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You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Re-Use Collections Ltd v Sendall & Anor [2014] EWHC 3852 (QB) (19 November 2014)
URL: http://www.bailii.org/ew/cases/EWHC/QB/2014/3852.html
Cite as: [2014] EWHC 3852 (QB), [2015] IRLR 226

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Neutral Citation Number: [2014] EWHC 3852 (QB)
Case No: HQ13X02852

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION


At the Manchester Civil Justice Centre
Handed down on 19 November 2014

B e f o r e :

HIS HONOUR JUDGE STEPHEN DAVIES
SITTING AS A JUDGE OF THE HIGH COURT

____________________

Between:
RE-USE COLLECTIONS LIMITED
Claimant

- and -


(1) MR. KEITH SENDALL
(2) MAY GLASS RECYCLING LTD


Defendant

____________________

Spencer Keen (instructed by MILS Solicitors, London SW5) for the Claimant
Akhlaq Choudhury (instructed by Coldham Shield & Mace Solicitors LLP, Chingford, London E4) for the Defendants
Hearing dates: 21 – 25, 28 July, 2 – 3 Oct. 2014;

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

    His Honour Judge Stephen Davies:

    Summary

  1. The claimant, Reuse Collections Limited ("Reuse"), claims that:
  2. (1) Its former employee, the first defendant, Keith Sendall, has acted in breach of duty as regards his involvement in setting up a competing business carried on by the second defendant, May Glass Recycling Limited ("May Glass").
    (2) May Glass, a company whose directors are Keith Sendall's sons Fred Sendall and Bill Sendall, who were also both former employees of Reuse, has induced or procured Keith Sendall's breaches and/or has unlawfully conspired with him to do so.

  3. HHJ Seymour QC, sitting as a High Court Judge, granted an interlocutory injunction against the defendants on 4 June 13, when he also ordered that there should be an expedited trial. Regrettably, and due largely to continuing disputes as to the adequacy of the defendants' disclosure, the trial did not come on for hearing until 14 July 14. Even then it was unable to conclude in the 5 days allocated, due to both parties making further belated disclosure, so that a further 1 day had to be allocated, on 28 July 14. The evidence could not be concluded on that day either, due to yet further belated disclosure by the defendants, so that the conclusion of the evidence and closing submissions had to be adjourned for a further 2 days on the first dates convenient to the parties, 2 - 3 Oct. 14. Supplemental written submissions followed, after which this judgment was produced in draft.
  4. Reuse had in June 14 agreed to the injunction being lifted, and no claim for a permanent injunction has been pursued before me, but the question as to whether or not the defendants' conduct was such as to justify the grant of an injunction in the first place, together with Reuse's claim for damages and Keith Sendall's counterclaim for damages for wrongful dismissal, remain hotly disputed and require resolution.

  5. There are a number of issues which I must address, which may be summarised as follows:
  6. (1) Did Keith Sendall owe a fiduciary duty to Reuse in addition to an (admitted) duty of fidelity and good faith?
    (2) Were certain restrictive covenants contained in the contract of employment signed by Keith Sendall on 22 Feb. 13 binding upon him? In particular:
    (a) Did Keith Sendall provide consideration for undertaking the covenants?
    (b) Are the covenants unreasonably wide and thus void as being contrary to public policy?
    (c) Was Keith Sendall discharged from the covenants by reason of his being constructively and wrongfully dismissed by Reuse?
    (3) To what extent was Keith Sendall involved in setting up the competing business established by May Glass, and did that involvement put him in breach of his obligations to Reuse?
    (4) Is May Glass liable for inducing or procuring Keith Sendall to breach his contract with Reuse or for conspiring with Keith Sendall for him to do so?
    (5) On the basis of the facts as I find them to be, was Reuse entitled to the interlocutory injunction which it obtained on 4 June 2013?
    (6) What if any loss and damage has Reuse suffered as a result of such unlawful conduct on the part of Keith Sendall and/or May Glass as I may find proved against them?
    (7) Has Keith Sendall established his counterclaim?

  7. My conclusions in relation to each of those issues are as follows:
  8. (1) Keith Sendall did not owe any fiduciary duty to Reuse.
    (2) Reuse did not provide consideration, and the covenants were of unreasonable duration, but if they had applied Keith Sendall would not have been discharged because he was not constructively dismissed.
    (3) Keith Sendall was directly and intimately involved in setting up the competing business established by May Glass, and was in breach of his duty of fidelity and good faith as a result.
    (4) May Glass is liable for conspiring with Keith Sendall to breach his contract with Reuse.
    (5) Reuse was entitled to the interlocutory injunction which it obtained on 4 June 2013 as against both Keith Sendall and May Glass.
    (6) Reuse has suffered loss and damage which it is entitled to recover against Keith Sendall and May Glass, which I quantify in the total sum of £51,822.20.
    (7) Because Keith Sendall was not wrongfully dismissed by Reuse his counterclaim fails.

  9. My reasons are given in the following sections of this judgment:
  10. (A) A brief history of relevant events [pars. 6 - 24].
    (B) An assessment of the witnesses' credibility and reliability [pars. 25 - 55].
    (C) My decision and reasons in relation to the issues in the case [pars. 55 – 234].

    A. RELEVANT HISTORY OF EVENTS

  11. Reuse is a company which was formed in 2000. It took over the operation of what had been a family run glass recycling business, which had been founded in 1922 by Keith Sendall's maternal grandfather. It remained as a family run business until the 1990's. Keith Sendall had joined the business in 1980, had become a director of the business until it left family control, and had remained in employment with the business ever since until the events in issue. His cousin, Mick Keogh, was also a longstanding employee and former director of the business. In due course members of the next generation of the family had also joined the business, as relevant to this case Fred and Bill Sendall and Mick Keogh's son, Dominic Keogh.
  12. The business, having left family ownership, was transferred into the ownership of Reuse, which itself was acquired about 7 years ago by an Australian company owned and controlled by Anthony Johnston, who is now Reuse's managing director. Mick Keogh was still employed by Reuse as its general manager, based at its principal place of business at South Kirkby, West Yorkshire, and Keith Sendall was still employed as the manager of the depot at Dagenham, Essex. Dominic Keogh was employed as a regional glass purchasing manager at Dagenham, and Fred and Bill Sendall were employed at Dagenham as drivers.
  13. I should say something about the nature of Reuse's business, together with that of its parent company Reuse Glass Ltd ("Reuse Glass"). In summary:
  14. (1) What Reuse does is to obtain quantities of waste glass from various suppliers, and to process that waste glass into a form which it can sell on to its various customers, who use it for manufacturing new glass products.

    (2) Reuse secures its waste glass from a number of different suppliers and in a number of different ways, reflecting the fact that waste glass comes in many different types and from many different sources. In some cases it may obtain waste glass simply by being allowed to leave a skip at a particular site, which once full it takes away and replaces with another empty skip. In other cases it may enter into a formal written contract with a business which produces substantial quantities of waste glass on a regular basis as a by-product of its operations. Depending on the circumstances, Reuse in some cases agrees to pay its supplier for the privilege of obtaining the waste glass, whilst in other cases it is paid by the supplier for removing the waste glass.

    (3) Although there are a number of different types of waste glass, the two principal types (at least so far as this case is concerned) are plate glass and bottle glass. Plate glass comes from a variety of sources, principally windows and car windscreens. It may be "clean", or mixed with other items, for example window or windscreen surrounds. Bottle glass, as its name indicates, is derived from empty glass bottles, although it may also contain glass from other sources, and again may be clean, or mixed with a variety of other items.

    (4) The waste glass is transported to a number of depots (or "transfer stations") operated by Reuse around the UK, one of which is at Dagenham. Here the glass is graded and then stored, ready for onward transmission to the S. Kirkby site, where contaminants such as the plastic surrounds mentioned above are removed, and the glass is then processed by crushing and screening to produce a furnace ready final product, known as "cullet", which is suitable for melting down and re-use to make new glass products.
    (5) At trial it emerged that although clean plate glass was processed in this manner at S. Kirkby and then sold on to the end customer, principally Saint Gobain, the well known glass manufacturing company, mixed plate glass was dealt with differently, being sent to a site at Doncaster, operated by the parent company Reuse Glass, where it was processed to produce cullet. This is relevant to the quantum of Reuse's damages claim, as I explain later.
    (6) Reuse is a substantial company, employing just short of 100 people with a turnover to the y/e 31 Jan. 13 of £26.3M. It acquires over 400,000 tonnes of waste glass yearly.
    (7) Dagenham is one of 3 large depots operated by Reuse, which in effect services South East England. It handles around 25% of the total glass acquired by Reuse, and around 12 of its employees are based at the depot.

  15. Returning to the chronology, in Sept. 11 Mark Wilson was brought in by Mr Johnston to become Reuse's CEO in order to turn around its fortunes as a loss making business. Shortly afterwards, in Nov. 11, Mick Keogh left Reuse. Mark Wilson suggests that this was a response to an investigation in relation to financial and stock discrepancies at Reuse, and I am invited to conclude that this is because he was implicated in certain irregularities whilst employed by Reuse. That however is not an invitation to which I could possibly accede: Mick Keogh is not a party to this litigation[1], there is no clear pleaded case against him, nor clearly marshalled or detailed evidence in support, and the relevance of the allegation is at best marginal to this case. It is known that after resigning Mick Keogh set up a competing glass recycling business, through a company known as INGS Environmental Limited ("INGS"), which is in the business of dealing with bottled, but not plate, glass.
  16. It is Reuse's case that by this stage Keith Sendall, who was and remained close to Mick Keogh, had already decided to act similarly, and that from Nov. 11 onwards he was actively engaged in progressing that plan in two main ways. The first, by searching for suitable premises, plant suppliers and the like, said by Reuse to have been conducted in company time; the second, by failing to take positive steps to sign suppliers up to long term contracts, thus leaving them free to be "poached" by his new business once established.
  17. In April 12, Mr Johnston and Mark Wilson brought in Mark Owen as Head of Support, based at S. Kirkby. He joined the company to replace the previous financial controller, but his responsibilities extended beyond financial matters to HR, IT and transport.
  18. Dominic Keogh remained with Reuse until Sept. 12, when he also resigned and left to work for INGS.
  19. It is common ground that prior to Oct. 12 Keith Sendall had no written contract of employment, although he did have a written statement of employment particulars. In Oct. 12 Reuse gave him a draft written contract of employment, which included for the first time specific provisions in relation to confidential information and post-termination restrictions. Keith Sendall did not sign it immediately. He took legal advice about it, and it is clear from communications he sent in Dec. 12 and Jan. 13 that he was not particularly happy about signing it. However, after a meeting with Mark Wilson later in Jan. 13, he did sign it on 22 Feb. 13. He now claims however that Reuse provided no consideration for his accepting these restrictions and that they are not binding upon him.
  20. It is Reuse's case that in the meantime Keith Sendall was taking increasingly active steps to set up a new business to compete with Reuse. In particular, it says that he was taking active steps to obtain finance, to obtain premises and to obtain skips and vehicles. It says that Keith Sendall set up May Glass in Jan. 13, becoming a director, along with his two sons, until he subsequently resigned his directorship in Feb. 13 after signing the contract of employment with Reuse. It says that he was in regular contact with Mick Keogh and others at INGS who, it believes, were actively involved in the plan to set up the new competing business, which was to operate in the plate glass market and thus complement, as opposed to compete with, INGS' bottle glass business. Keith Sendall on the other hand says that all that he had agreed to do was to provide finance to enable his sons to establish this competing business, which they were perfectly entitled to do, especially since they had no restrictions on their post-employment conduct. He says that all he did was to raise money with his wife, Deborah Sendall, by borrowing money against the security of their house. He also admits that he introduced them to an accountant to undertake the formalities of forming the company, and it was in that context that he was, he says, mistakenly made a director, which position he resigned once he realised the error. Finally, he admits providing some limited assistance to his sons in making contact with potential skip and vehicle suppliers and the like, but denies being actively involved in setting up the business more generally.
  21. It is common ground that Keith Sendall gave 3 months' notice of resignation on 27 March 13, as he was obliged to do under clause 15.1 of his contract of employment. It is also common ground that on 2 April 13 both Fred and Bill Sendall gave 1 week's notice of resignation, which is all that they were obliged to do. Neither Keith Sendall nor his sons told Reuse about May Glass at the time of their resignation. It is Reuse's case that Keith Sendall's plan was to keep his involvement in May Glass quiet, so that he could carry on receiving payment from Reuse in his period of notice, whilst surreptitiously assisting his sons to build up May Glass, so that he could join it in July 13 once free to do so. Keith Sendall's case is that he had no further involvement with May Glass over this period, having in effect played his part by providing funding.
  22. Mark Owen says that in April 13 he was informed that Keith Sendall had been approaching Reuse's customers. Reuse duly began an investigation, in the course of which they came to discover the existence of May Glass and Keith Sendall's role in it. Matters came to a head on 18 April 13, when Mr Johnston and Mark Wilson attended Dagenham unannounced to discuss this with Keith Sendall. There are disputes about what happened at that meeting, but the end result was that Keith Sendall was suspended with immediate effect, pending the conclusion of disciplinary proceedings. He was also asked to and did return all items of company property to Reuse at that meeting.
  23. Included within the items obtained by Reuse were two journals, in which Keith Sendall was in the habit of making business and personal notes. There is a dispute about whether or not the journals were in fact company property, because although Reuse claims that it provided these journals to employees such as Keith Sendall to use for work purposes, Keith Sendall claims that he provided them himself at his own expense for his own purposes, which included making notes on work-related as well as personal matters. There is also a dispute as to whether he gave up the journals voluntarily, or whether they were forcibly taken from him. Nonetheless Keith Sendall has not advanced a positive case to the effect that Reuse is not entitled to deploy the content of the journals in evidence against him, and their content is very strongly relied upon by Reuse as supporting its case against both Keith Sendall and May Glass, so that I will have to refer to them in some detail later in this judgment.
  24. In subsequent correspondence Keith Sendall asserted that the way in which he had been treated by Reuse, particularly at the meeting, amounted to constructive dismissal, and refused to participate in the disciplinary process invoked by Reuse. Reuse's response was to continue with the disciplinary process and, finally, on 1 May 13 to write to say that it regarded Keith Sendall as having resigned with immediate effect, failing which he would have been dismissed for gross misconduct in any event at the disciplinary hearing which had taken place the day before. In short, therefore, on any view the employment relationship was terminated as at 1 May 13 at the latest.
  25. It appears that May Glass actively began trading in competition with Reuse at the end of April 13. Fred Sendall has said that it made its first collection on 1 May 13, and there is no hard evidence to contradict this.
  26. On 1 May 13 Reuse's solicitors wrote to Keith Sendall, setting out its case to the effect that what it contended was Keith Sendall's conduct in relation to setting up May Glass and contacting customers amounted to a breach of his implied and express obligations, and seeking his undertaking: (a) to abide by his express post-termination obligations; (b) not to operate May Glass or contact Reuse's customers, whether by himself or by his sons, for a period of 12 months, failing which it would apply for an injunction.
  27. Keith Sendall consulted his solicitors, who wrote a substantive response on 14 May 13, denying that he was involved in May Glass or had contacted customers on their behalf, and contending that the post-termination contractual restrictions could no longer be relied upon due to Reuse having constructively dismissed Keith Sendall.
  28. Keith Sendall says that in July 13 he obtained new employment with a business known as DKM Consultants, and that his sons are and have been well able to continue to conduct the business of May Glass without involvement by or assistance from him.
  29. So far as the pleaded cases are concerned, through its Particulars of Claim Reuse contends, in outline, that Keith Sendall breached his express and implied obligations to Reuse through his involvement in relation to May Glass and his contacting Reuse customers with a view to persuading them to transfer their business to May Glass. As against May Glass it is pleaded that it knew that Keith Sendall was bound by contractual and fiduciary duties to Reuse, and induced or procured his breaches of duty, alternatively that it engaged with him in an unlawful means conspiracy as against Reuse. It is contended that the effect of these breaches was to give the defendants a "springboard" advantage, so that Reuse is entitled to an injunction to prevent them from so doing. Reuse also claims damages, including a sum, quantified at approx. £750,000, as representing its loss of revenue suffered as a result of the defendants' breaches.
  30. The Amended Defence raises the points which give rise to the issues outlined above. Keith Sendall also makes by way of counterclaim a complaint of constructive dismissal, amounting to the balance of his unpaid salary and benefits during what would have been the remainder of his 3 month notice period after 1 May 2013. The defendants have also in their skeleton argument for trial contended that they should be entitled to enforce the cross-undertaking as to damages given by Reuse as a condition of obtaining interim injunctive relief.
  31. B. THE WITNESSES

  32. The principal witnesses, Mark Owen, Mark Wilson, Keith Sendall and Fred Sendall, have all made a number of witness statements in the course of the interlocutory stages of these proceedings. Keith Sendall and Fred Sendall (on behalf of May Glass) have also sworn affidavits to confirm compliance with their respective disclosure obligations. They have all made substantive witness statements in Feb. 14 for use at trial. Where in this judgment I refer to their witness statements I refer to those substantive statements save where indicated to the contrary, citing paragraph numbers thus: [1]. Bundle page reference numbers are cited thus: p.1.
  33. (i) Mr Mark Owen

  34. Mr Owen is a chartered accountant by qualification, with considerable experience in finance, HR and IT. He had no previous experience of the glass recycling business when he joined Reuse in April 12. He left the claimant's employment in March 14 for personal reasons, but remains on good terms with Reuse.
  35. His first significant involvement in this case appears to have been on 20 April 13, when Mark Wilson asked him to review in detail the contents of Keith Sendall's journals in connection with Reuse's investigation into Keith Sendall's alleged conduct. He did so, and also reviewed Keith Sendall's work e-mail account for the same purpose.
  36. It is apparent that as a result of that investigation he formed the very clear view that Keith Sendall had been actively involved in planning to set up in competition with Reuse since 2011, and his witness statement contained a very detailed account of the information he had obtained from his analysis of the journal entries and the conclusions he had drawn from those entries.
  37. He was subjected to close cross-examination on this aspect of his evidence. As regards a number of entries he was forced to accept that his expressed conclusions, entirely unfavourable to Keith Sendall, were incorrect. As regards many more he stood doggedly by his conclusions, seeking on a number of occasions to fortify them by reference to evidence which was not in his witness statement.
  38. In his favour, it can be said that he was prepared to withdraw his previously expressed adverse conclusions when presented with evidence which clearly showed that he was mistaken. Against him is the fact that he was originally prepared to draw so many adverse conclusions, including some involving very serious imputations against Keith Sendall, on what was in many cases very slender evidence, and in circumstances where a more careful analysis of the entries, coupled in some cases with a consideration of the e-mails which he had also reviewed, should have caused him to express himself in far more qualified terms.
  39. I was particularly troubled by his analysis of an entry dated 22 June 11 relating to a business known as Glamorgan Glazing, which seems completely innocuous save for the note: "paid him cash this last week £2,000". Even this cannot in itself and without more be read as clear evidence of wrongdoing, but Mark Owen inferred that it demonstrated that Keith Sendall had paid the director of this company £2,000 in cash using money raised from selling stock belonging to Reuse. Although not entirely clear from his witness statement, Mark Owen made it clear under cross-examination that he was intending by including this in his witness statement to make a serious allegation that Keith Sendall had been involved in dishonest dealings with Reuse's stock and using the proceeds for the purpose of bribery. However he also had to concede that this serious matter had never subsequently been the subject of a further more detailed investigation by Reuse, let alone any referral to the relevant authorities, and Reuse had produced no evidence to support the allegation.
  40. Furthermore, in [63] Mark Owen had suggested that an entry at p.969 showed that Keith Sendall was using Reuse stock at S. Kirkby for his own purposes, but under cross-examination he had to accept that this was based on a misreading of the entry, because he had believed that the entry which actually read "Higham", a customer, was in fact an entry "Anglian", a supplier. This was a simple, but careless, error. More troubling, in my view, was that there was no justification for using this entry which, even on Mark Owen's understanding, was at worst ambiguous, to justify making such a serious allegation. Indeed Mark Owen's conclusions in relation to each of the 5 separate entries on p.969 seem to me to be not only mistaken in fact but reached on grounds which were not supported even on his mistaken belief. As I have said, there was no evidence in his witness statement or otherwise before the court which provided any evidential basis for these allegations.
  41. In his witness statement Keith Sendall had explained that all he was doing was noting in his journal the fact that he had discovered that a competitor of Reuse had paid money to Glamorgan Glass to secure its custom, as opposed to recording that he had done so. Given the absence of positive evidence to prove Reuse's allegations, given that this entry goes back to June 11 (and thus over 18 months before any competing business was even incorporated), his explanation appears to me to be far more credible than Mark Owen's rather far fetched theory, based on such slender uncorroborated evidence. In my view making and persisting in this allegation was inappropriate, and demonstrated poor judgment on Mark Owen's part.
  42. Another example was that in his witness statement Mark Owen had made reference to an entry in the journal relating to Keith Sendall's arrangements for drinks to be provided as a Christmas gift to valued suppliers. A reasonable reader of Mark Owen's witness statement would have assumed that it was intended to convey the impression that there was something sinister or underhand about this, not least because otherwise there was no reason to include it at all, but in cross-examination he appeared quite willing to accept that this was standard practice and that there was nothing at all sinister or underhand about this. Indeed e-mail communications disclosed by Reuse on day 2 of the trial showed that Keith Sendall was actively seeking, as he was required to do, Mark Owen's sanction for these purchases, so that there was nothing remotely underhand about them.
  43. It is also apparent that Mark Owen had little if any first hand knowledge of the nature of Keith Sendall's role or activities, or the operation of the Dagenham site more generally, so that his speculation as to the nature of Keith Sendall's activities was based on little direct knowledge.
  44. In short, I do not think that I can place very much reliance on his evidence, insofar as it forms the basis for making findings adverse to Keith Sendall, which go beyond the entries in the journals themselves. It seems to me that he took upon himself the role of advocate for Reuse's case, seeking to build up a case against Keith Sendall from the journals, and ignoring anything which did not fit with his adverse view of Keith Sendall's activities, rather than undertaking the proper role of a witness of fact, seeking to give evidence of fact confined to those matters of which he could personally speak.
  45. In my view substantially the same criticisms apply to his evidence in relation to the details of the damages claim against the defendants, which he had been responsible for producing. It became clear in cross-examination that in certain respects his assessment was flawed, that his witness statement did not include much of the detail which underpinned his assessment, and that in further respects his assessment depended on assumptions as to which he did not have detailed knowledge.
  46. Further, and yet more damaging in my view:
  47. (1) In at least one respect it seemed to me that he had been caught out in producing a materially misleading under-estimate of cost. He had made allowance for certain saved costs, one of which was transportation of mixed plate glass from S. Kirkby to Doncaster which he had assessed at £2.85/t. However under cross-examination he was taken to an internal capital expenditure request, which he had produced sometime in 2012, from which it was apparent that he had estimated this cost as being £5/t if undertaken in house, rising to £8/t if undertaken externally by a company known as Coopers. When asked to explain this apparent discrepancy, he suggested that his figure was "based on" a service level agreement with Coopers, which however had not been formally disclosed nor any reference made to it in his evidence. I was left with the clear impression that his figure for this claim had been set as low as he thought he could get away with, on a selective and partisan basis.

    (2) In at least another respect he had failed to make an allowance for saved costs, namely the price which Reuse would otherwise have had to pay to certain suppliers who it had agreed to pay for deliveries of waste glass, which ought obviously in my view to have been allowed. This must surely have been apparent to anyone with Mark Owen's knowledge and expertise, and it seemed to me that his failure to do so was at best extremely careless or at worst deliberately misleading.

    (3) He had completely failed to consider the implications of the fact that a substantial part of the mixed plate process had been undertaken through Reuse Glass as opposed to through Reuse. Again it seemed to me that someone with his knowledge and expertise ought to have been aware of the need to explain and address this point, and that his failure to do so was due to a desire to avoid making difficulties for Reuse in pursuing what, I am satisfied, is a grossly over-inflated damages claim against the defendants.

  48. In those circumstances I do not think that I can accept his evidence in relation to the quantification of the damages claim without very close scrutiny.
  49. I would not wish to give the impression that I believe Mark Owen to be a fundamentally dishonest witness, but I do consider that he was fundamentally partisan and prepared to commit himself, or to allow himself by his superiors in Reuse to be committed, to making assertions and claims which he either knew or ought to have known were at best speculative and at worst actively misleading.
  50. (ii) Mr Mark Wilson

  51. Mark Wilson was involved in the process of signing Keith Sendall up to a new contract, and he gave evidence about that. He was also involved in the investigation into Keith Sendall's alleged breaches in relation to May Glass, and gave evidence about that.
  52. Whilst it seemed to me that he had a reasonably clear recollection of events, I also conclude that his reliability was seriously damaged by his partisan view of the case. Thus, as with Mark Owen, I consider that his evidence was coloured by his firm belief [102-113] that Keith Sendall had been conspiring with Mick Keogh ever since the latter left Reuse in Nov. 11 to set up a competing business and to damage Reuse's business in preparation for that event. Again, it seems to me that this is derived from a partisan reconstruction of events, relying on a selective misreading of the journal entries and, for reasons I shall give later, I do not accept that view. Further, there were occasions where his evidence was undoubtedly wrong, and skewed against the defendants. In particular, his evidence in relation to the circumstances in which the meeting of 18 April 13 had been arranged was unsatisfactory, in that he had suggested in his witness statement that it had been set up as a reconvened grievance meeting, when that was plainly not the case, and in that he also initially denied in cross-examination that private investigators had been instructed to attend Dagenham to observe Keith Sendall, when they plainly had. It is also the case that he appears to have been less than careful in his approach to confirming that Reuse had complied with its disclosure obligations, although I consider that this was due to a failure to conduct a thorough search and review, as opposed to a positive intention to conceal relevant documents. Nonetheless it follows from the totality of the above that I am unable to accept his evidence uncritically, and without close consideration of whether it is reliable in relation to specific issues.
  53. (iii) Two witnesses made available to be called by the claimant but not required for cross-examination

  54. Anthony Johnston had made a very short witness statement which was limited to confirming the truth and accuracy of those issues addressed in the statements of Mark Owen and Mark Wilson to which he was privy. That was not the most helpful of approaches to take, since it left unexplained which particular issues he was referring to, and the basis on which he could confirm them from his own knowledge. Nonetheless it was reasonably clear from the evidence of those witnesses that his only direct involvement was in the visit to Dagenham on 18 April 13. Mr Choudhury, having cross-examined Mark Wilson in some detail about that visit was not minded, for reasons of timing, to re-run the whole process with Anthony Johnston, even though he was able to be called. Mr Keen, whilst not challenging my indication that it was not necessary for the defendants' case about that visit to be put again to Anthony Johnston, observed that in such circumstances it would be difficult for this court to make any adverse assessment of Anthony Johnston's reliability as a witness without seeing him being cross-examined.
  55. Whilst I accept Mr Keen's approach as being generally correct, I consider that two reasons justify Mr Choudhury's stance in this case, namely: (1) the delay caused to this trial on day 1, by the claimant's unsuccessful attempt to adduce late quasi-expert evidence, and on day 2, by the claimant's belated supplemental disclosure, collectively making it thoroughly undesirable that time should be spent on repetitious cross-examination; (2) Anthony Johnston's failure to identify in clear terms in his witness statement precisely what his evidence was in relation to this visit. If for whatever reason Anthony Johnston was unable or unwilling to take the time or trouble to provide a witness statement stating what his evidence was about this visit, it is not in my view incumbent on cross-examining counsel to have to begin cross-examination by embarking on a voyage of discovery to ascertain what his evidence actually is, before proceeding to challenge him upon it. In such circumstances I consider that I am entitled to place little or no weight on Anthony Johnston's evidence.
  56. Julie Knight, the managing director of a HR consultancy which provided services to the claimant, provided a short witness statement which simply confirmed her advice to the claimant as to the correct procedure to follow in dealing with Keith Sendall after the visit of 18 April 13. It was not contentious, and Mr Choudhury did not need to cross-examine her on its contents. My only criticism is that it also ended with the same general statement that she confirmed the truth and accuracy of those issues addressed in the statements of Mark Owen and Mark Wilson to which she was privy, which again seemed to me to be unhelpful especially since it was not immediately obvious from the rest of the witness statement precisely what evidence she was seeking, let alone able, to support in this regard.
  57. (iv) Mr Keith Sendall

  58. Whilst on a personal level Keith Sendall came across as likeable and engaging, I am afraid that detailed cross-examination revealed him to be a wholly unreliable witness. My principal reasons for reaching this conclusion are as follows:
  59. Disclosure.
  60. As I have stated, the adequacy of the defendants' disclosure has been a running sore in this case. I am satisfied that the claimant's complaints have been substantially made out as against Keith Sendall, and also that the reason for this is not ignorance or negligence, but his positive intention to conceal, both from Reuse and the court, damaging documentation. In particular:
    (1) In [2] of his witness statement made 12 Jan. 14 and again in [3] of his affidavit made 3 Feb. 14 he stated in terms that he had no mobile phone records available, yet when pressed he was able to obtain copies of statements showing his use of his personal I-Phone, without any apparent difficulty, which proved to contain much material adverse to him. Even then, however, he failed to provide a full copy of his records for Mar. 13 or to provide any records for Apr. 13 or subsequently, and had to be ordered to do during the first week of trial. Even at that late stage he initially failed to provide records post 17 Apr. 13. There was no explanation as to how, if such be the case, he had come to believe that he was entitled to limit disclosure in the way he had sought to do. In my view he was deliberately seeking to avoid providing these records because he knew full well that they contained damaging details about the true nature and extent of his involvement with May Glass and his contacts with Reuse's suppliers.

    (2) He claimed he had tried, but had been unable, to retrieve personal e-mails on his Microsoft Hotmail email account. However when pressed he was vague about what he had done, eventually saying that Fred Sendall had "probably" done it for him. Furthermore, the documentary evidence he produced [pp.864-867] raised far more questions than it answered. Thus: (i) the inbox printout appeared to contain only 2 items, both of which appeared to be e-mails received that day, as opposed to all e-mails in the inbox; (ii) it was clear from the list of folders that Keith Sendall was in the habit of making dedicated folders, yet the printout did not disclose all of the folders, nor did he provide a screenshot of folders which might contain relevant e-mails (for example "Barclays" and "Fred"); (iii) the deleted printout contained only 17 items, but including items dating back to 28 Oct. 13, so that it was clear that he was not in the habit of deleting e-mails and then permanently emptying the deleted folder. This was inconsistent with his evidence that he regularly deleted, both initially and then on a permanent basis, his e-mails. In my view he has deliberately avoided providing full disclosure of his emails for the same reason as above.

    (3) He repeatedly sought to excuse his inability to provide relevant documents by claiming that he had no involvement in certain matters. Particularly damning was his clear evidence on affidavit that he had no involvement in arranging payment in relation to INGS for the purchase of skip vehicles and an operator's licence, when his own bank statements showed – as he must have known – that the payments for these items had come from his personal bank account. He claimed in cross-examination when this was put to him that this was just "a mistake". I am afraid that in my judgment it was far worse than that, and amounted to deliberate concealment. I am also satisfied that he was also involved in the decision to redact the bank statements of May Glass, so as to conceal the extent of the financial dealings between INGS and May Glass, and which were only revealed during the course of the trial, once it had become clear to the defendants that they were unable to advance any coherent objection to producing the unredacted bank statements.

  61. Wiping company property.
  62. Keith Sendall also admitted that before returning his laptop and his Blackberry phone, both provided to him by Reuse for company purposes, he removed data from them. When asked why, he was unable to provide any explanation, and when pressed accepted that he had no particular reason to do so. He claimed to have done this at some time between his resignation letter of 27 March 13 and the meeting on 18 April 13, prior to the date when Reuse sent its fellow employee, Ron Green, to collect these items from him. Keith Sendall claimed that he was given no notice of this visit, and decided to wipe them clean there and then. I found this account completely unconvincing, not least given Keith Sendall's professed ignorance of how to use computers or access e-mails. In my judgment the most likely explanation is that there was data on those sources which Keith Sendall did not want Reuse to be able to access and that he wiped them, probably with the assistance of Fred Sendall, either before or shortly after he wrote his letter of resignation.

  63. Minimisation.
  64. In my judgment Keith Sendall's evidence was replete with attempts to minimise his involvement in matters which might be held against him. He claimed not to have discussed INGS or its business with Mick Keogh after the latter had resigned from Reuse and set it up as a competing business in circumstances where, as he admitted and as is evident from the phone records, he had a close relationship and regular contact with his cousin. He claimed to have made no investigations into setting up a competing business from Nov. 11 onwards, when it was evident that he had done so albeit, as I find, he had not actually made a firm decision to do so at that time. The fact however that he was prepared to deny even investigating the possibility of doing so was damaging to his credibility.
    He also sought to minimise the nature and extent of his involvement on behalf of May Glass with Barclays Bank. Thus when asked what May Glass' overdraft facility with Barclays was, he claimed not to know. That seems to me to be another example of his seeking to minimise his knowledge and involvement for tactical reasons. If May Glass genuinely had been set up by his sons entirely independently of him, but in a field in which he had considerable experience, operating from his home, and into which he had invested a significant amount, it would be very surprising if he had not – at least prior to the injunction – been aware what overdraft facility it had arranged. That is particularly so given: (a) the clear evidence of his direct involvement in arranging matters with the bank; (b) in summer 13 he had transferred a further £60,000 to May Glass, which had the effect of maintaining the credit balance on the account. It also appeared to be inconsistent with his unguarded answer minutes later when, on being asked in connection with his recorded dealings with Saint Gobain whether that was May Glass' largest customer, he immediately replied "No, Ardagh is the main one". In short, it seemed to me that he knew far more about May Glass' business than he was prepared to admit when asked in terms about it.

  65. Altering evidence
  66. He attempted to row back from his evidence, clearly given in his witness statement and confirmed in oral evidence, about his contact with a company known as Smiths of Gloucester on behalf of May Glass, once he realised how potentially damaging to his defence that evidence was. I was not remotely satisfied with his explanation that his original evidence was simply a mistake.

    (v) Fred Sendall

  67. I am also satisfied that Fred Sendall's approach, on behalf of May Glass, to disclosure has been completely inadequate, and that the reason for this is not ignorance or negligence, but a positive desire to conceal damaging information. In particular I refer to the following matters:
  68. (1) He claimed in [3] of his affidavit sworn 3 Feb. 14 that May Glass held no telephone records. However in [10] of his witness statement, made within days of swearing his affidavit, he stated, in the context of seeking to explain the steps that he had taken to set up May Glass, that in March 13 he had arranged "to have 2 business lines and broadband installed by BT at 27 Crofton Road". He made no attempt to seek to explain the obvious apparent inconsistency between his affidavit and his witness statement. When asked about this in cross-examination he claimed that he believed the question was directed to mobile telephone records, as opposed to landline records. I am simply unable to accept that as an explanation. Even now May Glass has failed to provide any records in relation to the calls made on those two phone lines. There is no good reason why Fred Sendall could not have disclosed the full itemised call records, or asked BT to provide copies, and I am satisfied on the balance of probabilities that the reason is because he knows full well that they would contain records of telephone calls from May Glass to Reuse suppliers, with a view to obtaining their custom, whilst both Keith Sendall and Fred Sendall were still employed by Reuse.

    (2) The bank statements for May Glass showed that in early Mar. 13 payments were made to IT related businesses, and under cross-examination Fred Sendall confirmed that a website and e-mail account were procured for May Glass at that time. No e-mails for May Glass have been disclosed. Under cross-examination he was asked whether he had searched these e-mails for potentially relevant documents, and answered that he had not, because he did not see what relevance they had. In my judgment that was completely unacceptable, given the pleaded allegations against the defendants. I am satisfied on the balance of probabilities that the true reason was that Fred Sendall did not want to disclose what I am satisfied, on the balance of probabilities, such e-mails would have revealed, namely communications from himself and Keith Sendall on behalf of May Glass, whilst still employed by Reuse, making arrangements for May Glass to start trading at the beginning of May 13 and making contact with Reuse suppliers with a view to obtaining their custom.

    (3) Numerous redactions were made to the bank statements which were disclosed. There was no proper basis for these redactions. For example, entries showing substantial payments to INGS were redacted, when there was no good reason, whether commercial confidentiality as Fred Sendall asserted or otherwise, for concealing those entries, especially when in his affidavit [4(k)] he had denied that there were any documents evidencing any agreement between May Glass and INGS.

    (4) Under cross-examination Fred Sendall accepted that he had a mobile telephone which he had used to make calls on May Glass business. He had not disclosed any statements relating to that telephone. When asked why he said that it had nothing to do with this case, and that he would have redacted all personal calls. However again in my judgment the true reason is that he did not want to reveal evidence which would show that he had been contacting Reuse's suppliers whilst still employed by Reuse.

  69. I also found most unsatisfactory the position whereby in the run-up to trial no documents had been disclosed which disclosed the current shareholders of May Glass. The documents disclosed still showed the shareholder to be the original company formation agent. I find it inconceivable that the question of shareholdings was not dealt with at the time that the company was formed.
  70. It was only on day 7, 2 Oct. 14, that the defendants produced an annual return for May Glass dated 17 Jan. 14, which disclosed that as at that date Fred Sendall and Bill Sendall each held a 24% shareholding and Deborah Sendall, Keith Sendall's wife, held a 52% shareholding. That in itself seems to me to be inadequate, because it also revealed that on 14 Feb. 13 the original company formation agent had transferred her original shareholding, but there was no evidence as to the identity of the transferee of the share, or when the further shares had been allocated, and to whom. In effect, the defendants had contrived to disclose records which showed only the position as at the date of incorporation and as at a date well after this litigation had begun, but had failed to disclose documents which must exist as to the issue and transfer of shares in the intervening period. In my judgment the obvious conclusion from all of this is that Keith Sendall was originally made a shareholder at the same time as his sons but that some later time, probably at around the same time as he resigned his directorship, he divested himself of his shareholding to his wife. Deborah Sendall has not given evidence, which is surprising if she is indeed the real majority owner of May Glass as the defendant to this claim, and I am driven to conclude that she has received and holds this 52% shareholding as Keith Sendall's nominee. There is no other credible explanation for her to be given a majority shareholding in the company in circumstances where, on the defendants' case, her only conceivable interest in the company is as the joint source, together with Keith Sendall, of a simple family loan to her sons to start the business, and none has been given. I found Keith Sendall's answer that he did not know why his wife had a 52% shareholding in May Glass to be incredible.
  71. It also seemed to me that he was prepared to give evidence without any genuine belief in its truth. Thus in examination in chief he was asked whose names were on the bank mandate, and answered his and his brother's. When he was asked about this in cross-examination it became clear that he did not actually understand the difference between the mandate and the overdraft facility letter, and that he had no actual knowledge of who had signed the mandate. His evidence really amounted to no more than an assertion that it must have been him and his brother, because his father had resigned as a director. However, since the bank account was opened on 20 Feb. 13 [p.584] whilst Keith Sendall was still a director, that does not seem to me to follow either.
  72. For completeness I should record that his brother Bill Sendall did not give evidence, and no explanation was proffered for that omission. The impression I have received is that he has had little or no direct involvement in the formation and management of May Glass, leaving that to his father and brother.
  73. C. MY DECISION AND REASONS IN RELATION TO THE ISSUES

    (1) Implied obligations

    1(a) Duty of good faith and fidelity

  74. It is not disputed that Keith Sendall as an employee of Reuse owed it the usual implied duty of fidelity and good faith.
  75. It is clear in my judgment that in the case of a senior employee such as Keith Sendall that would include a duty not to compete with Reuse during the duration of his employment, whether inside or outside ordinary working hours or inside or outside the workplace, and even in the absence of an express contractual term to that effect. It is also clear that although this duty may also include a duty not to make preparations during employment to compete with the employer after the employment has ended, that would depend upon precisely what preparations are undertaken, because it is clear that certain preparatory activities will not amount to a breach of duty. This is illustrated by the extremely helpful summary of the general principles relating to this duty to be found at [169] of the judgment of Haddon-Cave J. in QBE Management Services v Dymoke [2012] EWHC 80 (QB), and by the discussion of the authorities in Employee Competition (2nd edition) by Paul Goulding QC at [2.150 – 160].
  76. 1(b) Confidential information

  77. Obligations will also be implied in relation to the unlawful misuse of what genuinely amounts to confidential information, but there is no need for me to over-lengthen this judgment by referring to the well-known authorities in that respect.
  78. 1(c) Fiduciary duty

  79. The real issue debated between the parties is as to whether or not Keith Sendall also owed a fiduciary duty to Reuse. As to this, the first point to make is that Reuse is unable to rely on the fiduciary duties which will be owed by a company director to his corporate employer because, as I have said, although since Keith Sendall had previously been a director of the business whilst still under family control, he had never been a director of Reuse. It follows that Reuse has to advance its case on the basis that he owed a fiduciary duty to Reuse arising out of his position as employee. Reuse submits that he did owe a fiduciary duty in circumstances where he was a senior and longstanding employee, apparently the second highest paid employee after Mark Wilson at the relevant time, who it had entrusted with sole responsibility for the running of the Dagenham depot.
  80. There is a helpful discussion as to the circumstances in which an employee may come under fiduciary duties to his employer in Goulding at [2.39 – 58]. It is common ground that the employment relationship is not of itself a fiduciary one; see the illuminating analysis of Elias J (as he then was) in University of Nottingham v Fishel [2000] ICR 1462. Furthermore, the Court of Appeal has re-stated in Ranson v Customer Systems plc [2012] EWCA Civ 841 at [25] that "the starting point for determining whether [an employee] owed fiduciary duties to [an employer] and if so what duties is his contract of employment".
  81. In this case Keith Sendall had no formal contract of employment with Reuse until he signed the contract of employment on 22 Feb. 13. So far as that is concerned, it refers to Keith Sendall being employed as plant manager at Dagenham at an annual gross salary of c.£73,000, plus certain relatively modest benefits, but no bonus (although as I note later in the context of the issue of consideration there was towards the end of 2012 some discussion about giving him some bonus in relation to signing up suppliers onto long term contracts). His normal working hours were said to be from 8:30am to 5:00pm with a 60 minute unpaid lunch break (although he was also obliged to work further hours for no further pay if reasonably required to complete his work duties). There were express obligations in relation to confidential information, post-termination restrictions, but no express provision for or reference to any fiduciary duty. It is not possible in my judgment for a fiduciary duty to be imposed by reference to the terms of the contract of employment.
  82. Nor do I consider that it is possible for a fiduciary duty to be imposed by reference to the wider factors relied upon by Reuse. It is true that Keith Sendall was a highly trusted, well-remunerated and longstanding senior employee, and it is also true that he was in charge of the entire operation at Dagenham. However, apart from not being a director, he did not even attend or report to board meetings. Mark Owen was only able to point to one strategy meeting which he had attended, and there is no evidence that he was actively involved in the major strategy decisions taken by Reuse, which appear to have been taken by the triumvirate of Mr Johnston, Mark Wilson and Mark Owen.
  83. Furthermore, even in relation to Dagenham there is no evidence that he had any significant high level responsibility, strategic, financial or otherwise. It is noteworthy that when he suggested as part of his defence that it was his responsibility to act on his own initiative to look for suitable alternative premises for Reuse and to arrange insurance, that suggestion was ridiculed by Reuse's witnesses, and I am satisfied that these enquiries were undertaken for his private purposes, as I will explain. Moreover, it has not been said that he had any control over financial matters, such as purchasing, paying suppliers, invoicing, receiving payments, or the like – the evidence as to his having to obtain authorisation from Mark Owen as to the purchase of drinks as Christmas gifts being a telling indication. There is no evidence that he was responsible for the production of financial information in relation to Dagenham, or that he had any or any significant access to the financial information held at or produced by head office. In effect, he managed the Dagenham plant, solely as an employee, and received a salary and package which was generous by reference to the national average, but not particularly so by reference to senior management nationally. He does not appear to have had the final say in relation to hiring, firing, promoting or remunerating employees at Dagenham, as evidenced by the fact that it was Mark Wilson's decision to promote Fred Sendall in late 2012 to seek to free up Keith Sendall's time for customer and supplier contact.
  84. So far as dealings with customers and suppliers are concerned, at [12] Mark Wilson stated that in addition to his responsibility for glass collection, storage and transportation, Keith Sendall's "primary role was to protect the commercial position of the company through the retention of existing customers and addition of new customers". Keith Sendall accepted [7] that he dealt with certain customers and suppliers on a regular basis, and had been asked to attempt to win more work. Thus there is some measure of agreement that Keith Sendall was trusted with a commercial role, including customer retention and growth. However, there is no question of equating his role to that, for example, of a sales or commercial director, or that he had any wider responsibility for anything other than his particular area. On the evidence this is not the sort of industry where there is really sensitive confidential information in relation to Reuse's processes, or customer or supplier attributes, such as might render someone in Keith Sendall's position as liable to specific fiduciary obligations as regards such specific matters.
  85. In such circumstances I am satisfied that his position was not such as to make him a fiduciary generally vis-ΰ-vis Reuse or specifically vis-ΰ-vis any particular aspects of his employment duties. In short: there was no express contractual provision which is consistent with his owing fiduciary duties; his role was not similar to the sort of role which a board director might exercise; his role did not give him any responsibility other than in relation to the Dagenham depot, and even then it was relatively low level responsibility; although he undoubtedly held a position of some trust and responsibility as manager of Dagenham, nonetheless he was subject to close control by head office, and was not simply left to get on with things by himself; and he did not have access to confidential financial or other information.
  86. (2) Express contractual restrictions

  87. These fall into two categories, restrictions in relation to confidential information and restrictions in relation to post termination conduct.
  88. So far as the former are concerned, they are to be found at clause 18. In short, there is an express obligation to keep confidential "trade secrets" and "confidential information relating to [Reuse] or [its] customers, prospective customers or suppliers which come to your knowledge during your employment". Confidential information is further widely defined, and is stated expressly to include matters such as "prices charged", "sales targets", "other financial information", "lists and particulars of suppliers and customers" and "details and terms of [Reuse's] agreements with suppliers and customers". There is also a restriction against copying documents in paper or electronic format or removing such documents from company premises.
  89. So far as the latter are concerned, they are to be found in clause 19. As relevant they include the following restrictions:
  90. (1) A 6 month restriction on being involved in any of 7 specific identified excluded businesses, being competitors of Reuse, and including INGS (clause 19.3.1);
    (2) A 6 month non-solicitation clause as regards restricted clients (those dealt with in the last 12 months) or prospective clients (those dealt with within the last 6 months) in relation to restricted goods or services (those dealt with in the last 12 months) (clause 19.3.2);
    (3) A 6 month non-dealing clause as regards restricted clients and prospective clients in relation to restricted goods or services (clause 19.3.3);
    (4) A 6 month non-solicitation clause as regards, effectively, senior Reuse employees with access to confidential information (clause 19.3.4);
    (5) A 12 month restriction on setting up, "whether as director employee, principal, agent or otherwise", a business providing restricted goods or services intended to be competitive with Reuse (clause 19.3.6)

  91. It is also to be noted that by clause 19.6 these restrictions apply to Keith Sendall "acting in any capacity whether as principal, agent, partner, consultant, employee, director, shareholder or otherwise and whether directly or indirectly (including through any person, firm or company)".
  92. 2(a) Did Reuse provide consideration for undertaking those obligations?

  93. It is common ground that the restrictive covenants require consideration to be enforceable, since they were introduced after the inception of the employment relationship and thus amounted to a variation of an existing contractual relationship. Mr Choudhury has referred me to the discussion in Goulding (ante) at [5.28] and in Brearley & Bloch's Employee Covenants and Confidential Information (3rd edition) at [11.33] in support of his argument that in a case such as the present, where an employer seeks to impose substantial new obligations on an existing employee, the consideration must comprise "some real monetary or other benefit (promotion for example) conferred on the employee for the purpose of causing the employee to agree the restrictive covenant" and that it must be "substantial and not nominal".
  94. Although Mr Keen did not contest this legal analysis, there was a disagreement between the parties as to whether or not the consideration also had to be adequate. Mr Choudhury relied upon a passage in the judgment of the Privy Council in Bridge v Deacons [1984] 1 AC705, given by Lord Fraser of Tullybelton, where he considered the adequacy of the consideration in the context of assessing the reasonableness of the restrictive covenant. However, it does not appear from the note of the submissions advanced or of the judgment itself that the issue as to whether or not adequacy was relevant as a matter of law was a matter which arose for decision, and Mr Choudhury very fairly acknowledged that this was a matter of some legal uncertainty, as exemplified by the discussion in Brearley & Bloch (ante) at [11.24 – 11.34] to which he also referred me. I have not had the benefit of full argument on this point, and given the factual conclusions I have reached do not need to do so. If I had to decide the point I would hold, following what seems to me to have been the approach of Lord Fraser in Bridge v Deacons, that it is a factor relevant to the reasonableness of the restrictive covenant as opposed to being something necessary to be established in the context of the need for consideration to support a variation.
  95. Reuse's case is that the covenants contained in the contract of employment were supported by consideration, because they were introduced as part of a package under which benefits were conferred upon Keith Sendall, including a pay rise. Alternatively, it is said that consideration can be found in his continued employment in the months after the contract of employment was produced.
  96. Keith Sendall's case is that no consideration was provided in return for the restrictive covenants. He admits that a pay rise was given in Jan. 13, but denies that it had anything to do with the restrictive covenants. He denies that in the circumstances of this case mere continued employment could amount to consideration.
  97. I have already noted that the draft contract of employment was submitted to Keith Sendall in Oct. 12, and that there followed a certain amount of debate as to whether or not he was prepared to sign it but that eventually, following a meeting on 31 Jan. 13 with Mark Wilson, he signed and returned the contract of employment on 22 Feb. 13. I should also note that the contract contained an addendum page acknowledging receipt of the contract, acknowledging that various company policies also formed the basis of his contract of employment and, finally, stating that "if you do not sign your contract of employment within 4 weeks it will be automatically assumed that you have accepted the written terms and conditions of your employment unless you have stated your reasons for not doing so in writing".
  98. It was Mark Wilson's evidence that the contract of employment was introduced and offered to 11 senior managers on the basis that they were being asked to accept certain restrictions in return for accepting certain benefits. Reuse has not, however, disclosed any relevant documents in relation to what Mark Wilson described as this "consultation" process.
  99. So far as the package of benefits conferred on Keith Sendall under the contract of employment is concerned, they are identified by Reuse as being as follows: (a) life assurance of 4 x gross salary (clause 11.1); (b) family private medical insurance on request (clause 11.2); (c) a company car plus car expenses, or a car allowance, in either case in accordance with the company car policy (clause 12); (d) a discretionary payment for sickness absence in accordance with the Employee Handbook (clause 13); (e) a 25 day holiday entitlement (plus public holidays) in accordance with the Employee Handbook (clause 14); (f) a right to 3 months' notice after 2 years' service.
  100. It is however apparent that the majority of these benefits were already enjoyed by Keith Sendall. Thus:
  101. (1) It is apparent from his statement of employment particulars that he already enjoyed equivalent benefits in relation to holiday entitlement, sickness absence, and notice entitlement.
    (2) It is apparent from previous correspondence, and not in dispute, that Keith Sendall already received a company car, and there is no suggestion that he received any upgrade in his car as a result of agreeing to sign the contract of employment.
    (3) Mark Wilson accepted in cross-examination that Keith Sendall also enjoyed BUPA membership prior to the introduction of the new contract.

  102. In relation to life assurance, this had not previously been identified as a new benefit until the case was opened orally by Mr Keen on day 1 of the trial, and was not the subject of any evidence from Reuse until Mark Wilson was cross-examined on this issue. His evidence appeared to be that previously a benefit of 2 x gross salary was offered to a small number of employees, which he seemed to accept included Keith Sendall, but that the benefit of 4 x gross salary was only offered to those 11 senior employees who were asked to accept this new contract. Keith Sendall said that he knew nothing about this. Reuse has produced no documentary evidence to support its case that the terms in relation to life assurance were introduced in an amended and enhanced form to a limited number of senior employees as part of the process by which the new contract of employment including new restrictions was put forward for agreement, and I am unable to accept it.
  103. So far as the pay increase is concerned, it is agreed that Keith Sendall's annual salary was increased by approx. £3,500 with effect from 1 Jan. 13. However this was not reflected in the contract of employment, which continued to refer to his previous salary level (clause 9). In cross-examination Mark Wilson claimed that at a meeting in Oct. 12 at which the new contract was introduced the affected staff, including Keith Sendall, were told that there would be a 3% salary increase across the board plus a further 2% to those who signed the new contract. He claimed that the pay award was given to Keith Sendall with effect from 1 Jan. 13 on the basis that, having failed to object within 4 weeks, he was deemed to have accepted the new contract of employment.
  104. That assertion, however, is not supported by contemporaneous documentation, and indeed is inconsistent with that contemporaneous documentation which there is. Thus:
  105. (1) In an email sent to Mark Wilson and Mark Owen on 3 Dec. 12 Keith Sendall expressed his concern about signing the contract of employment for 2 reasons, one being that "my salary has not changed for at least 5 years".
    (2) In a letter sent to Keith Sendall by Mark Wilson on 18 Dec. 12, at which the pay rise is confirmed, there is no reference to its being awarded in connection, whether wholly or partially, with Keith Sendall accepting the contract of employment. To the contrary it is said that apart from this salary increase all other terms and conditions of his employment remain the same.
    (3) In his witness statement Keith Sendall said [5] that a pay rise was given to all employees at this time, and that non-management staff received a backdated pay rise as well. That is supported by his email to Mark Wilson and Mark Owen dated 24 Jan. 13, where he was still expressing his reluctance to sign the contract of employment, and complaining that "all my staff at Dagenham received back pay for the last 2 years and I did not".

  106. In summary, in my judgment Reuse has failed to produce any satisfactory evidence that this salary increase was specific either to Keith Sendall or to the other senior employees who were being asked to enter into a formal contract of employment, or that it was made clear to him that the increase was conditional upon his accepting the contract of employment, or even that in some more general sense it was linked with the introduction of the new contract of employment. In the circumstances it does not seem to me that this could be said to amount to consideration for the post-termination restrictions.
  107. It is also the case, as evidenced by Keith Sendall's journal entry, that during a salary review conducted by Mark Wilson on 20 Dec. 12 he was offered a bonus, initially 10% but later increased to 20%, for signing up suppliers on long term contracts. When asked about this Keith Sendall accepted that in the same discussion Mark Wilson had asked him if he was going to sign the contract of employment. However there is no evidence that Mark Wilson stated that this bonus would only be payable if Keith Sendall signed the contract of employment. In particular, there is no prior or subsequent communication from Reuse in relation to bonus, whether at all or linking the payment of bonus with signing the contract of employment, nor was the bonus arrangement incorporated into any revised draft of the contract of employment (which, incidentally, contains an "entire agreement" term at clause 22). There is no evidence that when Keith Sendall signed and returned the contract of employment he did so on the specific basis that this had become a term of his contract. In my judgment there is no connection, other than temporal, between the arrangement in relation to payment of bonus and the contract of employment. I do not consider, therefore, that this could be said to amount to consideration either.
  108. In the circumstances I am not satisfied that Keith Sendall received any consideration for his agreeing to enter into the contract of employment and thus to accept the contractual restrictions contained therein.
  109. Reuse's alternative argument is that consideration is found by its continued employment of Keith Sendall after the draft contract of employment was issued to him and/or after he signed it. However I agree with Mr Choudhury that this is not sufficient in the context of this case, where a long-serving employee was being asked to accept new, substantial, contractual restrictions. This was not a case where, on the evidence, Reuse was putting forward the draft contract of employment on the basis, expressly or implicitly, that a refusal to sign it would, or might, lead to dismissal or indeed any other lesser sanction. It does not appear from the evidence that Reuse was in effect giving Keith Sendall a deadline to sign or refuse to sign, after which consequences might flow. Reuse can scarcely rely on the "deemed acceptance" provision in the draft in circumstances where Keith Sendall was making it clear in the period following October 2012 that he was not willing to sign the contract of employment. It cannot be said, therefore, in my judgment, that Reuse provided consideration merely by continuing to employ him, particularly without seeking to link its continued willingness to employ him with his willingness to sign the contract of employment.
  110. I should say that I have not had the benefit of separate submissions as to whether or not the same requirement of consideration also applies in relation to the incorporation of the express confidentiality clause. In principle it would appear that it should, particularly since in this case the express clause, by reason of what seems to me to be the very wide definition of what amounts to confidential information, imposes a potentially very substantial obligation upon Keith Sendall which: (i) goes far beyond what would be imposed in the absence of an express clause; (ii) appears to be unlimited in time and, hence, to extend beyond the end of the employment relationship. It follows, in my view, that this clause is not enforceable against Keith Sendall either.
  111. 2(b) Enforceability

  112. In case I am wrong about the absence of consideration I should consider the question of the proper construction and the reasonableness of these clauses. In so doing I again gratefully adopt the helpful summary of principles relating to non-competition clauses generally in the judgment of Haddon-Cave J. in QBE v Dymoke & others (ante) at [208-210].
  113. Only one point arose in relation to the construction of the clauses, which is the meaning of clause 19.3.6, the 12 month non-setting up covenant. Mr Choudhury submitted that on its plain wording it only prohibited conduct amounting to setting up an intended competitive business in the period post-termination of employment. It followed, he submitted, that it could have no application to cases where the competing business was set up within the duration of the employment and thus, in this case, no application to conduct occurring pre 1 May 13. Mr Keen contested this, submitting that it would apply to any conduct beginning before 1 May 13 but continuing after that date in relation to the setting up of the competing business. Mr Choudhury retorted that this would, in effect, convert the covenant from a non-setting up covenant into a non-competition covenant, which: (a) is not what it says; (b) would be far too wide in any event.
  114. I prefer Mr Choudhury's submissions on this point. The clause can only be read as being limited to the setting up of the business, which logically must end at the time when the business actively commences trading activities which, on the evidence, was coincident with the date of termination of Keith Sendall's employment. It follows that there can be no breach of this clause in this case. If clause 19.3.6 was construed in the way contended for by Mr Keen it would appear to render clause 19.3.1 otiose. Moreover, there is no need to construe it in that way, given the undoubted existence of the implied duty of fidelity and good faith during the subsistence of the employment relationship. In any event, it seems to me that it is far too wide to be reasonable; Reuse has wholly failed to establish how a 12 month restriction on setting up in competition could be justified, in circumstances where it appeared to accept only 6 months' restriction was required in relation to the other restrictive covenants.
  115. As to the reasonableness of the other clauses:
  116. (1) Clause 9.3.1 is not relied upon, and is irrelevant, since even on Reuse's case (and in any event as I find) Keith Sendall was not employed, engaged, concerned with or otherwise interested in INGS as an excluded business.

    (2) The only challenge to the non-solicitation and non-dealing clauses is as to their length, 6 months. Mr Choudhury submits that Reuse has failed to adduce any evidence to satisfy the court that a restriction of 6 months is reasonably necessary to protect its legitimate interests. He submits that Reuse has failed to demonstrate that anything more than a 3 month restriction is reasonably necessary, and points to that as being the notice period required and also to the fact that this is a relatively informal business sector where, in the absence of long term supplier contracts, or formal contracts with minimum notice periods, suppliers are free to contract with whoever they wish and to switch at short notice.

    (3) As to that, it seems to me that the very fact that suppliers are free to change without notice is a factor which if anything supports Reuse's case, because it tends to support the need for some protection. However it does seem to me that the only legitimate interest justifying protection that Reuse is able to establish on the evidence in this case was the pre-existing relationship between Keith Sendall as its employee and the various suppliers, through which he was able to understand the suppliers' particular requirements and to gain a knowledge as to the prices which they were willing to pay or demand. It is not, however, a case where there is detailed confidential information which would justify a lengthy restriction. Reuse is entitled in my judgment to no more time than would be reasonably necessary to put another employee into Keith Sendall's position who would have sufficient time to develop a relationship with the suppliers, so as to gain a knowledge of their requirements and the prices charged or accepted, before having to face competition from Keith Sendall acting for another competitive business as the previous "face" of Reuse. Reuse has failed to adduce any positive evidence as to how long would reasonably be necessary for this to be achieved, and such evidence as there is indicates that it was able, once it became aware of May Glass' activities, quickly to assemble and send in a replacement team which then existing secured suppliers, albeit in some cases it says by having to offer improved terms.
    (4) In such circumstances I agree with Mr Choudhury that a restriction of more than 3 months maximum has not been objectively demonstrated as being necessary or reasonable. Accordingly I consider 6 months to be unreasonably long, and I would have refused to enforce these covenants on that basis.
    (5) For completeness, I record that there was some conflicting evidence as to how common such restrictive covenants are in the particular sector, but I did not gain any assistance either way from that evidence, which did not seem to me to demonstrate any clear pattern one way or the other, which is perhaps only to be expected.

    2(c) Constructive dismissal

  117. Again this does not arise directly for decision given my primary conclusions, but because it has been fully argued and involves a need to make findings on conflicting evidence I should deal with it.
  118. The law in relation to constructive dismissal has been very helpfully recently summarised by Warby J in Elsevier Limited v Munro [2014] EWHC 2648 (QB), where he stated as follows:
  119. "Constructive Dismissal
    29. The relevant legal principles are clear and undisputed. Constructive dismissal is a colloquial label for a repudiatory breach of contract by the employer which is accepted by the employee, bringing the contract to an end. In such a case the employee is relieved of all further obligations in his contract, including any post-termination restrictions. The breach must go to the root of the contract, and the employee must act decisively. As Lord Denning MR explained in Western Excavating (ECC) Limited v Sharp [1978] 1 QB 761, 769:-
    "If the employer is guilty of conduct which is a significant breach going to the root of the contract of employment, or which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract, then the employee is entitled to treat himself as discharged from any further performance. If he does so, then he terminates the contract by reason of the employer's conduct. He is constructively dismissed. The employee is entitled in those circumstances to leave at the instant without giving any notice at all. … But the conduct must in either case be sufficiently serious to entitle him to leave at once. Moreover, he must make up his mind soon after the conduct of which he complains: for, if he continues for any length of time without leaving, he will lose his right to treat himself as discharged. He will be regarded as having elected to affirm the contract."
    (I have omitted from this citation some words which are relevant only to constructive unfair dismissal claims). The common law requirement that the victim of a repudiatory breach of contract must promptly and clearly elect whether to accept that breach or to affirm the contract means that an employee cannot resign with notice, and later claim constructive dismissal; to give a period of notice is to affirm the contract in part: see Norwest Holst Group Administration Limited v Harrison [1985] ICR 668, 683E to F per Sir Denis Buckley; Cockram v Air Products Plc EAT 21 May 2014, [13] per Simler J.
    30. The mutual obligation not to destroy or seriously damage trust and confidence (clause [7] above) is a fundamental term of all employment contracts: Malik v Bank of Credit and Commerce International SA [1998] AC 20. Any breach of this obligation is repudiatory: Morrow v Safeway Store Plc [2002] IRLR 9, [23]. However as Jack J stated in Tullet Prebon Plc v BGC Brokers LLP [2010] IRLR 648, at [86]:-
    "The courts will…continue to scrutinise closely the arguments of employees (particularly highly paid individuals and teams moving to a competitor of their employer) who have already secured alternative employment prior to resigning, and who construct arguments of repudiatory breach as a means of avoiding notice periods and irksome covenants. In such cases the argument will fail: (a) often at the first hurdle whether there has been a repudiatory breach at all; or, (b) sometimes, because any such breaches have been waived."
    31. In scrutinising claims of constructive dismissal the Court will bear in mind that the test of repudiation is not a test of whether the employer's conduct is reasonable, or fair. There is only a breach of the obligation of trust and confidence if there is "no reasonable and proper cause" for the employer's conduct, and the conduct is calculated or likely to destroy or seriously damage the relationship lost in confidence; see Lord Steyn in Malik, at 53b to c. The test is therefore a "severe" one: Gogay v Hertfordshire County Council [2000] IRLR 703, [55] per Hale LJ (as she then was). The gravity of the conduct required to satisfy that test was emphasised by Lightman J in BCCI v Ali (No. 2) [2000] ICR 1354, [54]:-
    "(1) The misconduct on the part of the employer amounting to a breach must be serious indeed, since it must amount to constructive dismissal and as such entitle the employee to leave immediately without any notice on discovering it. The test is whether the employer's conduct is such that the employee cannot be expected to tolerate it a moment longer after he has discovered it and to walk out of his job without proper notice.
    …
    (4) The required conduct must be 'likely' to 'destroy or seriously damage' the relationship of trust and confidence with the claimant employee. The term 'likely' requires a higher degree of certainty than a reasonable prospect of indeed a 51 per cent. probability ('not unlikely') and reflects what might colloquially be termed 'a pretty good chance'; consider Taplin v C. Shippam Ltd [1978] ICR 1068, 1074A-G. A mere possibility of destruction or serious damage may not be sufficient, as may not the likelihood of any lesser adverse impact."

  120. A number of points flow from this analysis. First, it follows that Keith Sendall can have no basis for complaining about matters leading up to his giving notice on 27 March 13 because, as is made clear, the giving of notice – especially in this case 3 months' notice - is wholly inconsistent with accepting a repudiatory breach by the employer, leaving aside any question of delay in acting on any such matters amounting to a waiver.
  121. Furthermore there is no conceivable basis, in my judgment, for any complaint by Keith Sendall that Reuse's response to his giving notice was anything other than entirely proper. Indeed, it is clear that Keith Sendall's case rests, as it must do, on what he says was said and done by Reuse on 18 April 13.
  122. His first complaint in that respect is that he was given no notice that Mr Johnston and Mark Wilson were planning to visit Dagenham and discuss matters with him on that date. It is true that he was given no notice, and it is also true that if and insofar as this was intended to be the rescheduled occasion of his grievance meeting there would have been no proper justification for simply turning up without notice at 7.15am. However, it is clear that this was not the true purpose of the visit. Whilst I accept that Mark Wilson's witness statement, confirmed without amendment as his evidence in chief, clearly sought to suggest that it was simply a reconvened grievance meeting, under cross-examination he made it clear that it was viewed as a disciplinary investigation, and I accept that this in substance is what it was. The investigation notes make clear that its purpose was to discuss the information received to the effect that Keith Sendall was involved in direct competition with Reuse through May Glass. There can be no complaint in my judgment about Keith Sendall not having been given notice of that visit for that purpose. I do not accept that employment law or practice requires an employer, with the sort of credible evidence which Reuse had in this case, to notify the employee in writing of its concerns before attending at the employee's place of work to ask that employee about its concerns.
  123. It is also said that Reuse did not attend this meeting with an open mind, in that it had already arranged for private investigators to attend at 8am with a view to following Keith Sendall on his exit. However I reject that complaint. Clearly Reuse was entitled to plan for the eventuality that Keith Sendall's response to being challenged would be immediately to leave. Equally clearly Reuse was entitled to instruct private investigators to observe Keith Sendall to see if, notwithstanding any denial he might offer, he was involved in direct competition with Reuse whilst still employed by it. None of this could possibly amount to repudiatory conduct in the circumstances of this case.
  124. His second complaint relate to how he says he was treated at the meeting. That leads me to consider what happened at the meeting, as to which I am assisted by the typed up notes of the meeting, produced by Mark Wilson and sent to Keith Sendall under cover of the subsequent letter dated 23 April 13. Under cross-examination Keith Sendall accepted that they were largely accurate, and although in his undated letter at p.170 he contested their accuracy, he did not set out any detail as to in what respects he considered them to be inaccurate. They are in those circumstances, it seems to me, the most reliable guide to what happened, particularly given that I am unable to rely with any confidence on the evidence of any of the witnesses to the meeting.
  125. I am satisfied that Keith Sendall did say when asked what he intended to do post resignation that he had nothing planned. I am satisfied that this was untrue, because as I explain subsequently I am satisfied that his plan was to continue to be actively involved with May Glass in direct competition with Reuse. I am also satisfied that Keith Sendall answered untruthfully when he said that he did not know what his sons intended to do following their resignation, because he knew full well that they also intended to be actively involved with May Glass in direct competition with Reuse.
  126. I am also satisfied that Mr Johnston did not believe a word of this, correctly as it happens, and that he did in no uncertain terms confront Keith Sendall with his belief that he was involved with May Glass and that he had been approaching Reuse's suppliers to persuade them to take their business to May Glass. I am satisfied that Keith Sendall denied this as well. However his denial of involvement in May Glass and of approaching Reuse's suppliers was untrue, and I am satisfied that Mr Johnston made it clear that he did not believe that either.
  127. I accept that Mr Johnston expressed himself forcibly, but do not accept that he was physically or verbally aggressive to Keith Sendall. Keith Sendall complains that he was "subjected to a torrent of abuse and threats from Anthony Johnston". I do not accept this. In any event, given all of the circumstances, in particular Keith Sendall's position as a longstanding and senior employee, who I am satisfied from hearing him give evidence could reasonably be expected to cope with robust interrogation, and also given Keith Sendall's conduct at the meeting, which I am satisfied could fairly be described as "stonewalling", I do not think that he can credibly submit that his treatment was such as to amount to a repudiatory breach of contract.
  128. It is plain that at this point in the meeting Keith Sendall refused to answer any more questions, and I am satisfied that he was then informed that he was being suspended with immediate effect on full pay, and instructed not to attend the Dagenham site in the meantime, and that he was also asked to return all company property. I am satisfied that he returned the items of property listed on the signed sheet at p.152. I am satisfied on the balance of probabilities that he gave the journals to Reuse, albeit under protest, without force being exerted. It appears that they were not originally on the signed sheet, because they were not originally volunteered by Keith Sendall, but they were taken from him and added to the signed sheet once they were found in his bag. On balance I accept Keith Sendall's evidence that he did not want to show them what was in the bag, and that Mr Johnston took the bag from Keith Sendall and searched it and discovered the journals. I do not accept however that he used force, in particular that he pulled Keith Sendall by the arm to obtain the bag, as Keith Sendall alleges.
  129. I am also satisfied that the journals were in fact company property. That is because I am satisfied that they were purchased by Keith Sendall using Reuse funds as part of his responsibility for providing office stationery at Dagenham, and on the basis that their primary purpose was for him to record work-related matters, albeit that he also used them to record personal matters during the course of the working day. He clearly did not, even on his own account, obtain or use these journals purely for his own private purposes, and I do not consider it likely that he would have obtained these journals at his own expense for work related as well as private purposes. I also note that in his letter of complaint received 25 April 13 (at p.161) he makes no complaint about the fact that these journals were his private property and wrongly taken from him. It also follows, I am satisfied, that Reuse was entitled to require Keith Sendall to return them to its custody on his being suspended in the circumstances obtaining at that time.
  130. In the circumstances I reject his complaint that these journals were "forcibly and unjustifiably removed" from him. I do however agree with him that there appears to have been no justification for removing his copy of his contract of employment or the 3 road maps. However I am not satisfied that this comes anywhere near enough to amount to a repudiatory breach of contract. Indeed, even if I was wrong in my findings in relation to the journals, I would not have regarded that as amounting to repudiatory conduct.
  131. So far as events post 18 April 13 are concerned, I am satisfied that there is no basis for any complaint in relation to Reuse's letter of 23 April 13, confirming that Keith Sendall had been suspended, setting out the detail of its allegations against him, and inviting him to a disciplinary hearing on 25 April 13. Nor is there any basis for complaint in relation to Reuse's subsequent letter of 25 April 13, stating that if Keith Sendall failed to attend the meeting they reserved the right to proceed in his absence.
  132. In the circumstances I am satisfied that the constructive dismissal defence, if I had needed to decide it, would have failed.
  133. (3) Was Keith Sendall in breach of his obligations to Reuse by reason of his involvement in setting up the competing business carried on by May Glass?

  134. There are two principal issues to be resolved. The first and fundamental issue is whether Keith Sendall's involvement in May Glass was limited to providing finance for his sons to set up the company, or whether he was intimately involved with May Glass on the basis that the intention from the outset was to set it up and run it as a family enterprise involving him and his two sons. The second issue is whether, and if so to what extent, his involvement as I find it to be renders him in breach of his implied obligation of fidelity and good faith owed to Reuse.
  135. I begin by making findings as to what precisely Keith Sendall did, so far as May Glass is concerned, over the period alleged by Reuse and in the respects alleged by it. It is convenient to separate out my consideration into the two periods of Nov. 11 – Oct. 12 and Nov. 12 – April 13.
  136. 3(a) The period Nov. 11 to Oct. 12

  137. It is Reuse's case that by the end of 2011 Keith Sendall had already decided to set up a competing business, and had started to take steps to put that into practice. Reuse refers to the journal entries and phone records, and invites me to conclude that over the forthcoming year Keith Sendall was in regular contact with Mick Keogh and others to make arrangements, was taking active steps to locate a suitable yard for the new business, was making enquiries as to the licences which the new business would need, and was in contact with customers, suppliers and contractors. Reuse also contends that over this period Keith Sendall was taking deliberate steps not to sign up suppliers onto long term contracts, so that they would be free to switch to the new company once it had set up.
  138. It is true that the records show that Keith Sendall was in regular contact with Mick Keogh over this period. However there is no compelling evidence in my judgment that it was to do with a concluded plan to set up a competing business together. There would have been many, perfectly innocent reasons, for the two men to have been in regular contact, and no compelling evidence to show that what I accept were likely to have been discussions about both competing with Reuse matured over this period into a concluded agreement, acted upon, to do so.
  139. So far as finding a suitable yard is concerned, Reuse relies on entries in the journal showing that Keith Sendall was making enquiries of various potentially suitable properties in mid Nov. 11. Keith Sendall claims that he was making enquiries on behalf of Reuse on his own initiative, because there was a lack of storage space at Dagenham. I do not accept Keith Sendall's explanation, because: (1) there is no contemporaneous evidence to confirm any of this, whether that Reuse had a need for additional storage, or that he reported what he was doing to Reuse, or otherwise; (2) the entry at p.961 shows that he gave his personal email address, rather than his work email address, which would make no sense at all if this was Reuse business.
  140. So far as making enquiries about licences is concerned, it is clear from the journal entry at p.962 that Keith Sendall was indeed doing this, and I reject as inherently unlikely and self-serving his explanation that these notes simply show him taking steps to obtain licences on behalf of Reuse.
  141. There is little or no hard evidence however that over this period Keith Sendall was in contact with customers, suppliers or contractors for the purposes of setting up a competing business.
  142. In evidence Reuse's witnesses sought to place more emphasis on what they contended was Keith Sendall's conduct in deliberately not signing up suppliers to formal contracts. Thus it was Mark Wilson's evidence at [107 – 108], by reference to an analysis (which was not however exhibited), that there was a discrepancy between the position in the North, where 57.6% of plate suppliers were signed up, and the South East, where Keith Sendall was responsible, and where only 0.2% were signed up.
  143. However Mark Wilson also said that he was aware of this discrepancy at the time, that he raised it in meetings with Keith Sendall, who complained that his depot management duties were preventing him from spending sufficient time visiting suppliers to sign them up, with the result that a "succession plan" was agreed upon to free up his time for supplier visits. This succession plan however, which involved promoting Fred Sendall on a pilot basis to the role of depot manager, was not implemented until early Jan. 13, even though Mark Wilson's evidence was that it was discussed and agreed in April 12. Moreover, it was not until late Dec. 12 that Keith Sendall was offered a bonus to get suppliers to enter into contracts.
  144. Thus the effect of Mark Wilson's evidence in my judgment was that at the time he did not regard the discrepancy in signing up suppliers to contracts as suspicious, or that he had concluded that Keith Sendall was in some way deliberately seeking to frustrate Reuse's attempts to tie customers into long term contracts. Moreover, there is no corroborative evidence from any customers to support Reuse's case nor indeed, for example, from its current employees who, Mark Wilson said in his statement, had since been able to sign up around 60% of the South East customers to long term contracts.
  145. It follows, in my judgment, that Reuse has failed to make out this allegation, which is an allegation of a serious dereliction of duty intended to damage Reuse's business by enabling the new business to take over customers who were free to leave Reuse without being tied into any minimum contract duration.
  146. It is also the case that there is evidence of Keith Sendall obtaining new customers for Reuse through 2012. Although Reuse's witnesses sought in cross-examination to downplay this, suggesting that it was effectively customers who had nowhere else to go to after one of its competitors in the plate sector, Viridor, exited that sector in 2012, nonetheless it is also clear that at the time Reuse was actively seeking to focus Keith Sendall's efforts on winning new business. If the contemporaneous perception of Keith Sendall's performance in winning new business was, as Mark Owen described it in cross-examination, "disappointing", it is surprising that there is no contemporaneous evidence to that effect.
  147. In my judgment the position at this point was that Keith Sendall was undoubtedly investigating setting up a competing business. Thus there is a detailed checklist at p.1032, made by Keith Sendall, of items which the new business would need, which appears from the final entry to date from Nov. 11, and on the following page there is a detailed costings list, which also suggests that the proposed corporate structure would involve Mick and Dominic Keogh as well as Keith, Fred and Bill Sendall, and others.
  148. However, I am not satisfied that any of this amounted to any more than Keith Sendall thinking about setting up his own business, and making preliminary enquiries to see if it was feasible. There is no hard evidence that he took any firm steps. I am not satisfied that over this period he had made a firm decision. If he had, there would be no conceivable explanation for the delay from Nov. 11 to Nov. 12 in taking any firm steps to set up that business. The most likely explanation in my judgment, consistent with the entries at pp.1032 - 33, is that at the time of Mick Keogh's resignation and decision to set up a competing business he and Keith Sendall had actively discussed setting up together, but that Keith Sendall had cold feet and decided not to do so, whereas Mick Keogh had gone ahead. I am satisfied that nonetheless the idea remained in Keith Sendall's mind, and it was an idea to which he continually returned, but that it was not until Nov. 12 that he started making serious plans to set up the competing business which eventually became May Glass.
  149. 3(b) The period Nov. 12 – April 13

  150. This is the crux of the case in my judgment. I shall deal with it by examining the evidence as to Keith Sendall's involvement in relation to certain aspects of May Glass' formation and operation, namely:
  151. (i) Dealings by Keith Sendall with Barclays Bank on behalf of May Glass;
    (ii) Keith Sendall's role in the formation of May Glass;
    (iii) Dealings by Keith Sendall with Reuse's customers on behalf of May Glass;
    (iv) Dealings by Keith Sendall with vehicle and skip suppliers on behalf of May Glass;
    (v) Dealings by Keith Sendall with Mick Keogh / INGS on behalf of May Glass;
    (vi) Other dealings by Keith Sendall on behalf of May Glass;
    (vii) Activity conducted in Reuse's time?
    (viii) Timing of Keith Sendall's resignation.

    (i) Dealings by Keith Sendall with Barclays Bank on behalf of May Glass

  152. There is clear evidence in the journal at p.1043 that in Nov. 12 Keith Sendall made contact with Barclays Bank, speaking to its business adviser and its mortgage adviser. There is a note recording that he was asked to bring the company certificate of incorporation and "business plan" to the meeting with the mortgage adviser. There is a further entry at p.1047, showing that on 29 Nov. 12 he discussed a commercial loan on behalf of May Glass, giving its full company name at that point, as well as a mortgage. There is a further entry at p.1054, relating to a meeting with the bank on 17 Dec. 12, where Keith Sendall makes clear references to having "working capital behind me" (emphasis added) and the "2 boys as directors", and also to there being "2 months without anything coming in". When asked about this last entry he initially agreed that this referred to him, but then backtracked and suggested it related to his sons, and sought to deny that it showed he had already decided to leave Reuse by then. However I am satisfied that the entry obviously relates to him, and shows that he had indeed decided to leave and to set up May Glass with his sons by then. Indeed under further cross-examination at this point he accepted "I admit I started it [May Glass] off". He continued by saying "I didn't want to get involved. I'd had enough of it". That further answer, however, is inconsistent in my judgment with the further entry in his journal for 8 Feb. 13, at p.1062, in which he records arranging a meeting with a Barclays representative "to set up [a] business account". When asked about this he admitted that it was "quite possible" that he had met the particular representative concerned.
  153. That is a particularly damning piece of evidence, in my judgment, in circumstances where he had previously denied having any involvement in relation to the bank business account, not surprisingly since it was inconsistent with his case, that he was simply asked to, and agreed, to provide a loan to his sons to enable them to set up in business together, that he did so by way of joint remortgage with his wife of the family home, and that his involvement in May Glass was no more than as a source of finance. In addition to the points made above so far as the true extent of his involvement with Barclays is concerned, the following points are also in my judgment damaging to his case in this regard:
  154. (1) His evidence has changed significantly about the investment. Initially he had claimed that the money was a "gift". He later claimed that it was a loan. When asked whether he expected to be paid interest, he claimed that he had "never thought about it". When pressed he said that he did not intend the loan to be interest free, and that his sons should repay him the interest he had to pay to the bank. It seemed to me that his inability to answer this simple question demonstrated quite clearly that this was really part of an agreed overall involvement which went far beyond a mere loan, which is why no specific consideration had been given to identifying and agreeing the otherwise fundamental question as to what, if anything, the new company would have to re-pay to Keith Sendall and the timing and amount of any such payments. Indeed, the fact that the bank statements demonstrate that May Glass made payments to Keith Sendall on occasions significantly in excess of the regular mortgage repayments being made to the bank show, in my judgment, that this was not merely an arrangement under which May Glass would pay Keith Sendall what he had to pay the bank, no more and no less.

    (2) If his involvement had been limited to raising money by way of remortgage, it is difficult to see why he should have been required to take the company certificate of incorporation and business plan to the meeting in Nov. 12. It is even more difficult to see why he should have been discussing a commercial loan on behalf of May Glass with Barclays, or referring to having working capital behind him and expecting there to be 2 months without anything coming in to him.

    (3) There is another telling piece of evidence against Keith Sendall in the form of an entry in the journal for 17 Jan. 13 (p.1058) where he is making arrangements to obtain a "vehicle for company use for myself". He admitted making that entry, and also admitted that a vehicle similar to that described was indeed obtained by May Glass. That, in my judgment, demonstrates quite clearly that as at Jan. 13 Keith Sendall was intending to have an active involvement in May Glass.

    (4) Although the defendants claimed to have been unable to disclose a copy of the bank mandate, most probably completed prior to opening the business account on 20 Feb. 13 and thus at a time when Keith Sendall was still a director, under cross-examination Keith Sendall admitted that "my name could well be on the mandate". It seemed clear to me that he knew that his name was on the mandate and, moreover, that this was because his intention was to play a full part in the financial management of May Glass at this time.

  155. In short, I am satisfied that Keith Sendall was fully and directly involved in arranging bank finance for May Glass, going far beyond simply arranging a mortgage to lend his sons money.
  156. (ii) Keith Sendall's role in the formation of May Glass

  157. Keith Sendall accepts that he instructed accountants known as Trevelyan & Company, who he said he had known for years, to form May Glass. He also accepts that he became, together with his sons, a director of May Glass from the date of its incorporation on 17 Jan. 13 until he resigned on 26 Feb. 13. He was asked why he became a director if on his case all that he had done was to help his sons get the company formed. He was unable to provide any clear or coherent answer. He appeared to suggest that it was due to Trevelyan's misunderstanding of his role, rather than because of any positive decision on his part, but he was unable to explain what it was that he said or did which might have led them to that misunderstanding.
  158. Keith Sendall was asked to explain why he subsequently decided to resign on 26 Feb. 13, and it was put to him that it was no coincidence that this happened within days of his signing the contract of employment with Reuse. Although he denied that there was any connection, he was unable to provide any satisfactory explanation as to what did trigger his decision to resign – he said "It just happened, through talking to other people, told me no need to be a director to start the company up – that's what I thought you had to do". It seems plain to me that there was an obvious connection, and his resignation was intended to avoid it being discovered or said that whilst remaining employed by Reuse he was secretly involved in a competing business. (Whilst he would, of course, have been unable to conceal the fact that he had been a director, I am satisfied either that at the time he was unaware of that fact, or he believed he could simply "front" it out if confronted, as indeed he subsequently did attempt to do.)
  159. What has now happened, it appears, is that as well as being appointed shareholder in his place, his wife has now been appointed, or at least treated, as a director of May Glass. Thus its management accounts [p599] show that it is she who is recorded as holding the "director's loan", and the monthly loan repayments are being made to her. It seems clear to me that this is simply a switch from Keith Sendall to his wife in order to ensure that there is no risk of his being held to be in breach of the terms of the injunction.
  160. I am quite satisfied therefore that Keith Sendall set up May Glass, became its director and major shareholder, and continues to hold those positions through his wife as his nominee.
  161. (iii) Dealings by Keith Sendall with Reuse's customers on behalf of May Glass

  162. In his witness statement Mark Owen said that the starting point for the initial investigation was that he had been informed by another senior employee, Ron Green, that he had been contacted by a customer who had told him that Keith Sendall had been seeking to persuade him for some time to move his business to May Glass. However no witness statement was provided whether from Mr Green or from the unidentified customer, nor is there any other hard evidence to support this. The same is true of the more generalised complaint about customer contact made by Mark Wilson at [84(e)] and [117] of his first witness statement made for the injunction application. Indeed in that witness statement he makes reference to a number of witness statements from Reuse employees, particularly Ron Green, which would appear to form the basis for his statements in this respect, but who have not provided witness statements for trial (nor, so far as I have been made aware, for the injunction application itself), or given evidence.
  163. At [89] Mark Owen referred to a journal entry at p.1036, seemingly dated 19 Oct. 12, which he suggested was a customer list and which showed that Keith Sendall was "making a list of our customers to put under contract on behalf of May Glass". It does not seem to me however to show that Keith Sendall was preparing to contact these 6 customers for May Glass' purposes. Thus the first entry simply states "Impact Tuff [a supplier] to raise their charges", and that seems to me to be more consistent with Keith Sendall recording current information than planning illicit contact. Moreover the further references to "contracts" are just as consistent, in my judgment, with Keith Sendall planning to perform Reuse's objective to persuade these suppliers to sign up to formal contracts, as him seeking to contact them and sign them up to contracts on behalf of May Glass at this time.
  164. Mark Owen did however also refer however to pp. 1044-45, entries which I am satisfied from the dates of the surrounding entries were made in Nov. 12, and which show a number of suppliers and a number of skips against each supplier. Keith Sendall accepted in cross-examination what is clearly the case, which is that the majority of suppliers on that list transferred to May Glass. Under further cross-examination Keith Sendall admitted that the telephone records which he had belatedly produced for the relevant period showed he had called many of them after 1 May. 13. He claimed that this was because they were friends as well as work acquaintances who he wanted to tell he was leaving Reuse. In my judgment Keith Sendall's evidence is implausible. There is no plausible explanation offered as to why Keith Sendall would have written down not just these particular suppliers but also a specific number of skips against each supplier in his journal, if that entry had been for Reuse's as opposed to May Glass' purposes. By reference to the plans which Keith Sendall was undoubtedly making at this time in relation to May Glass, by reference to the fact that the majority of these suppliers became May Glass' suppliers in May 13, by reference to the contact with Keith Sendall had with these suppliers both whilst at Reuse and after he left Reuse and May Glass started in business, I am satisfied that these lists were prepared by Keith Sendall in around late Nov. 12 for the purpose of identifying suppliers which May Glass would seek to win from Reuse.
  165. There is also an allegation that on 6 Feb. 13 Keith Sendall met three of Reuse's "key clients" for the purpose of encouraging them to transfer their business to May Glass. That allegation derives from the journal, where there is an entry for 6 Feb. 13 at p.1064 which records him contacting these 3 customers. Keith Sendall accepts that he did so, and he also accepts that all three subsequently transferred their business to May Glass. Although there is no express statement in the journal that Keith Sendall had arranged these meetings with a view to soliciting their custom for May Glass at those meetings, in my judgment it is clear that this was the purpose of those meetings.
  166. There is also an entry for 15 Feb. 13 [p1068] which shows that Keith Sendall was seeking to arrange a meeting with St. Gobain, a major customer. It is clear that this was for May Glass' purposes, not for Reuse's purposes, and when asked about this all that Keith Sendall could say was that he did not believe that the meeting took place. Although it is fair to say that Keith Sendall was planning to hold the meeting in his own time, nonetheless he made the call on a work day, at a time when he was still of course employed by Reuse, and in relation to one of its major customers.
  167. It is also apparent from a comparison of the phone records belatedly disclosed by Keith Sendall that from 19 March 13 onwards there are many calls to Reuse suppliers made by Keith Sendall on his personal mobile phone, whereas previously there was little or no evidence of such calls. That is consistent, in my judgment, with Keith Sendall beginning to approach many of the targeted suppliers, to persuade them to switch custom to May Glass, at around the time that he gave his notice of resignation and May Glass was in the course of obtaining the skips and the vehicles necessary to start trading. Those telephone calls can be seen from the records to continue into May 13, after Keith Sendall ceased employment with Reuse. On Keith Sendall's case he would have had no reason to call these contacts after he had been suspended on 18 April 13, since he had no direct involvement in May Glass, other than that he wanted to call them as his friends to let them know that he was leaving Reuse. That does not explain however why he continued to call them. The obvious explanation is that he did so because he was calling them on May Glass business.
  168. In the circumstances I am satisfied that by Dec. 12 Keith Sendall was actively planning which suppliers he should approach, and by Feb. 13 he was actively contacting suppliers and at least one customer with a view to winning their business for May Glass.
  169. (iv) Dealings by Keith Sendall with vehicle and skip suppliers on behalf of May Glass

  170. There is clear evidence in the journal at p.1041 that, as early as Nov. 12, Keith Sendall had made contact with potential sources of skips. When confronted with this, he admitted that he had done so, but insisted that he had just "chased them up" on behalf of his sons, but had not had any dealings with them.
  171. There is also evidence that he was calling at this time the number of a company, European Steel Fabrications, who were subsequently to supply May Glass with skips. Although Keith Sendall claimed that in fact these were calls to an associated company, European Glass, who was a customer of Reuse, and there is some support for his case that they were an associated company, it seems to me that the coincidence is too compelling, and that these calls were about skips for the new business, and not about selling recycled glass to Reuse's customer.
  172. There is also evidence that in Dec. 13 Keith Sendall was calling the number of two companies, GJF Skips and Skyways Skips, as regards the supply of skips to May Glass. Keith Sendall admitted this, but claimed that he had simply made the initial contact but then left it to Fred Sendall to take forwards. He maintained that what he had said at [66] to the effect that he had not had any "negotiations" with these companies for May Glass' purposes, was true. However that evidence seems to me to be plainly inconsistent with the journal entry at p.1050, which records him discussing the details of skips with GJF. Moreover, it can be seen from Keith Sendall's phone records that he was still contacting GJF in Feb. 13. That is consistent with a journal entry for 15 Feb. 13 [p.1069], which records him arranging a meeting with GJF one Saturday. His explanation for the phone calls was that he was "making sure the boys are sorted", and his explanation for arranging the meeting was that "I just chased, no more". It seems to me that he was doing far more than that. Indeed, the subsequent invoice from GJF for the supply of the skips, although admittedly described as a verbal instruction from Fred Sendall, was paid for by Keith Sendall from his personal bank account, and he had telephoned GJF to give delivery details [p.1073].
  173. I am satisfied therefore that from Nov. 12 Keith Sendall was making arrangements for the necessary skips and vehicles to be obtained for May Glass to use as a competing business.
  174. (v) Dealings by Keith Sendall with Mick Keogh / INGS on behalf of May Glass

  175. There are two separate points here. The first is Reuse's case that May Glass is really a joint venture between Keith Sendall and Mick Keogh. The second is Reuse's case that Keith Sendall has had significant material dealings with Mick Keogh and INGS in relation to setting up May Glass at a time when he was still employed by Reuse.
  176. So far as the first point is concerned, it appears that Reuse's case is that since INGS is and was a competitor business, and is also an "excluded business" for the purposes of clause 19.3.1, discussing setting up a competing business as a joint venture with a competitor whilst still employed would amount to a breach of Keith Sendall's duty of fidelity and good faith and/or a breach of clause 19.3.1.
  177. Even if it had been open to Reuse to rely upon clause 19.3.1, I do not accept that it was breached. That clause would apply if Keith Sendall had been "employed, engaged, concerned with or otherwise interested in" INGS as an excluded business; it could not in my view as a matter of construction catch a joint venture between Keith Sendall / May Glass on the one hand and Mick Keogh / INGS on the other.
  178. I am not satisfied that Reuse has made out its case on the evidence as to the alleged joint venture. It is clear that Mick Keogh / INGS has provided substantial financial assistance to May Glass. It is not clear however that Mick Keogh / INGS has any direct financial interest in May Glass or any direct role in its management. It is just as possible in my judgment that it involves some form of straightforward financial assistance.
  179. In my judgment, therefore, the real question in relation to Mick Keogh and INGS is whether or not what Keith Sendall did vis-ΰ-vis them in relation to the setting up of May Glass itself amounted to a breach of his express or implied duties owed to Reuse. So far as that is concerned, Reuse relies on:
  180. (1) The numerous telephone calls made over this period by Keith Sendall to Mick Keogh and also to Pat Duker, another former Reuse employee who went to work for INGS after leaving the employment of Reuse.

    (2) The resulting arrangements whereby INGS provided substantial assistance to May Glass to help it set up, in particular:

    (3) Arranging to purchase two articulated vehicles for May Glass in Feb. 13, each costing £33,500 plus VAT, with the aid of finance entered into by INGS with a finance company [pp1393-4]. It appears from the documentary evidence that in Feb. 13 Keith Sendall paid the total sum, £80,400, from his own personal account to INGS [NB91, p1071], and that subsequently in April 13 INGS then transferred the same amount to May Glass.
    (4) Arranging to purchase two skip trailers for May Glass in Feb. 13, each costing £16,900 plus VAT, again with the aid of finance entered into by INGS with a finance company [pp1390].
    (5) Arranging to apply for and obtain an operator's licence for May Glass to use.
    (6) Arranging to purchase a skiploader for May Glass in Mar. 13, costing £24,500 plus VAT, again with the aid of finance entered into by INGS with a finance company [p1392]
    (7) May Glass receiving the further sum of £100,000 from INGS in April 13. The original disclosed bank statement had the payer redacted. Keith Sendall when asked claimed to have "no idea" who paid this, which I simply do not accept. When the unredacted version was shown to him, Keith Sendall claimed to know nothing about this, which I also do not accept. There is no obvious explanation for this payment, which does not correlate (in the same way as does the payment on the same day of £80,400) which some other transaction. It does appear, on its face, to be a cash injection from INGS.
  181. What is particularly damning, so far as Keith Sendall is concerned, about this, is that the money used to provide to INGS for them to make payments in relation to the articulated vehicles, the trailer deposit and the operator's licence came out of his own personal account. Whilst I appreciate that Keith Sendall says that this was just because the mortgage loan funds had come into his account, so that it was more convenient to make these payments direct rather than to transfer the money to May Glass for it to pay INGS, nonetheless it betrays a level of involvement with INGS and May Glass and their mutual financial and other dealings which is far greater than would have been the case if Keith Sendall was merely providing a loan on a hands-off basis to May Glass, and no more.
  182. Keith Sendall claimed that all of this was arranged direct between Mick Keogh and Fred Sendall, and he was just provided with the payment details by Fred and made the appropriate payments. I do not accept this. As I noted, when originally asked for disclosure regarding these matters Keith Sendall initially denied any involvement, which was plainly untrue.
  183. In the circumstances I am satisfied that Keith Sendall has been intimately involved in making arrangements for Mick Keogh / INGS to provide financial and other assistance to enable May Glass to set up in competition with Reuse.
  184. For completeness I should note that although Reuse also claimed that Mick Keogh / INGS were involved in the arrangements through which May Glass came to lease business premises, I am not satisfied that there is reliable evidence to this effect, and I accept the defendants' evidence that they occupy the business premises under an informal arrangement with a couple known as Lucy and Martin, who were already known to Keith Sendall and his sons, and who had undertaken vehicle maintenance work for Reuse in the past. There does not appear to be any evidence to show that these arrangements had been made through, or otherwise involved, INGS.
  185. (vi) Other dealings by Keith Sendall on behalf of May Glass

  186. There is also clear evidence in the journal at p.1046, confirmed by Keith Sendall at [67], that in Dec. 12 he made contact with a company known as Smiths of Gloucester, who undertook collection, storage and transport services, to arrange a meeting in relation to the proposed new business. Although under cross-examination Keith Sendall suggested that this was just a mistake on his part, because the meeting was to do with Reuse's business and not that of May Glass, and his witness statement was wrong, he was unable to provide any explanation as to how he could have come to make this mistake, particularly when he was careful in his witness statement to explain why that contact was not on his version of events inappropriate, and I am unable to accept his explanation.
  187. There is also clear evidence in the journal at p.1072 that in Feb. 13 Keith Sendall arranged a meeting with an insurance broker at his home to discuss May Glass' insurance requirements, and that as part of either his planning for that meeting or his discussions at that meeting he estimated a projected turnover figure for the new business. Keith Sendall claimed in cross-examination that although he arranged the meeting he probably did not attend it, and that this was simply his writing down what Fred Sendall had told him the new company required, but I regard that explanation as fanciful.
  188. (vii) Activity conducted in Reuse's time?

  189. Keith Sendall contends that insofar as he did undertake activities in relation to May Glass whilst employed by Reuse, whether as revealed by the journals or otherwise, they would have been undertaken in his own time, either in the evenings or at weekends or during his unpaid lunch break.
  190. However I reject this assertion. It is clear from the phone records that calls were being made by Keith Sendall in connection with the business of May Glass at all times of day. When confronted with this, Keith Sendall said that this was because he had no fixed lunch break, and took a break for lunch as and when he could. He explained that his day when at Dagenham would be spent either in the office or walking around the site. It seems to me that Keith Sendall's evidence, to the effect that he carefully kept his time spent on May Glass' business separate from his time spent on Reuse business, was self-serving and wholly implausible. In my judgment the reality is that from Jan. 13 onwards Keith Sendall was spending a significant amount of his time whilst at work on matters relating to May Glass, and was failing to give his full time and attention to Reuse's affairs.
  191. (viii) Timing of Keith Sendall's resignation

  192. In cross-examination Keith Sendall was asked why he had decided to resign a position he had held with many years at the end of Mar. 13, coincidental with his two sons' resignation a week later, at a time when they were getting ready to start May Glass in business (as they had done by the end of April 13), in circumstances where: (a) he had just committed to a substantial loan repayments to fund the loan to them; (b) he had no job to go to (his job offer did not arise until late Jul. 13); (c) his wife was earning only a modest income on a part time basis. He claims that it was a complete coincidence, and that he resigned for personal reasons largely to do with the health of his parents and his dissatisfaction with the job, but I find myself unable to accept that anyone would have resigned in those circumstances unless they were fully intending to be involved in the new business at the end of their 3 month notice period.
  193. 3(c) Conclusions in relation to breach by Keith Sendall

    (i) Breach of implied duty of fidelity and good faith

  194. Does the foregoing place Keith Sendall in breach of his implied duty of fidelity and good faith as against Reuse? It is of course the case, as appears from the authorities to which I was referred, that this is a fact-sensitive question. It is also true that there was no express restriction upon Keith Sendall in terms of what he was able to do during his employment with Reuse or (by reason of the conclusions I have reached in relation to the express post-employment restrictions) thereafter. I also acknowledge that on the evidence there was no actual competitive activity until the time that Keith Sendall's employment ceased anyway. I also accept that it could be said that certain conduct on the part of Keith Sendall, as I have found it, might by itself not have fallen on the wrong side of the line. However when considered in totality, there can in my judgment be no possible basis for viewing his conduct as amounting to anything other than a clear breach of his duty of fidelity and good faith.
  195. Thus from Nov. 12 through to April 13 Keith Sendall took active steps to set up May Glass as a company to compete with Reuse. He did so as a joint venture with his two sons who were also employees of Reuse to whom they also owed duties of fidelity and good faith. The agreed plan was that the business would be set up ready to start after his sons had resigned, but at a time whilst he was still employed by Reuse. Thus a necessary ingredient of the plan was that he would conceal his interest in the business from Reuse. In fulfilment of this plan, which on any view was reached in late 12, he arranged for May Glass to be incorporated, and he became a director of and majority shareholder in the company until he resigned the former and transferred the latter in a duplicitous attempt to conceal his interest from Reuse. He took positive steps to finance the business, including obtaining a mortgage to advance it a substantial sum, and arranging for it to obtain a bank account. He made contact with potential customers and suppliers who were also customers and suppliers of Reuse, with a view to soliciting their business. I am satisfied that this contact included conducting active negotiations with them and making firm arrangements with them to start dealing with them with effect from 1 May 13. He made contact with, negotiated and made arrangements with potential vehicle and skip suppliers, with a view to obtaining the equipment necessary to trade, which he arranged to be delivered whilst he was still employed by Reuse. He had extensive dealings with Mick Keogh and others at INGS with a view to obtaining financial and other assistance to enable May Glass to trade. He made contact with a potential sub-contractor and with an insurance broker. Much of this contact took place by telephone whilst Keith Sendall was at work at Dagenham, at a time when he should have been concentrating on Reuse's affairs. I have no doubt that in addition to what has been discovered by Reuse by reference to his journals and phone records he spent a considerable amount of time with his sons in planning in considerable detail everything necessary to get May Glass up and running as from 1 May 13.
  196. Thus this is not a case where certain limited preliminary steps were taken within the period of employment but the real arrangements were not made until after the employment had ceased and the business did not set up until some months afterwards. On any view his conduct fell on the wrong side of the line between what is and what is not permissible.
  197. For completeness I should add that if Keith Sendall's conduct had been limited to providing finance for his two sons to set up May Glass, with no involvement at all in the business, then on balance I consider that this would still have been a breach of his implied duty of fidelity and good faith. That is because it seems to me that, given his position and responsibilities with Reuse, and given that May Glass was intended to be directly competitive, operating in the same area of the country and competing for the same relatively narrow pool of suppliers and customers, it would have been impossible for him to have had a major financial interest in the success of May Glass as a new venture and conscientiously carry out his duties to Reuse, particularly in relation to actively competing with May Glass for the same suppliers, without conflict.
  198. (ii) Breach of fiduciary duty

  199. It follows from my previous findings that if I had decided that Keith Sendall owed a fiduciary duty to Reuse, then it is apparent that he would have breached that duty on the findings I have made. Again, and even more obviously than in relation to the duty of fidelity and good faith, he would have been in breach solely by reason of his having provided funding to May Glass, without having first disclosed his intended interest in May Glass to Reuse and obtaining their informed consent to his being involved with that competing business in that limited way.
  200. (iii) Breach of clause 19.3.6

  201. If I had decided that Keith Sendall was subject to this clause, and if I had decided that it had been drafted so as to apply to activity before as well as after termination of employment, then it would have been obvious from my findings that Keith Sendall would have breached it. However, since Keith Sendall's employment was not terminated until 1 May 13, by which time on any view the business of May Glass had been set up with the intention of competing with Reuse, it seems to me that on that basis there was no breach. If Keith Sendall's involvement had been limited to the provision of finance as a sleeping investor, I would not have held that this by itself would have amounted to a breach of clause 19.3.6.
  202. (iv) Breach of clauses 19.3 2 and/or 19.3.3

  203. If I had decided that Keith Sendall was subject to these restrictions, the evidence is clear that after 1 May 13 May Glass has had business dealings with and has entered into contracts with suppliers and customers of Reuse falling within the scope of clause 19. I am satisfied that I can properly infer from the evidence that this has included solicitation of these and other suppliers and customers also falling within clause 19. I am also satisfied that I can properly infer on the evidence that Keith Sendall has been directly involved on behalf of May Glass both in soliciting and in dealing with these suppliers and customers over this period. Given that I am quite satisfied that after 1 May 13 Keith Sendall continued to be directly or indirectly involved in May Glass, as de facto director and/or shareholder, I am satisfied that this amounts to a breach by him of these clauses when read with clause 19.6.
  204. (v) Breach of duty of confidentiality

  205. In his opening written submissions Mr Keen contended that the evidence would show that Keith Sendall had made lists of customers and used them to plan May Glass' business, and used prices quoted by Reuse to set pricing for May Glass. Whilst there is, as I have said, some evidence of Keith Sendall jotting down in his journal the suppliers which he was proposing to target and the number of skips the new business would need to service those suppliers, there is no evidence of his using his knowledge of Reuse's particular business methods in general or its detailed prices in particular to compete with Reuse.
  206. In closing submissions Mr Keen argued that Keith Sendall, by making plans to compete with Reuse and take its business from its suppliers, and by acting on those plans, both during and after his employment, involved misusing confidential information.
  207. So far as any implied duty of confidentiality is concerned, given the narrow ambit of what the law would regard as genuinely confidential information, I do not find that Keith Sendall breached that duty in this case, whether before or after the termination of his employment.
  208. Even if I had decided that Keith Sendall was subject to the express confidentiality clause, I would not have held that it had been breached by Keith Sendall. In my judgment this is a simple case of an employee using his general knowledge of the glass recycling business, including his knowledge of suppliers and customers with whom he dealt, gained over many years both before and after he entered Reuse's employment. There is no evidence that any of this information is genuinely confidential, even allowing for the wide definition contained in clause 18.2. There is no evidence that Keith Sendall used, or needed to use, his knowledge of the detail of Reuse's business affairs, specifically for example pricing, in order to set up May Glass or approach suppliers or customers. There is no evidence of his using, or needing to use, information made available to him in paper or electronic form by Reuse for such purposes, or for inferring that he must have deliberately memorised such information for such purposes. As Mr Choudhury has pointed out, the pleaded case against Keith Sendall in relation to confidentiality (par. 8) really does no more than allege that he knew of Reuse's customers and the terms on which Reuse dealt with them, and breached his duty by bidding for their business.
  209. In my judgment it would be wrong in principle to allow an employer, by the simple technique of defining confidential information in the widest possible terms, to categorise conduct which, on the facts, would not during employment amount to a breach of fidelity and good faith, or would not after employment amount to a breach of reasonable and hence enforceable express restrictive covenants, as a breach of an express confidentiality clause and thus achieve protection against reasonable planning for and/or actual competition through the back door which it could not achieve through the front door.
  210. (4) LIABILITY OF MAY GLASS

  211. The pleaded case is that May Glass: (a) intentionally induced or procured Keith Sendall's breaches of his duties owed to Reuse; (b) engaged in an unlawful means conspiracy with Keith Sendall. In Mr Keen's written opening he contended that the incorporation of May Glass was part of the plan agreed between Keith Sendall and his two sons for them to compete with Reuse, and for Keith Sendall to plan to do so and to do so, before giving notice and whilst working out his notice period.
  212. Reuse contends that from the time of its incorporation onwards the knowledge of Keith Sendall must be imputed to May Glass. That is so on the basis that: (i) from the outset it was intended that it be a joint venture between him and his two sons; (ii) he was a director of May Glass until he resigned on 26 Feb. 13; (iii) thereafter and despite his resignation he continued to be involved directly or indirectly as a de facto director and/or shareholder.
  213. Reuse also contends that Keith Sendall's two sons must have been aware that he owed contractual obligations to Reuse, and that he was breaching those obligations, in circumstances where I am invited to infer that they must have known that the only reason for his resigning as director of May Glass was to avoid being seen to be involved in May Glass when prohibited from so doing by reason of his contractual restrictions. In that respect I note that when cross-examined about this Fred Sendall said that the reason his father did not want to sign the contract of employment was because he did not want to be "tied in" to the company if he was not happy with it. Although he then sought to clarify his answer by saying he was not referring to being "tied in" by restrictive covenants, it seems to me that this was exactly what he was saying, and that he was unguardedly admitting what I would have expected to have happened anyway, namely that in the course of the discussions between father and sons in the circumstances to which I have referred there would have been some reference to these covenants.
  214. Finally, Reuse contends that given Keith Sendall's direct involvement on behalf of May Glass in relation to contacting and taking away Reuse's suppliers and customers, May Glass is to be taken as intending to cause Reuse loss by diverting suppliers and customers away from Reuse.
  215. So far as the essential agreements of these torts are concerned, Mr Choudhury helpfully referred me to the concise summaries contained in the judgment of Morgan J. in Aerostar Maintenance International v. Wilson [2010] EWHC 2032 (Ch), at pars. 163 and 167 respectively, which I gratefully adopt:
  216. "163. The ingredients of the tort of inducing or procuring a breach of contract are, first, there must be a contract, second, there must be a breach of that contract, thirdly, the conduct of the relevant defendant must have been such as to procure or induce that breach, fourthly, the relevant defendant must have known of the existence of the relevant term in the contract or turned a blind eye to the existence of such a term and, fifthly, the relevant defendant must have actually realised that the conduct, which was being induced or procured, would result in a breach of the term. I take these propositions from the decisions of the House of Lords in OBG Ltd –v- Allan [2008] 1 AC 1 per Lord Hoffmann at [39]-[44] and per Lord Nicholls at [191]-[193] and [202].
    …
    167. The second tort alleged against Mr Ashfield is that he and Mr Wilson (and indeed Avman) conspired together to injure AMIL by unlawful means. The tort of conspiracy has two branches. One branch of the tort requires a claimant to show that the relevant defendant acted with the predominant purpose of injuring the claimant. That branch of the tort is not relied on in this case. The Claimant relies on the alternative way of establishing the tort of conspiracy, by showing that it has suffered loss or damage as a result of unlawful action taken pursuant to a combination or agreement between the relevant defendant and another person or persons to injure it by unlawful means: see Kuwait Oil Tanker –v- Al Bader [2002] All ER (Comm) 271 at 311. Accordingly, there must be a combination, to carry out unlawful acts, which are the means by which injury is intended to be inflicted; there must be an intention to injure AMIL and there must be resulting loss and damage."

  217. In my judgment Reuse has failed to make out its case so far as establishing the tort of inducing or procuring breaches of contract is concerned. There are two reasons for this conclusion:
  218. (1) First, I do not consider that this is a case where it can properly be said that May Glass' conduct was such as to procure or induce a breach by Keith Sendall of his contract of employment with Reuse. That is because: (a) the only relevant breach was a breach of Keith Sendall's implied duty of fidelity and good faith; (b) it is apparent from my findings that Keith Sendall had already set off down the path of breaching that duty before May Glass was even incorporated, indeed its incorporation was one of the key steps taken in the course of conduct which amounted to a breach; (c) May Glass was a company which was I accept a joint venture between Keith Sendall and his two sons, but where Keith Sendall was the controlling mind and majority shareholder, so that it is conceptually difficult to see how he could in that capacity have procured or induced a breach of his personal contractual obligation to Reuse; (d) there is no hard evidence from which I could infer that anyone acting on behalf of May Glass procured or induced a breach by Keith Sendall of his contract with Reuse. The reality is that Keith Sendall for his own reasons decided to act as he did, and his two sons were quite content that he should do so, and all intended that May Glass should be the ultimate beneficiary of that conduct, but all that seems to me to be very far removed from May Glass either procuring or inducing those breaches.

    (2) Second, it does not seem to me that it has been established that May Glass as a legally separate entity knew or turned a blind eye to the existence of the implied duty of fidelity and good faith or knew that Keith Sendall's conduct would result in a breach of that duty. The only hard evidence on this topic was directed to all three being concerned that Keith Sendall's directorship of May Glass would result in a breach of his obligations to Reuse and specifically in relation to the restrictive covenants contained in the contract of employment. I do not consider that I can infer that any of the three were aware of the implied duty or that Keith Sendall's conduct post incorporation but pre-termination would breach that duty. In particular, I do not think that I can infer that Keith Sendall's approaching suppliers with a view to persuading them to transfer their business with May Glass at some future point was done in the certain knowledge that this would be a breach of Keith Sendall's implied duties to Reuse.

  219. However I am satisfied that Reuse has made out its case so far as establishing the tort of unlawful means conspiracy is concerned.
  220. It is clear that what is required is something less than an express or overt agreement. All that is needed is a combination and a common intention: see Clerk & Lindsell on Torts 24th edition at [24-95]. It is also clear that a company can conspire with its directors, other than in the case of criminal conspiracy involving a pure "one man" company: Clerk & Lindsell [24-96].
  221. In this case it is clear that after May Glass was incorporated, Keith Sendall acted in serious breach of his duty of fidelity and good faith for the benefit of May Glass. Thus all of his contacts with the bank, with suppliers and customers, with vehicle and skip suppliers, with Mick Keogh / INGS and others was in order to enable May Glass to set up in business in competition with Reuse. I am satisfied that he must be treated at such point as acting as the director (initially actual and subsequently de facto) and majority shareholder (ditto) of May Glass and on its behalf and for its benefit. It is also clear that at least Fred Sendall as a director and shareholder was fully aware that this was what Keith Sendall was doing, and indeed I am satisfied was working on behalf of May Glass and in its interests to achieve the same objective. To put it colloquially, they were both in it together, both acting on behalf of and for the benefit of May Glass. This common course of conduct, carried out with a common intention, continued for a considerable period of time from the date of incorporation in late Jan. 13 until the termination of Keith Sendall's employment relationship with Reuse on 1 May 13.
  222. I am satisfied, for the reasons given by Morgan J. in Aerostar and the editors of Clerk & Lindsell, and in the absence of submission to the contrary, that it is possible in law for there to be an unlawful means conspiracy involving a breach of the implied duty of fidelity and good faith.
  223. I am also satisfied that the other necessary ingredients of the tort of conspiracy have been made out. In particular I am satisfied that the steps taken by Keith Sendall whilst employed by Reuse to enable May Glass to compete were instrumental in causing Reuse loss, and that this was intended as being the means by which May Glass was able to set itself up in business, albeit as I accept that neither Keith Sendall not Fred Sendall positively desired to injure Reuse.
  224. It follows that the substantive claim against May Glass succeeds.
  225. (5) WAS REUSE ENTTILED TO AN INTERLOCUTORY INJUNCTION

  226. The injunction granted, which was to continue until trial or further order, restrained:
  227. (1) Keith Sendall from being involved with May Glass, from acting contrary to the non-solicitation and non-dealing restrictions, from soliciting Reuse employees, and from acting contrary to the confidentiality restriction;

    (2) May Glass from soliciting the customers identified in the schedule to the order (effectively, it would appear from the witness statement of Mark Wilson in support of the application, all of the suppliers, both national and local, who supplied plate glass to Dagenham), from soliciting Reuse employees, and from acting contrary to the confidentiality restriction. It did not, however, prevent them from continuing to deal with those customers who had already transferred their business to May Glass by that date.

    5(a) As against Keith Sendall

  228. On the findings which I have made it is clear that Reuse was entitled to seek injunctive relief against Keith Sendall on the basis that he had, during the course of his employment, acted in serious breach of his implied duty of good faith and fidelity. Reuse would not however have been entitled to seek relief against Keith Sendall on the basis of breach of fiduciary duty, breach of confidence or breach of restrictive covenants.
  229. In the circumstances, Reuse would in my judgment have been entitled to invite the court to grant it injunctive relief against Keith Sendall on the springboard basis. The principles to be applied so far as springboard relief is concerned are again helpfully summarised in the judgment of Haddon-Cave J in QBE v Dymoke (ante) at [239 – 247].
  230. In this case the position, in short, is that Keith Sendall had obtained a substantial head start by acting in breach of his duty of good faith and fidelity from Nov. 12 to May 13 during which he had effectively placed himself in the position where May Glass was able to begin competing with Reuse on 1 May 13. There is scope for argument as to whether it would have taken Keith Sendall 6 months to get to the same point had he limited himself to lawful conduct pre-termination both prior to giving notice and whilst working out his notice period and had at that point been free to devote all of his time and attention to May Glass. As I find later in relation to the damages claim, I am satisfied on the balance of probabilities that it would only have taken 3 months to get to that position. Thus there is a respectable case for considering that a springboard injunction limited to that lesser period of 3 months, would have sufficed. A reasonable counter-argument would be that since Keith Sendall was obliged, and had indeed chosen, to give 3 months' notice at the end of March 13, as at June 13 Reuse was entitled to say that springboard relief should be granted on the basis that but for his breach he could and should have worked out that notice so that the 3 months should only start from July 13. It is not necessary for me to decide, because on any view I am satisfied that as at June 13 Reuse was entitled to injunctive relief as against Keith Sendall of at least 3 and up to 6 months.
  231. 5(b) As against May Glass

  232. On the findings I have made Reuse was entitled to seek and obtain injunctive relief against May Glass on the basis that it had conspired with Keith Sendall that he should breach his duty of fidelity and good faith for its benefit.
  233. Even if I had not found against May Glass on the substantive claim, it still seems to me that Reuse would on my findings have been entitled to injunctive relief against May Glass. That is because I have also found that the position as at June 13 was that, contrary to his and his sons' protestations to the contrary, Keith Sendall had always been and continued to be the principal mover behind May Glass and through his wife as his nominee a director and the major shareholder. Moreover, May Glass had obtained the benefit of Keith Sendall's breaches of his duty of fidelity and good faith and as a direct result of that was in a position where it had entered into contracts with Reuse suppliers and would, I have no doubt, have continued to seek to persuade other Reuse suppliers to transfer their business as and when it was in a position to service their requirements.
  234. It follows, it seems to me, although I have not received submissions on this particular issue, that Reuse would have been entitled to an injunction in substantially the same terms as it obtained. There may be scope for argument as to whether or not such an injunction would have been directed against Keith Sendall and May Glass, or solely against Keith Sendall but specifically extending to conduct on his part on behalf of May Glass, but it seems to me that the practical result would have been the same.
  235. (6) THE CLAIM FOR DAMAGES

    6(a) Introduction

  236. The most substantial of the pleaded claims for damages is a claim (par. 13.1(b) for "lost revenue in the approximate sum of £747,609.89", on the basis that "If Keith Sendall had not behaved unlawfully May Glass could not have entered the market when it did and Reuse would have enjoyed a very much greater opportunity to shore up its business in the face of a competitive threat".
  237. This was not further particularised in the Particulars of Claim, but it is apparent from Reuse's evidence served in support of its application for injunctive relief that the majority of this claim was said to be its loss of revenue due to having lost 14 of its previous suppliers to May Glass prior to obtaining interim injunctive relief against the defendants in June 13, and having lost therefore the revenue stream which it would otherwise have gained from plate glass which it claims it would otherwise have obtained from those suppliers. There are then two much smaller heads of claim, the first being what Reuse claims is its loss of revenue from collection charge which it would otherwise have been able to levy against those suppliers in relation to the glass which they would otherwise have supplied, and the second being what Reuse claims is its loss of revenue from collection charges and increased payments in relation to 10 further suppliers where it claims it had to offer discounts to those suppliers to prevent those suppliers transferring their business to May Glass.
  238. There is also an un-particularised pleaded claim (par. 13.1(a)) for "substantial wasted management time and the cost of obtaining legal advice so as to investigate the defendants' unlawful actions". However there is no evidence to substantiate either of these claims, which have not been pursued at trial. The same is true of the pleaded claim for aggravated and exemplary damages, which have not been pursued at trial, in my view rightly so.
  239. Finally, there is a pleaded alternative claim for "gain based damages and/or an account" on the basis of breach of fiduciary duty or in lieu of injunctive relief. This was not referred to in the run up to the trial or at trial, until closing submissions when, in response to certain difficulties with the claimants' claim for compensatory damages, Mr Keen sought to resurrect these claims and invited me to adjourn any quantification exercise if I was satisfied that Reuse was entitled to pursued these claims. I will return to this once I have dealt with the claim for compensatory damages.
  240. The evidence in support of the claim as presented at trial is to be found in the witness statements of Mark Owen and Mark Wilson, from which it appears that Reuse is claiming a net sum of £621,996.51 for the year to 31 March 14, and £51,833.04 per month on a continuing basis. So far as the first 12 months' loss is concerned, it is made up as to £754,568.91 lost revenue and £55,246.95 increased costs, total £829,814.96, less £187,819.35 saved operating costs. So far as the continuing claim is concerned, there is no indication from these statements as to whether this loss was being claimed on an indefinite basis, or up to some specified cut off point.
  241. Mr Keen's opening skeleton did not address the quantification of the claim, because he invited the court to adjourn what he referred to as the remedy hearing until after liability had been determined. The reason for this unconventional approach was that on the first day of the trial Reuse had applied for permission to rely on a very late served witness statement from a Mr Alsop. Mr Alsop is a forensic accountant with the firm which audits Reuse's accounts, but he personally had no previous dealings with Reuse. It was abundantly clear from reading his witness statement that it was in fact a thinly disguised expert report which sought to consider the claim for loss of profit and, having revised it in a number of respects, to endorse it. Its admission was strenuously opposed by the defendants. Having heard argument, I ruled that Reuse should not be permitted to rely on it, in circumstances where it had been served so late that it was impossible for the defendants to be able to respond to it at trial, and unjust to them to accede to Reuse's invitation to order a split trial so as to give them the opportunity of doing so if liability was found as against them. In the circumstances Reuse was left in the difficult position, albeit entirely through its own fault, of having to proceed with a claim for damages for loss of profit based on a claim which it had tacitly recognised needed to be revised, and evidence which it had tacitly recognised needed to be supplemented by independent evidence from someone with appropriate expertise.
  242. In his closing skeleton argument Mr Keen contended as his primary case that damages should be assessed on the basis that but for Keith Sendall's breaches it would not have been possible for May Glass to operate, whether when it did or at any later date. The basis for this submission was that: (a) Keith Sendall could not have loaned any money to May Glass without breaching his duties to Reuse until Nov. 2014[2]; (b) if he had applied for a bank loan funded by remortgage at that time he would have been unable to do so without the benefit of income from any source; (c) without the benefit of that finance it would simply not have been possible for May Glass to set up in business. On that basis the loss is said to be a continuing loss. As his fallback case Mr Keen contended that since it took Keith Sendall 16 months from Nov. 11 to Mar. 13 to set up May Glass as an operational company, it would have taken him at least that time period (plus a further 6 months by reference to his contractual restrictions under clause 19.3[3]) to do the same from the date of actual termination, so that Reuse should be compensated for 22 months' loss. On the basis of the figures contained in Mark Owen's witness statement, which Mr Keen invited me to accept, that would produce a loss of £1,149,326.
  243. 6(b) Is Reuse entitled to recover damages for loss of profits, and if so over what period?

  244. When addressing these arguments it is necessary in my judgment to begin the analysis of the claim for loss of profits by considering what breaches Reuse is entitled to be compensated for, and what loss it has suffered in principle as a result of those breaches. In particular, is Reuse entitled to claim damages on the basis that but for the Keith Sendall's breach the 14 suppliers who transferred to May Glass would have stayed with it?
  245. I am satisfied on the balance of probabilities that had it not been for the unlawful approaches by Keith Sendall in early 2013 these 14 suppliers would not have switched their custom to any other of Reuse's competitors. It was suggested to Mark Owen in cross-examination that suppliers could, and would, move elsewhere from time to time. He agreed, but said that in his opinion that was unlikely to have happened in 2013, because of the withdrawal from the plate glass market in 2012 of Reuse's only major competitor, Viridor. That led to some debate about whether or not Viridor had only withdrawn from this sector in northern England. However, in the absence of evidence (which Keith Sendall could have given had he wished) that one or more of these suppliers had been in the habit of switching between competitors on a regular basis, there is no good reason to think that any of them would have done so in early 2013 if it had not been for his approaches.
  246. Moreover, as I have held Keith Sendall breached his implied duties of fidelity and good faith by reference to his conduct in relation to setting up May Glass whilst still employed by Reuse. In my judgment it is clear that, had he refrained, as he ought to have done, from breaching his duty of fidelity and good faith prior to the end of the employment relationship, there is no way that May Glass would have been able to commence trading as at 1 May 13. Without the active involvement of Keith Sendall in arranging finance through his dealings with the bank, finance companies and Mick Keogh, in arranging for May Glass to be incorporated, and in arranging the provision of vehicles and skips, I am satisfied that his sons would not by themselves have been able to take steps to enable May Glass to start trading by 1 May 13. In that respect it must be remembered that they would not have been able to take any active steps without breaching their own implied duty of fidelity and good faith until their notice given on 2 April 13 had expired.
  247. I am also satisfied on the balance of probabilities that had Keith Sendall and his sons acted in accordance with their contractual obligations, it would have taken 3 months for May Glass to start in business in lawful competition with Reuse. That is because if prior to that date Keith Sendall had limited himself to lawful preparatory activities he would have needed 3 months to obtain the necessary premises and equipment, specifically vehicles and skips, to arrange finance both for the equipment and working capital, and to make the necessary approaches and arrangements with suppliers and customers. I do not consider that there is any basis for Mr Keen's submission that it would have taken the length of time equivalent to the time from Nov. 11 to May 13, because: (a) as I have found Keith Sendall only began taking active steps as from Nov. 12 at the earliest; (b) from Nov. 12 to May 13 Keith Sendall was working for Reuse 5 days per week (albeit not concentrating exclusively on Reuse's business), whereas he would have been free to work exclusively on setting up May Glass in the hypothetical circumstances under consideration; (c) Keith Sendall would, perfectly properly, have been able to undertake a good deal of preparatory planning and limited preparatory activity in his own time whilst still employed by Reuse; (d) the business of May Glass did not require a huge amount of organisation to set up, in that all that it needed was a yard, sufficient numbers of vehicles and skips, suitably trained employees, the necessary licences and insurances, working capital, and access to willing suppliers and customers, all of which Keith Sendall and his sons could obtain without difficulty due to their experience of the industry.
  248. It follows in my judgment that subject to Mr Keen's "finance" point May Glass would have been lawfully entitled and able to commence trading and take the 14 suppliers from Reuse after 3 months of the termination of his employment. In the absence of any enforceable restrictive covenants Reuse had no legitimate basis for seeking to prevent fair competition from Keith Sendall and his sons once they were no longer employees.
  249. That then raises the question as to whether the suppliers would have gone over to May Glass at that point. If so, that must be the end point of any loss which Reuse can recover as against the defendants. Since none of these suppliers were signed up with Reuse to any formal contract, with any exclusive supply obligation for any fixed period or minimum notice period, they were of course free to do so without restraint. Although, as I have noted, Reuse has complained about Keith Sendall's failure to sign customers up to such contracts, that is not a pleaded allegation of breach as against him and, in any event, I have rejected it on the facts. It follows that damages must be assessed on the basis that suppliers were free to choose to supply their plate glass to anyone they wished to do so at any time.
  250. Given that these particular suppliers were ready, willing and able to switch their custom to May Glass with effect from 1 May 13, there is no obvious reason in my judgment why they would not have done so 3 months later. Reuse can argue that if it had been given time, it could, in the same way as it did with other suppliers, have retained their custom at the expense of offering improved terms. However:
  251. (1) There is no hard evidence to this effect, let alone that it would have produced the intended result. After all it would also have been open to May Glass to match these terms in order to win the custom, and there is no proper basis for me to make findings on some speculative basis that Reuse would have been ready, willing and able to match or better any terms which May Glass was able to offer.
    (2) There is no evidence as to whether or not Reuse in fact approached these suppliers post 1 May 13 offering them improved terms to return to Reuse. In his witness statement Fred Sendall said that he had been informed that Reuse had attempted to win back the custom, by offering significantly better prices, but without success. If that is correct, and there is no other evidence about this, that tends to indicate that it would not have succeeded in the hypothetical circumstances under consideration now.
    (3) Although Reuse can argue that it would have been more difficult to bring suppliers back into the fold in Aug. 13 than it would have been to keep them in Aug. 13, there is no hard evidence to this effect, and it would be pure conjecture.

  252. What about Mr Keen's "finance" point? It seems to me that an essential flaw in this argument is that it assumes, without proof, that it would not have been possible for Keith Sendall to raise finance for working capital secured on his and his wife's home without being able to satisfy the bank that he could meet the mortgage repayments from his salary from Reuse. It assumes that Keith Sendall raised the finance by misleading the bank as to a continuing source of income from Reuse. Whilst I appreciate that one of Reuse's complaints is that Keith Sendall has failed to disclose the contents of his application form to the bank (which appears to have been completed online), it does not seem to me to be proper to infer even on that basis as against Keith Sendall that this is what he did. To the contrary: (a) the journal entries in relation to his dealings with the bank, in particular that at p.1054, seem to me to indicate that Keith Sendall made it clear that he was to be directly involved in running May Glass (and hence that he would no longer be receiving a salary from Reuse); (b) there is no indication that the bank pulled the plug once the salary stopped coming in, to the contrary the evidence is that in July 13 the bank was prepared to lend more money to Keith Sendall to finance the business at a time when he was no longer in receipt of salary; (c) Keith Sendall was not seeking unsecured finance, where I appreciate that different considerations would have exercised the bank, but finance secured against a house with full equity, where the proposed business venture was obviously a sound one. In my judgment if Reuse had wanted to advance this as a positive case – and I note that this was not flagged up until written closing submissions – it was incumbent on Reuse to adduce positive evidence to support it or, at the very least, make it crystal clear to the defendants and their advisers in the run-up to trial that they would be advancing this as a positive case at trial in relation to quantification and that in the absence of disclosure or a proper explanation for non-disclosure in relation to the bank loan position it would be inviting the court to draw appropriate adverse inferences.
  253. In my judgment, therefore, the loss of profit which Reuse can recover is limited to such loss as it can prove it suffered in the first 3 months from 1 May. 13 to 1 Aug. 13.
  254. 6(c) Quantification of the claim for loss of profits

  255. This is made up as to:
  256. (i) The sum of £694,419 pa in relation to the revenue it would otherwise have generated from the sale of cullet made from plate glass supplied by those suppliers, details of which are also attached to Mark Owen's witness statement at p.1490.
    (ii) The sum of £37,760 pa in relation to the collection charges it would otherwise have received from those suppliers who paid Reuse to collect their plate glass, details of which are attached to Mark Owen's witness statement at p.1489.

  257. Mr Choudhury submitted that these claims should fail in their entirety because Reuse had failed, indeed refused in correspondence, to give disclosure of the primary documentation to support its claim in relation to quantum, relying instead on figures contained in its witness evidence without supporting documentation. He noted that the only hard evidence submitted by Reuse comprised its statutory accounts for the period ended 31 Jan. 12, and that notwithstanding requests made Reuse had failed and refused to provide audited accounts for any subsequent periods or management accounts for any of the periods in question. He noted that the audited accounts failed to provide any breakdown between bottled and plate glass, in circumstances where this claim concerns plate glass only and where it was apparent from the evidence that very different considerations apply to the two activities. He noted that the gross profit on turnover for the p/e 31 Jan. 12 was only 8.4% (£1.143M on £13.533M), which is fundamentally different to the gross profit claim advanced in this case, which postulates a loss of gross profit of £506K on a turnover of £694K, a percentage figure of 73%[4]. He submitted that the only evidence offered by Reuse to explain this dramatic difference was two short paragraphs in the witness statement of Mark Owen [199 – 200], without any supporting information other than two schedules which were not themselves cross-referenced to any other document or information, and that this was woefully lacking in detail, particularly in circumstances where this very point was flagged up in the Defence [13.1(b)].
  258. In the course of his oral closing submissions he produced a document which he had produced, based on the evidence as he submitted it had emerged in evidence, which he submitted evidenced at best a loss of profit over 12 months of £25,000. This was responded to by Mr Keen with a supplemental 11 page closing submission accompanied by a revised schedule of loss showing total losses for the first 12 month period of £530k. Mr Choudhury made some short written submissions in reply in relation to points which he submitted had not been raised originally by Mr Keen. I have taken all of these into account.
  259. It is convenient to deal with the issues in the following order:
  260. (i) Lost tonnage and rates in relation to clean and mixed plate glass.
    (ii) The issue in relation to how Reuse dealt with mixed glass processing and sales.
    (iii) Purchase costs.
    (iv) Loss established in relation to clean plate glass.

    (i) Lost tonnage in relation to clean and mixed plate glass

  261. Reuse contends that in the period in question it would, based on figures for the previous year, have obtained 11,000t of plate glass from those customers, 6,146t being clean plate and 5,058 being mixed. In context, this is out of a total of some 400,000t processed annually, of which 100,000t passed through Dagenham.
  262. Although it was suggested to Mark Owen in cross-examination that tonnage could fluctuate, as he said there is no particular reason to believe that there would have been any significant fluctuation between the tonnage collected in the previous year and that which would have been collected in the following 3 months in relation to these particular dealers. Moreover, as Mark Owen said in re-examination and as Mr Keen submitted in his closing submissions, there is a broad consistency between the tonnage estimated by Reuse and the tonnage processed by May Glass insofar as it appears from such evidence of sales as had been disclosed by it.
  263. In the circumstances it seems to me that it is not unreasonable to adopt the tonnage for the previous year as a basis for assessing lost custom in the following 3months.
  264. Another point canvassed in cross-examination was the issue of wastage. It was suggested to Mark Owen in cross-examination that there was quite a considerable wastage element, as much as 30%, involved in the process from collection from the supplier through to delivery to the customer. He agreed that the process of converting plate into cullet involved an element of waste generation, but he assessed the proportion as being only around 20% in relation to mixed plate and far less (only about 1-2% in relation to clean plate). Whilst I have to say that I found it remarkable that he had not included any allowance for wastage from the outset, and that this had to be extracted from him under cross-examination, I am prepared to accept that the wastage figure for clean glass is bound to be less than that for mixed glass. I also accept that it was open to the defendants to adduce evidence in relation to this point, and that they failed to do so. In the circumstances it seems to me that I can and should make the best estimate I am able. For reasons I have given I consider that I should approach Mark Owen's figures with some caution, and overall I assess the percentage wastage for clean as 5% and that for mixed as 25%.
  265. So far as the rates are concerned, Mark Owen was cross-examined on the basis that the evidence suggested that the rates obtained on sale of cullet could vary quite considerably. He said, and I accept, that there was little variation in the rates for plate glass, compared to bottled glass, and gave a reason for this which was the availability of a form of carbon credit scheme in relation to bottled, but not plate, glass for which there is a market. I accept that there is no good reason not to use the same rates when calculating the claim.
  266. (ii) The issue in relation to how Reuse dealt with mixed glass processing and sales

  267. In his witness statement Mark Owen had stated [193] that "all mixed plate is supplied into Ardagh Glass at £68/t". In cross-examination he confirmed that the mixed plate glass was sent for further processing at a site at Doncaster to produce cullet suitable for melting down. He was asked, and confirmed, that the Doncaster site was owned and operated by Reuse's parent company, Reuse Glass. He was asked whether there were inter-company arrangements to reflect the fact that processing costs were incurred by Reuse Glass at Doncaster. He said in clear terms that there would be, so that Reuse would sell some glass to Reuse Glass, and Reuse Glass would invoice Reuse for some processing costs.
  268. He was asked for more details, and explained that of the total quantity of mixed plate approximately 60%, was sold to a customer known as Ardagh. He was very clear that this was the subject of a direct sale by Reuse Glass to Ardagh. Whereas one might have assumed there would be some inter-company invoicing from Reuse to Reuse Glass to balance this, in fact Mark Owen confirmed in evidence that this did not happen, and that all revenue was received by Reuse Glass and all costs borne by Reuse Glass, so that it simply did not feature at all on Reuse's books. Although it was of course included in Reuse Glass' books, there was no separate breakdown in Reuse Glass' statutory accounts as to bottled glass, which was its principal business, and mixed plate glass, which forms a small percentage of its business. He was asked very clearly about this, and gave very clear answers. He was not re-examined about this, and when Mr Keen attempted to adduce such evidence in examination in chief of Mark Wilson, whose evidence followed that of Mark Owen, since this was not the subject of a supplemental statement, nor the subject of supplemental disclosure, and since he had not dealt with this aspect of the claim at all in his witness statement, and given the inevitable prejudice to the defendants if I had allowed this evidence to be adduced, I refused to permit Mr Keen to do so.
  269. In his supplemental written closing submissions Mr Keen submitted that Mark Owen had simply become "confused" about this and that his evidence was "unclear" and a "mistake". He noted that there is in evidence at least one invoice showing a direct sale by Reuse to Ardagh. He invited me to ignore this evidence, and as a fallback invited me to discount the evidence on the basis that it should not affect the valuation of the claim, since Reuse had been deprived of the opportunity of dealing with the mixed glass from the suppliers unlawfully taken from it by the defendants, and cited a decision of the Court of Appeal, Penarth Dock Engineering v Pounds [1963] 1 Lloyds Representative 359, to the effect that "the measure of damages is not what the plaintiffs have lost but what benefit the defendant obtained", and that the loss can and should be assessed by reference to the commercial value of the plate glass.
  270. In my judgment there is no question of Mark Owen having been confused in giving this evidence. He was plainly not at all confused. He was responsible for financial matters at Reuse, and would have been expected to know. His evidence did not change on this aspect. It was not contradicted by clear evidence either from Mark Wilson or otherwise, and the evidence that some glass was invoiced directly to Ardagh by Reuse in the absence of some further or better explanation proves nothing.
  271. Mark Owen was also asked about the remaining 40% of the mixed plate glass. He said that this was the subject of inter-company invoicing, whereby Reuse Glass invoiced Reuse for the cost of processing the glass on behalf of Reuse. However Reuse, due to its failure to appreciate the relevance of this point, had failed to produce any evidence at all as to the savings which would have been generated through not having to pay these inter-company invoices.
  272. What is the impact of these evidential difficulties on Reuse's claim? The starting point, in my judgment, is that there is no proper basis by which Reuse can claim, on behalf of Reuse Glass, the loss of revenue suffered by Reuse Glass in relation to this element of mixed plate glass. It is not a loss suffered by Reuse, and there is no basis for allowing Reuse to claim the loss on behalf of Reuse Glass, nor of allowing Reuse Glass to intervene to seek to claim its own loss directly against the defendants. Whilst it might be possible for the position to be regularised after the event, so that Reuse invoiced Reuse Glass for the true value of the unprocessed mixed plate glass supplied to Doncaster, in order for Reuse to recover that loss against the defendants in this action there would have to be evidence that this is what had been, or would be, done and evidence as to what the true value would be. I do not accept Mr Keen's argument that the loss can be recovered on the basis that it is a loss of opportunity and the commercial value can be recovered by Reuse notwithstanding the arrangements it entered into with Reuse Glass. It seems to me that what he is effectively seeking to do is to introduce a restitutionary gain-based claim into his claim for compensatory damages in order to overcome an inconvenient difficulty, entirely caused by Reuse's own failure properly to prepare its claim on quantum for this trial.
  273. In the circumstances it seems to me that as a minimum the claim for mixed glass would have to be reduced by 60%. However, given that Reuse had deliberately chosen not to allow any discount for saved processing costs, and had completely failed to provide any evidence as to what those costs would be if it was wrong on that point, it does not seem to me that I am in any position to speculate when that would be, in effect, to pluck a figure from the air. That difficulty is compounded by Reuse's failure to provide evidence in relation to wastage, in circumstances where Mark Owen was driven to accept that in relation to mixed plate it could be as much as 20% and where I consider it could be as high as 25%. It is further compounded by Reuse's failure to offer any credit in relation to saved purchasing costs, in circumstances where on Mark Owen's best estimate it was a considerable amount (see below). Finally, there is the point about Mark Owen's failure to provide acceptable evidence about the true cost of transport to Doncaster – see par. 37 ante.
  274. In my judgment, where there are such significant potential uncertainties, entirely the fault of the claiming party, the end result is that the court should not seek to speculate but should simply disallow the whole of the claim in relation to mixed plate glass.
  275. (iii) Purchase costs

  276. Reuse's position throughout had been that the only costs in respect of which it was required to give credit were the saved costs of transportation and electricity for processing. In particular, it failed to give credit for any purchase acquisition costs which it would otherwise have had to pay to the 14 suppliers where Reuse paid to acquire their plate glass, even though it had made a positive claim for the loss of revenue of amounts which the 14 suppliers would have paid to it for the privilege of having its waste glass collected. It is quite remarkable in my view that it was not included from the start. Reuse belatedly sought to remedy this omission through the witness statement of Mr Alsop, but as I have said that late served thinly disguised expert report was not permitted to be adduced in evidence. Not surprisingly Mark Owen was asked about this, and the best he could say was that it had just been "missed out". That seems to me to display a thoroughly cavalier approach to the assessment of this claim, not least because when asked Mark Owen said that he would estimate the saved costs as being in the region of £114,000 pa (£9,500 pcm).
  277. Mr Keen sought to produce an alternative and much lesser figure for saved purchase costs by reference to the evidence produced by May Glass as to its purchase costs in the first 6 months of trading, which he submitted was consistent with the figures included in the schedules produced by Mark Owen. The difficulty with this exercise is that it is not one which was undertaken by Reuse at trial, whether through evidence from Mark Owen or Mark Wilson, or cross-examination of Keith Sendall, or otherwise. It is flatly contradicted by Mark Owen's own evidence which was clearly given and not in any way resiled from. Again the problem is entirely one of Reuse's own making, in failing to address this point in its original claim.
  278. I have considered whether in the absence of any reliable evidence in this regard I should conclude that I am unable to reach any accurate assessment for the loss of profit on clean glass as well. However on balance it seems to me that I can achieve broad fairness by discounting the loss of clean glass by £62,700 pa (being 55% of £114,000, where 55% is the proportion of lost clean glass tonnage to the total).
  279. In further submissions made after circulation of this judgment in draft Mr Choudhury invited me to reconsider the amount of the discount, and to allocate the entirety of the purchase costs to clean glass, on the basis that: (a) Mark Owen did not identify what proportion of the purchase costs was attributable to clean, as opposed to mixed, glass; (b) the parties had not been able to address the court on this issue before the draft judgment was produced; (c) such evidence as there was indicated that mixed glass was not subject to purchase costs, see [p.1492], being Mark Owen's schedule indicating the extra costs paid to suppliers to retain their custom[5], which showed that before May Glass had set up in competition none of the 6 were paid for mixed glass, whereas 4 of the 6 were paid for clean glass.
  280. In response Mr Keen referred me to the authorities noted in Civil Procedure 2014 Vol. 1 at 40.2.1.0.2 to the effect that only in exceptional circumstances should a party invite the court, and should the court accept the invitation, to reconsider the substance of his decision as contained in a draft judgment. He submitted that this was not such a case, and that the defendants had been given and taken every opportunity to argue their case in relation to what discount(s) ought properly to be allowed in respect of both clean and mixed glass. Finally he submitted that the schedule at [p.1492] did not prove the defendants' case, not least because it showed that Reuse had indeed paid suppliers for mixed glass, albeit after and as a reaction to May Glass' setting up in competition.
  281. I have considered whether or not I ought to accede to Mr Choudhury's invitation, and ultimately concluded that I should not. In short, that is because it seems to me that it was both justified and reasonable to adopt a straight pro rata allocation of costs as between mixed and clean glass given the evidence and submissions which were before me in relation to this point. The following factors are relevant: (1) there was no cross-examination or re-examination in relation to the split of purchasing costs as between mixed and clean glass (2) It was open to the defendants to seek permission to adduce supplemental evidence in examination in chief from Keith Sendall (who must have known about any differing proportion of purchasing costs as between mixed and clean glass, if there was one) in relation to this point, yet no such application was made; (3) Neither party advanced closing submissions to me on the basis that I should apportion the purchasing costs differently as between mixed and clean glass[6]; (4) It would have been open to the defendants to raise this point in closing submissions by referring me to [p.1492], but they did not do so, doubtless for the good tactical reason that their fire was concentrated upon achieving their primary goal of persuading me to award nothing at all in relation to either category. I also bear in mind the further following factors;
  282. (1) I had already taken into account the purchasing costs when reaching my decision in relation to the claim for mixed glass, so as to reach a decision which gave the benefit of the doubt to the defendants: paragraph 114 above, so that to accept Mr Choudhury's invitation at this stage now to allocate the purchasing costs in their entirety to clean glass might well be unfair to the claimants;
    (2) If, as appears the case, the only available evidence as to the allocation [p.1492] does not in itself prove that all purchase costs in relation to all relevant suppliers were incurred in relation to clean glass, then: (i) to accept Mr Choudhury's invitation seems to me to be not justified on the evidence; (ii) the only reasonable means of allocation is to adopt a pro rata approach.
    (3) In the context of this claim the difference between the two competing positions so far as the substantive claim is concerned is modest, only £12,825[7].

    (iv) Loss established in relation to clean plate glass

  283. Reuse's evidence was that there were three heads of saved variable cost in relation to clean glass, totalling £16.35/t, being:
  284. (a) The saved cost of transportation of glass, both clear and mixed, from Dagenham to South Kirkby, assessed by Mark Owen in his witness statement as being £12.85 per tonne.
    (b) The saved cost of electricity, assessed by Mark Owen in his witness statement as being £0.50 per tonne.
    (c) The saved cost of transportation of glass to the end customer, assessed by Mark Owen in his witness statement as being £3 per tonne in relation to clear glass.

  285. Although there was some challenge to these allowances, it seems to me that they were broadly speaking reliable. Whilst I accept that it is possible that this is unduly favourable to Reuse given all of the circumstances, on balance it seems to me that this is in a rough and ready way balanced out by my conclusions in relation to mixed glass.
  286. My assessment of the loss for a 12 month period in relation to clean glass is thus as follows:
  287. No Item Amount Total
    1 Loss of revenue at £57/t x 5,838.7t (6,146t less 5% wastage) 332,805.90  
    2 Less purchase costs 62,700  
    3 Less saved variable costs (£16.35 x 6,146t) 100,487.10  
    4 Total loss   169,618.80

  288. It follows that the loss for 3 months would be £42,404.70.
  289. 6(d) Lost revenue – hire and collection charges

  290. This seems to me to be a straightforward claim, in relation to which there can be little or no dispute. Whilst I accept that Reuse has not produced supporting documentation, the data is taken from the period when Keith Sendall was in charge of Dagenham and there is no reason why he could not have challenged these figures if he had considered them exaggerated. Moreover, since they represent losses to Reuse which one assumes May Glass would have gained, unless it had decided not to make these charges to win the business, it would have been open to May Glass to adduce its own evidence as to what charges it levied on these collections, but it has not done so.
  291. Accordingly I allow the claim as made, namely £37,670, which is a 12 month claim and thus over 3 months equates to £9,417.50.
  292. 6(e) Costs to retain other suppliers

  293. Reuse contends that in order to prevent 10 identified other suppliers from switching to May Glass it had to: (a) offer a reduction in the charges it was levying to collect their waste plate glass, at a cost of £22,480 pa, details being found attached to Mark Owen's witness statement at p.1491; (b) offer an increase in the payments made to 6 identified other suppliers, at cost of £55,246.95pa.
  294. Reuse has produced no direct evidence to support this element of their claim. Mark Owen's evidence was that Reuse had instructed 2 employees, David Barlow and Ron Green, to visit suppliers to ensure that their custom was retained, but Reuse had not provided witness statements from those employees or called them to give evidence, or explained why they had not done so. There was no evidence from any of the suppliers either, whether in the form of witness statements or even letters. Mark Owen also accepted that these suppliers had not been signed up to new contracts, and that there was no documentary evidence to record these visits or agreements, so that the information he had provided came only from the information entered into Reuse's IT system from the information provided by these employees. In short, there was no hard evidence put before the court from Reuse to confirm that these individual suppliers had been approached by Keith Sendall (or anyone else from May Glass) and that these increased payments had been negotiated solely in order to prevent the suppliers from transferring their custom to May Glass as a result of those approaches.
  295. In my judgment it is unacceptable for Reuse to advance this claim with such a paucity of evidence, in circumstances where it could and should at the very least have provided witness statements from Mr Barlow and Mr Green, or explained why not. For all the court knows Reuse chose to adopt a strategy of offering these discounts to all suppliers which it perceived were vulnerable to being poached by May Glass without any enquiry as to whether or not they had actually been approached or were considering transferring their custom, and without any attempt to mitigate the cost to Reuse of so proceeding. Accordingly I allow nothing under this head.
  296. 6(f) Conclusion

  297. Reuse is entitled to damages as against Keith Sendall and May Glass assessed in the total sum of £51,822.20.
  298. 6(g) Reuse's alternative claim for gain based damages and/or an account

  299. Finally I return to Mr Keen's alternative claim for gain based damages and/or an account of profits. The immediate difficulty which Reuse faces is that on the case as pleaded and in the light of the current circumstances and the findings neither remedy is open to it. That is because the claim for breach of fiduciary duty has failed, and because in the absence of any basis for a final injunction it is not open to Reuse to claim damages in lieu of such an injunction. Moreover, and even if it was open to Reuse to advance such a claim, there is no basis for acceding to Reuse's invitation to defer the quantification of such a claim, because that would be to allow it to secure by the back door what I refused to do on day 1, namely to obtain a deferment of the trial of the issue of quantum. Insofar as both claims depend on my being able to make findings as to the profits which May Glass has made through dealing with Reuse's suppliers, that is not a case which was advanced in opening or the subject of evidence from Reuse, nor were the defendants cross-examined on this point. Whilst Mr Keen would doubtless object that Reuse should not be prejudiced by the defendants' failure to make proper disclosure in relation to May Glass' business with these suppliers, and whilst in principle I have some sympathy with that complaint, the difficulty Reuse has is that if it had ever been serious about advancing this alternative claim it could and should have sought and obtained an unless order for specific disclosure of this specific class of document, and I am reasonably confident that if it had done so it would have been successful in obtaining such an order. In circumstances where Reuse has pursued and obtained an award of compensatory damages, and insofar as it has not recovered all that it hoped for that is entirely its own fault, it would be wrong in my judgment to allow it a second bite of the cherry.
  300. (7) KEITH SENDALL'S COUNTERCLAIM

  301. Given the conclusion I have reached as to constructive dismissal, it is apparent that the counterclaim must fail. I am quite satisfied that Keith Sendall resigned voluntarily, but that in any event Reuse would have been entitled to dismiss him summarily for gross misconduct.
  302. I have not heard any argument as to the quantification of such a claim, but it would appear that it could only have extended to pay falling due in relation to the balance of the notice given by Keith Sendall on 27 March 13.
  303. (8) CONCLUSION

  304. There must be an order giving judgment for the claimants against the defendants for £51,822.20 plus applicable interest. Although it would not appear to be necessary for the order to contain any specific term on my finding about the claimant's entitlement to interim injunctive relief, since that is relevant only to my judgment in relation to costs, which will follow in due course, I will hear argument on that if necessary as well as all other matters arising after judgment is handed down.
  305. I conclude by expressing my gratitude to both counsel for the presentation of their respective client's cases.

Note 1    On Reuse’s case he could have been, in the same way as May Glass, joined as a party, but Reuse has chosen not to do so. There is no suggestion that he was even formally notified of these serious allegations against him and invited to participate in the trial as a witness on that basis.    [Back]

Note 2    It is not immediately clear why Mr Keen chose Nov. 14, being 6 months from the termination of his employment, as the relevant date.     [Back]

Note 3    If, as seems to be the case, Reuse is relying on clause 19.3.6, it would be 12 months, but given my findings there is no basis for any extension by reference to the restrictive covenants.    [Back]

Note 4    The figure for lost revenue is £694,419 [p1490] and the credit for saved operating costs is £187,819 [p.1493].    [Back]

Note 5    See section 6(e) below.    [Back]

Note 6    In his schedule produced in closing Mr Choudhury applied the £114,000 to arrive at a saved purchasing cost per tonne without differentiating between mixed and clean glass.    [Back]

Note 7    The difference over 12 months is £51,300 (£114,000 less £62,700), producing a difference over the relevant period of 3 months of only £12,825.    [Back]


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