England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		St Dunstan's House 133–137 Fetter Lane London EC4A 1HD
		22nd November 2005

HH Judge Richard Seymour QC:

Introduction

1. This action is concerned with a reference which was given in respect of the claimant, Mr Ian Dike, by Mr Gerald Rickman, the first defendant, who was at the material time a director of and shareholder in the second defendant company, Ziegler Rickman Ltd. In this judgment I shall refer to the second defendant as "the company". The reference in question, to which I shall refer in this judgment as "the reference" was in writing and took the form of answers to a questionnaire sent to the company by a company called St James's Place Wealth Management Group plc. I shall refer to that company in this judgment as "SJP". The reference was completed in manuscript by Mr Rickman and dated 8 April 2003, although it was in fact dispatched a day or two after that date. Before coming to the terms of the reference which are relevant to this action, it is necessary to explain something of the background to the circumstances in which it came to be given.
2. Mr Dike is now aged 55 years. For many years, in fact between 1977 and 1992, he worked for Save & Prosper Group as a salesman of the financial products of the group. Ultimately he became a district team manager, in which capacity he recruited and led sales teams. In 1992 he left Save & Prosper Group and set up in business with two colleagues as an independent financial adviser, which occupation I shall describe in this judgment as an "IFA". The vehicle through which at that time Mr Dike operated as an IFA was called Sage Financial Services Ltd, to which I shall refer in this judgment as "Sage". Mr Dike left Sage in 1996 and moved to Wimborne Insurance Brokers, which seems to have been a trading style of a company called Montague & Co (Dorset) Ltd. In this judgment I shall refer to the latter company as "Montague".
3. The business of the company at the material time was also that of providing independent financial advice. The company has now ceased to carry on business. The business formerly carried on by the company is now carried on by a company called Ziegler Rickman (Ringwood) Ltd.
4. The way in which the company operated its business in 1999 was a little unusual. The shareholding directors of the company were Mr Rickman and Mr William Ziegler. They were each working directors and gave advice to clients in the respective fields which they covered, which were, for Mr Rickman, investment advice, and for Mr Ziegler, insurance advice. The company employed three members of staff, all female. Ann Staff was employed essentially as the personal assistant to Mr Rickman, while Nikki Kerr and Carol Darling shared the job of personal assistant to Mr Ziegler. However, apart from those who were employed by the company, the company housed, in the sense of providing accommodation for, and certain support services to, three other IFAs. They were respectively Mr Nicholas Riley, Mr Terry Gilderdale and Mr Charles Fogg. Mr Gilderdale and Mr Fogg did not themselves employ anyone, but Mr Riley employed his wife, Claire, and Sandy Parsons. The arrangement which Mr Riley had with the company was that he paid a percentage of the commissions which he earned from his activities as an IFA in return for the facilities and services provided to him, but he was in fact self-employed and carrying on his own business. The impression I have is that the basic arrangements between the company and Mr Gilderdale and Mr Fogg were similar in principle, although the detailed arrangements were not the subject of evidence.
5. One of the services provided by the company to Mr Riley, Mr Gilderdale and Mr Fogg related to the requirements of Financial Services Authority, to which I shall refer in this judgment as "the FSA". FSA was the regulatory authority with jurisdiction over IFAs. One of the requirements of FSA in relation to IFAs was that they comply with various standards of advice, reporting and training. The particular service which the company provided in relation to the FSA was really in two parts. The first was that it was the umbrella registered with the FSA under which Mr Riley, Mr Gilderdale and Mr Fogg could operate. The second, related to the first, was that it undertook to secure the compliance of Mr Riley, Mr Gilderdale and Mr Fogg with the relevant FSA standards and to provide appropriate manuals to that end, to monitor compliance with the relevant standards, and to provide the services of a compliance officer. The duties of the compliance officer included investigating and determining, in the first instance, complaints against an IFA. The compliance officer for the company was Mr Rickman.
6. Mr Riley and Mr Fogg were both in fact non-executive directors of the company. Neither had any shareholding. It appeared that the status of director conferred upon each was really just a way of providing each with a grand sounding title to impress potential customers.
7. In the summer of 1999 the company was interested in recruiting a further IFA to act on a self-employed basis as a representative of the company, in the same manner as Mr Riley, Mr Gilderdale and Mr Fogg. Mr Gilderdale knew Mr Dike and knew that he, Mr Dike, was interested in leaving Montague. Mr Dike was introduced to the company. After some negotiation, and subject to taking up references, Mr Dike was invited by a letter dated 1 September 1999 to join the company as a self-employed IFA. The terms upon which he did so initially were that the business which he generated would be treated as business of the company, so that the commissions generated would belong to the company. However, the company would pay 70 per cent of the gross new business income and of the income from policy renewals on business transacted by him after he commenced his association with the company to Mr Dike. The balance of the income would be retained by the company in return for the accommodation and services which it provided.
8. Mr Dike joined the company on 26 August 1999. With him he brought an administrator, Mrs Janet Hathaway. As I understand it, Mrs Hathaway acted for Mr Dike on a self-employed basis and was not an employee.
9. There came a time, it seems in about April 2000, when the questions arose of the level and quality of the support being provided by the company to Mr Dike. It is unnecessary to go into any detail for the purposes of this judgment as to what the questions were, but the resolution agreed was that thenceforth Mr Dike would employ a personal assistant of his own and in return the percentage of the new business and renewal income which he generated for the company which the company would retain would be reduced from 30 per cent to 25 per cent. That variation to the terms prevailing between the parties was recorded in a letter dated 3 May 2000 written by Mr Ziegler to Mr Dike.
10. After the variation to the terms of the agreement between the company and Mr Dike to which I have just referred, Mr Dike employed Michele Dwyer as a personal assistant from April 2000 until November 2000. After Michele Dwyer left Lorraine Cox was employed as a personal assistant to Mr Dike from December 2000 until July 2001. Finally, from September 2001 until after he left the company, Mr Dike employed Miss Barbara Griffiths as his personal assistant.
11. On 1 April 2001 the company and Mr Dike entered into a new, and much more formal, written agreement, entitled "Contract for Services". In this judgment I shall refer to that agreement as "the contract". It was not in dispute that the effect of the contract was that indeed Mr Dike was self-employed. However, a number of the provisions of the contract are relevant to the issues in this action, and it is material to notice them at this stage. In the contract the company was called "the client" and Mr Dike was called "the consultant". The provisions of the contract which are presently material are as follows:

"6. The Client shall not control, nor have any right of control as to how the consultant is to perform the Services. The Client recognises that the consultant offers specialist services at a high level of expertise and as such the consultant cannot be told how to perform the Services, other than to ensure that the consultant complies with the requirements of any Regulatory body with whom the Client is authorised or regulated.

….

12. During the term of this Contract for Services the Client will maintain insurance cover in respect of professional indemnity to include the actions of the consultant, but in the event of the Client being held responsible during the term of this contract or any time thereafter for any action or advice given by the consultant to a third party which results in financial cost or loss to the Client, the consultant will indemnify the Client in respect of such liability.

….

18. The consultant is not entitled to partake in any grievance procedure which the Client operates and as an independent self employed consultant is not entitled to any employment law rights."

12. Not the least of the services arranged by the company for Mr Dike, Mr Riley, Mr Gilderdale and Mr Fogg was the cleaning of the offices occupied by them in the premises of the company at 16–18, Southampton Road, Ringwood, Hampshire. In this judgment I shall refer to those premises as "the offices". A partnership which traded under the style "Two Counties Cleaning Services" and to which I shall refer in this judgment as "the cleaners" was engaged by the company to undertake the requisite cleaning. One of the partners in the cleaners was Mr Trevor Jackson. The cleaners subsequently incorporated under the title Two Counties Cleaning Services Ltd, but that is not material to any issue in this action. The cleaners engaged two ladies relevant to the present judgment to do the physical work of cleaning of the offices. Mrs Mandy Bowater worked on the cleaning on three days of the week from 1999 to 2001. From July 2002 Mrs Carol Hopper did the cleaning also on three days a week.
13. At the beginning of 2003 the company was experiencing difficulties in obtaining professional indemnity insurance. The difficulties seemed to be widespread among smaller companies providing financial advice and appeared to be related to the large numbers of claims arising at that time from, amongst other things, alleged miss-selling of investments such as split capital investment trusts. However that may be, the way forward decided upon by Mr Rickman and Mr Ziegler was to re-structure the company and to enter into a larger network of financial advisers. At the same time Mr Dike was considering ceasing his association with the company and seeking to join SJP as what was called an "associate partner". What that actually seems to have meant was appointment as a self-employed authorised representative of SJP. At all events Mr Dike made an application for appointment to SJP which was signed and dated 10 March 2003. That application was made on a standard form used by SJP. In this judgment I shall refer to the application form as completed by Mr Dike as "the application".
14. In a letter to Mr Dike dated 24 March 2003 Mr Michael Wilson, chief executive of SJP, wrote as follows:

"Following your recent application to join St James's Place, I can confirm that we would be delighted for you to join us as an associate Partner of the St James's Place Partnership.

As you know, we are currently in the process of obtaining references in support of your application and as soon as these are clear we will let you know. In the meantime, this means that we will be unable to register you with the FSA and you will not, therefore, be able to act on our behalf in any way. We will, of course, let you know as soon as the references are clear. However, should you have any queries please talk to Martin Brunt.

I am convinced that with your contribution the St James's Place Partnership will become the most professional and trusted provider of advice on wealth management."

15. A week later, on 31 March 2003, Mr Peter Glew wrote a letter to Mr Dike in which he set out the terms upon which Mr Dike would be appointed an associate partner with SJP, "subject to the satisfactory completion of our recruitment process". That included the receipt of satisfactory references.
16. In a letter to Mr Ziegler and to Mr Rickman dated 19 March 2003 Mr Dike had written as follows:

"Just a note to confirm most of what I said to William on Wednesday afternoon and to be sure that you both get the same information.

As mentioned to you I shall be visiting St James's Place next week to have a detailed look at their whole business and to see whether I feel it does provide what I am looking for. I am not committed to them since they take the view that they can't recruit IFAs until they have had a chance to have a proper look.

I shall confirm to you on either Monday 31 March or Tuesday 1 April my intentions. If I decide to move to St James's Place I will formally submit my resignation then. I am hoping to go on a week's holiday from Saturday 5 April to Saturday 12 April and then Barbara is away for the week after Easter. Friday 2 May might therefore be a proposed date of leaving but can we discuss that if appropriate?

I would like to take this opportunity, even if my proposals don't come to fruition, to thank both of you for the honourable way in which you have kept the agreements we made when I first joined you. Unfortunately this has not been my experience previously. This is appreciated and whilst there have been the occasional incidents over the last three and a half years, generally things have gone very well I believe to mutual satisfaction.

In the event that my decision is to leave I look forward to being able to do so on excellent terms and that the agreements that we made on both sides, in terms of outstanding commissions, future claw-backs and client agency transfers will be honoured. Could I suggest that we could deal with those issues, if appropriate, during week commencing 31 March?

17. In the event, in a letter dated 3 April 2003 Mr Dike wrote to Mr Ziegler and Mr Rickman in these terms:

"Further to my conversation with you both on Tuesday I now formally confirm my intention to resign from the company. My plan is that my last working day will be Friday 2 May. Hopefully I should have been able to move out my furniture and belongings by then but if there is an overlap by a day or two I trust that that would not be a problem if needed.

I am concerned about the transfer of agencies in respect of my clients as I would like this finalised before my departure. I will discuss this with you again shortly.

Once again, may I thank you both for your help and support during my time here and I wish you well in your new arrangements."

18. By a letter dated 8 April 2003 to the company SJP made this request:

"We have received an application from the above named [that is to say, Mr Dike] to join St James's Place as a Company Representative.

To help us with our enquiries, I would be grateful if you could answer the questions on the attached form as fully as possible. However, should you prefer to use your own standard reply, please do so quoting our reference above."

Enclosed with the letter was the standard form of questionnaire used by SJP. As I have indicated, the reference took the form of answers given to the questions in that form by Mr Rickman. It is appropriate now to turn to the reference.

The reference

19. The form of questionnaire used by SJP contained 18 questions. The answers to most of the questions given by Mr Rickman were not the subject of criticism in this action. However, the answers to questions 6, 8, 10, 14(d), 17 and 18 were said on behalf of Mr Dike to be inaccurate and unfair. Those questions and the answers given to them were as follows:

"[Question] 6. Has the applicant made the anticipated progress in compliance, technical and product training.

[Answer] No. To compliance only.

[Question] 8. Have there been any complaints made against the applicant? If so please state the date and nature of each complaint (if no complaints, please proceed to question 10).

[Answer] Yes. 3 complaints for misselling 2003/2002

All result from misselling Split Capital Inv. Trust.

1 withdrawn 1 full closure letter sent [that is, complaint investigated and found to lack substance] 1 with ombudsman

One complaint from client's solicitor regarding equity release still ongoing 2003.

[Question] 10. Has there been any evidence that the applicant has failed to give investors best advice? If so, please provide full details.

[Answer] Reports in complaints regarding verbal advice from Mr Dike (not upheld in correspondence) indicate bad advice sometimes given but not proven.

[Question] 14. How much money, if any, does the applicant owe you on account of:

….

d Any other reasons

[Answer] Nil. We still have to await the decision of the ombudsman. If compensation due Mr Dike will be responsible for this.

[Question] 17. What is/was the reason for the applicant no longer being tied to your company?

[Answer] We are currently moving to ISL Network & Mr Dike abhors both administration and compliance. He sees more rather than less and wants to move.

[Question] 18. Any other comments:

[Answer] Mr Dike is a very difficult person with whom to work. We shall not be sorry to lose his services. We have received two complaints of sexual harassment from a secretary and outside office cleaner. Mr Dike has been cautioned for both complaints which he denied. No further action resulted."

20. Attached to the particulars of claim in the action was a schedule which included a commentary upon those parts of the reference to which exception was taken. A column in that schedule set out the respects in which it was said that each of the answers which I have quoted to questions in the reference was incorrect. The material comments were these:

"[Answer to Question 6]

This answer was false. The claimant's performance on compliance was good. His files were and were recognised by the 2nd Defendant to be satisfactory with regard to both compliance and organisation. The ₂nd Defendant made a statement to suck effect in its letter to SJP dated 28 April 2003 (p.2 para 2)

[Answer to Question 8]

The statement that the 3 complaints for misselling all resulted from misselling split capital inv. Trusts was misleading. In no case had the Compliance Officer of the 2nd Def (the 2nd Def) found any evidence of misselling.

The reference to the complaint from the Client's solicitor regarding equity release failed to make it clear that the complaint related to a transaction that did not go ahead and in respect of which the claimant sought to levy a charge of £125.

[Answer to Question 10]

This answer was extremely misleading. It related to Q.8 in response to which details were given of complaints. Q.10 asked for details as to whether there was any evidence of failure to provide best advice. There was no evidence in the files that the claimant had failed to give best advice and indeed the files showed that the risk profile of investments, as per the company literature, matched with the client's risk profile and the 1st Def having examined the files found that they were compliant. He so stated in the 2nd Def's letter dated 28 April 2003 (p.1 paras 5 and 6). The accurate answer would have been that there was no evidence that the Applicant had failed to give investors best advice.

[Answer to Question 14 d]

This answer was unnecessary in the context of the reference. Moreover it was inaccurate and incomplete because the complaint to the Ombudsman had been triggered by the claimant following instructions of the Directors of the 2nd Def (Mr Ziegler and the 1st Def) upon receipt of a complaint from Mrs Fordyce. If therefore the Ombudsman's decision had been adverse to the 2nd Def on a ground relating to that instruction, the claimant would not have been responsible for it.

[Answer to Question 17]

The statement that the claimant abhors both administration and compliance was untrue.

[Answer to Question 18]

The first 2 sentences were untrue, alternatively misleading. In the 2nd Def letter dated 28 April 2003 (p.2 para 9) the 1st Def stated In completing this form it was not my intention to give the impression that Mr Dike was an unsuitable person, and would point out that if we, as a company had felt he was a liability to the company we would have terminated our contract with him. This is not the case, his application to you being driven by changes to the circumstances of Ziegler Rickman Ltd. However it was my duty to complete your reference accurately and honestly.

It was untrue that the 2nd Def had received 2 complaints of sexual harassment. 1 complaint from a secretary had been communicated to the claimant (by letter dated 16 May 2001) to the effect that the complaint from a member of staff was that the claimant had become over-familiar with the female staff in the office causing them embarrassment, Mr Ziegler (who wrote the letter) stating that he was sure that the actions were not deliberate. This was not, nor was it anything close to, a complaint of sexual harassment.

The 2nd complaint from a cleaner (which had not been communicated to the claimant) was to the effect that the cleaner alleged that the claimant had passed several sexist remarks and she felt that he expected her to pick up and dispose of old food from his floor: the complaint had allegedly been dealt with by the employer of the cleaner speaking to the claimant (the claimant denies this) and asking him to throw old food away and refrain from off-the-cuff comments to Carole, even if he felt they were insignificant and meaningless. This was not a complaint of sexual harassment.

In any event the answer was incomplete. To have been complete in relation to the alleged complaint by the secretary the answer should have stated that the complaint had been made 2 years earlier and that no further complaint had been made by that member of staff and that Mr Ziegler had persuaded the claimant not to take legal action in relation to the complaint upon the basis that the complainant was of a sensitive nature and had made a similar accusation about another staff member earlier and that the file note would be removed after 12 months: to have been [illegible manuscript words added] the alleged complaint by the cleaner the answer should have stated that the incident had not been discussed with the claimant.

It was misleading to state that the claimant had been cautioned for both complaints, since that terminology implies that despite his denials the complaints had been found proved whereas they had not been investigated let alone found proved."

21. At the end of the schedule attached to the particulars of claim was an analysis of the alleged "general thrust of the reference":

"The general thrust of the reference was very disparaging to the claimant and gave the reader the impression that.'

1. The claimant's attitudes to compliance were inappropriate.

2. There was reasonable suspicion that the claimant had failed to give investors best advice.

3. A complaint made against the claimant had resulted in a reference to the Ombudsman.

4. There were grounds to suspect the claimant had been guilty of sexual harassment.

5. The claimant was unsuitable for employment (whether under a contract of service or contract for services) as an adviser in the financial services industry.

This was a misleading and false impression and unjustified by anything within the claimant 's client files, his personnel file or known to the 1st Defendant or the 2nd Defendant."

The claims made in the action

22. As I have already indicated, both Mr Rickman in his personal capacity and the company were defendants in this action. As against the company what was said in the particulars of claim was that it was an implied term of the contract that in the event that the company was required to provide a reference concerning Mr Dike to a prospective future employer, using that term in a broad sense as including someone to whom Mr Dike might provide his services on a self-employed basis, it would provide such a reference and would take reasonable care in the preparation of it. It was contended that the company owed Mr Dike a duty of care to the like effect and that Mr Rickman personally also owed Mr Dike such a duty of care. It was not in issue that, having elected to provide the reference, the company owed a duty both in contract and in tort to take reasonable care in the preparation of it. However, it was denied in the defence that Mr Rickman in his personal capacity owed any duty of care to Mr Dike. It was alleged in the particulars of claim at paragraph 16 that, in breach of the alleged implied term of the contract and negligently, the company and Mr Rickman had provided a reference which was wrong and misleading in the respects set out in the schedule to the particulars of claim, the material parts of which I have already quoted. At paragraph 17 of the particulars of claim were set out the details of the allegations of negligence:

"The particulars of the negligence averred in para 16 above are as follows, references to the 1st Defendant being references to the 1st Defendant himself and in his capacity as Director of the 2nd Defendant:

PARTICULARS OF NEGLIGENCE

17.1 [not pursued]

17.2 In respect of question 6 there was no evidence or no sufficient evidence to justify the negative answer given in relation to the claimant's progress on compliance:

17.3 In respect of the answers to question 8, the 2nd Defendant failed to consider whether the answers as drawn properly reflected the nature of the complaints and failed to state that each of the three alleged complaints for misselling had been investigated by the Compliance Officer of the 2nd Defendant (the 1st Defendant) and that in each case the 1st Defendant had found that the claimant's conduct of the file was compliant.:

17.4 The answer given to question 10 failed to differentiate between the complaint on the one hand and evidence on the other that the claimant had failed to give investors best advice. Addressing the proper question the 1st Defendant should have advised that he as Compliance Officer had investigated the complaints and found there to be no evidence that the claimant had failed to give investors best advice:

17.5 In giving the answer that he did to question 14(d) the 1st Defendant failed to pay any or any [sic] regard to the fact that the complaint to the Ombudsman was prompted by the claimant carrying out the direction of the Directors of the 2nd Defendant:

17.6 In respect of the answer to question 17 there was no, alternatively no adequate evidence either on file or known to the 1st Defendant which justified the assertion that the claimant abhors both administration and compliance:

17.7 In respect of the answer to question 18:

17.7.1 there was no, alternatively no sufficient evidence on file or known to the 1st Defendant to support the assertions that the claimant is a very difficult person with whom to work and that we (meaning the 2nd Defendant) shall not be sorry to lose his services:

17.7.2 there was no evidence on file or known to the 1st Defendant to support the assertion that two complaints of sexual harassment had been received:

17.7.3 neither complaint particularised under the reference to sexual harassment amounted to a complaint of sexual harassment:

17.7.4 alternatively, having chosen to describe these complaints as being ones of sexual harassment, the 1st Defendant failed to spell out the true nature of the complaints:

17.7.5 the statement that the claimant had been cautioned for both complaints failed to pay heed to the fact that there was no, or no sufficient evidence on file or known to the ₁st Defendant to support a caution:

17.8 In all the circumstances the reference provided was such that it was probable that it would cause any prospective employer to reject an application by the claimant upon the basis that he was not a fit candidate for employment, whereas there was no or no sufficient evidence on file or known to the 2nd Defendant to justify or support the disparaging thrust of the reference."

23. In addition to the allegations of negligence on the part of Mr Rickman personally in the preparation of the reference, the fol1owing allegations were contained in paragraph 18 of the particulars of claim:-

"Further or alternatively the answer to question 18 was false in the respects pleaded in Part 1 of the Schedule in relation to that answer. The 1st Defendant made the statement comprised in the answer maliciously.

PARTICULARS OF MALICE

18.1 The 1st Defendant upon being informed by the claimant that he was contemplating taking an appointment with SJP knew that the 2nd Defendant would be asked to give a reference to SJP but gave no warning to the claimant that the reference, if completed by him, would be adverse:

18.2 The 1st Defendant gave the reference at a time when he knew both that the claimant had given notice of resignation from the 2nd Defendant and that the 2nd Defendant had accepted and implemented that by giving the appropriate notification to the Financial Services Authority:

18.3 The 1st Defendant therefore gave the reference in circumstances where he knew that the inevitable consequence would be that the claimant's application to SJP would be rejected and his future employment prospects in the life insurance and investment advice industry would be blighted:

18.4 The 1st Defendant gave the reference under the cloak of assumed secrecy believing that the claimant would not discover that he had given an adverse reference:

18.5 The above circumstances give rise to the inference that out of malice the 1st Defendant intended in giving the reference to sabotage the claimant's existing application and to blight his future employment."

24. In opening the case for Mr Dike, Mr Michael Norman, who appeared on his behalf, made plain that the case that Mr Rickman had acted maliciously in giving the answers to Question 18 in the reference which he did depended entirely upon inference from the terms of the answers themselves.
25. It was contended on behalf of Mr Dike that the immediate consequence for him of the reference being in the terms it was was that he lost the opportunity of working for SJP. The offer which had been made to him by SJP subject to, amongst other things, references, was withdrawn. The long term consequence for which he contended was that he had become totally unemployable in the life assurance and investment advice fields.
26. The case of the company and Mr Rickman was that the terms of the reference were true to the best of their knowledge and belief and that the answers to which exception was taken were not given negligently. It was denied in the defence that Mr Rickman had been malicious in answering Question 18 as he had. It was denied that the cause of Mr Dike's offer from SJP being withdrawn was the terms of the reference.

Mr Rickman's explanations for the terms of the reference to which exception was taken

27. For the purposes of this action Mr Rickman prepared a witness statement in which, at paragraph 83, he set out his explanations for the answers which he had given to the various questions in the standard form of questionnaire which, when completed, constituted the reference. It is material at this stage in this judgment to set out those explanations:

"83.6 Q.6

……

The question was quite specific in that it asked if he had made the 'Anticipated progress in compliance'. The nature of compliance is that it is an ongoing progression, therefore the most up to date files are the most relevant.

I checked files relevant to this question. In particular the files relating to complaints received concerning his activities.

I have referred to the complaint from Mrs Fordyce at paragraph 56 above. This file contained evidence from the client that showed Mr Dike had received a complaint and returned it to the complainant several times asking for amendments to be made or that it should be withdrawn.

This indicated that compliance had not been adhered to and correct procedures had not been followed.

Mr & Mrs Hardy had complained through their solicitors about the charge for an aborted equity release scheme. On this file, compliance with regards to the Mortgage Code Compliance Board and the Consumer Credit Act had not been adhered to, and the correct procedures had not been followed.

Further issues were recorded on his file. A memo from William to Mr Dike dated 11 September 2000 with regards to not supplying continuous professional development progress reports, which is a compliance issue, was on file. Compliance is an on-going process necessary to keep abreast of new legislation.

At the time of leaving Ziegler Rickman Ltd. pension plans sold by Mr Dike previous to his joining us, were under review by the compliance manager, Wendy Beckett of Sage Financial Services Limited, one of his previous employers. This was part of the Pension Review started by the Securities Investment Board in 1994. They had been asking Mr Dike for assistance in this for some time, and at this time, he had not responded to twenty six cases.

Ms Beckett emailed us on the 28 April 2003 and advised us, 'If we are unable to complete the review because of lack of co-operation of another registered individual this will be formally notified to the FSA who are anxious for everyone to complete the review'. Hence the question used the phrase 'anticipated progress'. As the compliance issues were both recent and, in some cases, potentially serious breaches, I answered truthfully, but in the shortest way possible.

83.8 Q.8

……

Mr Dike advised Mr Ziegler and I, before he went on the introduction course with St James's Place, that he had provided them with all details regarding all three complaints regarding the misselling of split capital investment trusts. In addition, when he told me that a reference was being sent to me and it needed to be returned as soon as possible (on or about 8 April 2003), I said that I would have to mention the three complaints and he acknowledged that and confirmed he had mentioned them to St James's Place.

The three complaints were:

1. The withdrawn complaint from his secretary, Barbara Griffiths at paragraph 43 [of Mr Rickman's witness statement]. He had sold her this investment and it had lost money. Initially she complained, but later withdrew the complaint. A letter of withdrawal of the complaint was received by us.

2. Following a full investigation of the file, Mr & Mrs Lusted had been sent a full closure letter (at paragraph 54 above). This means that the file had been fully investigated. It was found to be fully compliant, and the client advised, as per the Financial Services Authority requirements, that this was the case. At the time the reference was written we did not know if the client had accepted our findings. However it was factually correct to say a full closure letter had been sent.

3. Following a full investigation of the file, Ms Fordyce had received a response from us but had, without further notice to us, complained to the Financial Services Ombudsman (at paragraph 56 above). The file from the Ombudsman on this matter was received by us at almost the same time as we were completing the reference (2 April 2003). Therefore it was correct to say that one was with the Ombudsman.

I also referred to the complaint from Mr & Mrs Hardy's solicitor. Following a full investigation of the file, it revealed a letter of complaint had been received from a solicitor, on behalf of clients, on or about the same time the reference was being prepared. This letter complained about Mr Dike in connection with an equity release scheme (at paragraph 63 above). Contrary to what the clients declared they had been told, Mr Dike had submitted an invoice to them for services rendered. We had responded to this letter, but had not received a response. Therefore it was correct to report that it was still ongoing.

83.10 Q.10

…….

It was clear from the documents before me that there were allegations within the complaints that suggested that best advice had not been given. Such allegations were based on verbal advice given by Mr Dike so there was no written evidence of failure to give best advice. The allegations of a failure to give best advice before me had not been proven at that stage, although the allegations had been made.

I therefore wanted to say that there were allegations in this regard but they had not been proven. I looked again at the complaints we had received regarding the handling of the Fordyce case, and the letters received on the Lusted case.

I read the Fordyce file again as certain remarks made in the letters of complaint to the Ombudsman required further attention.

In Ms Fordyce 's complaint, she stated that Mr Dike had advised her not to repay her mortgage with capital she had received, this being all the capital she had, but to invest it into a medium to high risk investment to produce income that would repay her mortgage.

When she wrote her letter of complaint to Mr Dike, he had returned the letter to her, and telephoned her advising her to alter the wording of it and re-submit it at a later date. She complained that he had advised her to borrow money, even though by then she had lost all her capital. The borrowed money was to be put in an investment based in Florida. To borrow money in these circumstances on the advice of Mr Dike would constitute bad advice being given. This matter was still with the Ombudsman though.

Mr & Mrs Lusted complained about misselling. In a letter dated 2 March 2003 they referred to conversations held with Mr Dike. They wrote: 'We did identify that the content of some unrecorded conversations had greater influence than the published literature on our decision to invest.'

In view of the above, I felt the comments made on the reference were a fair reflection.

83.14 Q.14

…….

I re-read Mr Dike's contract with Ziegler Rickman Ltd. This states: 'In the event of the Client (Ziegler Rickman Limited) being held responsible during the term of this contract or at any time thereafter for any action or advice given by the consultant (Dike) to a third party which results in financial cost or loss to the Client, the consultant will indemnify the Client in respect of such liability.'

In view of this, and in view of the outstanding complaint with the Ombudsman, I completed the answer accordingly.

83.17 Q.17

…….

Ziegler Rickman Ltd was in the process of changing from being regulated directly by the Financial Services Authority, to becoming a member of a network.

We had offered Mr Dike the opportunity to continue working with us under the new regulatory regime. He advised us he had looked carefully at the network, ISL. However, he had made enquiries regarding the procedures required with regards to compliance and administration under a network and had been advised this would increase.

Bearing that in mind, he advised us that, as he already hated all the administration and compliance that was involved when in receipt of Financial Services Authority direct, and this was likely to increase to a level beyond which he was prepared to work, he would resign from the company when we joined the network This was the only reason he provided for wishing to resign.

83.18 Q.18

…….

I only mentioned the two filed complaints of which we had a hard record. Our experience of him during his entire contract period with us was unpleasant.

His attitude towards some members of our female staff consistently over his employment period, was chauvinistic, bullying, degrading and sexually offensive.

We had received several other complaints from the other female members of staff referred to earlier in this witness statement. I did not refer to those in the reference as there was no hard file to support them.

The concern when completing this reference was this. Mr Dike was applying to join an organisation that recruited sales people and others, of both sexes, from a wide variety of the work force available.

Should Mr Dike carry on treating female members of staff employed by St James's Place in the same way as he treated female members of staff with us, then the prospect was that further complaints would be made against him.

We wanted no future comeback on Ziegler Rickman Ltd. from St James's Place.

As we had received two formal complaints and at least four informal complaints I considered that this should be mentioned. In view of this, I referred to the two formal complaints we had received.

We had received complaints from four other female members of staff with regards to his attitude towards them. These ranged from shouting at them, repeatedly banging their desk in temper, touching them inappropriately, and all the other accusations referred to earlier in this witness statement. Therefore, I commented on how he was a difficult person with whom to work and we would not be sorry to lose his services.

In the circumstances I felt these comments were appropriate to the situation. indeed, it seemed very clear to me that the office became a happier place the moment Mr Dike left and as such, those comments were justified. I continue to believe that those comments were justified."

The integrity of Mr Dike

28. During the course of his oral evidence Mr Dike was much concerned to emphasise his integrity and the value which he placed upon it and upon his reputation. Unfortunately it soon became apparent that his view of the standards required of a person who aspired to be described as a person of integrity was somewhat flexible. Three examples will suffice.
29. From quite soon after the giving of the reference, indeed it would seem no later than about 27 April 2003, Mr Dike started to receive from Mr Fogg copies of confidential documents which he had intercepted within the office of the company and which were relevant to Mr Dike. The earliest of these documents seems to have been a copy of the reference, which SJP sent to the company at the request of the latter as Mr Rickman had not kept a copy when he dispatched the original to SJP. Other documents in this category included notes made by Mr Ziegler of discussions with Mr Rickman after Mr Dike had threatened to sue over the reference and a report made by letter by the company to its professional indemnity insurers. It was unclear whether Mr Fogg provided copies of these documents unprompted by Mr Dike or at the request of the latter. However that may be, Mr Dike received the copy documents, kept them and did not disclose them for the purposes of this action until about a month before the trial began. When challenged by Mr Gary Self, who appeared on behalf of Mr Rickman and the company, that this was not the conduct of a man of integrity, his response was that, since his professional livelihood was at stake he considered that it was appropriate for him to receive and to retain the documents copied by Mr Fogg. In other words, in effect, if he judged the issue to be important enough to him, the requirements of integrity could be put to one side.
30. However, it would seem that it was not only in respect of issues of financial life or death that Mr Dike considered that his integrity did not prevent him from engaging in conduct which most would think was not that of an honourable individual. As I have already noted, he submitted the application to SJP when he decided to seek to join that organisation. Part of the application was a sheet entitled "Capital Account/Evidence of Previous Earnings". One of the questions on that sheet was:

"Please state total commission generated over the last 12 months.

(Please attach copies of commission statements to verify this amount)"

Mr Dike answered that question, "£105,000 gross". That answer was in fact completed by Mr Martin Brunt, a senior sales manager employed by SJP whose function was to seek to recruit people to be associate partners or partners. However, the sheet in question was signed by Mr Dike and dated 10 March 2003. He accepted in cross-examination that he took responsibility for the accuracy of the answer. Mr Dike's annual accounts prepared by his accountant for the year ended 30 June 2003 were put in evidence. Those accounts showed, in the usual way, figures for the previous accounting period by way of comparison. One could thus see that in the year ended 30 June 2003 Mr Dike's turnover was £48,041 and in the previous year was £50,018. Mr Dike was challenged by Mr Self over the apparent discrepancy between his turnover as revealed by his annual accounts and the figure for total commission over the 12 months up to 10 March 2003 stated in the application. This issue arose shortly before the short adjournment on the first day of the trial. At the time it first arose he seemed to accept that he had put in an excessive figure in answer to the question on the application and said that it was a bit like when someone made an application for a mortgage, one tried to make the application look attractive. At that stage he accepted that the figure stated in the application could not be reconciled with the figures in his accounts. I invited him to consider the position further over the short adjournment. After that further consideration he gave two rather different, and complicated, explanations. One was to the effect that the figure stated in the application was the result of making various adjustments to the figures stated in his accounts, for example to take account of the sum which the company retained out of gross commissions which he earned but which were payable in the first instance to the company, which passed on his share after deducting what was due to it. The other was that SJP required figures to be presented in a certain way so that it could compare income which might have been calculated on different bases. Mr Brunt was called as a witness on behalf of Mr Dike. When he was asked about the figure in the application he said that he simply wrote down the figure which Mr Dike gave him. Mr Brunt had no role in determining what that figure should be. I accept the evidence of Mr Brunt on this question. He struck me as a perfectly straightforward witness. Mr Dike's post-adjournment attempts to reconcile the figure stated in the application with the figures stated in his accounts seemed to me to be essentially a "smoke and mirrors" exercise designed to confuse and thereby to avoid the plain and obvious conclusion that he had lied in causing the figure in the application to be completed as £105,000 gross. That is, I find, the true explanation for the discrepancy between the figure in the application and the figures in Mr Dike's accounts.

31. The final example which it is appropriate to mention is that when he was being cross-examined about the complaints of sexual harassment mentioned in the reference he made the point that any mention of "complaint" was wrong and unfair because the word "complaint" connoted, at least to him, that the relevant subject matter had been investigated and found proved, which he contended was not the position in relation to the two "complaints" of sexual harassment referred to in the reference. However, later in his evidence when he was being asked about the "complaints" of misselling mentioned in the reference which had been investigated by Mr Rickman as compliance officer of the company and which Mr Rickman had found not to be made out, Mr Dike had no problem in using and understanding the word "complaint" in the sense in which it is ordinarily understood in the English language. I came to the conclusion in relation to this part of his evidence, and in relation to other parts, to which I shall come, that he did not feel in any way impeded by considerations of integrity from putting forward a false account if he conceived that it was in his interests to do so.
32. In the result, I regret to have to say that I do not find Mr Dike to be a man of integrity. Far from it. In my judgment his standards of behaviour, and in particular his regard for the truth, are entirely conditioned by what he perceives to be in his best interests. An aspect of this was that he was very free, during his cross-examination, with allegations of lying against various of the witnesses called on behalf of the company and Mr Rickman. Those allegations I find to be entirely unjustified. I find that it is Mr Dike whose evidence on any contested issue is unreliable.

Compliance issues

33. Because of the documentary evidence available it was very difficult for Mr Dike to contest the basic facts as to the complaints which had been made against him in relation to miss-selling and what the grounds alleged of those complaints were. He did dispute in the witness box that one of the three complaints was a complaint, that being the case of Mrs Griffiths, his own former secretary. He contended that because it had been withdrawn it was not a complaint at all and had been made as a result of a misunderstanding on the part of Mrs Griffiths. However, this was just nonsense. There came a time when Mr Dike was asked to give SJP details of the complaints which had been made against him. He produced a document entitled "Previous Complaints". In it he said this, so far as is presently material:

"You asked me for a summary of complaints received during my term with Ziegler Rickman Ltd. They all relate to the Split Capital investment saga and have all come within the last 3 months approx.

Complaint – client Lusted

Purchased a combination of zeros and income shares. Original complaint was that he was missold as he asked for low risk investments on part of his portfolio (Zeros) and capital has either seriously reduced or been lost. File thoroughly reviewed by Z/R compliance officer who concluded that ID [Mr Dike] did not in any way missell. However responsibility appeared to be pointed to Fund Managers for miscommunicating the risk profiles and the mismanagement of the funds. Client responded to say that he accepted that ID did not misrepresent or missell and asked Z/R to support him in bringing his complaint against the Funds Managers. This is currently the position.

Complaint – client Fordyce

This was a high to medium risk client who purchased a selection of income shares with an exceptionally high income. Client admitted to me verbally that she did not hold me responsible for her losses and agreed that I would support her in taking her complaint direct to the Fund Managers for misrepresentation in a similar way to above case. She suddenly, without warning, reverted her position and wrote direct to the Ombudsman complaining that she had been missold. Similarly to above case, Compliance Officer findings from the report were that there was no question of misselling particularly because of the higher level of risk she was prepared to accept. Again client file in watertight condition. We responded to Ombudsman and await his findings. This lady client had previously complained of being missold by a previous IFA before contacting me and as a result I was meticulous in my files to ensure that everything was agreed in writing before the case was submitted.

Complaint – client Griffiths

This was a formal letter from my personal secretary addressed to me and not intended to be taken as a complaint by the company but it was and had to be recorded so. Subsequently Miss Griffiths has withdrawn her complaint in writing and requested that the firm supports her in any compensation from the investment companies concerned.

I trust this information is adequate but if you want any expansion please let me know."

Thus at that time Mr Dike recognised, correctly as it seems to me, that the proper way in which to regard the complaint of Miss Griffiths was as a complaint which had been withdrawn, not as a communication which was not a complaint at all.

34. The position in relation to the complaint of Mr and Mrs Lusted as at about 8 April 2003 was quite straightforward. In a letter to Mr Dike dated 13 October 2002 they wrote, so far as is presently material, as follows:

"It is now fairly obvious that the investments we have made in the split capital funds run by Legg Mason and BFS are now virtually worthless. I have been following the debacle with interest over the past few months and have researched some of the recent history surrounding this type of investments.

It is with some regret that I have to inform you that we wish to formally complain about the advice we were given by you and the subsequent investments we made based upon that advice."

They went on in the letter to elaborate upon the grounds of their complaint, but for present purposes it is not necessary to go into the detail.

35. Mr Rickman, as compliance officer of the company, then considered the file relating to the way in which Mr Dike dealt with Mr and Mrs Lusted. As I understand it, the investigation was essentially a consideration of the papers in the file with a view to considering whether there was documentary evidence of the nature of the client's instructions and of the advice given. Certainly it did not involve any attempt to investigate what may have been said orally during the course of the dealings between the client and the IFA. Mr Rickman wrote a long letter to Mr and Mrs Lusted dated 21 November 2002 in which he set out what he had found on a consideration of the papers on their file and reached the conclusion that there was no substance in the complaint that Mr Dike had not given proper advice. He indicated that the company would be glad to assist in a complaint against the investment company in which Mr and Mrs Lusted invested, if that was their wish.
36. Mr and Mrs Lusted replied to Mr Rickman's letter in a letter dated 8 December 2002. What they wrote was:

"Thank you for your comprehensive response to our complaint concerning the advice given by Ian Dike prior to making our investment in various split capital trusts.

The information you have provided undoubtedly accurately reflects the data held on file by your company and would almost certainly provide sufficient evidence of probity on Ian's part as to make any further pursuance of our complaint at this level a potentially pointless exercise.

However, we do not feel that the file information accurately reflects the enthusiasm for this type of investment that Ian communicated to us during our discussions and that was a significant influence upon our decision to invest. Of course, because of the nature of the investment advice process and the range of the discussion held, very little, other than cold fact would ever be recorded, but I do recall two statements (not verbatim) that were significant:

– these type of investment [split-caps] have never failed to pay out yet

– I [Ian] have invested a significant sums [sic] of my own money in these investments and will be buying more

We feel that the above type of advice was significantly more influential upon our decision than any published brochure, or any statutory warning words of advice about risk

Our primary aim is to recover the loss on our investments based upon the fact that we have been poorly advised. If the advice given by Ian was misplaced because of the inaccurate information published by the Trust companies then pursuing a claim against them would seem to be the next logical step.

Based upon this approach we shall not take our initial complaint any further, but we may review this decision at a later date. Consequently, we would be interested in receiving your proposals about how such a complaint would be managed by yourselves.

Thank you for you attention to this matter and we look forward to reaching a successful conclusion for us both."

Mr Dike was asked in cross-examination about the alleged two verbal statements set out in the letter. He agreed that he had probably said something to the effect alleged. He did not accept that that was bad advice.

37. Mr Rickman did not reply to the letter dated 8 December 2002. Mr and Mrs Lusted wrote a letter dated 2 March 2003 in which they required a reply within seven days, failing which they would reconsider their position as to the original complaint. Mr Rickman responded that he had not received the letter of 8 December 2003. Mr and Mrs Lusted sent him a copy under cover of a letter dated 7 March 2003. They did seek to pursue complaints against both Legg Mason and BFS, at least by writing to those companies. Having failed to obtain redress, by an application dated 26 July 2004 they made a complaint to the Financial Ombudsman Service ("FOS") about the original advice of Mr Dike. That complaint was resolved in favour of Mr Dike, in the sense that the complaint was found not to have been substantiated. However, that was not until April 2005. The position as at the date of the reference thus was that Mr Rickman had found the complaint originally made against Mr Dike not to have been substantiated and the Lusteds seemed to have accepted that advice. The matter appeared to be at an end, a conclusion which was accurately recorded as "Full Closure letter sent".
38. Mrs Joan Fordyce also complained about advice given by Mr Dike to invest in Legge Mason and BFS split capital investment trusts. Her complaint seems to have made in a letter dated 28 December 2002, but no copy of that letter was put in evidence. Mr Rickman considered the file in the same manner which he did in the Lusted case and came to the conclusion that there was no substance in the complaint. He communicated that conclusion and the reasons for it to Mrs Fordyce in a letter dated 14 March 2003. She replied in a letter dated 17 March 2003. In the course of that letter she wrote, so far as is presently material:

"Any further communication I had with Ian Dike was when I contacted him. After several telephone calls to your office during the following 9 months he offered no help or assistance, in December 2002 I again rang your office to say that I thought I ought to be putting in some sort of complaint to the FSA regarding this investment. He suggested I should go into the office and that he would draw up my letter of complaint in his words and for him to justify it. He also recommended I called in to the office as he was excited about a new product he was researching that would enable me to recuperate some of my lost funds. When I enquired as to where I was funding this scheme he suggested I borrowed it! It was then I emailed Legge Mason and BFS re the risk category. Hence my original letter of complaint dated 28 December 2002. I immediately had a telephone call from Ian Dike (the only one received on his behalf) apart from the call I received on March 28 2002, requesting I withdrew my complaint, re-date this and omit the last paragraph for personal reasons and re-submit it a week later so the complaint would not be received by your office until his return from Florida. I duly did this only to be requested again to withdraw my letter of complaint. It was then I went to the Citizen's Advice Bureau who recommended I forward my complaint to the Financial Ombudsman."

39. By the date of Mr Rickman's letter of 14 March 2003 Mrs Fordyce had already made a complaint to FOS dated 29 January 2003. In that complaint she indicated that the last paragraph of the original letter of complaint to Mr Dike which he had requested her to omit "made reference to his new investment idea ", that is to say, borrowing money to invest in Florida in the hope of making good her losses on her investment in split capital investment trusts. In cross-examination Mr Dike accepted that he had asked Mrs Fordyce to reword her complaint. He said that he did not recall asking her to omit the last paragraph of her letter about the investment in Florida. A copy of Mrs Fordyce's complaint was forwarded to Mr Rickman by FOS under cover of a letter dated 2 April 2003. Thus at the date of the reference the complaint of Mrs Fordyce was with FOS and Mr Rickman was aware of that. Ultimately, as I understand it, that complaint also was found not to have been made out.
40. Mr Dike accepted, I think, that, at least in the ordinary way, it was a contravention of the rules of FSA for an IFA to seek to dissuade someone from making a complaint or to seek to influence the terms of the complaint. He also accepted that in the case of Mrs Fordyce that is what he had attempted to do. However, he said that he had done that as a result of advice given to him to take that course by Mr Rickman and Mr Ziegler at a meeting with them on 15 January 2003. He produced what he said was a manuscript note of the meeting. The meeting was not specifically about the complaint of Mrs Fordyce, but rather a general discussion about how to deal with complaints arising out of advice to invest in split capital investment trusts. The note was short. The first item read, "letter from client saying not to blame". Mr Dike told me that in was in the light of that advice that he sought to get Mrs Fordyce to withdraw her complaint. Mr Rickman and Mr Ziegler denied ever suggesting to Mr Dike that he should seek to dissuade anyone from making a complaint if that was what they wished to do. On this matter I prefer the evidence of Mr Rickman and Mr Ziegler to that of Mr Dike. Both Mr Rickman and Mr Ziegler gave evidence and were cross-examined. Each impressed me as straightforward, keenly aware of the need to comply with the requirements of FSA, and anxious to be fair and frank in giving their evidence. I therefore find that Mr Dike did seek to persuade Mrs Fordyce to withdraw and to modify the terms of her complaint, but that he did so on his own initiative and not as a result of any advice given to him by Mr Rickman or Mr Ziegler.
41. The complaint of Mr and Mrs Hardy did not involve split capital investment trusts, but an equity release plan. Mr and Mrs Hardy were interested in the possibility of raising money on the security of the property which they owned and sought the advice of Mr Dike about that. It seems that they were not happy with the approach adopted by Mr Dike to dealing with them and they decided not to proceed with the equity release plan through him. Although I was not shown the relevant statutory provisions, I was told that under Consumer Credit Act 1974 or regulations made under that statute, a maximum fee of £5 is, or was at that time, chargeable by an arranger of an equity release plan which did not proceed. That contention was not disputed on behalf of Mr Dike. On 20 February 2003 Mr Dike wrote to Mr and Mrs Hardy in the following terms:

"Further to my letter ₀f₄thl December 2002, I am sorry that you seem to have decided not to proceed with your application for an Equity Release Plan on your home. I confirm that I did agree that by coming to my offices there would be no charge for your initial enquiry. However as a result of your visit you left me with instructions to carry out further enquiries as to whether the scheme would be applicable in your case due to the term of your lease.

I secured special terms from Northern Rock plc for your case and there have been further telephone calls, illustrations and general advice on the basis of your confirmed interest.

Once again I am sorry that you have not been able to take advantage of this type of scheme which would unquestionably provide a great benefit for you but I am sure you can appreciate that, as Independent Financial Advisers, we have to charge a fee for our services. In the circumstances I have reduced my normal fee of £250 to £125 on the basis of immediate settlement."

42. That letter drew forth a complaint on behalf of Mr and Mrs Hardy from McQueen Yeoman, a firm of solicitors. That complaint was made in a letter dated 13 March 2003 addressed to Mr Dike:

"I act on behalf of Mr and Mrs Hardy and they have consulted me following receipt of your letter to them dated 20 February.

Quite frankly my Clients were both astounded and dismayed to receive your letter.

The circumstances as they have relayed them to me were as follows.

My Clients arranged to see you on 18 October last year having made a telephone enquiry about the possibility of their entering into a Home Equity Release Scheme.

You indicated to them that you would waive any enquiry fee if they attended at your offices rather than you involve yourself in a home visit.

They accordingly called to see you where you had prepared an illustration received from Norwich Union.

At that meeting no mention was made of any further fees other than the fact that if they took up the Norwich Union Scheme they would have to pay Norwich Union's solicitor's and valuer's fees.

It was implicit (indeed they seem to recall express) that if the proposal were taken up by Mr and Mrs Hardy you would receive commission as the introducing agent.

Our Clients tell us that they were frankly horrified at the way in which you badgered them to make a swift decision.

You told them that you were shortly leaving on holiday and they had to make their minds up within four days.

We are sure that on reflection you will appreciate that when dealing with elderly people in connection with a matter as sensitive as their own home and only significant asset that it is totally inappropriate for any such pressure to be brought to bear.

They apparently left the meeting shaken, confused and worried

You did indicate that you would make further enquiries to see whether an alternative Scheme with Northern Rock might be available but apparently this was not so available because of the shortness of the unexpired term of their lease.

In the circumstances as adumbrated above our Clients tell us that they do not intend to settle your invoice and that if you persist in pursuing the matter they will seek the intervention of the Financial Services Authority."

43. Mr Rickman told me in cross-examination, and I accept, that he was unaware of the letter from Messrs. McQueen Yeoman until a reminder was sent by that firm. Once the matter was brought to his attention, he responded in a letter dated 11 April 2003 in which he said, in effect, that the matter of payment of Mr Dike's invoice would not be pursued. Mr Rickman told me that the complaint of Mr and Mrs Hardy actually came to his notice as he was preparing the reference.
44. Mr Dike accepted in cross-examination that in seeking to charge Mr and Mrs Hardy a fee of £125 he had committed a breach of compliance. He seemed to suggest both that the breach was minor and that the matter was not resolved until weeks after the giving of the reference.
45. Other matters relevant to questions of compliance relied upon by Mr Rickman as justifying his observations on that question in the reference included that Mr Ziegler had written a memorandum dated 11 September 2000 to Mr Dike, of which a copy was put in evidence, on the subject of continuing professional development. In it Mr Ziegler wrote:

"I note from my files that I have still not received any sheets or supporting evidence relating to the above, and as a matter of urgency I would ask you to have these prepared and given to me for the period from 1 April 2000 to 30 June 2000."

Mr Rickman explained in his evidence that details of continuing professional development undertaken in each quarter should be reported as soon as possible after the end of the relevant quarter, and that what this showed was that Mr Dike had not made his return almost three months after the end of the relevant quarter. There was no evidence that Mr Dike failed completely to make the appropriate return, or, assuming he made it at some point, when that was. This did seem to be a minor matter.

46. Another minor matter upon which Mr Rickman relied was the fact that Mr Dike had rendered an invoice in his own name to AXA in respect of a claim for compensation in the case of a Mr Niven. Mr Rickman took the view that any invoice which was appropriate should have been rendered in the name of the company. That may be so, but it never really became clear what issue as to compliance, if any, arose from these circumstances.
47. A further matter which requires mention in relation to compliance issues is that a copy of an invoice dated 10 December 2002 rendered again by Mr Dike in his own name to a Miss McEwen was put in evidence. The narrative on the invoice indicated that the service to which it related was advising in relation to pension funds. Mr Rickman told me that in his view Mr Dike was not authorised to give pensions advice. Mr Dike accepted that both in the case of the invoice to AXA and in the case of the invoice to Miss McEwen the invoice ought to have been rendered in the name of the company. He said that he did not accept that he was not authorised to give pensions advice. On the question of whether Mr Dike was authorised to give pensions advice I prefer the evidence of Mr Rickman, who was the compliance officer of the company, to that of Mr Dike, who told me, in relation to the invoice rendered to Mr and Mrs Hardy, that FSA has a lot of rules and keeping on top of them is difficult.
48. The evidence in relation to Mr Dike's reluctance to assist Sage in its pensions review seemed to consist solely in the passage from the witness statement of Mr Rickman which I have already quoted. He was not challenged on that passage and I accept his evidence about the matter.
49. Mr Norman cross-examined Mr Rickman at some length on the question whether any of the concerns which he said in his evidence he had in relation to Mr Dike in respect of matters of compliance had been raised with Mr Dike. Mr Rickman said that some issues, in particular those concerning Mr and Mrs Hardy and Miss McEwen, only came to light during the course of his preparing to respond to the request for the reference. At that time Mr Dike was away from the offices of the company either on holiday or on a course run by SJP. So far as the question of the allegations made by Mrs Fordyce that Mr Dike had sought to persuade her to withdraw her complaint was concerned, Mr Rickman did not recall any specific conversation with Mr Dike about that matter, but the copy of Mrs Fordyce's letter dated 17 March 2003 which was put in evidence did bear upon it a note which appeared to be a request to Mr Dike to discuss the contents of the letter with Mr Rickman.

50. Mr Norman's main point in relation to compliance issues seemed to be that it was unfair to mention anything in the reference which had not been raised specifically with Mr Dike. However, it seems fairly clear that Mr Dike was fully acquainted with the cases of Mr and Mrs Lusted, Mrs Fordyce and Miss Griffiths and knew what allegations had been made by each of them. He had told Mr Rickman, as I find, that he had passed on to SJP details of all of the complaints against him. Mr Rickman, I find, had told Mr Dike, when the latter mentioned that SJP would be seeking a reference, that he would have to give details of the complaints. In those circumstances, if, which I doubt, there would otherwise have been some obligation on Mr Rickman to inform Mr Dike that he was intending to tell SJP about the complaints which had been made and to give him an opportunity to comment, that had been done in the cases of Mr and Mrs Lusted, Mrs Fordyce and Miss Griffiths, because Mr Dike had been told that those cases would be mentioned. The case of Mr and Mrs Hardy and their solicitors' complaint seems to have been known to Mr Dike prior to the date of the reference, but only to have come to the attention of Mr Rickman whilst he was preparing the reference and at a time when Mr Dike's absence prevented him from discussing it with Mr Dike.

50. It is, in my judgment, quite plain that at the time he completed the reference Mr Rickman had good grounds for believing, as I find he did believe, that Mr Dike had failed to make the anticipated progress in relation to compliance. Compliance had been a relatively small issue in September 2000 when Mr Ziegler had written his memorandum to Mr Dike about continuing professional development. At best the need for that memorandum indicated that perhaps Mr Dike was not giving the subject matter of the memorandum the priority which it required. However, at the date of the reference there were, as I find, current and important issues as to compliance. The most serious was probably the attempts to dissuade Mrs Fordyce from pursuing her complaints or to influence the content of such complaints. However, also serious was seeking to charge a fee not permitted by law and to give advice in respect of pensions which he was not authorised to give. The failure to give to Sage the assistance which it wished in its pensions review as promptly as Sage wanted, whilst not perhaps on its own of enormous significance, was nonetheless part of a picture. I find that the answer which Mr Rickman gave in the reference to Question 6 was true and amply justified by the material available to him. If anything it was generous to Mr Dike in not giving details of the Fordyce case, the Hardy case and the McEwen case, which if given would only be likely to have exacerbated the concerns of SJP.
51. The answer given by Mr Rickman to Question 8 in the reference was true beyond peradventure. There had been three complaints against Mr Dike in 2002 — 2003 of miss-selling split capital investment trusts, those of Mr and Mrs Lusted, Mrs Fordyce and Miss Griffiths. That of Miss Griffiths had been withdrawn. A full closure letter had been sent in the case of Mr and Mrs Lusted. The complaint of Mrs Fordyce was with FSO. Messrs McQueen Yeoman had complained on behalf of Mr and Mrs Hardy in a case concerning equity release. That case was still ongoing at the date of the reference. A criticism which Mr Norman made of the answer to Question 10 in relation to equity release was that Mr Rickman ought to have indicated the nature of the issue which had arisen, namely that it concerned the making of an unlawful charge. It might have been helpful for SJP to have known that, but scarcely, I think, helpful to Mr Dike if SJP had a concrete example of a contravention of the law on the part of Mr Dike.
52. In my judgment the answer given by Mr Rickman to Question 10 in the reference was also true. There was, perhaps, a degree of confusion at the trial as to how the answer to Question 10 which Mr Rickman gave could be reconciled with his conclusions that the complaints made by Mr and Mrs Lusted and Mrs Fordyce were not justified. The basis for the reconciliation, if a little obscure to lawyers, nonetheless seems to be well-understood in the financial services industry. In considering a complaint, such as of miss-selling, what the person considering the complaint, whether a compliance officer or FSO, is looking at is whether there is an appropriate paper trail, that is to say, whether the relevant file contains documents of various types appropriately completed. What does not happen is an investigation of contested issues of fact, such as what was said by an IFA at a meeting with the client. Thus the rejection of a complaint by a compliance officer, such as happened in the cases of Mr and Mrs Lusted and Mrs Fordyce by Mr Rickman, tells one nothing about whether there were allegations of representations being made orally in order to induce an investment decision, which representations were not good advice. Question 10 asked the broad question "Whether there has been any evidence that the applicant has failed to give investors good advice? It did not ask whether there was written evidence to that effect or whether the evidence was incontrovertible.
53. In the case of Mrs Fordyce there was clear evidence, in the form of her letter dated 17 March 2003 and in the terms of her complaint to FSO that she had been badly advised by Mr Dike. There were two clear respects in which, if her account were correct, he had advised her badly. The first was in the initial advice in August 2001 to invest in split capital investment trusts. In her form of complaint to FSO what she said about that initial advice was this:

"Initial meeting with Ian Dike. I was looking for extra income, he advised me not to pay off my mortgage but to allow the investments to pay the monthly premiums."

That was plainly highly questionable advice, if given. The obvious safe advice to give was that she should use the capital sum available to her to discharge her mortgage debt.

The other piece of extremely dubious advice which she alleged she had been given, after the original investments had failed, was to seek to recoup her losses by borrowing to invest in Mr Dike's Florida scheme.

54. In the case of Mr and Mrs Lusted there was also fairly clear evidence, if what they asserted were correct, and in the event at the trial Mr Dike did not dispute it, that he sought to outflank written "health warnings" in relation to the split capital investment trusts under consideration by saying that that type of investment had never failed to pay out yet and he had invested significant sums of his own in such investments and would be investing more.
55. In the light of the material to which I have referred, it seems to me that the position in relation to evidence of bad advice given by Mr Dike as at the date of the reference was accurately summarised as, "Reports in complaints regarding verbal advice from Mr Dike (not upheld in correspondence) indicate bad advice sometimes given but not proven".
56. The answer given by Mr Rickman to Question 14 d was also correct, in my judgment. If the complaint of Mrs Fordyce to FSO resulted in the company being ordered to pay compensation to Mrs Fordyce, the effect of clause 12 of the contract was that Mr Dike would have been bound to indemnify the company in respect of that liability.
57. So far as the answer to Question 17 in the reference given by Mr Rickman was concerned, Mr Norman submitted that, in effect, what someone reading the reference was being told, especially if the answer was read with the answer to Question 6, was that Mr Dike was the sort of person who would avoid complying with the standards of FSA if he could. It seems to me that that is rather over-stating the position. In the financial services industry it is not possible to operate lawfully if one disregards the requirements of FSA. The question which drew forth the answer, "We are currently moving to ISL Network & Mr Dike abhors both administration and compliance. He sees more rather than less and wants to move", is important. It was, "What is/was the reason for the applicant no longer being tied to your company?" The question was not directed at how good was his compliance in fact. In my judgment the answer given by Mr Rickman was intended, and would have been understood, to mean that he was not enthusiastic about the burden of form-filling and such like associated with compliance, not that he did not comply. Moving to SJP was not a solution if his problem was with having to comply at all. I accept that, understood in the sense which I have indicated, the answer was true. Mr Dike himself told me that his real interest was in selling. I accept the evidence of Mr Rickman that his answer to Question 17 was in fact based upon what Mr Dike himself had said was the reason he wished to cease his association with the company.

Mr Dike as a work colleague

58. The answer given by Mr Rickman to Question 18 in the reference was: "Mr Dike is a very difficult person with whom to work. We shall not be sorry to lose his services. We have received two complaints of sexual harassment from a secretary and an outside cleaner. Mr Dike has been cautioned for both complaints which he denied. No further action resulted." In his witness statement, in the passage from paragraph 83.18 which I have already quoted, Mr Rickman dealt essentially only with the sexual harassment question. His evidence as to whether Mr Dike was a difficult person with whom to work really only came out during his cross-examination. Most of the evidence led on behalf of the company and Mr Rickman at the trial was in fact directed at that issue. Mr Norman raised a question of law as to whether what was alleged in the two complaints to which Mr Rickman referred in his answer to Question 18 in fact amounted, if true, to sexual harassment, as opposed to rudeness, boorishness or some lesser defect in character. I shall come to that question, but it is necessary to make findings as to how Mr Dike in fact behaved during the period of his association with the company.
59. Michele Dwyer, who was the first personal assistant employed by Mr Dike after the variation in his arrangements with the company so as to increase his percentage of fees in return for him employing his own secretarial assistance had been made, was called to give evidence on behalf of the company and Mr Rickman. I was impressed by her as a witness. Moreover, she seemed to me, to use an expression from a different legal context, to be a lady of reasonable firmness and courage. I accept her evidence without hesitation. What she said in her witness statement included:

"3. From the time that I started working for Mr Dike, he would regularly make little comments on how I was dressed I felt increasingly uncomfortable with these comments and they began to sound more and more 'sleazy' to me.

4. For example, on one occasion in the first month, when I was wearing a v-neck blouse I was greeted by Mr Dike with 'Morning, don't you look buxom today'. On other occasions, if I was wearing a knee length skirt, he would comment on my legs or ankles. He made it quite clear that he did not like his 'ladies' to wear trousers to work, although there was no specific statement that I can recall him making to that effect.

5. These comments began to be made on a daily basis and I was always aware that I had been carefully looked at. His comments were far too specific to be appropriate in an office environment.

6. As the verbal comments became more frequent, so too would the invasion of my personal space. My office was at the front of the building, next to Claire Riley's office, and I shared my office with Janet Hathaway, who was Mr Dike's assistant. The two desks faced the wall at the front of the building and the door to the office was behind the two desk chairs.

7. When I was at my desk, Mr Dike would stand so close to the side of my chair that he would actually brush his leg, hip and groin against my arm and shoulder whilst I was sitting down, I would have to move away or make an excuse to stand up. He would also lean right over so he could see down my top. He was much closer than would ever be necessary.

…….

13. Mr, Dike could also be extremely selfish and insensitive. In July, when my father was gravely ill in intensive care with cancer, I telephoned Nikki Kerr over the weekend to ask her to pass a message to Mr Dike on the Monday morning to the effect that I would not be in the office on Monday. My father's condition had worsened considerably over the weekend. I said I would try and pop in later in the week to do the urgent work I did not have a number for Mr Dike as I was in Buckinghamshire with my fat her.

14. I popped into the office on Wednesday to ensure that the message has got through and to see if there was anything urgent that I could help with. Mr Dike was extremely rude and aggressive to me and shouted at me for not telling him directly that I would be away from Monday. He told me he should not have had to hear it from Nikki downstairs and he was 'offended' by that. He made no effort to find out how I was or how my father was.

15. I was in emotional turmoil at the time and if it had not been so difficult for me, I would probably have told him what I thought of him. However, I fled the office in tears after being treated with such an appalling lack of consideration.

16. I ran across the road to an alleyway alongside the shop over the road. Nikki Kerr came out to see what was wrong and I told her about Mr Dike 's reaction. I was so upset that I needed time to cool down, so I went home and did not return until the following Monday. Nikki went and got my coat and bag and brought it to me at home shortly afterwards."

60. Although Mr Dike denied standing too close to Michele Dwyer or any other ladies, he did accept that he had been insensitive on the occasion of which she spoke when her father had been in intensive care and she had told him via Nikki Kerr that she would not be coming in to work on the Monday. It was put to Michele Dwyer that that occasion was the culmination of a number of incidents upon which she had not attended for work and had sent messages to Mr Dike via members of the staff of the company, rather than contacting him directly. She denied that she had ever had any other time off work whilst employed by Mr Dike. I accept that denial. The incident involving Michele Dwyer became widely known in the small offices occupied by the company. Not only did Miss Kerr follow Michele Dwyer out on the occasion itself, but Mr Rickman was aware of the noise of someone leaving the offices in a hurry and he subsequently spoke to Michele Dwyer in order to find out what had prompted her to leave on the day in question.
61. Michele Dwyer's replacement as personal assistant to Mr Dike, Lorraine Cox, was also called to give evidence on behalf of Mr Rickman and the company. I hope that she will not think it inappropriate if I describe her as a rather retiring lady. However, she was a very straightforward and convincing witness and I accept her evidence also without any hesitation. Her experience of working for Mr Dike seems to have been similar to that of Michele Dwyer. In her witness statement she said this:

"2. I found Mr Dike to be a very aggressive person to work for. On one occasion, towards the end of my time working for him, Mr Dike came into my office and shouted at me repeatedly whilst thumping his fist on the desk so that other members of staff could hear him. Naturally, this incident reduced me to tears and I had to leave the room. I went and spoke to Mr, Rickman, who was one of the Directors of Ziegler Rickman Limited and told him of the incident.

3. In addition, Mr Dike behaved in a very unprofessional way towards me. At the beginning of my time at Ziegler Rickman Limited, he would constantly stand too close to me or reach across in front of me for something from my desk instead of simply asking for it. He would also make contact by brushing his forearm against mine when he stood next to me and he continually invaded my personal space. When I first worked for him, he put his arm around my waist a couple of times.

4. I would always make a point of moving away from Mr Dike in an exaggerated way to make clear my dislike of his actions but this never seemed to have any effect."

In cross-examination Lorraine Cox clarified her evidence to make plain that, while the incidents in which Mr Dike put his arm round her waist were only at the start of her employment, the other behaviour which she mentioned continued throughout. She was asked why she did not seek the assistance of Mrs Hathaway in getting Mr Dike to change his behaviour. Her response was that she thought that Mrs Hathaway would deny that there was a problem or make excuses. Mrs Hathaway was called as a witness on behalf of Mr Dike and she did say that she was not aware of any difficulties in his relationships with others working in the offices. However, my assessment of Mrs Hathaway was the same as that of Lorraine Cox. I did not find the evidence of Mrs Hathaway of assistance.

62. Mr Dike in his evidence accepted that there had been an incident when he had thumped his fist on the table and shouted at Lorraine Cox. He said that he regretted the incident, which was an isolated one. He told me that he had found it difficult to deal with some comments which she had made to him. He did not elaborate upon what those comments were. I find it inconceivable, having seen Lorraine Cox give evidence, that she could possibly have made any comments to Mr Dike which could have provoked the sort of intemperate reaction which there evidently was. Under very delicate and sympathetic cross-examination by Mr Norman Lorraine Cox was reduced to tears. Mr Dike in his cross-examination described the table thumping incident as one 30 second event, and he said that he was human and he thought that he was entitled to the occasional lapse.

64. Chronologically the next thing which happened which is relevant to the aspect of the case which I am now considering was probably that Carol Darling made a complaint about Mr Dike. I say that that was probably the next relevant incident because the evidence was unclear as to the date of a barbecue at which there was a relevant incident, to which I shall come shortly. Carol Darling was an employee of the company at the time. She did not give evidence before me. The evidence of Mr Ziegler was that she came to him at a time when Mr Rickman was on holiday in May 2001 and complained that Mr Dike had been touching her clothing in a way which caused her concern and that he was becoming over-familiar and causing her embarrassment. He would rub the fabric of her clothes between his thumb and forefinger and comment upon the quality of the fabric. She also complained that on one occasion he had purported to look closely at a brooch she was wearing and had taken the opportunity to look down her dress. Carol Darling wanted the matter dealt with formally. Mr Ziegler therefore wrote a letter dated 16 May 2001 to Mr Dike, in which he said this:

"I have received a verbal complaint from one of the female staff in the office as regards the way you deal with them, as they feel that you have become over familiar, which is causing them embarrassment.

I am sure that your actions are not deliberate, but must ask you to exercise extreme caution in the future as regards the way you deal with any female staff in this office so as to ensure that a similar situation does not arise again."

63. Mr Ziegler was cross-examined to the effect that the letter was rather vague and indefinite, in particular not mentioning the complainant or any specific incident. It was suggested to him that in writing "I am sure that your actions are not deliberate" he was expressing his genuine opinion that the conduct complained of was inadvertent. He said that in fact he was simply trying to deal delicately with a situation which he found embarrassing, and was not expressing an opinion at all. I accept that the words which he used were in fact a linguistic and social device designed to make more palatable to Mr Dike the fact that a formal caution about his behaviour with women was being given to him. I accept that evidence of Mr Ziegler, Mr Rickman and Mr Nicholas Riley, who was also called to give evidence on behalf of Mr Rickman and the company, that they all found it embarrassing to contemplate having to tackle a man of mature years, with whom they worked and with whom they imagined they would have to continue to work, over his behaviour towards women.
64. The complaint of Carol Darling was one of the two which in answering Question 18 in the reference Mr Rickman characterised as a complaint of sexual harassment. I shall come to consider whether that was an appropriate characterisation. For the moment I am simply concerned with the fact and nature of the complaint and not with what label, if any, should be attached to it.
65. I have to say that I was unclear what position Mr Dike adopted in relation to the complaints of Carol Darling. In a supplemental witness statement dated 11 October 2005 at paragraph 25 he said this about it:

"I recall the written complaint from W Ziegler concerning Carol Darling in May 2001 very well and already have made a full statement. I did not know until now that the touching of her jacket had been the problem. It is something that I occasionally do with people (not just females) by way of complimenting them on their good dress. Not any more. I therefore do not deny that I may have done this on one or possibly two occasions."

In his original witness statement what he said about the matter was:

"27. The first letter of complaint which was held on my file related to an incident in May 2001. At that time, I was presented with a formal letter from Mr W. Ziegler, without warning, stating that one of the secretaries had verbally complained about the way I dealt with them, which had apparently caused them embarrassment. I did not know who the person was. I was extremely upset and categorically denied being responsible for any inappropriate behaviour. I immediately responded with a formal letter to Mr W Ziegler dated the 17 May 2001 denying the incident and stating that this letter of complaint was severely damaging to my previous unblemished professional record.

28. In my letter I asked for details of the incident in question but nothing was produced I threatened to take legal action unless the unfounded accusation was withdrawn, Mr W Ziegler however strongly recommended that I took no further action for two reasons. Firstly there had been a similar incident with the same staff member and another member of the company and the staff member involved was currently of a sensitive nature for various reasons. Secondly he assured me that the file note would be removed after twelve months and that the matter would be forgotten. In reliance of this therefore, and in the interests of sustaining a relaxed working environment, I did not proceed with any legal action. I did however write a personal letter to the staff member apologising if indeed I had caused any embarrassment to her, and assuring her it was by no means intended. I asked if she could kindly acknowledge the letter, however regrettably she did not respond."

66. The letter which Mr Dike contended he had written to Mr Ziegler, and of which a copy was put in evidence, was dated 17 May 2001. Mr Ziegler did not recall receiving it, which is surprising, given the terms of the letter, if it was indeed sent to him. The copy letter put in evidence was disclosed on behalf of Mr Dike and was in typescript. What it said was:

"I refer to your letter of16 May which I received incredulously and with shock and anger.

I flatly deny any accusation, deliberate or otherwise of being "familiar to the point of embarrassment" with any member of the female staff.

On the matter of complaints concerning my association with the firm and its staff if anyone had grounds to make complaints it would in fact be me on the basis of previous incidents concerning both poor performance and harassment, evidence of which is documented.

I regard this complaint as entirely untrue, nonsensical, entirely unproven and libellous, and therefore damaging to my unblemished professional record. However I would be happy to receive details of incidents, together with times, dates and any witnesses as to causes of such embarrassment.

As this matter has already been recorded and is now filed as a blemish on my personal and professional character, I intend to seek redress through legal channels.

Before pursuing this route however, I shall give the female staff member concerned 48 hours to reconsider her position, withdraw the accusation and apologise. Failure to receive such I will have no hesitation in pursuing the matter as promised.

Naturally I do regret your involvement William and hope very much for a swift end to the matter as requested."

67. The tone of the letter which Mr Dike contended he had sent to Carol Darling and of which a copy was put in evidence could not have been more different from that of the letter dated 17 May 2001. The letter to Carol Darling was written in manuscript and was dated 18 May 2001. It was in these terms:

"After much thought and discussion with my private family I have decided initially to write to you personally. Your allegations, resulting in a formal warning letter placed on my file, have caused both me and my wife great personal upset. It is possible you are not aware of the possible implications.

I really thought we had a good professional relationship, you have been particularly helpful with my messages etc and I believe I have told you so. You have stated that I am over familiar and have embarrassed you. How have I managed to do that? I am happily married with two lovely children. I am simply not interested in you. I am very, very upset however, if I have embarrassed you somehow. I apologise. I would be very grateful if you could acknowledge that you have received this letter, have a chat with me or telephone me at home. My no. is 01258-840136. A pity that another way to deal with the situation couldn't have been found I dislike incidents of this sort being left incomplete particularly when I believe fundamentally there is no real cause for concern."

68. Mr Ziegler denied in cross-examination that he had ever told Mr Dike that a copy of the letter dated 16 May 2001 would be removed from Mr Dike's file after a year. I accept that denial. It is not easy to reconcile the apparently very aggressive tone of Mr Dike's alleged letter of 17 May 2001 to Mr Ziegler and the apparently very conciliatory tone of Mr Dike's alleged letter of the very next day to Carol Darling. I think that it is probably enough for me to say that in fact Carol Darling never acknowledged receipt from Mr Dike of any letter and he took no further action. He seemed to accept that he had touched Carol Darling's clothing, as she alleged.
69. The evidence was that it was the custom of Mr Ziegler each year in July to invite all the members of the staff of the company and all of those who shared the offices, with spouses and children, to a barbecue. The incident at the barbecue to which I have referred was an occasion upon which Mr Dike joined Mrs Claire Riley and Miss Kerr as they were chatting under a tree. Evidence of what happened was given to me by both Mrs Riley and Miss Kerr. Each said that Mr Dike, having joined them, suddenly stretched out his arm and brushed Mrs Riley's breasts. According to them, he said that he was removing crumbs from her clothing. Miss Kerr told me that she asked him why he had touched Mrs Riley. His response, she said, was to smirk and to say that she had nothing to worry about because she was fat. Curiously, Mr Dike's reply to the allegation of touching Mrs Riley's breasts was not a vigorous and outraged denial. What he said about it in his supplementary witness statement at paragraph 33 was this:

"There is an accusation by Claire that I had brushed crumbs from her breast at this BBQ. I repeat that I do not believe I was at this BBQ. Whilst I cannot recall the incident perhaps it is possible that I may have done so at another event, but it is not something that I would normally do. If I did do something of that nature which I knew to have caused such offence as described, I would have immediately apologised."

His evidence about it in cross-examination was to the same effect.

70. In their witness statements both Mrs Riley and Miss Kerr put the relevant barbecue as that which was held in 2001. Each was cross-examined closely as to whether that was the correct year and whether Mr Dike had been at the barbecue in that year. When he was asked about it, Mr Ziegler remarked that surely the point was not at which barbecue the incident occurred, but that it occurred at all. With that observation I agree. Mrs Riley and Miss Kerr were both very impressive witnesses and I have no hesitation in accepting their account that at a barbecue Mr Dike brushed Mrs Riley's breasts in the manner described and told Miss Kerr that she was fat. Miss Kerr told me, and I accept, that she told Mr Ziegler what had happened.
71. Each of Mrs Riley and Miss Kerr gave evidence of their general experience of Mr Dike. Miss Kerr told me that she found Mr Dike to be rude, arrogant and chauvinistic. She said that he made asides as he walked through the offices, although he could be charming. In her witness statement Mrs Riley said this about Mr Dike's general behaviour:

"6. At work, Mr Dike's general behaviour made me feel uncomfortable and was often with a sexual undertone with his mannerisms. When in his presence, he would make suggestive noises and remarks. One frequent comment concerned a striped French looking jumper and whenever I was wearing it, he would say 'oh, you're wearing that French outfit again' and after this statement would make a suggestive growling noise in his throat. I felt this was totally inappropriate behaviour in an office environment and I disliked such comments.

7. He would have a habit of coming too close to me when making conversation making me feel very uneasy whilst giving me the impression that he was trying to undress me with his eyes. His behaviour was so degrading that I reported this to my husband Nick He said he would have a serious word with him if this continued It came to the point that I tried to keep out of his way, but this was sometimes difficult as we both worked on the 1st floor, I avoided any contact with him where I could.

8. As my office was next to the office of Mr Dike 's personal assistant, I did hear various conversations between Mr Dike and his various personal assistants. Especially with Lorraine Cox, he showed her no respect and was very impatient and she would inevitably get upset. I would not have been able to work with him."

72. Almost all of the female witnesses called on behalf of Mr Rickman and the company used the same word to describe Mr Dike. That word was "sleazy".
73. Mr Rickman told me in cross-examination that Mr Dike was inclined to make asides of a sarcastic nature. He gave two examples. One was of an occasion when Mr Dike enquired when he was going to be provided with a printer which worked, he never having previously mentioned that his did not. The other concerned the quality of the coffee in the office kitchen and was along the lines what did one have to do to get a decent cup of coffee, the existing brand of coffee making him feel unwell. He also told me that Mr Dike was a man of moods. He could be charming, but he could also be unpleasant, and one did not know from day to day what his mood would be.
74. Mr Ziegler also felt that Mr Dike was a man of moods. Mr Ziegler frankly accepted that he avoided confrontation if he could and he tended to keep out of Mr Dike's way because of uncertainty as to his mood, Mr Ziegler~ s perception was that Mr Dike was a fomenter of trouble, or, as he put it, a shit stirrer.
75. In the light of the evidence which I have recited in this section of this judgment which I have indicated I accept, Mr Dike managed during the course of his association with the company to upset almost everyone else who worked in the offices, in particular the female staff. Mr Gilderdale, whose unchallenged evidence was put before me, seems to have been an exception, but the limit of his evidence was:

"4. During this time [Mr Dike's period working with the company] I was totally unaware of any stories or rumours of inappropriate behaviour."

Mr Gilderdale employed no staff. Mrs Hathaway was, of course, another exception.

76. One of the difficulties in justifying a statement in a reference like "He is a very difficult person with whom to work" is that conveying the flavour of what it is like to work with someone to a person who has not had that experience is not easy. When pressed to identify particular incidents to illustrate the proposition that X is a difficult person with whom to work, the outcome can readily be made to appear a catalogue of the trivial. However, that was not, in my judgment the effect of the evidence led on behalf of Mr Rickman and the company at the trial of this action. A consistent picture unfavourable to Mr Dike emerged from the evidence of many witnesses. Mr Dike could be charming, but was moody, and one would not know from one day to the next what his mood would be. He made asides of a sarcastic nature, was rude, bullying in his behaviour, arrogant, intolerant and, at very least, condescending and over-familiar in his relations with females working in the offices. Interestingly, during the course of his own cross-examination he illustrated an unattractive characteristic which supported the evidence of his character to which I have already referred. On a number of occasions he sought to insist that Mr Self reformulate an entirely proper question so as to avoid an implication perceived by Mr Dike to be distasteful. These were really attempts, if not to bully counsel, then certainly to exercise a degree of control of the process of cross-examination which it is not appropriate for a witness to have. I have no hesitation in finding that Mr Rickman was amply justified in his comments in answering Question 18 in the reference, "Mr Dike is a very difficult person with whom to work. We shall not be sorry to lose his services."

Mrs Hopper – the facts

77. The second of the two alleged complaints of sexual harassment to which Mr Rickman referred in answering Question 18 in the reference concerned a complaint by Mrs Carol Hopper. She was called as a witness on behalf of Mr Rickman and the company. Before coming to the matter of the complaints which she made about Mr Dike it is material to record the effect of her evidence in cross-examination about Mr Dike and his attitude towards her. Mrs Hopper struck me as a fairly strong character and a lady who was very straightforward in the evidence which she gave. Once again, I accept her evidence without hesitation. She was one of those who used the adjective "sleazy" to describe Mr Dike. She said that he could be polite and charming, but he stared at her a lot and made her feel uncomfortable. When he talked to her he looked her up and down, as if undressing her with his eyes. She also felt that he thought that because there was a cleaner he was entitled to expect that all of his dirty dishes would be removed and washed and all his food refuse removed and disposed of.
78. In her witness statement Mrs Hopper gave this account of the incident which prompted her to complain about Mr Dike:

"5. The incident that led to me making my first complaint about Mr Dike to my employer, Trevor Jackson, revolved around a teapot that I found in his office. Whilst I was cleaning his office, I collected an old teapot to clean and accidentally broke the handle whilst washing it up. I didn't realise that it belonged to Mr Dike but I replaced it with a similar teapot the same day.

6. Approximately 2 months later, Mr Dike approached me whilst I was cleaning his office and asked if I had broken his teapot. I explained what had happened and he said that he was not happy with the replacement and he had bought another teapot. He went on to say that, 'If you break this teapot I will smack your bottom'."

79. Mr Dike did not deny that he had said to Mrs Hopper something about smacking her bottom. His version, set out at paragraph 34 of his first witness statement, was that there was a rather light-hearted conversation in which she said that she had broken his teapot and apologised, and he said something to the effect that, "had I known you any better I might have smacked your bottom". He said that they both then laughed and the matter was concluded. Quite apart from the fact that in any event I prefer the evidence of Mrs Hopper as to what happened, an obvious difficulty in the way of accepting Mr Dike's account is that Mrs Hopper at once complained to her employer about what had been said. He took it up with Mr Rickman. Mr Rickman suggested that it would be more appropriate for Mr Jackson, as Mrs Hopper's employer, to take the matter up with Mr Dike himself.
80. Mr Dike's evidence was that he had never met Mr Jackson and had not had a conversation with him about Mrs Hopper and threatening to smack her bottom. Mr Jackson was called as a witness on behalf of Mr Rickman and the company and he confirmed that he had indeed had a conversation with Mr Dike within a day or two of receiving her complaint. His account of the conversation was that it was low-key, at the request of Mrs Hopper, who did not want to make too much of the matter because she still had to work in the offices. In his witness statement what he said happened on the occasion of his meeting with Mr Dike was:

"I introduced myself to Mr Dike and requested that he throw away any old food in his office as removing food and washing up was not included within our contract. I also asked him to refrain from making 'off the cuff' comments to Carol, even if he felt they were meaningless as we did not expect anyone to make such remarks to any of our staff Mr Dike denied that any such incident had happened."

I accept the evidence of Mr Jackson that he had a conversation with Mr Dike within a day or two of receiving the complaint from Mrs Hopper and that the effect of the conversation was as he said in his witness statement. While that account was somewhat vague, I am satisfied that Mr Dike must have known what prompted a visit from the cleaners, otherwise he would have made plain to Mr Jackson that he did not know why he had come or what he was talking about. In fact Mr Dike denied to Mr Jackson making any "off the cuff" comments to Mrs Hopper. As civilised conversation is perfectly innocent, he must have known perfectly well to what comments Mr Jackson was referring.

81. After his conversation with Mr Dike, and at the request of Mr Rickman, Mr Jackson wrote a letter dated 1 October 2002 to Mr Rickman in which he said:

"Further to our various telephone conversations I am writing to confirm that last week we had an incident reported by our Cleaning Operative, Carole Hooper [sic].

On my weekly visit to your office last Wednesday ~ September, I received a telephone call from Carole Hooper, our cleaner, who mentioned that she had a few problems with Ian at your office. He had passed several sexiest [sic] remarks and she felt that he expected her to pick up and dispose of old food from his office floor. She wanted me to be aware of the situation and I felt that I must advise you.

Carole also mentioned that she did not want me to take it too far as she did not want to feel vulnerable being left in the building on her own.

As we discussed, I saw Ian on Thursday 26 September, and introduced myself asking him to throw old food away and refrain from 'off the cuff comments' to Carole, even if he felt they were insignificant and meaningless.

I hope that this situation has now been dealt with and there will be no further repercussions.

I have also asked Carole to inform us immediately, should the problem reoccur in order that it can be dealt with immediately."

82. Mr Jackson told me that the conversation with Mr Dike was short, lasting perhaps two minutes.
83. Mrs Hopper told me that after the incident she changed her days of work from Monday, Wednesday and Friday to Monday, Wednesday and Sunday to avoid Mr Dike. She said that she had most often encountered him on Friday evenings in the offices. She also said that she told him that she was married and had children in an attempt, apparently successful, to discourage him from making remarks which made her feel uncomfortable.
84. In the passage from her witness statement from which I have quoted, Mrs Hopper referred to her "first" complaint about Mr Dike. She did make a second complaint, but that arose out of an incident on 4 May 2003, after the date of the reference. That second complaint is not, therefore, material to any issue which I have to determine. Other evidence was led which was not really material to any issue which I have to determine. In particular, there was evidence as to a visit to the offices made by Mr and Mrs Dike on 19 April 2003 and to a meeting between them and a friend, Mr John Page, with Mr Ziegler on 20 April 2003. I do not need to make any findings about the detail of these visits and I do not do so.

Sexual harassment

85. As I have indicated there was no real dispute that Mr Dike had at least touched the clothing of Carol Darling, as I find, and that he had said to Mrs Hopper that he would smack her bottom. However, Mr Norman submitted that the matters complained of by Carol Darling and by Mrs Hopper were not properly to be characterised as "sexual harassment" and that Mr Rickman had fallen into serious error in so characterising them in the reference. In support of his submissions Mr Norman reminded me of the definition of "harassment" in Shorter Oxford English Dictionary, 2002 edition, which included, relevantly, "Trouble by repeated attacks. Now freq. subject to constant molesting or persecution". He also submitted that, in the absence of a definition of the expression "sexual harassment" in the Sex Discrimination Act 1975, useful guidance was to be obtained from the definition of harassment on the grounds of sexual orientation in Employment Equality (Sexual Orientation) Regulations 2003, reg 5, by which it is provided:

"(1) For the purposes of these Regulations, a person ("A") subjects another person ("B") to harassment where, on the grounds of sexual orientation, A engages in unwanted conduct which has the purpose or effect of—

(a) violating B's dignity; or

(b) creating an intimidating, hostile, degrading, humiliating or offensive environment for B.

(2) Conduct shall be regarded as having the effect specified in paragraph (1)(a) or (b) only if having regard to all the circumstances, including in particular the perception of B, it should reasonably be considered as having that effect."

What, I think, Mr Norman sought to derive from the dictionary definition was that the concept of harassment involved a degree of persistence, although that did not seem to be an ingredient of the definition in reg. 5 of Employment Equality (Sexual Orientation) Regulations 2003. From the latter Mr Norman sought to derive the proposition that conduct should only be regarded as harassment if it could reasonably be considered as having the effect provided for in reg 5(1)(a) or (b). From time to time during his submissions Mr Norman also seemed to suggest that sexual harassment could not take place unless such was intended by the alleged harasser, or he was at least aware of what he was doing.

86. Mr Self submitted that the test of sexual harassment which I should apply should be that which he contended was to be derived from Commission Recommendation 92/131/EEC Art 1, namely:

"conduct of a sexual nature, or other conduct based on sex affecting the dignity of women and men at work, including conduct of superiors and colleagues, is unacceptable if—

(a) such conduct is unwanted, unreasonable and offensive to the recipient;

(b) a person's rejection of or submission to such conduct on the part of employers or workers (including superiors or colleagues) is used explicitly or implicitly as a basis for a decision which affects that person's access to vocational training, access to employment, continued employment, promotion, salary or other employment decisions; and/or

(c) such conduct creates an intimidating, hostile or humiliating work environment for the recipient."

What was important about that test, submitted Mr Self, was that the determining criterion of harassment or not was simply the perception of the supposed victim. Considerations of the intentions of the supposed harasser or an objective assessment of the quality of the matters complained of were simply immaterial.

87. Attached to Commission Recommendation 92/131/EEC was a Code of Practice. In that Code, in paragraph 2, is a definition of the expression "sexual harassment" to which Mr Self also drew my attention:

"Sexual harassment means 'unwanted conduct of a sexual nature, or other conduct based on sex affecting the dignity of women and men at work'. This can include unwelcome physical, verbal or non-verbal conduct.

Thus, a range of behaviour may be considered to constitute sexual harassment. It is unacceptable if such conduct is unwanted, unreasonable and offensive to the recipient; a person's rejection of or submission to such conduct on the part of employers or workers (including superiors and colleagues) is used explicitly or implicitly as a basis for a decision which affects that person's access to vocational training or to employment, continued employment, promotion, salary or any other employment decisions; and/or such conduct creates an intimidating, hostile or humiliating working environment for the recipient.

The essential characteristic of sexual harassment is that it is unwanted by the recipient, that it is for each individual to determine what behaviour is acceptable to them and what they regard as offensive. Sexual attention becomes sexual harassment if it is persisted in once it has been made clear that it is regarded by the recipient as offensive, although one incident of harassment may constitute sexual harassment if sufficiently serious. It is the unwanted nature of the conduct which distinguishes sexual harassment from friendly behaviour, which is welcome and mutual."

88. Mr Self also drew to my attention the guidance of the Employment Appeal Tribunal as to what constitutes sexual harassment for the purposes of Sex Discrimination Act 1975 s 6 in Reed v Stedman [1999] IRLR 299 at paragraphs 23 to 30. At paragraph 25 of the decision the Tribunal said this:

"It seems to us important to stress at the outset that "sexual harassment" is not defined by statute. It is a colloquial expression which describes one form of discrimination in the workplace made unlawful by s. 6 of the Sex Discrimination Act 1975. Because it is not a precise or defined phrase, its use, without regard to s 6, can lead to confusion. Under s 6 it is unlawful to subject a person to a "detriment" on the grounds of their sex. Sexual harassment is a shorthand for describing a type of detriment. The word detriment is not further defined and its scope is to be defined by the fact-finding tribunal on a commonsense basis by reference to the facts of each particular case. The question in each case is whether the alleged victim has been subjected to a detriment and, second, was it on the grounds of sex. Motive and intention of the alleged discriminator is not an essential ingredient, as in any other direct discrimination case, although it will often be a relevant factor to take into account. Lack of intent is not a defence."

Later in the decision, at paragraph 30, the tribunal said:

"As to whether the conduct is unwelcome, there may well be difficult factual issues to resolve. In general terms, some conduct, if not expressly invited, could properly be described as unwelcome. A woman does not, for example, have to make it clear in advance that she does not want to be touched in a sexual manner. At the lower end of the scale, a woman may appear, objectively, to be unduly sensitive to what might otherwise be regarded as unexceptional behaviour. But because it is for each person to define their own levels of acceptance, the question would then be whether by words or conduct she had made it clear that she found such conduct unwelcome. It is not necessary for a woman to make a public fuss to indicate her disapproval; walking out of the room may be sufficient. Tribunals will be sensitive to the problems that victims may face in dealing with a man, perhaps in a senior position to herself who will be likely to deny that he was doing anything untoward and whose defence may often be that the victim was being over-sensitive. Provided that any reasonable person would understand her to be rejecting the conduct of which she was complaining, continuation of the conduct would, generally, be regarded as harassment. But at all times, the tribunal should not lose sight of the question at issue: was the applicant subjected to a detriment on the grounds of her sex? The answer to that question does not depend upon the number of incidents. A one-off act may be sufficient to damage her working environment and constitute a barrier to sexual equality in the workplace, which would constitute a detriment."

89. It is, in my judgment, important to remind oneself that Mr Rickman, in referring to complaints of sexual harassment, was not seeking to apply some statutory provision or regulation. He was simply seeking to convey as a matter of the use of the English language a concept to the reader of the reference. That concept was that complaints had been made against Mr Dike that he had, on the ground of their sex, subjected two women to conduct on his part which was degrading or offensive. That concept has, it seems to me, an objective element in the sense that what was being conveyed was that the nature of the complaints was such that, if substantiated, what was complained of objectively amounted to conduct which was degrading or offensive and that the motivation for it objectively was the sex of the individuals concerned. In my judgment, as a matter of common usage, at least in conjunction with the adjective "sexual ", the use of the word "harassment" does not of necessity connote a persistent course of conduct. A single incident could amount to sexual harassment.
90. It seems to me that for a man to touch, uninvited, the clothing of a woman does amount to sexual harassment in that it shows a disregard of her personal worth and an invasion of her privacy. The motivation for treating a woman in that way is, objectively, her sex in the absence of any other supposed justification for such conduct. It is not the way men ordinarily behave towards one another. Carol Darling had complained that Mr Dike had touched her clothing uninvited on more than one occasion, and Mr Dike appeared to accept that there had been more than one incident. Thus, if, contrary to my view, sexual harassment required more than a single incident, in the case of Carol Darling that requirement was satisfied. It goes, I think, without saying that so to position oneself, being a male, as to look down the dress of a female, is sexual harassment. In my judgment, the complaints of Carol Darling were~ correctly characterised by Mr Rickman as complaints of sexual harassment. At one point in his submissions Mr Norman seemed to be contending that the question which I needed to decide in respect of Carol Darling was whether she had, as a matter of fact, made clear to Mr Dike that his attentions were unwelcome. However, in my judgment all I have to decide in relation to her complaints is whether what she was complaining about could properly and fairly be described as sexual harassment. There was no necessity to go behind the terms of the complaints in order to assess their merits.
91. It is possible to envisage that someone who treated a cleaner with disdain, expecting the cleaner to perform menial tasks not normally within the scope of the cleaner's remit, might be motivated so to treat the cleaner as a result of the sex of the cleaner. On the other hand, the motive for so treating a cleaner could be some sense of social superiority. The evidence that Mr Dike expected Mrs Hopper to clear up old food and an excessive number of dirty dishes was clear, but the motivation for that behaviour on his part was not. It seemed possible that, not having negotiated the contract with the cleaners, he did not in fact understand what was covered by the contract and what was not. In the circumstances, had the complaints of Mrs Hopper about being expected to clear up old food and to wash dirty dishes stood alone, I do not think that it would have been right to categorise them as complaints of sexual harassment. However, a threat to smack a lady's bottom, is a threat to commit a battery. I accept the account of Mrs Hopper as to the circumstances in which the threat was made. It was not a light-hearted bit of banter. It was a threat to impose a physical punishment of a degrading kind in the event that Mr Dike's new teapot should be broken. Moreover it had carnal undertones. The motivation for the threat was plainly, in my judgment, to violate the dignity of Mrs Hopper on the grounds of her sex. It was thus an episode of sexual harassment. I find that Mr Rickman, in considering how to characterise the complaints of Mrs Hopper, did proceed, and was entitled to proceed, on the basis of how the complaint of smacking her bottom was put to him. It does not seem to me that a complaint properly characterised as one of sexual harassment loses that character by virtue of being combined with a complaint which may not be of sexual harassment.
92. In the result I find that Mr Rickman was correct in answering Question 18 in the reference to say that:

"We have received two complaints of sexual harassment from a secretary and outside cleaner. Mr Dike has been cautioned for both complaints which he denied No further action resulted."

The cautions were that in the letter of 16 May 2001 written by Mr Ziegler and the mild reproof administered during the interview with Mr Jackson in September 2002. The recording of the fact that Mr Dike denied the incidents and of the fact that no further action resulted seems to me to convey to the reader of the reference both that the incidents were minor, such that no further action was necessary notwithstanding the denials, and that there had been no repetition.

The reference – conclusions

93. For the reasons which I have endeavoured to explain, in my judgment every statement in the reference to which exception was taken on behalf of Mr Dike was in fact true. I agree with a comment which Mr Rickman made more than once during the course of his oral evidence, namely that in a reference, the truth is always fair, however unwelcome it may be to the subject of the reference. Mr Dike's case as to the general thrust of the reference did seem to me to be somewhat over-stated. It was not, indeed, a favourable reference. However, it seems to me, as I have already said, that it was reading too much into it to interpret it as indicating that Mr Dike actively sought to avoid complying with the requirements of FSA, if that was what it was sought to suggest was the effect of the alleged message in the reference that, "The claimant's attitudes to compliance were inappropriate". Again, in my judgment, the suggestion that the message in the reference was that:

"The claimant was unsuitable for employment (whether under a contract of service or contract for services) as an adviser in the financial services industry"

did seem to me to be inserting a gloss upon it. The fact that Mr Dike was difficult to work with did not make him unsuitable for employment. It just meant that a prospective employer would have to decide whether the other qualities which Mr Dike had to bring to a job outweighed such difficulties. His attitude to compliance meant that he probably needed further training in that area and perhaps careful monitoring, but again it was for a prospective employer to decide whether those aspects were outweighed by other qualities. The mention of complaints of sexual harassment, which were denied and in respect of which no further action had been taken after caution, just alerted a prospective employer to a potential problem, which might not be of any relevance, depending upon the prospective working environment. The overall message in the reference, in my judgment, was not that Mr Dike should not be employed at all, but rather, that if he were to be employed, certain matters — those to which I have referred in this paragraph — would need to be taken into account and his performance in those areas at least monitored.

94. In the result, the allegations that the company acted in breach of contract and negligently in giving the reference in the terms in which it was given fail, and the claims against the company are dismissed.
95. The claim in negligence against Mr Rickman depended in the first instance upon establishing that Mr Rickman personally owed Mr Dike a duty of care in giving the reference. Mr Norman submitted that to hold that Mr Rickman did owe such a duty of care was a legitimate incremental extension of the decision of the House of Lords in Spring v Guardian Assurance plc [1995] 2 AC 296. He contended that because the majority of the House based its decision upon an application of the test of a duty of care enunciated in Caparo Industries plc v Dickman [1990] 2 AC 605, and not on the doctrine of assumption of responsibility considered in Hedley-Byrne & Co Ltd v Heller & Partners Ltd, the decision of the House of Lords in Williams v Natural Life Health Foods Ltd [1998] 1 WLR 830, did not constitute an obstacle to imposing a duty of care upon Mr Rickman personally. He sought to draw comfort for his submission from the decision of the House of Lords in Standard Chartered Bank v Pakistan National Shipping Corp [2003] 1 AC 959.
96. On the assumption that Mr Rickman owed a duty of care to Mr Dike in giving the reference, on my findings he was not in breach of that duty. For that reason it is not necessary to determine whether he did in fact owe a duty of care.
97. A claim for damages for malicious falsehood has, as its necessary foundation, that something has been said which was in fact false. I have already found that the answer given by Mr Rickman to Question 18 was true. That is enough to dispose of the claim for damages for malicious falsehood against him. Moreover, there was not a scrap of evidence to support the inference which I was asked to draw that Mr Rickman had been actuated by malice in answering Question 18 in the reference in the terms in which he did. The claim based on malicious falsehood also fails.
98. Consequently the action fails and is dismissed.

Causation

99. In the circumstances it is not necessary to consider the question of whether, as a result of the giving and terms of the reference, Mr Dike lost a reasonable chance of being engaged by SJP as an associate partner. Mr Dike's case was that it was in fact the giving and terms of the reference which caused the offer made by SJP to him to be withdrawn. However, the circumstances of the case were rather unusual and seemed to me to lead to the conclusion that, contrary to the case of Mr Dike, it was not the reference which had put an end to his chances of working for SJP. The role of the reference, as matters turned out, was that its terms prompted SJP to consider more carefully whether it wished to proceed with his recruitment.
100. The immediate effect of the receipt of the reference by SJP, in the sense of the next significant event, which occurred some days after the reference would have been received, was that it was decided that his application would not be proceeded with, a decision described within SJP as "NPW". The only witness from SJP who was called to give evidence on behalf of Mr Dike was Mr Brunt. Mr Brunt made clear during his oral evidence that he was not the person within SJP who decided who should be recruited and who should not. He was not party to any discussion at decision making level about who should be recruited and who should not. He was simply told what decision had been made and his role was to communicate it to an applicant. He performed that role in the case of Mr Dike on 17 April 2003 when he told him that the decision had been made not to proceed with his application. He did not know by what process that decision had been made. He assumed, because of the stage that matters had by that time reached with Mr Dike, that the company had given an unfavourable reference. Mr Dike seems to have received from Mr Brunt the message that that was the case. Mr Brunt in his own evidence was less definite that he had conveyed to Mr Dike a view as to what had prompted the offer to him from SJP to be withdrawn.
101. In 2003 17 April was Maundy Thursday. The next working day was 22 April, the Tuesday after Easter. Mr Dike telephoned Mr Ziegler on 19 April, Easter Saturday, seeking a meeting. Mr Rickman was at time away on holiday. Mr Dike and his wife visited the offices on 19 April 2003, after speaking to Mr Ziegler and arranging to meet him at the offices on Easter Sunday, 20 April 2003. Allegations were made to the effect that Mr and Mrs Dike removed certain documents from the safe at the offices on 19 April 2003. It is unnecessary for me to make findings in relation to those allegations, and I do not do so. Following the meeting on 20 April 2003, Mr Ziegler made contact with various people at SJP by telephone on 22 April 2003. One of those people was Jill Dixon, the SJP Partnership Recruitment Manager, After the telephone conversation she wrote Mr Ziegler a letter dated 22 April 2003, a copy of which was put in evidence and the contents of which are self-explanatory:

"Further to our telephone conversation please find enclosed a copy of the reference provided by Mr Rickman on behalf of your company.

If after reading the reference you feel you would like to provide us with a more detailed explanation then I would appreciate your comments in writing. On receipt of this then we may be able to reconsider Mr Dike's application to join St. James 's Place Partnership.

Thank you for your assistance so far and I look forward to hearing from you."

Thus from 22 April 2003 SJP was indicating a willingness to reconsider the application of Mr Dike, and that is what happened. The letter and its enclosure were copied for Mr Dike by Mr Fogg. When precisely Mr Dike received the copies was not clear, but he certainly had them by 27 April 2003.

102. By a letter dated 19 March 2003 SJP had sought a reference on Mr Dike from Montague. That company did not initially provide a reference. Reminders were sent on 3 April 2003, 7 April 2003 and 29 April 2003. Thus, as at the date of the initial NPW decision in respect of Mr Dike no reference from Montague had been received by SJP. A reference was provided on the standard printed form used by SJP, that is to say, on the same form as that upon which Mr Rickman provided the reference. The Montague reference was dated 1 May 2003. It revealed that a complaint had been made about Mr Dike during his association with Montague about giving incorrect drawdown advice. The Montague reference went on to record that the complaint indicated that Mr Dike had failed to give investors best advice, and that the complaint had resulted in compensation being paid and Mr Dike being formally disciplined for breach of FSA rules. The answer given to Question 17 as to the reason for the departure of Mr Dike was "Incompatibility".
103. Once Mr Dike was aware that his application to SJP was still live he wrote to Jill Dixon a letter dated 24 April 2003. By that date he may not have had a copy of the reference. His letter of 24 April 2003 was lengthy. In it he dealt both with the allegations of complaints of sexual harassment against him and with the complaints of misselling. He said that he had learned about the complaints of sexual harassment from seeing copies of the relevant letters stapled to the request from SJP for a reference on his file during his meeting with Mr Ziegler on 20 April 2003. About the complaints of Carol Darling which prompted the letter of 16 May 2001 from Mr Ziegler Mr Dike in his letter gave the account which he gave at the trial of responding to it in a letter dated 17 May 2001, but not pursuing the threat of legal action after Mr Ziegler assured him that the letter of 16 May 2001 would be removed from his file after one year. About the complaint of Mrs Hopper he wrote that he thought that the complaint was a fabrication and the matters complained of had never been raised with him. In dealing with the matter of complaints of miss-selling he said that they all related to split capital investment trusts, and that there were three, including one from his secretary. He wrote that she had withdrawn her complaint. He said that the other two complaints had been investigated by Mr Rickman, who had found that there was no substance to them. He added this in relation to complaints:

"Very recently I received, just prior to my holiday, a letter from a solicitor complaining about sending an agreed fee to a prospective client over an equity release situation. Mr Rickman replied agreeing that my actions were entirely reasonable but in any event as it was an unregulated product which had not in fact even been sold, it was not covered by the FSA. I would be delighted to provide full details on any or all of the above complaints."

In due course Mr Dike was asked to provide more details of the complaints relating to split capital investment trusts. I have already set out the relevant terms of the document in which he did so, entitled "Previous Complaints".

104. Another matter which had arisen prior to the decision of about 17 April 2003 not to proceed with the application of Mr Dike to SJP was the terms of the answer which he had given to the question in the application as to his total commission earned over the preceding 12 months. In a memorandum dated 19 March 2003 to Mr Brunt Emma Johnson of SJP had asked whether she was going to get any evidence to support the claimed level of earnings other than what Mr Dike himself produced. Mr Brunt responded in an e-mail of 1 April 2003 in which, essentially, he avoided the issue. Jill Dixon returned to the question in an e-mail of 8 April 2003 to Mr Brunt. She wrote:

"I have had a look at the evidence of earnings you have supplied to prove the Entry Level of £75K, and discussed with Jon Groocock, we feel there are two points to cover:

1. From the invoices you have supplied (10 months) I am unable to prove the £105K, even the total of the Credits only come to £69K, can you expand in any way what figures are on these invoices.

2. As the letter confirming £105K has been written by Ian himself we will require further supporting documentation of some kind, ie breakdown of commission records or bank statements showing payments, even something written from Ziegler might be acceptable — let me know what you think you can supply."

It does not appear that any further evidence of earnings ever was supplied or that Mr Brunt responded to this e-mail.

105. A copy of an internal SJP document which was put in evidence indicated that the case of Mr Dike had been referred to the directors of SJP on 28 April 2003. The reason for the referral was stated to be:

"reference from Ziegler Insurance has complaints, states that Ian is a difficult person with whom to work and they are not sorry to lose him. Also they have had complaints of sexual harassment."

It does not appear that the author of that document had interpreted the reference as meaning that the complaints, of sexual harassment or otherwise, had been made out. Issues of compliance were not mentioned.

106. Following a discussion between Mr Rickman and Mr Ziegler Mr Rickman wrote a letter dated 28 April 2003 to Jill Dixon the principal aim of which was said to be "to make clear those matters contained in my reference which I feel may have caused you to reassess Mr Dike's application to join. The material part of the letter said this:

"7. I would wish to make clear that the complaints regarding the sale of Split caps related to clients claiming that the investments did not match the investors risk profiles. In all cases the risk profile of the investments as per the company literature, did match with the clients risk profile and this is demonstrated on file.

As we all know things have gone very wrong in this market and a number of companies are being investigated. These sales were based on the information supplied by the companies and I, as the compliance officer for the company, feel that they were compliant. I have advised the clients accordingly. One client did not accept my findings and has submitted her case to the Ombudsman.

The case relating to the equity release concerned a fee for work carried out on behalf of the client by Mr Dike, which was raised as they chose not to proceed. Since the date of the reference it has been settled to our satisfaction.

17. Mr Dike, along with the rest of us is not a lover of compliance or administration work This is not to say that he did not do it, but as with everybody it is nearly impossible to dot ever[y] "i" every time. However I can confirm that there were no occasions on which a formal warning was required. As with all of us, everyday compliance issues raise their head, hence my answer to that question.

It might also be worth commenting that Mr Dike has said that he would prefer to be in an organisation such as yours that provides a more structured environment and support especially with regards to this issue.

18. This was a difficult one. My understanding is that I either had a choice of not giving a reference at all, or that if I did, then I had a duty to answer any questions truthfully and disclose anything that might be deemed a material fact. Failure to do so could, in the worst instance, result in an accusation against us that we had failed to do so. This comment in fact relates to all the questions.

It is a fact that there have been two allegations made against Mr Dike. They related to remarks\comments that are alleged to have been made by him to two females working in our offices. There was no question of accusations of anything other than verbal remarks.

One complaint was made verbally by a secretary who works directly for us, whilst the other one was made by an employee of an outside cleaning company to her employer, and then by him to us.

Mr Dike rebutted both cases strenuously. Mr Dike was not a direct employee of ours but works on a self employed contract. Therefore with regards to the outside cleaning company, we allowed him to deal with this situation directly, which, as was confirmed by the cleaning company in writing, he did No further action was taken by either party. The employer then confirmed in writing to me that he had met with Mr Dike and discussed the matter. He hoped the matter had been dealt with and there would be no further repercussions.

With regards to our secretary, we dealt with this internally. No further complaint has been made by that member of staff and I would also mention that they have all continued to work together under the same roof since.

My fellow director, Mr Ziegler, did however write to him after the situation involving our employee asking him to take great caution so as to avoid any future comments that could be misconstrued We felt that as a complaint had been made by a member of our staff we had a duty to put something in writing.

In completing this form it was not my intention to give the impression that Mr Dike was an unsuitable person for you to employ. I would point out that if we, as a company, had felt that he was a liability to the company, we would have terminated our contract with him. This is not the case, his application to you being driven by changes to the circumstances of Ziegler Rickman Ltd.

Lastly, and as stated earlier, it was my duty to complete your reference accurately and honestly. I am rather surprised that if there were issues contained in it that concerned you, you did not refer to me at that stage for fuller details, rather than take the course of action you did.

I trust this additional information is of help to you."

107. There does, indeed, seem to have been a genuine reconsideration on the part of SJP of the case of Mr Dike. Concerns identified in the course of that reconsideration were what it was that Mr Dike sold and how he sold it. Those matters were dealt with by Mr Paul Johnson of SJP in an e-mail of 7 May 2003 to Mr John Schofield. Mr Johnson said this:

"Following our discussion regarding the above [Mr Dike] and my telephone conversation with Ian Dyke [sic], I can confirm the following points:

• Ian is heavily into the Equity Release market with 50 per cent of his business coming from this route. The advice appears to be normally given to elderly women.

• The proceeds from the Equity Release are used for investment for immediate income. Ian does not currently carry out a comparison of income producing Equity Release v. lump sum Equity Release to ensure appropriate advice.

• Ian does not have MAQ or CeMap which he must have to give advice on Equity Release. Potentially he has been giving unauthorised mortgage advice as an IFA.

• Martin [Brunt] has sent me some of Ian's Product Confirmation/Suitability Letters regarding the Equity Release advice he has given and while he has not made any exaggerations regarding the contract, he has not confirmed why the advice is appropriate for the client. I am concerned that if a future compliant [sic] is instigated that Ian would have no defence and could we be left paying up due to retrospective P1 cover?

Emma has also just received another reference confirming that Ian 's contract was terminated due to incompatibility."

That reference was, of course, that from Montague.

110. Notwithstanding the matters to which I have already referred, in an e-mail to Jane McTigue sent on 8 May 2003, Mr Peter Glew of SJP seemed to think that things for Mr Dike were looking encouraging. Mr Glew wrote:

"as discussed yesterday. I am moving forward cautiously with Ian and intend to meet him this week to bottom out the equity release issue which Martin Brunt has fully discussed and got Ian to sigh [sic] the mortgage update 07 which covers our position on this market.

Your view on the fuller reference would be appreciated so that if I get comfortable with his marketing we can proceed quickly."

The "fuller reference" seems to be a reference to Mr Rickman's letter of 28 April 2003, while the "marketing" appears to refer back to Mr Johnson's e-mail of 7 May 2003 about equity release schemes.

108. A final decision not to proceed with the application of Mr Dike seems to have been taken on about 14 May 2003. All that was put in evidence in relation to the reasons for the final decision was a letter to Mr Dike from Mr Glew dated 19 May 2003. What was said was:

"Further to our recent discussions, I am writing to confirm that we will not be proceeding with your application to join St James's Place.

We have reached this decision following consideration of the references received from your previous positions and having taken into account the points made in your letter of 24 April 2003. We also take into account other factors relating to your existing business practice.

I am sorry that on this occasion your application has not been successful."

109. As at about 14 May 2003 the position seemed to be that the reference itself had not proved to be fatal to the application of Mr Dike to join SJP. The reasons given for the decision of SJP on 28 April 2003 to refer the application to its directors were complaints in relation to miss-selling and from solicitors in relation to the equity release matter, the fact that Mr Dike was a difficult person with whom to work, and the complaints of sexual harassment. The clarification of the reference in Mr Rickman's letter of 28 April 2003 could not sensibly be said to have been detrimental to Mr Dike. In that letter Mr Rickman explained, and minimised the effect of, both the complaints of miss-selling and in relation to the equity release scheme, and the complaints of sexual harassment. Of the concerns identified in the SJP document, that left the difficulty of working with Mr Dike. Unfortunately for Mr Dike the existence of problems in that area was confirmed by the terms of the Montague reference. In other words, a pattern emerged. The mention in the Montague reference of the disciplining of Mr Dike over a complaint of giving incorrect drawdown advice, in respect of which compensation had to be paid, cannot have been helpful to his cause. However, a new concern had emerged by about 7 May 2003 and that was how Mr Dike sold equity release schemes. It was to that matter that the sentence in Mr Glew's letter of 19 May 2003, "We also take into account other factors relating to your existing business practice" seemed to refer. Ultimately it appears that it was that issue and the confirmation in the Montague reference of concerns originally prompted by the reference in relation to Mr Dike being difficult to work with which were at least the principal reasons for the final failure of his application to join SJP. Certainly, were it relevant, I should not have been satisfied that, as a result of the fact and terms of the reference, Mr Dike lost a reasonable chance of joining SJP. By the date of the final decision a number of other factors were clearly in play.

Overall conclusion

110. For the reasons set out in this judgment, the claims of Mr Dike fail and the action is dismissed.