Mercantile Court

IN THE BIRMINGHAM MERCANTILE COURT

		33 Bull Street, Birmingham, B4 6D
		13th May 2013

1. HIS HONOUR JUDGE SIMON BROWN: This action began on 20th February 2012 with the granting of a search order and other associated injunctive relief arising out of attempts by the first defendant, Lea Mark Adams, working with the fourth defendant, John Jones, and through the second and third defendants companies or trading names to hijack the business of the first claimant and thereby breaching the contractual and fiduciary obligations owed to both the claimants.
2. Following the granting of the injunctive relief and the search order the defendants have only engaged to a limited extent in the litigation. That was on 3rd April, when they appeared with counsel on the return date of the injunction and notwithstanding the arguments that were put forward about the injunction the order remained; indeed I ordered that the unsuccessful defendants should pay the costs of the return date to be assessed on a standard basis and to pay an interim of £15,000 by way of interim payment. This is a case which this court has case managed by me throughout and dealing with all orders necessary that have been required.
3. The defendants have absented themselves from participating in these proceedings apart from the occasional e-mail that they have sent in. The claimants have used the e-mail address of certainly the first defendant and the fourth defendant and so I have no doubt that the defendants are fully aware of these proceedings and have been throughout. I am told, and I accept, that the claimants have fulfilled their duties to the court and by communicating with the defendants so far as they have been able to do. I have therefore no doubt that the defendants know that this hearing is taking place today.
4. What has occurred in this litigation is that I entered judgment against the defendants and ordered that finally, because they did not participate in the disclosure process which was particularly important in this case, they be debarred from taking part in these proceedings. Another further costs order was made was dated 25th March 2013. Notwithstanding, the defendants have still not participated in the case. Today the claimants have been put to proof effectively to prove their losses arising out of the judgment which was granted on 15th May 2012, a year ago.
5. The claimants have conducted a considerable amount of work to be able to prove what would be the minimum of their loss and they have therefore focused on transactions where they do have contemporaneous reliable data and evidence in support relating to two transactions which they lost through the activities of the defendants. One of them was the loss of the opportunity to make a profitable transaction providing seating for the Saracens Rugby Club ground and the other the Austin Grand Prix in Texas. The business that they are engaged is the supply of seating for major sports events in various territories around the world. This is a very niche area of business. It also means that it involves designing the seating arrangements to meet the requirements of the customers, the demands of public safety, manufacturing and purchasing seating components and installing seating and installing for various sporting events. These are extremely lucrative areas of business and as will be seen from the figures that we will come to, they are indeed large and in this case perhaps it is not a surprise that there was an attempt to muscle in on the business by the defendants.

The court has been provided with a whole range of bundles of documents but mercifully through the very efficient, high class work of Messrs Shakespeares and counsel, Mr Clarke, they have managed to distil this case into something which is readily understandable. I have been provided with signed witness statements from a number of witnesses and those witnesses (three of them) have given evidence this morning before the court. Mr Heywood and Mr Hoane have given evidence about these contracts and the court has been helped considerably by the witness statement of Mr Black, who is a Finance Director of a subsidiary company, who has gone through the figures and produced them in exemplary fashion. I have no doubt that those figures are impregnable and that even if the defendants were here to challenge them they would find that an extremely difficult task because they are so robust. Also I have no doubt that the evidence that Mr Hoane and Mr Heywood has given is entirely truthful and indeed, in my judgment, probably slightly understated.

6. When we look at the two contracts, the Saracens contract is one where a letter of intent had already been signed and it was with the lawyers for a performance bond. This was effectively waiting for signature. I have no doubt and this is supported by the evidence of Mr Hoane, that this would have occurred; they would have received this lucrative contract with Saracens Rugby Club had it not been for the intervention of the defendants - wrongful intervention I should add. Similarly, the Texas Grand Prix was one where they were extremely close to the deal and Mr Hoane said the CEO of the company he was negotiating with said: you can have the order. Again, I am satisfied that that order would have gone through on the balance of probabilities.

In my judgment, the claimants have lost the cast iron opportunity (100%) due to the wrongful activities of the Defendants to receive substantial well earned profits from these two events. The claimants have indicated that there were other events but the problems of investigating those and providing the contemporaneous documents to be enable the witnesses to work on and the court to rely upon are not so readily available and of course that is a situation which is made worse by the lack of co-operation of the defendants in the litigation in the disclosure process. This is a case where disclosure is of the utmost importance in order to be able to help the court come to the just and fair result. So they have fairly not pursued those other matters when they would have been perfectly justified in doing so. They have incurred various costs, they being the time and other allied costs in arising out of these events.

7. The quantum of these claims has been calculated. First of all, the Saracens case is one where there is loss of profit and Mr Black has calculated it at £1,237,544. Similarly Mr Black has calculated the Austin Grand Prix. I accept his calculations. Two figures were originally mentioned for the Austin Grand Prix: one was a loss of profit on purchase which should have been £837,000-odd but on rental it would be £2,895,855. I have heard evidence today that in fact what did happen was that the contract that was eventually signed was one for rental. I have no doubt that is the opportunity that the claimants lost in this particular instance and therefore, in my judgment, they have proved they have lost that sum of £2,895, 855. This brings the total, if one adds in the schedule of losses which have been identified with cross references of £201,026, to a total sum of £4,334,435. That is my judgment on the damages.
8. The claimants also ask for their costs and in this particular case, as I say, has been case managed throughout by me and therefore the activities of the claimants have been controlled to a certain extent by the active case management of the court. The claimants have co-operated in that process, as indeed they are obliged to do. By running this case with a costs budget, I approved a budget of a grand total of £359,710.35 pence for doing this case through to trial. In my judgment, that budget was proportionate to what was at stake: the £4.4 million sum that I have just awarded. The claimants have laudably kept within that budget and exercised due control over their activities and expenditure in an exemplary fashion. The statement of costs on 13th May 2013 (which is today) is favourably compared with the costs estimate of 22nd May 2012. The form is signed by the partner of the solicitors and a member of the client company as well, Mr Beasley; the grand total is £351,267.35 pence. In my judgment that is a sum which is, looking at each of the phases, is within the budget that was set and the claimants are to be commended with controlling their budget throughout this particular period.
9. That will be the sum that I would award to be paid within 14 days without the need for detailed assessment, detailed assessment becoming otiose. However, in this case the claimant asks for indemnity costs. In my judgment, that is the approach that the court should take here on account of the defendant's conduct. Here, I am in a position - bearing in mind this is a one-day trial although a lot of activity has taken place - to summarily assess these costs because I have been actively involved in managing this case throughout. I would know more about the costings of this case than any detailed costs judge would have. Therefore, it seems to me quite right that I should assess these costs today with all that knowledge.
10. The approach on indemnity costs, vis a vis cost budgeting is a different one: whereas under standard costs the claimant is entitled to recover those costs it proves are proportionate and reasonable. Here, they say the burden is rather different: it is the activities of the defendant in the claimant and in the litigation has been such that their conduct requires the court to award indemnity costs. Here one is entitled to look at, first of all the nature of the action. This is effectively conduct which was unacceptable in interfering in substantial contracts with a breach of fiduciary duty is a serious matter and that it is one which normally would attract an award of indemnity costs. We also had the issue that there had to be a search of their premises and the injunction return date was resisted and so there has been resistance and I find wrongful resistance in that particular part of the process.
11. The defendants have not helped the process of the court by dropping out of the litigation but occasionally by sending emails to the claimant. Either they should participate in the litigation process properly or they do not. It means that it places a burden upon the party which has to prove its loss as considerably greater. That is exemplified by the fact that counsel apologised for the number of lever arch files that the court received which it may have had to go through because the defendants had failed to engage in the litigation or engage in the process and co-operate at all and it meant they had to do all that additional work. Therefore, in those circumstances, indemnity costs are applicable. This means that the costs budgeting, even if the claimants had exceeded their budget would not have come into play as far as this is concerned because it would be upon the defendant to show that the costs they had incurred, whether within or above the budget were unreasonable. Here a good example is that they would find it very difficult to show that these costs, which were within budget, were unreasonable and one of the factors that there has run up the bill considerably I have no doubt is the fact that the claimants had to involve themselves in a lot more work on the documents and on producing them to the court. But, as I say, mercifully the skill of counsel and his instructing solicitors have enabled the court to cut through all that debris to find the key golden documents - as is often said there are only probably 10 key documents in any case - and counsel and solicitors have found those and have been able to put before the court a very laudable summary of the case, a six page skeleton argument which again is to be applauded, upon which I have been able to rely heavily in making this judgment.
12. Accordingly I will order the judgment sum of £344,435 together with certified costs of £351,267.35 pence to be paid within 14 days of this judgment.