Nor does there appear to me to be any proper basis for concluding that any other client investor, if called, would not have given evidence consistent with the account given by Mr Bennett in his statement concerning the circumstances in which they decided to transfer. As Mr Quinn pointed out it was open to Towry to call any client listed in the Table. Whilst first contact is not determinative of solicitation, how that contact came to be made and the circumstances in which it was made are clearly relevant factors. On the facts of this case I do not regard it as wholly implausible either that the clients who requested to transfer all sought Mr Bennett out, rather than the other way around, or that they were all anxious for him to continue to act as their adviser. Further, the hearsay witnesses who were called were not selected by Mr Bennett but, for the reasons I have given, the evidence of Mr Elliott and Mr Skinner did not advance Towry’s case against him.

Much of the cross-examination of Mr Bennett focused on the terms of the suitability letters he sent to clients after the meetings. Their striking similarity, in particular as to the clients’ reasons for the transfer, which Mr Bennett accepted he had formulated himself to some extent, owes much, in my view, to the template and pro forma nature of the document prepared and the obligation upon the adviser to send such a letter. On all the evidence before me, however, I find on balance that the decision of the clients previously advised by Mr Bennett to transfer their investments had already been made by the time they arrived at this meeting.

I find also that it was a decision that the clients had made by themselves, without any element of persuasion by Mr Bennett, mainly because of their wish for him to continue to act as their adviser and the importance attached to the continuity of that personal relationship. Any inaccuracies concerning Towry, or concerning their proposition following the acquisition, which were contained in the reasons for transfer in the suitability letters, as I find, played no part whatsoever in the clients’ decision to transfer. Mr Bunn’s evidence was unequivocal. None of those reasons influenced his decision in any way, his decision to transfer being made on the basis that he wished to retain Mr Bennett to act as his adviser.

I therefore reject the submission that the evidence in Mr Bennett’s case shows him to have exercised a material degree of persuasion by means of giving presentations to the clients, with a view to those clients transferring their business to Raymond James. Making particular recommendations, explaining fees and costs, or giving information or advice as to how to give effect to their decision to transfer and move forward, after those clients had already made their decision to stay with Mr Bennett and to do what was necessary to bring that about, does not in my judgment evidence solicitation. I am not satisfied to the requisite standard that Mr Bennett solicited any client in breach of Clause 16.4.1 of his contract.

In coming to this conclusion in Mr Bennett’s case I emphasise that I have taken the evidence as a whole into account, together with the detailed submissions made on Towry’s behalf, including the “common themes” relied upon in relation to the contents of the transfer and investment documentation in the case of all the individual Defendants and the clients called.

Mr Burger was approached by several, financial services companies as soon as news of the acquisition broke. On 26 October, after hearing Mr Fisher’s presentation at the Bath meeting, he sent an email to Raymond James asking if there were any vacancies. Their name had been mentioned at this meeting and he did some research, which revealed that they were one of Edward Jones’ competitors in the US. The description of their business model seemed to match that of Edward Jones. Meanwhile, he was arranging meetings with other companies and recruitment agencies for various dates in November and December. Someone from 2Plan met him at his home on 3 December.

Of the other Defendants, he had known Barry Bennett since he joined Edward Jones. He met Stuart Hutton as a result of the acquisition and the process which followed it. He had not met James Chandler, Wayne Hayhurst, Tom Spain or Tracey Simpson until this case.

On 4 November Mr Burger, together with Darren Rowe and Alan Stone, travelled to London for a first meeting with Jason Cherriman. This was the first time that Mr Cherriman had spoken to him because Tamsin Potter made the appointment. At this meeting there was a general discussion about the Raymond James proposition and Mr Burger became aware that many Edward Jones advisers were applying to Raymond James. I accept Mr Cherriman’s evidence that he raised the legal implications of the covenants in his contract at this meeting and advised him that he must seek his own legal advice. On 12 November Mr Burger was sent an email referring to the names of various firms of solicitors who would be able to provide advice.

He was sent an AQ, which he completed on 11 November, but many weeks went by before he heard from Raymond James again. Mr Cherriman had told him that his track record was not in line with their requirements and questioned whether it would be the right move for him. However, he referred to Mr Burger as being “incredibly keen” and as putting across a “very strong case” so that Raymond James decided to continue with the recruitment process. In the end it came down to Mr Hazelton’s assessment of him.

By 25 November, when the Towry offers were made, Mr Burger had a shortlist of companies that he liked but he had received no offers of employment. The week after he resigned he contacted Positive Solutions and agreed to meet them with a view to exploring an opportunity there. However, he was then invited to an AQ meeting at Raymond James, on 18 December, so he cancelled the Positive Solutions meeting.

At this AQ meeting it was made clear to him that he had to comply with his restrictive covenants, Mr Hazelton going through the script in the usual way, and he was told that he should obtain his own legal advice. Mr Hazelton questioned him closely on how he would build new business. In describing his marketing, networking and professional connections, Mr Burger stated that he told him he had started to receive calls from some of his former clients.

In his AQ he had stated that he had already told most of his clients that, if they should choose to invest with him in the future, there was likely to be a 0.5 to 1.0% management fee. This however was written at a time when Mr Burger was still considering whether to stay with Towry and had made no decision to leave. I accept his evidence that, at this stage, he was referring only to the fact that he had spoken in general terms to clients about the new world on the horizon for the industry, the FSA and the inevitability of fees being charged in the future.

A very brief handwritten note made by Mr Cherriman, probably at this meeting, indicated that Mr Burger had stated, at some point, that “Many people know how to find him”. There is no dispute that this was said. I find that Mr Burger was quite openly explaining the nature of his work and presence in the local community and referring to the fact that he was well known in the area, so that clients would know where to find him.

Having met him, Mr Hazelton considered Mr Burger’s background to be such that he was likely to be able to build a business successfully at Raymond James, even though the asset and revenue levels on his Performance Summary were lower than they were looking for. Like Mr Bennett he had a background in finance, having been at Lloyds TSB, and he had built businesses successfully at both Lloyds and Edward Jones. Mr Cherriman also described him as a “reasonably hard negotiator”. Mr Burger was therefore invited to sit the knowledge and role-play assessments on 4 and 13 January respectively, which he passed. On 19 January he entered into the SLA with Raymond James. Like Mr Bennett and Mr Hutton, Mr Burger did not qualify for the higher transition assistance payments received by other Defendants.

Following Raymond James’ advice, Mr Burger instructed the solicitors Scott Rowe to advise him on his contract.

A number of the clients he advised whilst at Edward Jones had followed Mr Burger to that firm from Lloyds TSB, whose office was just around the corner from the Edward Jones office, or from Pearl Assurance where he had worked before then. After Mr Burger resigned, Towry wrote to his clients on 17 December informing them that he had left and advising them that Alan Stone was now their new adviser. They were also told that the branch office administrator would remain at the Honiton branch in the High Street to deal with any queries. Mr Burger received a number of calls from clients on his mobile and at his home asking him how he was and what was happening. Clients who called into the office to ask about him were also told that they could call him on his mobile and did so.

I find that he told the clients who contacted him at this time that he was on garden leave until January, that he was speaking to a number of companies at this time and was not currently registered to advise, and that their new adviser was Alan Stone, who was a “nice guy”. He told them that he was not allowed to contact them because of the restrictions in his contract, and that they would have to contact him if they wished to continue to deal with him. He did not expect to be operational until February at the earliest and he did not know what he would be doing.

Mr Burger stated that the response of most of these clients was to ask him to contact them once he knew what he was doing or once he was up and running. Between leaving Edward Jones and successfully obtaining work with Raymond James he stated that some clients called him on a number of occasions to see what was happening because they had not heard from him. I accept this evidence. I find that, when he left, he removed all the phone numbers relating to Edward Jones clients from his mobile, and that he did not contact the clients himself at any stage unless they expressly requested it.

In January the Honiton office closed, at first temporarily when the administrator was away and then permanently, at the end of the month. A note was placed on the door telling people to contact Mr Stone at the Exeter office if they needed anything. Post began to mount up behind the door. Clients saw this and called Mr Burger to express their concerns. As the letterbox was close to the ground one client, at least, was anxious that others might get hold of confidential, financial information included in the pile of unopened post.

Mr Stone, working from the Exeter office some sixteen miles away, gave evidence that he believed he had managed to speak on the telephone to all of Mr Burger’s clients by mid-February at the latest, and I accept that he probably managed to speak once on the phone to many of them. However, as will become apparent, one of these clients, Margaret Maltman, who gave evidence at trial, stated that she was not contacted by anyone from Towry during this period. Other clients, from whom I did not hear, also told Mr Burger that no-one had contacted them. Mr Stone stated that it became clear, by mid to late January, that he would not have time to service all Mr Burger’s clients as well as his own and the majority of them were reallocated at his request. A number were reallocated to Mike Clitheroe and Mr Burger stated that others were reallocated to Colin Ransom.

Mr Burger denied all the allegations of wrongful conduct, maintaining that he followed the legal advice he received and stuck to the rules of his contract throughout the entire process. At the time he left he had approximately 220 clients in 130 households. In relation to the 42 households, comprising those clients who appear in the Table, Mr Burger set out in detail in his witness statement the circumstances in which they came to make contact with him and to tell him that they wished to transfer their investments to Raymond James.

He described the process that he put in place in respect of all new clients, including those who were former clients at Edward Jones and who asked to retain him as their adviser. After the first phone call a meeting would be arranged. Two meetings would usually be held, first for an initial fact find and then for a discussion of financial planning needs. However, if a client already had an account with him or only had investment needs there was no need to follow the financial planning process. For a new client wishing, for example, to buy some BP shares or to invest a lump sum he would provide him with the Terms of Business, and the Schedule of Fees. He would then complete an ISAT (investment strategy) form and, if necessary, a basic personal financial questionnaire, and then the relevant ISA or deal account form. In accordance with Raymond James’ requirements clients also completed a HDYH form.

On behalf of Mr Burger, the client Margaret Maltman was called to give evidence. By agreement I also read the statement of the client David Lobley who was, in the event, unable to attend the trial.

Ms Maltman, who is now retired, used to work at the Foreign Office. Mr Burger had been her adviser since 2003, when he was at Lloyds TSB, and she followed him to Edward Jones, where she held stocks, shares, corporate bonds, investment trusts and ISAs. She described Mr Burger as a close friend, as well as her adviser, and she is also a friend of his family. He had helped her in relation to her husband’s financial affairs and proceedings before the Court of Protection and she stated that she trusted him totally. Of particular importance to Ms Maltman was the fact that she was able to drop into the office in Honiton to speak to him, which she did regularly.

She first learned of the acquisition when she received the letters of 23 October from Edward Jones and Towry. At this stage Mr Burger told her only that Edward Jones was being taken over. He said nothing about leaving or about looking at other options. Her immediate reaction was that she would look into it, but that she would go with Mr Burger if he ever went anywhere else.

She received a letter dated 17 December, telling her that Mr Burger had left, and she had also bumped into his secretary in December, who told her that he had resigned. Ms Maltman understood about contractual restrictions in relation to former clients and was herself aware that he would not be able to contact her professionally. He did not tell her this. There were health problems in the family at this time and she did not contact him immediately concerning professional matters. Mr Burger’s mobile phone bill shows that he called her on 22 December and that they had a 14 minute discussion, which she stated was about her niece who had just had a heart bypass. She was sure that Mr Burger himself said nothing to her at this time about having left Edward Jones and they did not discuss it at all. I accept that evidence.

She then called him, on about 8 January, and asked him what was happening. He told her that he had resigned and was looking into what to do. She confirmed to him that “wherever he went I would go” and I find that she asked him to call her when he was ready. When Ms Maltman completed the HDYH form she wrote “I called Pieter at his home and asked him to come and see me.” Once he had set up at Raymond James, “we started the ball rolling, at my request, for me to transfer over to them in about February/March after I had asked him to visit me on 24 February.” I find that Mr Burger called her, at her request, to tell her that he was now at Raymond James and that a meeting was arranged for 24 February.

Ms Maltman was cross-examined about the meeting on 24 February and the relevant application forms and documents which Mr Burger brought with him for her to complete or sign, which included documents of the same type as those signed by Mr Bennett’s clients, (referred to collectively hereafter as “investment documents”). It is accepted that Mr Burger completed some details on some of them himself, and Ms Maltman referred to having trouble writing. It is also accepted that Mr Burger gave her the Terms of Business and the Schedule of Fees that would apply, and that he explained them to her. She agreed that he also explained the various service levels on the ISA Application form and that she requested the advisory portfolio service.

She agreed that the suitability letter subsequently sent to her by Mr Burger on 12 April was a “proper record” of their discussions at this meeting. This, pro forma letter was written in effectively the same terms as the suitability letters sent to Mr Bennett’s clients, referring to “advice” that Mr Burger gave, and to “recommendations” he made as to transfer. However, the following questions and answers were illuminating:

“Q. Did you understand that Mr Burger had made a recommendation that you should transfer your investments to Raymond James?

A. No, he hadn’t made any recommendations at all. It was my choice.

Q. So, what was Mr Burger’s investment advice in relation to this?

A. We were carrying on as we had done before.”

At the meeting on 24 February, Ms Maltman signed a letter to Towry of that date, requesting that they transfer all her stock and cash in specie to Raymond James. She was asked if she had understood that she could have continued to hold her assets in exactly the same way on the Edward Jones platform and to continue to receive advice from Mr Burger whilst they were held there. She had understood this, but she stated that she did not want to, that it was her choice not to and that she “wanted to go with Pieter.” Mr Quinn pointed out that there was no suggestion in the letter of 17 December that she could have continued to use Mr Burger as her adviser if she left her investments on the Edward Jones/Towry platform. I have also referred previously to the evidence given in this respect by Mr Hazelton, which I accept, to the effect that Raymond James would not have regarded this course as either practical or appropriate.

This remained Ms Maltman’s position throughout her evidence. When she was asked if she had understood that she would have ended up incurring a higher cost by transferring her assets, her response was, “I didn’t stop to think about it, because I was going to go with Pieter anyway.” Further questions as to whether or not she was aware that she was going to be charged transaction costs for the transfer met with the response “I don’t think I bothered about it at that stage.” She could not remember what he had said about the payment of an annual advisory fee for the future.

During these questions it also emerged that Ms Maltman had carried out some research of her own into Towry, because she gave this as another reason for not wanting to continue to hold her assets on the EdwardJones/Towry platform. She stated that she had “checked out Towry on the internet” and that what she had read about them “wasn’t very encouraging.” Further, although she was informed by Towry that she had a new adviser, in fact no-one had ever contacted her. She was also notified, by letter of 12 February, that the Honiton office had closed permanently and that her file had been transferred to an office in Exeter, about sixteen miles away.

Notwithstanding the views she expressed about Towry, I find, on the evidence, that the real reason for Ms Maltman deciding to transfer her investments to Raymond James was that Mr Burger was working there and that she wanted him to continue to be her adviser. Further, I find that this was a decision which she arrived at entirely on her own and without any element of persuasion by Mr Burger.

In his witness statement David Lobley stated that his investments were stocks and shares, with about 85% in equities, 7.5% in bonds and the rest in managed funds. He met Mr Burger in 2007, when he was looking for a new broker and wanted to switch to someone local. He regarded Mr Burger as knowledgeable and he liked the fact that Edward Jones had a local office.

He received the letters about the acquisition in October, but heard nothing from Mr Burger himself about this. Since he was told that it would be business as usual he was not initially concerned, but “alarm bells started to ring” when he received a further letter from Towry referring to an “investment service.” His new adviser was Mike Clitheroe and he spoke to Mr Clitheroe on several occasions about the Towry proposition but decided that this was not the kind of brokerage service he needed. For various reasons set out in his statement but which it is unnecessary for me to refer to, in particular since Mr Tolley did not have the opportunity to cross-examine this witness, he became angry with the service being offered and provided by Towry at this time and he “started to look around” in about March. He needed to trade and believed that Towry did not offer an efficient or effective trading desk.

He had discovered in December that Mr Burger had left, when he rang his office and was told this by the administrator. He then rang Mr Burger because he wanted to make an investment before the end of the year, but at that stage Mr Burger “was not in a position to say much on the work front”. Subsequently, when he began to look around in February or March, Mr Lobley contacted Mr Burger again.

I find that they met on 4 March, as Mr Burger stated, and there is no dispute that Mr Burger explained the Raymond James proposition, together with costs and charges, at that meeting and that the various investment documents were completed and signed. Mr Lobley signed the HDYH form describing Mr Burger as a personal friend and stating that “I called him on his mobile to discuss my investments” which I find was an accurate summary of what had happened. Mr Lobley described “being on the same wavelength” as Mr Burger, whom he knew and trusted. He described himself as someone who would decide for himself where to place his business and as liking to control his own destiny. He liked the benefit of a broker’s advice and was “prepared to pay a small fee for that.” The pro forma, suitability letter sent to him was dated 1 July 2010.

I acknowledge that Mr Lobley’s evidence was not tested in cross-examination and I have regard to that in assessing the weight to be given to it. This witness stated that there were two reasons for transferring his assets to Raymond James, first that Pieter Burger was working for them and they offered the kind of service he wanted, but also, “most importantly they are not Towry.” Whilst no doubt Mr Tolley would have wished to challenge the basis for his criticisms of Towry, and I make no finding I respect of them, it is clear that Mr Lobley held strong views in this respect. In his contemporaneous letter of complaint about the service Towry had offered him, dated 17 May 2010, he referred to being “appalled at the all round lack of integrity and inept central management.” I find that these views played an important part in his decision to transfer his investments away from Towry at this time and that this decision was arrived at without any element of persuasion by Mr Burger.

I shall not set out here the detailed account given in Mr Burger’s statement as to the circumstances in which, between February and May all the clients in the Table came to request a transfer of their investments. Notwithstanding the wide range of circumstances, a number of common themes emerge. He had known many of them for some time and a number of them were personal friends. All of them contacted him and asked him to contact them when he was back in business, or asked him to come and assist them and to continue to look after their money, or told him that they wanted to stay with him. Some of them had not had any contact at all from Towry. Others had seen or spoken to a Towry wealth adviser before contacting Mr Burger and did not like or want the service that was being offered to them. In a couple of cases (Ms Leddra and Ms Mitchell) the clients had already signed paperwork to transfer their funds to the IIM before contacting Mr Burger to say they had changed their mind, asking him to continue to advise them. All of these clients completed the HDYH form and the relevant investment documents.

Like Ms Burn-Jones, Mr Stone gave evidence that he had noted a change in attitude by Mr Burger’s clients, in that they became “uninterested” after showing an initially positive response to the Towry proposition. Given the pressures that Mr Stone was under at this time, and the large number of client reallocations made, at his request, I am not satisfied on the evidence that the conversations he had, mostly on the telephone, with those clients with whom he had more than one conversation, could justify his conclusion that “it was clear from the tone of the conversations that clients who had previously been very positive about the Towry proposition had been persuaded to continue with their investments with another financial adviser.” I do accept that some of the clients may initially have expressed interest and then changed their minds, but I am not satisfied that Mr Stone was in a position to say that any persuasion had been applied to them.

I find that the clients in the Table had all contacted Mr Burger and had all asked him to transfer their investments to Raymond James. Am I satisfied that these clients were solicited by Mr Burger, in breach of his contract? On all the evidence in this case I am not. I found the evidence of Ms Maltman compelling. In my view Mr Burger responded thoughtfully and consistently to sustained cross-examination. Many of the observations I made when considering the same issues raised by Towry in Mr Bennett’s case seem to me to apply with equal force in relation to Mr Burger. Although each case must be, and has been considered separately, the issues raised are common to both cases, and indeed to the cases of all the individual Defendants. I refer in particular, in this respect, to Mr Anderson’s views as to the terms of the suitability letters, about which Mr Burger was also cross-examined closely, to the contents of the investment documents and to my observations at paragraphs 630 – 636 above, concerning the evidence relating to all the clients listed in the Table.

I find, in Mr Burger’s case, that advice was given and recommendations made, as recorded in the investment documents and suitability letters, only where the relevant clients had already made a decision to stay with Mr Burger and to transfer their investments so that their decision could be brought into effect. I am not satisfied on all the evidence in this case that their decision was the result of any element of persuasion on Mr Burger’s part. I find that he was not therefore in breach of Clause 16.4.1 of his contract.

Mr Chandler first met Jason Cherriman at a meeting on 6 November, attended by four other advisers, including Wayne Hayhurst. He had heard of Raymond James through colleagues and believed that there were a number of similarities with the Edward Jones way of working, which appealed to him. He made inquiries and Tamsin Potter arranged the meeting.

Before then, amongst the Defendants he knew Wayne Hayhurst well and they had spoken regularly both before and after the acquisition, when they both discussed their concerns and their options. They were both looking at other organisations, as well as Raymond James. He had seen Mr Burger once before, at a training course. He had met Tom Spain whilst travelling to New York, for Edward Jones, and they had spoken to each other occasionally after that, having more regular contact after the acquisition, when they spoke about Towry and about other options, including Raymond James. He had met Tracey Simpson on a number of occasions but never spoke to her about Towry or his future plans. He had never met Barry Bennett or Stuart Hutton before they joined Raymond James.

At this meeting he recalled Mr Cherriman telling them that their solicitors had looked at the advisers’ contracts, that they should all get independent legal advice, and that they should all be very careful as to how they conducted themselves if they left Edward Jones. I find that Mr Cherriman went through the same issues that he covered at other meetings. Mr Chandler stated that there was no discussion about client banks, other than the general information given to them that Raymond James were interested in advisers who had proved that they could build a business of over £10 million. The next day Mr Chandler was sent an AQ, which he completed on 8 November and emailed back. Tamsin Potter sent him a list of law firms who could provide the relevant legal advice. It appears that the other advisers at this meeting, apart from Mr Hayhurst, decided to go elsewhere, eventually joining St James’ Place.

In November Mr Chandler sought legal advice from Russell Jones & Walker. The advice he received included guidance on what could and could not be said to clients, and he understood solicitation to be “not just about seeking out clients but...also saying certain things whilst still employed and preparing to compete against your employer for the eventuality you might leave.” In any discussions with clients before leaving Towry he adhered closely to a “script”, in which he told them he could not say that he would definitely stay with Towry because he did not yet know enough about their investment proposition. He also stressed that he had restrictive covenants, which he took very seriously, and that, if he did leave, he would be prohibited from contacting them. He said nothing to suggest that clients should call him if he left.

On 17 November Mr Chandler and Mr Hayhurst met David Hazelton at the AQ meeting, where Mr Hazelton first went through the script concerning their restrictive covenants, emphasising the need to comply with them and the need to obtain legal advice. His brief, handwritten notes relating to this meeting contained a list of subjects headed “fundamentals”, including the words “segmentation”, “packaging and pricing services” and “convert existing clients”, which Mr Tolley drew attention to in cross-examination. Mr Tolley suggested, referring to that last phrase, that Mr Hazelton was emphasising to the advisers, amongst other things, the importance of them persuading their existing clients to move their business and assets across to Raymond James.

Whilst Mr Hazelton strongly denied this, no-one at that meeting was able satisfactorily to recall, from this note, what may have been said at this point, or by whom, or what it may have meant. Mr Hazelton suggested that the advisers may have been asking about the process involved if any Edward Jones clients decided that they wanted their investments to be transferred. On the other hand, from its appearance and position at the head of the document, it appears more likely to be a list of issues that Mr Hazelton was himself wanting to raise with the advisers in the meeting. There is, however, nothing in any of the notes that follow it to indicate that existing clients were ever discussed.

I consider this note to be of no evidential value in the circumstances. It is impossible to determine who said what and to draw any conclusions from the use of this phrase. In any event I reject, as inherently improbable, the suggestion that, within a short time of taking the advisers through the script and emphasising the importance of them adhering to their restrictive covenants, Mr Hazelton would have been encouraging them to break them.

Mr Cherriman described Mr Chandler as clearly very successful, and as one of the advisers they knew they wanted from the outset. Mr Hazelton agreed that his Performance Summary showed that he had the ability to build a business quickly and that, having met him, he was someone they “definitely wanted”. He assessed Mr Chandler as someone who was determined but also “quite conservative”, in the sense that he was not the sort of man to take risks. That was, in my view, a shrewd observation. In various emails sent to Mr Cherriman, before he moved to Raymond James, Mr Chandler asked a number of detailed questions about features of the business model at Raymond James or about the fees and costs, which showed him to be proceeding cautiously and thinking carefully before pursuing his application. He referred in one such email, sent on 10 December, to being “...a lot more paranoid after dealing with Edward Jones.”

Even though Mr Chandler was an adviser that Raymond James definitely wanted, he still had to get through the second stage of the process. He attended the knowledge assessment on 4 December and the role-play assessment on 5 January, both of which he passed. He signed the SLA on 3 February.

On 5 January Mr Cherriman had sent an email to Mr Chandler, Mr Spain and Mr Hayhurst concerning charging structures and an approach to charging at Raymond James, suggesting the possibility of a common approach and of no initial fee being levied for “any Edward Jones clients that come across”. He asked for feedback on his suggestions. Mr Chandler discussed this with the other advisers and responded on 7 January. Mr Tolley places reliance on some of the comments made by Mr Chandler in this email, in relation to the case against all three advisers and Raymond James. He pointed out that neither Mr Cherriman nor Mr Hazelton raised any concerns about the comments made by Mr Chandler in his response.

Agreeing with Mr Cherriman’s proposals in a number of respects Mr Chandler referred to various charging structures “…that would give us the best chance of retaining our important clients in the short term.” He continued, “Also I was informed by Anna Pollins that the charging structures could be changed in the future, therefore if we needed to adapt some for RDR we could, but at least we could have the conversation with clients. If we make it too difficult for ourselves now there will be no conversation to have, the clients could already have been lost….we need a default option or last choice option to keep our existing client bank in the short-term….Please bear in mind that without retaining the bulk of our best clients we do not have much of a business to build on….I am sure we will learn an awful lot of new ideas from you and even probably change our target client, type of business etc. but this is where we are at present and we need as much help retaining our existing clients as possible.”

Mr Cherriman stated that he raised no concerns about these comments because he regarded it as entirely normal for the advisers to anticipate, as was the Defendants’ case, that clients would want to stay with them, “We would assume that some clients would indeed decide to move with their advisers, irrespective of what restrictive covenants exist. If they’re a good financial adviser and they’ve built up a great deal of trust with their clients and their clients trust them implicitly, see them as the centre of their community, the person they can go to for their financial advice, then there’s an assumption that there will be clients that will move. I won’t have read too much into this….”

Mr Hazelton had a similar reaction, describing the substance of this email in his reply as a “well thought through response”. He considered that it was. The Edward Jones charging structure was completely different from that at Raymond James and, “…we felt that we needed to give them some help and support on how to present our SOFAC…these advisers hadn’t much experience of developing their own charging structure, we gave them some input into that…they had made a decision that they didn’t want to work with Towry. They knew that they had strong relationships with their clients…we looked at these guys and said: we understand the way they work. They imbed themselves in their local community. They have very strong relationships with their clients. They’re known locally. They have a local office. There’s a very strong local representation. If that’s removed from those clients, is there a chance that they will want to deal with their former adviser? I think there’s a decent chance that they would.”

The purpose of this series of email exchanges, as Mr Hazelton explained, was to enable the advisers to create an attractive charging structure, and to be skilled in doing so for all clients, not just any clients who might decide that they wanted to transfer their assets from Edward Jones. I accept that evidence. I also accept Mr Chandler’s evidence that, in his response, he was doing no more than providing feedback on the points being made, and doing so on the basis that the advisers should be able to present an attractive charging structure both to new clients and to clients who had decided for themselves that they wished to retain him as their adviser and to transfer their investments. I arrive at that conclusion based on all the evidence in this case and, in particular what I find actually happened in relation to the contact that did take place between Mr Chandler and those clients who asked to transfer their assets.

At this point, I accept that Mr Chandler, Mr Hayhurst and Mr Spain, all of whom knew each other, were discussing their options together generally. Mr Hayhurst’s reference, in an email to Mr Cherriman, to “planning” and “working as a group” was a reference to the joint discussions they were all involved in at this time. They were also discussing the various fee structures that could arise at Raymond James and I find that, in January, they agreed the SOFAC they would all use. I find nothing sinister in that, however. As Mr Cherriman observed, “…they were coming from a similar background. They’d worked at the same organization. They’d had experience of charging their clients in a certain way. And because of the industry requirements they were going to have to fundamentally change the way that they charged clients on an ongoing basis. And we had suggested, perhaps, how they could make that transition.” He did not consider it unusual that they had discussed these issues together in this way. Nor do I.

Denying all the allegations against him, Mr Chandler stated that he complied with his restrictive covenants in full. In the early days after the acquisition he was giving clients the message that he had been told to, namely that nothing would change. In an email sent on 2 November to the client, Tony Beharrell, who had raised a query about the acquisition, Mr Chandler had said, about Towry, that “they do seem a very good company and have a good reputation”, and had told him that “as a client I don’t think you will see too much change other than a change of name on the statement at this stage…” His evidence was that this is what he was telling his clients generally at this stage. I accept that evidence.

After he left, whilst he did not contact any client himself, clients continued to contact him. They still had, or could easily find his contact details, and he would also bump into clients when shopping or jogging in the area, or in pubs and restaurants. Whilst he was on garden leave he gave a standard response to any client, in accordance with the legal advice he had received, that he could not tell them what he was going to do at this time. If they asked him when he could tell them, he said “after 3 February”. He also told clients that, if they had any questions relating to their investments, they should direct them to the Edward Jones office in Swanland.

After his garden leave ended, again in accordance with the legal advice he received, he was very careful not to say anything derogatory about Towry to any client and would tell them, “I made a decision not to stay…as it wasn’t right for my career or my family.”

Mr Chandler stated that there were various reasons why clients contacted him after he had left. First, some of them had received no contact at all from Towry between the letters sent out on 23 October and the end of January. A number of them had not received written notification of Mr Chandler’s departure and were calling the office and being told by the administrator that he had left. Others had left messages at the office, but no-one was getting back to them. Later on, some clients saw that the administrator had left and the office had closed. Some had seen negative coverage about Towry in the media. Other clients had had meetings, sometimes two or three meetings, with Towry advisers and had decided that the IIM proposition was not for them. Most of the clients who contacted him were those with over £100,000 invested, with whom he had stronger relationships, and with whom Towry had already been in contact as a priority.

Mr Chandler’s evidence was that all the clients listed in the Table decided that they wanted him to continue to be their adviser and asked him to transfer their assets to Raymond James. When they had contacted him he would visit them, at their request, explain to them the Raymond James proposition and complete the relevant investment documentation, on which he would make any relevant notes. Some said they would transfer straightaway and others did so after a second meeting and further completion of forms. All of them completed the HDYH form.

In his witness statement Mr Chandler set out in detail how each of the 45 households, comprising all the clients listed in the Table, contacted him and requested to transfer and the reasons they gave. Again, a number of common themes emerge. An example of a client who did not like the Towry offering was Mr Adamson, who had met the Towry wealth adviser David Tarbotton at Mr Chandler’s office and was told about the IIM. Mr Adamson then rang Mr Chandler and told him that he did not want to change advisers again, after taking some years to decide to transfer to him in the first place and being pleased with the portfolio he had created for him.

At Mr Chandler’s request, which he made of all those clients who contacted him, Mr Adamson wrote to him to this effect on 18 February. I reject any suggestion that this was part of a deliberate plan to mislead or to create a cover for what was really solicitation activity on his part. I find that there was an entirely innocent explanation for this request. Mr Chandler had been advised that he needed to be able to demonstrate that clients had contacted him, had given him their contact details, had asked to retain his services and had explained how they had been informed about his departure from Edward Jones. If they called him and left a message, only then would he return a call. The decision to ask clients to write a letter to them in these circumstances was that of Mr Chandler who adopted a cautious approach to this issue, as to his application to join Raymond James. It was not the result of any advice given by Raymond James. Mr Hayhurst also made a similar request of his clients. A note made by Mr Cherriman at the AQ meeting shows that Mr Chandler or Mr Hayhurst had referred expressly to asking any former clients to write such a letter. This was part of a general discussion about the difficult situation they could find themselves in and how they could best avoid any suggestion that they had solicited such clients.

Other clients who asked to transfer referred to the excellent, or close relationship they had with Mr Chandler, or cited their wish to have an adviser in the local area, the good performance of their investments, or their dislike of the IIM or of discretionary management in general. A number were angry, or could not understand how their adviser could just be changed without them having any input into the process. Some (for example Mr and Mrs Davies) said they had had previous experience of Towry and did not want to stay with them.

One client appears to have changed his mind, after initially asking Mr Chandler to arrange for his investments to be transferred. Mr Covell called Mr Chandler in March and asked to see him. A meeting was arranged, at which Mr Chandler explained the Raymond James proposition and Mr Covell asked to transfer. Subsequently, however, Mr Chandler learned that Towry were refusing to transfer because Mr Covell had changed his mind. Mr Chandler then rang him during the summer, when he confirmed that he had decided to leave his investments where they were and Mr Chandler wished him well for the future.

In respect of Mr and Mrs Hill, Mr Chandler gave unchallenged evidence that he had in fact never had any dealings with them and can only assume that he had inherited them very late in the day from another Edward Jones adviser, which is why his name appears as their adviser. The same applied to the clients Gordon Hubbard and Sydney Nicholls.

Mr and Mrs Bills had sought out Mr Chandler after meeting Howard Pykett of Towry and having the IIM explained. After deciding that they did not like it they had gone first to Barclays, but did not like their service proposition and then asked Mr Chandler to continue to advise them. Mrs Carter also telephoned Mr Chandler after receiving a call from Mr Pykett. She was suspicious of someone she had never met wanting to speak to her about her investments, which were performing well. She told Mr Chandler that she wanted to retain him as her adviser and wrote to him to that effect on 18 February. Mr and Mrs Drewery had also met Mr Pykett and decided, after hearing about it, that they did not want the IIM.

I refer to these clients specifically because Howard Pykett gave evidence at trial and confirmed that many of the clients he had been allocated were very dismissive of the idea of remaining Towry customers. He referred to no particular complaint having being voiced in explanation, or to clients having said that they were making no decisions about their financial investments for the time being. He named Mr and Mrs Bills as an example, which seems to me to be entirely consistent with Mr Chandler’s evidence that they told him they had listened to what Mr Pykett proposed, but then decided to go elsewhere. Mr Williamson, whose evidence at trial is addressed below, had also met Mr Pykett and listened to his proposal before deciding that it was not for him and telephoning Mr Pykett to tell him. Other clients in that position may have decided just not to come back to Mr Pykett, not wishing to have to give him reasons for not wanting to take up Towry’s offer.

Peter Berry was another Towry wealth adviser who was allocated some of Mr Chandler’s clients after he left. Mr Berry made essentially the same point as that made by Ms Burn-Jones and Mr Stone in relation to Mr Bennett and Mr Burger, respectively. His references to detecting a cooling off of initial enthusiasm for the Towry proposition, without voicing any complaint, seem to me to be subject to the same deficiencies, or at any rate to indicate no more than that some clients were sufficiently interested to listen initially to what Towry had to say but then, after thinking about it, decided that it was not for them. In cross-examination Mr Berry conceded that he had “attempted to contact” rather than actually contacted all the clients on the list, and that there were in fact only two clients he contacted who had then cancelled meetings with him, a Mr Jenkins and a Ms Hawson. I do not regard his evidence as supportive of the allegations of wrongful conduct against Mr Chandler.

Two of the clients listed in the Table were called to give evidence, namely Elaine Young and John Williamson.

Mr Williamson and his wife had been clients of Edward Jones, with Mr Chandler as their adviser, since 2008. They held a mixed portfolio, which they had designed and worked on with him after moving from Rathbones because they were unhappy with its content and balance. Mr Williamson met Mr Chandler when he knocked on his door in 2005. They had kept in touch and he would see him about locally because his office was in Swanland where they lived. The prospect of a local office and a more personal service were the most important reasons behind their decision to move to Edward Jones, rather than to Citi Quilter, who also made them a proposal, and thereafter they had developed a good rapport with Mr Chandler.

On the day that news broke of the acquisition Mr Williamson had been walking past the office and saw Mr Chandler inside. He described him as being “still in shock” and said that he knew nothing more than the fact of the acquisition by Towry. The letters of 23 October then arrived. Mr Williamson said that he was immediately suspicious of the phrase “business as usual”. However, no urgent work was required on his portfolio at the time and he felt that he could sit back and “let the transition happen”. However, as the weeks sent by he received no communication at all from Towry. There was “complete silence” and Mr Williamson became increasingly disillusioned.

He first discovered that Mr Chandler had left in January, when he bumped into him at the Spire Hospital in Anlaby. Mr Chandler told him that he had left and was contemplating his future, but that for contractual reasons he could not say any more. He did not mention Raymond James and he did not even say whether he was going to remain in the financial advice industry. Mr Williamson asked him to keep him informed. He then sent Mr Chandler a letter, dated 11 January, in which he said that he was stunned to hear that he had left and was “particularly disappointed that the new management have not even bothered to let me know of your departure and presumably the appointment of a successor.” He stated, “I feel that we have built up a very positive relationship which we do not readily want to lose. Please keep us informed of your future plans as it may well be that we will decide that ongoing management of our portfolio is taken away from Towry Law.” In fact Mr Williamson’s evidence was that he had written this letter himself and not as a result of a request from Mr Chandler for him to do so.

Out of the blue, in February, Mr Williamson received a call from Mr Pykett asking for a meeting, which was arranged. At the meeting Mr Pykett explained the IIM and Towry’s proposals for ongoing management of their portfolio. Mr Williamson stated, “…it became clear to me that it certainly was not “business as usual” as had been promised.” He considered that Mr Pykett appeared “uncomfortable and embarrassed” about suggesting something so different from the portfolio which had been performing very well only months before. Mr Williamson stated that he “did not like the proposals one bit.”

After this meeting formal proposals were sent to Mr Williamson on 8 February, which he found “totally unacceptable”. A few days later he telephoned Mr Pykett and informed him that he would not be signing up with Towry and was considering his options. In doing so he reconsidered the proposal he had received from Citi Quilter and also called Mr Chandler, whose mobile number he still had. He described being pleasantly surprised to learn that Mr Chandler was setting up a local office again, but this time with Raymond James. He knew the company well, because of time he had previously spent in the USA, and he had previously held a small portfolio with them and been satisfied with the service and with its performance.

At his request Mr Chandler came to his house on 17 February and explained the proposal to him. He found it attractive “because I knew the frontline adviser, James, and had worked with him for a while so I trusted him and I knew he had the support of the Raymond James back office which I also knew and trusted.” They were essentially providing a very similar service to that offered by Edward Jones. He therefore decided to transfer their portfolio to Raymond James. Some of the relevant investment documents were signed at a second meeting on 30 March.

Mr Williamson gave the following as his reasons for transferring: Towry’s attempt to offer a completely different product from the one they had been offered previously, which was working well, and the way in which it seemed to be “rammed down our throats”; the complete lack of communication from Towry between October and February; worry about the progressive cessation of advisory services if they did not sign up to the IIM, together with loss of control of their investments and an increased risk of capital gains tax if they cashed up and moved away later on; and the closure of the local office and loss of face to face contact with their adviser.

He identified the most important reason for moving to Raymond James as being the fact that they could transfer the existing portfolio over to Raymond James, retain the investments as they were, continue to get the same kind of service as before, and retain face to face contact with Mr Chandler in a local office. When Mr Tolley put to him that Mr Chandler had persuaded or encouraged him to move his business and investments from Towry to Raymond James he stated that there had been “absolutely no element of persuasion.” He had to make “a straight decision between James Chandler, Raymond James and other companies…I was not persuaded.”

Whilst Mr Tolley challenged his understanding of the capital gains tax position and his fear that he would lose control of his portfolio if he stayed with Towry, I find that Mr Williamson’s views, even if mistaken, had not been formed as a result of anything said to him by Mr Chandler. Mr Williamson attributed his understanding to the information he had been given by Mr Pykett, but Mr Pykett did not accept this. As it seems to me this is a dispute that I do not need to resolve. The important point, in my view, is that on the evidence before me I am satisfied that Mr Williamson genuinely held those views, that they were part of his reasoning in deciding to transfer, and that he did not hold them as a result of anything Mr Chandler had said to him.

There is no dispute that Mr Chandler explained the Raymond James proposition and the fees to Mr Williamson, and that he completed various investment documents with him. Mr Williamson stated that the fee structure was not really a “big issue” for him in the context of moving his investments. He was unable to recall whether Mr Chandler made clear that it would be a fee based, rather than a commission based service going forward; or whether he had told him that there would be no charge for transferring his assets across.

It is correct that Mr Williamson could not recall how the answer “Met in local hospital when visiting relatives respectively” given on the HDYH form came to be written, that is whether it came from him or from Mr Chandler. Given the careful way in which I find that Mr Chandler was proceeding generally, I consider it more likely that it was Mr Williamson’s description of their contact, which Mr Chandler wrote down on the form, but there is no dispute in any event that Mr Williamson had met him again at the hospital in January.

Mr Tolley suggested that this was not an answer to the question, but that rather depends on how the question is interpreted, and there were a number of different views expressed as to that from various witnesses in this trial. In any event, I do not find this supportive of the allegation that Mr Chandler was improperly suggesting the answer that Mr Williamson should give. I accept as credible and reliable the evidence of both Mr Chandler and Mr Williamson as to the circumstances of their meeting and of the process that led to his decision to transfer.

Mr Williamson indicated on the account and ISA Application forms that he wanted the “execution only” service at this time. His understanding was that this was an interim position, before he “fully signed up” with Raymond James, and he said that he had later signed another form requesting the advisory dealing service, which was what he wanted in the long term. This is in fact what happened because Mr Williamson signed another form on 25 May 2010, changing to an advisory portfolio account at that time. I find that it was a deliberate decision to adopt this course.

Both Mr Williamson and Mr Chandler were cross-examined about the initial selection of the execution only service, as were other Defendants and clients who had adopted the same course. The suggestion that this step was deliberately taken in order to make it appear that no advice was being given, and thereby to conceal the fact of solicitation is, however, unsustainable. Whilst Mr Williamson always wanted an advisory service, at the time he entered into the first, execution-only agreement, his assets were all still on the Towry platform. There was in fact a delay of several months before they were transferred. Mr Chandler took the view that he was unable to advise on or deal with those assets whilst they were held there and Raymond James’ position was that this would be neither practical nor appropriate.

I find on the evidence that the reason this service was selected at the time was because Mr Chandler was executing only Mr Williamson’s instructions to transfer the assets. Mr Tolley suggested to Cynthia Poole that it would be more logical, and more usual, if the client really wanted an advisory service, to sign up for such a service and then provide an execution-only instruction to the adviser. Her response, however, noting that the same explanation had been given by all the Defendants who adopted this course, was that this was a perfectly legitimate and acceptable way of handling the transaction in the circumstances. I accept that evidence and I reject the suggestion that this method was adopted as some sort of subterfuge or device for concealing the fact that advice was being given by Mr Chandler at a presentation, the aim of which was to persuade Mr Williamson, or indeed any other clients, to transfer.

The other client called to give evidence on behalf of Mr Chandler was Elaine Young, who is a retired personnel manager. She had first met Mr Chandler in about 2005 when he was knocking on doors in Welton, a village about 2 miles from Swanland. When her own adviser retired she became a client of Edward Jones. Personal service and the identity of the adviser were important factors for her. She both liked and trusted Mr Chandler and appreciated the presence of a local office, where she would visit him or just call in for a cup of tea.

Ms Young first heard of the acquisition from Mr Chandler. She could tell from his demeanour that he was not happy about it. She described her immediate reaction as one of panic. Her experience of takeovers was that offices close, staff are “let go” and personal service suffers. She received the letter from Towry in October telling her that nothing would change and, in early December, she went to visit family in Australia. Before she left she had sought some financial advice from Mr Chandler on her investments and a possible house purchase and he had given her advice. So far as the acquisition was concerned, he just told her that they would have to wait and see what happened.

On about 19 January, on her return from Australia, she received a telephone call from David Tarbotton of Towry. He asked her if she was aware that Mr Chandler had left. This came as a shock to her, as did the news that Mr Tarbotton was now her new adviser. Ms Young pencilled in a date for him to come and see her, but she regarded it as discourteous that Towry had not written to tell her about this change. She knew nothing of the circumstances surrounding Mr Chandler’s departure and, after much thought, she decided to telephone him. She told him that she would like to keep him as her financial adviser if he was remaining in the industry. She was happy with the way her investments were performing and did not want to change her adviser. She also said that she was unhappy with the way that Towry had treated her and she cancelled the meeting with Mr Tarbotton.

At Mr Chandler’s request she wrote a letter to him dated 22 January, stating, “I received a telephone call on Tuesday from David Tarbotton asking me if I was aware that you had left Edward Jones and telling me that he would be dealing with my financial affairs in future. Having been out of the country for five weeks from early December, I was not aware of what had happened. However, if you are still in the industry, I would like to talk to you with a view to continuing our business association, which has proved successful.”

It was put to Ms Young that Mr Chandler had asked her to give the impression that that letter had been the first contact between them. She denied this and I accept her evidence that the phrasing in this letter was her own, not shaped by any observations of Mr Chandler, and that it was her intention to confirm that she had telephoned him. Her observation that “I wasn’t expecting to be in this situation and have a legal mind looking at it” was a genuine reaction to what she clearly regarded as an exercise in semantics. I reject entirely any suggestion that Ms Young had been prepared to draft this letter in accordance with Mr Chandler’s instructions, and in a way that would have been deliberately misleading. Shortly before this suggestion was made, and in another context, Mr Tolley had been at pains to assure her that he was not suggesting that she had done anything wrong. Her response, expressed in robust terms, was telling, “Had I remained with Towry I assume I would have been a valued client….what I resent is the fact that because I have chosen to take my business elsewhere they are implying that I’m open to being solicited, induced or encouraged to transfer my investments. I resent that assumption.”

A note in her diary indicated to Ms Young that she had called Mr Chandler on 17 February and asked him to come and see her. In her witness statement she stated that an appointment was made for 23 March at her home, so that he could come and tell her about the company he had just joined which, in the way they operated their business, he said was more in line with his business principles. In fact, the dates of some of the documents she signed indicate that Mr Chandler had come to her house on both 17 February and 23 March. I find that she had mis-remembered the date when he first came to see her and that she must have called him before 17 February to arrange a meeting.

Ms Young described the reasons for her decision to transfer. She stated that she did not feel comfortable staying with Towry and that her instinct was to move on. Mr Chandler had brought the relevant information and some forms to her house and she decided to move her business to Raymond James, “which ensured that I kept James as my adviser.” Her reasons were the continuity of adviser, the location of his office, the range of services offered and the fact that he had the backing of a large organization behind him.

There is no dispute that, when he met her, he explained to her the different types of account, the fees and the backup and research facilities available to him. She did not recall asking about whether there would be any charge for the transfer. Nor had she tried to work out whether she would be paying more for advice at Raymond James than she had at Edward Jones. I find that she was not particularly concerned about these matters.

In completing the HDYH form she had ticked the box marked “telephone directory”, in answer to the question “how did you hear about James Chandler, a Raymond James adviser”. This, she agreed, was not really an answer to that question and I accept her evidence that she may have misunderstood the purpose of the form. She too had indicated that she wanted an “execution only” service at this time, when she had always wanted an advisory service from Mr Chandler. The reasons for the execution only request made in her case are, as I find, exactly the same as those which applied in Mr Williamson’s case. They do not support the allegation of solicitation.

Ms Young agreed that she had found Mr Chandler’s “presentation” attractive, but she stated, “I wanted the continuity of my adviser. I wanted somebody that I knew, trusted and I could work with. That was very important to me.” She went on to say that she had decided that she did not want to stay with Towry and that her initial thoughts were to go to Thesis but, since Mr Chandler had looked after her business very well for her, she felt “honour bound” to ring him up and see if he was remaining in the industry.

I have considered Towry’s submissions with care but I am not satisfied, on all the evidence, that Mr Chandler ever solicited any client to transfer their assets to Raymond James. Many of the clients, as I find, had already decided that they wanted to transfer to the company where Mr Chandler was now working when he agreed to meet them. Others had already decided that, for various reasons, they were not going to stay with Towry. I make the same observations in relation to the clients listed on the Table as I have already made when addressing the case of Mr Bennett (see paragraphs 630-636), which seem to me to apply equally in the case against Mr Chandler.

I do not accept the submission that Mr Chandler was under financial pressure to solicit existing clients. All his projections were based on an assumption that he would be starting again from scratch. Only if a client contacted him and wanted to retain his services did he regard that client as a prospect and agree to meet them. I find that he took conspicuous care to ensure that he followed the legal advice he was given at all times and the evidence showed him to be a cautious individual as evidenced, for example, by the detailed queries he was raising with Towry, and then Raymond James concerning the offers made to him, and by his requests to clients to write letters to him about how they had contacted him.

I find that the clients who contacted Mr Chandler, and who then signed and completed the relevant investment documents, had already decided that they wished to retain his services or that they did not wish to stay with Towry. Accepting explanations and recommendations in relation to the Raymond James proposition and accepting Mr Chandler’s advice as to how to process their request to transfer and execute their wishes does not, on the facts of this case, indicate that any element of persuasion was used at the time when their decision to transfer was made.

The first time that Mr Hayhurst met Barry Bennett, Pieter Burger and Stuart Hutton was at the training and orientation meeting at Raymond James, following his decision to join that company. He had been through the training at Edward Jones with Tom Spain and since then regarded him as a friend, though he only found out that Mr Spain had joined Raymond James when he too had decided to join them. Since joining Edward Jones he had become very good friends with James Chandler, who had already been employed there for two years when he joined. He would ring him for ideas and to run something past him and they spoke frequently. However, whilst they both discussed their various options, including joining Raymond James, after the acquisition, the decision to join Raymond James was his own, personal decision, as it was for Mr Chandler. He had known Tracey Simpson since she joined Edward Jones and he would see her at various training events and regional meetings. They lived near each other and became friends. The circumstances in which she came to work with him at Raymond James will be addressed below.

Soon after news of the acquisition a colleague, Rafael Bravo-French, told Mr Hayhurst about Raymond James, having approached them himself. Mr Hayhurst made some enquiries on 26 October and spoke to Mr Hazelton, who emailed him some more information on the same day. He then attended the meeting with Mr Cherriman on 6 November, together with Mr Chandler and the other advisers.

At this meeting, in addition to explaining the Raymond James model and discussing the advisers’ past performance, Mr Hayhurst recalled Mr Cherriman emphasising the importance of their restrictive covenants and the fact that Raymond James took them very seriously. Mr Cherriman also advised them to obtain their own legal advice. Mr Hayhurst was sent an AQ, which he completed on 7 and 8 November and emailed back.

He then attended the AQ meeting on 17 November, together with Mr Chandler, and I have referred already to what happened at this meeting. Like Mr Chandler, Mr Hayhurst was an adviser with whom Raymond James were immediately impressed. His performance summary showed him to be someone who had been able to grow a book of business very quickly. Both Mr Hazelton and Mr Cherriman believed that he was someone who would be able to do so again. It was clear that he was a well-respected figure in his local community. Mr Hazelton referred to him asking some searching questions at the meeting and he was aware that Mr Hayhurst was also looking at other firms at that time.

In November Mr Hayhurst sought legal advice from Russell Jones & Walker about his contract. The same solicitor had also advised Mr Chandler. The restrictive covenants were all explained to him. He was advised as to what he could and could not do and as to how, if he did not stay with Towry, he should deal with any former clients that contacted him. He was given a “script” of what to say to any former clients whilst he was on garden leave.

Mr Hayhurst was also impressed with Raymond James. After he had seen the Towry contract and decided to leave he spoke to Mr Cherriman again, indicating that he was, according to Mr Cherriman’s note “…going down the RJ route”, though he still had to survive stage two of the recruitment process.

I have considered but reject the suggestion, made in cross-examination, that a note made by Mr Cherriman during this conversation indicated that Mr Hayhurst told him that he had approached his high net worth clients. Whilst accepting that there would probably have been references to clients, or to high value clients, or to being approached, Mr Cherriman stated that, if something like this had been said, “alarm bells would have been ringing big style in my head.”

The layout, handwriting, shorthand and punctuation at this point is wholly unclear, the relevant note reading as follows:

“- Do not know 10-50.

Mr Hayhurst passed the knowledge and role-play assessments on 4 December and 8 January respectively. He then received an offer from Raymond James and signed the SLA on 4 February. Together with Mr Chandler and Mr Spain he received transition assistance from Raymond James.

It is correct that Mr Hayhurst had previously raised a concern as to the requirement in the draft SLA (at paragraph (f)(i)) for him to generate at least £10 million of AUC within 12 months, but I find that he was reassured in this respect. This was a potential point of concern generally for all the advisers and, as set out above when dealing with the evidence of Mr Hazelton, I find that they were reassured both that Raymond James were not concerned about the asset level and that “the thing that really counts is meeting those revenue levels.” I am not persuaded therefore that the advisers felt under any pressure in this respect.

Further, the reference by Mr Hayhurst, in a request made on 5 February for earlier payment of the second instalment of his transition assistance because of all the upfront costs and “transfers taking perhaps one to two months to come across” was a reference to transfers generally, for any client wanting to move money to Raymond James wherever they may be, and not specifically for Edward Jones clients. This was certainly how Mr Hazelton understood it, being “how the business works”, and I accept that evidence.

In denying the allegations against him Mr Hayhurst emphasised that he knew himself to be capable of repeating the success he had at Edward Jones. Whilst he believed that some of his clients would want to stay with him, all his future plans and projections were based on the premise that he would need to start again from scratch. He did not see this as a problem. He had become very profitable very quickly at Edward Jones and this time he had much more knowledge and experience. He was still only 27 and he had his full career ahead of him, which he said that he would not have jeopardised by breaching the covenants which bound him and which he had accepted when he entered into the contract.

When he left in December he had deleted, removed or disposed of all data he had in his possession. This is not disputed. Nor did he retain any client contact details, save those of family members. He kept only his FA Performance Summary.

However, he stated that any client who wanted to approach him would have been able to contact him quite easily, because they would still have his business card and mobile phone number. He only had one mobile and would always answer a call from an unknown number, or return a missed call. His mobile phone records show that he made a number of calls to clients on various days between late November and early December, but, as he was still an employee at this time, he was still required to deal with clients’ inquiries. In any event, as noted previously, the records do not show any incoming calls and are therefore of limited assistance in this respect. Clients could also find Mr Hayhurst on the internet, or through other family members in the community. Sometimes he would just bump into them in the local area, at the gym or football ground, or in shops or restaurants.

When a call, or missed call, to his mobile turned out to be from a former Edward Jones client I find that, before 4 February, he would always stick to the same form of words, i.e. the “script”, in accordance with his legal advice. He told them that he was no longer their adviser, asked them to call the office number and told them that they would be referred to someone that could help them. If they asked him about his future plans he told them he could not tell them at that time. If he was then asked when he could tell them he informed them that his garden leave ended on the 4 February. Mr Hayhurst stated that the conversation reached this point on many occasions, and that many clients told him they would call him back then because they wanted to know what his plans were.

Mr Hayhurst said that the letter of 17 December, notifying clients that he had left, prompted many clients to call him in this way. They had been told that Fraser Irvine was their new adviser and that the branch administrator would remain at the Longridge office and deal with any queries. For a short time the Towry wealth adviser, Kat Mulvihill, moved to that office in mid-January, so as to be able to continue to deal with any queries. The Longridge office then closed in late January or February and a notice was placed on the door, informing clients that any queries would now be dealt with through the Bracknell office, which was over two hundred miles away.

After 4 February, Mr Hayhurst stated that many clients called or came back to him. He was still based in the Longridge office, though working now for Raymond James, and he described a “flurry of calls and appointments” throughout February and March. When he was contacted in this way, in accordance with his legal advice he stated that he did not give the clients any specific information unless they asked for it. If they asked him whether he was up and running again he confirmed that he was. If the client asked him to come and see them he made an appointment to do so.

When he saw or spoke to them some clients told him they had not been contacted by anyone from Towry and had not seen an adviser. Some stressed their concern about the closure of the Longbridge office or referred to the strong personal relationship they had with Mr Hayhurst. A number of them spoke about the bad publicity they had seen concerning Towry. Many clients told him they had already met a Towry adviser and listened to their proposition but had decided, for various reason, that Towry was not for them.

Mr Hayhurst described the process he adopted at the appointments with those clients who had asked him to come and see them. He explained the Raymond James investment proposition, his relationship with the company and the fee structure. If the client still wanted to proceed they would complete the relevant forms and open an account. All of them completed the HDYH form. When it was suggested to him that he gave a presentation at these meetings with a view to persuading the clients to move their investments to Raymond James he stated, “…if you had heard some of the phone calls that I received from clients and some of the clients that came into the office when we re-opened, you will have understood that there was no persuasion needed in any case….the clients did not need encouraging at all, absolutely none. They were coming to me and they were encouraging me to take them on. All the persuasion and encouragement was the other way around.”

This account was supported by the evidence I heard from two clients called on behalf of Mr Hayhurst, namely Richard Longton and Clive Turner.

Mr Longton is a teacher, who held a broad selection of mutual funds, bonds and shares with Edward Jones. Mr Hayhurst had been recommended to him by his solicitor, who worked in an office next door to Mr Hayhurst’s. In 2008 he was with the Halifax and, after meeting Mr Hayhurst, decided to move to Edwards Jones in February 2009. The fact that Mr Hayhurst was “on the same wavelength” as him and worked locally was very important to him. He wanted a personal service and regularly called in at the office for an update. He also liked the fact that Mr Hayhurst had the backing of a large firm. He therefore had a personal, transparent, broad ranging service with a local adviser in a reputable firm and Mr Hayhurst therefore “ticked all the boxes”.

In October he received the letter informing him of the acquisition. The news concerned him because, having spent some time moving from the Halifax and building up his portfolio with Mr Hayhurst, he did not want there to be any change. His evidence that Mr Hayhurst told him expressly, at this time, that everything would stay the same, that only the letter headings would change and that he needn’t worry was unchallenged.

At some point during the winter, he thought before Christmas although he could not recall the date, Mr Hayhurst told him that was not going to stay with Towry but told him that his money was safe and that he would be getting a new adviser. In response to the questions I find that Mr Longton was asking him at this time, Mr Hayhurst referred to the local office closing and to the fact that he would no longer be able to give stockbroking advice.

Mr Longton then saw some negative publicity about Towry, raising concerns in particular as to the fact that their advisers were encouraged to move existing investments into in-house schemes. He began to be concerned. He received a letter notifying him that his new adviser was Fraser Irvine, but he was based in Southport, some miles away. He heard nothing from him and no-one from Towry contacted him. All he received was a letter and monthly statement indicating that the monthly statements would be stopping.

Mr Longton decided that he did not want to stay with Towry and contacted Mr Hayhurst in February to find out what he was doing. He still had his mobile number and called him to make an appointment, which took place on 24 February at Mr Hayhurst’s home because Mr Longton’s house was undergoing some renovations.

Mr Longton stated that he decided to stay with Mr Hayhurst because he had built up a good relationship with him as his personal adviser and trusted his judgment; the presence of a local office was very important to him; his portfolio was working well; he did not like what he had read about Towry and their investment proposition; he had looked up Raymond James and knew what to expect and that he would be able simply to transfer his investments over; there was the same back-up for Mr Hayhurst at Raymond James as he had before; he wanted to keep things the same and, “staying with Wayne and moving to Raymond James meant that that could happen.”

There is no dispute that Mr Hayhurst completed the information on some of the investment documents at the meeting, or brought some documents already partly completed to that meeting, that he explained some of the terms and the fees and charges that would apply, and that he explained that Raymond James would be similar to the Edward Jones experience which, as I find, Mr Longton already understood from his own researches. There was a second meeting on 28 April, when the ISAT form was signed. Mr Hayhurst referred to Mr Longton as being “impressed” with the new offering and as wanting to sign everything across immediately, but I accept Mr Longton’s evidence that “impressed” was not the right word. It was more that it was what he was looking for and he stated that it was his idea, not Mr Hayhurst’s, to ask for all his investments to be transferred across in specie to the Raymond James platform “all in one process.”

Whilst he could not recall the charges that he was told about, he thought that they were reasonable at the time. He could not recall whether Mr Hayhurst told him there would be no initial fee for the transfer and said that he “wasn’t too worried about the fee situation to be honest…I was concerned to keep the same investments and just move them across.” Asked if Mr Hayhurst advised him on whether that was a suitable thing to do, he replied “he said that was a possible thing to do. He said that would be—it was my choice to do that.”

Although he had not had a meeting with a Towry adviser, Mr Longton referred to having seen various negative comments about Towry made on Citywire, blogs on Martin Lewis’ money website and an article by Janet Walford FT Adviser, and said “it turned me off those kind of investments.” By mid-February he said that he was “quite adamant…that I really didn’t want this. I really didn’t want the Towry type fund or Towry type investment. And I certainly didn’t want to travel to Southport to see somebody who I had to set up a new relationship…I’d made a decision in mid-February to seek another adviser and not retain the services of Towry.” He referred to seeing advice on some of these blogs that clients who did not want this type of investment should look at the register of advisers, or try and trace their old adviser. He followed that advice and telephoned Mr Hayhurst.

On the HDYH form he wrote “Worked with Wayne previously wanted to continue. He is local to me. I called his mobile to make contact.” Sustained cross-examination about this answer, and the suggestion that Mr Hayhurst told him how to answer this question, met not only with a denial of the latter but with genuine puzzlement on the part of Mr Longton in the witness box as to the meaning of the questions. He plainly considered that he had accurately answered a straightforward question as to how it was, on this occasion, that he had heard about Wayne Hayhurst, a Raymond James adviser? I find that he had.

Clive Turner and his wife became clients of Edward Jones in late 2008 or early 2009 after he met Mr Hayhurst at a business networking meeting. He was impressed both with Mr Hayhurst personally and with the nature of the Edward Jones service. Before then he and his wife were looking after their investments (individual shares in various companies) themselves. The fact that there was a local office enabled them to maintain easy access to their adviser and was also an important factor in their decision to choose Edward Jones.

When they received the October letter, informing them of the acquisition, Mr Turner said that he was not “overly keen” but thought he would find out more about Towry. His wife wrote to them on 2 December stating, “I have been very happy with the service from Edward Jones as my investments have been well managed, monitored and advised upon. I have appreciated being able to discuss these with their representative at face to face meetings in the formal business environment of their offices here in Longridge….I note you say that nothing will change and would be pleased if you would confirm that all the above elements will be provided by Towry Law..” The reply from Graeme Creevy, dated 15 December, whilst confirming that there would be no changes to her portfolio, unless she felt it appropriate, was silent upon the prospect of Mrs Turner being able to continue to discuss her investments in the Longridge office. The fact that the office then closed in January led to them taking a very dim view of Towry, referring to a “total lack of credibility.”

They were contacted by a number of different advisers including, at one stage, Kat Mulvihill, working in Manchester. Mr Turner stated that Ms Mulvihill was “not very forthcoming with information” and he subsequently notified her by email that they were leaving. Mr Turner considered that he had set up a nice portfolio and was very happy with it and with how it was performing. Although he agreed that he was not opposed to discretionary fund management in principle, as part of a portfolio, he said he did not want to move into a managed fund. It was also important to him to have a local office and he saw no reason to change things.

He discovered in about December that Mr Hayhurst had left. There had been some earlier discussion between them, soon after the acquisition on 2 November, about what was happening and whether Mr Hayhurst would be able to continue providing a stockbroking advice. Mr Turner had made some enquiries with a firm of solicitors in Manchester, on Mr Hayhurst’s behalf, and had sent him a name of a barrister. Nothing turns on that, in my view, and I find that Mr Turner did not contact him again until February.

He then either called Mr Hayhurst on his mobile or emailed him and asked him to come and see them. He came to their house on 19 February and told them about Raymond James and what they could offer. Mr Turner had himself printed out a letter requesting the transfer of his account from a template he had created on his own computer, which was why it was dated 15 February. Mr Hayhurst, he said, did not offer him any advice about whether he should transfer in specie.

Mr Turner agreed that Mr Hayhurst had given him information, both about Raymond James and about the fee structure, which was different from what he had been used to but which he found reasonable and with which he agreed. He was asked if he found Mr Hayhurst’s presentation impressive and said, …It was certainly informative. I mean, by the time it had reached this point, I had already decided, in fact shortly after I got the original letters relating to the takeover, that I wouldn’t be keeping my account with Towry.” He answered the question on the HDYH form by saying “became aware of local branch office” and “internet search”, which he thought was right because he had seen Mr Hayhurst’s website and was also aware that Mr Hayhurst was now back working for Raymond James in the same office in Longridge. Mr Turner’s own office was just two doors away. It appears that there was another meeting between them on 8 July when he signed his investment strategy form.

The reasons Mr Turner gave for deciding to transfer to Raymond James were the ability to retain Mr Hayhurst as their adviser, the location of the office, the range of services offered and the good reputation of the firm he had joined. Mr Tolley suggested to him that the key factor in his decision to transfer to Raymond James was Mr Hayhurst’s recommendation, but he did not accept that. If Mr Hayhurst had gone to St James’ Place “I wouldn’t be his client now.” He added that it would not be accurate to say that Mr Hayhurst had made a recommendation for him to move to Raymond James, “…obviously he’s making me aware of the products and services that he can offer with the new company. And the decision about whether that fulfils my needs is my decision.”

I accept the evidence given by both these clients and there is no basis, in my view, for making any different findings from those made in the cases of other Defendants as to the contents of the various investment documents, and the way in which these documents came to be completed and signed.

Further, Mr Hayhurst’s evidence as to the circumstances in which the approximately 51 households, comprising the other clients listed in the Table, decided to transfer their investments to Raymond James also demonstrates a number of common features. These are the close relationship that they had with Mr Hayhurst and the value they attached to continuing that relationship, the availability of a local office and regular face to face contact with him, the lack of any contact from Towry, or their decision, following discussions with a Towry adviser, that they wanted to stay with Mr Hayhurst. A number of the clients were personal friends. The client Joyce Holgate is in fact a client of Tracey Simpson and I accept that Mr Hayhurst had not dealt with her himself.

Fraser Irvine had been allocated Mr Hayhurst’s clients after he left and he stated that he had made courtesy calls to the majority of them between January and February. Kat Mulvihill then became responsible for contacting those clients in February and March. Mr Irvine stated that he had a number of meetings with clients, at which he had “a strong sense that Mr Hayhurst had already been in contact with them”. His assessment that there had been contact was undoubtedly correct, although the circumstances of that contact, who initiated it and how it came about, were unknown to him. In some cases he understood that clients had spoken to the former branch administrator, Val Briggs, who had told them that Mr Hayhurst was going to be setting up on his own.

He referred specifically to only one client, a Mr Bamford, who initially told him that he would be transferring into the IIM but then decided not to and to stay with Mr Hayhurst. I accept Mr Irvine’s evidence about this. Mr Hayhurst stated that Mr Bamford called him on his mobile in February and asked him to come and see him. He and his wife had met Mr Irvine and said that they had decided that they did not really understand what Towry were offering and felt that the service would not be so personal.

When Ms Mulvihill took over from Mr Irvine she stated that she immediately called all the clients to introduce herself and to attempt to arrange meetings to discuss what Towry could offer them. She referred to the clients who had been dealing with Mr Hayhurst and Ms Simpson as being “initially receptive” on the phone but stated that a number of them were then reticent about arranging meetings. Those meetings she did hold with Mr Hayhurst’s clients she described as initially very productive but her evidence was that, by the last two weeks of March, “the demeanour of those clients had changed completely” and they cancelled follow up meetings on short notice.

She named only Mr and Mrs Butterworth as an example of where this happened, describing a positive meeting on the 8 March but their cancellation of the next meeting arranged for the 15 March. I accept that Mr and Mrs Butterworth may have changed their minds, having heard from her about the Towry proposition, but in this case that evidence does not in my view support a suggestion that they were persuaded to do so by Mr Hayhurst. Mr Turner’s evidence was that Ms Mulvihill had not been “very forthcoming” with information when they met her. Other clients to whom she spoke may have formed a similar view, or may just not have liked what Towry were offering. The client Christine Ashton, called on behalf of Tracey Simpson, stated that although she had been given Ms Mulvihill’s name as her new adviser, in fact she had never heard from her. In cross-examination Ms Mulvihill accepted that, whilst she would have “tried the phone number”, she may not have spoken to that client.

Earlier in this judgment I found Ms Mulvihill’s evidence to be unreliable in relation to events involving Mr Hayhurst on the day of the acquisition. In addition to the general deficiencies which undermine the evidence she gave, as it did the evidence of other Towry advisers, as to a noted change in attitude from clients, there were other factors which in my view undermined the evidence given by Ms Mulvihill in relation to the clients.

First, having stated in her witness statement that Mr Hayhurst told her on the day of the acquisition that he would be “printing off his client list before he left” and that she should do the same, evidence upon which Towry placed some reliance, she then resiled, in cross-examination, from any suggestion that she was insinuating that he was going to take the list with him. She accepted, as I find to be the case, that he was at that stage referring only to obtaining a list of clients who would have to be contacted and reassured about the acquisition, in accordance with Towry’s instructions to all advisers.

Secondly, whilst she initially accepted the suggestion that, in November 2009, she had asked Mr Hayhurst to take her with him, wherever he went, she then maintained that he had asked her to go with him to Raymond James. Since, at this stage, he had not been through the recruitment process and had not been offered any job there I do not accept her evidence that he asked her to go with him. Her reference, unprompted, to knowing that he had “asked Tracey Simpson as well” and her acceptance that, as a joke, she had asked him on Facebook if she could come to his Raymond James Christmas party in 2010, indicated in my view a continuing interest in joining Mr Hayhurst and a continuing irritation that Tracey Simpson was now working with him, but that she was not. She described herself as being, in November 2009, the most inexperienced adviser and Mr Hayhurst as someone whom she respected, and still does respect “very much”. I find on balance that she did ask Mr Hayhurst to take her with him, that, as he stated he made it clear to her that, if he did go anywhere, he was not taking anyone with him, and that he had never offered her work or encouraged her to join him.

From the evidence given by Mr Hayhurst as to the circumstances in which each client listed on the Table came to request him to transfer their investments, once again a number of common themes emerge as to their reasons for doing so, which are wholly consistent with the evidence given by Mr Longton and Mr Turner. For these two clients, the fees to be charged, or the fee structure described by Mr Hayhurst when he saw them, were of no real significance in their decision to transfer their assets from Towry. There is no basis upon which I could be satisfied that these were significant factors for any other client. The strong desire to retain Mr Hayhurst as their adviser, access to a local office, unhappiness at a lack of contact from Towry or with the proposition that had been out to them were all factors which I find led these clients to decide to transfer without any element of persuasion by Mr Hayhurst. I am not satisfied on the evidence that he solicited any client in breach of his contract.

Ms Simpson did not know James Chandler well herself, though she was aware of him in the region, and she got to know him and his family gradually, after she began work with Raymond James. She had met Mr Burger only once, on a training course, and had never had any dealings with him, and she had never met Barry Bennett or Stuart Hutton. She had only ever had general telephone “chit chat” with Tom Spain since working at Raymond James.

After the acquisition Ms Simpson was not placed in the top tier group of 234 advisers whose services Towry wanted to retain. Her future was therefore uncertain. She was being approached by competitor organisations and recruitment agencies and she wanted a back-up plan in case no job with Towry materialised. She applied for jobs at Santander, Skipton Building Society and Charter Group.

At around this time she found out that she was pregnant again. She received, but decided not to accept an offer of a job with Towry, to which I have already referred, and she was one of two, final candidates being considered for the job with Charter Group. She was also offered a job with Santander. Although she was grateful to have Santander’s offer, the job did not really appeal to her because she wanted advisory work in the community, of the kind she had been doing. Once Towry put her on garden leave in December, she decided to accept the Santander offer, to start in mid-January, because she did not want to be “totally out of a job” when her contract ended. I find that Mr Hayhurst was unaware of this at the time.

To begin with I find that, notwithstanding her own misgivings, Ms Simpson sought to reassure any client who was expressing concern about the acquisition and did not refer to her own, uncertain future. After she left in December a letter was sent to her clients informing them that she had left and that a new adviser would be appointed shortly. Her clients were allocated to Kat Mulvihill, who began to contact them and advise them of the situation. Many clients were concerned at this news and called Ms Simpson on her mobile to ask what she was doing and where she was going. When she received such calls, or returned a missed call, she told them that they had to contact their new adviser and that she could not speak to them until the end of her garden leave in February.

When Mr Hayhurst had decided to leave Towry, Ms Simpson had asked him what his plans were and he told her about Raymond James. She was interested in the similarities with Edward Jones, in particular the prospect of continuing to work in her local community, and she decided to contact them herself. She spoke to Mr Cherriman in January. Since she had built a business from scratch once before she thought she could do it again, and she was attracted by the idea of working autonomously, as a business, and not face losing the list of clients that she would gradually build up.

After several conversations with Mr Cherriman she felt she was making some progress and she decided to turn down the job at Santander. She was sent an AQ, which she completed and took with her to interview on 26 January. It was a testing interview. She was asked many questions about her level of experience, how she had built her business and how she planned to do so again. The importance Raymond James attached to her restrictive covenants was explained, which she found reassuring, and advice was given that she should obtain her own legal advice.

Although, on 9 February, she was called back and passed the knowledge test, she was told by Mr Cherriman and Mr Hazelton that they did not consider her to have enough experience to be a Branch Principal and that, from a compliance perspective, she was regarded as too new to the industry to run a branch herself. Mr Cherriman had already expressed this preliminary view on 26 January, her asset and revenue levels being well below the usual criteria.

They asked her to return a week later for the role play test and recommended that she speak meanwhile to a local adviser to see if there was any prospect that she could go and work for them and gain experience in that capacity.

She then wrote to Mr Hayhurst on 13 February asking if it would be possible to work for him. Although they were friends, this was a business matter and Ms Simpson considered that it should be dealt with separately and more formally. He contacted her and they met to discuss it. He was aware of her connections in the village and through the Chamber of Trade. He had a high opinion of her abilities as an adviser and he was also aware of her personal situation and her pregnancy. He offered her a position, helping him with the development of the business and the administration, at a fixed annual salary of £30,000. Whilst this was less than she had been offered with Santander, Ms Simpson was happier to have the kind of work she really wanted and to be able to be based, once again, in her local community.

During their discussions I find that Mr Hayhurst impressed upon Ms Simpson the importance of her restrictive covenants, emphasising that if she did solicit any clients it would be “on his head”. Both of them, she stated, wanted to do things by the book. In her evidence Ms Simpson emphasised the importance to her of this opportunity, at an important time in her life, and the fact that she would not have done anything that might place that opportunity in jeopardy or cause problems for the friend and business associate who had offered it to her.

In relation to the allegations against her she stated that she had complied with her restrictive covenants in full. Whilst she had not contacted any of her former clients, many of them knew, or could easily find out how to contact her and many of them decided that they wanted to transfer their investments to Raymond James and to retain her as their adviser. After her baby was born in August 2010 many clients had come to visit her at her home.

Many of her former clients were elderly and it had taken time for her to build relationships with them. Regular access to a local office and continuity with a trusted adviser were of real importance to them and she would bump into them often, in and around the village. They knew where she lived and would often contact her at the weekends and they were all appreciative of her interest in their families and hobbies and their plans for the future. I accept that Ms Simpson believed, when she left, that many of them would be concerned at her departure and I find, on the evidence, that many were.

She started working with Mr Hayhurst at the Longbridge office from 24 February, initially in a supportive role. She then became fully authorised with Raymond James on 15 March 2010.

One of the allegations made in this case was that Mr Hayhurst deliberately used Ms Simpson to solicit four clients, Mr and Mrs Brook, Mrs Dewhurst, Ms Shinks and Ms Swift, as a means of avoiding the undertaking he had given the Court in March. I reject this suggestion without hesitation. Whilst Mr Hayhurst did ask Ms Simpson to deal with these clients, I find that he did so because he was busy with his own workload and he trusted her to deal with them appropriately.

In fact, Mr Hayhurst’s unchallenged evidence was that three of these clients were “walk-ins,” who just came into the office in April and asked him to continue to be their adviser. Ms Simpson had not met them before then. Since he was busy at the time she had asked them if they were happy for her to deal with them and they agreed. She then completed all the necessary investment documents in respect of those clients. She described Mr and Mrs Brooks as being upset that Mr Hayhurst had not been in touch or contacted them, and she had to explain to them the contractual restrictions which were binding upon them both.

Ms Simpson has also provided details concerning the 16 households, comprising all the clients listed in the Table, and the circumstances surrounding their decision to transfer. It is not in dispute that all new Raymond James clients were shown the terms of business and the schedule of fees. The nature of the advisory portfolio service was explained and no fee was charged to move the investments across to Raymond James. The relevant investment documents were completed and signed, and every client completed a HDYH form.

The two clients called on Ms Simpson’s behalf were Christine Ashton and Anne-Marie Bailey.

Ms Ashton and her husband, now both retired, became clients of Edward Jones in about 2008/9 and Ms Simpson had always been their adviser. She had knocked on their door at a time when they did not need a financial adviser but they had then decided to contact her and ask for her advice. They liked the fact that she had a large company behind her. Ms Ashton said that she was also very good at explaining everything and money was regularly coming into their pension. Whilst Ms Ashton did not have a full understanding as to how mutual funds worked, Ms Simpson dealt with all that for her and they came to regard her as a friend.

Towry wrote to them telling them about the acquisition and Ms Ashton thought she may also have heard about it from Ms Simpson herself. They were in regular contact generally and often spoke on the phone. She knew all about her previous miscarriage and how upset she had been by it all, and she stated, “we think of her like a daughter really, we talk about babies, holidays and personal matters.”

They learned subsequently that Kat Mulvihill was their new adviser, but they heard nothing from her. Ms Ashton said that she wondered what was going on and she decided to call Ms Simpson and ask her to contact them. She was “not very happy with the situation, liked how it was before and did not want change.” She thought this call was around Christmas time, but it may have been in January and when they spoke, Ms Simpson told her that she was not allowed to talk to her because she was on garden leave. She gave Ms Ashton the Leeds telephone number and advised her to call Towry. Ms Ashton told her that she wanted her to act as their adviser, if she could, and Ms Simpson invited her to contact her in a month’s time.

Ms Simpson’s phone records showed that she made two calls to Ms Ashton on 22 January, one of which was some 16 minutes in length. Mr Tolley placed some reliance upon this call but, since Ms Ashton was a friend of Ms Simpson’s and since it is not in dispute that, at this time, Ms Ashton was having a problem in respect of some money she should have received from Towry in January, I see nothing to support the allegation of solicitation in the fact, or length of this call. Ms Ashton said that Ms Simpson was helping to sort the matter out for her. She emphatically denied Mr Tolley’s suggestion that Ms Simpson was telling her about her employment plans for the future. She stated that she had been the one who was contacting Ms Simpson and that “when I was asked not to do so anymore, I didn’t do.” I accept that evidence.

Ms Ashton called her again on 8 March and Ms Simpson came to see them on what would seem, given the dates on the various investment documents, to have been three or four occasions between March and May. Ms Ashton agreed with the suggestion that, at one of these meetings, Ms Simpson had presented to her what Raymond James had to offer, that she understood it to be the same that they had with Edward Jones, and that the fees were explained, along with the lack of any fee to be charged for transfer. She also agreed that it was important to her that Ms Simpson had the back up of a large organisation. In response to the suggestion that she had found Ms Simpson’s presentation attractive and persuasive, she responded, “I don’t think persuasive is the right word…it was what we wanted, yes. It was attractive to us. But she didn’t persuade us. I think ‘persuade’ is the wrong word altogether.”

Ms Ashton gave as her reasons for transferring to Raymond James the “complete non-service” they had from Towry and the fact that Ms Simpson had left and gone to Raymond James. They wanted to stay with her because she was really good at her job and some of their friends had asked her to be their adviser as well.

Anne-Marie Bailey and her husband, a retired teacher, had been clients with Edward Jones for about two to three years and Ms Simpson had always been their adviser. They read a leaflet she had pushed through their letter box and contacted her for an appointment. They recognised each other from the gym. They were very impressed with her and decided to ask her to be their adviser. Thereafter they kept in regular contact and would see each other in the gym and around the area generally.

Ms Bailey first learned of the acquisition when Ms Simpson told them about it at a routine meeting. Her first reaction was that, so long as things just continued the way they were, and that Ms Simpson continued to be her adviser, all would be well. After that Ms Simpson did not contact them again, which she thought was strange because they had been in regular contact until then. No-one from Towry telephoned them to tell them what was happening and whether they had been allocated a new adviser. The local office then closed and Ms Bailey decided to call Ms Simpson on her mobile, to ask her if she was still their adviser or if she could find out who her new adviser was. At this point Ms Bailey had received some money and she wished to invest it.

She rang Ms Simpson on 18 February but, getting no answer, she sent a text telling her about her money and asking her to call. Ms Simpson returned the call and explained that she had left, but when she said she would find out who it was that she needed to contact at Towry, Ms Bailey said no, she did not want that and asked if Ms Simpson could still help her. Ms Simpson said she could. When she came to see her on 10 March, she explained that she was now with someone else but, in response to Ms Bailey’s questions, she told her that Raymond James would be essentially the same service. Ms Bailey’s evidence was that “I just said please get on with it and let’s transfer over to you.” A number of investment documents and the HDYH form, on which Ms Bailey stated that she had contacted Ms Simpson on her mobile because she wanted to continue contact with her, were completed at subsequent meetings, on 16 March and 20 April, in order for the arrangements to proceed for the transfer of their investments.

Ms Bailey agreed that Ms Simpson had explained the fees, the nature of the back-up service at Raymond James and the safety of her funds; and she agreed that she found what Ms Simpson said in the meetings reassuring. Mr Tolley suggested to her that her decision to transfer had therefore been a gradual process, over the course of several meetings, at which Ms Simpson was presenting an attractive proposition to encourage her to transfer. She responded, “No, I decided, as soon as I knew that Tracey was no longer with Towry, no matter where she was, if she was still in the financial service industry, that’s where we would be. These documents, obviously, couldn’t all be done on one day, for whatever reason. But the decision I made was when I knew that Tracey was no longer…with Towry….so there was no doubt in my mind that I would go with Tracey, no matter what company she was with, so long as she could look after us as she had been doing.”

Ms Bailey stated that they never had any meeting with a new Towry adviser and, in fact, no-one from Towry contacted them until about six months after she had spoken to Ms Simpson. The letter they then received referred to a new adviser with an address in London. At that point Ms Bailey explained that they had decided to go elsewhere.

She gave as her reasons for transferring to Raymond James the fact that Ms Simpson had always done a very good job looking after them and that they trusted her. She stated, “We are not worried which company she works for, we just want to be her clients.” In addition Towry had never contacted her.

On all the evidence before me I simply do not accept the suggestions put to Ms Simpson that she had planned to process sixteen transfer requests in advance and then carried out her plan to solicit clients, or that she had targeted high net worth clients, or that she agreed to solicit Mr Hayhurst’s clients as a device to prevent him being in breach of the undertaking he had given to the Court. The evidence Ms Simpson gave as to the circumstances in which the clients listed in the Table came to request a transfer showed a clear and familiar pattern, with a strong wish to retain Ms Simpson’s services and to continue to have access to a local office, combining with dissatisfaction with Towry as the reasons for their decision.

I am not satisfied on all the evidence that Ms Simpson encouraged or persuaded any client to transfer their assets to Raymond James. I note that, of the clients listed in the Table, one, Mark Schofield, is her brother in law and their families meet every week. Another, Maureen Board, is her mother in law, whom she sees almost every day. The client, Joyce Holgate, is someone with whom she organises local charity and fundraising events and another, Barbara Park, is a close personal friend of many years standing. Whilst I have not heard evidence from these or other clients I am not satisfied that Ms Simpson solicited any clients in breach of her contract. I find that their decision to transfer was made without any element of persuasion by Ms Simpson.

Amongst the individual Defendants Mr Spain knew both James Chandler and Wayne Hayhurst, and the three of them kept in regular contact both before and after the acquisition, discussing their various options and opportunities, including Raymond James. I have dealt above with my findings in relation to the agreement of the SOFAC as between these three Defendants. So far as the other Defendants are concerned, before Mr Spain left Edward Jones he had not known Barry Bennett, Pieter Burger, Stuart Hutton or Tracey Simpson.

As soon as news of the acquisition broke, Mr Spain was approached by a number of rival organisations. He had heard previously about Raymond James from a colleague, Mark Slobham, who spoke positively about the firm. Whilst all options were still open for Mr Spain, he decided to contact them and make some inquiries. He was one of the first advisers to do so.

His first meeting with Raymond James was on 28 October. He was the first Edward Jones adviser whom Mr Cherriman had met and since, at this point, Raymond James had not yet received legal advice themselves, Mr Cherriman did not express a view as to the restrictive covenants in Mr Spain’s contract. Mr Spain recalled that there was a general discussion about the Raymond James operation and that Mr Cherriman was keen to understand how he had been able to build his business for Edward Jones from scratch. It is clear that Raymond James regarded Mr Spain very highly from the start and that they saw him as someone who would be successful with them. Whilst he was “borderline” in terms of the criteria, Mr Cherriman regarded him as a good adviser with a proven track record, who had reached good asset and revenue levels in a very short space of time through “highly proactive prospecting and networking.”

Mr Cherriman’s handwritten notes of this meeting included a section headed by the name “Tom Spain”, which were notes of his answers to Mr Cherriman’s questions about his personal achievements and wishes. They are not all legible, or easy to read but Mr Cherriman thought that they included the following words, “Where we are. – why does he want to work. – come to RJIS – a project in Africa. cap salary – personal. Would give away money – wants his legacy – very portable. - drives him – make a clearer path.” Mr Cherriman referred to being “a bit shocked” to discover, at this meeting, that Mr Spain was an ex-minister of the church, who had been involved in a great deal of charity work, including a project in Africa, which he was interested in being involved in again in the future. He understood Mr Spain to be indicating at this point that money was not a driver for him and that he wanted his legacy to be people’s respect.

Mr Tolley suggested that, by the word “portable”, Mr Spain was in fact referring to his client base, but Mr Cherriman rejected that suggestion, as do I. Cynthia Poole conducted the subsequent AQ meeting with Mr Spain herself, in the absence of Mr Hazelton and Mr Cherriman, on 2 November. She recalled speaking to Mr Spain on a number of occasions about the clean water project he had undertaken in Africa, of which he was immensely proud, and said that this was what he was referring to in speaking about his legacy. She thought that the word might be “potable” in any event, referring to the drinking water itself, if not to the systems for carrying it to the villages. I agree that the handwriting is unclear at this point. Whatever the word is, however, I am entirely satisfied that this discussion had nothing to do with a portable client base, or bringing a base of clients over to Raymond James with him, and everything to do with his clean water project in Africa and the importance, to him personally, of that work.

Mr Spain signed a confidentiality agreement and returned it on 2 November, when he attended the AQ meeting with Mrs Poole. Mr Spain stated that he had explained, at each of the meetings on 28 October and 2 November, both his intention to start again from scratch and his hope that, in time, some of the former Edward Jones clients would contact him and want to continue working with him in the future. In his AQ he had referred to this specifically, when drawing attention to his non-solicitation clause, stating “Nevertheless plan to live and work in the same community and confident from client reactions that where I move to clients would follow.”

A note made by Mr Cherriman indicated that, on 28 October, he had written the words “99% of clients will come with him”. He could not recall whether Mr Spain had said this to him at that early meeting, but I find that he had. Mr Cherriman’s assessment of him as “a quite confident and ambitious individual” and as the kind of person who “wanted to be at 100 million after 2 minutes” was in my view an accurate assessment, having heard his evidence at this trial. Further, Mr Cherriman accepted that he may well have “pushed him on the matter” at this time, before the position on the restrictive covenants was clear.

However, the position had changed by 2 November, and I find that the need for him to abide by his restrictive covenants was made absolutely clear at this meeting. Further, on 25 November, Mr Hazelton made sure that he met Mr Spain himself, so that he could go through the contents of the script with him ensure that he understood his legal obligations and the serious results, for him, if Raymond James discovered that he was in breach of his covenants. He also emphasised the importance of Mr Spain obtaining his own legal advice, although Mr Spain had already met a solicitor shortly after the meeting on 2 November.

Mrs Poole had noted, on or just after the 2 November meeting, that Mr Spain was shortly to see a solicitor. She had noted that he told her, as was the case, that a number of advisers were considering putting a group together for the purposes of sharing the costs of obtaining the necessary legal advice in respect of their contracts. She had also noted that “They believe they have flexibility during time before they sign a new Towry Law contract to be able to take clients.”

Mrs Poole’s evidence was that this was a reference to something she herself had suggested to Mr Spain. She was referring to the practice, not uncommon when financial advisers are leaving an “employed environment”, of successfully negotiating with their former employer, as part of the terms of their departure, to be able to take a segment of their client base with them, in particular members of their family or close friends. She explained that, in her experience, employers will often have regard to the practical realities in this situation and agree to these investors going with the adviser. Mrs Poole gave a number of previous examples of situations where this had occurred. In this case, however, whilst Mr Spain was initially interested in this possibility, he did not report back to her on any attempts to negotiate and she did not follow it up. The circumstances surrounding the deadline for acceptance of the new contracts and the advisers’ departures were such that, in her view, “it became evident really quickly that it was not an environment conducive to those kind of reasonable negotiations.” I accept that evidence.

Mr Spain successfully passed his knowledge and role-play assessments in early January and entered into his SLA on 19 January.

Towry had written to Mr Spain’s clients on 22 December, informing them that he had left and that their new adviser was Gary Hans. They were also told in this letter that the branch administrator, Sue Milne, would remain at the local branch and continue to deal with any queries. However, Ms Milne was then made redundant on 22 January and placed on garden leave, and the office was closed.

Mr Spain denied that he had acted, at any stage, in breach of his restrictive covenants. He never contacted any client himself unless that client asked him to make contact, but any client who wished to contact him could easily find his details through the internet or the FSA Register, or simply because they had retained his business card or mobile phone number. Whenever he was contacted by a client, he explained that, if they wanted to see him, that needed to be their own decision because he could not solicit any clients from Edward Jones. If a client then asked him to come and see them he made an appointment to do so. There is no dispute that he would then tell them about Raymond James and answer any questions they might have about the company or the service offered.

I find that, following the acquisition, many clients were contacting Mr Spain, asking him what was happening, expressing concern, asking him what his own plans were and telling him that they wanted to stay with him. Some of them were stopping him in the street to talk to him about it. I find that he told Mrs Poole about this as early as 2 November, because her notes of the meeting on that day included a reference to “His clients have noted they want to come with him.” I find that they continued to call him during November and December and that he took, or returned these calls and explained the position to them, as set out above.

After he left Towry, clients continued to contact Mr Spain and to ask him to come and see them. He did so. After hearing that he could continue to advise them and offer similar services, the clients whose names are listed in the Table, comprising some 59 households, with most of whom Mr Spain had had a particularly close relationship, asked him to arrange for their investments to be transferred. All of them completed a HDYH form, as Raymond James required.

The two clients called on behalf of Mr Spain were Wendy Edmond and Martin Hill. I also heard from the hearsay witness Peter Elphick.

Mrs Edmond, now retired, and her husband had been advised by Mr Spain since they had first invested with Edward Jones, meeting him when he was knocking on doors and cold calling. They made an appointment to discuss their investments with him and they also looked into Edward Jones, which was a large company with a good reputation. She said that they had “really clicked with Tom” who had “total integrity” and they came to trust him totally. They liked to drop into the local office to keep in touch with him and they would do so regularly. They wanted a wide portfolio.

It was at an appointment with Mr Spain in late October that he told them about the acquisition. Mrs Edmond was not very pleased at the prospect of change and no-one was sure what was happening. In a number of very short calls in November, in which I find that Mr Spain was returning calls from Mr or Mrs Edmond and leaving messages, Mrs Edmond stated that he told them that he could have no contact with them and could not act for them and that they would be getting a new adviser. Nor did he indicate in those messages that there would come a time when he could communicate with them. I accept that evidence which, in my view, points away from the planned intention to solicit clients alleged against Mr Spain in this case.

Mr and Mrs Edmond had a few meetings with Gary Hans, who was now their new Towry adviser. He assured them that the Market Harborough office would stay open, but it then closed down. They were told that there would be an office in Leicester, but that also closed and they were then told that the office would be in Nottingham, which is some distance away.

They explored the Towry proposition carefully and had a number of conversations with Mr Hans about it, but they considered that what Towry were offering was a “completely different scenario” and was not for them. Nor could Towry offer a local office, which was important to them. Mrs Edmond felt that Mr Hans was putting pressure on them and she was very annoyed when he said that if they waited for Tom and “Tom messed up” they could lose everything.

They decided to contact Mr Spain but he told them initially that he could not talk to them until February. They then contacted him again in February and he came to see them, at their invitation. They talked about Raymond James. There is no dispute that Mr Spain showed them the literature, explained the fee position, the protection arrangements for their investments and the lack of any fee for transfer. The relevant investment documents were completed and signed. Mrs Edmond agreed that she was satisfied from what he had told her that she would get the service she wanted from Raymond James. On the HDYH form they stated “Requested an appointment from Tom”.

Mrs Edmond stated that the reasons they transferred their investments were the fact that their adviser had changed, the fact that the local office closed and that the quality of the service offered afterwards was not as good, the range of services offered by Raymond James, their good reputation, and the fact that they trusted Mr Spain and wanted to go where he was. She observed at one point that “Towry may have bought Edward Jones but they didn’t buy us or our money.”

Martin Hill is a private client solicitor and tax adviser. He became a client of Edward Jones in early 2008, with Mr Spain as his adviser. He had first met Mr Spain in August 2007, when he introduced himself at Mr Hill’s office, which was also in Market Harborough. Mr Hill had also referred some of his clients to him and considered that Mr Spain was extremely knowledgeable about his subject. He described Market Harborough as a small town in which the professional community is a close and friendly one. Whilst the company behind Mr Spain had good research resources, the personal and professional relationship he had was first and foremost with Mr Spain.

As soon as he received the letter from Edward Jones about the acquisition and heard the same news from Mr Spain, he told him that he had a problem with that. A previous problem involving an elderly client of his and the need for recourse to the Financial Ombudsman meant that he decided immediately that he would not under any circumstances be a client of Towry’s. As a solicitor he appreciated that Mr Spain would be subject to restrictive covenants but he said that he was determined from the outset to transfer his business to wherever Mr Spain went, if that were possible.

Mr Hill did not accept the suggestion, which Mr Spain also denied, that Mr Spain had “sounded him out” in October or November about him moving with him. I find that Mr Spain made no such approach. I accept Mr Hill’s evidence that he had already told Mr Spain that he was not going to stay with Towry and that, as he maintained, it was he who sounded Mr Spain out about the possibility of following him once he knew where he was going. They continued, meanwhile, to speak on the phone about personal business.

Mr Tolley suggested that Mr Spain was effectively laying the ground for solicitation generally by telling clients after the acquisition that he was weighing up his options and deciding whether Towry was the right place for him. However, on the evidence I’ve heard I find it more likely that Mr Spain’s clients were openly volunteering to him that they wished to follow him and asking him to let them know where he went.

During January, Mr Hill stopped him in the street one day and Mr Spain then told him that he had left. Mr Hill told Mr Spain that he wanted to instruct him if he set up locally with another company and he asked him to let him know when he had. Mr Spain did so when he had joined Raymond James and Mr Hill then asked him to come and see him.

At their meeting, on 15 February, there is no dispute that Mr Spain told him about Raymond James and showed him various summaries of the recommendations they had for investments. The relevant investment documents were completed and signed, some being concluded on another occasion. Mr Hill, who is fully conversant with investments, transfers in specie and execution only business, stated that he did not need any of the terminology to be explained. He opted for the ‘execution only’ service on the basis that he thought, erroneously as it turned out, that it would not take long for his assets to be transferred across, at which point, the normal advisory service could be resumed. On the HDYH form he stated, “Know Tom socially I asked him to act on my behalf.”

Mr Hill therefore wrote to Towry in February and March informing them that he wished to cease to be a client of theirs. Two people then telephoned him, one of whom was Gary Hans, and sought to persuade him, unsuccessfully, to change his mind. Mr Hill said that he was particularly displeased by the fact that Mr Hans sought to denigrate Mr Spain’s performance as an adviser. He stated that his reasons for transferring were first and foremost that Mr Spain would be his adviser and secondly, that Raymond James were not Towry.

It is correct that Mr Hill subsequently wrote letters of complaint to Mr Fisher, which were expressed in robust terms. I do not accept, however, that his obvious displeasure with Towry’s conduct means that I should reject as unreliable his evidence concerning his dealings with Mr Spain. Mr Hill was not alone amongst the clients in expressing dissatisfaction with Towry. Having regard to all the evidence I find, on balance, that similar concerns would have been expressed by a number of other clients, if they had been called. Mr Hill was, in my view, a credible witness and his evidence as to the circumstances surrounding his decision to transfer was entirely consistent with the evidence of other clients called at this trial. I accept it.

In early March Lee MacDonald, a Towry wealth adviser, was allocated some of the clients who had formerly been allocated to Gary Hans. He attempted to contact them but, by then, a number of them had already submitted requests to transfer their investments to Raymond James. He agreed in cross-examination that he was unable to establish any contact at all with many of them and said that he found it odd that people were unwilling to speak to their new adviser.

He stated that he made a number of appointments with people whose previous adviser had been Tom Spain and that, between the initial telephone contact with them and the meeting “it became apparent that Mr Spain had been in contact with a significant number of them.” I accept that there had by now been contact between Mr Spain and many of the clients whom he had previously advised, but I do not accept, having regard to the whole of the evidence, that Mr Spain had made contact with any of them before they came to him and asked him to come and see them.

Mr MacDonald named, by way of example in this respect, the clients Mr Brown, Peter Elphick and Peter Coopey. He described Mr Elphick as being initially “very interested in the Towry proposal” but said that “by the time I attempted to arrange to see him in person to present my recommendations, he had spoken to Thomas Spain and was no longer interested in meeting me.” The inference I am invited to draw from this evidence is clear, but I heard evidence from Mr Elphick himself, as one of the hearsay witnesses called in this case.

Mr Elphick stated that Mr Macdonald had in fact been to see him in March. At that meeting, “he went through what they could do for me. But can I mention that I wasn’t too happy the whole business being transferred to Towry in the first place. And I wasn’t sure I’d get the same service.” After that meeting he then contacted Mr Spain, who came to see him at his request in about mid to late March. Taken by Mr Tolley to the relevant passage in Mr MacDonald’s witness statement he added, “The only thing I can say about that is that I was happy to listen to what Towry had to tell me, but I was still a little unhappy about the arrangement being taken over. And as far as he was concerned I left it at that.”

I prefer Mr Elphick’s account. On balance, I find that there was a meeting with Mr Macdonald, that Mr Elphick made no reference to having been in contact with Mr Spain and that it was only after that meeting that Mr Elphick then telephoned Mr Spain and asked him to come and see him. Mr Macdonald’s evidence therefore provides no support for the allegation that Mr Spain was soliciting clients in breach of his contract.

The details given by Mr Spain in his witness statement concerning the other clients who asked to be transferred disclose similar reasons for deciding to transfer to those given by Mr Hill and Mrs Edmond in the witness box, namely the strong wish to retain Mr Spain as their adviser, the close relationship and the trust they had in him, which, in Mr Spain’s case in particular, indicated a strong personal loyalty towards him on the part of many clients; the availability of a local office in their area; the lack of contact from Towry, or an unwillingness to deal with someone based some distance away; or their unhappiness with what they were told about the Towry proposition by Gary Hans. A number of the clients in the Table are close, personal friends of Mr Spain, in particular friends from the church he attends. I find that the clients who asked to transfer decided that they wished to do so without any element of persuasion by Mr Spain.

The execution only service selected by clients when completing the relevant forms, including Mr Rudge about whom Mr Spain was asked specifically, was in my view selected for precisely the same reasons as applied in the case of the other clients and advisers in respect of whom this point was made. It does not further Towry’s case on the issue of solicitation. I am not satisfied on all the evidence that Mr Spain encouraged or persuaded any client to transfer to Raymond James.

Although he had met Barry Bennett and Pieter Burger at regional meetings, Mr Hutton did not know either of them and had never worked with then before. He never discussed his own business plans with them before going to Raymond James. He did not know and had never met James Chandler, Wayne Hayhurst, Tracey Simpson or Tom Spain.

In the immediate aftermath of the acquisition many clients contacted Mr Hutton, after receiving the letters from Tim Kirley and Andrew Fisher. Despite the uncertainty surrounding his own future, I accept his evidence that he spent the first couple of weeks seeking to reassure them, as he had been asked to do. At the same time he was looking to see what else the market place might offer if he was not offered employment at Towry. A number of rival organisations had been in touch and, from 5 November onwards, he had meetings with a number of companies, including Positive Solutions, Tenet Group, St James’ Place and Raymond James. He had heard about Raymond James from a friend some two years earlier and was attracted by its obvious similarities with Edward Jones. He rang them on 27 October and a meeting with Mr Cherriman was arranged for 5 November.

At that first meeting I find that Mr Cherriman talked through with him Raymond James’ view as to the restrictive covenants in his contract and Mr Hutton’s legal obligations in this respect. Mr Cherriman regarded Mr Hutton as “borderline” in terms of the criteria and at that stage, having discussed the matter with Mr Hazelton, they decided not to progress his application. Mr Cherriman told Mr Hutton that he was concerned about his lack of experience in the industry and as to whether it was enough for him to be an independent Branch Principal. At the time Mr Hutton accepted that and left the matter there.

On 9 December, having decided to leave Towry, and shortly before resigning on that date, Mr Hutton emailed Raymond James again, asking if they would reconsider him. They decided to call him in for an AQ meeting and the meeting initially arranged for 18 December was then moved to 5 January. Mr Hutton stated that, during December, he did not contact clients himself, either to tell them he was leaving or that he had left, and he did not mention Raymond James. However, a number of his clients were contacting him, expressing their concerns, which I set out in detail below, and making it clear that they wished to retain him as their adviser. Sometimes he bumped into clients socially or when out in the town, when he also told them that he had left. I accept that evidence.

At the meeting on 5 January Mr Hazelton went through the script with Mr Hutton and emphasised the importance of compliance with his contractual restrictions. His evidence was that Mr Hutton seemed already well apprised of what he could and could not do. I find that Mr Hutton had already received legal advice on his contract by the time of this meeting and relayed this to Mr Hazelton, who noted it down in his handwritten notes. Mr Hutton recalled a detailed discussion about his restrictive covenants at this meeting. Raymond James made it clear both that he was to obtain his own legal advice about them and that there would be very serious consequences for him if he breached them, when his contract with Raymond James would be terminated. It seems that Mr Hutton obtained further legal advice in March, so as to make it clear to Raymond James that he understood his contractual obligations and was taking them very seriously.

At the meeting on 5 January, there was then a detailed discussion as to his ability to build a successful business under their umbrella and how he had done this in the past. Mr Hazelton considered, having met him, that he was someone who had managed to build up a good client base pretty quickly, with relatively little experience, and that having been in business before on his own he would have the relevant experience to run a branch.

Mr Hutton said that it would have been naïve of both him and Raymond James to think that none of his clients would consider moving to him eventually, not least his parents. He had referred expressly to his hopes in this respect in his AQ, stating, “Although I have over 200 clients in my business that I have signed up over the past few years, I have a very strong core of clients who are the growing strength in my business. These clients are keen to remain with me although fully understand my contractual conditions.” Mr Cherriman regarded this statement on the AQ as an “impassioned plea” by someone who had been rejected first time round and that he did not regard it with either interest or suspicion. I agree that it is likely to have been written with a view to persuading Mr Cherriman of his merits as a candidate, but Mr Hutton did not dispute that this was his genuine belief at the time.

Nevertheless I find that Mr Hutton, Mr Cherriman and Mr Hazelton all approached this meeting on the basis that he would have to start again and work hard to build a successful business from scratch. I find that, during the meeting, Mr Hutton said nothing about any of his individual, Edward Jones clients or about the value of their assets, and that he was asked no questions about any of them.

Mr Hutton proceeded to the second stage and passed the knowledge and role play tests later on in January. Like Mr Bennett and Mr Burger he did not qualify for transition assistance. On 2 February he entered into the SLA with Raymond James, setting up an office in Cheltenham where he lives and being able, because of the flexible working arrangements, to continue to pursue his other local activities and interests, in particular his role in public life.

From December onwards I find on the evidence that Mr Hutton was receiving calls from a large number of clients, who either still had his details or could easily have obtained them from the internet. Some had not been contacted by anyone from Towry, whereas others were contacting Mr Hutton after they had met a Towry representative. Concern was commonly expressed to him about the acquisition and about his departure. He told them that Edward Jones would still be able to assist them and that they should contact Paul Brisley in the office with any queries. If they already had appointments booked to see someone from Towry, he encouraged them to have that meeting. Others expressed concerns to him, or contacted him again, after such a meeting had taken place.

The common complaint from those clients who called him was that, contrary to their original understanding, business was not continuing as usual. In many cases there had been a complete lack of communication and clients contacted him in March not having heard anything from Towry since the original letter of 23 October. Clients with life savings were not receiving any correspondence and the local link for managing their anxieties had disappeared. In some cases there were transaction issues and clients were not receiving their regular income, which they relied upon to pay bills. For other clients, the initial meeting with Towry had been with someone who was not local and, from mid-February, there was no longer any local office in Winchcombe, where most of Mr Hutton’s former clients lived.

The Towry wealth adviser Paul Evans was based in Chepstow, some fifty miles away. He had been allocated Mr Hutton’s clients and a number of clients expressed concern to Mr Hutton about his approach or about the Towry proposition he had presented, which was very different from the one they had. A number of those who had seen an adviser from Towry told him that they felt under pressure to sign the documents early on. Having to make quick decisions made them uneasy.

Mr Hutton accepted that the clients who asked him to transfer their investments were clients with investments of higher value than average. Rejecting the allegation that he deliberately targeted such clients and encouraged them to transfer, he stated that he regarded it as wholly unsurprising that these clients were contacting him and expressing concern. They had been used to regular and consistent contact, in particular regular face to face contact with a local and easily accessible adviser. For those in this category, who had received no communication from Towry, alarm bells were more likely to ring. In addition, those clients who had been contacted were expressing concern about the speed at which they were being advised to move their investments into the IIM.

When a client contacted Mr Hutton for the first time, he said that he always asked them to contact Towry direct because they were now Towry’s clients and he could not assist. Despite this, many clients asked him to let them know when they could contact him again and when he could meet them. He stated that he explained his situation very carefully and told them what his contract required him to do, and not to do. He understood exactly the nature of his obligations under the contract, having taken legal advice, and he stated that he complied with the restrictions in full. Those clients who did come back to him told him that they wanted him to continue to advise them and asked him to come and see them. He did so. Mr Hutton set out in detail in his witness statement the circumstances in which the 25 households, comprising the clients listed in the Table, came to transfer their investments to Raymond James. All of them completed an HDYH form.

The two clients called to give evidence on his behalf were Steven Cox and Roy Phinn. I also heard from the hearsay witness David Hillam.

Steven Cox first met Mr Hutton in 2007 when he knocked on their door asking if they needed financial advice. He was about to take early retirement from his managerial post with Kraft foods, and they arranged a meeting. They became clients of Edward Jones and their relationship with Mr Hutton developed into a friendship over the following months. They came to trust him completely and had complete confidence in him. Mr Cox said that his first reaction to the news of the acquisition, on receipt of the October letters, was “what was going to happen to Stuart?” He thought he had spoken to Mr Hutton once the acquisition was announced, either when he rang Mr Hutton or bumped into him in the street, when he asked him what he was going to do. Mr Hutton responded that he did not know and that his options were open. Mr Tolley suggested that Mr Hutton was sounding him out about whether he would move to wherever he decided to move, but Mr Cox denied this. I accept Mr Cox’s evidence about this and find that, after this brief conversation, he had no further conversation with Mr Hutton until the end of January or early February, as set out below.

He first found out that Mr Hutton had left Towry in early January 2010, when he phoned the office and was told that he had left in December. On 10 January he wrote a letter to Mr Hutton, hand-delivering it to his home, in which he referred to having discovered that he had left, to being “extremely disappointed” that he was no longer their adviser and asking him to contact them if he returned to being a financial adviser so that they could discuss the possibility of renewing their business relationship with him. Receiving no reply, he then phoned Mr Hutton at the end of January or beginning of February and left a message asking him to contact him. Mr Hutton did so and Mr Cox asked him to come round to his home to talk to him. Mr Hutton’s mobile records show that he made a five minute call to Mr Cox on 27 January, which I find was probably Mr Hutton returning Mr Cox’s call.

Mr Cox said that he had decided not to phone Mr Hutton straightaway and to write to him first, because in his working life he had dealt with people who had been made redundant or been sacked, and some of them took it very hard. He thought it more appropriate to write but he did then phone him, as a friend, when he received no rely to his letter. I accept that evidence and I reject without hesitation the suggestion, which he denied, that Mr Hutton had asked him to write the letter, in order to indicate that he was keen for Mr Hutton to continue to advise him.

After this meeting, at the end of February, when Mr Hutton mentioned Raymond James, Mr Cox requested a follow up immediately and met again on 15 March, when Mr Hutton outlined his proposition and the fee structure, which was accepted. There may have been a further meeting, because the dates of the various investment documents indicate this, but nothing turns on the number of meetings. More important is whether it has been shown that Mr Hutton solicited Mr Cox to transfer his investments to Raymond James.

Mr Cox described Mr Hutton as “the only financial adviser we would have.” He stated that, if he had not gone with Mr Hutton, he would have managed his investments himself as he had done in the past. Having decided to become a client of Mr Hutton’s at Raymond James, Mr Cox requested a transfer of his assets and completed or signed all the relevant investment documents. He was cross-examined closely on the documents and agreed that Mr Hutton had given him an overview of Raymond James’ investment proposition, including the relevant fees. He stated that Mr Hutton did not have to explain about the advisory service indicated on the account form, because “he didn’t need to re-explain something that I knew.” Nor could he remember Mr Hutton mentioning that there would be no charge for transfer. He completed the HDYH form with the words “We contacted Stuart in January by letter and then telephone (mobile number on old EJ business card).” He rejected the suggestion that Mr Hutton had told him to indicate on the form how contact had been made. I find that Mr Cox completed it entirely on his own.

Earlier on in this process Amanda Jenkins from Towry had phoned Mr Cox and arranged a meeting. Mr Cox stated, “I accepted at first but then called back as I had already decided to leave Towry and did not want to waste Amanda’s time.” He spoke to a different person on this occasion, who asked him what he was going to do and he told them that he had not made up his mind. At this point he had contacted Mr Hutton in the circumstances described above and had either asked him to visit them or had already had the first meeting with Mr Hutton in February. Mr Cox said that he never saw himself as a client of Edward Jones, his main relationship being with Mr Hutton. The adviser allocated to them was based in Dina Powys, so that he would not have had easy access to her and he did not consider that he would be able to develop the same relationship that he had with Mr Hutton.

Asked why he understood it to be in his interests to move his investments to Raymond James, Mr Cox stated, “ …you need to understand my psyche, right. It wasn’t a case of moving them to Raymond James. I had one investor. My investor was Mr Hutton. If I didn’t go with Mr Hutton then I would manage it myself…my adviser and relationship is totally with Stuart Hutton…I have complete confidence in the ability of Mr Hutton and his honesty and integrity. So the other platforms are irrelevant.” When asked how it came about that his assets came to be transferred, or how he made that decision, his response was, “Because I wanted to be with Stuart Hutton. His platform was Raymond James. So, naturally, I will move my assets across to Raymond James.” He denied that Mr Hutton had ever made any recommendation that he move his assets. Nor did he accept the suggestion that Mr Hutton had “influenced” him to move them, accepting only that “Mr Hutton, as a person and as my previous adviser, and his open and honest approach, influenced me that I wanted him as my adviser.” I accept that evidence.

Roy Phinn had been a client of Edward Jones for about three years before the acquisition. Mr Hutton was his second adviser, after his first adviser moved away. He already knew Mr Hutton, because he had done some plumbing work for him in the past. He described the identity of his adviser and the range of services provided by Edward Jones as both important factors for him.

His immediate reaction to news of the acquisition was concern for the safety of his investments, about 80% of which were tied up in shares. He described Towry as being “very slow to react”. He did not receive a letter informing him as to the change of adviser until 4 March. His adviser was Rowan Gregory and, although he tried to make an appointment with him, he had to wait because Mr Gregory was “snowed under”. Mr Gregory then left and Mr Phinn learned that he had resigned. He did not care for Towry’s proposition. He said that he wanted to have control over his money and to be able to get to it when he wanted to. Nor was he pleased that the local office had closed or that his adviser had changed.

Mr Phinn first found out that Mr Hutton had left sometime in 2010, when he called him to find out what was going on, at which point Mr Hutton explained that he had resigned and that he could not help him because he was under contractual restrictions and could not speak to him. He contacted Mr Hutton again later on in March, when he expressed dissatisfaction with what Towry were offering and asked Mr Hutton to come and see him. It was then that I find Mr Hutton first mentioned Raymond James.

Mr Hutton came to see him on 21 April, Mr Phinn stating that he came and “presented to me on Raymond James” and at which meeting the relevant investment documents were completed and signed. Mr Phinn accepted that, during this meeting, Mr Huton had explained what the fees would be, and the protection in place for his investments, although he could not recall Mr Hutton saying that there would be no charge for transferring the assets across. He agreed with Mr Tolley’s suggestion that he was satisfied that the service offered met his requirements, although he also referred to having done his own research on Raymond James, and he agreed with the suggestion that he was persuaded that it was safe to transfer his investments across. He completed the HDYH by saying, “I have known Stuart for a number of years and have been his plumber in a number of jobs. When I found out he had left from the Winchcombe office, I contacted him to discuss the situation.”

Mr Phinn gave as his reasons for transferring to Raymond James the fact that Mr Hutton was his friend and he trusted him, the availability of a local office and the range of services offered, which appeared to be the same as Edward Jones.

The evidence of James Johnson, Towry wealth adviser, was that in mid-January 2009 he was allocated a number of clients whose adviser had been Mr Hutton. Until then the adviser Paul Evans had been responsible for dealing with Mr Hutton’s clients but Monica Burman took the view that he would not have the capacity to service all of his own clients and all of Mr Hutton’s, so that some were allocated to Mr Johnson. He was asked to “make sure everyone was looked after very quickly”, which gives an indication, in my view, of the level of concern at Towry at the delays that there had been in contacting former Edward Jones clients.

Mr Johnson stated that he attempted to meet each of the clients allocated to him, but that he was in fact able to meet only one. This was David Hillam, whose adviser at Edward Jones had originally been Elizabeth O’Dell, whose portfolio, in Mr Johnson’s view, could have benefited by investing through the IIM. He stated that he told Mr Hillam this when he spoke to him on 27 January and that he met him on 3 March, when he agreed to put together information that Mr Hillam had requested and to return to discuss the specifics. However, when he telephoned Mr Hillam to arrange this second meeting for 18 March, “he informed me that Stuart Hutton had contacted him and he had agreed to meet Mr Hutton to discuss the service offered by Raymond James.” In their second meeting Mr Hillam’s attitude had changed and he no longer seemed interested in Towry or the IIM. He told him that he had been visited by Mr Hutton and that he would be transferring to Raymond James.

Mr Hillam gave evidence, as one of the hearsay witnesses in this trial, when a rather different picture emerged as to what had happened. He thought that his first meeting with Mr Johnson was on 17 February. Mr Johnson explained that Towry could offer two levels of service. One was a purely dealing service and one was a fully discretionary service. Mr Hillam referred to the service he had at Edward Jones, when he consulted with his adviser and she gave him various alternatives, of which they would discuss the pros and cons and he would then make a decision as to what investment to buy. Mr Johnson told him that that was a service Towry would not offer. Mr Hillam expressed his reservations and said that he would have to make enquiries elsewhere to see if he could find another adviser who could offer that service.

He then contacted Ms O’Dell, but she told him she had left. He explained the service he wanted and asked her if she knew of anyone. She sent him Mr Hutton’s contact details. At that point, about late February, he had contacted Mr Hutton and he was meeting Mr Hutton at the same time as the other meetings with Mr Johnson were being arranged. There was some confusion as to the dates on which these meetings took place, but nothing turns on that in my view. The relevant aspect of this evidence is that Mr Johnson’s account, which might suggest that Mr Hillam was about to sign up to the IIM until Mr Hutton persuaded him to transfer instead to Raymond James, is in my view incorrect. I find that Mr Hillam was not happy that he would no longer be able to get the service he had at Edward Jones; that he sought out another adviser who could provide it; and that he decided for himself to move to Raymond James. This evidence provides no support for the allegation that Mr Hutton solicited clients to transfer.

Nor do I regard as supportive of an allegation of soliciting the evidence of Paul Evans, that several clients of Mr Hutton were initially happy to discuss Towry’s services with him at meetings, but then changed their minds and cancelled further meetings, telling him that they would be staying with Stuart Hutton. Whilst this evidence is subject to the same deficiencies to which I have already referred in other cases, this account is in fact entirely consistent with Mr Hutton’s own evidence as to what clients were telling him when they contacted him and asked him to go and see them.

On the basis of the evidence I heard from the clients called, I consider there to be no proper basis for inferring that Mr Hutton encouraged or persuaded either of those clients or indeed any other client listed in the Table to transfer. I find that their decision to transfer was arrived at without any element of persuasion by him and I am not satisfied therefore that Mr Hutton solicited any client in breach of his contract of employment.

Given these findings it will be apparent that I reject Mr Tolley’s submission that the inferences against the individual Defendants in this case are “overwhelmingly strong” and that the material on which they are based is cogent. Whilst I have not addressed all the points made by Mr Tolley in seeking to sustain that submission, I have had regard to them in arriving at my conclusions. I summarise below some of the main points arising from the general submissions made in this case, to which I have had regard in arriving at my findings in the cases of all the Defendants.

It is correct, as Mr Anderson stated, that, from 4 February onwards, Towry received a large number of similar requests from Raymond James, on behalf of clients whose adviser had previously been one of the individual Defendants, to transfer their investments under management to Raymond James. Requests for references, in respect of all the Defendants save Ms Simpson, had been received from Raymond James during January and there was already a high index of suspicion regarding solicitation activity, as shown by Mr Donlon’s letter to Mr Bennett dated 25 January.

It is, however, unsurprising that the format of these requests was almost identical. The similarities in respect of the transfer documentation completed with the clients and then received by Towry is, as Mr Quinn submitted, equally consistent with the relevant transfer requests having been made without solicitation. The necessary process for transfer required similar forms to be completed and signed. The real issue in this case is how, and in what circumstances those forms came to be completed, signed and submitted by those clients and I have set out above my findings in this respect in relation to the individual Defendants.

In my judgment it is clear on the evidence in this case that Towry were rocked, both by the numbers of top tier advisers who decided to leave and by the scale of the transfer requests from clients subsequently submitted from a competitor organisation, where six of the seven individual Defendants in this case had been offered positions as Branch Principals. I accept that, for Towry, such losses were unprecedented. In previous acquisitions, as Mr Fisher stated, Towry had always retained the majority of the acquired advisers.

Whilst Towry were unable to state how many clients of those advisers who had moved to rival organisations other than Raymond James subsequently sought transfers, I do not regard this point as having particular significance in the circumstances of this case. Quite apart from Mr Anderson’s riposte that “suing everybody or not suing anyone at all” is not something that Towry have to justify, I accept on the evidence before me that the numbers of transfer requests received from Raymond James were higher than those received from other organisations and that, by July 2010, the majority of the clients being advised by the individual Defendants were former clients of Edward Jones.

Further, Mr Quinn’s point that the evidence shows that Mr Goodship, who stayed with Towry, in fact retained the same percentage (85%) of his clients as Mr Burger, who moved to Raymond James, is not of itself significant, save as part of the wider picture clearly established by the evidence in this case, that the identity of their financial adviser and the trust and loyalty towards someone with whom they had a close, personal and professional relationship was of paramount importance to many Edward Jones clients.

In my judgment Towry seriously underestimated the importance of these factors in this case. Mr Fisher’s sincere and strongly held beliefs as to the superiority of the Towry model and of the IIM left little room for acceptance that others might take a different view and decide to go elsewhere, without any element of persuasion or encouragement for them to do so. The primary reason for the acquisition, identified by Mr Fisher, had been that it would substantially increase Towry’s total assets under advice. The amount of transfer requests received, within a relatively short period, and the value of the assets being lost to a competitor organisation led in my view to an assumption, which the evidence has shown to be unsustainable, that there must have been solicitation. Towry’s unwillingness to contemplate any other explanation for what occurred was also illustrated by Paul Wright’s admission, during cross-examination, that he had not even read any of the witness statements of the individual Defendants in this case.

Mr Anderson, who accepted that he had never been a financial adviser himself, is of course entitled to his view that there was “systemic working” through the client bank to transfer assets out; and that such high numbers of transfer requests “…demonstrate to us that there was significant solicitation activity targeted to those client banks over a very short period of time.” In my judgment, however, the evidence shows that there were other, powerful factors operating in this case, referred to in detail above, which were nothing to do with any wrongful conduct by the Defendants and which I find accounted for the volume of transfer requests received by Towry over the relevant period.

In addition to the strong desire of many clients to retain the services of the person who had been their adviser, and to be able still to visit him or her in a local office and enjoy all the benefits of that local presence in the community, there was clearly a considerable degree of client dissatisfaction with Towry, either because there had been no contact at all from their new adviser, or because such contact as there had been had led them to the view that Towry was not for them. I am not persuaded on the evidence in this case that there was any deliberate targeting, by any individual Defendant, of clients with larger investments for the purposes of solicitation. In respect of those clients who held assets of substantial value, the more likely I consider it would be that they would become concerned at any lack of, or delay in contact, or about the prospect of change generally or about the readily accessible, negative publicity concerning the Towry proposition. The more likely it would be, in my view, for such clients to want urgently to get in touch with the person who had hitherto been advising them and managing their portfolio, so as to ensure that they would continue to do so.

Nor do I regard as probative of solicitation Mr Anderson’s evidence that the individual Defendants had acted, in various ways, in breach of relevant regulatory requirements in their dealings with the clients. His evidence in this respect related in the main to alleged deficiencies in record-keeping at meetings with clients, and in the lack of preservation of notes of such meetings.

I do not consider it necessary to deal with these allegations in any detail. First, the allegations are all denied. The Defendants did not accept that, in making any necessary notes on the face of the relevant investment documents, rather than in separate notes, or indeed in any other respect relating to those documents, they were acting in breach of any regulatory requirement. Mr Anderson was not giving expert evidence in this respect but merely expressing his own personal view, with which the Defendants, including the senior managers at Raymond James, clearly did not agree. In any event, Mr Anderson realistically accepted that there can be a range of explanations for the failure to follow a particular regulation, including for example a misapprehension as to the applicability of the requirement. He also accepted that different financial services organisations have different methods of compliance with regulations, based on their own interpretation of the requirements, with which he may well disagree, but the fact of which does not seem to me to advance his arguments in this respect.

Secondly, a number of the Towry wealth advisers who gave evidence as to their meetings with clients did not themselves provide any records they had taken of such meetings, giving some indication of the lack of consensus as to the requirements of particular regulatory provisions. Thirdly, Mr Tolley made it clear during the course of the hearing that it was no part of his case to accuse any individual of breaches of FSA Rules or to invite me to make any such findings. Given the complexity of the requirements and the differences of opinion as to what constitutes compliance, I regard that as the right approach to take to this particular allegation. I do not consider it appropriate, or helpful, to make any such findings in this case on the basis of Mr Anderson’s personal opinion, which is disputed.

In any event, and perhaps most importantly, even if there were such breaches of regulatory requirements by any Defendant, I reject the suggestion that this is evidence from which it could, or should be inferred that the Defendants were soliciting clients and taking steps to conceal that fact. The specific attack Mr Anderson made, in respect of the execution only service requested by some clients, was in my view sufficiently explained by the evidence that, at that stage and whilst assets remained on the Edward Jones/Towry platform, the adviser was being instructed only to execute transfer, a method of operation which Mrs Poole and Mr Hazelton regarded as legitimate and unobjectionable.

In his closing submissions Mr Quinn criticised what he described as an insufficient challenge to the evidence from both the Defendants and from the clients who were called in this trial, submitting that I should not lightly reject the unequivocal evidence given by all of them that each client had decided for themselves to request a transfer of their assets to Raymond James, without any element of encouragement or persuasion.

However, in a case which was opened on the basis that the allegations of wrongful conduct depended entirely on the inferences I would be invited to draw from the evidence, it is understandable that Mr Tolley adopted a more exploratory approach to cross-examination, concentrating on the contents of contemporaneous documents to test the Defendants’ denials of wrongful conduct. In my view, and given the way in which Towry’s case on solicitation was articulated by Mr Anderson, no criticism is to be attached to a challenge, which proceeded on the basis of an intensive forensic examination of what particular documents were said to evidence. In the exploration of this evidence on behalf of Towry it is fair to say that no grain of sand was left unturned. However, applying the relevant legal principles to the whole of the evidence in this case, thoroughly tested as it was in cross-examination, the interpretation placed by Towry on the various documents relied upon was unsustainable.

I have considered with care the many points made in this respect in closing submissions presented on Towry’s behalf. On all the evidence in this trial, however, I find that Towry has not discharged the burden upon them of proving to the necessary civil standard that any client was solicited by the individual Defendants. There is some merit, in my view, in Mr Quinn’s submission that the focus on the investment documentation and completion of the requests to transfer, at the meetings between the clients and the individual advisers, meant that there was a failure to recognise the significance of earlier events in the factual matrix. By concentrating more on how the transfer requests were then processed, than on why this was then being done and what it was that had led to the meeting at which those documents were completed and/or signed, Towry focussed on only one part of the picture.

In this case the evidence demonstrated a high level of awareness from the start, on the part of both Raymond James and the individual Defendants, of the need to proceed cautiously and of the need to comply strictly with the obligations imposed upon them by their restrictive covenants. Legal advice was required to be taken, and was taken as to the meaning and extent of those obligations. The legal advice that was given in each case was correct and I find that the Defendants understood what their obligations required of them.

In a case in which the credibility of the Defendants was very much in issue the evidence given by those clients who were called was in my view of considerable assistance in this case, in establishing what happened after news of the acquisition broke, in the confusion and uncertainty that followed, and the circumstances surrounding their decisions to transfer.

Mr Tolley criticised the individual Defendants for failing to obey the instructions given to all the Edward Jones advisers at the time of the acquisition to reassure clients that nothing would change and that nothing would happen to their assets, which is said to have been responsible, at least in part for the concerns which were subsequently expressed by those clients. In the circumstances of this case, however, I do not consider that this criticism is justified.

I have found on the evidence that the individual Defendants did carry out those instructions to begin with. However, a number of events occurring over the days and weeks which followed the acquisition meant that the giving of reassurance that nothing would change, that it would be business as usual, and that clients’ accounts would be serviced as they had been in the past, was no longer tenable.

Contrary to Towry’s initial advice that nothing would change, it became clear to the individual Defendants that there were in fact going to be a number of significant changes, not least the closure of most of the local offices, the cessation of stockbroking activities and an expectation that clients’ assets would be transferred into the IIM. At the same time, the individual Defendants were being approached by rival organisations and recruitment agencies, or making their own inquiries elsewhere and attending potential recruitment meetings, in order to keep their future employment options open. They were also obtaining legal advice, as required by Raymond James, and were understanding the need to proceed very carefully so far as contact with clients was concerned. It is hardly surprising that, in these circumstances, the individual Defendants were generally cautious about being seen to be in contact with their clients, and were not wanting to represent to them that nothing was going to change, when they considered that would no longer be accurate or honest.

For the reasons set out above, the submission that I should regard with caution or indeed scepticism, the evidence of those clients who were called, on the basis that they were “carefully selected” or “partisan”, was unsustainable. The evidence given by these individuals, from different backgrounds and regions, and with differing levels of knowledge or differing views concerning investments, demonstrated a striking and essentially consistent pattern in relation to their reasons for deciding to transfer to Raymond James. Their evidence was, in my view, powerful evidence pointing away from the allegations of solicitation in this case.

Nor do I find persuasive the suggestion that the evidence of the clients who were called was tainted on the basis they were prejudiced against Towry because of the delays experienced, accepted to have been severe in a number of cases, in transferring their assets across. It is correct that a large number of those clients referred to in the Defendants’ witness statements, as well as those clients from whom I heard, had made complaints about the delay. In some cases their complaints had been upheld by the Financial Ombudsman and compensation awarded. Paul Wright fairly acknowledged in his evidence that there were delays and a substantial number of complaints in this respect, due to the volume of requests and the backlogs that ensued. However, the suggestion that each client who made such a complaint gave untruthful, or unreliable evidence to the Court as to how they made their decision to transfer in the first place does not withstand scrutiny and I reject it.

As set out above and applying the relevant legal principles to the whole of the evidence in this case, I find that none of the clients from whom I heard was solicited by any individual Defendant in breach of clause 16.4.1 of their contract. Nor is there any basis upon which I could properly infer, in the light of all the other evidence given, that the other clients listed in the Table prepared in respect of each Defendant were solicited by the Defendants. Whilst making allowance for the fact that Mr Tolley could not cross-examine the hearsay witnesses, the evidence they gave was consistent with the evidence of those clients called on behalf of the Defendants. In the light of all the other evidence in this case I find their evidence to be both credible and reliable.

Whilst Mr Tolley places considerable emphasis on what he submits was a fundamental misunderstanding by each Defendant as to the meaning of the non-solicitation covenant, the evidence simply does not support his submission in this respect. I reject the suggestion that each Defendant believed that, so long as he did not make the initial contact with the client, whatever happened thereafter in terms of advice and encouragement to transfer was legitimate and not in contravention of his contractual obligations. I do accept that each Defendant understood that initial contact was relevant and, in my judgment it is a relevant factor in considering in any case whether there has been solicitation. Towry’s close analysis of the Defendants’ mobile phone records indicated the relevance they also attached, evidentially, to how, when and by whom contact was first made.

However, having taken their own legal advice and having been advised by Mr Hazelton at some length, at the start of each AQ meeting, on Raymond James’ views as to the scope of their obligations, I am not persuaded that any Defendant either held that erroneous view or that he or she in fact proceeded on that basis. The belief genuinely held, and openly expressed to Raymond James, that clients would be likely to want to follow them did not equate at all, in this case, to an intention to solicit those clients. Nor did the wish to ensure that, for all clients, including those clients who did decide to follow them, the fee structure on offer was a reasonable and attractive one.

Nor do I consider that any Defendant, in referring to a client’s “free choice” misunderstood the nature and scope of his contractual obligations. On the evidence the use of that phrase meant, in its correct context, only that the client was exercising an independent decision to transfer, without any encouragement or persuasion to do so by the Defendant. Mr Anderson’s view that the Defendants, in their meetings with clients, were involved in “solicitation activity” in promoting Raymond James, advising them on the benefits of their business model and on the relevant fee structure and encouraging or recommending transfer was, on an analysis of the whole of the evidence in this case, misplaced. For a number of the clients who gave evidence, the information being given as to the fee structure, and the lack of any fee being charged for the transfer, was wholly irrelevant to their decision to request a transfer. For others who did regard this information as relevant, by the time that each Defendant was providing it I find that the decision had already been made that Towry was not for them, that they wished to retain their personal financial adviser to advise them and that they wanted to transfer their assets.

For all these reasons, I find that Towry have not proved the allegation of solicitation against the individual Defendants.

There is no suggestion in this case that, after the termination of their employment, any individual Defendant had retained any documentation relating to any Edward Jones client. The evidence relating to these allegations is therefore inextricably linked to the evidence relied on in support of the allegation of a breach of Clause 16.4.1 and I have dealt with the evidence relating to each Defendant when considering the allegations made in each individual case. I do not repeat it here.

No individual Defendant, as I find, made contact with any client before that client had first contacted them. There was therefore no misuse of any personal information confidential to Towry, such as a client’s address or telephone number.

For the reasons I have already set out in full above, I find that the FA Performance Summaries shown to Raymond James were not confidential documents, as alleged by Mr Anderson, or documents which contained Towry’s confidential information.

Whilst I accept that the identities of customers, their contact details and addresses, investment needs, strategies and objectives and the nature and amount of their investments were all information which was confidential to Towry, for the reasons which appear fully from the findings made above, I am not satisfied on all the evidence that any individual Defendant (a) induced any client, directly or indirectly, to cease dealing with Towry by any means involving the disclosure or use of confidential information in breach of Clause 16.5.1 (Issue 8(2)); (b) made use of or disclosed any confidential information to Raymond James in breach of Clause 16.5.3 (Issue 8(3)); or (c) acted in breach of confidence as a matter of the general law (Issue 8(4)).

Clearly, whilst no longer in possession of any paperwork containing these details in relation to any client, I accept that each individual Defendant retained, to a greater or lesser degree, a certain amount of general knowledge about the individual clients and about their portfolios, or their attitudes to investments or to risk generally. However, for the reasons set out above, in my judgment the evidence does not establish that any client was induced to cease dealing with Towry by any means involving the disclosure or use of confidential information, or that any Defendant acted in breach of confidence generally.

I find on the evidence that none of the Defendants had memorised all the necessary, relevant information in relation to each client. I accept their evidence that, whilst recalling the general nature of a client’s investments, they no longer retained any of the details as to the value or make-up of their investment portfolios. Some clients, for example Mr Cox, stated that they had to start from scratch in terms of giving details of their investments and preferences to the relevant Defendant. Others could not recall with precision the extent to which a Defendant brought paperwork already completed with them to the meeting, or the extent of that completion.

On the evidence I find on balance that after each client had decided, without solicitation, to request a transfer of his or her assets to Raymond James, each Defendant had then completed the necessary documentation on the instructions of that client, as a result of the relevant information being re-supplied by the client at the meeting, or meetings, so that the request could properly be processed. To the extent that some of those details may have been reproduced on the relevant forms by any Defendant from memory, I find that they were not such as to involve a breach of Clause 16.5.1 of their contracts or any breach of confidence at common law.

The only information disclosed to Raymond James by each of the Defendants before they left their employment, apart from their contract of employment in some cases, was their FA Performance Summary, which contained no details relating to any client and, as I find, was not a confidential document. For the reasons given in the previous paragraph I find that there was no breach of Clause 16.5.3 or breach of confidence generally in the circumstances, in conveying the completed client investment documentation to Raymond James to enable the transfer requests to be processed.

In view of my findings on the evidence as to the allegations of wrongful conduct against the individual Defendants on Issues 8 (1) to (4), there being no breach of contract by any individual Defendant, I find that the allegation of knowingly inducing or procuring a breach of contract made against Raymond James also fails.

There is no evidence to support a suggestion that Raymond James deliberately set out to induce a breach of contract by any individual Defendant. The suggestion that Mr Hazelton and Mr Cherriman either knew or were reckless as to whether any Defendant was going to solicit any client is in my view unsustainable, as is the suggestion that they closed their eyes to the obvious.

Far from being reckless, or closing their eyes to the obvious, the evidence demonstrates a high degree of awareness of the need for caution and the taking of a number of steps, after obtaining legal advice, designed to ensure that each Defendant recognised the importance of compliance with the restrictive covenants and that each did in fact comply with them. Given the prospect that any Defendant found to have acted in breach faced the termination of his position as Branch Principal, the incentive to ensure compliance was strong. Setting them a target of £10 million of assets under advice within their first year did not detract from this incentive and the general approach for the reasons already set out above.

I reject, as entirely without foundation in this case, the allegation that the conduct of the individual Defendants prior to leaving their employment with Towry was consistent with “a pre-existing plan” to poach Towry’s clients. This, bold assertion made in the written opening submissions presented on behalf of Towry was tempered by Mr Tolley’s oral indication, at that early stage, that the allegation of conspiracy might be limited to the position as between Raymond James and each of the individual Defendants, rather than being some overarching conspiracy between all of the individual Defendants and between all of them and Raymond James; but that there may have been particular combinations within the grouping of the individual Defendants.

In my judgment the allegation of conspiracy as between the individual Defendants, or some of them, was wholly unsustainable on the evidence in this case. I am therefore unsurprised by Mr Tolley’s closing submission that Towry no longer pursues a case against any individual Defendant that they combined and conspired with any of the other individual Defendants. Indeed I am surprised that such a case was pursued until the end of the trial.

Notwithstanding that position, allegations of “a significant degree of collaboration and contact” throughout the relevant period are still made against the individual Defendants, none of which in my view has any merit. The fact that advisers working in the same region (Messrs Bennett, Burger and Hutton, for example) were speaking to one another on the telephone at a time of general upheaval and uncertainty is in my view of little assistance. I have dealt above with the discussions which took place, about the possibility of an agreed SOFAC, between Messrs Hayhurst, Chandler and Spain, and the events which led up to Ms Simpson going to work for Mr Hayhurst, none of which in my view evidences collaboration with any sinister motive.

The allegations that Raymond James acted in breach of confidence and that they combined and conspired with each of the individual Defendants for them to use unlawful means, consisting of breaches of clauses 16.4.1 and 16.5.1 and misuse of confidential information, with the inevitable effect of harming Towry and its business, have been pursued. For the reasons set out above when dealing with my findings under the other heads of claim, these allegations also fail.

It is a striking feature of the evidence in this case that, within a short time of the acquisition and in circumstances where expressions of interest from Edward Jones advisers were arriving in increasing numbers, Raymond James decided to seek legal advice as to their position. Mindful of the risk of litigation they sought advice at that early stage. In my judgment they then followed that advice by taking a series of steps designed to ensure that advisers complied with their contractual obligations. Advisers were told in unambiguous terms that they must obtain their own legal advice and that a breach of those obligations would result in the termination of their working relationship. Further legal advice was sought at the time of making the preliminary offer to each Defendant. Clients who decided to follow any Defendant were required to complete the HDYH form. I reject any suggestion that this was no more than a cynical ploy, designed to give the misleading impression that any possible solicitation was being checked and monitored. The design and wording of this form could undoubtedly have been improved, and the arrangements for monitoring their completion tightened, but the evidence of such defects comes nowhere near to establishing the unlawful means conspiracy alleged.

None of the individual Defendants was certain of success in his application for a position as Branch Principal at the time he resigned, when stage two of the recruitment process had still to be successfully completed. The existence of a right to terminate the Service Level Agreement entered into with each Defendant if it was shown that there had been a breach of the restrictive covenants, and an obligation to indemnify Raymond James in respect of the costs of such a claim as the present one, point away from the existence of a conspiracy of the kind alleged in this case.

For all these reasons Towry have not proved the allegations of wrongful conduct against these Defendants. There is therefore no need for me to consider the submissions of the parties in relation to remedies, contained in Issue F. This claim is therefore dismissed.