Beals Mortgage and Financial Planning LLP & Ors v First Global Financial Services Ltd & Ors

Introduction

The claimants are closely related partnerships. The second claimant, Beals Independent Estate Agents and Surveyors (“BEA”), is an estate agency partnership. The first claimant, Beals Mortgage & Financial Planning LLP (“BMF”), is a limited partnership that is wholly owned by BEA. It provides financial services, particularly by arranging mortgages and life insurance for those using BEA’s estate agency services. The action has proceeded on the basis that BEA and BMF have identical causes of action against each defendant and no distinction has been made between them and the action has proceeded as one brought by the claimants collectively. Throughout this judgment, I will refer to both claimants collectively as Beals and, when it is necessary to distinguish them, I will refer to the first claimant as BEA and to the second claimant as BMF.

The claim against the first defendant (“1^st Global”) has been stayed by an order dated 20 January 2010 following its dissolution on 10 February 2009 and that against the third defendant (“Zoe Halford”) has been withdrawn by a consent order dated 28 May 2010 following the settlement of all claims against her.

The basis of Beals’ claims is that the second defendant (“Bob Rice”) planned and instigated the actions of all the defendants. He, Zoe Halford and the fourth defendant (“Sean Healy”) were at the outset self-employed financial services providers who had been working for BMF. They left Beals in 2008 and are then alleged to have worked in unlawful competition with Beals, initially using 1^st Global and subsequently using the seventh defendant (“RFS”) as the company that they worked for and the sixth defendant (“Westminster”) as their intermediary. The fifth defendant (“Zarra Addis”) was employed as an administrator by BEA and she also left Beals in 2008 having allegedly unlawfully passed confidential information and parts of Beals’ database to Bob Rice. Following her departure from Beals, Zarra Addis worked for 1^st Global and in doing so assisted the other defendants in their enterprise.

Bob Rice assisted his son, the eighth defendant (“Robbie Rice”) to set up the seventh defendant (“RFS”), allegedly to take over from 1^st Global as the vehicle through which the individual financial services providers operated. 1^st Global, before the action was stayed against it, RFS and Westminster acting as an intermediary for both company financial services providers, are alleged to have unlawfully assisted the individual financial services providers to procure and use Beals’ data and clients.

Beals contend that Bob Rice, with the assistance of Zarra Addis, Zoe Halford and Sean Healy and, subsequently with the additional assistance of 1^st Global, Robbie Rice, RFS and Westminster, conspired unlawfully to procure, copy and use part of Beals’ database and, using that data, unlawfully to solicit clients and business from Beals.

The claims for injunctive relief and for delivery up orders and damages are based on five separate but cumulative causes of action. The contractual claims against those with agreements with Beals are based on breaches of contractual duties of confidence and on the restraint of trade provisions in their agreements. The common law and breach of statutory duty claims against all defendants are based on the statutory duty imposed by section 3A of the Copyright, Designs and Patents Act 1988 and on the torts of conspiracy and inducing breaches of agreement.

The terms of Beals’ compromise with Zoe Halford included an admission that she acted in breach of agreement and an agreement that she would pay Beals a sum of £13,000 in full and final settlement of her liability for damages and costs. She also agreed not to disclose any confidential information to others and to deliver up any of Beals’ documents in her possession. Zoe Halford has therefore ceased to be a party to the claim but, as required by and following the settlement agreement, she made a witness statement which was served by Beals and she attended court to be cross-examined on its contents.

The claim form was issued on 3 December 2008 after Beals became aware of what appeared to them to be significant breaches of their rights of confidentiality, data protection and restraint of trade by Bob Rice, Zoe Halford, Sean Healy and Zarra Addis assisted by 1^st Global and Westminster. Beals immediately sought an interim injunction to restrain these perceived breaches pending the trial. On 17 December 2008, at a hearing at which all those defendants except the unrepresented 1^st Global were represented by counsel, Macduff J granted wide-ranging interim relief restraining until trial or further order the use or disclosure of confidential information held on Beals’ database, requiring the delivery up of Beals’ physical and electronically held data and the procuring or undertaking of business with any of Beals’ clients or the unlawful interference with Beals’ business. The application for that injunction was opposed but there was no appeal from or application to vary that order and the injunction, albeit modified in minor respects during the trial, still remains in force.

Beals maintain their claims for relief under all the heads of claim that they originally advanced and the six remaining defendants maintain their total opposition to all claims as well as putting forward claims for damages and costs totalling about £840,000 by way of counterclaims and applications for damages pursuant to Beals’ cross-undertakings. These defendants have been unrepresented and have conducted their own cases save for a short period in the middle of the trial when Bob Rice, Robbie Rice and RFS were represented by counsel and solicitors. Westminster was unrepresented throughout but its principal, John Hall, attended parts of the trial and successfully applied for permission to put in five witness statements on its behalf on terms that he submitted himself for cross-examination. The trial itself was originally called on in January 2010 but, after three days of submissions it was adjourned without any evidence being called. The hearing occupied nine days between October and December 2010 and was followed by the parties preparing detailed written submissions over an extended period.

A preliminary pleading issue was raised for the first time by the defendants in their closing written submissions which should be dealt with at the outset of this judgment. BMF, the second claimant, has throughout the history of this litigation been referred to in all pleadings as “Beal Mortgage & Financial LLP” whereas its correct name, and the name in which it is registered as an LLP, is Beal Mortgage & Financial Planning LLP. This error came about because whoever drafted the claim form and particulars of claim by mistake omitted the word “Planning” from the name of the second claimant. This mistake was not noticed, or was not considered worthy of notice thereafter and the litigation has continued until the closing submissions were served on the basis that the second defendant was Beal Mortgage & Financial Planning LLP. However, in the closing submissions, the defendants contended that the service agreements that Bob Rice and Sean Healy signed, which form the basis of the contractual claims against them, were entered into by MBF whereas a different entity is now suing them. The defendants also contend that this error was drawn to the attention of Beals’ solicitors during the course of the litigation on a number of occasions and nothing was done by the solicitors to remedy the error. None of these letters was drawn to the court’s attention during the trial and no objection was raised that the wrong party was suing the defendants until these closing submissions were served.

On behalf of Beals, it was contended that the mistake amounted to no more than an erroneous description which had not caused the defendants any prejudice or confusion. By raising this matter in the way and at the time that they did, the defendants were seeking to make mischief over a typographical error in the claim form.

The first point that should be noted is that, although all the pleadings mistakenly describe the first claimant, the injunction issued by the Court following the hearing and order of Macduff J correctly describes the first claimant, thus showing that no-one had been misled by the erroneous description in the pleadings. The second point that should be noted is that this type of mistake is expressly provided for by CPR 17.4(3) which provides that:

“The court may allow an amendment to correct a mistake as to the name of a party, but only where the mistake was genuine and not one which would cause reasonable doubt as to the identity of the party in question.”

This rule is applicable where the mistake was genuine, where it was as to the name of the party, where it was possible to identify the intending claimant (Footnote: ¹) and where it was one which did not cause any reasonable doubt as to the party bringing the claim. In this case, all these requirements are satisfied. Although the defendants now assert that they are confused as to who is suing them, it is clear that they have never actually been confused, misled or prejudiced as can be seen by their taking no step in the proceedings to bring this error to the attention of the court and have never in fact been in any doubt as to the fact that BMF is the party that is bring the claim against them. There is, therefore, no substance in the submission that BMF and “Beals Mortgage & Financial” are different parties.

Since the issue has now been raised, it is clear that the name of the second defendant should now be amended in the proceedings. In the order giving effect to this judgment, it will be directed that the name of the first claimant should be amended pursuant to CPR 17.4(3) so as to be “Beals Mortgage & Financial Planning LLP”.

Beals. BEA was established by Tony Beal in 1995 as a Hampshire-based estate agency. Paul Duck became a partner in 2000 and these two men remained the senior partners thereafter. By 2007, the partnership had grown in both size and in the range of services it provided. It was operating from ten branches in the county and each branch had at least one financial adviser able to arrange mortgages and life insurance for clients using its estate agency services and it also provided property management services. It had a staff of about ninety people including ten self-employed financial advisers. Beals’ total income in 2007 was approximately £5.7 million. Financial services account for about 15% of this income.

Beals underwent a significant reorganisation in 2007. This involved separating the financial services business from the estate agency business by establishing BMF as a limited partnership on 7 August 2007 that was wholly owned by BEA. Beals also changed the authorised body through which it obtained its clients’ financial products. For some time before this change, Beals had obtained its mortgages from a packaging company called Synergy Mortgages Ltd and its life insurance from MGM Assurance. With effect from 29 August 2007, Beals moved all its business to the Intrinsic Network which gave its clients greater flexibility in the financial products that they could obtain. When making this change, Beals changed the basis on which its advisers earned commission on the financial products that they sold and also established new and more demanding targets for them. It also insisted that each financial adviser should enter into a new agreement with BMF to reflect these changes. Finally, Beals moved its principal office from Waterlooville to new premises in a business park in Whiteley in August 2007.

Neither BEA nor BMF were registered with the Financial Services Authority (“FSA”). Instead, both sold financial products as the agent of MGM and Synergy until August 2007 and of Intrinsic thereafter. These companies were authorised by and registered with the FSA as a Directly Authorised Business (“DA”) and each of them had the responsibility for ensuring that each of BMF’s transactions that it was involved in complied with all relevant FSA regulations. This is a perfectly normal arrangement in the financial services sector and those providing financial advice must do so having been licenced as a Registered Individual (“RI”) and using a DA as an intermediary. Each financial adviser worked for BMF pursuant to a services agreement and provided their services as a self-employed financial adviser. One reason for the change of Beals’ DA from MGM and Synergy to Intrinsic in August 2007 was to enable BMF to cease to be tied to any particular product as it had been previously. Each sale of a mortgage or life insurance policy resulted in a commission payment from the product provider that was paid to the DA who passed it on to BMF having deducted an agreed proportion of the commission for itself. BMF then passed onto the individual RI his or her agreed share of that commission.

Tony Beal. Tony Beal is an extremely successful business man and the success and continued growth of Beals has clearly been achieved through his drive and determination. He was forceful and direct in his dealings with others although he had what some considered to be a bullying and abrasive manner. He was loyal to those who respond to his leadership but he would not tolerate disloyalty or actions that were capable of undermining Beals’ business or good name. He left much of the detailed management of the business to his colleagues including three of those who featured in the evidence, Paul Duck his partner, Nigel Strutt, Beals’ Financial Services Manager and then Financial Planning Manager between October 2006 and March 2009, and Paul Janes who became Bob Rice’s Financial Manager in 2007 and succeeded Nigel Strutt as Beals’ Financial Planning Manager in 2009.

Bob Rice. Bob Rice joined Beals on 4 May 1999 when he was 49. He had not previously worked as a financial adviser. He was considered to be the most senior non-partner and was, until a year or so before he left Beals, very close to both the senior partners. Indeed, Tony Beal stated in evidence that he regarded Bob Rice as his best financial adviser. He was significantly older than other financial advisers working for Beals and was looked up to by several of the other advisers and support staff as a father figure. He was both unwilling and unable to use any form of modern communication except infrequent use of a mobile phone. He disliked any form of target-setting or security regulation and was someone who others in authority treated warily. He was, however, a very successful mortgage adviser, particularly with problem cases, and he had earned the nickname within BMF of “the man who can”. In the two full years he worked before leaving BMF, he earned commission payments totalling £222,600 in 2006 and £245,719 in 2007.

However, despite their earlier closeness, his relationship with Tony Beal changed dramatically during 2007. The obvious sticking points that contributed to this relationship breakdown included the establishment of BMF as a limited partnership, the change in the commission arrangements, the requirement to sign a new and much more prescriptive agreement, his enforced move from the Waterlooville premises to what he regarded to be a backwater in the new Whiteley premises and the imposition of increased financial targets at a time when the economy was in decline and the poaching of some of his clients by other advisers who he considered to be less scrupulous than himself. He also resented what he considered to be the intolerable new regime imposed by Paul Janes, the recently arrived new financial manager, which he considered to be a much more pressured working regime based on achieving much more stringent financial targets. He also experienced health problems in 2007 and 2008 and felt deeply the loss of his father. Thus, when he was persuaded by Darren Heathfield to join him in marketing Cypriot properties, Bob Rice decided, at the beginning of April 2008, that he would leave Beals. Although he started planning for his departure then, he only took the final decision in early June and it took effect at the end of July.

Zoe Halford. Zoe Halford was still in her twenties when she joined Beals in December 2006 as a self-employed mortgage adviser having previously worked for six years in the lettings business. Her experience working for Beals was not a happy one. She had studied for three months before starting with Beals on her understanding that she would then be working from the Havant office close to where she lived. On completion of her training, arranged by Beals, she learnt that she would be working at a different office involving lengthy periods of travelling. She initially declined to take up Beals’ offer but was then faced with being charged £1,000 by Beals for her training so she elected to work this off. When doing so, she was persuaded to take up Beals’ work offer. Some time later, she was required to sign the new Beals’ agreement, hers being dated 7 November 2007. She found that the new agreement had reduced the commission percentage that she had been told she would receive and had exposed her to an unexpected liability for cancellation charges if a client prematurely cancelled a mortgage that she had arranged. Her particular source of dissatisfaction, particularly after she was relocated to the new Whiteley office, was the requirement that she should work long hours as a self-employed financial adviser even when there was no work for her to do.

When these proceedings were started, Zoe Halford was still working for 1^st Global and she readily agreed to join Bob Rice, Sean Healy, Zarra Addis and Westminster in instructing solicitors to represent her. She left her defence to Bob Rice and her solicitor who prepared two witness statements for her to sign dated 12 and 16 December 2007. These were placed before Macduff J when he dealt with the injunction application on 17 December 2007. Following the granting of the injunction restraining her from misusing Beals’ database and infringing the terms of her agreement, a defence was served on her behalf dated 23 January 2008 and a third witness statement was also served dated 12 February 2009. When she left 1^st Global soon afterwards, she ceased to instruct her solicitors since Bob Rice was no longer willing to meet her legal bills. She prepared and served three further statements in the period just before the first day of the trial although she took no further part in the pre-trial preparations. She did not appear at the hearing in January 2010 and she then reached a settlement agreement with Beals that was set out in the consent order dated 25 May 2010. As agreed with Beals, she then served an eighth witness statement which, in material respects, departed from the denials of liability contained in her previous statements and provided, if credible, evidence that directly implicated the other defendants. I will consider that change of tack and the attack on the credibility of her eighth witness statement and her oral evidence later in this judgment.

Sean Healy. Sean Healy was a Beals financial adviser who was a few years older than Zoe Halford. He had worked for a short time some twenty years earlier as a legal executive in a solicitors’ firm working in the conveyancing field but had not otherwise practised law. He had worked for about seven years as a financial adviser before joining BMF in July 2007 and, on being offered a job by Beals, was required to provide a list of his previous clients. He had to train with both MGM Assurance and then Intrinsic and contended that he signed two separate agreements. The first, dated 23 July 2007 is contended by BMF to be a forgery and the second, in his case dated 6 November 2007, is in identical form to that signed by both Bob Rice and Zoe Halford. His time with BMF was unsuccessful and his agreement was terminated by Mr Janes and Mr Strutt at a meeting held on 26 May 2008 with effect from 30 May 2008.

Sean Healy’s evidence was that he was approached by Darren Heathfield in June or July 2008 and asked if he would be prepared to work for his company on an ad hoc basis and write life policies for his clients which would support their mortgages taken out to enable them to buy Cypriot properties. He accepted that offer. However, he contends that he made no money in the period up to November 2008 when he terminated his ad hoc commercial relationship with Darren Heathfield and his company or companies. It is in dispute which of Darren Heathfield’s two relevant companies Sean Healy was contracted to.

Zarra Addis. Zarra Addis was employed as an administrator by BEA under an employment agreement which took effect on 20 February 2006. As part of her duties, she had access to Beals’ database which was held on its internal computer system and which contained details of all of Beals’ customers. Only three other people within Beals had such access and she had strict instructions not to disclose to others, save on the express instructions of her supervisor, any of the contents of the database or to copy or provide copies to others. Zarra Addis gave notice and ceased her employment with Beals on 27 June 2008.

Darren Heathfield. 1st Global, the first defendant, was a private company that was wholly owned by Darren Heathfield who took no part in the trial but whose name was mentioned frequently by the witnesses. Darren Heathfield owned a large house from which he ran his various businesses. He first came to Bob Rice’s attention in June 2007 when he was introduced to him professionally by a friend of Tony Beal’s who worked at Barclay’s Bank who were Darren Heathfield’s bankers and who had not long before this introduction declined him a re-mortgage. He had an adverse credit rating and he was advised that Bob Rice might be able to assist him to obtain a re-mortgage. This proved to be the case since Bob Rice was successful in obtaining one for him in August 2007.

Darren Heathfield’s companies. In mid-2007, Darren Heathfield owned or had a substantial interest in at least three companies. The first of these was an electrical contractor called Heathfield Electrical Ltd. By the middle of 2008 it had got into considerable financial difficulties and it went into liquidation later in 2008.

The second company was called 1^st Global Real Estate Limited (“1 GRE”) which is to be distinguished from 1^st Global which was only formed in May 2008. 1 GRE had been incorporated on 21 June 2004 and was said by both Bob Rice and Stuart King to have been jointly owned by Darren Heathfield and his business partner called Ben Matley. Bob Rice said that 1 GRE had been set up to market holiday and second homes in Cyprus to buyers in England and that that was its only active business. He also stated that Darren Heathfield and 1 GRE had a commercial relationship with a Cypriot developer called Pambos Moleskis.

The third company was only referred to in a statement that was adduced in evidence that Stuart King had made to the Police in December 2009 in connection with enquiries that they were making about a complaint relating to Darren Heathfield’s alleged involvement in an unrelated criminal matter. In that statement, Stuart King stated that Darren Heathfield and Ben Matley owned a company called 1^st 4 Boats Ltd that was based in Bournemouth and that someone called Rod White also had a financial interest in it. Heathfield Electrical Ltd and 1^st 4 Boats Ltd did not otherwise feature in the evidence.

Darren Heathfield kept in touch with Bob Rice after he had obtained his re-mortgage and, according to Bob Rice’s evidence, Darren Heathfield persuaded him to leave Beals and join him in the project to market newly developed properties in Cyprus to people living or based in the south of England that he and 1 GRE were involved in. These discussions started in April 2008 and Bob Rice agreed with Darren Heathfield in a telephone conversation on 13 May 2008 that he would give notice to Beals at the beginning of June with a view to his starting work at the beginning of July. Soon afterwards, Darren Heathfield formed 1^st Global on 20 May 2008 with himself as both the sole director and shareholder.

Bob Rice only finally agreed to join the project after Darren Heathfield had taken him to Cyprus in June 2008 to meet Pambos Moleskis and 1 GRE’s contacts in four separate banks and view some of the properties being constructed that 1^st GRE was intending to market in England for the Cypriot developers that Darren Heathfield was involved with. According to Bob Rice, during their discussions Darren Heathfield agreed that they would market both mortgages and life insurance to those who wanted to buy one of these Cypriot properties. It would appear that 1^st Global was originally set up so that that marketing exercise would be operated separately from 1 GRE’s involvement in marketing the properties. It does not seem that it was ever envisaged that Bob Rice would be employed by 1 GRE since 1^st Global entered into an agreement of employment with Bob Rice dated 18 July 2008. I will have to examine in some detail the relationship between Bob Rice, 1^st Global and 1 GRE in the period immediately before and after Bob Rice left Beals.

Stuart King. Stuart King was an important witness at the trial and Beals place great weight on his evidence. However, the veracity and reliability of his evidence is hotly challenged by Bob Rice, Sean Healy, Westminster, Robbie Rice and RFS. There was no evidence of Stuart King’s career prior to November 2007 save that he had one or more county court judgments registered against him which prevented him from being authorised as an RI and consequently from undertaking regulated mortgage and life business. In November 2007, he was given a four-week trial by BFS as a trainee mortgage advisor. In that short period, he shadowed a number of Beals’ financial consultants including Bob Rice. He did not, according to his evidence, take up Beals’ offer of employment at the end of this short period because he did not like the prospect of working the long hours required by Beals of their financial consultants. His County Court judgment (“CCJ”) on his file was also, no doubt, a major factor in Beals not taking him on. On leaving, he started working on his own as a financial consultant and a few months later, on 10 May 2008 contacted Nigel Strutt, Beals’ then senior financial consultant, in order to help him complete a mortgage application he was having a problem with. Nigel Strutt passed him over to Bob Rice to help him. Bob Rice spoke to him on the telephone and agreed to deal with the application and then told him he was starting up his own financial services company and offered him a job working for him. The following day, he went to see Bob Rice and completed the mortgage paperwork and then Bob Rice took him outside to talk privately to him. During this private conversation, Bob Rice explained that he was starting the financial services company with Darren Heathfield and that it would be based in Darren Heathfield’s house in Wickham.

Stuart King visited Darren Heathfield’s house the next day and met Bob Rice who introduced him to Darren Heathfield and Russell Harvey of Westminster who was also there. Bob Rice and Darren Heathfield explained to him that 1^st Global was being set up, financed by Darren Heathfield and run by Bob Rice. It was to be a satellite office of Westminster working under Westminster’s FSA licence number. Given his CCJ problem, Bob Rice and he agreed that he would be taken on as an introducer, particularly for Cypriot property sales, which did not require him to be authorised as an RI under the FSA regulations. Stuart King accepted this offer and was taken on there and then. Between June and December 2008, Stuart King undertook a disputed amount of introducer work for both Cypriot and domestic properties and loaned or paid a sum of money to Darren Heathfield to invest in 1^st Global which was neither invested in that company nor returned. He moved with Bob Rice, Robbie Rice, Zoe Halford and Zarra Addis to RFS’s new offices in January 2009 but was asked to leave soon afterwards by Robbie Rice because he was considered to be no good at his job.

In November 2009 and January 2010, Stuart King volunteered himself as a witness against Bob Rice and the other defendants who had been made the subject of an interim injunction and as a witness in the Police’s investigations of Darren Heathfield. This evidence is, if true, highly damaging to the surviving defendants, particularly Bob Rice. For a series of reasons, the surviving defendants contend that the damaging parts of his evidence are self-serving lies induced by his bias against Bob Rice and it should be ignored. I will address these contentions later.

Beals’ evidence. Beals allege, in summary, that Bob Rice, Zoe Halford, Sean Healy and Zarra Addis copied, or took possession or used copies of, part of their database without their consent, broke the express and implied terms of their agreements which prohibited the use of confidential information obtained during or in consequence of their employment or engagement with them or solicited and provided professional services to their clients in breach of the restraint provisions of their agreements. These alleged breaches of agreement and duty were committed or were planned to be committed by each of them directly or by their conspiring to harm Beals or by their inducing others to commit the wrongs that amounted to breaches of agreement. First Global, Westminster, Robbie Rice and RFS are similarly alleged to have conspired with the first group of defendants to cause harm to Beals or to have assisted or induced the first group of defendants to commit the same breaches of agreement.

General approach to the evidence. These claims are clearly highly fact sensitive. The principal witnesses were Tony Beal, Nigel Strutt, Stuart King and Zoe Halford on Beals’ side and Bob Rice, Sean Healy, Zarra Addis, John Hall and Robbie Rice on the defendants’ side. The defendants urged me to reject the entirety of Stuart King’s evidence since, as they contended, he is untruthful by nature, parts of his evidence are demonstrably false and he is motivated with feelings of revenge and ill-will towards Bob Rice. I accept that for each of these possible reasons, I must pay particular attention to his evidence.

However, the evidence of several of the other witnesses is also potentially tainted. Tony Beal and Bob Rice each now clearly have an intense dislike of the other and each regards the other as untruthful and vengeful in his pursuit of the case against the other. Sean Healy is said to have forged a vital document in order to improve his case, Zarra Addis is said to have demonstrated a wish to lie and withhold evidence in order to assist Bob Rice, Zoe Halford is said to have lied in her earlier witness statements which protest that she committed no wrong or in her last witness statement in which she effectively recanted her earlier evidence and to have been suborned by Beals, Robbie Rice and John Hall are said to have withheld vital evidence which is, or must be assumed to be strongly supportive of Beals’ case and to have demonstrated a biased determination to support Bob Rice’s case and 1^st Global, Westminster and RFS’s cases are said to be inexorably flawed due to the shortcomings of the defendants and their witnesses.

The reality is that I must apply the same degree of detached scepticism to the entirety of the evidence and to look for independent corroboration of any significant evidence from any of the witnesses.

Letter dated 24 July 2007. Sean Healy contended that Beals’ Financial Planning Manager Nigel Strutt had agreed with him in a letter dated 24 July 2007 when he was engaged as a self-employed financial consultant that he was required to provide Beals with details of his existing clients but would nonetheless retain ownership of those clients. He also contended that that agreement remained in place, that Beals had broken it by treating the relevant clients as their own and that that breach provided him with a further and complete defence to Beals’ claims against him.

This short letter reads as follows:

Further to our recent conversation and Tony Beals letter of 23rd July I can confirm that our offer for you to join our Financial Services Department as a self-employed financial consultant is subject to you providing full details of all clients that you had previously conducted business with whilst you were employed as a mortgage consultant with Fox and Sons, estate agents.

“Following concerns that you have expressed with regard to the ownership of this information, and for the avoidance of any doubt, I can confirm that you will retain full ownership of all client information handed over at the commencement of your agreement for services although Beals Mortgage and Financial Planning LLP reserve the right to add your clients’ details to their database for the purposes of marketing and administration.”

Authenticity of the letter. Sean Healy only pleaded reliance on the terms of this letter for the first time in his re-amended defence dated 14 May 2010. He had not previously referred to this letter nor asserted that it created any legally enforceable contractual obligation nor given any evidence about the circumstances that had led to these terms being legally enforceable in the three witness statements he had already served or in the fourth witness statement dated 24 June 2010 that he served soon after serving the re-amended defence.

This failure to rely on the letter at an earlier stage in the proceedings is particularly striking. Sean Healy had been sent a detailed letter before action dated 10 September 2008 by Beals’ solicitors and was then a represented defendant at the application for an interim injunction that was heard on 17 December 2008. He relied on a witness statement dated 12 December 2008 in resisting that application. In that statement, he contended that he had not breached his agreement by dealing with Beals’ clients following his departure from Beals. He stated that he had been required to give Beals details of his existing clients on joining them which were entered on their database and that, in consequence, he had no confidential information to deliver up to Beals. Moreover, he contended that he should not be the subject of a restraining order which named a list of people with whom he should not deal containing the names of the clients he brought with him to Beals. However, the interim injunction was made against him because there was evidence that the database had been misused by him. What Sean Healy strikingly failed to do was to refer to the letter since that would have provided him with a very strong defence to the injunction if it was authentic. This is because the letter appears to show that Beals had agreed in July 2008 that although the names of Sean Healy’s clients that he had brought with him to Beals would be entered on their database, he would retain ownership of that information and could, in consequence continue to deal with them as soon as he left Beals. The interim injunction was granted and he was restrained from dealing with a list of named former clients since the court was not informed that Sean Healy had retained the right to deal with them once he had left Beals. Thus, his failure to refer to the letter in his evidence for that hearing is strongly suggestive that the letter containing the suggested agreement did not exist and the document he subsequently produced is not authentic.

It is also striking that Sean Healy did not refer to this letter when sending Beals’ solicitors a detailed response to three letters that the solicitors had sent him in early October 2009. The response sets out a detailed refutation of the case being advanced against him and it refers to, and relies on, the contents of what he was putting forward as his initial engagement agreement. His engagement started as soon as he had signed this document. The document he was referring to was his initial appointment letter dated 23 July 2009 which Tony Beal had prepared and signed and which he stated Tony Beal had handed to him on 9 October 2007. He also stated that as soon as he was handed the letter, he immediately signed it and returned it to Beals. It is therefore most surprising that, if he had considered that there was in existence a separate and authentic letter dated 24 July 2007 that also had contractual effect, he did not refer to that letter and its contents as well.

Thus, his somewhat belated reliance on a potentially very helpful contractual provision gives rise to a suspicion that the letter was not authentic. This suspicion was heightened when Nigel Strutt served a witness statement dated 24 June 2010 to the effect that the letter was not genuine. Nigel Strutt’s evidence cried out for a witness statement in response that set out Sean Healy’s rebuttal evidence in some detail but Sean Healy never served any rebuttal evidence before the trial. Nigel Strutt was called for cross-examination and he reiterated his evidence which was not challenged in any detail by Sean Healey who was defending himself. When Sean Healey was cross-examined, he was unable to explain why the letter was genuine and why Nigel Strutt’s contrary evidence was incorrect.

The letter is a photocopy of a photocopy of the original letter. Somewhat surprisingly, Sean Healy was never provided with the original, if his evidence is accepted and, moreover, it was not sent to him but had to be collected by him from Beals’ head office at Whiteley. He contended that he went to those offices and collected the copy and that Nigel Strutt had kept the original. He was unable to explain what discussions had taken place before the letter had been drafted, why the letter had had to be collected rather than being sent, what had caused him to call into Beals’ head office to collect the document and why Nigel Strutt had kept the original. He also explained that the document he produced was a copy of the copy that he had picked up. He had, he said, provided the top copy that he had originally received to his solicitors in 2009 to enable them to defend county court proceedings that BMF had brought against him claiming payment from him of some of the commission he had allegedly wrongly diverted from them having first made a copy of that copy which he retained. He provided no satisfactory explanation as to why he had not obtained the top copy back from his solicitors and had had to rely on a copy of that top copy. His inability to produce the original letter and a top copy of that original is highly suspicious since it is well-known that a forged signature is very much harder to detect on a copy, let alone a copy of a copy, of the document containing the forgery.

Nigel Strutt provided a series of convincing reasons why the letter had not been written by him or, indeed, by anyone else at or associated with BMF. These were:

The address given on the letter head as BMF’s address was the address that it moved to some days after 24 July 2007 which was the date on the letter. BMF had not, and would not have, sent out a letter on 24 July 2007 with any other than then current address which was in Waterlooville.

The letter head described BMF as “Beals Mortgage & Financial Planning LLP” and the letter gave its limited partnership number as OC330360 at its foot. However, BMF was not formed as a limited partnership until 7 August 2007 so that it was not an LLP on 24 July 2007. It therefore had no LLP number at that time nor was it then using a letter head which described itself as an LLP and a footing which provided its LLP number.

He had been responsible for ordering the new notepaper for BMF to take account of the new address, LLP status, LLP number and new designation as Intrinsic’s representative and he could remember ordering this new notepaper from the printers in September 2007 following BMF’s move from Waterlooville to Whiteley.

The footing described BMF as “an appointed representative of Intrinsic Mortgage Planning Ltd”. However, BMF only became an appointed representative of Intrinsic on 20 August 2007, previously it had been the representative of MGM.

Nigel Strutt stated that he would not have drafted the letter since it was written in an unusual style, was poorly punctuated, contained grammatical errors and failed to use capital letters in a number of places. He was always meticulous in seeking to eradicate stylistic, grammatical and punctuation errors from his letters.

Although the letter was apparently signed by him, he was sure that it was not his signature on the letter. He accepted that he sometimes arranged for other people to sign his letters on his behalf but when that occurred, the person signed the letter “pp Nigel Strutt” with their own signature whereas this document was signed by someone purporting to be Nigel Strutt. He was clear therefore that the signature on the letter had not been placed on the original by himself even though the document he was looking at was a second hand copy of his original signature.

Had he been asked to agree to the suggestion that Sean Healy should retain ownership of the information about his existing clients, he would have first needed Tony Beal’s approval and he never raised this issue with Tony Beal or discussed it with him. It followed that this issue had never been raised with him by Sean Healy.

Sean Healy could provide no answer to these points. Furthermore, he stated that he had collected the copy from Beals’ premises in the Victory Business Park, Whiteley which were neither opened nor occupied in late July 2007 when he stated that he went there. Beals did not move from Waterlooville to Whitely until the Victory Business Park opened on 8 August 2007 (Footnote: ²). I conclude that the letter of 24 July 2007 is, beyond reasonable doubt, a forgery and that Sean Healy knew it was a forgery but nonetheless gave evidence on oath that it was an authentic letter sent out by BMF. I also conclude that there never was a conversation between Sean Healy and Nigel Strutt about Sean Healy’s existing clients or any agreement reached as to Sean Healy’s ownership of the information about those existing clients. In the light of this crude but sustained attempt to mislead the court in reliance on a document he manufactured himself which purports to come from a senior member of Beals’ staff, I must treat his evidence as being unreliable save and to the extent that it is independently corroborated.

Legal enforceability of the letter. Although the further issues that this letter could give rise to do not arise, since the letter was not genuine, I will briefly outline how they would have been answered had the letter been genuine. The first further issue was whether the letter would have created any legally enforceable obligations. In order to answer that, it is necessary to consider the relevant exchange of documents. The first document was, according to Sean Healy, the purported letter dated 24 July 2007 which was worded as an offer whose terms could only become contractually enforceable if and when the offer was accepted by Sean Healy. However, he never sent Beals an acceptance letter. He did, however, receive a letter dated 23 July 2007 which Tony Beal sent to him. That letter was not adduced in evidence but it was described in Sean Healy’s third statement as being an offer of appointment letter which he also stated had not been provided to him until 9 October 2007. It follows that the purported letter of 24 July 2007 was not responded to by Sean Healy before he received the offer of appointment letter which he stated he acknowledged by signing it on 9 October 2007. Thus, had the letter dated 24 July 2007 been a genuine letter which Sean Healy received later in July 2007, it would not have had contractual effect since the agreement that was entered into was that created by the letter received on 9 October 2007 which was signed on 9 October 2007.

Sean Healy’s case would have faced two further insuperable difficulties. The first difficulty was that he signed a second services agreement on 6 November 2007. The effect in law of his signing this second services agreement was that the earlier services agreement that had taken effect on 9 October 2007 was automatically discharged by the coming into force of the agreement dated 6 November 2007. The second difficulty was that the second agreement was not repudiated by Beals notwithstanding Sean Healy’s argument to the contrary. He contended that the second agreement provided that if Beals wished to terminate it, it had to give Sean Healy seven clear days notice of termination in writing whereas he only received four clear days oral notice. Sean Healy did not protest at the time of being given oral notice that he had to be given seven days written notice so he waived the need for strict compliance with the notice provisions of the agreement. Furthermore, even if a breach of agreement occurred, it was not a breach of such magnitude or significance as to give rise to a repudiation of the agreement. The breach would only have given rise to a very small sum by way of damages.

Conclusion. The overall conclusion is that no contractually enforceable obligation was created by the purported letter dated 24 July 2007 because the letter was a forgery, because it remained unanswered and its terms were not expressly accepted by Sean Healy, because the terms of the letter were superseded by the second agreement entered into on 6 November 2007 and because that second agreement was not repudiated by Beals so that there was no possibility of any earlier contractual obligation being revived.

The agreement signed by Bob Rice on 22 November 2007 was the third he had signed whilst working for Beals. The first was set out in a letter he received from Tony Beal dated 27 April 1999 which started his initial engagement to work as a self-employed financial adviser and to his starting work for Beals Estate Agents on 4 May 1999. The second was set out in an agreement for services dated 2 July 2004 which he entered into with Tony Beal trading as Beals Financial Services. The reason for this new agreement was that Beals had recently set up Beals Financial Services as a separate part of the Beals partnership and had appointed MGM as its packager. These new arrangements were introduced to enable compliance with the Financial Services legislation and the new agreement was a detailed document which included non-compete and non-solicitation provisions. The third agreement was drafted and circulated in draft to the financial advisers in August 2007. This agreement was a modified and improved agreement and it had been triggered by Beals setting up BFS as an incorporated partnership in substitution for Beals Financial Services, by its replacing MGM with Intrinsic and by its wish to introduce a new commission system. The draft also improved the previous version by adding a confidentiality provision and by strengthening Beals’ protection when a financial adviser left.

The new draft agreement was not popular with the financial advisers. Their particular concern was what they saw as reduced commission payments although Tony Beal in evidence stated that that was not a consequence of the revised formula for calculating commission. The evidence suggests that some of the financial advisers were also put off by Tony Beal’s abrasive negotiating style which it was suggested by Bob Rice and Sean Healy was unnecessarily combative and expletive-laden, a suggestion which Tony Beal firmly denied. However, all the financial advisers came round, in part because Tony Beal allowed them a week to consider the new agreement and then issued them with an ultimatum of sign now or leave.

Bob Rice’s case about his agreement has changed since the proceedings were first started. Initially, he contended that he had signed a two-page agreement and that the fourteen-page agreement exhibited to Tony Beal’s second witness statement dated 16 December 2009, which was before Macduff J when he heard the interim injunction application, was not one he had signed albeit that it had his signature on it. He went so far as to contend that the exhibited agreement had been concocted by being put together from different documents and the last page with his signature on it had been taken from a different document and that this concoction was masked, albeit poorly masked, by a photocopy of the document being put forward as an exhibit. In his defence, settled by the solicitor then acting for him, it was contended that he was asked to sign documentation that only related to his commission entitlement and that he was therefore duped into signing a more elaborate agreement which is unenforceable since he provided no consideration for it. This case was elaborated upon by counsel on one of the three days of the trial that Bob Rice was represented. Counsel accepted that there was no defence known to the law of being duped and disavowed any allegation of fraud or dishonesty or undue influence on the part of Beals or Tony Beal. He contended that Bob Rice was, in effect, alleging that the agreement could be rescinded on the grounds of misrepresentation. It was pointed out that no counterclaim seeking rescission had been pleaded and counsel was invited to reconsider Bob Rice’s defence and, if rescission was being advanced, to draft the appropriate pleading and apply to amend. No such amendment was put forward, counsel was disinstructed and Bob Rice maintained his allegation of being duped when putting forward his closing submissions.

I will first consider the evidence and decide whether that discloses a possible entitlement to rescind and only if it does, consider whether that case may be advanced in the absence of a pleading claiming rescission. Bob Rice contended that he had been tricked into signing the agreement by Tony Beal who had misled him by telling him that the agreement simply set out new commission arrangements which he now appreciated, long after he had signed the document, contained new and different clauses on which Beals relied heavily in their claims against him for an injunction, delivery up and damages.

He accepted when cross-examined that he had been in error in originally stating that he had only been given a two-page document and he withdrew the suggestion that Tony Beal had appended a forged document to his witness statement and stated that that was the agreement that he had signed. He explained that he had been given a copy of the agreement in late August 2007, soon after it had been drawn up. There were various meetings with Tony Beal to discuss the proposed commission arrangements. He placed the draft agreement in a drawer in his desk and continued his refusal to sign because he was so dissatisfied with the commission proposals that it contained. Given his role as a father-figure and unofficial leader of many of the financial advisers, several others followed his lead and refused to sign their draft agreements which were in identical terms to his. Eventually, Tony Beal came into his office and shouted at him: “fucking sign that or you’re out”. He said that he again explained to Tony Beal that he would be adversely affected by the new proposed commission arrangements given the limited amount of life insurance that he sold and Tony Beal told him that he would not be adversely affected by the commission arrangements and again replied that he had no alternative save to sign the agreement or leave. Bob Rice thought that the document was only concerned with commission payments although he accepted that that mistake arose because he had not read the document rather than from anything Tony Beal had told him. He trusted Tony Beal, and since he understood that the document only dealt with commission and its terms would not adversely affect him, he signed.

Tony Beal’s evidence was that he went out of his way to explain the new commission arrangements to Bob Rice and to offer him a different package of sales so as to ensure that he did not suffer financially from them. Indeed, given Beals’ switch to Intrinsic, Bob Rice should have ended up better off financially under the new arrangements. He denied making any statement about the content of the new agreement or suggesting that it only dealt with commission. He had not spoken about the other clauses in the agreement with Bob Rice who had had the draft for a week and could reasonably have been expected to have read the whole document and bring up himself any dissatisfaction that he had with any of its clauses so that his silence about them could reasonably be taken to amount to informed approval of them.

It is clear from this evidence that Tony Beal had not misled Bob Rice or stated anything misleading about the commission payments and Bob Rice didn’t seek to show that these were disadvantageous to him. Furthermore, it was obvious that the new agreement was not confined to commission payments but covered all relevant matters concerning his provision of financial services for BMF and its clients and there was nothing in the evidence to suggest that Bob Rice or Tony Beal had raised or discussed any issue about any other provision in the agreement. It follows that there was no evidence of any misrepresentation, duping or undue influence. It is clear that Bob Rice only raised the suggestion of his being duped in a forlorn attempt to circumvent the contractual restrictions that he was subject to on leaving Beals. I therefore conclude that Bob Rice was not duped, that Tony Beal did not misrepresent any aspect of the agreement prior to his signing it and that the agreement was not susceptible to being rescinded.

Bob Rice. Both Bob Rice and Sean Healy contend that the agreements each signed in November 2007 lacked consideration and are therefore unenforceable. The basis of this contention was when these two agreements were signed, each had an existing agreement requiring them to perform financial advisory services for clients of Beals so that the new agreements were doing no more than requiring them to perform services that they had previously agreed to perform. However, this is a misanalysis of the contractual situation. In Bob Rice’s case, the new agreement discharged, and was intended to discharge, the then existing agreement and the consideration for the new agreement was the agreement to discharge the old one. It frequently happens that contracting parties make a new agreement covering the scope of an existing agreement and it is well established that when that occurs, the new agreement discharges the old by necessary implication and the consideration for the new agreement is provided by the discharge of the old agreement. In any case, the obligations were not identical since the old agreement provided in clause 3 that Bob Rice would supply financial services exclusively for Beals whereas the new agreement provided in clause 6 that the agreement permitted Bob Rice to enter into similar agreements with other individuals. That significant change between the old and the new agreements provided further consideration for the new agreement.

Sean Healy. In Sean Healy’s case, the same considerations apply as are applicable to Bob Rice’s agreement. However, in his case, there never was an earlier agreement than the one that he signed on 9 October 2007 so that the issue of consideration does not arise.

Bob Rice’s growing disillusion with Beals. Mr Harvey and Mr Hall were directors of Westminster and BEA used Westminster as its mortgage packager and both men worked and became friendly with Bob Rice from the time that he started with BEA as a mortgage loan broker in 1999. Westminster provided mortgage packaging services for BEA until 2002 when Mr Harvey and Mr Hall set up Synergy because they had decided to split packaging and mortgaging services. Between 2002 and 2007, BEA used Synergy to provide the necessary services needed for the packaging of its client’s mortgages. BEA’s relationship with Synergy ceased when BEA decided to move its mortgage business and its insurance business which Westminster had not been involved in, to Intrinsic. Bob Rice’s last piece of broking business that he passed to Synergy from BEA was in February 2007 but he clearly remained in contact with both Mr Harvey and Mr Hall subsequently. This contact would have been largely by telephone since Westminster’s offices are based in Epsom, Surrey.

As I have already explained, throughout 2007 Bob Rice’s working life at Beals became less and less congenial for him. Outward appearances of this were his intense dissatisfaction in being moved from Waterlooville to Beals’ new Whitely premises located in what he dismissively described as an “out of the way business park”; his intense dislike of the newly arrived financial manager Paul Janes with whom he rowed constantly; his disapproval of the remuneration provisions of the proposed new contract which he only signed after a number of blazing rows with Tony Beal and Paul Duck; the increasingly stressful working conditions that he considered arose from ever-increasing targets, longer working hours, greater levels of regulation and lower levels of remuneration; the growing dependence on laptops, mobiles and emails and the use of e-recording instead of hard copies to record all his transactions which, as a self-described technophobe, he was neither willing nor able to use; ill-health and the recent death of his father all contributed to his growing wish to leave Beals.

Darren Heathfield’s encouragement. As also already described, Bob Rice had met and provided financial services for Darren Heathfield during 2007. The two men kept in touch after Bob Rice had arranged Darren Heathfield’s initial re-mortgage and associated life cover in August 2007 and it seems that Bob Rice provided gratuitous and friendly help and advice to Darren Heathfield in his increasingly despairing attempts to keep his electrical business afloat. However, there is no evidence that Darren Heathfield sought to interest Bob Rice in joining in his putative Cyprus property business until about April 2008, by which time Bob Rice was desperate to leave Beals. What is most unfortunate is that Bob Rice never raised his growing dissatisfaction with Tony Beal despite their long previous friendship. Instead, he allowed his growing dislike of Tony Beal and his growing disenchantment with Beals to remain bottled up. It only became evident to Tony Beal after Bob Rice had left and the growing evidence of what Tony Beal saw as Bob Rice’s treacherous theft of Beals’ business that Bob Rice had become an implacable enemy of Beals in general and Tony Beal in particular.

Telephone transcripts - introduction. It is necessary first to introduce these transcripts since they provide the first significant independent corroborative evidence of Bob Rice’s actual and intended breaches of his contractual duties of confidence and non-competition. Paul Duck explained that neither Beals’ head office and nor any of its branches had a recording facility on any of its telephone systems until Beals moved into its new head office in August 2007. As part of the fitting out arrangements for those new offices, Beals installed a state of the art telephone system with an integral recording facility. This had the facility of recording six internal calls simultaneously in the offices where about twenty staff are employed. The principal purpose of recording calls was for training and quality control purposes. The calls of individual advisers would be listened to on an ad hoc basis to enable the content and quality of the advice being given to be checked and appraised and then used as feed-back with the adviser in question. Similarly, the calls made to the property maintenance department would be monitored on an occasional basis to check on the speed and quality of the response to calls reporting such matters as leaks, malfunctions and damage requiring repair. The six recording facilities recorded the calls that each recorded for six months and the recording was then automatically recorded over unless any part had first been saved.

Although not specifically mentioned by Mr Duck in his evidence, it is clear that, given the highly regulated regime that applies to the provision of financial services and advice, calls related to such services and advice involving Beals’ financial advisers and mortgage and insurance brokers could also legitimately be recorded and subsequently used for legitimate employment-related purposes by Beals, subject to the necessary safeguards required by financial services and data protection legislation and regulations.

Paul Duck explained that he was in charge of training, appraising and quality control at Beals in the period after the move and the introduction of the recording facility in their new head office. He listened into the recordings from time to time for training purposes but he did not start to listen to any of Bob Rice’s recorded calls until 2009 when he was preparing evidence for the trial. This was after he had already learnt that Bob Rice had as he put it, probably stolen from Beals some of its clients and parts of its database. He listened to all of Bob Rice’s calls that had been recorded which were, inevitably, only a proportion of the total calls that he had made and received on Beals’ telephone lines. In doing so, he was assisted by two other partners of Beals, Beverley Bailey and Tom Miller. He found that, in a nine-week period between April and June 2008, Bob Rice’s calls that he listened to contained a significant number of calls that evidenced him planning to act for Beals’ clients or actually acting for them in breach of his contract. All of Bob Rice’s calls in this period that contained evidence of what was considered to be evidence of him breaching his contract were re-recorded onto tapes and the length of these calls lasted, in total, about 90 minutes.

Beals then arranged for these particular recordings to be transcribed and fifteen of the transcribed calls were admitted into evidence. The defendants were provided with copies of all the transcripts and of the tapes and had a full opportunity to check the accuracy of the transcripts against the tapes and to introduce further transcripts if they wished but they neither queried the accuracy of the transcripts nor introduced further transcripts. Bob Rice, supported by the other defendants, in his closing submissions contended that all the calls whose transcripts had been introduced were concerned with his then future intention to leave Beals and to join with Darren Heathfield in selling Cyprus homes and associated life insurance to non-Beals clients. Furthermore, this would be clear to anyone listening to the taped calls. It was his contention that I should have listened to the tapes, that Beals’ evidence and the submissions made on their behalf distorted and misrepresented their content and that I should disregard them as a result if I did not exclude that evidence altogether. However, at no point in the trial was an application made by any of the defendants for the tapes to be played in court and no attempt was made to introduce the transcripts of other calls which might have clearly shown Bob Rice discussing non-Beals’ Cyprus business as evidence that the calls that I did consider were also properly to be regarded as being concerned exclusively with such business.

There was no evidence of breaches of contract prior to 21 April 2008 and Bob Rice’s calls were no longer recorded after 25 June 2008 since he was working in Beals’ Portsmouth Office from then until the end of July 2008 when he dramatically gave in his notice and left Beals.

Bob Rice and Sean Healy objected to the admission of the transcripts because, they contended, the recording of their calls amounted to a serious breach of their entitlement to privacy at both common law and as protected by Article 8 of the European Convention on Human Rights. They both gave evidence that they had never been informed that some of their telephone conversations were being recorded, had never consented to this being done and that the use of the transcripts as evidence against them was an unlawful use of material which had been unlawfully obtained. In response to this evidence, Beals introduced the unchallenged evidence from two members of Beals’ staff, Maxine Faulkner and Bruce Tomlinson, to the effect that they, and all members of staff working in the Whiteley offices, which in context included all the financial advisers, were fully aware that the telephone system recorded some of the calls made and received by all members of staff for the protection of Beals, their clients and all members of staff. I accept that evidence and the evidence of Paul Duck to the same effect.

Moreover, given the prevalence of recording client’s calls in the financial and related services, the authorisation of such recordings subject to safeguards by the FSA and relevant legislation and the terms of Bob Rice and Sean Healey’s contracts of engagement which expressly defined as Beals’ property as including all client files which in turn were defined as including personal data and other records held by electronic means including records stored on disc or tape, I also conclude that both defendants had expressly or by necessary implication had authorised such recordings and their subsequent storage and use or could not have any rights of privacy or confidentiality in relation to such calls.

I was asked to exclude the transcript evidence during the trial but ruled that that evidence was admissible. I am asked again to rule out the evidence as being inadmissible. On both occasions, I was referred by Mr Clifford Darton to Jones v University of Warwick (Footnote: ³) and I ruled during the trial and confirm now that that authority makes it clear that even if the evidence was unlawfully obtained, it is not necessarily to be excluded from the trial. The court must balance the claimants’ rights to place all relevant evidence before the court against the defendants’ rights to privacy. As Lord Woolf LCJ put it in this passage taken from his judgment:

The court must try to give effect to what are here the two conflicting public interests. The weight to be attached to each will vary according to the circumstances. The significance of the evidence will differ as will the gravity of the breach of Article 8, according to the facts of the particular case. The decision will depend on all the circumstances. Here, the court cannot ignore the reality of the situation. This is not a case where the conduct of the defendant's insurers is so outrageous that the defence should be struck out. The case, therefore, has to be tried. It would be artificial and undesirable for the actual evidence, which is relevant and admissible, not to be placed before the judge who has the task of trying the case. (Footnote: ⁴)

I conclude that Bob Rice and Sean Healey’s objections fail on all counts. They knew that Bob Rice’s Whiteley calls were subject to being recorded and listened to subsequently, their contracts authorised Beals to retain such taped recordings, their contracts contained necessary implied terms authorising this practice and it is both authorised and common accepted practice for employers in the financial services field to record business calls of their staff. In any event, even if the recordings were both unauthorised and unlawful, the balancing exercise required of me overwhelmingly points to their introduction as evidence. I therefore confirm my ruling and will consider and rely on the contents of these transcripts.

Contents of the transcripts - general. The transcripts have been redacted so that only passages of dialogue involving business matters are recorded. Since the calls were made in business hours on Beals’ telephone number and Bob Rice was in Beals’ office discussing matters which were, or were apparently involved or were directly or indirectly concerned with with Beals’ past, present or potential clients, Beals were clearly entitled to rely on the contents of the transcripts and to adduce them into evidence.

It is only necessary to summarise the contents of the salient transcripts and provide brief extracts from them of Bob Rice’s comments. Essentially, the fifteen transcripts, when taken together, show that Bob Rice and as a peripheral participant Sean Healey, were engaged in the relevant nine-week period in at least four types of activity which provide very strong evidence of breaches of Bob Rice’s contract with Beals and of an orchestrated plan to commit further breaches of that contract in the future.

Contents of the transcripts – Setting up a new company vehicle. Bob Rice had a telephone conversation with his solicitor, Iris Male of Harris & Co, on 21 April 2008 to discuss the current draft of a contract that had been settled by counsel which was to be used by England-based clients buying properties or timeshares in Cyprus. This business was, on the face of it, entirely concerned with clients who were not, nor would become, Beals’ clients and with business that Beals were not concerned with. However, Bob Rice was keen not to adopt his solicitor’s suggestion that her assistant should drive over to the Whiteley offices where Bob Rice was speaking from and show him the draft. He did so stating:

(having just spotted Tony Beal in the open plan office) … I have got Tony hanging outside my door yeah, Tony Beal and obviously I don’t want none of this lot knowing what’s going on.

Further, the solicitor referred twice in the conversation to the fact that 1^st Global (and not GRE) should indemnify her firm against any future claims. This conversation, with the benefit of hindsight, relates to the setting up of 1^st Global (it was registered as a new company on 20 May 2008) as the company through which Bob Rice would be undertaking his post-Beals business and that that business would include business that Tony Beal should not have any inkling about.

In a second call on 13 May 2008, again just prior to 1^st Global’s formation, Bob Rice and Darren Heathfield discuss 1^st Global’s role in the Cypriot work and, towards the end of the conversation, they discuss some English work that it will be involved in. Bob Rice stated:

“… but I’ve got those 30 apps sitting in the back of my [expletive] car filled in … all I need is the English contract side of it sorted … what I want is the other, the account from First Global Finances point of view, yeah? … I want it set up in another account, I don’t want it near your accounts.”

The “30 apps” were applications for English mortgages or for life insurance linked to purchases of either English or Cypriot property purchases which would have been received by Bob Rice whilst still working at Beals and all of which were business which had already been initiated by Bob Rice whilst working at, and for, Beals. This business was, in consequence, Beals’ business. With hindsight, it can be seen that Bob Rice is informing Darren Heathfield that he wants this Beals’ business put through 1^st Global in an account which is separate from one that Darren Heathfield controls once that company has been set up. 1^st Global was set up seven days later.

Arrangements with Westminster to undertake all Bob Rice’s mortgage and insurance work. On 24 April 2008, Bob Rice had a conversation with Sean Healy during which they agreed that a life cover with critical illness policy that Russell Harvey and Westminster closed on behalf of Darren Heathfield which had been arranged through Beals by Sean Healy would be replaced with a new contract arranged through Westminster by Sean Healy. This was subsequently arranged by Westminster after Sean Healy had put the business through Westminster after he had started with 1^st Global. Westminster forwarded the application to the insurance company, were unable to close the contract due to Darren Heathfield’s medical condition. During the course of this conversation, this passage occurred, initiated by Bob Rice:

BR: Redo the whole case then – you do it – you be in control of it yeah?

SH: I’ll redo the whole thing.

BR: And if there is anything I have got to deliver to them I’ll take out tonight.

SH: Yep obviously I’ll redo the whole case – it’s under your name, of course in the same way with Darren Heathfield – I’ll redo that one.

BR: Do them both then Yeah.

SH: and then we will just worry about it afterwards.

BR: You have got the details of what’s on there haven’t you – I don’t want that scrawny little fuck [in context, Tony Beal] getting anywhere near it.

On 12 May 2008, Bob Rice had a long conversation with Russell Harvey at Westminster. They initially discussed someone whom Bob Rice described as an old friend who he explained wanted to borrow £250,000 charged against her land in England in order to build stables on it. He asked Russell Harvey whether Westminster could arrange the loan. Russell Harvey replied that he would look into it. They then discussed Westminster’s possible involvement in future Cypriot sales that Darren Heathfield and Bob Rice were planning to undertake through the new company, in context 1^st Global, that was about to be set up and which would be located at the refurbished part of premises in which Darren Heathfield’s electrical contracting company was located. Bob Rice then indicated that he wanted to set up all the work that he would be putting through the new company using Westminster’s “Trigold numbers” and Russell Harvey agreed to that course of action.

Russell Harvey then asked:

… what are you doing with your client bank at the moment, nothing?

To which Bob Rice answered:

Not a lot, I’ve got people like [the client he was seeking a mortgage for on her land] are coming in and I’m doing the odd one for people that I know, if I didn’t know Kim, she wouldn’t of got through the door to be honest … The reality is, if I can do the client bank, but if I can get someone that’s fully up together … Then clients can come in and see me ya know.

Russell Harvey then intervened and said:

Well, yeah, I mean if you’ve got stuff like that, ya know, you’re struggling with at the moment; we can always help with that, just to get the ball rolling.

A little later, Bob Rice said:

… and I’ve got others out there, … we’ll do all of them, but I’ll just ring you and you can do them for me.

To which Russell Harvey answered:

Mmm, yeah.

On 13 May 2008, in a telephone conversation between Bob Rice and Darren Heathfield, Bob Rice stated:

BR We’ll get Russell down to get the licences set out for the office [in context 1^st Global’s office and 1^st Global’s Trigol licences] and then we’ll start working from there as is with (sic) the …

DH Brilliant

BR This week yeah?

DH Yeah.

BR And then I’ll see how, the end of the month yeah?

DH Yeah.

BR Providing the first 20 have gone over, which they should have done.

DH Yeah.

BR So, like I say, I’ll give a month’s notice as of the 1^st and then we’ll start working from there as is with the …

…

BR Ya know, I spend more time out of here now doing the other ones that do in here at the moment anyway, I put in a good month last month to keep everybody off my case, but … But from a reality check point of view, I would expect to start working my month’s notice as of the month, as in a month now, yeah?

DH Yeah, yeah.

On 12 June 2008, Bob Rice had a conversation with Russell Harvey during which he arranged with Mr Harvey that Westminster would arrange a mortgage on an English block of six flats and at the end of which Russell Harvey stated that he would talk to Bob Rice on the following day about “the life stuff”. Bob Russell then stated that he was hoping to put further two-year English mortgages Westminster’s way.

What is clear from the totality of these conversations and Westminster’s involvement in the business that was discussed during them is that Bob Rice informed Russell Harvey as early as May 2008 that he was helping Darren Heathfield to set up a new company into which he would divert both new business and business involving Beals’ existing clients. The new company would use Westminster’s access to the Trigold system for all of this business. That business would include English mortgage and English and Cypriot insurance business for previous clients of Beals. Russell Harvey clearly agreed to the totality of this proposal on behalf of Westminster and from June onwards acted for 1^st Global on many occasions for work and business, at least some of which he can be seen to have known, or ought to have known, had originated from Beals’ existing clients and from transactions that Beals had initiated but which had then been diverted to 1^st Global and Westminster.

Diverting Beals’ work-in-progress and existing clients for 1^st Global to complete. There are many examples in the telephone transcripts of Bob Rice diverting Beals work-in-progress to 1^st Global for Sean Healy, Zoe Halford, Sean Healy or himself to finish off. Mr Duck referred to 21 in his evidence giving the name of each Beals client, being the client whose enquiry and agreement to act had occurred with Bob Rice whilst he was still working with Beals. There were three others that were referred to in telephone conversations that took place. Bob Rice did not provide an explanation for any of these diversionary acts save that the clients were long-standing clients of his who were not covered by the restraint of trade clause in his contract. However, he didn’t, or couldn’t, address Beals’ principal complaint which was that each diverted transaction had started with Beals no more than a few weeks prior to the transaction being diverted away from Beals and was then handled by Bob Rice and 1^st Global through Westminster. Some of the attempts to complete these transactions were successful and some were unsuccessful.

I will provide one extract from the transcripts of one of these clients that took place between Bob Rice and Sean Healy on 29 May 2008. This call took place three days after he had been given notice of termination of his contract of engagement by Beals and one day before that notice took effect. The relevant part of the transcript reads as follows:

BR … I need you to do a half million pound load case on [Ms King] … See if we can get one million without a medical check yeah?

SH Yeah, right OK.

BR Go on your system, OK, log it under my name, yeah … What we’re gonna do is put it on, yeah … Then we’re going to cancel it. … and then you’re gonna write it under the new company when the licence is there.

SH No trouble at all.

BR So, you’ll get your co[mission] what Stuart McInerney]’s got and what I’ve got because since you leaving, yeah …

SH Yeah.

BR We’ve now got five life cases that we want you to write so you own them from day one.

SH Excellent.

BR Alright, so you’ll get your 25, 30 percents of everything of theirs, do you understand?

SH Yeah.

BR So that there’s work for you, it’s just if you want it Sean. … And we’ve got to go through all the reviews … so if you want to be busy son, then it’s up to you, but you, best not say anything over there.

SH No.

BR Do you understand what I’m saying?

SH Don’t worry I’m fucked up …. .

Conclusion – telephone transcripts. These telephone transcripts are no more than a sample of all the telephone calls made and received by Bob Rice on Beals’ telephone lines at the head office in Whiteley. They do not include any relevant calls that he received in the last five weeks he was working for Beals since, in that period which culminated with his leaving Beals at the end of July 2008, he was working in Beals’ Portsmouth office which had no recording facility. Moreover, these calls were an unknown proportion of all calls received and made by Bob Rice since they do not include those made on his mobile. Notwithstanding that, there were a significant number of calls that were monitored which revealed breaches of contract by Bob Rice and Sean Healy and these breaches may be summarised as follows:

Introduction. Bob Rice started to think seriously about leaving Beals early in 2008. The catalyst must have been Darren Heathfield and his learning about the opportunities that appeared to exist for him to make a better living with far less stress away from Beals marketing Cypriot retirement and second homes to residents of Hampshire and the South East of England.

There was, however, little evidence that Darren Heathfield had had any previous meaningful involvement in marketing property. At best, he appears to have had contacts with developers and banks in Cyprus who he could team up with and that he hit upon Bob Rice as the person who could develop the business in England to enable Darren Heathfield to enter into partnership with these developers. Bob Rice stated that one of his roles was to establish a financial services company for Darren Heathfield. This company was, on the evidence, the same company that was set up to market Cypriot properties, namely 1^st Global and which provided Bob Rice with a lucrative contract of employment when he left Beals.

Bob Rice, however, maintained that Darren Heathfield had been involved in marketing Cypriot properties for some time prior to his own involvement with that marketing and that he had been carrying out this business, which was entirely separate from his electrical contracting work, through 1^st GRE with his partner in that business, Ben Matley. However, 1^st GRE’s records at Companies House show that 1^st GRE was incorporated in 2004 as LJH Developments Ltd and it changed its name to 1^st Global Realestate Ltd (i.e. 1^st GRE) on 31 July 2007. There was no evidence as to when Darren Heathfield was first appointed a director. However, Ben Matley was first appointed a director on 29 February 2008, the same day as Darren Heathfield’s wife Melanie Heathfield was appointed company secretary. 1^st GRE’s registered office was moved to the address in Wickham where Darren and Melanie Heathfield lived and from where the electrical contracting business was run on 30 April 2008. 1^st Global was incorporated on 20 May 2008 and its registered and only office was located at the same address in Wickham. 1^st Global only traded for a few months in 2008. Darren Heathfield applied to strike it off the register on 10 September 2008, the Registrar gave notice on 21 October 2008 that it would be struck off in three months time and it was dissolved on 10 February 2009. Darren Heathfield’s appointment as a director of 1^st GRE terminated on 17 February 2009 and 1^st GRE was dissolved on 2 February 2010.

There is, therefore, no evidence, other than the uncorroborated assertions of Bob Rice, Sean Healy and Robbie Rice that are not supported by any document, that 1^st GRE was involved in any property transactions or in the provision of any financial services in either Cyprus or England. Indeed, it would seem that 1^st GRE ceased trading when the company adopted that name in July 2007 and that it never undertook any property or financial services business in that name.

The evidence in fact shows that Bob Rice always intended to help set up and then run 1^st Global and that the original reason for his leaving Beals was to become involved in marketing mortgages and life insurance for both English and Cypriot properties for 1^st Global. The earliest telephone transcript adduced in evidence is of a discussion between Bob Rice and his solicitor on 21 April 2008 in which the solicitor is discussing a draft contract that would be adopted in Cypriot property transactions that Bob Rice was planning and that 1^st Global would be the contracting party in those transactions who would give the solicitor’s firm an indemnity, presumably because the firm would be entering into those contracts on behalf of 1^st Global. However, although Cypriot property marketing may have been a significant reason for leaving Beals, it is clear that Bob Rice always intended to take with him from Beals those that he saw as “his clients” and that the mortgage and insurance needs of these and other clients would be provided for through 1^st Global by a team that he would recruit and lead.

It is highly significant that Bob Rice decided no later than mid-April 2008 that he would leave Beals in order to work as a financial consultant with the company he was helping to set up but he did not give Beals notice of his departure until the day he left Beals. On his last day working for Beals on 31 July 2008, he informed Paul Duck that he was resigning from Beals with immediate effect because he was gravely ill and would not work again in the Financial Services sector. He made this statement although there was no evidence that he was gravely ill at that time and, moreover, he had only a few days before, on 18 July 2008, signed a contract of employment with 1^st Global to be its sales director.

Stuart King recruited by Bob Rice. Stuart King had acquired a Certificate in Mortgage Advice and Practice (CeMAC) from the Institute of Financial Services and he joined Beals on a temporary placement traineeship for a four-week period in November 2007 during which he shadowed a number of Beals’ advisors including Bob Rice. He found Bob Rice to be both friendly and helpful and he introduced his partner, Kelly McKinerney to him. Stuart King considered whether he wanted to stay on at Beals but he learnt that that would entail him registering with Intrinsic as a Registered Individual. He obtained an application form to fill in and discussed his answers with Bob Rice since one of them was to the effect that he had a county court judgment registered against him which would show up on any credit rating agency check that might be made. Bob Rice told him that he would have no chance of being accepted by Intrinsic whilst that judgment remained registered. As a result, Stuart King did not pursue his application and decided to leave Beals at the end of his trial period, partly because he realised he would not obtain an Instrinsic registration and partly because he found the long working hours uncongenial. He found other employment.

Stuart King and Kelly McKinerney were interested in obtaining life insurance and they arranged to meet Bob Rice at Beals’ Whiteley offices on 23 April 2008 to discuss this. Bob Rice registered both in Beals’ database and passed them over to Sean Healy to progress their life cover application. At about that time, Stuart King decided that his recently acquired employment was uncongenial and he started to look for another job. He contacted Nigel Strutt to ascertain whether Beals might after all be able to offer him employment and Nigel Strutt referred him to Bob Rice who arranged to meet him on 12 May 2008. It is possible that this meeting was arranged during the earlier meeting to discuss life insurance or else it was arranged soon afterwards. The meeting occurred at what must have seemed a fortuitous time since Bob Rice was in the throes of helping to set up 1^st Global. According to Stuart King, Bob Rice immediately offered him a job with 1^st Global and explained that the company was about to start trading as mortgage and life insurance financial consultants and that he wanted someone who need not be qualified to undertake most of the client interviews, fill out the necessary application forms and generally help out around the office. Bob Rice explained that he wanted this person to start at once and Stuart King accepted with alacrity.

1^st Global was established in Darren Heathfield’s home and in the early weeks of its operations, whilst a barn in the property was being converted into offices, it operated in the same office as Darren Heathfield’s electrical contracting business. When Stuart King started work, a few days after his being taken on by Bob Rice, he met Russell Harvey of Westminster. He learned, on starting, that Bob Rice had already arranged that 1^st Global had arranged that all its business would be conducted through Westminster and the purpose of his meeting Russell Harvey was to fill in the necessary paperwork to become one of Westminster’s RIs. However, he learnt from Russell Harvey that Westminster would have to refuse his application for the same reason as Intrinsic would have done.

Bob Rice did not see that it was a problem that he could not register as an RI with Westminster since, as he explained to Stuart King, the role he was to play did not involve his having any professional qualifications. Bob Rice informed him that he would receive from Bob Rice details and the files of clients that he was to contact. Having made contact, he would then arrange to see them and fill out and complete a fact finding form which he would return to 1^st Global to be approved by Bob Rice. Stuart King was then to send the details through from 1^st Global to Russell Harvey at Westminster. He would deal with mortgages and Sean Healy would deal with life insurance.

Stuart King received his first contact from Bob Rice a day or two after Bob Rice had hired him and this led to his first meetings with Bob Rice’s clients on 19 May 2008. He kept a diary of his appointments which he filled out himself when he made a client appointment. The files would be brought over to 1^st Global’s office by Bob Rice or Zarra Addis or, on occasion, he would meet Bob Rice by arrangement at Beals’ office and would be handed the relevant file. The clients that he interviewed had all been passed on by Bob Rice following an initial meeting or telephone discussion with him. The original of this diary was produced by Mr King when he gave evidence in court and copies of its contents were adduced in evidence. Its accuracy and authenticity were verified by supporting evidence in the form of copies of some of the fact finder and mortgage application forms that he had filled in with the clients being produced by Westminster. In the period whilst Bob Rice was still working at Beals, the diary records twelve clients that Stuart King met and took details from. Most of these had been clients of Beals whose details were stored on its database.

It was suggested by the defendants in their closing submissions that this diary was concocted or that it was wholly unreliable as a result of entries in it that were clearly false. These allegations were not put to Stuart King when he was cross-examined and there was no substance in the suggestion that the diary had been forged or made up since so many of the entries tallied with paperwork that Westminster had disclosed after the diary had been made available to the claimants and which Stuart King would not have seen before disclosing his diary. However, the examples given by the defendants are themselves unreliable. Thus, the defendants asserted that an entry for 19 May 2008 that suggests that Stuart King met Mr and Mrs Wheatcroft in connection with a remortgage of their English property was erroneous since Mr and Mrs Wheatcroft had submitted a witness statement stating that their only meeting with Stuart King was in connection with a possible Cypriot purchase which didn’t eventually materialise. However, it was clear that there were more than one meeting with the Wheatcrofts and that one of those meetings related to a possible remortgage of their Hampshire home. This was evidenced by an entry on Bob Rice’s Follow Up sheet for 22 July 2008 which clearly relates to a domestic mortgage. Two other entries were challenged on the basis that although Stuart King had met these two clients, each meeting had been set up in order to discuss Cypriot properties rather than Hampshire re-mortgages. However, in both cases, the client was a former Beals client and it is likely that the meetings in fact discussed both types of business.

It follows that the entries in Stuart King’s diary provide good evidence that Bob Rice redirected at least twelve of Beals’ clients away from Beals between May and July 2008 after they had approached him in the early months of 2008 about a possible mortgage transaction. Each client had previously been a client of Beals and Bob Rice had arranged for each of them to redirect their business to 1^st Global by persuading them to see Stuart King and then passing on to him their Beals file.

Sean Healy leaves Beals and is recruited by Bob Rice. Sean Healy started working at Beals on a self-employed basis in July 2007. However, he had to undergo an induction course with MGM Assurance and then with Intrinsic and he finally signed a contract on 9 October 2007 and was appointed as an Intrinsic representative on 16 October 2007. He worked at Beals for seven months and, on 26 May 2008, Paul Janes and Nigel Strutt met him and gave him notice that Beals were terminating his contract and that his last day would be 30 May 2008. He was taken on to be a life insurance financial consultant but he was moved to Beals least successful branch at Hedge End in February 2008 as a mortgage adviser whilst retaining his role as a life insurance adviser as required. When he started with Beals, he brought with him a client list that he had built up previously. This list was incorporated into Beals database and after he left Beals, he remained resentful that Beals retained the data he had provided him with on its database as it was entitled to under the terms of its contract with him.

Sean Healy stated in evidence that he was recruited by Darren Heathfield to work for 1^st GRE in June 2008 and that he started work on a part-time self employed basis on 24 June 2008 as a life insurance financial adviser. However, it is clear from the transcript of his telephone conversation with Bob Rice on 29 May 2008, which took place on the day before he was to leave Beals, that he was going to be working for 1^st Global once he left Beals. There is this passage in the transcript:

BR: … and then you’re gonna re-write [a life insurance policy] under the new company [1^st Global] when the licence is there.

SH: Yeah, no trouble at all.

BR: So you’ll get your cos (commission) what Stuart [King]’s got and what I’ve got because since you leaving yeah.

SH: Yeah.

BR: We’ve now got five cases that we want you to write so you own them from day one.

SH: Excellent.

It is clear from this excerpt that Bob Rice had been instrumental in arranging with Sean Healy that he would join 1^st Global when he left Beals and it is likely that he was recruited by Bob Rice in the day or two following his receiving notice of the termination of his Beals engagement on 26 May 2008. It follows that although Darren Heathfield may well have spoken to him about the terms on which he would work for 1^st Global, it was Bob Rice who had recruited him four weeks earlier and Darren Heathfield, in his capacity as the director of 1^st Global, was merely confirming what had already been agreed with Bob Rice. It is also clear from the except from the telephone transcript of 29 May 2008 that Sean Healy was recruited to handle the life insurance business that would be generated from the clients that Bob Rice would be introducing to 1^st Global including the Beals clients that he would be diverting to 1^st Global.

Zarra Addis recruited by Bob Rice. Zarra Addis worked as an administrator, employed by BEA, between 20 February 2006 and 27 June 2008. She was a highly trusted employee since she was only one of five people within Beals who had access to the entire database of its client’s details. This access was obtained using the codes that she was provided with and which only she and the other four people with full access were party to. Bob Rice did not have access to this database. According to her evidence, She decided to leave Beals in order to take up a job offer with the NHS but she subsequently had an improved offer from Heathfield Electrical Ltd and started to work for that company at the beginning of July 2008. It is noteworthy that she was unable to give any details of the NHS job she must, on her account, have accepted before handing in her notice to Beals nor of how she obtained the job offer from Darren Heathfield.

The evidence shows that she left Beals because Bob Rice persuaded her to move with him to 1^st Global. This is clear from the telephone transcript of a conversation between Bob Rice and Darren Heathfield on 13 May 2008 during which they are discussing the start-up arrangements for 1^st Global. Bob Rice states:

BR: We’ll get Russell [Harvey] down to get the licences set out for the office and the conversion on the new office over there, right?

DH: Yeah.

Zarra Addis was present with Bob Rice during this telephone call since he stated that she is “stood right next to me now”. Later in the conversation, Bob Rice stated:

BR: And I hand the notice in then, if Zarra’s still coming across I’d want her to start one week before me, yeah?

DH: Yeah.

BR: But I wanna make sure you’ve got the funds in there to pay those wages so from Zarra’s point of view, it would be Monday 23rd, is that, go forwards, so if we go, 1,2, that would be 5 weeks and we could get Russell to get the diary completely licensed by that date.

DH: Yeah, yeah.

BR: So all the money would then come through that office yeah?

DH: OK mate, lovely.

On 16 June 2008, Bob Rice had a telephone conversation with someone at Westminster. The call started with the unidentified party at Westminster stating that Russell Harvey would be in shortly. Bob Rice then continues to the Westminster representative receiving the call:

BR: Can you do me a favour? I’ve got some clients with me yeah. … Right to buy. … OK, the valuation is it, is it a two bedroom you’ve got, it’s three bedroom, so, so, it’s the end of terrace, its worth about 150 over here isn’t it, 150. …

WR: How much do you need to borrow?

BR: 123, can you do that?

WR: I’ll have to have a look through who we’ve got, 123, OK, is it status or self cert?

…

BR: Do you want to sit in on this one Zarra?

ZAs: Yeah.

The conclusion to be drawn from these extracts of BR’s telephone conversations with Darren Heathfield and Westminster is that Zarra Addis was recruited by Bob Rice to work for 1^st Global in May 2008 before 1^st Global had been formed and that her work as an administrator at 1^st Global would include her processing mortgage applications with Westminster from clients introduced by Bob Rice including Beals’ clients that he had diverted to 1^st Global. This is consistent with Zarra Addis’s other evidence to the effect that her contract of employment was with and she was employed and paid by 1^st Global.

Zarra Addis’s copying of diary for Bob Rice’s project. At 10.09 in the morning of 27 June 2008, her last day at work for Beals, Zarra Addis emailed from her Beals’ desktop to her personal account an email with no subject and no message but with a number of attachments to it. These attachments contained documents and data, all of which were Beals’ property. One of the attachments was highly significant. It was a file that contained copies of Bob Rice’s “On Risk” diary from 2 December 2004 until 24 June 2008 and of his “Business Arranged” diary from 5 June 2004 until 26 June 2008.

These datasheets must have been taken from Beals’ database where they were stored and only Zarra Addis and the other four privileged users of Beals’ database could have accessed them. The documents contained a complete list with details of the mortgages that Bob Rice had agreed with the client would be applied for and of the mortgages that he had arranged that had gone on risk. These sheets would provide invaluable information to Bob Rice since most of these mortgages would have been short-term mortgages and in most cases, the client would need a re-mortgage within two to three years. The information was stored on Beals database so that Beals’ could contact each client towards the end of their mortgage period and suggest that that client should apply through Beals for a re-mortgage. If the financial adviser who had arranged the previous mortgage was still with Beals, that adviser would be supplied with details of the previous mortgage in sufficient time to enable that adviser to make the follow-up contact and, if possible, to arrange the re-mortgage. If the financial adviser no longer worked for Beals, the details would be passed to another current financial adviser to chase up. In Bob Rice’s hands, this information could be used to enable him to contact most of his Beals’ clients at the appropriate time. This data was clearly confidential to Beals and the copying of it, particularly if done to enable the data to be used to solicit business from Beals’ clients, was both unauthorised and a serious breach of several legal duties owed to Beals by Zarra Addis and any recipient of the data that she passed it to.

This unauthorised removal of Beals’ data from its database was not detected until a forensic examination of Beals’ hard disk drive was undertaken in September 2010. Zarra Addis had not referred to this copying in her evidence despite being ordered to deliver up all Beals’ confidential information in her possession and to make and serve a witness statement verifying that she had delivered up such information and no longer had it in her possession. Those orders were made as part of the interim injunction that she was made subject to on 17 December 2008. Zarra Addis accepted that, at the time when she was made subject to the injunction, that she was represented by a solicitor who advised her on what she should say and do in response to these orders. She must have realised at that time that she should disclose the fact that she had copied and removed these extracts from Beals’ database even if she had, by then, deleted the relevant email and its attachments from all computers she had access to.

Zarra Addis initially stated, in a witness statement dated 12 January 2010, that she had never copied, downloaded or removed any original files from Beals offices. She reinforced this denial by asserting:

… anyone can see there is no evidence to prove such an accusation, only a statement based on lies which has no real hard evidence to back it up.

Zarra Addis is there referring to Stuart King’s statements which implicated her in other acts of file removal (Footnote: ⁵) and downloading but did not refer to the downloading of Bob Rice’s diaries. She gave oral evidence on two occasions. On the first occasion, there had been served a forensic expert’s report which reported the downloading but, significantly as it emerged, had not exhibited copies of the attachments to her email since these were still in the process of being opened. Zarra Addis was therefore confronted with the fact that she had downloaded a document which appeared to consist only of a blank template of Bob Rice’s “On Risk” register. She explained that she had downloaded that document and the other documents for her own personal use if she ever wanted to set up a financial services business in the future. These documents would be used by her as examples of the type of document she would need to set up. She never opened the attachments and deleted the email from her personal computer soon afterwards when she undertook one of her regular clear outs of dead emails. She also stated that she had not referred to this downloading episode in her post-injunction witness statement because she didn’t think it was relevant and because it had not led to any financial gain.

Soon afterwards, Zarra Addis was confronted with the full evidence of the forensic examination of her email and sight of the attachment. She served another short witness statement dated 2 November 2010 which stated in part:

Having seen the report Disklabs have produced today about the attachments to the emails I sent to myself just before leaving Beals, I have realised my genuine error. … When I emailed the Arranged Business, the NTU Business and the On Risk Business sheets to myself, I genuinely thought I only sent one copy of each sheet. It did not occur to me that these are actually kept on an Excel book so I should have realised, especially with my experience and knowledge that there might be other sheets sent at the same time.

In considering whether to accept Zarra Addis’s unfolding explanation for her downloading of Bob Rice’s working diaries, I take account of her related evidence as to her intentions when giving notice to leave Beals and subsequently. On her account, she left Beals to work for Darren Heathfield’s electrical contracting business and with no present intention of working with or for financial advisers. She claimed to have had no involvement in, or knowledge of, Bob Rice’s activities in setting up 1^st Global and in diverting Beals’ clients to that company in the two months prior to her leaving Beals and she only started to work for Bob Rice at the beginning of September when she was moved from Heathfield Electrical Contractors to work for him as his personal assistant. However, as the telephone transcripts reveal, by mid-April 2008, she had agreed to leave Beals and work for Bob Rice and 1^st Global on all its future business including the work generated by the clients he was diverting away from Beals. She had never intended to work for the NHS and she never worked exclusively for Heathfield Electrical Contractors and she had been involved in diverting files from Bob Rice to Stuart King and in the other arrangements that Bob Rice was undertaking throughout the last ten or more weeks that she was working at Beals.

Moreover, she appeared to trip herself up whilst giving evidence on the second occasion that she appeared at the trial. On that occasion, she realised for the first time that she had emailed to herself not merely a template of the relevant diary but the complete diary for a period of nearly four years with the details of all clients seen by Bob Rice in that period. She was seen to text Robbie Rice outside court and, after an application had been made to me, she revealed what she had texted to him. This read:

… I’ve really f****d up that makes me look like a right liar I really didn’t think of that.

This is tantamount to an admission that she had been lying when she originally gave evidence that she had only downloaded a one-page template of the diary. If her first explanation was a lie, it would follow that her second explanation was also a lie.

Tony Beal provided corroborative evidence of Zarra Addis’s misuse of Beals’ database in his witness statement dated 1 December 2008 that was prepared for the injunction proceedings long before Beals had any inkling that Zarra Addis had downloaded Bob Rice’s diaries. Tony Beal stated that he had been informed by a Beals’ financial advisor, Daniel Smith, that he had been approached by Bob Rice before Bob Rice had left Beals and invited to join 1^st Global. This evidence corroborated Zoe Halford’s evidence that she also had been informed of the same approach by Daniel Smith. Moreover, Tony Beal stated that Daniel Smith had told him that Bob Rice, in the course of this approach, had stated that he had obtained a copy of Beals’ database from Zarra Addis which she had obtained surreptitiously from the database which she had privileged access to prior to leaving Beals’ employment.

When Zarra Addis’s action in downloading the diaries is considered against that background, her incredible explanation of her actions can be seen to be wholly untrue. I am satisfied that she downloaded Bob Rice’s diaries at his request and for the express purpose of giving him the entire file to assist him in setting up 1^st Global’s financial services’ business. Moreover, she was aware that the files she was downloading contained confidential data about Beals’ clients which would be of considerable benefit to Bob Rice once he had left Beals and had started to work for 1^st Global.

Zoe Halford recruited by Bob Rice. Zoe Halford, having settled with Beals after the interim injunction had been obtained, served a fresh witness statement which she prepared unaided by anyone connected with Beals and attended court to be cross-examined by the defendants.

Zarra Halford was a successful and able mortgage financial adviser. However, she had become very disillusioned with working for Beals. This was as a result of the changed remuneration package in the new contract that she, along with all the other financial advisers, had signed in the autumn of 2007 coupled with the very long hours she was required to work. Her particular gripe was that, she felt, it was unnecessary for her to work so long into the evening. Little further business resulted from those extra hours and, if everyone worked as efficiently as she did, they would have been unnecessary for everyone else as well. It must have seemed like a godsend when she found herself talking to Bob Rice one day when both had gone outside the building to have a smoke. She clearly looked up to Bob Rice as a father-figure and as one whose success in obtaining mortgages for clients that others could never have obtained she greatly admired. On this particular occasion, in early June 2008, she had just returned from a short holiday to find that her office had been re-allocated to another member of staff. Bob Rice informed her that he was setting up in business with Darren Heathfield and he invited her to join them. He stated that she could earn as much as she was earning, namely £1,000 per week, for much less effort and many fewer hours and that he would provide her with many leads to work on. She claimed that he didn’t state where those leads would come from and she did not know their source, even after he started to supply them.

Data front sheets. Zoe Halford did not need much persuading to agree to join Bob Rice. She gave in her notice to Beals soon after her conversations with Bob Rice in early June 2008, left Beals in July 2008 and started to work for 1^st Global at the beginning of August 2008. She stated in her evidence that she was told by another Beals’ financial advisor who she was friendly with, called Danny Smith, that Bob Rice had encouraged him to join 1^st Global but he had decided against it. Before she left, Zoe Halford collected the front sheet from each of the hard copy files of the clients she had worked for during her time at Beals. These sheets contained a summary of the file details of that file’s client or clients. She did this, she explained, to enable her to keep track of outstanding commission that was due to her but it is likely that she also had in mind that her clients’ details would prove useful for her once she started at 1^st Global. She estimated that there were about 50 of these clients whose data front sheets she took with her to 1^st Global. These data front sheets were, of course, the property of Beals and they formed part of the confidential information and property that Zoe Halford was required to leave with Beals and was not to make use of after she had left.

Evidence of Bob Rice diverting Beals’ clients to 1^st Global – Beals’ database. Until the end of June 2008, Bob Rice worked from the Whiteley office and was, so far as Beals then knew, working entirely for Beals in the way that he had always worked for them and with no current intention of resigning or retiring. He was asked to move, temporarily, to the Portsmouth office in July 2008 to help out there due to shortages in that office. He took with him his Beals’ computer and tower because he would need access to the Trigol facility and to such other limited parts of the database that he would have had access to. Stuart King gave some remarkable evidence about that computer and tower. According to him, sometime in mid-July 2008, Bob Rice drove to 1^st Global’s offices and parked in the car park with the computer and tower in his car. He had evidently travelled from the Portsmouth office where he was working. He brought these into Zarra Addis’s office and asked her to download the data stored in the tower. Zarra Addis took a memory stick and downloaded data including a client list from the tower. He believed that what was downloaded was what he described as Trigol data.

This evidence was hotly disputed by Bob Rice and Zarra Addis. Before considering its authenticity, it is necessary to deal with further evidence that Stuart King gave. He stated that during the period of time when he was working from 1^st Global’s offices, which would have been in the period from August to October or November 2008, he had been able to look in a filing cabinet kept in the office where Zarra Addis worked when she was not in the office. To his amazement, he found in one of the drawers a document of 25 pages in length which was a list of Bob Rice’s clients with their addresses and the date on which their names had been added to the list. It was clear from the reference to Bob Rice (e.g. “BR504”) that this was a copy of a list of all of Bob Rice’s clients that he had done business with in the period in question and that it had been downloaded from Beals’ database. This would have been, for Bob Rice, a highly useful document, particularly when used in conjunction to the diary entries that Zarra Addis had downloaded. Stuart King stated that he copied this document and returned it to the drawer of the filing cabinet. He kept this copy secretly until he produced it and other highly material documents to Beals’ solicitors when he went unsolicited to their offices in November 2009 to voluntarily make a statement for use in Beals’ claims against the defendants.

This list provided real evidence and ocular proof of the veracity of Stuart King’s evidence and of the surreptitious removal of data from Beals’ database. This was because there were only three ways that Stuart King could have obtained access to the document he produced or to a top copy of that document which he had then copied: he obtained the document from Zarra Addis or Bob Rice’s possession, from Tony Beal or another person in the “Beal camp” or from Beals’ possession. Indeed, Bob Rice in his submissions, stated bluntly albeit for the first time in the trial that Stuart King must have obtained from Beals whilst working there in November 2007 or have been given it by Tony Beal or on his instructions. However, there was no evidence that either possible source of the document occurred and each is so improbable as not to count as a possibility. Thus, Stuart King must have obtained the document from Zarra Addis or Bob Rice’s possession. Their stout denials coupled with Bob Rice’s far-fetched hypothesis that the document was stolen by Stuart King from Beals or forged or dishonestly provided by Beals, none of which suggested means of access having been put to Stuart King when he was cross-examined, all support the conclusion that Zarra Addis or Bob Rice had obtained the top copy surreptitiously from Beals.

This brings me back to the suggested downloading incident which Stuart King says that he witnessed in 1^st Global’s offices. The most obvious way that the document found its way into 1^st Global’s filing cabinet would have been by Zarra Addis downloading the document from a Beal computer or tower and that is what Stuart King states that she did, as observed by him.

The defendants challenged Stuart King’s evidence on a whole variety of grounds. He had a grudge against Bob Rice, he had been proved to have been a liar, and he had not produced the evidence of the downloading incident until he came to give oral evidence, Bob Rice and Zarra Addis were reliable and truthful witnesses and Stuart King had, or must have had, a financial incentive to provide this blatantly perjured evidence. However, the defendants had to face up to the real evidence produced by Stuart King and the absence of any possible explanation for it ending up with Stuart King save the one he gave. Moreover, both Bob Rice and Zarra Addis were blatantly dishonest witnesses as was revealed by the large number of obvious lies that they had told in their written and oral evidence. Finally, Stuart King did not have the financial motive for lying and had no interest in 1^st Global.

The defendants also sought to rely on the forensic expert evidence and on their unsupported assertions as to what could and could not be downloaded from Beals’ database. In respect of the expert evidence that had been adduced, the defendants placed great weight on the suggested conclusion of the jointly instructed expert that there was no evidence of the database having been copied. However, that conclusion was a misstatement of the expert’s conclusion which was much more limited. He concluded that if the database had been copied, there was no evidence of the copy having been opened on any of the computers that he had examined. The database had clearly been copied since the attachments to Zarra Addis’s email and the copy of the records of Bob Rice’s clients had both been taken from the database. As to the defendants’ assertions, these were just that, they were not supported by any expert evidence adduced at the trial and they do not amount to evidence.

In conclusion, it is necessary for me to remind myself that it is not necessary for Beals to prove how Bob Rice and Sarah Addis obtained the part of the database that Stuart King found in the filing cabinet in Sarah Addis’s office. If it is clear that they had obtained that document from the database without the authority of Beals, that is sufficient to establish the unlawful use and retention of Beals’ confidential property. However, it is possible in this case to determine on the balance of probabilities that Sarah Addis provided Bob Rice with a part of the database when she downloaded material from the computer and tower that he brought to her and that the document was obtained from that downloaded material.

I conclude that Stuart King had found the document he produced in Zarra Addis’s possession and that it had got there by it having been downloaded by Zarra Addis at Bob Rice’s instigation to assist Bob Rice to further his financial services business at 1^st Global by diverting Beals’ clients and former clients to 1^st Global and the details held about them on Beals’ database.

Evidence of Bob Rice diverting Beals’ clients to 1^st Global – Removal of files. There were three sources of evidence that showed that Bob Rice had removed files from Beals and passed them to 1^st Global so that their contents could be used to obtain mortgages and life insurance for clients for the benefit of 1^st Global and those who were working for 1^st Global. These were:

Evidence of Bob Rice diverting Beals’ clients to 1^st Global – Downturn in earned commission. In July 2008, Bob Rice did not sign up any clients for Beals whereas his average sign up rate in the months before April 2008 was about 26 per month. Such clients as he did sign up in that month must, therefore, have been diverted to 1^st Global.

Setting up 1^st Global’s offices. 1 GRE’s registered office was changed from its previous address in Burridge, Southampton to Darren Heathfield’s house in Wickham, Fareham, Hampshire on 30 April 2008 and 1^st Global’s registered office was also this address from the date of its incorporation on 20 May 2008. The house was large and there were a number of outbuildings including a disused barn. Darren Heathfield ran his electrical contracting business from an office in the main building and his wife also ran her business from another office in the main building. From late May 2008, when 1^st Global started to trade, it used the same office as Heathfield Electrical and, to the limited extent that 1 GRE traded, and there was no documentary evidence that it ever traded, it too used this office. However, from the time when Bob Rice and Darren Heathfield agreed to set 1^st Global up as a provider of financial and mortgage services in early April 2008, they planned to convert the disused barn into 1^st Global’s offices. The conversion work started towards the end of April and it was completed in late June 2008. The fitting and furnishing of the offices was paid for by Bob Rice, probably because Darren Heathfield was already in financial difficulties and did not have the resources to pay for the fitting out and furnishing himself. The offices comprised at least three separate rooms since Bob Rice and Zarra Addis had separate rooms and there was an open plan area for the others who were working for 1^st Global and 1 GRE. The offices were occupied by Zarra Addis and Stuart King from early July 2008. Bob Rice rarely attended 1^st Global’s offices until the new offices were opened but he was a frequent visitor during July 2008. Confirmation that the new offices had been occupied in July 2008 was provided by the evidence of David Watters who was a mortgage broker who had undertaken a commission for a Beals client who had been introduced by Bob Rice. The reason that the defendants called him to give evidence was to enable him to state that that such commission as was paid had been paid to Beals. However, his evidence was of significance for a different reason because he explained that Bob Rice had arranged to meet him about this case at the offices of 1^st Global on 4 July 2008. He was not given any explanation as to why he was attending those offices but he remembered being told on arrival by Bob Rice in an office with new furniture in it that he was attending the new offices of the new business that Bob Rice had recently started.

Bob Rice subsequently gave evidence to the effect that 1^st Global did not move into the new refurbished offices in the barn until he had returned from the holiday he took on leaving Beals. He contended that he had not visited 1^st Global’s offices until late August 2008 and that that was when the new offices were occupied. I do not accept this evidence since the other evidence clearly shows that Bob Rice was taking an active part in 1^st Global’s activities from late May 2008 when it first started to trade, that he frequently visited its offices from late June 2008, that he helped to finance the start up costs by paying for the furniture and fitting out costs of the new offices, that those new offices were occupied prior to 4 July 2008 and that through July 2008, Bob Rice attended these offices frequently and undertook business for 1^st Global in both Cypriot and domestic properties. It was in the new offices that Zarra Addis downloaded extracts from Beals’ database from the tower that Bob Rice brought in. To round off these activities, Bob Rice signed his contract of employment with 1^st Global on 18 July 2008.

Bob Rice, Sean Healy, Zoe Halford and Zarra Addis’s contracts with 1^st Global. The best evidence that 1^st Global was the only company that any of the defendants, including Bob Rice, worked for and did business through is provided by the defendants’ contractual arrangements. Bob Rice was ordered at a late stage to produce a copy of his contract of employment which he had not disclosed previously. This was dated 18 July 2008 and was clearly and unequivocally entered into with, and only with, 1^st Global. Bob Rice was appointed to be the Sales Director of 1^st Global and his remuneration was stated to be:

Upon the signing of this Contract of Employment and in consideration of the advance sum of £150,000, [Bob Rice] will terminate all previous employment. The employee contracts to remain in the sole employ of 1^st Global Financial Services Ltd for a minimum period of 10 years. The sum of £150,000 will be set against any sales commission earned as a result of employment with this Company, 33% sales commission rate will be applicable to the overseas business.

The contract was signed on behalf of 1^st Global by Darren Heathfield. There was a space for Pambros Moleskis to sign under the signature of Darren Heathfield as a second name signing on behalf of 1^st Global but he had not in fact signed the contract. He was the Cypriot developer that Darren Heathfield had arranged to sell Cypriot properties for. There was no evidence of what financial interest or employment position Pambros Moleskis had in 1^st Global but his name on the contract of employment shows that 1^st Global was the company through which Bob Rice and Darren Heathfield would be undertaking the Cypriot property side of a business which would also be providing mortgages and other financial services to English clients involved in mortgages on English properties.

Zarra Addis was clear in her evidence that she was paid by 1^st Global and, certainly from early September 2008, worked for 1^st Global. She adamantly insisted that between June 2008 when she started to work at Darren Heathfield’s premises, until the end of August 2008, she was working for Heathfield Electrical Contractors. However, the evidence clearly shows that she was recruited by Bob Rice, she worked for him and at his direction from her first day’s working at Darren Heathfield’s premises and that work on all of 1^st Global’s mortgage and insurance business for all clients occupied her for most of her time. Zarra Addis did not produce a copy of her contract of employment since she had mislaid it. However, she accepted that it had been issued to her by, and was with, 1^st Global. It is likely, particularly in the early weeks of her employment, that she also helped out with the electrical contracting business but by June 2008, it appears that that business was not trading given its intense financial difficulties which culminated in its going into liquidation in September 2008.

Zoe Halford, Sean Healy and Stuart King were not provided with any contract. They were engaged to provide services as directed and to be paid on commission for any successful transaction. Commission statements were issued by 1^st Global and each received commission payments from 1^st Global’s bank account. These arrangements were administered by Zarra Addis.

Robbie Rice recruited. Robbie Rice Had worked for about 8 years in the financial services sector before he started with 1^st Global. He had worked for Bob Rice on leaving school when he was 17, for a short period with Beals in their Waterlooville offices and then, when he was 19 he worked for Amec Mortgages for one year and then for Westminster for about 18 months. Whilst with Westminster, he got to know John Hall well and he obtained a CeMAR qualification and a licence to use the Trigol system. He then went to work as an employee for Cubit & West for about 1 year selling both mortgages and life insurance and was earning about £30,000 a year by mid-2008.

In about July 2008, Bob Rice contacted Robbie Rice and asked him to whether he would move to 1^st Global to help him and Darren Heathfield out. Robbie Rice stated in evidence that he went to work for a partnership but he was mistaken, if that is what he thought, since the only trading entity involving financial services and financial advice was 1^st Global. Robbie Rice accepted his father’s invitation and started to work at 1^st Global in September 2008. His official role was that of administrator and he was made Zarra Addis’s line manager. However, he was also to be involved in the marketing of both mortgages and insurance for both Cypriot and domestic business in a similar role to that being undertaken by Stuart King. He had no formal contact with 1^st Global and it was arranged that he would be paid on commission.

1^st Global’s mail shot. On 29 September 2008 and over the next few days thereafter, a significant event occurred which can now be seen as triggering the interim injunction and subsequent demise of all eight defendants. This event was the sending out of a mail shot by 1^st Global to a large number of Beals’ clients and former clients’ in a circular letter dated 29 September 2008. This was a marketing strategy devised by Bob Rice soon after he started work at 1^st Global in early September 2008. When he started work, he could see that 1^st Global’s attempts to break into the English domestic and Cypriot mortgage and life insurance markets were not going well. Furthermore, Darren Heathfield, 1^st Global and Heathfield Electrical Contracting were all in serious financial difficulties. It is clear that the mail short that Bob Rice devised was a despairing, indeed final, attempt to get 1^st Global started as a viable financial services provider.

Bob Rice decided that he would send a circular letter to every contact that he had details of who might conceivably have mortgage or re-mortgage needs. The letter that he drafted read as follows:

First Global Financial Services

[Individual name and address]

29^th September 2008

[Name]

As you may not be aware that I have now left Beal’s (sic) Financial Services, if you have any queries or concerns about any previous business I have done for you please do not hesitate to contact me on [BR’s current mobile number].

I would like to take this opportunity to thank you for your past business.

Kindest Regards

Bob Rice

Mortgage Adviser

Westminster Mortgages

First Global Financial Services [address, telephone numbers, Zarra Addis’s email address]

First Global Financial Services is a trading style of Westminster Mortgages Ltd who are authorised and regulated by the Financial Services Authority.

Three things stand out in this letter which it is likely was sent to up to 500 different people. Firstly, Bob Rice is holding himself out as being directly associated with 1^st Global; secondly, he is describing himself as a mortgage adviser for Westminster Mortgages; thirdly, he is stating that 1^st Global is the trading style of Westminster and fourthly, he is soliciting business from Beals’ current and former clients in relation to domestic mortgages, re-mortgages and life insurance. This description of 1^st Global and his relationship with Westminster is significant since the wording of this letter was expressly approved by Westminster in its capacity as 1^st Global’s Authorised Representative under the FSA regulatory structure . That approval occurred in this way:

It is noticeable that the draft letter was approved on the basis that Bob Rice was personally holding himself out as a mortgage advisor of Westminster acting through 1^st Global and that he was soliciting business from Beals’ clients who he had dealt with whilst at Beals and that there were no contractual issues about his approaching these clients. Bob Rice then instructed that the letter should go out to all those on the proposed mail short even though there were contractual issues since his contract with Beals had contained a restraint of trade clause which prohibited his approaching at least some of those that the letter was sent to.

The letter was then sent out. Although Zarra Addis maintained that the letter went out to a few intended recipients just before the interim injunction was issued on 3 December 2008 and that all further intended letters were not sent out because the injunction had been issued, it is clear that the letter was sent out on the day it was dated. It can be seen that Zarra Addis asked John Hall to vet the letter as soon as possible so it is surprising that over three weeks elapsed before the letter went out and given the financial pressures that Bob Rice was under, it is inconceivable that another nine weeks elapsed before the letter, with an unchanged date, was sent out. Moreover, some of the recipients of the letter contacted Tony Beal in October 2008 to complain about receiving the letter, another indication that the letter was sent out on the day it was dated.

Zara Addis undertook the work of preparing and sending out the letters. She maintained that all the names and addresses were given to her by Bob Rice and Zoe Halford on bits of paper and she copied these details onto her computer. Zoe Halford stated that she provided Zara with all the names and addresses on the data front sheets she had brought over from Beals and Bob Rice stated that he provided a few names from his personal address book. Zarra Addis suggested that about 50 letters were sent out at most.

The evidence however, points to a very much larger number of letters being sent out and that the source of the names and addresses was Beals’ database and, in particular, the list of Bob Rice’s clients. These inferences arise because, firstly, Zarra Addis stated that she used the mail merge facility to print out the letters. That facility would normally be used when a long list is being used as the source for the names and addresses of a large number of people that are to be added to documents that are being produced. Moreover, as is clear from the copy of the list of the names and addresses of Bob Rice’s Beals’ clients found by Stuart King, a list of Beals’ clients must have been on Zarra’s computer and must have been printed down from that computer. Finally, the intention was to circulate as many people as possible. That would suggest that all the available names would be circulated and there were in excess of 600 names on the list of clients found by Stuart King.

I conclude that the lists of names in Bob Rice’s possession certainly included the list found by Stuart King and probably included the other lists that Zarra Addis printed down before leaving Beals’ employment and Zoe Halford’s clients and Sean Healy’s clients and any other list available to those present at 1^st Global in September 2008. Given that about 50 copies of letters sent to different people were disclosed, that Zoe Halford added at least a further 50 names to the list and that over 600 names were on the list of Bob Rice’s clients, I estimate that at least 500 letters were sent out. It was when a number of Beals clients who had received this letter in early October 2008 started to contact Tony Beal to complain about receiving the letter that he was alerted to this letter and to the infringement of Beals’ rights it constituted. This provided the spur to his instructing his solicitors to write to the defendants to warn them that proceedings against the first five defendants would be started unless appropriate undertakings were given forthwith. These letters led to proceedings being started which, in turn, led to the grant of an interim injunction and the downward spiral of each defendant.

The demise of 1^st Global. 1^st Global never did much business and by the time Bob Rice started to work there full time at the beginning of September 2008, new business work had almost dried up. There were three inter-related reasons for this. Firstly, Bob Rice had left Beals at the end of July 2008 and the principal source of 1^st Global’s early work, namely Bob Rice’s diversion of his current Beals’ clients to 1^st Global had dried up. Secondly, Darren Heathfield was in severe financial difficulties and such funds as he received from Cyprus appear to have been diverted in an unsuccessful attempt to stave off his creditors and keep his electrical contracting business afloat. Thirdly, the storm clouds were gathering for the financial crash that occurred in October 2008 and no-one was prepared to invest in Cypriot property. By early October 2008, all new and further business had ceased. Beals’ solicitors sent letters before action dated 10 October 2008 to each of the first six defendants which was not responded to by any of them. Darren Heathfield applied to Companies’ Registry on 21 October 2008 for the company to be struck off and dissolved. Sean Healy left in early November 2008 since all work had ceased and much of the commission that he was still owed remained unpaid. Zoe Halford also found that she was getting no new work and that a significant amount of commission remained unpaid. Bob Rice stated in evidence that he too was not being paid and was paying out significant sums to those who 1^st Global owed money to.

It is clear that the receipt of the letters before action in early October led Bob Rice and Robbie Rice to start frantically planning their exit strategy from 1^st Global and Darren Heathfield. They decided that Robbie Rice would set up a new company elsewhere and use that company to start a new mortgage and life insurance financial services business. Stuart King was set to work urgently to find premises and he found suitable offices in Havant which Bob and Robbie Rice agreed to take on. A short term lease was signed by Bob Rice and RFS was formed. In late November, Bob and Robbie Rice with Stuart Hall and Zarra Addis’s assistance, moved to the new offices. The only papers they took with them were all the clients’ files, most of which were the files that Bob Rice had originally removed from Beals. All the other papers relating to 1^st Global and 1 GRE were torn up and burned.

Such was the speed and secrecy of this move that Zoe Halford knew nothing about its planning before she went on holiday in mid-November 2008. When she returned in early December, she found the offices had been stripped bare and the files and furniture had been moved to the newly established company, RFS, in Havant. Bob and Robbie Rice instructed solicitors to act for them and for Zoe Halford, Zarra Addis and Westminster and those five defendants were represented at, and opposed the applications for, interim injunctions. Bob Rice funded the representation for all five defendants. 1^st Global was not represented and took no part in the proceedings. The interim injunctions were issued on 17 December 2008 and 1^st Global was dissolved on 10 February 2009. The reality was that 1^st Global effectively ceased taking on new business about the time that Bob Rice started to work full-time at its offices and it entered into a rapid terminal decline that culminated when the interim injunctions were issued and with its dissolution soon afterwards.

No documents. One of the principal reasons why this litigation has been so protracted and complex is that the defendants have only given partial discovery and that only after repeated orders and directions by the court. 1^st Global provided no discovery and although the other defendants must have had in their possession many documents related to their respective activities, many of these were not disclosed. The mysterious 1 GRE and Darren Heathfield provided no documents and the many documents related to 1 GRE’s activities in the Cypriot property market that must have been in Bob Rice’s possession if they existed were not disclosed. No-one provided disclosure of documents related to failed transactions involving 1^st Global and Westminster, RRS and Robbie Rice disclosed no documents, allegedly because neither had any to disclose and Westminster made no attempt to obtain disclosure of documents lodged with the FSA or other regulatory body connected with any transaction it had been involved in that had emanated from 1^st Global. Sean Healy disclosed no document relating to his life insurance work.

However, Stuart King provided a number of relevant documents that he had copied and retained after the demise of 1^st Global. The principal documents that he produced were his diary, copies of 1^st Global’s bank statements and commission statements and a copy of the list of Bob Rice’s clients held on Beals’ data base.

Westminster was finally ordered to disclose the files for a list of clients that it was known had been passed to it by 1^st Global and it permitted, under order, an inspection of all its files. The files that it did disclose had all been doctored in the sense that pages identifying the 1^st Global individual or individuals who had been involved in the relevant transactions had been removed from the disclosed file. This did not prevent it being possible to see evidence in many of the files that were disclosed that Bob Rice had been involved in many of those transactions. As a result of these disclosures, Beals’ legal team was able to compile a schedule of all successful transactions of which there are disclosed records which involve a former client of Beals. These transactions were set out in a schedule. The schedule contained the names of 34 separate clients all of whom had been clients of Beals at one time and most of whom had been diverted to 1^st Global from Beals by Bob Rice after they had contacted him during the last few months of his time at Beals.

There was introduced into the evidence an email from Friends Provident to Beals dated 31 October 2008. This email provided clear evidence that Bob Rice in the case of five different clients and Zoe Halford in the case of one client had diverted business away from Beals and Friends Provident after that business had gone on risk. It can be seen from the documents introduced into the trial that in each case, the client in question undertook a replacement transaction involving 1^st Global.

The evidence also shows that all these transactions were passed to Westminster, that any commission payment arising from any of them was paid initially to Westminster and, by Westminster, to Global and that Global then distributed such commission as was paid to Sean Healy, Zoe Halford, Stuart King or Robbie Rice to those individuals. There was no sufficient evidence to enable it to be ascertained whether Bob Rice was paid any commission for any of these domestic sales. It is not possible to identify which transactions were initiated by Zoe Halford and which by Sean Healy. What is clear is that most of the mortgage transactions were initiated by Bob Rice or Zoe Halford and very few of the insurance transactions by Sean Healy in the four months that he was working part-time for 1^st Global.

When Beals’ solicitor was finally granted access to Westminster’s files, it became clear how dependent Westminster had been on the work emanating from 1^st Global in 2008. Westminster never recovered from the financial downturn and the loss of 1^st Global’s business and it ceased to trade in 2009. Russell Harvey resigned as a director and left and the company remained in business as a non-trading company located in John Hall’s house. That did not prevent John Hall from giving evidence on Westminster’s behalf to the effect that Westminster had no knowledge of, and no involvement in, 1^st Global’s work on behalf of diverted clients of Beals.

The interim injunctions were issued against each of the first six defendants on 17 December 2008 save for 1^st Global since it was appreciated that 1^st Global had already stopped trading and was soon to be struck off the register. The first injunction ordered Bob Rice, Zoe Halford, Sean Healy and Zarra Addis not to use or disclose confidential information acquired during their employment or engagement with Beals that was held on Beals’ Database. Westminster was ordered not to use or disclose any database confidential information. Bob Rice, Zoe Halford and Sean Healy were ordered not to procure, engage in or do business with any clients or financial institutions in contravention of their contractual restraint of trade obligations and Westminster was ordered not to induce or encourage any such contractual breach. Finally, all the defendants were ordered to deliver up any source containing any part of Beals’ database and to provide sworn evidence verifying their compliance with the delivery up requirements.

The judge delivered a short extempore judgment which was not transcribed. It is clear that he accepted the evidence that was before him disclosed a clear prima facie case against each of the five defendants still involved. Beals had decided not to proceed further against 1^st Global given its imminent demise. The evidence that was presented to the court was provided in witness statements sworn by Tony Beal, Paul Duck and Beals’ solicitor, Tom Watkins. Although much of the evidence that was adduced at the trial was not then available to Beals, the evidence presented an overwhelming case for both interim and final relief. It had been responded to by witness statements from each of the four personal defendants but those statements failed to respond to the direct evidence from Beals of the diversion by Bob Rice of a number of their clients and of the circular letter that had been sent out in late September 2008 that had been received by some of their clients. The defendants did, as ordered, provide sworn evidence asserting compliance with their delivery up obligations which, in the light of the evidence that has subsequently come to light, is clearly untrue since the evidence makes no reference to the removal of files from Beals’ possession, the downloading of Bob Rice’s diaries and the names and addresses of his clients from Beals’ database, the removal of copies of data front sheets or to the misuse of Beals’ confidential information acquired during their respective periods of employment or engagement whilst working for or at Beals.

In short, the case for granting interim relief in the form it was granted in was overwhelming at the time that it was granted and that overwhelming case has been greatly strengthened by the further damning evidence that is now available.

Zoe Halford leaves. Zoe Halford was invited to remain with Bob Rice and to work for RFS on her return from holiday. Initially, she agreed to do so, no doubt because she had no other available work and needed to recover from the sudden shock of finding that the company she had been working for had, effectively, ceased to exist in the time she had been away on holiday. However, she was already extremely disillusioned with 1^st Global and with Bob Rice. She was owed a significant amount of commission which, indeed, she never was paid. She had not obtained any new work for some weeks and she felt that she had been misled by Bob Rice initially in persuading her to move to 1^st Global on the basis of a promise of work which he knew did not exist and subsequently in his repeated assurances that work would soon be coming in. He had also told her on a number of occasions that it was perfectly legal and normal for her to be working for the former Beals’ clients that Bob Rice was passing to her. In those circumstances, Zoe Halford left RFS in mid-January 2009 and has now found another career outlet and has started a family.

Stuart King and Zarra Addis also moved to RFS. Both left soon afterwards due to a shortage of work and receiving no commission, in Stuart King’s case, or salary in Zarra Addis’s case. It is not clear that Zarra Addis was ever provided with a new contract of employment, she was paid by Robbie Rice for a few weeks after the move but that source of payment ceased and she left.

RRS and RR’s work for BR and Beals’ clients. Such work as RFS generated was put through Westminster. Robbie Rice had been provided the codes to enable him to access Westminster’s Trigol system when he started work for 1^st Global in September 2008 and he retained that facility when he started up his new company. Bob Rice was technically an employee of RFS and he appears to have undertaken some work, presumably for his own clients using the files and other data that were taken from 1^st Global to RFS when the Rices moved since RFS appears to have had no success in generating new business. It is not possible to do other than speculate what if any work was undertaken since RFS and Robbie Rice disclosed no documents at any stage and there was little evidence of work emanating from RFS in Westminster’s files when they were finally inspected. It would appear that RFS ceased such trading activities as had occurred later in 2009 after only a few forlorn months in the Havant offices.

By the end of the trial, the remaining defendants, essentially Bob Rice, Sean Healy and Robbie Rice with the assistance of John Hall’s evidence and the brief evidence of a number of Bob Rice’s former clients, were confined to casting general and unsubstantiated aspersions on the honesty, veracity and integrity of Tony Beal, the other witnesses from Beals, Stuart King, Kelly McInerney and Zoe Halford, to somewhat forlorn pleas that Zarra Addis and John Hall’s evidence was reliable, to a reliance on the credible but wholly irrelevant evidence of the various former clients of Bob Rice who gave oral evidence or brief witness statements and to general denials of the allegations they had to meet based on pleas as to their own integrity, hardship and the various misfortunes that they had endured. I have clearly accepted the principle parts of the evidence of the witnesses called on Beals’ behalf and rejected the principle parts of the evidence of Bob Rice, Robbie Rice, Sean Healy, Zarra Addis and John Hall. This is largely because the claimant’s evidence is entirely corroborated by the documents that were adduced in evidence and the defendant’s evidence was demonstrated to be false by those documents, by the obviously untrue statements they made in evidence as revealed by the documents and by the at times incredible explanations that were provided by, in particular, Bob Rice, Sean Healy, John Hall and Zarra Addis in attempts to authenticate their evidence. It is not necessary to analyse the evidence of any of the witnesses in any further detail. That analysis is already provided in the detailed findings of fact that I have made throughout this judgment and in this overview of the witnesses.

The basis of Beals’ claims is that Bob Rice orchestrated the setting up of a rival business to BFS using Beals’ clients, database and confidential information. This was achieved by Bob Rice, Sean Healy, Zarra Addis and Zoe Halford misusing their contacts, access to Beals’ data and information and knowledge acquired whilst employed by or working for Beals who complain about both the unlawful way in which their property rights were misused but also about the misuse of these rights and the unlawful benefits and gains that were obtained. The widespread unlawful collective action taken by these four amounted to significant and sustained breaches of each of their contract respective contracts with BFS and the unlawful inducing of these breaches by Westminster, Robert Rice and RFS. All defendants are alleged to have broken Beals’ statutory entitlements to preserve the confidentiality of BFS’s confidential data and information. Overall, all defendants are alleged to have conspired to cause Beals substantial loss. In all cases, the losses claimed arose as the direct consequence of the unlawful acts of all defendants and Beals, that is both BFS and BEA, are entitled claim all their losses from all defendants jointly and from each defendant separately.

Beals essentially base their claims under four separate but, on the facts of this case, closely inter-related heads:

The claim, when first started, focused on the perceived misuse of Beals’ database and the financial claims for breach of Beals’ copyright. Those claims are, of course, both maintained and established by my findings. However, what is now clear is that each defendant was a knowing participant in Bob Rice’s scheme to set up a rival company to provide financial services for both domestic and Cypriot clients and, if only in the early stages, to finance that new operation with commissions earned from Beals’ clients, protected data and hardcopy files. Each defendant was fully aware that they were using data and property and were working with clients that they were not entitled to handle, work with and profit from. In those circumstances, Beals rely on a proved overarching conspiracy which is also reflected in each particular of each of the other causes of action.

Issue estoppel and abuse of process. The defendants relied on one particular and two general defences to the claims made against them in addition to their general denials of wrongdoing. The first, particular defence was maintained by Sean Healy alone. He maintained that Beals were no longer entitled to proceed against him because they had started an action in the Portsmouth County Court claiming various claw backs arising from transactions he had completed whilst working for Beals that Beals were entitled to claw back under the terms of his contract because the transactions had been terminated early by the client. These proceedings had been struck out by the district judge in a pre-hearing case management conference due to the non-attendance of Beals’ representative at the hearing. The non-attendance occurred because Beals had already notified Sean Healy that the claim should be transferred and incorporated into these High Court proceedings. However, if the striking out of the claim had occurred solely due to Beals’ default, that would not have given rise to an issue or cause of action estoppel or to any other reason justifying these claims against Sean Healy being struck out or dismissed. Beals’ claims had not been tried and what occurred in the Portsmouth County Court amounted to neither an estoppel or an abuse of process. This defence is dismissed

Restraint of trade. Bob Rice’s repeated claim during the trial was that he was entitled to pass the work and files he passed on from Beals since the clients in question were his clients who were not covered by the restrictions in his contract. These restrictions, essentially, only precluded his working for clients he had worked with in the year preceding his leaving Beals and only for the year following his leaving. However, Bob Rice couldn’t or wouldn’t accept that a client who contacts him, or initially sees him at Beals whilst he is still working at and for Beals becomes a client he has acted for at the time of first contact. If that client is then diverted to 1^st Global, that client is one who is to be treated as a client who Bob Rice has dealt with in the year preceding his departure from Beals. Moreover, that client is one who Bob Rice may not profit from given the other causes of action that arise in this case.

Bob Rice also contended that the restrictions in his contract of engagement were unenforceable as amounting to an unlawful restraint of trade. No evidence was adduced to support this contention and, given the narrow width, scope and timescale of the covenants in question, no case for unlawful restraint of trade was made out.

Database. Bob Rice also contended that the material stored by Beals was not capable of amounting to a statutorily protected database and that anything stored on its Trigol system was not part of a database which Beals were making a claim about. Both these contentions are ill-founded. For the reasons already given, the client lists and diary records were clearly part of Beals database and that database included anything stored on the Trigol system which, for the purposes of the statutory requirements, formed part of Beals’ protected database.

There is no question but that all six remaining defendants are liable for each of the four bases of claim. In the case of Westminster, Robbie Rice and RFS, their first head of liability is that of inducing breaches of contract by Bob Rice, Sean Healy, Zoe Halford and Zarra Addis.

Damages. Beals prepared a schedule of special damages, being the commission they could have earned from the 34 separate clients that it was clear from the disclosed documents that Bob Rice, Sean Healy, Zoe Halford and Zarra Addis had, jointly or severally diverted from Beals to 1^st Global. It is not possible to clearly identify which individual commission can be allocated to which breach of contract. What is clear is that the overall sum claimed, whose quantification was not in issue, totalled approximately £33,000. To that should be added the relatively small number of further commissions earned by 1^st Global from clients that it should not have processed and from the even fewer additional number of such clients that RFS wrongfully processed.

The claims succeed in their entirety.