Nick and Malcolm Statman vs Stuart Brown Verdict Transcript (23/04/2014)- Pages 36 to 40 (of 75)

APPROVED JUDGMENT (contd… Pages 36 to 40 of 75)

152. Later in his evidence, Mr Statman (Snr) qualified his concern by placing emphasis not upon his personal experience of distress but by reference to the distress he could feared would be caused to his son Nick, particularly in relation to the harassment allegations to which reference was made.  I mention this particular issue at this stage because at one stage I was concerned as to whether the defendant’s explanation for his publications and his denial of there being any malice or desire for vengeance was, in fact, reliable.  I was satisfied by the end of the evidence, however, by his response in relation to the ‘Jimmy Savile paedophile’ tagging complaint. He did not tag the relevant articles to the BBC News Jimmy Savile news article as a means of causing any kind of harassment or upset to the Statmans. Rather, as he openly explained, he simply used it as a means of gaining higher rankings for his own blogs. The BBC News article in relation to the sale of the Jimmy Savile penthouse was itself wholly innocuous in content and, of course, a matter of public interest which explains it high number of viewings online and coincidentally it had been purchased by Mr and Mrs Statman. It was no coincidence, of course, that the defendant chose to create the link but I did not consider that he was motivated by a desire to cause harm, merely to boost rankings. By linking his blog with the BBC article his blogs gained wider potential readership.  The defendant explained how the link worked. I accepted his explanation. Later in his evidence Mr Statman (Snr) appeared to shift his ground. The link did not literally associate his name with the words ‘Jimmy Savile paedophile’. It was simply linked to the innocuous BBC article. Mr Statman somewhat over dramatised the  effect of the link initially. Mr Statman had added ‘paedophile’ in his evidence after ‘Jimmy Savile’. He was not, in a number of respects, in addition to the dispute over his conduct in the meeting, a reliable witness.

153. So far as the defendant’s report to the SFO was concerned, he was questioned in particular by Mr Richardson on the basis of ‘why should he refer this matter to the police or to the Serious Fraud Office at all?  The defendant said that he believed that there was a practice of the kind already alleged but which he regarded as a fraud.  He said that he had no response to his online complaint.  He said the same in relation to each of the other specific matters, some of which he could not remember but all these matters were also dealt with in the context of the harassment proceedings.  He denied that he was obsessed with the defendants and that he simply wished to reiterate facts, which he did in his blogs, and that he was not disclosing confidential information.

154. He also denied that he had fabricated a complaint of assault by Malcolm Statman on him on 10th October 2011 (that is, at the meeting described). He had not reported his complaint of assault until the week after his counterclaim was struck out on 10th October 2012 or the day when one of his blog sites had been removed.  So far as this allegation is concerned, I accept that the defendant did not fabricate the alleged assault for the reasons I have given.  I do accept that he was prompted by these events, however, to complain to the police in October 2012. However, he had a factual basis for his belated complaint which he believed to be true.  Unsurprisingly, he was given short shrift by the police officer. He was complaining of a common assault, at best (and I stress at best) more than six months after the event. On that basis, a reasonable police officer would not be expected to spend time or resources on it. Nonetheless, I reject the proposition put to him by Mr Richardson that there had been any fabrication by the defendant.

155. In that context, the defendant also denied that he had acted maliciously or in an unfounded way when making a complaint of perjury which relates to the harassment action (see later).

156. The upshot of the defendant’s evidence under cross examination in relation to the confidential information claim was that he had not disclosed any information which was confidential nor had he threatened to do so.  He said the information passing between him and Mr Barber and other franchisees was typical of the kind which could be seen in hundreds of emails passing between them without comment or intervention by Mr Statman. In any event, he did not consider himself bound not to disclose that kind of information in his blogs which was part and parcel of innocent personal and permissible comment.  He denied that he had complained about anything other than that which was already in the public domain and he made particular reference to the two newspaper reports, the BBC report and the OFT report.

157. So far as the BBC report is concerned, an agreed transcript of that programme was put in evidence together with the video recording of it, which I have viewed in the course of considering this evidence as requested.  There was one matter arising of significance in that in his evidence Mr Malcolm Statman sought to put in context the number of complaints received by the West Yorkshire Trading Standards authority, namely that whereas there may have been 40, that included, he said, the totality of (mundane) enquiries made by customers in relation to this particular sector. The actual number of complaints  against the company was much smaller, he said.  That evidence was not consistent with the actual words used by the officer from the Trading Standards in the film who clearly referred to 40 complaints from consumers. That was another reason why I was unable to accept the evidence of Mr Malcolm Statman.

158. As for the defendant’s evidence, he understandably relied upon the BBC report and steadfastly rejected the suggestion put to him by Mr Richardson that it was he, the defendant, who had provided confidential information to the BBC. The claimant’s solicitor, Miss Emily Slater stated in her affidavit that the operation manual had been provide to the BBC by the defendant.  The defendant denied providing any such information to the BBC. He said it was already in the BBC’s possession which was used for the programme. There was no evidence to support the assertions made by the claimant. I accept the defendant’s denial. I have considered the correspondence passing between Miss Slater and the BBC and whilst it is true to say that a (typically) somewhat robust or combative letter was sent by Miss Slater to the BBC  they responded in turn and pointed out that they had not used any information from the defendant.  There really is no evidence to support the claimants’ assertion of wrongful disclosure by the defendant to the BBC. In the circumstances, I accept the defendant’s testimony on this.

159. That is a summary of the evidence, documentary and oral testimony, which addressed the claim for the permanent injunction being sought. I turn now to the issues arising and the proper interpretation of the clause relied upon.

160. Mr Richardson drew attention to the decision of Coco v AN Clark (Engineers) Ltd [1969] RPC 41 (at page 47) and the guidance of Megarry J to the effect that: first, it must be shown by the claimants that the information complained bore the  necessary quality of confidence.  That is, whether the recipient had known or ought to have known that it was fairly or reasonably to be regarded as confidential.  Secondly, the duty arises out of the nature of the relationship and the terms of the contract. Thirdly, whether there has been an unauthorised use of that information to the detriment of the party communicating it; that is, unauthorised use viewed objectively would affect the conscience of the user.

161. Mr Richardson relied upon, in his closing submissions, the implied duty of confidence at common law which existed concurrently, he submitted, with clause 7.1.14 of the agreement.  He pointed out that the defendant himself accepted that he entered into this agreement freely with the benefit of independent legal advice.  It was not suggested that there was any material difference between the alleged implied duty at common law and the express terms relied on within the agreement.  However, if, as Miss Omar submitted the express clause was so widely and loosely drafted so as to render it meaningless, then, in any event, the claimant would be able to rely upon the implied duty of confidence.

162. I was not referred to any other judicial guidance, for example that in Faccenda Chicken Ltd v Fowler [1987] Ch 117 which well-established and authoritative guidance is provided in respect of the existence of an implied duty of good faith, albeit in the context of an employer/employee relationship. I am satisfied that even if, which I reject, the clause was so widely drafted as to be rendered meaningless, the nature of the relationship was such that the defendant would have been subject to the limited implied duty of good faith which would extend to, in my judgment, but not beyond, the kind of information identified at paragraph 1 of the undertaking and paragraph 2, accepted (if not formulated) by Keith J, on 19th March 2012. The claimants were content with the ambit of the undertakings as providing adequate protection.

163. As for the interpretation of the contract and, in particular, clause 7.1.14, neither party addressed me on the correct approach to the interpretation of that clause nor did they refer to any judicial guidance on this subject.  In this respect, I have reminded myself of the observations of Lord Hoffman in Investors Compensation Scheme Limited v West Bromwich Building Society [1998] 1 WLR 896 at 912 as applied and considered many times subsequently, namely:

“Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.”

164. The true meaning of the clause is to be sought from within the contract document itself and the words used rather than to guess at what the parties’ intention might have been.  As Lord Hoffman observed (see page 913):
“The law does not require judges to attribute to the parties an intention which they plainly could not have had.  Thus words must be construed in their ordinary sense unless the meaning arrived at would lead to or involve absurdity.”

165. Miss Omar submitted that clause 7.1.14 generally and, in particular, for example, subclause (3) could be regarded as absurd for it fails expressly to except franchisees and their agents from intercommunication of the kind complained of in these proceedings. So far as subclause (2) was concerned, which was the only potential relevant clause she submitted, the information now alleged to be ‘confidential’ or alleged in any event to constitute relevant ‘knowledge concerning the system has not been established by the claimants.

166. Mr Richardson submitted that there is no public domain exception to the ‘knowledge of the system’ irrespective as to whether the information in question is shown to be ‘confidential’.  He invited the court to find that the terms of the clause are capable of being construed so as to give effect to the true intention of the parties which could be reasonably ascertained in the circumstances.  He submitted that it was necessary first to identify the information which was in the public domain.  That is by reference to the Express and Mirror articles, the BBC programme and the OFT.  He submitted that in none of those sources of information is there identified the details of the claimants’ system. Rather, they contain general details of complaints about practices in respect of which, it was alleged by some, had been engaged in by the defendants. Here it was asserted that the information which the claimants feared would be released by the defendants in the absence of a permanent injunction related to that which Mr Richardson described as ‘the standards of quality of services provided’.  In short, the franchisee may publicly refer to his franchise agreement or to the claimants business by way of compliments but he could not criticise it, in that to do so would be expressly or implicitly to involve revealing to third parties information concerning ‘standards of quality of service’ of the claimants.

167. It was submitted, having regard to the blogs concerning the Lincolnshire and Wolverhampton apologies, there was a breach of the clause because they commented, implicitly, upon the standards and quality of service.  In other words, wherever there was a criticism, actual or implied, of the claimants, that could reasonably be construed as a criticism or reference to ‘the standards of quality of service’ and thus a franchisee with that alleged ‘knowledge’ and, in particular, the defendant would be caught by the clause.  I am unable to accept that submission. It is necessary to scrutinise the words used alleged to constitute ‘knowledge’ and it is for the claimants to show that the clause has been breached, at least in a material manner to justify the need for an injunction.

168. As for the meaning of “for his own benefit” in subclause 1, Mr Richardson submitted that Miss Omar’s argument was to be rejected.  “For his own benefit” could not be constrictively construed as being for his own commercial benefit in the event that he, the franchisee, sought to engage in his own practice or trade.  Rather, ‘benefit’ would extend to the financial or ‘other benefit’ which the franchisee might have in using information to bolster or support, for example, a dispute which he may have with a franchisee.

169. In that context I was invited to interpret these (sub) clauses and find that there was in each allegation not only a breach of the clauses but also a breach of sufficient seriousness as to demand or justify the granting of a permanent injunction.  It was in that context that the claimants’ concerns about the motives of the defendant and his attitude towards the claimants, which were explored in the harassment action to which I shall refer, became relevant, Mr Richardson submitted.  In short, this is a defendant who has no respect for the claimants or their confidential information.  True, limited information has been released since termination of the franchise agreements but that was explained, Mr Richardson submitted, simply by reference to the undertaking and not otherwise.  In these circumstances, Mr Richardson placed specific emphasis on clause 7.14.1 and, in particular, the ambit of knowledge of the system relating to the claimant’s business and confidential information which was not in the public domain.  He also placed particular reliance on subclause (3), so as to justify strictly the claimants’ complaints that the defendant had revealed the existence of the fact of the agreement, its duration and the fact of its termination.

170. In my judgment, a duty of confidence was created by virtue of the nature of the parties’ business relationship between first claimant and the defendant as franchisor and franchisee.  The claimants had a real and legitimate business interest which reasonably required protection and both parties knew and understood that, upon entering into their relationship, such confidences would need to be respected.  The duty was created also at common law and existed concurrently.  The duty was restricted, however, and was not open-ended so as to include any or all information howsoever relating to the business of the franchisor or mere criticism.  It was restricted to that which was reasonably necessary to protect the legitimate business interests of the franchisor.  The scope of that duty is to be found by reference to the nature of the parties’ interrelated business relationship and the scope and terms of the written agreement.  It is restricted to confidential information received during the currency of the franchise agreements in question.  The scope of the duty or the kind of information subject to the duty of confidentiality is neatly identified in my judgment in paragraph 1 and paragraph 2 of the undertaking of 19th March 2012.

171. Given the competitive nature of the business sector within which the claimants operated, it was reasonable and necessary to seek to protect the particular kind of information.  That is, the know-how of their own system and methods of operation, particularly in the context of their method of identifying and evaluating the open market value so as to allow there to be made an appropriate BMV discount.

172. Mr Statman did give a brief insight as to their business model but it was not necessary for either party to go into that in detail.  It is certainly fair to say that no such detail of the kind alluded to by Mr Statman had in fact been disclosed or threatened to be disclosed beyond the uncertain nature of the threat at the outset to which I have referred.

173. It is also reasonable for the claimants operating a series of franchise agreements to desire to keep confidential as between franchisor and individual franchisee the material terms and details of their particular agreement.  The limit or scope of that duty is, in my judgment, again neatly identified by the specific references at paragraphs (a) and (b) of paragraph 2 of the order of 19th March 2012.  Open disclosure of individual terms concerning remuneration under the franchise agreement could be a cause for internal conflict and disharmony and it is reasonable and legitimate for the franchisor in those circumstances to want to protect that sensitive information from being disclosed.  That is the limit, however, on the scope of that implied duty concerning information passing between franchisees by reference to the terms of the franchise agreement.

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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 –
OPANET LIMITED
CXI 92 LIMITED
KINGSBRIDGE AND CARTER LTD
STATPROPS LIMITED
SPEEDY PROPERTIES LTD
TOM CRAVEN LIMITED
ROBERT CHARLES PROPERTY LIMITED
GATEWAY HOMES RENTALS UK LIMITED
GATEWAY HOLDINGS (UK) LIMITED
GATEWAY HOMES RENTALS UK LIMITED
PROP BUY LTD
ROOST UK LIMITED)

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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