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OUTER HOUSE, COURT OF SESSION

[2024] CSOH 23

CA144/21

OPINION OF LORD HARROWER

In the cause

IMRAN AHMAD

Pursuer

against

THE LORD ADVOCATE

Defender

Pursuer: Lord Keen of Elie, KC, E Campbell; Pinsent Masons LLP

Defender: Moynihan, KC, M Hamilton; Scottish Government Legal Directorate

29 February 2024

Introduction

[1]

The pursuer is a former commercial director of the Rangers Football Club Ltd,

formerly known as Sevco Scotland Ltd. The defender is the Lord Advocate, and is

responsible for the public prosecution of crime in Scotland. In May 2012, Sevco Scotland Ltd

purchased the business and assets of the Rangers Football Club plc out of administration.

Following investigation into events surrounding the insolvency of Rangers, the Crown

obtained a petition warrant on 2 September 2015 for the pursuer's arrest, along with others,

on charges that included conspiring to acquire the business and assets of the Rangers

Football Club plc for less than their true market value, contrary to the interests of creditors.

[2]

The petition warrant was never executed against the pursuer. Prior to the warrant

being sought, he had been living in Dubai. Shortly after it was granted, he left for Pakistan.

An indictment containing substantially similar charges to those in the petition required to

be deserted in October 2015, as it could not be served on the pursuer. In January 2016, a

substitute indictment fell, due to the pursuer's failure to appear. On 21 June 2016, the

warrant for the pursuer's arrest was withdrawn. Charges against his alleged co-conspirators

were also dropped, with the exception of those against Craig Whyte, who was found not

guilty after trial. In February 2018, the Lord Advocate publicly confirmed that the pursuer

would not face further proceedings.

[3]

In February 2019, the pursuer brought the present action against the Chief Constable

of Police Scotland and the Lord Advocate, seeking damages for malicious prosecution. On

12 August 2020, the Lord Advocate wrote to the pursuer's solicitors indicating that the

pursuer should not have been prosecuted, and advising that damages would be paid and

an apology issued. On 1 October 2020, the Lord Advocate formally admitted liability to

make reparation for any loss, injury and damage sustained by the pursuer as a direct and

natural result of the prosecution, beginning on 2 September 2015, when the pursuer was

placed on petition, until 21 June 2016, when the charges were dropped. On 7 June 2021, the

Lord Advocate issued a public apology to the pursuer. Meanwhile, the pursuer's action,

having settled extra-judicially insofar as directed at the Chief Constable, proceeded solely

against the Lord Advocate, on the commercial roll to which it had been transferred. After

sundry procedure, the case called before me at a proof before answer at which the sole

issues were causation and quantum.

Evidence

[4]

As is usual in commercial proofs, evidence in chief was given predominantly by

witness statement. In this case, for many of the witnesses, both initial and supplementary

statements were lodged, cross-referenced to two bundles of productions consisting of

almost 9,000 pages. The pursuer's counsel called the following as witnesses to fact,

some of whom gave evidence remotely by means of the Webex platform: the pursuer

himself, Michael ("Mike") Moran, Karol Sikora, Michael von Bertele, Mahdi Al Fardan,

Charles Green, Michael Schmidt (remotely), Gordon Baltzer (remotely), John Wisbey

(remotely), and Graham Herring (remotely). In addition, parties agreed that the statements

of the following witnesses could be taken as their evidence without the need for them to

be called: Muhammed Zeeshan Sialvi, Sanjeev Verma, Stephen Best, Joss Burrell Alcraft,

Michael Shinya, and Sin Mo ("Stephen") Koo. The Lord Advocate called Nicholas Naylor,

Malcolm Murray, and Martin Walton.

[5]

Stuart Andrews and Simon Cuerden were called as skilled witnesses for the pursuer.

Mr Andrews was an experienced broker who, at the time of writing his report, was

employed by finnCap Group PLC, a company of which he was a director. By the end

of 2022, he had become a managing director of Zeus Capital Ltd. Mr Cuerden was a

chartered accountant, employed by Deloitte Forensic within the firm Deloitte LLP.

Costas Constantinou was called as a skilled witness for the Lord Advocate. He was a

managing director of Teneo UK, specialising in the valuation of companies for litigation and

commercial purposes.

[6]

At a pre-proof hearing, I heard submissions on notes of objections lodged by each

party to the expert evidence proposed to be relied on by the other. The pursuer objected

to the admissibility of parts of the evidence of Mr Constantinou, on the basis that he lacked

the appropriate expertise, failed to provide proper reasoning, and strayed beyond giving

opinion evidence into matters of fact. I accepted Lord Keen's invitation to reserve judgment

on his objection until after the evidence was heard. The objection having been insisted

upon, I now repel it. Having considered Mr Constantinou's report and heard him in

evidence, I considered that he had sufficient expertise to assist the court in relation to

the issues that were before it. It is true that his report contained statements of fact, as well

as inferences from matters of fact. However, I was satisfied, particularly having heard

him give evidence, that he understood the difference between fact and opinion, and had

highlighted appropriately areas where his opinion depended on a determination of factual

matters by the court. Insofar as there may have been anything of substance in the pursuer's

objections, it went to weight rather than admissibility.

[7]

The Lord Advocate objected to the evidence of Mr Andrews as proceeding on the

basis of a less than candid account given by the pursuer of the circumstances in which he

left a stockbroking firm called Allenby Capital Ltd. He also objected to it on the basis that

Mr Andrews had a conflict of interest, now that he was employed by Zeus Capital Ltd, a

company that had employed the pursuer, and which had allegedly failed to respond to

information requests relating to the pursuer's employment with that firm. At the pre-proof

hearing, I repelled the Lord Advocate's note of objections. As we shall see, the

circumstances of the pursuer's departure from Allenby Capital Ltd did become an important

feature of the case. However, I was not in a position to make any sort of assessment of the

pursuer's evidence at that stage. The question of conflict of interest, insofar as relevant,

went to weight rather than admissibility.

[8]

The three experts produced a lengthy but helpful joint note identifying areas in

which they agreed and disagreed. They gave their evidence concurrently, with the usual

advantages and disadvantages associated with the evidential "hot tub". While Mr Andrews

provided the benefit of his considerable practical experience as a broker, Mr Constantinou

offered a more carefully researched perspective. I was able to draw upon the evidence of all

the experts in different degrees and in different respects, as noted in what follows. I have

also noted my reservations regarding the credibility or reliability of particular witnesses or

with particular aspects of their evidence. Subject to those reservations, I was content that the

witnesses were generally reliable and doing their best to assist the court.

Outline

[9]

The pursuer is 54 years old. For about 15 years, until 2011, he was a corporate

finance broker. Between 1996 and 2005, he worked at ARM Corporate Finance Ltd, and

then, between 2005 and 2009, at HB Corporate Ltd, where he became managing director.

In September 2008, he led a management buyout of that firm, and in August 2009

HB Corporate Ltd was renamed Allenby Capital Ltd ("Allenby"). Allenby is a nominated

adviser ("NOMAD"). NOMADs advise companies on their responsibilities in relation to

their admission to and ongoing participation in the alternative investment market ("AIM").

AIM is a sub-market of the London Stock Exchange enabling small and medium-sized

companies to attract investment. The pursuer remained at Allenby until August 2011. The

true circumstances surrounding his departure from that firm only became apparent during

the course of the proof. They are described in the next section.

[10]

In April 2012, following the expiry of a period during which the pursuer was

contractually unable to compete with Allenby, he joined Zeus Capital Ltd ("Zeus").

While at Zeus the pursuer began working with Charles Green on an opportunity to

become involved with Rangers, which had entered administration earlier that year.

Mr Green was an experienced businessman, some 20 years the pursuer's senior. He had

been a professional footballer in his youth and once held the post of Chief Executive Officer

at Sheffield United. While still at Allenby, the pursuer had had occasional dealings with

Mr Green. Their involvement with Rangers marked the beginning of a much closer business

relationship, which the pursuer described as a partnership, albeit one in which the pursuer

played a junior role. Mr Green described him as his "bag carrier".

[11]

In May 2012, the pursuer and Charles Green set up Sevco Scotland Ltd, which

bought the business and assets of the Rangers Football Club plc. As stated, Sevco Scotland

Ltd changed its name to the Rangers Football Club Ltd, and it is by that name, for

convenience, that I will refer to the company regardless of the period of time under

discussion. In June 2012, the pursuer became the commercial director of the Rangers

Football Club Ltd on a salary of £350,000 per annum and a bonus of 5% on commercial

contracts negotiated by the pursuer. Charles Green also became a director. At the same

time, at the invitation of the pursuer and Mr Green, Malcolm Murray became chairman

of the Rangers Football Club Ltd. On 19 December 2012, the Rangers Football Club Ltd

became a subsidiary of the Rangers International Football Club plc, which had recently

been incorporated. The Rangers International Football Club plc was listed on AIM, raising

approximately £22.2 million. Charles Green, but not the pursuer, became a director of the

Rangers International Football Club plc. Meanwhile, the pursuer had left Zeus, though only

in October 2012, notwithstanding his contractual obligation to devote the whole of his time,

attention and skill to his duties to his new employer.

[12]

Clearly, these bald statements of fact, much of which was agreed, do not disclose

the precise circumstances surrounding the pursuer's involvement with Rangers, something

which was not directly the subject matter of this proof. Rather, the evidence was more

particularly focussed on the pursuer's relationship with the club's former owner,

Craig Whyte. Craig Whyte had become a somewhat controversial figure, certainly by the

time the club had been put into administration. Malcolm Murray's evidence was that, as

a condition of taking up his appointment, he had required, and been given, an assurance

from the pursuer that he had had no discussions with Mr Whyte. However, in an article

published on 4 April 2013 in The Sun, Charles Green was reported as having "sensationally

admitted shafting Craig Whyte to buy Rangers". In the same article, the pursuer was

reported to have "sweet-talk[ed] Whyte to ensure the deal for [the] fallen giants went

through". The pursuer gave evidence of having made a payment of £200,000 to the

administrators of the Rangers Football Club plc in order to guarantee "exclusivity" in

negotiations. In return for putting down the £200,000 deposit, the pursuer's evidence was

that Craig Whyte had agreed to pay him £500,000. However, in the result, Mr Whyte only

paid £137,500 of that amount, which the pursuer directed to be paid into his mother's bank

account in order to keep Mr Whyte's involvement "[below] the parapet". Cross-examined

over his dealings with Mr Whyte, the pursuer claimed that anyone wishing to acquire

Rangers would have been required to "deal with the devil", and that Mr Murray would

have been aware of that.

[13]

Shortly after the publication of The Sun article in April 2013, Mr Green resigned

from his role at Rangers, and the pursuer was sacked as commercial director. On 15 April

2013, the board of the Rangers International Football Club plc announced that it was

commissioning an investigation into allegations made by Craig Whyte concerning the

pursuer and Charles Green. The findings of that investigation were published on 25 April

2014, and were highly critical of the financial management of Rangers during the period in

which the pursuer was the club's commercial director and occupied a senior position in the

management team.

[14]

Between the pursuer's leaving Rangers in May 2013 and the end of the tax year to

5 April 2015, the pursuer received no income, although I should record that he did receive

the following payments during this period. The first related to a commercial action raised

by the pursuer in the Court of Session in which he claimed that Rangers had failed to make

bonus payments to him. This claim was disputed but ultimately settled in September 2014,

when the pursuer accepted a global sum (inclusive of legal expenses) of £250,000. The sum

included in the pursuer's tax return for the year to 5 April 2014, net of legal expenses but

before tax, was £64,417.08. The second payment related to the sale of shares in the Rangers

International Football Club plc. Although Mr Green's evidence had been that the £200,000

deposit put down by the pursuer in return for preferred bidder status was "non-returnable",

it was a matter of agreement that £178,000 was repaid on 15 August 2012, with the

remaining £22,000 being converted into 2.2 million ordinary shares in the Rangers

International Football Club plc. It was further agreed that the pursuer received payments

totalling £901,999 in 2013 for the sale of his shares, and also that he failed to disclose these

in his tax return for the year to 5 April 2014, even though capital gains tax of 25% would

ordinarily have become payable on these receipts.

[15]

Although not in receipt of income during this period, the pursuer had not been

"bone idle", as the pursuer himself put it. Charles Green had had a history of involvement

as a businessman in the healthcare sector. In 1999, he had founded a company called

Medical Solutions plc, where he came into contact with Professor Karol Sikora, the

oncologist. While still at Rangers, Charles Green and the pursuer began to discuss the

development of proton therapy centres for cancer treatment in the UK and elsewhere.

In due course, the partnership between the pursuer and Charles Green was expanded to

include a business associate of Mr Green's called Paul Fraser. According to the pursuer,

the three of them reached a verbal agreement to work together to raise funds for the

purpose of developing proton centres and to split any profits equally among them.

[16]

In a separate development, the pursuer, Charles Green and Professor Sikora had

proposed to set up a quite different cancer therapy business with a company called Cancer

Partners International Ltd. A letter of engagement had been entered into on 15 January 2014

between Cancer Partners International Ltd and a company called Albans Capital Ltd, a

company that had been incorporated by the pursuer in 2011, but which was in fact dormant

and had never traded. In terms of that letter of engagement, Albans Capital Ltd was to

provide Cancer Partners International Ltd with corporate financial advice with a view to

raising £100 million of funds prior to any initial public offering ("IPO"), and then achieving

IPO on the AIM within 24 months. Albans Capital Ltd was to receive a total maximum

success fee equivalent to 5% commission on all funds raised, whether directly or indirectly,

prior to the IPO, and 30% of sums paid to the broker upon successful completion of the IPO.

[17]

Ultimately, on 4 February 2015 ("World Cancer Day"), a new company, Proton

Partners International Ltd ("Proton"), was set up in order to develop the proposed business

in proton therapy centres. The letter of engagement with Cancer International Ltd included

a clause allowing for the possibility that Albans Capital Ltd might provide corporate finance

advice to "any other company Karol Sikora [was] involved with as a director, adviser or

consultant to develop Proton Cancer Therapy". This allowed the pursuer and Charles Green

to use the letter of engagement with Cancer International Ltd to "paper up" the new

business with Proton, and on 5 January 2015, the letter of engagement was assigned to

Proton. The letter of engagement was never actually regarded as suitable for the new

business and was intended only to be a temporary arrangement. As a matter of fact,

however, no new letter of engagement was entered into.

[18]

The pursuer was a founding member of Proton, along with Charles Green,

Paul Fraser, Karol Sikora, who became its Chief Medical Officer, and Mike Moran.

Mr Moran had had a long career in the British Army, had set up a business dealing with

defence and private security, and more recently had been the project manager for the

construction of a trauma centre. He was introduced to the others by Paul Fraser. The

intention had been for Mr Green to become Proton's chief executive officer and for the

pursuer to become its investor relations director. However, in November 2014 criminal

proceedings had begun against the former administrators of Rangers. There were rumours

going about that Charles Green was to be arrested, or even that he had already been

arrested, in relation to his involvement with the club. In January 2015, Mr Green agreed

to be interviewed by Sky television, in order to "set the record straight", as Mr Moran put

it in evidence. However, the combination of rumour and broadcast had consequences

not just for Mr Green, but for his business partner, the pursuer, and their continuing

involvement in the business of Proton. As Martin Walton, chief executive officer of the

Wales Life Sciences Investment Fund, one of the investors in Proton, put it, "[Charles Green

and the pursuer] acted together on the Rangers deal and ...they were treated as being a unit

in the rumours".

[19]

The most immediate consequence of the Sky interview, again as Mr Moran put it,

was that "all the meetings [with potential investors] fell away". Even among those who

had already signed a placing letter for the subscription of shares, there was at least one,

Dr Mahdi Al Fardan, who was deterred from investing as a result of the rumours and the

Sky broadcast. By February 2015, it was impossible for either Charles Green or the pursuer

to have been on the board, as it was originally intended that they should, or be publicly

associated with Proton. They could not attend meetings with investors. Mike Moran, rather

than Charles Green, became Proton's chief executive officer. The pursuer could not be its

investor relations director. They could not appear "on paper", though they remained

involved in the background.

[20]

The rumours also had consequences for what could appear on the share register.

A Dubai company set up by Charles Green, called Albans Partners General Trading LLC,

held 3 million founder shares on behalf of the pursuer, Charles Green and Paul Fraser, in

accordance with the three-way split they had agreed. However, since any potential investor

carrying out due diligence in relation to Proton would likely have discovered the connection

between Albans Partners General Trading LLC and Mr Green, it was necessary to transfer

the founder shares to an entity with no connection to Rangers, but which would continue

to hold them for the benefit of the pursuer, Charles Green and Paul Fraser. Accordingly,

on 3 June 2015, the 3 million shares held by Albans Partners General Trading LLC were

transferred to Fannigan Holdings Ltd, a Cypriot company, which was Paul Fraser's family

trust. In addition, and for similar reasons, Albans Capital Ltd assigned the benefit of its

rights under the fundraising agreement with Proton to Fannigan Holdings Ltd.

[21]

As the fund-raising developed, not all of the investors were prepared to pay 5%

commission, as envisaged by the letter of engagement. Woodford Investor Management

LLP ("Woodford") stated that their policy was not to accept broker's fees in excess of 3%.

On 19 May 2015, the pursuer, on behalf of Albans Capital Ltd, agreed to reduce its

entitlement to commissions under the fundraising agreement, so far as the funds raised from

Woodford were concerned, to 3%. Further, a sub-commission agreement was entered into

between "Albans Partners LLC" (which the pursuer accepted meant Albans Partners

General Trading LLC) and Arthurian Life Sciences Ltd dated 1 April 2015, in terms of which

the latter would be paid 3% plus VAT (where applicable) of the amount invested by the

Wales Life Sciences Investment Fund LP in Proton. A further sub-commission agreement

was entered into with W H Ireland Ltd in terms of which Albans Partners General Trading

LLC would pay away 2.5% plus VAT on funds invested by David Ross, Standard Life,

JP Morgan and Brian Kingham. In the end, only Arthurian introduced any equity capital

into Proton.

[22]

On or around 9 September 2015, shortly after the warrant was taken out for his

arrest, the pursuer left Dubai for Pakistan. This led to a falling out between the pursuer

and Charles Green, who considered that he had been abandoned by the pursuer, so much

so that he would "never work with him again". Ultimately, in 2018, the pursuer, Mr Green,

Proton and Albans General Trading LLC (a new company formed by Mr Green after the

prosecution began) entered into a settlement agreement in which the pursuer agreed to

give up his entitlement to "any shares" in Proton in return for a payment of £750,000. The

pursuer arranged for this payment to be mandated to his wife.

[23]

Between 21 July 2015 and 22 February 2016, the pursuer was paid £631,000 in

commission payments from Fannigan Holdings Ltd. In March 2017, while Mike Moran

was issued with 3,138,937 growth shares in Proton, no growth shares were issued to the

pursuer or Charles Green. In total, therefore, the pursuer was paid £1,381,000 in respect

of his involvement in Proton. Proton eventually floated as "Rutherford Health plc" on the

NEX Exchange (now known as the Aquis Stock Exchange) in February 2019. At IPO, Proton

achieved a share price of £2.25. Woodford agreed to subscribe for an initial 10 million shares

upon admission at £2 per share. Ultimately, Proton/Rutherford Health plc was not a

success, and the company was wound up on 15 June 2022.

[24]

The pursuer claimed that, as a result of the prosecution, he had suffered loss and

damage. He had incurred fees and outlays to solicitors and counsel in the sum of £22,722.

Prior to the prosecution, he had acquired substantial experience in merchant banking and

stock-broking, such that, by 1997 he was a "qualified executive" for NOMAD purposes

(only a firm or company can acquire NOMAD status, and in order to do so it must retain at

least four qualifying executives). As a result of the prosecution, he had suffered irreparable

reputational damage in the global business community. He had also lost the opportunity

to participate in numerous business opportunities. In relation to Proton, he had lost the

opportunity to earn commission. He had lost the opportunity to take up the position of

investor relations director on a salary of £100,000 plus bonuses and pension contributions.

But for the prosecution he would not have sold his founder shares to Mr Green and would

have been issued with growth shares. He would have sold all his Proton shares as soon as

Proton floated. At the point of IPO, Proton shares achieved a price of £2.24 per share. He

would have used the money earned from Proton as seed capital to invest in further growth

companies. He would have held concurrent salaried directorships. He had no plans to

retire so long as he remained healthy. The total sum sought by the pursuer in compensation

from the Lord Advocate was £60 million. The Lord Advocate contended that, with the

exception of his legal expenses incurred in connection with the prosecution, as well as a

relatively small sum in solatium, the pursuer was not entitled to any compensation.

[25]

Having sketched out that background, I now need to explore the critical issues in the

case in more detail.

Departure from Allenby

[26]

The pursuer's explanation for his leaving Allenby was an important part of his

case, not least because it set the scene for the transition in his career from being a broker,

employed by a NOMAD, towards becoming an independent "venture capitalist

entrepreneur". This was a term that Mr Andrews felt the need to invent, apparently in

the absence of any accepted description of the pursuer's activities, post Rangers. Be that as

it may, in his first witness statement, dated 27 April 2022, the pursuer sought to explain his

departure as follows:

"By 2011, I could see the cost base was going to increase, due to an increase in

regulatory requirements. My end-game was always to represent myself, and I

wanted to be the principal in deals. To get this journey started, I sold Allenby

back to its employees with Adam Wilson's agreement. (Adam held 10% of Allenby).

Adam was based in Dubai at this time and had asked if I'd like to go out and join

him."

Unfortunately, this explanation was false, as the pursuer was constrained during the course

of the proof to admit. That admission, as well as the circumstances in which it was required

to be made, have had a significant bearing on my assessment of the pursuer's credibility and

reliability. As I come on to explain, they also provided the basis for a submission by the

Lord Advocate that I should dismiss the pursuer's entire claim in respect of financial loss,

other than for the costs incurred in defending the prosecution. In this section, therefore, in

addition to setting out the true reasons for the pursuer's departure from Allenby, I need

to set out in some detail the circumstances giving rise to the pursuer's belated concession

that he had begun his evidence, in April 2022, by giving a false account to the court.

[27]

I note firstly that the pursuer further embellished the above explanation for leaving

Allenby with the following additional reasons provided to the pursuer's expert, Mr Andrew,

and appended to his report as part of the pursuer's CV:

"HB Markets [plc, the parent company of HB Corporate Ltd] had previously agreed

to sell their 50% interest (held by way of an option) to me but unfortunately changed

their minds hence I decided to sell my 50% stake as I believe HB having a

shareholding in Allenby is detrimental to shareholder value."

This statement was a false, or at best incomplete, account of the pursuer's reasons for selling

his shareholding, as will become evident from what follows.

[28]

On 5 December 2022, the Lord Advocate lodged the witness statement of

Malcom Murray, in which he stated:

"When [my appointment as Chairman of Rangers] was announced I was bombarded

by ex[-]colleagues and employers of Mr Ahmad who said unanimously he was not

fit and proper and not approved by the Financial Conduct Authority [`FCA']. This

accelerated as we approached flotation when Cenkos Securities plc said Mr Ahmad

would not be acceptable as a plc director. This was unnerving but I was persuaded

to stay on the basis we appointed other fit directors."

The lodging of this statement, in particular the comment regarding the absence of FCA

approval, provided the pursuer with an opportunity candidly to explain to the court

the circumstances surrounding his departure from Allenby. Instead, however, in a

supplementary witness statement dated 19 December 2022, he stated the following:

"...[Malcolm Murray] states that he was `bombarded' by my ex-colleagues and

employers who advised that I was `not fit and proper and not approved by the

Financial Conduct Authority'. This cannot be correct. I have never been refused

approval by the FCA. My approval lapsed after my departure from Allenby and

then was no longer required. It wasn't revoked. After Allenby I was out of the

market for 9 months because of a non-compete requirement agreed on my exit... .

When I started at Zeus, I applied to get approved again. However, Rangers came

along and I wouldn't need authorisation so I withdrew the application."

[29]

At this point, it is necessary to record that, prior to the proof, various enquiries

and attempts had been made on behalf of the Lord Advocate to ascertain the position with

regard to Mr Ahmad's FCA approval and the circumstances surrounding his departure

from Allenby. These included a motion for commission and diligence for the recovery of

documents falling within the first two calls of a specification numbered 51 of process. This

motion was opposed by the pursuer, but granted by the court. Thereafter, following the

issuing of a letter of request to the High Court in London, the specification was served on

the FCA. By email dated 3 February 2023, the FCA confirmed that they held documents

falling within the terms of the specification, but that they would be delivering them to this

court in a sealed confidential envelope, since the FCA were prohibited from disclosing

them by virtue of section 348 of the Financial Services and Markets Act 2000 ("FSMA").

Nevertheless, in an effort to assist the court, the FCA made certain disclosures which they

considered were not covered by section 348, FSMA.

[30]

In summary, these disclosures were that the pursuer had made an application for

approval to hold a controlled function while at Zeus, but that the application had been

withdrawn after it had been referred to the FCA's "non-routine" team for review. Between

3 May 2012 and 25 April 2013, the FCA had engaged in correspondence with Zeus,

requesting information in relation to the pursuer in order to determine the application.

The list of correspondence provided by the FCA identified 23 separate items within that

time period. The application having been withdrawn, no determination of Mr Ahmad's

honesty, integrity and reputation to hold a controlled function was made. However,

the FCA confirmed that a full assessment would require to be made should any future

application from the pursuer be received.

[31]

I should also record that, by the same note of objections lodged in advance of the

proof, in which the Lord Advocate objected to the admissibility of Mr Andrews' evidence,

the Lord Advocate also objected to the admissibility of "the totality of the pursuer's

evidence on loss of earnings". By restricting access, on the ground of confidentiality, to

documents known to be held by Allenby, the FCA and Zeus, the pursuer was lacking in

candour, in breach of the best evidence rule, and had failed to allow the expert witnesses

properly to discharge their duties. At the pre-proof hearing, I repelled that objection, which,

as with the Lord Advocate's objection to Mr Andrews' evidence, appeared to me at that

stage to go to weight rather than admissibility.

[32]

Shortly before the first day of the proof, the pursuer sought to lodge, in a seventh

inventory of productions, six documents disclosed by Allenby to his agents. The documents

included a compromise agreement entered into between the pursuer and Allenby on

2 August 2011. I have already noted one aspect of that agreement, the non-compete clause,

which had at the outset been referred to by the pursuer in his evidence. However, this was

the first time that the full contents of that agreement had been placed before the court.

Paragraph B of the agreement stated as follows:

"The Company informally raised with [the pursuer] potential allegations of

wrongdoing and required [the pursuer] to stay away from the offices and changed

the locks to the Company's premises preventing [the pursuer] from attending work."

At the start of the first day of the proof, Mr Moynihan, senior counsel for the Lord Advocate,

explained that it was his understanding that the six documents did not represent the totality

of relevant documents held by Allenby, but that certain FCA permissions were being sought

to disclose the rest. As a result, although he clearly wished the documents to be admitted

into evidence, and indeed had been seeking to recover them for some time, given their

lateness he required to reserve his position regarding any issues that might be raised by

these or any further Allenby-related documents. The proof proceeded under reservation of

any question of relevancy and competency arising from the evidence sought to be adduced

by the pursuer in or on the basis of the documents in the seventh inventory.

[33]

In his evidence in chief, the pursuer sought to characterise paragraph B of the

compromise agreement as "a slight over-reaction". He explained himself as follows:

"What you had have [sic] there is a situation where one 9.99 per cent shareholder

had been paid sub-commissions of £250,000, and another shareholder of 9.99 per cent

wanted dividends and they felt that they were being treated unfairly, not

understanding that sub-commissions are a fact of life in our business. HB Markets

is a stockbroker. They don't really engage in any corporate activity, and they don't

understand how the corporate finance world works".

[34]

This evidence was repeated in cross. The pursuer dismissed the whole episode as a

"shareholder squabble". Asked if he had disclosed the squabble to the FCA's predecessor,

the Financial Services Authority ("FSA") in his application dated 18 April 2012, while at

Zeus, for approval to carry out controlled functions, he said that he did not believe it

was required, as it was something that had occurred in the ordinary course of business.

However, the pro forma application document, at question 14(a), required the pursuer,

as applicant, to answer whether he had ever been requested to resign from any profession,

vocation, office or employment. He had answered, No, and confirmed to the court that that

answer was correct. He cited the confidentiality of the compromise agreement as a reason

for not including more in his CV, despite the fact that clause 4.4 of that agreement excluded

the FSA from the duty not to disclose the circumstances surrounding the termination of his

employment.

[35]

In the afternoon of the second day of the proof, while the pursuer was still being

cross-examined, I was advised that thirteen further documents relating to his departure

from Allenby had been disclosed, these having been provided by Allenby's solicitors to the

pursuer's solicitors after consent had been obtained from the FCA. Mr Moynihan advised

the court, after discussing matters with Lord Keen, senior counsel for the pursuer, that he

intended to complete his cross-examination of the pursuer without reference to these further

documents, and then, if necessary, seek leave to recall the pursuer, once he had had an

opportunity to consider them. He also required to take a statement from Mr Nick Naylor,

who had been Allenby's finance director at the time of the pursuer's departure, and was

now its chief executive. Meanwhile, Lord Keen led the remainder of his witnesses to fact,

and closed that part of his case (parties having agreed to split the purely factual witnesses

from the opinion evidence).

[36]

On the fifth day of the proof, Mr Moynihan led Mr Naylor in evidence. Mr Naylor

did not agree that the pursuer's evidence, quoted at paragraph 26 above, was an accurate

description of the reasons for his departure from Allenby, since it implied that it was the

pursuer's own decision to resign. During an audit meeting held in March 2011, at which

the pursuer was not present, Mr Naylor, as finance director, two other board members,

Matt Butlin and Andrew Baker, and a board observer, Stephen Greenwood, expressed

significant concerns regarding a payment of £250,000 made to BDL Holdings Ltd in

March 2011. Ostensibly, the payment related to a number of transactions introduced by

Adam Wilson, who, as explained above, was a 9.99% shareholder in Allenby, and business

associate of the pursuer. The payment had not been disclosed to the board or to Mr Naylor

as finance secretary. Nor had it been accrued in the company's management accounts. It

related to transactions that had not generated material amounts of revenue for Allenby.

Mr Naylor raised these concerns with the chairman of Allenby in advance of a board

meeting scheduled to take place in June 2011. Following a discussion, Mr Naylor, Mr Butlin,

Mr Baker and Mr Greenwood, collectively, asked the pursuer to resign as chief executive of

Allenby. The pursuer agreed to do so, and to sell his shareholding to the company, on the

basis that they would not commission a forensic accountant to investigate the details of the

BDL payment.

[37]

In implement of Allenby's regulatory obligations, Mr Naylor wrote to the FSA in

July 2011, explaining the reasons for the pursuer's departure. At the end of August 2011, the

FSA requested further information. Mr Naylor responded to the FSA's request, as Allenby

were obliged to do. It was at that point that he discovered emails from the pursuer to

Adam Wilson, owner of BDL, forwarding an invoice for £220,000 from one Almas Shah to

BDL in respect of consultancy services. He and Matt Butlin were suspicious of the invoice.

They were unaware of any consultancy arrangements between Almas Shah and BDL. They

did not even know who Almas Shah was. It was a statutory requirement incumbent on

Allenby to respond to the FSA's requests. During the internal review carried out by Allenby

further to the statutory request from the FSA, emails and invoices (including invoices in the

name of Almas Shah) were uncovered that suggested that the payment to BDL had been a

"shadow dividend". A shadow dividend was a device to allow a dividend to be paid to

half of the Allenby shareholders without paying a dividend to the other 50% shareholder,

HB Markets. Mr Naylor disclosed the results of Allenby's investigations in further

correspondence with the FSA.

[38]

Allenby were subsequently advised by their lawyers to notify the matter to the

Serious Organised Crime Agency. Allenby became aware, during its investigations, that the

pursuer might be offering brokering and advisory services in breach of restrictive covenants.

This included a deal described as "Project Rainbow". Allenby were also concerned that the

pursuer was providing financial and fundraising advice that would require FSA

authorisation. In 2012 Zeus asked Allenby to provide them with what Mr Naylor described

as a "regulatory reference" for the pursuer. A regulatory reference was one provided by

one regulated firm to another, and would be required to address matters relating to the

propriety and integrity of an individual, all as set out in a template. On advice received

from the FSA, the reference to Zeus gave no details of the FSA investigation, but did state

that FSA investigations into the pursuer were ongoing. Some time later, after the pursuer

had left Zeus, Allenby were asked for a regulatory reference from another broker/NOMAD

called ZAI (Zimmerman Adams International) who were looking to employ the pursuer. At

some point after that, in 2014, the FCA (as the new regulatory authority) asked Mr Naylor

and Mr Greenwood a number of further questions relating to the pursuer's departure from

Allenby and the information that Allenby had uncovered. Mr Naylor understood the FCA

to be assessing an application made by the pursuer to be an approved person.

[39]

In the event, on the sixth day of the proof, the inevitable motion to recall the pursuer

was made, not by Mr Moynihan, but by Lord Keen, unopposed subject only to his evidence

continuing to be heard under reservation. In the course of that evidence, the pursuer

confirmed that Almas Shah was his mother. The invoice for £37,000 in her name that bore

to be a "consultancy fee" was a fiction. That sum represented a "salary catch-up" due to the

pursuer, and which he was mandating to his mother in repayment of a loan. In relation to

the invoices for £250,000 from BDL and for £220,000 from his mother, he explained that the

chairman of Allenby had told him that he had been awarded a bonus of £220,000. He used

Adam Wilson of BDL as what he called a "structure" and "a smart way of not paying tax",

both Adam Wilson and his mother being based offshore. The pursuer said he understood

that what he did was wrong, which I understood to be an acknowledgement that he had

engaged in tax evasion. He made a misleading statement to the auditors about the payment

of £250,000. As a result, the accounts of Allenby were false as regards the payment

of £220,000. The true reason for his resignation from Allenby was in order to avoid an

investigation into the BDL payment. He did not want an investigation because he was

apprehensive that someone would "marry up" the various invoices. He believed that in

agreeing to resign and to sell his shares, Allenby would "honour the no FCA and [he] could

carry on with [his] career".

[40]

In answer to the question whether the CV supplied to the FSA was false he said it

was a "partial account rather than the full account of the circumstances regarding [his]

departure from Allenby". Pressed to answer whether his application for approval to the

FSA was misleading, he responded, "It's a job application", almost as if he thought a

degree of self-promotion and concealment was to be expected. In this response, as well

as the rather casual manner in which it was delivered, the pursuer betrayed a complete

misunderstanding of what was involved in his dealings with the regulatory authorities.

At one point he appeared to suggest that he had only become aware that he had made

false statements to the FSA after the confidential information had been disclosed and the

statements had been "pointed out to [him]". Returning to where all of this began, namely,

the explanation given in his first witness statement quoted at paragraph 26 above, he

conceded that this was a false account of the circumstances in which he left Allenby.

[41]

I would draw the following conclusions. Firstly, I found Mr Naylor an impressive

and entirely credible witness. I accepted his evidence in its entirety. Mr Murray's evidence

was brief and given in a straightforward manner. His evidence, that when his appointment

as chairman of the Rangers International plc was announced, he was told by former

colleagues that the pursuer was not a fit and proper person and had not been approved by

the FCA, is consistent with the evidence of Mr Naylor. I accepted Mr Murray's evidence in

its entirety. The pursuer himself accepted that he gave false evidence in his first witness

statement concerning the reasons why he left Allenby. However, he insisted that he had

"always been happy to be open and transparent on all of this" and that he had only objected

to disclosure of the details of the compromise agreement on the basis of legal advice. It was

almost as if, even while making the concession that his first witness statement had contained

false statements, he regarded this as an inadvertent and rather minor error that, left to his

own devices, he would have taken the earliest opportunity to correct. However, in my view,

the very opposite is the case. The pursuer set out to mislead the court on an issue of central

importance. He was afforded several opportunities to set the record straight, but chose

instead to persist, even while under oath, with what were, frankly, lies. As a result, I find

that the whole of his evidence has been contaminated.

[42]

Secondly, I would accept the distinction drawn by Mr Moynihan in his submissions

between the dishonest invention of a claim, and the dishonest exaggeration of losses

caused by a wrong that was admittedly committed (Grubb v Finlay 2018 SLT 463, at

paragraphs-34-36). Outright dismissal would be justified only in a claim of the former

kind. In the case of the dishonest exaggeration of a claim, the pursuer's evidence should

only be relied on where corroborated by other unchallenged and acceptable evidence

(Johnstone v William Morton Ltd 2010 SCLR 256, paragraph 38). The pursuer's dishonesty

was of the latter kind.

[43]

Thirdly, Mr Moynihan maintained his objection to what he referred to as the

"relevancy of the pursuer's case", though he said this was "not aimed at excluding the

admissions of dishonesty". Rather, his objection to the relevancy was "based on the simple

proposition" that the pursuer's evidence, when he was recalled, had "turned the case on

its head". As a result there was no proper basis upon which to speculate as to how the

evidence would have developed had the pursuer given a true account of his career from

the date when the action was commenced. Sustaining the objection, he submitted, should

have the result that the pursuer had no relevant case for any financial loss other than the

legal costs incurred in defending the prosecution.

[44]

With respect to Mr Moynihan, I had understood his initial objection to have been

directed to the admissibility of evidence, which I had allowed to be heard under reservation.

That evidence, as Mr Moynihan conceded, must now be admitted, not least because it

provided the evidential basis upon which the dishonesty of the pursuer was revealed, and

upon which I have found the pursuer to lack credibility as a witness. However, I would

agree with Mr Moynihan to this extent. The court's finding as to the pursuer's lack of

credibility would not satisfactorily address the prejudice which the pursuer's conduct

of the litigation had caused the Lord Advocate to suffer. For example, as Mr Moynihan

complained, the pursuer had led all of his factual witnesses before Mr Naylor gave evidence.

Although it may have been practicable for Lord Keen to recall the pursuer himself, who

had been in attendance throughout the proof, this was hardly an option in respect of the

pursuer's other witnesses, many of whom resided abroad and who had all been released

from their citations. Mr Moynihan may also have had questions for Adam Wilson. The

pursuer had provided a witness statement from Mr Wilson. His name appeared on the

parties' witness timetable for the proof. Ultimately, and rather conspicuously, he was not

called. Mr Moynihan also complained that it was only as a result of Mr Naylor's evidence

that he discovered that ZAI had asked Allenby for a regulatory reference regarding the

pursuer at some point prior to April 2014. Mr Constantinou confirmed in his evidence that

he would have wished to explore that line of enquiry as one being potentially of relevance

to the pursuer's career path. Further, the only prior reference in the evidence that there had

been to ZAI was in the agreed evidence of Mr Koo, the executive chairman of UniVision

Engineering Ltd ("UVEL"). Mr Koo had been considering whether to invite the pursuer to

become a non-executive director or UVEL, in order to assist it with raising funds. However,

he was advised against doing so by Richard Morrison of ZAI (UVEL's NOMAD), "due to

some trouble that [the pursuer] was in" (which Mr Koo said he later found out was the

"malicious prosecution"). "Whether that [was] correct", Mr Moynihan submitted, "or

indeed whether this related to the pursuer's FCA difficulties, [was] now a live issue" in the

case. I agree that the pursuer's evidence when recalled, as well as that of Mr Naylor, might

have given the Lord Advocate cause to wish to cross-examine Mr Koo rather than simply

agreeing that his evidence was contained in his witness statement.

[45]

In all of the above examples, the true nature of the problem identified by

Mr Moynihan has to do not with the relevancy of the pursuer's case, as he put it, but with

the prejudice sustained by the Lord Advocate. And, indeed, prejudice also to the due

administration of justice. I am not persuaded that the pursuer should be held, on that basis,

to have forfeited the right to a determination of what amounts to the vast bulk of his claim

for financial loss. Proportionality, particularly in the context of the pursuer's rights under

article 6 ECHR, is a relevant consideration (Summers v Fairclough Homes Ltd

[2012] 1 WLR 2004). I would also refer to certain well-known extra-judicial remarks of Lord Reed,

regarding the situation where, as here, the dishonesty of a litigant only becomes apparent

to the court in the course of the evidence. Provided the court is able to make a proper

assessment, which in this case is one of quantum, then notwithstanding the dishonesty,

"it could only be in the most exceptional circumstances that a strike-out would be a

proportionate response" ("Lies, damned lies: Abuse of process and the dishonest litigant",

26 October 2012). As Mr Moynihan acknowledged, it would never be appropriate for the

court to speculate as to how the evidence might have developed had the pursuer given

a true account of his career from the start. What it can do, however, is to consider what

weight, if any, should be given to evidence which the Lord Advocate was not afforded a

fair opportunity to explore or contest. At any rate, that is what I have done in what follows.

That does not mean that the pursuer's dishonesty should necessarily go unpunished. It may

be appropriate, following Lord Reed's suggestion in the above lecture, to make an award of

expenses against the pursuer, possibly on an agent and client basis. Contempt of court is

another possibility.

The pursuer's reputation following Allenby

[46]

Lord Keen conceded that the pursuer's behaviour at Allenby "reflected very poorly

on his judgment and conduct at that time". Beyond that, however, he submitted that it had

no relevance to the court's assessment of loss. It might have had relevance to any future

career in which the pursuer required FCA approval. However, the pursuer had no intention

of returning to a role requiring FCA authorisation. With the exception of the FCA, to whom

disclosure would have been required to have been made, there was no reason why anyone

should have known about the true circumstances surrounding the pursuer's departure from

Allenby. These circumstances were subject to confidentiality arrangements as set out in

the compromise agreement. When assessing what would have happened but for the

prosecution, the court "must proceed on the basis that these matters [the circumstances

surrounding the pursuer's departure from Allenby] were not known publicly" (emphasis

supplied). The Lord Advocate submitted that, as a matter of public policy, the court should

not proceed on the hypothesis that "a man like [the pursuer] might have had a successful

career by concealing fraud and other acts of dishonesty".

[47]

Unlike the objection considered in the previous section, which was concerned with

the pursuer's dishonesty in giving evidence, this submission by the Lord Advocate does

indeed raise a question of relevancy, being akin to a defence of illegality or ex turpi causa

non oritur actio. However, while it is often said that there is no confidence in iniquity, I

am not persuaded that awarding the pursuer compensation for financial loss involves

proceeding upon the hypothesis suggested by the Lord Advocate. The purpose of

compensation is to put the pursuer in the position that he would have been in but for

the prosecution. The entering into of the non-disclosure obligations in the compromise

agreement may well be regarded as a concealment of fraud or other acts of dishonesty.

However, the Lord Advocate has not demonstrated either that the pursuer has in fact

built a career based on that concealment or that the career which the pursuer claims the

prosecution has prevented him from enjoying would necessarily have required any such

concealment.

[48]

The Lord Advocate referred to the pursuer's misleading application for FSA

approval while employed by Zeus, and submitted, under reference to R v Andrewes

[2022] 1 WLR 3878, that excessive remuneration achieved as the fruits of fraud can be confiscated

after the fraud has been uncovered. I would accept that, in an application of that kind,

it would have been incumbent on the pursuer honestly to state the circumstances of his

resignation from Allenby, or at the very least to reply truthfully to the question whether

he had ever been asked to resign from his employment. But his application for approval

while at Zeus was withdrawn. Admittedly, there is a whole question, to be considered

subsequently, of whether the corporate financial advice provided by Albans Capital Ltd

pursuant to the letter of engagement with Proton amounted to a regulated activity or

regulated activities requiring FCA authorisation under FSMA. But, subject to that matter,

the pursuer's claim is not based on having been deprived of the opportunity to pursue

a successful career in a role requiring FCA approval. To that extent, therefore, I am in

agreement with senior counsel for the pursuer.

[49]

However, I would reject that part of the pursuer's submission which would require

me to proceed on the basis that the circumstances surrounding the pursuer's departure from

Allenby were "not known publicly". Firstly, because of the iniquity defence, it cannot be

assumed that whatever rights to confidentiality the pursuer thought he had pursuant to

the compromise agreement were anything other than precarious. Secondly, the question of

what was and was not a matter of public knowledge is obviously a question of fact. In that

regard, Malcolm Murray's evidence was highly relevant. He was being "bombarded" with

reports from former colleagues in the City relating to the pursuer's reputation and the fact

that he was not approved by the FCA. As I have already mentioned, it is striking that

these reports were consistent with Mr Naylor's evidence describing the circumstances

surrounding the pursuer's departure from Allenby. Indeed, the pursuer himself seems to

have concluded that Allenby must have been the source of the reports reaching Mr Murray

since, as soon as he found out about them, he instructed his lawyers to send "cease and

desist" letters to his former firm. These letters were met by a denial from Allenby, and it is

entirely possible that the pursuer's bad reputation may have come from a source other than

those who were privy to the compromise agreement. According to Mr Murray, Cenkos

Securities plc ("Cenkos"), who were NOMADs in relation to the flotation of the Rangers

International Football Club plc, told him that the pursuer was not a fit and proper person

and would not be acceptable as a plc director. I accept, contrary to the pursuer's evidence

that he made the decision not to be on the plc board of his own volition, that this was

the reason that the pursuer could not take up a position on the board of the Rangers

International Football Club plc. Cenkos cropped up in evidence again, in their capacity

as potential NOMADs in relation to a proposed AIM listing of Proton. During the critical

period of fundraising, between February and July 2015, the pursuer and Mr Moran had

turned up for a meeting with several people from Cenkos. At reception, they were informed

that the meeting was cancelled, and told by Cenkos "not to darken [their] door", to use

Mr Moran's colourful language.

[50]

I conclude that the pursuer's lack of fitness to undertake work in financial services,

whatever the source of the information may have been, was already known to a number of

individuals in that sector. Further, that knowledge followed the pursuer into the Rangers

job, and thence into his post-Rangers career. For these reasons, at least, his reputation was

already significantly compromised prior to the prosecution, and would continue to be so

compromised, even had the prosecution not occurred.

[51]

In reaching that conclusion, I have not ignored the evidence of the pursuer's friends

and former colleagues who spoke highly of him at the proof, particularly in their witness

statements. However, I was struck by the tendency in these statements to attribute the

pursuer's loss of reputation all too uncritically to what the witness would refer to as "the

malicious prosecution". Take the example of Stephen Best, a businessman with a particular

interest in mining companies for whom the pursuer had raised funds when he was with HB

Corporate Ltd. Mr Best claimed that "the malicious prosecution was common knowledge in

the City. It was the talk of the town." Now it seems very unlikely that townsfolk, whatever

they were talking about, would have used the words "the malicious prosecution". In this

statement, as in others, there was more than a hint of the leading question. I had similar

difficulties with the evidence of the pursuer's other former colleagues. Mr Wisbey said he

would be "happy to work" with the pursuer, but conceded that "many firms don't want

any reputational risk at all". Mr Shinya said that, "[p]ersonally, [he] would work with [the

pursuer] again if [they] were swimming in the same pond", but he conceded that reputation

is everything, and, "If you cast a stone at someone and it has even the slightest iota of

credibility, you can severely damage them" (emphasis supplied). While all these witnesses

insisted on attributing the pursuer's plight to what they called the "malicious prosecution",

it would have been more helpful if they had been asked to consider the extent to which the

pursuer's reputation had already been compromised, for example, by his conduct at

Allenby, his involvement with Rangers, or the fact that he was associated with others being

investigated by the police. These were all live issues in the case which were not directly

addressed by the statements to which I have referred, and to which I have therefore given

little weight. I have also had to bear in mind the prejudice suffered by the Lord Advocate

referred to in the previous section.

The pursuer's involvement with Rangers

[52]

Cenkos's role as brokers and NOMADs in relation to the flotation of the Rangers

International Football Club plc as well as the proposed AIM flotation of Proton provided

a bridge between the pursuer's career prior to and following upon his appointment as

commercial director with Rangers. However, there was other evidence that the pursuer's

association specifically with Rangers would have had a negative impact on his career.

[53]

According to the pursuer, he was fired from Rangers in April 2013 due to "internal

politics" within the company. What is of interest in the present dispute is not so much what

may have occurred "internally", but what was reported and in the public domain. The

pursuer himself referred to the action he raised in this court for unpaid bonuses. He omitted

to mention a newspaper report of a preliminary hearing in that dispute in which Rangers

attempted to resist disclosing certain documents for fear that they might be leaked by the

pursuer. The report referred to the pursuer as having been dismissed by Rangers from his

employment on the basis that he "put material that was confidential and damaging to his

employers onto the web". I underline that I am not adjudicating on the correctness of these

allegations, which the pursuer denied, merely observing that they had been given publicity.

[54]

Of perhaps greater significance was the report published on 25 April 2014, following

the independent investigation commissioned by the board of the Rangers International

Football Club plc. Of course, the pursuer's sacking as commercial director had already

occurred in May 2013. Confronted in cross-examination with the results of the investigation,

the pursuer's response was that he could not be responsible for whatever might have

happened at Rangers after he left. However, the report covered the 13-month period ending

on 30 June 2013. Anyone reading it would be aware that it related to the period during

which the pursuer was commercial director. The findings of that investigation were

highly critical of the financial management of Rangers during the period of the pursuer's

employment at the club. Among the many criticisms levelled at management, the review

stated, "The Club's financial position was precarious as it had mismanaged almost all its

cash reserves following administration" (emphasis supplied).

[55]

Mr Constantinou provided evidence of an analysis of media reports relating to the

pursuer's involvement with Rangers. These covered the pre-prosecution period between

February 2012 and September 2015, when the pursuer was placed on petition, the

prosecution period itself between September 2015 and May 2016, when the petition warrant

was withdrawn, and the post-prosecution period up until July 2022. He explained which

platform he and his colleagues used to conduct the search, as well as the search parameters

deployed. He made a qualitative assessment of the articles identified during these periods

according to whether they were "positive", "neutral" or "negative" in relation to the

pursuer. In cross-examination, Mr Constantinou was challenged on the basis that he did

not carry out the search himself, and had not provided in his report either the search inputs

or outputs.

[56]

However, Mr Constantinou's report provided the search parameters and the

platform used. Details of each article, including its "url" or web address, were included

in a separate table appended to his report. To have included the articles themselves would

have required appending a further 2,000 pages or so of publicly available information to

his report, all in the context of a proof that had already generated thousands of pages of

documentation. The search parameters having been provided, I am satisfied that the

searches could have been replicated by or on behalf of the pursuer. Had the pursuer

wished to present an alternative overall picture of the manner in which his conduct had

been covered in the press, no doubt he could have proposed alternative search parameters.

He did not. In these circumstances, I am satisfied that there is no substance in the pursuer's

criticisms.

[57]

Mr Constantinou found that, during the pre-prosecution period, 68.9% of the articles

were neutral and 29.2% were negative, while during the prosecution period, 31.6% were

negative and 68.4% were neutral. In cross-examination, he was asked whether it followed

that the majority of negative articles occurred in the prosecution period rather than the

pre-prosecution period. Mr Constantinou patiently identified the statistical fallacy upon

which that question was based, namely the assumption that the same number of articles

were published during the prosecution period as were published pre-prosecution. On the

contrary, the volume of press coverage pre-prosecution was far greater, with the result that

there were in fact 3.5 times as many negative mentions pre-prosecution as there were during

the prosecution period.

[58]

On the basis of all of the above evidence, I conclude that the pursuer's already

compromised reputation was, and would but for the prosecution have continued to have

been, damaged still further by publicity regarding the pursuer's association with Rangers.

Rumours and Charles Green's Sky interview

[59]

So far I have considered the impact on the pursuer's reputation of events occurring

both prior to and following his involvement with Rangers. Included among the latter were

those events arising from the pursuer's association with his business partner, Charles Green,

the beginning of a police investigation of Mr Green in connection with his involvement with

Rangers, and rumours that began to circulate about a potential prosecution of Mr Green,

culminating in his Sky interview. In addition to the reputational damage to Charles Green

and the pursuer, these events created a risk of commercial damage to any business with

which they would become associated.

[60]

The clearest evidence in relation to commercial risk came from Martin Walton,

manager of the Wales Life Sciences Investment Fund ("WLSIF"). Mr Walton led the due

diligence on behalf of both WLSIF and Woodford who, together, contributed 91% of the

funding raised by Proton between January and July 2015. Mr Walton was asked to explain

an email he had written to Patrick Cannon, Proton's lawyer, on 7 May 2015, in which he

stated, "As per prior discussions please DO NOT include Charles or Imran in the email

conversation". I have already referred to Mr Walton's evidence that Charles Green and

the pursuer were treated as a unit. "No problem in forwarding stuff to them", the email

continued, "but they must be completely removed from company activity or we risk

potential investors walking away".

[61]

Mr Walton explained that due diligence inevitably involved "looking at the people

involved", that is, "the potential chief executive officer, the potential chief operating officer,

the clinical officers, and so on". The City of London "revolv[ed] around information,

rumour and hearsay", and it was "[at that point when you start to look at the people

involved] ... that you begin to hear stories about [them]". Mr Walton became aware, as

did representatives of Woodford acting quite independently, that there were rumours,

"potentially damaging stories", going around about Charles Green and the pursuer. Asked

what these rumours were, he replied that there was "potential police investigation into the

Rangers deal".

"[U]ntil such time as this story, these rumours ... were resolved, it was viewed

as potentially damaging to the company's prospects to have those names

[Charles Green and the pursuer] associated with the company".

Had it become clear that Mr Green or the pursuer were not to be prosecuted "or [had]

the slate been wiped clean", as Mr Walton put it, then they could have been reinstated.

[62]

It was clear that Mr Walton was not necessarily expressing any view on the pursuer's

behaviour, or impugning his reputation. His insistence that Proton needed to remove the

pursuer and Mr Green from the public face of the company was purely a business decision.

The particular sensitivity of the stock market is such that it reacts not just to loss of

reputation but to the mere potential for loss of reputation, or to the commercial risk to which

a business such as Proton might be exposed if it became associated with someone (who was

associated with someone) who was known to be under investigation and who might be

prosecuted.

[63]

Mr Walton's evidence on the sensitivity of the City to rumour was echoed by the

evidence of others, such as Sanjeev Verma, a contemporary of the pursuer's at Hoodless

Brennan and someone who had followed him to Allenby. He referred to the City as a

"small place", where news "spreads like wildfire". To similar effect was the evidence of

Joss Alcraft, a corporate lawyer who had worked on deals with the pursuer while he was at

HB Corporate Ltd. He said that, "Everybody googles anyone they might do business with,

and if there are hints of a scandal they will be very reluctant to deal with them." His firm

had reached the point where they did not need every client they came across, "so if [they

got] a red flag in their checks, [they] may just put it in the `discard' pile without further

investigation". Banks were the same. He knew of someone who had his bank account

closed "because of a story in the press that [was] neither here nor there - it [was] easier for

the Bank just to close the account".

[64]

Mr Alcraft might be understood as offering an extreme view of commercial risk,

where the mere "hint of a scandal" or "red flag" may deter a potential investor, client, or

employer. This would apply, as he suggested, where the subject of the rumour was just

one client among many. In the particular circumstances of Proton, however, where a

business relationship had already been formed with Mr Green and the pursuer, Mr Walton's

view was that they would have been able to return to Proton once it became clear that they

were not to be prosecuted or "the slate [had] been wiped clean". Indeed, his view was that

the shareholders would have expected the founders to be "totally involved and delivering

on the commitments they made to investors". Clearly, for the period during which

Mr Green and the pursuer were in fact prosecuted, this would not have been possible. But

there was nothing in Mr Walton's evidence to suggest that the prosecution itself eliminated

the possibility, once the slate had been "wiped clean", of Mr Green and the pursuer

returning to their roles in Proton and being actively involved with the company.

[65]

I conclude therefore that the pursuer became a commercial risk, specifically

to Proton, as a result of rumours that Charles Green had become the subject of police

investigation and might become the subject of prosecution. It crystallised in the minds of

investors in Proton, at the latest, by the time of Mr Green's Sky interview. The pursuer's

removal from the public face of Proton was therefore a consequence not specifically of the

prosecution of the pursuer, but of the rumours, and the commercial risk that the pursuer

represented by reason of his association with Mr Green and Rangers. Further, the pursuer's

continued exclusion from Proton, after the warrant had been withdrawn, was a consequence

of the continuing risk to Proton that he represented to that business until the "slate had been

wiped clean". In other words, the commercial risk to Proton would have continued for

at least as long as the Lord Advocate had not made a public announcement renouncing

prosecution and, on one view, for as long as he had not issued a public apology. I therefore

find that the pursuer, both before and after the prosecution, was subject to a continuing risk

of prosecution. I further find that the overwhelming likelihood is that, had the pursuer not

been prosecuted, he would have continued to have been at risk of prosecution throughout

the entire period during which he was in fact prosecuted between September 2015 and

May 2016. In that event, the continuing risk of prosecution during that period would have

exposed Proton to continuing commercial risk, and required his continued exclusion from

active involvement with that company.

[66]

I should make it clear, before moving on, that there was no question in these

proceedings of the Lord Advocate being responsible for the release of information

identifying either Mr Green as being under investigation prior to his being charged.

Whether or not the rumours or the interview involved any misuse of private information,

of the sort considered in ZXC v Bloomberg LP [2022] AC 1158, has nothing to do with the

present action.

The Crown's duty to clear the pursuer?

[67]

In his written submissions the pursuer argued that it was necessary to consider not

what would have been likely to have happened, but for the prosecution, but "what would

have been likely to have happened had the Lord Advocate acted properly, rather than

wrongfully". The pursuer's answer to that question was that he "would not have been

prosecuted and would have continued to work, resulting in significant earnings and capital

gains". Developing his submission, the pursuer argued that the Lord Advocate, acting

properly, would have come to the conclusion already in September 2015 that there was

no evidence of the pursuer having committed any crime, and would have made a public

pronouncement to that effect, confirming that there would be no criminal proceedings

against him. In short, not only would the pursuer not have been prosecuted, but the risk

of prosecution would have been eliminated, allowing the pursuer to return to Proton in

September 2015.

[68]

The first problem with this argument is that it is not the pursuer's pleaded case.

The pursuer does not sue the Lord Advocate for having acted oppressively by failing to

conclude the investigation into the pursuer within any particular period of time. It is true

that the pursuer's first plea-in-law was that the Lord Advocate had interfered with his right

to respect for his private and family life. However, this was not insisted on at the proof,

and ultimately, in their written submissions, counsel restricted the pursuer's case to his

plea-in-law based on "wrongful" prosecution.

[69]

The second problem is that, even if it had been plead, the case would have failed.

The pursuer correctly states, standing the extent of the Lord Advocate's admission of

liability in this case, that as at September 2015 there was insufficient evidence to support a

prosecution. The pursuer is also correct in stating, with the benefit of hindsight, that there

was never sufficient evidence to prosecute the pursuer. However, it does not follow that,

as at September 2015, the Lord Advocate should have known that there would never be

sufficient evidence to prosecute the pursuer. Or that he was wrong to keep the case against

the pursuer open. In September 2016, the then principal Crown counsel informed counsel

for the pursuer that the Crown were at that stage focusing their attention on the remaining

live prosecution against Mr Whyte, and that it was not anticipated that a decision would be

made in the pursuer's case before March 2017. No criticism of Crown counsel's position was

ever suggested in evidence. Even if the pursuer had plead a case against the Lord Advocate

that he had somehow failed to act properly, he would have failed to establish that, as at

September 2015, the Lord Advocate was in breach of such a duty by failing to clear the

pursuer. Indeed, he would have failed to establish that the Lord Advocate was in breach

of such a duty by failing to clear the pursuer any earlier than February 2018, when he

announced that the pursuer would no longer face any further proceedings.

[70]

I would note in passing that the pursuer was able to cite a number of cases in which

the Crown had made public pronouncements that there would be no prosecution following

investigation. He cited the Glasgow bin lorry case, in which the Lord Advocate made a

public pronouncement, on 28 August 2015, that the driver, Harry Clarke, would not face

prosecution, almost 8 months after the collision in George Square, killing six people. The

pursuer also cited the case of the near collapse of the Royal Bank of Scotland in 2008, where

a public pronouncement that Fred Goodwin would not be prosecuted was made some

8 years after the rights issue in which shareholders had invested £12 billion in the bank.

The pursuer also mentioned the Clutha case, where a Crown decision that there would be

no criminal proceedings was taken some 4 years after the police helicopter had fallen on the

pub, killing ten people. In all of these cases, there were individuals and firms who remained

under investigation or at risk of prosecution for many months or, more usually, several

years. It is true that the pursuer also cited a case in which the police were able publicly

to confirm within a matter of weeks that an MSP would not be facing charges relating to

alleged sexual misconduct. But of course such a statement would never amount to a

renunciation binding the Crown of the right to bring criminal proceedings (Huston v

Buchanan 1995 SLT 86). In short, the pursuer was unable to cite a single case supporting

the duty belatedly contended for by him.

[71]

Against that general background, I now turn to the specific heads of loss in the

pursuer's claim.

Legal expenses

[72]

The pursuer sought reimbursement of expenses incurred in instructing solicitors

and counsel to act for him "in respect of the malicious prosecution". He produced

four invoices for sums totalling £22,722. However, the first two of these invoices were

in the VAT-inclusive sums of £540 and £156. They were dated 29 January 2015 and

27 February 2015 respectively. They related to expenses incurred at least 6 months prior

to the prosecution. They did not bear to relate specifically to the prosecution. Therefore

no damages are due to the pursuer in respect of these sums. The Lord Advocate conceded

that damages were recoverable in respect of the remaining two invoices. These were dated

31 August 2015, shortly before the pursuer was placed on petition, and 10 September 2015.

It was further conceded that interest at 8% was due on these sums. The pursuer sought

interest from October 2015, which was not opposed. The pursuer is therefore entitled to

recover £22,026 in respect of legal expenses incurred as a result of the prosecution, with

interest at 8% from 1 October 2015.

Solatium

[73]

The pursuer sought an award for solatium of £150,000, 75% of which he submitted

should be attributed to the past. Obviously, the awards in previous cases involving

detention did not assist, since the pursuer had been at liberty throughout, albeit that he

had fled to Pakistan and was unable to travel freely for fear of extradition. But the

pursuer submitted that he remained under threat of proceedings from September 2015 to

February 2018. Further, the award should include an amount to reflect injury to reputation.

In Turley v Unite the Union [2019] EWHC 3547, a defamation case, the defendant had

published an article stating the claimant had joined a trade union fraudulently. An

award of £75,000 was made. The pursuer submitted that his case was more serious still.

[74]

The Lord Advocate submitted that an award of solatium in the region of £22,500

would be appropriate to reflect the mental distress, humiliation and anxiety caused to the

pursuer by reason of the prosecution. That was a figure accepted as appropriate by the

Lord Ordinary in Grier v Lord Advocate (2022 SLT 199) to cover a similar period during

which one of the pursuer's alleged co-conspirators was prosecuted. The Lord Advocate

referred to the guidance given by the Court of Appeal in Thompson v Commissioner of Police

of the Metropolis [1998] QB 498. That case held that in malicious prosecution cases, not

involving detention, damages should start at £2,000. If the prosecution continued for

2 years, £10,000 would be appropriate. Thompson was applied in Rees v Commissioner of

Police of the Metropolis [2019] EWHC 2339, where it was agreed that, adjusting for inflation,

the upper end of the bracket for malicious prosecution would be about £20,000. In that case,

the period between charge and no evidence being offered was about 3 years. Excluding

aggravated damages and exemplary damages, which would be unavailable under Scots law,

as well as damages for loss of liberty, which would be inapplicable in the present case, the

claimants in Rees were awarded £27,000 in damages, which included a small amount for loss

of reputation, reduced having regard to their past offending. Defamation cases offered no

guidance and, in any event, no award should be made to the pursuer for loss of reputation

"because that would be to compensate his lies".

[75]

So far as loss of reputation is concerned, I accept the submission that defamation

cases offer no assistance. The purpose of damages in a defamation action is to

demonstrate to the public that the claimant has vindicated his reputation (Gleaner Co Ltd v

Abrahams [2004] 1 AC 628, paragraphs 55, 56). Awards tend also to be higher where they

include an amount to reflect loss of earnings, which in a case such as the present would be

compensated, if at all, separately, as special damage. Mr Moynihan did not specify which

lies in particular the court would be compensating were it to award damages for injured

reputation. It may be that he intended to refer to the lies that the pursuer himself conceded

he had told the court. To ignore these lies, or their impact on his reputation, might be said

to be awarding him compensation which is not justified. But that would be to permit a

defence of truth or justification, analogous to the law of defamation which Mr Moynihan

conceded was of no relevance in this area. He may have intended once again to refer to

the lie the pursuer told, while at Zeus, in his application for approval by the FSA, but as I

have already said, that application was withdrawn. Finally, he may have been intending to

refer to facts that the inclusion of an obligation of confidentiality in the Allenby compromise

agreement was intended to conceal. However, I am reluctant to proceed on that basis in the

absence of argument, or evidence, as to whether or to what extent any such concealment

may have permitted the pursuer to maintain a sound business reputation.

[76]

I prefer to proceed on the basis that, in an action of malicious prosecution, at

least some award may be appropriate for injury to reputation, as appears to have been

acknowledged in Rees (ibid). The difficulty lies in disentangling the extent to which his

reputation would have been damaged by the prosecution from the extent to which it was

already substantially compromised as a result of events occurring both prior to and

following his involvement with Rangers. A similar difficulty confronted Lord Tyre in

Grier (ibid). He considered that there was a basis in the evidence to suggest that material

damage was occasioned to the pursuer by adverse publicity, partly as a result of television

broadcasts occurring prior to his detention, arrest and charge (2022 SLT 199, paragraph 152).

There was no single, indivisible wrong, but a consecutive series of alleged wrongs, each with

their own consequences (ibid, paragraph 148). He did not consider that he was provided

with a sound evidential basis to quantify the extent to which the pursuer's reputation might

have been damaged by pre-detention adverse publicity or either of the alleged wrongs

committed by the actions of the Chief Constable or the prosecution by the Crown. On

appeal, the Inner House held that the Lord Ordinary was correct in his analysis that the

losses sustained by the pursuer were divisible, and that some of his losses were attributable

to the pre-detention publicity (2023 SC 116, paragraph 143). However, difficulties in

attribution should not be a reason to award nothing. The court should apply the

"conventional broad axe with a blunt blade" (ibid, paragraph 144).

[77]

In this case, although the pursuer's reputation had already been compromised prior

to the prosecution, his reputation is likely to have been injured further by the decision of a

trusted prosecutor that there was sufficient evidence to bring his case to trial. That injury

would not have been fully mitigated by dropping the case against the pursuer, since, as

witnesses such as Mr Wisbey pointed out, it might be thought that the Crown took that

decision simply because they did not have enough evidence. However, nor do I accept

that the pursuer's reputation would have been irretrievably damaged by the prosecution.

Indeed, there is at least an argument that the pursuer might be in a better position, having

received an unreserved public apology, than if he had not been prosecuted at all, and the

rumours and speculation had been allowed to linger or perhaps fester. On balance, I am

prepared to accept that the Lord Advocate's public apology on 7 June 2021 will have

largely mitigated whatever damage was done to the pursuer's reputation by the

prosecution. Deploying the judicial broad axe, I consider that a total award of £40,000

would be appropriate for solatium. Within that award, I have allowed £25,000 for distress,

anxiety and humiliation, and £15,000 for loss of reputation. I would attribute 75% of the

award to the past, and award interest on £30,000 at 4% from 2 September 2015 to the date

of decree, and at 8% thereafter.

Loss of salary and benefits at Proton

[78]

The pursuer claimed for loss of salary and other benefits from his employment

with Proton worth £127,000 per annum. The claim was made for the period between

September 2015, when the prosecution began, and February 2019. February 2019 was

chosen as being the date when Proton floated as Rutherford Health plc. That was the

date when the pursuer said he would have "exited" Proton, by which he meant sold his

shares, and left his employment.

[79]

I address the question of when the pursuer would have sold his shares in a later

section. So far as his claim for loss of employment is concerned, for the reasons already

given, it was not the prosecution, but the commercial risk that the pursuer presented,

from the date of Mr Green's Sky interview at the latest, that caused him to lose his job at

Proton as investor relations director. Had he not been prosecuted, that risk would have

continued until such time as the Crown renounced prosecution, at the earliest. For the

reasons already given, I reject the pursuer's submission that the Lord Advocate should

have renounced prosecution in September 2015 or at any date earlier than 28 February 2018,

when he publicly announced that the pursuer would not face fresh criminal proceedings.

That still leaves the period between February 2018 and February 2019. Notwithstanding

Mr Walton's evidence that the pursuer could have returned to Proton had "the slate been

wiped clean", there was no evidence that the pursuer was or would have been considered

for employment at Proton by this stage. In any event, at some point in 2018, he entered into

a settlement agreement to sell his shares in the company. No sum is due in respect of this

head of loss.

Loss of commission

[80]

Different considerations apply to the pursuer's claim for loss of commission. His

claimed entitlement to commission was not based on his role as investor relations director,

nor included in any contract of employment with Proton. Rather, the entitlement to

commission was derived from the letter of engagement, in terms of which, in the first

instance, Albans Capital Ltd, and then Fannigan Holdings Ltd, were entitled to 5% of the

funds raised in Proton. The pursuer acknowledged that, so far as any funds managed by

Neil Woodford were concerned, the agreed rate of return was reduced to 3%. Further, in

terms of the three-way split agreed among the pursuer, Charles Green and Paul Fraser, they

would each have been entitled to a one-third share of the profits. I consider later whether

the pursuer has provided an adequate evidential basis on which to ascertain whether he

has suffered a loss of commission. In the first place, however, I must address a more

fundamental argument raised by the Lord Advocate, namely, whether the letter of

engagement gave rise to any enforceable right to commission at all.

Enforceability of the letter of engagement

[81]

In terms of section 19, FSMA, no person may carry on a regulated activity in the

United Kingdom, or purport to do so, unless he is an authorised person or an exempt person

(the so-called "general prohibition"). It was a matter of agreement that the pursuer was

neither an authorised nor an exempt person at any relevant time. The principal issue

was whether the pursuer's activities under the letter of engagement with Proton involved

carrying on regulated activities in the United Kingdom, contrary to the general prohibition.

If so, submitted the Lord Advocate, then the agreement was unenforceable by reason of

section 26, FSMA. However, section 26 provides only that the agreement is unenforceable

"against the other party", and at the end of this section I consider what implications that

qualification has for the Lord Advocate's argument.

[82]

Section 22, FSMA, so far as relevant, provides that an activity is a regulated activity

if it is an activity of a specified kind which is carried on by way of business and relates to

an investment of a specified kind. The specified kinds of activities and investments are to

be found in the Financial Services and Markets Act 2000 (Regulated Activities Order) 2001

("the RAO"). Article 25 RAO, so far as relevant, specifies the following kinds of activity:

"(1)

Making arrangements for another person (whether as principal or agent) to

buy, sell, subscribe for or otherwise underwrite a particular investment which is

(a)

a security...

(2)

Making arrangements with a view to a person who participates in the

arrangements buying, selling, subscribing for or underwriting investments falling

within paragraph (1)(a) ... (whether as principal or agent)..."

Security is defined as including any shares or stock in the share capital of any body

corporate (articles 3, 76, RAO). Articles 26 to 36 set out a list of exclusions from one or other

of both of articles 25(1) and 25(2). Article 26 excludes from article 25(1) "arrangements

which do not or would not bring about the transaction to which the arrangements relate".

[83]

In Re The Inertia Partnership LLP [2007] EWHC 539 (Ch), [2007] Bus LR 879 (at

paragraph 39), Jonathan Crow KC, sitting as a deputy judge of the High Court, gave the

following broad interpretation to article 25:

"The critical words in article 25 are these: `making arrangements for another person

... to buy, sell [or] subscribe for' shares. The exception under article 26 applies to

`arrangements which do not or would not bring about the transaction to which the

arrangements relate'. In my judgment, the correct analysis of these provisions is

as follows: (1) the word `arrangements' is, depending on the context, capable of

having an extremely wide meaning, embracing matters which do not give rise to

legally enforceable rights; (2) in articles 25 and 26 , the word `arrangements' is

used in contradistinction to the word `transaction'; (3) in article 26 , the word

`transaction' is plainly a reference to the purchase, sale etc of shares contemplated by

article 25; (4) as such, a person may make `arrangements' within article 25 even if his

actions do not involve or facilitate the execution of each step necessary for entering

into and completing the transaction (ie the purchase, sale etc of the shares); (5) the

availability of the exception in article 26 is essentially a question of fact: as a matter

of causation, did the arrangements bring about the transaction (i e the purchase, sale

etc of the shares)?"

In that case, three UK companies wished to raise capital and were introduced to an

intermediary, Porterland, by The Inertia Partnership LLP ("TIP"). In the case of one such

company, Vivadi, the court held that TIP had merely introduced it to Porterland, without

that introduction necessarily resulting in anything further happening between Vivadi and

Porterland, and without TIP retaining any power to direct what might happen following the

introduction. A bare introduction of this sort, the court held, would not amount to "making

arrangements" for the purpose of article 25(1). In relation to a second company, Plasma,

however, TIP had entered into an express agreement pursuant to which it provided

administration services designed to facilitate the sale of Plasma's shares. Rejecting an

argument that TIP had merely provided the necessary paperwork in relation to contracts

that had already been concluded between broker and consumer over the telephone, the

court held that, even were that the case, the contracts would not have been brought about

without TIP's administrative services, which were therefore sufficient to amount to "making

arrangements". The situation was even clearer in relation to the third company, Police 5,

where there were no pre-existing contracts, and where TIP's administrative services

included sending out application forms, collecting the cheques, and making payment. The

court's reference to whether or not the contracts would have been "brought about" without

TIP's activities suggests that it had article 25(1) in mind, since these words appear in

article 26, which provide an exclusion only from article 25(1) and not article 25(2). I discuss

this further below under reference to the Court of Appeal decision in Financial Conduct

Authority v Avacade (in liquidation) [2021] Bus LR 1810.

[84]

In Watersheds Ltd v DaCosta [2010] Bus LR 1, Watersheds were engaged to provide

financial advice in connection with the raising of finance for the defendant's company.

The contract stipulated a minimum fee of about £59,000, but otherwise the fee payable

was a percentage of the funds raised. Only a bank loan of £250,000 was secured before

the company went into administration. Watersheds sued for the minimum fee. One issue

was whether the contract was unenforceable because Watersheds was not FCA-authorised.

The court held that the work undertaken by Watersheds amounted to more than a bare

introduction to a third party. Watersheds was required to use its experience and expertise

to assist the company to ensure that all necessary material was provided to investors in

the most attractive form so as to assist or promote a successful outcome to any meeting.

Nevertheless, the court held that the terms of engagement contemplated Watersheds,

"at most trying to effect introductions and to assist the company in meeting

potential investors in order that the company could try to reach agreement

with those potential investors as to a transaction. ... Watersheds were not able

in any real sense to influence whether or not an investment was made in the

company" (paragraph 64).

The court concluded that Watersheds were not undertaking activity which was of a kind

specified by article 25(1). In any event, even if Watersheds' activities amounted to making

arrangements falling within article 25(1), the court held that they did not in fact bring about

the transactions to which they related, with the result that the article 26 exclusion applied.

[85]

The court in Watersheds accepted that the inclusion of the words "with a view" in

article 25(2) made it wider in scope than article 25(1). However, under reference to the FSA's

Perimeter Guidance Manual, PERG 2.7.7B G, it considered that the purpose of article 25(2)

was to regulate the provision by a third party of facilities with a view to the conclusion "by

others" of transactions through the use of these facilities. As a result, article 25(2) would

only be applicable where the facilities were capable of being accessed by both parties to

a potential transaction rather than just one of them. The guidance mentioned by way of

illustration the activities of exchanges, clearing houses and service companies. The court

held that, were it not for the emphasis in the guidance on the provision of facilities for use

by others, it would have held that article 25(2) applied to Watersheds' activities. If it were

wrong in that regard, the court further held that the exclusion in article 27 would apply.

Article 27 provides that a person does not carry on an activity regulated by article 25(2)

"merely by providing means by which one party to a transaction (or a potential transaction)

is able to communicate with other such parties".

[86]

The FCA has since reflected on and updated its guidance in the light of the

Watersheds decision. In the updated version, it has pointed out that, had it been intended

that the activity of introducing should be excluded altogether from the scope of article 25(2),

then it would not have been necessary in article 33 expressly to exclude certain

arrangements for making introductions from its scope. The FCA therefore remains of the

view that article 25(2) includes certain types of arrangements for making introductions.

[87]

The relationship between articles 25 and 26 was explored further in the following

passage by Popplewell, LJ in Financial Conduct Authority v Avacade (in liquidation) [2021] Bus

LR 1810 (paragraph 48), in a judgment with which Jackson, LJ and Sir Geoffrey Vos, MR

agreed:

"Article 26 excludes from the operation of article 25(1) arrangements which do

not or would not bring about the transactions to which the arrangements relate.

The words `would not' make clear that even article 25(1) is not concerned only

with arrangements which successfully result in a relevant transaction; a person

may contravene article 25(1) by making arrangements `for' such a transaction which

does not in fact take place. Nevertheless article 26 introduces an actual or notional

test of causation (`bring about') in relation to arrangements for the purposes of

article 25(1). In Adams [2021] Bus LR 1568 the court held that the degree of causal

potency required was that for arrangements to `bring about' a transaction they must

play a role of significance but need not involve a direct connection (see para 97).

Importantly, however, article 26 is expressly confined by its terms to article 25(1)

and other articles; it does not apply to article 25(2), as this court confirmed in

SimplySure at para 26. There is no need to introduce any test of causation into 25(2)

by reference to the language of the inapplicable article 26 because by using the

words `with a view to', article 25(2) makes clear that it is concerned with the

purpose of the arrangements. An intended purpose, an end in view, must be that

a relevant transaction take place, but the arrangements do not need to bring it about

by way of an actual or notional test of causation. These are wide words which

suggest that all that is necessary is that a relevant transaction is part of the purpose

of making the arrangements. A person may have a relevant transaction as an end

in view where the arrangements do no more than create or facilitate a situation

which provides the opportunity for it to take place. That may be an intended

result notwithstanding that the arranger is powerless to ensure that it takes place

or even influence the decision which leads to it taking place. You cannot make the

proverbial horse drink, but taking it to water involves making arrangements with

a view to it drinking."

Both The Inertia Partnership LLP and Watersheds must now be read in the light of the Court

of Appeal's decision in Avacade. In particular, Avacade confirms that the distinction in the

earlier cases between being a mere introducer, on the one hand, and having some influence

over whether or not the transaction takes place, on the other, is relevant only to article 25(1)

and the question of whether the actual or notional test of causation is satisfied. Provided

that the purpose of the activity, including that of introducing, is to create or facilitate a

situation which provides the opportunity for a transaction to take place, then article 25(2)

may be satisfied, even though the arranger is powerless to ensure it takes place or has no

influence over whether it does or not. The activities described in Watersheds of "assist[ing]

the company in meeting potential investors in order that the company could try to reach

agreement with those potential investors" would now be regarded as falling within the

scope of article 25(2). In particular, the fact that a company such as Watersheds were not

able "in any real sense to influence whether or not an investment was made in the

company" would not mean that article 25(2) does not apply.

[88]

Article 64 of the RAO provides that agreeing to carry on a specified kind of activity

is itself a specified kind of activity. This has the result that entering into the letter of

engagement would amount to a regulated activity, where the activities to be carried out

pursuant to the letter of engagement themselves amount to regulated activities. Turning

therefore to the terms of the letter of engagement, the services to be supplied by Albans

Capital Ltd are described in clause 1.1 as the provision of "corporate financial advice", and

in clause 2.2 as,

"assist[ing] in all aspects of organising Pre IPO funding and an IPO including

considering appropriate brokers and other professional advisers, making necessary

introductions, negotiating fees, supporting you through all aspects of the detailed

project work, reviewing the draft reports produced by our reporting accountants,

guiding you through the various work streams of the Pre IPO and IPO process,

commenting on drafts of the Admission Document, and assisting in other issues

that will inevitably arise as the project develops over a four or five month period".

It is significant that the agreed activities included but went considerably further than

"making necessary introductions". Subject to the question of any exclusions, to be discussed

presently, it is in my view obvious that the activities to be carried out pursuant to the letter

of engagement would play a sufficiently significant causal role in bringing about investment

in Proton such as to amount to regulated activities of the kind specified in article 25(1).

They were also arrangements "with a view" to investment in Proton, in the sense covered

by article 25(2). They were arrangements to create or facilitate a situation which would

provide the opportunity for such investment to take place. The pursuer relied heavily

on clause 2.6(e) of the letter of engagement which purported to exclude responsibility for

"any service that require[d] FCA regulation". However, the question is whether, objectively

considered, the services to be supplied pursuant to the letter of engagement amount to

regulated activities. At best, parties' statement that the services do not amount to regulated

activities may be of assistance in interpreting the intended scope of the agreement, but it

cannot be conclusive. Parties may not contract out of FSMA.

[89]

The above interpretation of the letter of engagement is consistent with the evidence

of what services were in fact provided pursuant to the letter of engagement. The pursuer's

own witness statement described his role as "to help prepare the financial information;

prepare the Power Point presentation; and to approach stockbrokers, institutional investors

and private investors". In court, he tended to describe his role variously as one of "project

manager" or "financial engineer". He denied that he met private investors, and described

himself as a mere introducer. However, he met Dr Al Fardan, and he had email discussions

with solicitors about changes to the shareholders' agreement, including discussions about

anti-dilution clauses and the number of directors. Mr Moran described the pursuer's role

as setting up communications with potential investors, with a view to giving them the

initial brief. He worked closely with Mr Moran in preparing the information memorandum.

He would take Mr Moran through the details of that memorandum, checking the financial

documents that they had, and making sure that Mr Moran was prepared for meetings with

investors. Mr Moran also confirmed that the pursuer attended a number of meetings with

investors, at least at the start of the process, presumably up until the Sky interview, and

the taking of the decision that he could no longer represent Proton. The pursuer played

a critical role in drafting the placing letters by which investors undertook irrevocably to

acquire shares in Proton. Karol Sikora spoke to the pursuer's role in assisting him in making

presentations and in "putting together the investment package" for Proton. Dr Al Fardan

confirmed that the pursuer was the main negotiator and persuaded him to sign a placing

letter. Quite apart from article 25, this on its own may amount to the regulated activity of

advising on investments for the purposes of article 53.

[90]

The general prohibition is territorially limited and only applies to the carrying on

of regulated activities in the United Kingdom. In Financial Services Authority v Bayshore

Nominees Ltd [2009] EWHC 285 (Ch), it was held that advising by telephone from abroad

was carried on "either at both the adviser's location and the investor's location or

exclusively at the investor's location". Although in this case, Fannigan Holdings Ltd was

a Cypriot company, it was merely assigned the benefit of the rights of Albans Capital Ltd

under the letter of engagement. Albans Capital Ltd retained the contractual obligation to

carry on the services specified in the letter of engagement, and it was a company registered

in the United Kingdom. In any event, the fundraising was for Proton, a company also

registered in the United Kingdom, where at least some of its actual and prospective

investors were located. Accordingly, the territorial requirement is satisfied.

[91]

I turn now to consider potential exclusions. The pursuer submitted that, insofar as

the court accepted that Albans Capital Ltd was "making arrangements" for the purposes

of article 25 RAO, then the arrangements were of a kind that were excluded by articles 28

and 33.

[92]

Article 28 excludes arrangements for transactions, or with a view to transactions,

which the person making the arrangements "enters or is to enter as principal or as agent for

some other person". The pursuer submitted that he was a founder of Proton, and would

have continued to be the investor relations director at Proton. An employment contract had

been prepared for him. He would therefore have been acting as an employee and founder

of Proton. Any arrangements he made were made in that capacity and therefore fell within

the article 28 exclusion. I reject that argument. In the first place, the pursuer was not a

shareholder in Proton. The shares were held by Albans Partners General Trading LLC and,

from 3 June 2015, by Fannigan Holdings Ltd. Secondly, and more importantly, the pursuer

makes the mistake of assuming that the arrangements were made by him as an employee

and founder of Proton. They were not. The letter of engagement, in respect of which an

entitlement to commission is claimed, provided that the arranger would be Albans Capital

Ltd. Although Albans Capital Ltd appears to have assigned the benefit of its rights under

the letter of engagement to Fannigan Holdings Ltd, it did not substitute Fannigan Holdings

Ltd for Albans Capital Ltd as the contracted provider of corporate financial advice. The

pursuer pointed out that no one suggested that he had been required to be an authorised

person while helping to raise finance at Rangers, notwithstanding the "similarity in his role

at Proton". However, this argument ignores the fact that his entitlement to a percentage of

funds raised at Rangers was a condition of his contract of employment, such that it might

properly be said in that case that he was making arrangements as an agent for his employer.

[93]

The pursuer relied separately on the exclusion in article 33 of arrangements under

which clients will be introduced to an authorised or exempt person, where,

"the introduction is made with a view to the provision of independent advice

or the independent exercise of discretion in relation to investments generally

or in relation to any class of investments to which the arrangements relate".

He submitted that any arrangements made by the pursuer involved authorised brokers

who would exercise discretion in relation to investments. Arthurian Life Sciences were

authorised persons acting for Proton and they dealt with authorised persons such as

Neil Woodford and his advisers. However, the fundamental difficulty with this argument

is that the article 33 exclusion, so far as relevant, only excludes the arrangements to which

it applies from article 25(2), and not article 25(1). I have already held that the services

provided by Albans Capital Ltd went beyond the making of bare introductions, and

included the making of arrangements which brought about or would have brought about

the transactions to which the arrangements related.

[94]

Article 29 excludes arrangements:

"made by a person (`A') who is not an authorised person for or with a view to

a transaction which is or is to be entered into by a person (`the client') with or

through an authorised person if-

(a)

the transaction is or is to be entered into on advice to the client by an

authorised person, or

(b)

it is clear, in all the circumstances, that the client, in his capacity as an

[investor...], is not seeking and has not sought advice from A as to the merits

of the client's entering into the transaction (or, if he has sought such advice,

A has declined to give it but has recommended that the client seek such advice

from an authorised person)."

The article 29 exclusion applies to both articles 25(1) and (2). However, it is itself subject to

an exclusion contained in article 29(2), namely, where "A receives from any person other

than the client any pecuniary reward or other advantage, for which he does not account to

the client, arising out of his making the arrangements".

[95]

The pursuer did not make any express reference to article 29, but for the sake of

completeness, I should record that I agreed with the Lord Advocate that the exclusion

provided for in that article does not apply. Albans Capital Ltd was to receive commission

from Proton for which it would not account to investors. The Lord Advocate appeared

troubled by the assignation to Fannigan Holdings Ltd, since it would appear that ultimately

the commission was received by the latter company and not by the person making the

arrangements. Ultimately, Mr Moynihan thought this should not matter, since Albans

Capital Ltd had agreed to carry on a regulated activity and the fact that that company

"did not complete the work" should not retrospectively excuse the absence of the necessary

FCA authorisation or approval. As it happens, I am not persuaded that it was correct to

have conceded that Albans Capital Ltd did not complete the work. It was only the benefit

of the letter of engagement that was assigned to Fannigan Holdings Ltd, such that Albans

Capital Ltd remained the person contractually obliged to provide the services for Proton

that amounted to carrying on regulated activities. In the result, however, I agree with the

Lord Advocate, since all that has happened is that Albans Capital Ltd has mandated its

commission to a third party. Even if that means that Albans Capital cannot be said to have

"received" a pecuniary reward, which may be doubted, it has certainly received another

"advantage", since it has ensured that a third party received the commission, one that

obscured the identities of those beneficially entitled to it.

[96]

I would conclude that the services provided by Albans Capital Ltd pursuant to the

letter of engagement were regulated activities under at least article 25(1), and probably also

article 25(2), and that there may also have been an element of advising caught by article 53.

In addition, therefore, the entering into of the letter of engagement was itself a regulated

activity under article 64. I now consider whether it follows that the letter of engagement,

and therefore the right to commissions, was unenforceable, as the Lord Advocate contended.

[97]

A person who carries on a regulated activity in the United Kingdom, and who is

neither authorised nor exempt, contravenes the general prohibition and is guilty of a

criminal offence under section 23, FSMA. Section 26, FSMA, provides that "an agreement

made by a person in the course of carrying on a regulated activity in contravention of the

general prohibition is unenforceable against the other party" (emphasis supplied). I would

accept the Lord Advocate's submission that the letter of engagement was an agreement

covered by section 26. However, I do not accept the submission that it is thereby

unenforceable. At most, it is unenforceable against Proton. The general prohibition

corresponds to, the now repealed, section 3 of the Financial Services Act 1986. In Lloyd v

Popely [2000] 1 BCLC 19, the Court of Appeal held that breach of section 3 did not render

the agreement either illegal or void but merely unenforceable as provided for by that Act.

When considering what would have happened, had the pursuer not been prosecuted, it

would be wrong simply to dismiss the pursuer's claim outright on the basis that he had

no enforceable right to any commission. Rather, it is necessary to ask whether there was a

"real or substantial chance as opposed to a speculative one" that Proton would have paid

commission notwithstanding that the letter of engagement could not have been enforced

against it by Fannigan Holdings Ltd and, ultimately, the pursuer (Allied Maples v Simmons &

Simmons [1995] 1 WLR 1602, 1614C-D, 1618H; Perry v Raleys Solicitors [2020] AC 352; PCP

Partners LLP v Barclays Bank PLC [2021] EWHC 307 (Comm), paragraph 533). If the pursuer

succeeds in establishing that there was a real or substantial chance that Proton would not

have avoided paying commission, then the evaluation of that chance must be considered as

part of the assessment of quantum of damage (Allied Maples v Simmons & Simmons, ibid).

Loss of the chance to earn commission

[98]

It did not appear to be in dispute that the pursuer was entitled to one third of

whatever Albans Capital Ltd/Fannigan Holdings Ltd were entitled to receive under the

letter of engagement. But what was that entitlement? Mr Moynihan pointed out that the

pursuer accepted in evidence that the letter of engagement, drafted as it had been with

a view to a wholly different project involving Cancer International Ltd, was only ever

intended to be a temporary arrangement. It was used to "paper up" the new business with

Proton. As a matter of fact, no new letter of engagement was ever entered into. Quite what

the terms of that new letter of engagement might have been, or whether indeed any new

letter of engagement would have been entered into, must be a matter of some uncertainty,

particularly since it was not explored further in evidence. Mr Moynihan accepted that the

pursuer appeared to have been paid commission on the first phase of fundraising which

brought in about £58 million by June or July 2015. However, he doubted whether Proton

"would have been agreeable, even if permitted by existing investors such as Woodford, to

pay additional commission beyond that paid for the first phase". He submitted that the

pursuer had "failed to prove" that there was a soundly based contractual entitlement to

commission "beyond what was actually paid to him" (the agreed £631,000). I am not

persuaded by this argument. The letter of engagement may have been intended to be

provisional. But it nevertheless applied for so long as it was not replaced.

[99]

The next question is, What did the letter of engagement mean? Clause 1.1 referred to

Albans Capital Ltd providing corporate finance advice "in relation to up to a pre IPO £100m

fund raise". However, clause 3.1 provided, "Our fee for this assignment will be a total

maximum success fee equivalent to 5% of all funds raised directly and indirectly in relation

to Pre IPO placing commissions". Mr Moynihan referred to the figure of £100 million as a

"cap", however the word "cap" is nowhere used in the letter of engagement. The closest

one gets to the notion of a cap is in the reference to a "maximum success fee". The

agreement is not that 5% commission would necessarily become payable. It was an

agreement that no more than 5% would become payable. The 5% maximum success fee is

then said to be applicable to "all funds raised" pre-IPO. It does not say it will be applicable

only to the first £100 million of funds raised. Clause 1.1 is obviously poorly drafted, where

it states that Albans Capital Ltd will provide advice "in relation to up to" a pre-IPO fund

raise of £100 million. But in my view it should be understood as an undertaking by Albans

Capital Ltd of what they would seek to deliver in terms of funds raised pre-IPO, not as a

ceiling on the amount of funds in relation to which commission would be payable. In my

view, therefore, the letter of engagement would have entitled the assignee, Fannigan

Holdings Ltd, to charge commission on all funds raised pre-IPO up to a maximum of 5%.

[100]

Mr Andrews' calculation of the funds upon which commission would have been

paid, but for the prosecution, began with the observation that Proton's financial statements

for the year ended February 2019 showed share capital and premium of £158 million. As

it happens, the experts appear to have agreed that £167.5 million was raised. Mr Andrews

acknowledged that, as further investors were sought, there would have been more focus on

the fees and it would become more difficult to claim commission. As a result, he did not

consider that the maximum success fee of 5% stipulated in the letter of engagement could

be sustained beyond the initial pre-IPO fund-raising of £58 million. Overall, he decided to

reflect this in his report, not by reducing the rate of commission, but by lowering the amount

of funds to £118 million upon which the rate of 5% should be applied. Mr Cuerden refined

this approach by retaining the figure of £118 million, as the multiplicand to which the

commission rate would be applied, but adjusting the commission rate from 5% to 3% on

£20 million of that amount, representing the Woodford funds, and applying the 5% rate to

the balance of £98 million. Mr Cuerden then deducted £700,000 paid to Arthurian for its role

in fund-raising, and divided the net profits by three to arrive at the pursuer's third share.

He then deducted the sum of £631,000 which it had been agreed the pursuer had already

received in commission to arrive at a figure for loss of commission.

[101]

In line with my interpretation of the engagement letter, I consider it is appropriate

to start with the figure of £167.5 million of funds raised. The pursuer has already

earned £631,000 commission on the first £58 million. His claim is one for the loss of the

chance of earning further commission. Mr Andrews' approach, as I understood it, was to

discount the multiplicand to which the rate of commission should be applied on the basis

that, as a generality, it would be more difficult, as fund-raising continued, to persuade

investors to pay commission, or at least commission at 5%. Such an approach is

unobjectionable in principle, and I acknowledge that the figure of £118 million represents

a substantial reduction from the total sum of funds raised. However, in my view, further

substantial discounts are necessary to reflect a number of other uncertainties.

[102]

I have already mentioned in the previous section the uncertainty caused by the fact

that the letter of engagement would be unenforceable against Proton. This is a factor to be

considered when asking what, if anything, Proton would be prepared to pay by way of

additional commission, even if permitted to do so by existing investors such as Woodford,

beyond that already paid for the first phase of funding in June/July 2015. To these

uncertainties must be added the pursuer's reduced role in fundraising after the first phase.

By that stage, he had already been required to work in the background. He could not take

up the role that had been envisaged for him of investor relations director in Proton.

Mr Moran's evidence was that the pursuer, though he attended meetings at the start of

the fund-raising, could not attend thereafter. While the contractual right to commission

belonged to Fannigan Holdings Ltd, in reality whether they had earned that right, or

whether the pursuer had earned his one-third share, would depend on the pursuer being in

a position to perform the role that had been envisaged for him. In order to take account of

all of these uncertainties I would discount the sum upon which commission is payable to the

first £100 million of funds raised.

[103]

While, therefore, I do not agree with the Lord Advocate or with Mr Constantinou

that the letter of engagement imposed a cap on the funds that would attract commission,

ultimately I agree that £100 million represents an appropriate starting point for the

calculation. Mr Constantinou looked at the first £100 million actually raised and calculated

the appropriate commission payable according to whether they were Woodford related

funds, on which commission at 3% was payable, or other funds where 5% would be applied.

This resulted in a total gross figure of £3,919,000 commission on the first £100 million of

funds raised. He then deducted sub-commission fees and expenses, working on the

assumption that fees and expenses would have been incurred in the same proportions as

they were in fact incurred by Fannigan Holdings Ltd on sums actually received from Proton.

I preferred this approach to that of Mr Cuerden since it appeared to me to be more firmly

rooted than was Mr Cuerden's abstract calculation in the empirical evidence of what had

actually been paid by Fannigan Holdings Ltd. On that basis, Mr Constantinou arrived at

a deduction of 35%, consisting of 26.4% for sub-commissions and 8.6% for the expenses of

both Fannigan Holdings Ltd and Albans Partners General Trading LLC. Applying that

deduction produced a figure of £2,550,000, being the net commission that would have

been received on the first £100 million of funds raised. Dividing by three to arrive at the

pursuer's share gives a figure of £850,000. From this figure, £631,000 requires to be further

deducted, being the amount already paid to the pursuer. That produces a figure of £219,000

for loss of commission. A final deduction may be required to take account of tax payable on

that sum, depending on whether the pursuer would have been resident for tax purposes in

the UK or in Dubai. I address that question in a later section.

[104]

Interest is also due. The calculation is not straightforward since the evidence shows

that the commission payments that have been made, totalling £631,000, were made in a

series of four unequal amounts between July 2015 and February 2016. In all probability,

additional commission would have been payable in further instalments. Appendix 18 to

Mr Constantinou's report showed that £100 million of funds were raised by the end of

January 2017. I did not understand that to be in dispute. It would be reasonable to assume

that the remaining commission to which the pursuer is entitled would have been payable in

further tranches over the course of the year to the end of February 2017. In order to reflect

that, I would award interest on £219,000, or such other sum as may be appropriate to take

account of tax, at the rate of 4% from 1 March 2016 until the end of February 2017, and at

the judicial rate of 8% thereafter.

Founder and growth shares

[105]

It is not in dispute that the pursuer at one point held the beneficial interest in

1 million founder shares, that is, his one-third share of the 3 million shares transferred from

Albans Partners General Trading LLC to Fannigan Holdings Ltd on 3 June 2015. Nor is it in

dispute that the pursuer was never issued with growth shares. It is agreed that Mike Moran

was issued with 3,138,937 growth shares in Proton in about March 2017. The pursuer claims

that, but for the prosecution, he would also have been issued with 3,138,937 growth shares.

There were some contradictions in the evidence about that. The pursuer claimed that he had

received a draft contract of employment in which he was to receive "roughly" 3.1 million

growth shares. However, Mr Moran doubted whether that would have been a term in

anyone's contract of employment. Ultimately, however, the Lord Advocate appeared

to accept that there was at one point a "prospect" that the pursuer would also have

received 3,138,937 growth shares. Whether or not that prospect of receiving growth shares

would ever have been realised must be doubtful, given that the pursuer had already prior

to the prosecution been excluded from fully participating in the growth of the company by

reason of the risk that he might at some point face prosecution. I have already found that,

had he not been prosecuted, that risk would have remained.

[106]

What we do know is that in terms of a settlement agreement entered into in 2018

among the pursuer, Mr Green, Proton and Albans General Trading LLC, Mr Green agreed

to pay the pursuer £750,000 in full and final settlement of inter alia "[the pursuer]'s claim

that he is legally and/or beneficially entitled to any Shares in [Proton]" (emphasis supplied).

It was not in dispute that the pursuer, or rather his mother, received the settlement sum.

What is significant in the present context is that the agreement did not state that it was

limited to a dispute over the pursuer's entitlement to founder shares. On the face of it, the

agreement appears to cover the pursuer's entitlement, legal or beneficial, to shares of any

kind. Although the precise date of the settlement agreement was uncertain, it was agreed

that it was concluded at some point in 2018. In his evidence, the pursuer stated that, after

the "malicious prosecution" he had "written off the shares in [his] mind", and he was "just

grateful" to Charles Green that he had given him something back for them. I do not accept

the pursuer's evidence in relation to that. In 2018, the pursuer was still in an on-going

dispute with Mr Green and, as part of that dispute, the pursuer was continuing to insist on

his entitlement to shares in Proton. Given that growth shares were issued to Mr Moran in

March 2017, it seems likely that the pursuer's dispute with Mr Green, in 2018, encompassed

both founder and growth shares. I therefore consider it likely on the evidence that the

pursuer had been persuaded to accept £750,000 in return for any and all Proton shares to

which he was "legally and/or beneficially" entitled. The pursuer has not proved, on a

balance of probabilities, that he sold his shares as a result of the prosecution, as distinct

from his exclusion from full participation in the company following Mr Green's Sky

interview. Having already been paid for his shares, he is not entitled to any compensation.

[107]

Even if I am wrong in that conclusion, and that, but for the prosecution, the pursuer

would have held or had in interest in a total of 4,138,937 founder and growth shares, the

question then becomes, when, if at all, he would have sold them. The pursuer says that he

would have sold them no later than February 2019 when the IPO took place. Since this is a

question that turns on what the pursuer would have done in order to obtain a benefit, rather

than the actions of third party, it is an all or nothing question that has to be decided on a

balance of probabilities (Allied Maples Group, ibid; Hirtenstein v Hill Dickinson [2014]

EWHC 2711 (Comm), paragraph 85; Perry v Raleys Solicitors [2020] AC 352; PCP Capital

Partners LLP v Barclays Bank Plc [2021] EWHC 307 (Comm), paragraphs 533-553). Applying

that standard of proof, I am persuaded that the pursuer would not have sold his interest

in shares prior to Rutherford Health plc going into liquidation, by which stage the shares

would have been worth nothing. There was a suggestion in Mr Moran's evidence that

the shares may have retained some residual value, but this was contradicted by the public

announcement from the government's Insolvency Service on 13 June 2022 that, due to the

Official Receiver having been appointed liquidator, "there [was] no prospect of a return to

shareholders".

[108]

The evidence in support of the pursuer's not selling prior to liquidation came from a

variety of sources. Firstly, while there had been some sales of shares in 2017/2018, prior to

the IPO, after the IPO only 7,199 shares out of a total of 198 million shares changed hands.

There was a lack of liquidity in the market for Proton shares. Any sale would have required

to have been heavily discounted. Secondly, at the date of the IPO, in February 2019,

Proton/Rutherford had a value of about £400 million but with a prospect of being valued

at £1 billion. In view of these anticipated rewards, the pursuer would have been unlikely to

have sold at a discount. Thirdly, I accept the evidence of Mr Green that "the final intention,

with regards to [the pursuer] was for him to hold a non-executive role on the board [of

Proton]". The importance of this evidence was that board members were subject to a lock-in

preventing them selling their shares for a period of 1 year following IPO. This undermined

the pursuer's case that he would have attempted to exit at the IPO stage. In any event, quite

apart from the lock-in, there was the evidence of Mr Walton, that shareholders would have

expected the founders to be "totally involved and delivering on the commitments they made

to investors". Fourthly, the pursuer's exit strategy involved threatening Woodford that he

would depress the value of Rutherford shares generally by selling his on the open market.

However, the efficacy of this as a strategy was undermined by Mr Andrews, who

considered that one would have had to approach other investors first, aggressively

discounting the value of the shares, before turning to Woodford "as a last resort". Fifthly,

Mr Constantinou pointed out that, in the 5-year period prior to 2021, Proton/Rutherford had

achieved a total revenue of just £14.4 million with total losses of over £95 million. Anyone

buying the pursuer's shares would not have been paying money into the company for its

benefit, but simply paying it away to the pursuer.

[109]

In short, I have held that, pursuant to the settlement agreement, the pursuer sold any

interest he had in Proton shares in 2018, for reasons unrelated specifically to the prosecution.

If I am wrong in that, I hold that he would have retained or been required to retain any

interest that he had in Proton shares until they were worth nothing. No sum is due in

respect of this head of loss.

Loss of business opportunity

[110]

At this point, it might be appropriate to take stock. The pursuer's career path was

determined not by a wish on his part to become a "principal" in deals, as he put it, but by

the circumstances in which in 2011 he was forced to leave Allenby. Only a firm or company

may be a NOMAD in the AIM market in which the pursuer specialised. In order for a firm

or company to be a NOMAD it required to retain at least four qualifying executives.

Qualifying executives required FCA approval. The pursuer was unable to obtain FCA

approval without disclosing the real reasons for his departure from Allenby, and if he had

disclosed the real reasons, he would not have obtained FCA approval.

[111]

Unable to work as a qualifying executive, he was effectively cast adrift from the

career he had enjoyed for many years as a broker, working for NOMADs in the AIM. The

pursuer tried to restart his career at Zeus, but it was inevitable that his application for FCA

approval would require to be withdrawn. He may also have tried to restart his career as a

broker at ZAI, but this only emerged during the course of the proof and was not further

explored. If he had done, it seems likely that the attempt would have met a similar fate.

[112]

The pursuer had little alternative but to take the risk of developing a new career as

a commercial director at Rangers. However, by this time the reputational baggage he had

acquired in the City had followed him to Glasgow. The chairman of Rangers received

multiple warnings that he was not a fit and proper person to be a plc director. Within a year

he was sacked. An independent business review criticised his management of the club's

financial affairs. The pursuer's career post-Rangers became increasingly tied up with that of

Mr Green, his business partner. He moved to Dubai, a milieu with which he would have

been less familiar than the one he left behind. No sooner had he and Mr Green started to

get Proton up and running when there were rumours going about of a potential prosecution,

culminating in Mr Green's Sky interview. Quite apart from any damage that may have been

done to his reputation, already badly compromised by the circumstances of his departure

from Allenby and his involvement at Rangers, the threat of prosecution to his closest

business associate meant that he now represented a significant commercial risk to investors.

The pursuer could no longer take up employment as investor relations director at Proton,

take a seat on the board, hold shares in his own name, or attend meetings with investors.

[113]

When, in September 2015, a petition warrant was taken out for his arrest, he fled to

Pakistan. His relationship with Mr Green fell apart. Paul Fraser, his other business partner

at Proton, has since died. Although Mr Green does appear to have continued working,

despite being prosecuted, the pursuer has not been able to restart his career. In my view,

the principal reasons for that will have been a combination of his badly compromised

reputation post-Allenby and post-Rangers, as well as the commercial risk that the pursuer

presented to any investor, employer or business partner at least until February 2018 when

it was announced that he would no longer face fresh criminal proceedings.

[114]

Both sets of experts developed an array of scenarios with a view to assessing the

pursuer's potential career and how it may have been damaged by the prosecution. For

Mr Andrews, the options that might potentially have been open to the pursuer were (1) to

return to working as a qualified executive, (2) to complete the Proton deal and return to

corporate finance, and (3) to continue a career as a "venture capitalist entrepreneur". He

considered the first two options unlikely, even before the pursuer's FCA-related difficulties

emerged in evidence. The venture capitalist entrepreneur was a term Mr Andrews invented

to describe someone who was not following any recognised career path, for whom there

was no pay scale, and no typical remuneration, but who had a "certain set of skills" and

the "freedom to pursue financial opportunities". Venture capitalist entrepreneurs would

typically find other such entrepreneurs with whom they would work closely in formal

corporate structures or partnerships or less formal "handshake" agreements.

[115]

The assumptions upon which Mr Andrews considered the venture capitalist

entrepreneur as a likely option for the pursuer are very far removed from the facts of this

case as I have found them to be. To take one significant example, Mr Andrews assumed that

the pursuer left Rangers on a "career high", whereas I have concluded that his career was

already at that point on a downward trajectory, and that it has continued downwards ever

since. While Mr Andrews acknowledged the importance of reputation in the development

of any career the pursuer might have had in the financial sector, he took no account of the

reputational damage and commercial risk which had already arisen pre-prosecution. He

naturally made assumptions, running contrary to my findings, about capital gains likely to

have been made from selling Rutherford shares and that could have been re-invested as

seed money in new projects. None of this is intended as a criticism of Mr Andrews, since his

opinions were necessarily based on the information he was given, but ultimately I derived

little assistance from this aspect of his evidence.

[116]

Similar comments may be made in regard to various possible scenarios contemplated

by Mr Constantinou. However, there was one scenario considered by Mr Constantinou,

though not by Mr Andrews, which may be of some assistance. In that scenario the pursuer

developed what he called a "Proton Partners" type career, by which he meant that he

pursued "salaried career opportunities with corporates without holding any significant

shareholdings in those companies". Mr Constantinou gave as a rationale for that scenario

the need to take account of the possibility that the pursuer's reputation had been damaged

by a number of factors. These included damage associated with his involvement at Rangers,

and the liquidation of Rutherford. Naturally enough, he had not been aware at the time of

his report of the pursuer's true reasons for leaving Allenby.

[117]

In this scenario, Mr Constantinou assumed that the pursuer would have remained

investor relations director at Rutherford until its liquidation in June 2022, and would then

have taken up a similar role at one or other of the companies that were considered in

evidence as potential business opportunities for the pursuer. One of these was a company

called Haslar Developments Ltd, which was Paul Fraser's property development company.

There had been discussions in the months prior to the prosecution of the pursuer being

appointed to the board, but which fell through after the prosecution began. The pursuer

stated that he was due to earn a salary of between £100,000 and £150,000, while Mr Schmidt

stated that it might even have been as much as £200,000.

[118]

Mr Constantinou's scenario does not quite fit the facts as I have found them to be. In

particular, I cannot accept that, but for the prosecution, the pursuer would have continued

to work at Proton, since his exclusion from the public face of that company was attributable

not to the prosecution but to the commercial risk that he presented to investors as a result of

his association with Mr Green and Rangers. However, it is certainly possible that, but for

the prosecution, the pursuer might have been perceived as presenting less of a risk to firms,

such as Haslar Developments Ltd, owned by friends and associates, particularly if, as

Mr Constantinou's scenario suggests, he did not acquire equity in the firm, or take up a

position as director. Such a firm might have had a greater tolerance for risk, and been

prepared to accept the reduced level of exposure that the pursuer's taking up such a limited

role might present. In addition to the damage to his reputation which I have already

referred to as meriting a certain amount of compensation, I consider that a further lump

sum award is necessary to compensate the pursuer for whatever additional difficulty the

prosecution caused him to suffer in his efforts to secure employment. Mr Moynihan, as I

understood him, compared such an award to compensation for "handicap in the labour

market", which does capture something of the general idea.

[119]

Mr Constantinou stated that a salary of £150,000 that might have been earned at

Haslar Developments Ltd would correspond to a net salary of £88,000, after deduction of

UK income tax. For the reasons I have given I do not accept that the pursuer's loss of that

or any similar business opportunity would have been solely attributable to the prosecution.

Again, for the reasons already given, I consider that any such handicap in the labour market

would have been largely removed in June 2021 by the Lord Advocate's unreserved public

apology. In the next section, I find that the pursuer would have been resident in the UK for

tax purposes. Resorting once more to the judicial broad axe, I am prepared to make a lump

sum award of £176,000 for loss of business opportunity. This corresponds to 2 years' net

salary at a company such as Haslar Developments Ltd. I will attribute 75% of that sum to

the past. Accordingly, interest will run on £132,000 at 4% from 2 September 2015 to the date

of decree, and at 8% thereafter.

Residence for tax purposes

[120]

The final question to be resolved is whether damages should be calculated gross

without deduction for UK tax on the basis that, but for the prosecution, the pursuer would

have been permanently resident in Dubai for tax purposes.

[121]

The pursuer claims that he moved permanently to Dubai in March 2015 in order

to enjoy the tax benefits. However, the evidence of Mr Schmidt was that, until the pursuer

left for Pakistan in the autumn of 2015, he interacted with the pursuer regularly. He said

that he was aware that the pursuer was "seriously considering" moving to Dubai on a

permanent basis. He had brought his family out for a summer to see if they could settle

there. In the first joint minute, parties agreed that the pursuer was resident in Pakistan

from September 2015 to September 2016, but that period straddles two tax years and does

not demonstrate his non-UK residency for tax purposes in either of them. There was also

a considerable amount of vacillation in the pursuer's own evidence regarding when he

returned to the United Kingdom from Pakistan. Some of his admitted dishonesty relates

to tax evasion. Against that background, I do not find it proved that the pursuer had

become permanently resident in Dubai for tax purposes.

Disposal

[122]

I would summarise the conclusions I have reached on the various heads of damage,

as follows.

Head of Loss

Award (£)

Legal expenses

22,026

Interest on legal expenses

8% from 1 October 2015

Solatium

40,000

Interest on solatium

4% on 30,000 from 2 September 2015 to date

of decree and 8% thereafter

Loss of salary and benefits at Proton

Nil

Loss of commission

219,000 or such other sum as may be

appropriate to take account of tax

Interest on loss of commission

4% on 219,000 (or such other sum as may be

appropriate to take account of tax) from 1

March 2016 until 1 March 2017 and 8%

thereafter

Sale of founder and growth shares

Nil

Loss of business opportunity

176,000

Interest on loss of business opportunity

4% on 132,000 from 2 September 2015 to

date of decree and 8% thereafter

[123]

At the invitation of parties, I will put the case out by order to discuss the terms of

the interlocutor that would be appropriate to give effect to the award that I have indicated

I would be prepared to make, taking account of interest and any tax calculations. I will

reserve any question of expenses, whilst drawing parties' attention to paragraph 45 of this

opinion.