Nick and Malcolm Statman vs Stuart Brown Verdict Transcript (23/04/2014)- Pages 6 to 10 (of 75)

APPROVED JUDGMENT (contd… Pages 6 to 10 of 75)

22. On 1st March 2012 the claimants applied ex parte for an interim injunction in the terms set out in the particulars of claim.  Butterfield J granted the injunction in the terms sought in light of Mr Nick Statman’s witness statement of 29th February 2012.  In that witness statement, Mr Statman exhibited the two agreements relied on and the emails complained of.  Mr Statman summarised the dispute which had come to a head with the defendant who had expressed his dissatisfaction with the business or the set-up of the claimants, which he believed was not viable and which was unable to provide an income or sufficient return upon his investment, claiming that he should have returned to him the payment of the franchise fees and other matters.

23. In the witness statement, there was identified and exhibited the particular emails relied on in support of the assertion that an injunction was necessary to prevent the threatened disclosure of such confidential information relating to the claimants’ business.  The emails specifically then referred to were as follows:

24. First, the email dated 15th February 2012 from the defendant to a fellow franchisee Mr Oliver Barber in the following terms:

“Yes, it may well be ill-advised but my bankruptcy hearing is in the next 14 days so I actually don’t give a shit anymore, so all debts to Gateway and anyone else to disappear and I’m jobless/homeless etc, etc.  There will, no doubt, be a lot more to come but not internally.  Depends on how Mr Statman wants to act.  Unfortunately, for current franchisees, it may well harm the value of their investment on a permanent basis and affect the leads that come through the internet.  Sorry for wasting a £100,000 I didn’t have and nearly two years of working without a penny, all on a company that said it cannot fail.”

25. Before Butterfield J, in the witness statement, the claimants relied on the first half of the first sentence and the second sentence of that email in support of their claim that the defendant intended to reveal confidential information.

26. Secondly, the email dated 16th February 2012, again to Mr Barber, in which the defendant wrote:

“That’s all I’ve ever heard from Mr Statman, bullshit of what’s coming/happening or not.  However, the reality is in the here and now that I’ve tried everything and just get fobbed off with shit.  I’m the first franchisee to go bankrupt and I will not be the last as things stand.”

Then, in relation to the matters relied upon before the court:

“As I said, what becomes public, if anything, will be up to Mr Statman.”

27. Thirdly, email to which reference was made and relied upon was again from the defendant to Mr Barber, dated 19th February 2012, in which he stated:

“Just so you are aware what I’ve said to Statman, see attached.  I await his response.  Technically, I’ve now broken terms of contract and he legally can pull the plug on franchise contract.”

Then a little later:

“If he does decide to terminate, then I will assess what is released and how to other franchisees and to the public at large and I shall stand up to them for as long as I can and cost them as much as I can.  I have nothing left for them to take.”

28. Fourthly, the email of 24th February 2012 from the defendant to other franchisees within the company intranet, as appears from the list of addressees.  Mr Statman’s statement recited the following extracts of sentences from a four page letter (which are also pleaded within the particulars of claim).  Near the end of that lengthy letter:

“I apologise in advance to all franchisees as I know you may have all families etc to support as I do but…”

And there then follows the offending words relied on:

“… the details surrounding Gateway Homes, Gateway Homes franchise and Gateway Homes people and operation and my bankruptcy will not go unreported in the press.  I did think it best to warn you in advance.”

29. In the witness statement and in the particulars of claim, the relevant confidentiality clause within the agreement was recited and which formed the basis of the application for the permanent injunction before this court.  The relevant clause is clause 7.1.14, which reads as follows:

“During the subsistence of this agreement and after termination: Not, except with the sole purpose of conducting the business, divulge or use, whether directly or indirectly, for your own benefit or for the benefit of any connected person or any person, firm or franchisor, other than the franchisor, any confidential information or knowledge concerning the system which may be communicated to you or which you may acquire in carrying out your obligations under this agreement.  Not to use any confidential information for any purposes other than running the business but this prohibition shall cease after termination if any such confidential information becomes generally known or easily accessible otherwise than by your breach.  Keep this agreement confidential and not disclose nor permit disclosure of any of its contents to anyone other than your professional advisors and then only if you ensure that such disclose is made to them in confidence and that no copies of the whole or any part of it are made.”

30. In respect of the first sub-clause, the parties focused on ‘confidential information or knowledge concerning the system’.  In the second sub-clause, the focus was on ‘confidential information [which] becomes generally known or easily accessible otherwise than by [the defendant’s] breach’.  In the third sub-clause, the focus was on ‘keep this agreement confidential and… any of its contents.’

31.  In his witness statement, Mr Statman anticipated that the defendant might argue that the information which the claimants feared was to be disclosed was information which was already in the public domain (see paragraphs 22 to 27 of his statement) and he exhibited two newspaper articles published by the Mirror newspaper and the Sunday Express newspaper on 27th April 2011 and 11th September 2011 respectively.  Mr Statman revealed and confirmed that the businesses were then engaged in another action involving another disgruntled ex-franchisee, a Mr Tony Barlow, who was referred to in the articles.  Mr Statman sought to draw a distinction between the published details of the businesses within those articles, which, he said, were of a general nature, and contrasted them with the level of detail which he suggested, in light of the emails to which I have referred, would be disclosed by the defendant.  Mr Statman stated that disclosure of information to a franchisee was to be contrasted with that of the threatened disclosure in some detail to the public at large as the defendant had appeared to threaten.  That distinction again featured in the evidence before me.

32. Thus it was Mr Statman who adduced in evidence the Mirror article exhibited to his witness statement. That article was published on 27th April 2011 and is called “Gateway Homes franchise left me a wreck.”  This revealed that the ex-franchisee in question, Mr Barlow, had acquired the Portsmouth and Southampton geographical areas and had paid a franchise fee of £15,000 and was paying £2,100 per calendar month to the claimant, the franchisor.  His complaint was that the business method was to secure quick sales with offers typically less than 80 percent of the open market value but with a virtually guaranteed cash payment.  The problem, according to his complaint, was that Gateway Homes’ offers were so low as to put off potential vendors with whom he had to deal.  When he complained of not making money and wanted a refund, the Gateway Homes’ response was described as ‘ballistic’.  Gateway Homes threatened him with damages for slander and upset caused to their business.  Ultimately, the parties settled, it appears, by payment to Mr Barlow of £15,000, subject to that which is described as a “gagging clause” together with a formal retraction by Mr Barlow.

33. The Express article was published on 11th September 2011 and was also exhibited in evidence.  It is entitled, “Quick house sale not all it seemed.”  It described the experiences of a Gateway Homes client, Mr Malcolm Haywood, aged 65 years.  He had evidently complained about his experience.  He believed that his house was worth £165,000 but that he had secured an offer from Gateway Homes via its franchisee, the defendant (who was named in the article) of £120,000 in consideration for a speedy transaction.  However, on completion day, Gateway Homes suddenly lowered its offer to £80,000.  Mr Heywood went to the Express and complained about the claimant’s tactics and the exploiting of his vulnerable position with last minute withdrawal of the ‘agreed’ valuation being replaced with a much reduced offer.  However, the contract which Mr Haywood had entered into with Gateway Homes allowed for Gateway Homes to pull out at any time but, on the other hand, he, the customer, had committed himself to selling only to Gateway Homes for one year.  Faced with that last minute offer Mr Haywood pulled out notwithstanding his apparent commitment to selling only to Gateway Homes.

34. The witness statement did not expressly refer to (new) allegation (1) within the schedule of allegations now before this court, that is an email dated 13th February 2012 from the defendant.  This email is headed, “The biggest success secret of all time” and was addressed to Mr Nick Statman and the other franchisees.  The full email reads:

“In an ideal world, this is wonderful advice, Nick.  However, the Gateway world is far, far from being ideal, which I am sure franchisees in a similar position will agree.  Persistence comes from motivation.  Motivation comes from something you have a positive belief in, a drive and a hunger to succeed in.  So far, the only success since the inception of the Gateway Homes franchise operation and Gateway is head office staff, judging by the contents of the car park.  By increasing the number of deals signed, this would only increase the disappointment factor when Gateway fail to convert from contract signature to completion, in my case by a factor of over 60 percent.  So for every ten further signatures I achieve, at least six will fail (statistics based on operational evidence from 22 months of operating a six area loss-making Gateways franchisee).”

35. The comments alleged to contain the confidential information is the sentence commencing, “By increasing the number of deals signed…”  It is alleged, in the schedule, that in revealing such alleged details of the operational success of his own franchise agreement the defendant was in breach of the confidentiality clause, in particular, it was submitted, clause for it went directly to the standard of service provided and also referred to the franchisee’s own business, contrary to clause

36. The defendant’s response, in the schedule, to that statement is that the statement was a general statement concerning operations generally and that the alleged degree of success was already in the public domain due to the Tony Barlow disclosure, the Express article referred to, which referred to a success rate of completion transactions, and, that the franchisees commonly communicated by email in this manner in any event without objection or criticism.

37. It will be necessary in due course to consider each of the allegations in turn, particularly having regard to the claimants’ contention that the court should have particular regard to the cumulative effect of the allegations rather than concentrate, for example, on a single allegation.

38. Mr Statman in his witness statement referred to the claimant’s 360 computer system called ‘the 360 franchise form’ and complained about wrongful disclosure or reference to that system. The defendant’s contention before me was that there could be no breach of contract simply by him referring to that internal system in an internal email, not least since all of the franchisees were well aware of its operation, its purpose and used it themselves.

39. Be that as it may, that was the state of the evidence as presented to the learned judge who granted the interim injunction, in the terms sought, and which are in exactly the same terms which are sought before me by way of permanent injunction.

40. On 19th March 2012, the matter came back before the court in the usual way and this time was dealt with by Keith J.  On that occasion, a witness statement had been filed by the claimants’ solicitor, Miss Emily Slater, dated 7th March 2012 and the defendant filed a witness statement of 16th March 2012.  The defendant was a litigant in person.  The defendant made much of his complaint that he had not been provided with, nor had there been disclosed within these proceedings, a complete version of the operations manual, without which it was asserted the claimants’ allegations could not fairly be scrutinised or judged.  The statement ran on to 16 pages.  It contained vast detail which obscured any good points the defendant was seeking to make.  He complained that the claimants were, in truth, seeking to gag him on the basis of flimsy allegations.  He complained of the breadth of the ex parte injunction. He itemised his own claim (at paragraph 68) and sought an interim award of damages.

41. In his evidence, the defendant said that Keith J was concerned by the breadth of the ex parte injunction which had the effect of preventing him, for example, from carrying on his own franchise business. It was in that context that the terms of the ex parte injunction were markedly different from the terms of the undertaking which were accepted by Keith J, namely:

“These undertakings are given by the defendant and are accepted by the claimants as being given by the defendant in the knowledge and on the basis that they will not interfere with the operation of his franchise with the claimants and will not prevent him from taking any action necessary for the sale of his franchise to a bona fide purchaser”

The terms of the undertakings were:

“(1)  The defendant undertakes not to disclose to any third party, save for employees and other franchisees of the claimants, any of the claimants’ confidential information, including but not limited to:
(a) the type of vendor who the claimants seek to attract and any information about any vendor who agrees to sell their property to the claimants;
(b) the actual offer made to any vendor and any policy of the claimants relating to how such offers are calculated;
(c) the time taken for the sale of any property by the vendor to the claimants to be completed;
(d) the nature of the transaction between any vendor and the claimants, including the manner in which such transactions are negotiated and any terms of agreement between the vendor and the claimants;
(e) the number and nature of the enquiries received by the claimants from prospective vendors;
(f) the claimants’ profit margins, that is the difference between the purchase, sale and valuation price of any property sold by any vendor to the claimants.

(2)  The defendant further undertakes not to disclose to any third party, including employees and other franchisees of the claimants, the terms of his franchise agreement with the claimants, in particular:
(a) the terms related to the remuneration to which he is entitled under his agreement; and
(b) such remuneration as he has received under his agreement.”

Thus those were the undertakings which have remained in force pending the outcome of this hearing.

Find pages 1 to 5 here
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Find pages 11 to 15 here
Find pages 16 to 20 here
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Find pages 51 to 55 here
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Find pages 71 to 75 here

Claimants –

Mr Nicholas Charles Statman aka Nick teflon-coat Statman
Mr Malcolm Robert Statman aka Malcolm bully-boy Statman
Gateway Homes Nationwide Franchise Ltd / Whitehall Franchise Ltd (in liquidation from August 2014)
Gateway Homes UK Ltd
(Other trading companies / names in operation –

Claimants Legal Team (upto end July 2014) –

Miss Kaye Longhorn – Cohen Cramer Solicitors
(apparently now departed employment)
Miss Emily Slater – Cohen Cramer Solicitors
(apparently now been fired) aka Miss Emily I-am-the-law Slater
Miss Gemma Bowkett – Cohen Cramer Solicitors
(apparently now departed employment)
Mr Michael McDonnell – Cohen Cramer Solicitors

Mr Matthew Richardson – Barrister @ Henderson Chambers aka Mr Matthew tweedledum Richardson (Ex-UKIP General Secretary … that didn’t last long!)
Mr Adam Richardson – Barrister @ Warwick House Chambers
aka Mr Adam tweedledee Richardson

Claimants Legal Team (post July 2014) –

Miss Clare Painter – Group Manager, Gateway Homes UK Ltd aka Jane Wood (trying to act as a McKenzie Friend)
Mr Nick Statman – acting as a Litigant In Person

Defendant –

Mr Stuart Brown – acting as Litigant In Person, represented at Trial by Miss Omar

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