UK Dry Risers Ltd v Maher

‘The balance of probability standard means that a court is satisfied an event occurred if the court considers that, on the evidence, the occurrence of the event was more likely than not. When assessing the probabilities the court will have in mind as a factor, to whatever extent is appropriate in the particular case, that the more serious the allegation the less likely it is that the event occurred and, hence, the stronger should be the evidence before the court concludes that the allegation is established on the balance of probability. Fraud is usually less likely than negligence. Deliberate physical injury is usually less likely than accidental physical injury…Built into the preponderance of probability standard is a generous degree of flexibility in respect of the seriousness of the allegation. Although the result is much the same, this does not mean that where a serious allegation is in issue the standard of proof required is higher. It means only that the inherent probability or improbability of an event is itself a matter to be taken into account when weighing the probabilities and deciding whether, on balance, the event occurred. The more improbable the event, the stronger must be the evidence that it did occur before, on the balance of probability, its occurrence will be established.’

Mr Duggan accepted that, although it might be possible for the court to find that Mr Maher carried out the installations without stealing UKDR’s property, or vice versa, the primary case put forward by the claimant is that Mr Maher used the stolen materials in carrying out the two installations. It follows that (subject to coming back to this question if, applying the requirement for stronger evidence, I find that Mr Maher did not carry out the installation work) I am looking throughout for the stronger evidence needed for the claimant to satisfy me on the balance of probabilities that the defendants have committed the tort of conversion and the breach of contract alleged.

the first on the phone by Mr Charlton, his evidence was that he could not remember that either but later did recall that it was a testing job that he had done as a favour to Jonathon Cooper (by then working for TDK). So, on the crucial questions, much of his evidence was unreliable.

It was UKDR’s stock of dry riser components that was used for the installations at Dunmore Point and Granard House. I arrive at this finding for the following reasons. It is not in dispute that the components and the suppliers of those components, which were used for Dunmore Point and Granard House, were accurately listed in an identical exhibit to the witness statements of, for example, Stephen Walker (the managing director of Hydrotech, dated 26 November 2018), Graham Wilkins (a regional director of Shawston International Ltd (‘Shawston’), dated 3 December 2018) and Bradley Rothwell (an employee of UKDR, dated 30 November 2018). That list shows that most of the components were supplied by Hydrotech with the rest being supplied by JD Fire

Ltd (‘JD Fire’), Shawston, and Victaulic. Very importantly, the witness statement of Stephen Walker of Hydrotech says the following:

‘I confirm that Hydrotech has never supplied such component parts to [Jack Maher] or [JM Fire Protection and Maintenance Ltd] or to companies known as TDK Mechanical Services (UK) Ltd or to a company known as PC Dry Risers Ltd or to a Mr Jon Cooper. I confirm that Hydrotech however is a regular supplier to UK Dry Risers Ltd of the Hydrotech component parts referred to in the lists exhibited … I should point out that Hydrotech supply the market only via two distributors (Shawston International Ltd and Lenpart Ltd) and the only company it supplied directly is UK Dry Risers Ltd.’

The witness statement of Graham Wilkins of Shawston also confirms that Shawston has never supplied the listed components to the defendants or TDK or PC Dry Risers or Mr Cooper. Subject to a qualification as regards supplying PC Dry Risers, the same evidence as regards their respective companies is also contained in a witness statement of Sean Siddons (a director of Lenpart Ltd, dated 29 November 2018) and David Lamb (the managing director of JD Fire, dated 30 November 2018). The qualification as regards supplying PC Dry Risers related to quantities supplied in late March/early April 2018. But as regards the Lenpart supplies to PC Dry Risers, they were probably fully used up on jobs that had been carried out by PC Dry Risers (see bundle 2/470). And as regards the supply to PC Dry Risers by JD Fire, Mr Maher had prepared an inventory on 25 April 2018 for Mr Charlton of UKDR (see bundle 2/438). That inventory showed that there was relatively little of that PC Dry Risers stock left but, in any event, the inventory correlated to JD Fire’s invoice to UKDR dated 22 May 2018 by which UKDR was buying what was left of the PC Dry Risers stock (see bundle 2/439 and 2/440). In other words, once the invoice of 22 May 2018 had been paid, it is likely that there was no PC Dry Risers stock left. The relatively small amount of stock had all been bought by UKDR.

Although it could have been as late as 5 June 2018, it is more likely than not that the dry riser installation at Dunmore Point was carried out (albeit not tested) between 22 May and 24 May. This follows from the facts that there was an email at 8.31 on 22 May from the head-contractor, Engie, instructing TDK to proceed (see bundle 2/613); and that TDK’s invoice to Engie for the dry riser installation was issued on May 24 (see bundle 2/610).

It is not in dispute that the dry riser installation at Granard House was carried out by 9 July (because post-installation survey photos, which were attached to the first witness statement of Daniel Teden dated 1 November 2018, were taken on 9 July by Mr Cooper). I find that, in the light of an email dated 27 June from Mr Cooper to Mr Maher instructing or requesting installation work at Granard House, that installation was carried out (albeit not tested) at some date between 27 June and 9 July (and it is noteworthy that that email of 27 June suggests that, at the time it was sent, it was not envisaged that the whole new dry riser, which was ultimately installed, would be required).

I accept the evidence of Mr Charlton that it was very much the normal practice for the engineer who installed the dry riser system also to carry out the test and issue the test certificate. But he accepted that there were rare exceptions (and, in relation to the counterclaim, he himself gave an example of an exception: see bundle 2/448, note 3).

Mr Charlton and Mr Maher were in agreement that at all relevant times the stock control and guarding at UKDR’s main warehouse in Bury was lax. There were eight or nine teams of UKDR sub-contractors who would pick up components from Bury. UKDR also had a container in Hackney where dry riser components were stored. The container was in a gated compound controlled by Wates. I accept Mr Maher’s evidence that, apart from himself, other UKDR sub-contractors – and there were, as I understood it, three or four other teams of UKDR sub-contractors working in the Hackney area - would be allowed access to the container by Wates; and some components were stored outside alongside the container. But Mr Maher was the main person who, on his own evidence, supervised deliveries to the UKDR container. Although it is conceivable that other UKDR sub-contractors stole the components from the Hackney container or from the Bury warehouse, there is no evidence linking any other UKDR sub-contractor to the dry riser installation at Dunmore Point or Granard House.

Following on from the above findings, I conclude that either Mr Maher stole the materials from UKDR and installed them at Dunmore Point and Granard House on the instructions of Mr Cooper (acting for TDK); or Mr Cooper did so. As between the two of them, it is clear that, on the balance of probabilities (and I emphasise the need for strong evidence as explained in paragraph 8 above), it was Mr Maher. Mr Maher had control of the UKDR stock, Mr Cooper did not. It was Mr Maher’s name on the test certificates not Mr Cooper’s. And although Mr Cooper had been an installation engineer until 2015, he was working for TDK who project-managed installations - and subcontracted out the installations - rather than holding themselves out as installation engineers. While it is my view that Mr Cooper was involved (on behalf of TDK) in instructing/requesting Mr Maher to do the work, it was, on the balance of probabilities, Mr Maher who stole the components and installed them at Dunmore Point and Granard House (and was paid by TDK).

Two further considerations tend to support, or, at least, are consistent with, that central finding that Mr Maher stole the materials and installed them at Dunmore Point and Granard House:

As I have already said in paragraph 11, it is hard to believe that on the two installations for which we have documentary evidence that he was the tester, Mr Maher cannot recall the second and initially could not recall the first either.

Given the windows of time for each installation job set out in (ii) and (iii) above, it was perfectly possible, because he was largely in the London area during those periods, for Mr Maher to have carried out the installations at Dunmore Point and Granard House alongside the other jobs that he recorded in his notebook and invoiced to UKDR. Although it was submitted on behalf of Mr Maher that, at least on July 9, he could not have done the Granard House installation because he was working at Astor College in London, there is an email from Mr Maher to Michael Heydon (of UKDR), at 17.08 on 9 July, in which Mr Maher explained that they had not done much at Astor College that day as they had got there late.

I am conscious that my conclusion is partly contradicted by the third witness statement of Daniel Teden the director of TDK, dated 7 December 2018, and wholly contradicted by the two witness statements of Mr Cooper, dated 31 October 2018 and 7 December 2018. Mr Teden in his third witness statement says that, as regards Granard House, neither of the defendants installed the dry riser system which was installed by Mr Cooper, an employee of TDK. But note that that is a very bare assertion without any dates given for the installation or any further details. Mr Cooper’s second witness statement is again a bare assertion that neither of the defendants installed the dry riser system at Granard House which he had installed along with employees of TDK. In his first witness statement, Mr Cooper after explaining that he was a friend of Mr Maher and had worked with him in a professional capacity for a number of years went on to say:

‘On or around 12 June 2018, I confirm that I installed a thirteen story dry riser at Dunmore Point, Tower Hamlets… After the installation was completed (by me), I called [Jack Maher] to ask him to lend me some testing equipment as I did not have any at the time. [Jack Maher] arrived and tested the system for me that same day.’

Apart from the fact that the date of 12 June was clearly wrong, Mr Cooper sent an email to Mr Maher headed ‘Dunmore Point’ on 4 June at 15.38 giving the address of Dunmore Point and saying ‘I’ll see you in the morning’. That is plainly inconsistent with his witness statement saying that he called Mr Maher who tested the system that same day. But there are more general reasons for not placing any real weight on those witness statements of Mr Teden and Mr Cooper. Those witnesses were not called by the defendants. Their witness statements therefore fall within the hearsay provisions of the Civil Evidence Act 1995, s 2, and CPR 33.2. Notice of the intention to rely on hearsay evidence was not given by the defendants. It follows that, although such statements are admissible, the failure to give notice is a matter affecting the weight (if any) to be given to that evidence: see Civil Evidence Act 1995, ss 2(4) and 4. Most importantly, the failure to call those witnesses has meant that Mr Duggan has been deprived of the opportunity to cross-examine them so as to test their statements and to explore the apparent weaknesses in them. Mr Wilkinson submitted that I could regard the statements as reliable because Mr Teden and Mr Cooper had everything to lose and nothing to gain by making those statements. I do not agree. Admittedly, by accepting that he himself installed the system at Dunmore Point and Granard House, Mr Cooper may have been putting himself at risk of being in breach of the undertakings given to the court and UKDR in the earlier proceedings brought against him by UKDR that I have mentioned in paragraph 2 above. But as against that, Mr Cooper is a friend of Mr Maher. Naturally he would be inclined to be partial to him. In any event, precisely because he has been sued by UKDR in the earlier proceedings, he has every reason to dislike UKDR and hence has a reason to counter allegations made by UKDR against his friend. As regards Mr Teden, it is possible that he is supporting his employee in a situation where the relationship between TDK and UKDR is under strain. The important point, however, is that the claimant has been deprived of the opportunity to test these sorts of issues. My conclusion is that I should place virtually no weight on those witness statements; and certainly their weight is nowhere near sufficient to undermine the reasoning I have set out above in reaching my central finding.

I therefore reiterate that my central finding, drawn from my other findings of fact, is that Mr Maher stole the materials from UKDR and installed them at Dunmore Point and Granard House.

‘5. I shall not use or disclose to any person, firm, company or other organisation whatsoever any confidential information belonging to UKDR, or UK Dry Riser (Maintenance) Limited. This shall, without prejudice to the generality of the foregoing, include any information about UKDR’s confidential information, clients or finances, or any business dealings, transactions or affairs, including information which came tomy knowledge, whether directly or indirectly, from Andrew Power and/or JonathanCooper and/or Thomas Power and/or PC Dry Risers Limited. In particular (without prejudice to the generality of the foregoing) confidential information relating toHackney Borough Council’s intentions to install dry riser systems in all of its high risebuildings.

I shall immediately cease all activities which commenced using the confidential information belonging to [UKDR], or UK Dry Riser (Maintenance) Limited, and, if activities have not yet commenced, I shall notcarry out any activities which involve the use of any Confidential Information. In particular (without prejudice to the generalityof the foregoing) I shall not:

…

Directly, or indirectly for my benefit or that of any third party solicit, or accept anyorder from TDK Mechanical Services Limited, or Wates Property Services Limited, or Hackney Borough Council, or any other contractor engaged by Hackney BoroughCouncil for the supply and installation of a dry riser system to any building owned byHackney Borough Council.

For the purposes of these undertakings, confidential information shall mean:

All information which came to the attention of myself, in circumstances of confidentiality, [from] Andrew Power and/or Jonathan Cooper and/or Thomas Power in consequence of the employment of each of them with UKDR and which is the property of UKDR and/or UK Dry Riser (Maintenance) Limited, which is not in the public domain.

Without prejudice to the generality of the foregoing, all details andinformation relating to the UKDR and/or UK Dry Riser (Maintenance) Limited of its:

Customers, Hackney BC and other London Boroughs.

Customer trading history.

Details of systems previously supplied to that customer.

Details of customer intentions for future installations.

All surveys carried out by the Applicant …, working notes and documents and all documentation relating to the preparation of quotations.

Prices paid by customers, Hackney BC.

Identity of the Applicant’s suppliers.

The prices paid by the Applicant and/or UK Dry Riser Maintenance to its component suppliers.

Documents such as “Quote build up forms”, which set out all relevant dry riser components and enabled quotes to be quickly prepared and submitted.

Work in progress documents which detail all ongoing contract work.

UKDR’s sales order book.

All quotations provided by UKDR and/or UK Dry Riser (Maintenance)

Ltd.

All orders received by UKDR and/or UK Dry Riser (Maintenance) Ltd.’

The court must interpret the contractual undertakings applying the law on contractual interpretation. The correct modern approach in English law to contractual interpretation can be briefly summarised as follows (see also my summary of the law in Harry Greenhouse v Paysafe Financial Services Ltd [2018] EWHC 3296 (Comm) at [11]). The court must ascertain the meaning of the words used by applying an objective and contextual approach. The court must ask what the term, viewed in the light of the whole contract, would mean to a reasonable person having all the relevant background knowledge reasonably available to the parties at the time the contract was made (excluding the previous negotiations of the parties and their declarations of subjective intent). Business common sense and the purpose of the term (which appear to be very similar ideas) may also be relevant. Important cases recognising the modern approach include Investments Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, HL, especially at 912-913 (per Lord Hoffmann giving the leading speech), and Rainy Sky SA v Kookmin Bank [2011] UKSC 50, [2011] 1 WLR 2900. The Supreme Court in Arnold v Britton [2015] UKSC 36, [2015] AC 1619, clarified that the words used by the parties are of primary importance so that one must be careful to avoid placing too much weight on business common sense or purpose at the expense of the words used; and one must be astute not to rewrite the contract so as to protect one of the parties from having entered into a bad bargain. In Wood v Capita Insurance Services Ltd [2017] UKSC 24, [2017] AC 1173, at [14], Lord Hodge, with whom the other Supreme Court Justices agreed, said that there was no inconsistency between the approach in Rainy Sky and that in Arnold v Britton: ‘On the approach to contractual interpretation, Rainy Sky and Arnold were saying the same thing.’

It is clear, as a matter of objective contextual interpretation, and even if one goes on to take into account business common sense and purpose, that paragraphs 6.4 and

17.2(1) of the undertakings are not free-standing but are dependent on there being use (or disclosure) of UKDR’s confidential information. In other words, they are specific instances of the general provisions in paragraphs 5 and 6, and therefore require there to have been use (or disclosure) of UKDR’s confidential information.

Again as a matter of contractual interpretation – although the same point applies to the law on breach of confidence as an equitable wrong distinct from breach of contract – information plainly cannot be confidential once it is in the public domain. Indeed that is expressly stated in paragraph 17.1. The correct interpretation of the contract, therefore, is that the contractual undertakings applied only so long as the information in question was confidential and not in the public domain.

What was the alleged confidential information? Although this was not made entirely clear in the Particulars of Claim in this case, it is set out in paragraphs 22-26 of the Particulars of Claim in the earlier proceedings (referred to in paragraph 2 above) which were attached as an exhibit to the first witness statement of Mr Charlton (dated 1 August 2018) in this case. In essence, and in line with Mr Duggan’s submissions, Mr Charlton found out information in January 2018 about the intentions of Hackney and other London boroughs to install dry risers in all of their high-rise buildings. It may be accepted that, for a period of time, that was information confidential to UKDR (although, as mentioned in (v) immediately below, that information cannot have been confidential as against TDK any more than it could have been confidential as against Wates). Had the information remained confidential, one can again accept that it would have given UKDR a very valuable competitive advantage in being able to secure many dry riser installation contracts before any rivals knew what was happening. However, that information did not remain confidential at the time of the events with which we are concerned in this case (late May 2018). By then, I take judicial notice of the fact (and certainly there was no evidence put forward by the claimant to contradict this) that that information must have been in the public domain. It must have been apparent to anyone with any interest in dry risers that, in the light of the Grenfell Tower disaster, the London boroughs were installing, and would continue to install, large numbers of dry risers in their high-rise buildings.

However, even if I am wrong about the information being in the public domain and no longer being confidential by May 2018, UKDR faces another difficulty in relation to the alleged breach of confidence. This concerns the role of TDK. As I have mentioned in paragraph 2 above, after October 2017, the work in Hackney BC and, as I understand it, in other London boroughs, came down from Wates (or other headcontractors, such as Engie) through TDK to UKDR. Being higher in the ‘chain of command’ than UKDR, TDK must itself have known of the intentions of Hackney BC and the other London boroughs in relation to the installation of dry risers. TDK must have been free to use that information in deciding who should carry out the dry riser installations. I have found in paragraph 12 point (vi) above that Mr Maher carried out the installations at Dunmore Point and Granard House on the instructions, or at the request of, TDK (acting through Mr Cooper). In so doing, Mr Maher was making use of information given him by TDK that was its own information and was not the confidential information of UKDR.

In my view, therefore, the defendants were not in breach of their contractual undertakings to UKDR because the correct interpretation of the contractual obligations is that they are not free-standing but require there to be the use (or disclosure) of confidential information; and Mr Maher was not using confidential information of UKDR by installing the dry risers at Dunmore Point and Granard House. By that time, the alleged confidential information of UKDR was in the public domain and therefore no longer confidential: but, even if I am wrong on that, Mr Maher was using information given him by TDK that was its own information and not the confidential information of UKDR.

It follows that I do not need to consider the case of Capgemini India Private Ltd v Krishna [2014] EWHC 1092 (QB) or any issues arising from the restraint of trade doctrine. All that I will say is that, if I had decided that the defendants were in breach of their contractual undertakings, I would have been concerned as to whether the injunctions that the claimant was seeking in this case went beyond what is permitted under the restraint of trade doctrine.

‘TDK are currently snagging every job which UKDR have completed on their behalf (which includes those undertaken by Mr Maher)…’

But no snagging list has ever been shown to Mr Maher despite requests for it and despite the fact that the work was undertaken by Mr Maher many months ago. Although the terms on which the defendants worked for UKDR were not in evidence before me, I think it likely that one could imply a term to the effect that payment could be delayed pending ‘snagging’ for a short period of time. But any such justification passed many months ago.

The claimant succeeds in its claim for the tort of conversion because Mr Maher did steal UKDR’s dry riser components. The claimant is therefore entitled to damages of £3690.72 (plus interest) as the value of those components.

The claimant fails in its claims for breach of Mr Maher’s contractual undertakings because, although Mr Maher did carry out the alleged dry riser installations at Dunmore

Point and Granard House, he did not use UKDR’s confidential information in so doing.

Now that we have had the trial, the undertakings given by Mr Maher to the court on 9 August 2018, as the equivalent of an interim injunction, should be discharged.

The second defendant succeeds in its counterclaim for the sum of £13,628 plus VAT (plus interest).