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Cite as: [2018] EWHC 1040 (Ch)

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Paragraph 753 is amended pursuant to the “slip” rule to correct an arithmetical error.

Neutral Citation Number: [2018] EWHC 1040 (Ch)

Claim No: HC-2015-003085





Royal Courts of Justice

7 Rolls Building

Fetter Lane

London EC4A 1NL

Date: 8 May 2018



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- and -




(as trustee of the Cap Ferret Trust)





- and -


(as trustee of the Cap Ferret Trust)

Third Party

- and -


Fourth Party

- and -


Fifth Party

- - - - - - - - - - - - - - - - - - - - -

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Ms. Monica Carss-Frisk, Q.C. and Mr. Edward Brown (instructed by Mishcon de Reya LLP) for the Claimant, Fourth Party and Fifth Party

Mr. Thomas Plewman, Q.C., Ms. Sarah Ford, Q.C. and Ms. Joanne Box (instructed by Rosenblatt) for the Defendants and the Third Party

Hearing dates: 17-20, 23-26, 30-31 October, 1, 3 and 7 November 2017

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Judgment Approved






Para. 1



Para. 19


An analysis of the compulsory transfer process

Para. 19


The triggering event

Para. 19


The Deemed Transfer Notice

Para. 23


The process of sale of the Shares the subject of the Deemed Transfer Notice

Para. 25


Issues arising out of the compulsory transfer process

Para. 29



Para. 30



Para. 31



Para. 31


Factual witnesses called by Mr. Caudwell

Para. 32


List of witnesses called

Para. 32


Mr. David Canfield

Para. 33


Mr. Tim Maycock

Para. 39


Mr. John Caudwell

Para. 42


Ms. Kate Cooper

Para. 48


Ms. Janet Tarbet

Para. 52


Ms. Rebekah Caudwell

Para. 55


Ms. Victoria Olszewska

Para. 57


Mr. Paul Lester

Para. 59


Mr. David Hayes

Para. 62


Mr. Daniel Ward

Para. 66


Mr. Michael Fenton

Para. 68


Mr. Michael Balfour

Para. 70


Factual witnesses called by Ms. Dauriac

Para. 71


List of witnesses called

Para. 71


Ms. Nathalie Dauriac

Para. 72


Ms. Kelly Degruttola

Para. 80


Ms. Tracy Gehlan

Para. 84


Ms. Suzette Burger

Para. 88


Mr. Martin Wilson

Para. 89


The expert witnesses

Para. 92



Para. 97


The background to Mr. Caudwell’s and Ms. Dauriac’s relationship

Para. 97


The objective of the collaboration

Para. 101


Mr. Caudwell’s practice

Para. 106


The indicative terms

Para. 108


The Investment Term Sheet

Para. 113



Para. 114


Kinetic Partners’ advice on regulatory capital

Para. 115


Ms. Dauriac’s Service Agreement

Para. 120


The Shareholders’ Agreement

Para. 122


The loan agreements

Para. 124


The Articles of Association

Para. 126


The early operation of Signia

Para. 127



Para. 131


Signia’s business activities and the revenue derived therefrom

Para. 131


Signia’s total costs and total revenue

Para. 143


Signia’s profit/loss

Para. 145


Signia’s sources of finance over time

Para. 149



Para. 149


Financing of Signia in 2011

Para. 153


Financing of Signia in 2012

Para. 155


Financing of Signia in 2013

Para. 159


Financing of Signia in 2014

Para. 168


Signia’s debt as at the end of 2014

Para. 170


Ms. Dauriac’s bonuses

Para. 172



Para. 177


Setting the scene

Para. 177


Events leading up to the investigation into Ms. Dauriac’s expenses

Para. 182


The Mayfair Project and its effect

Para. 182


Provision of information by Mr. Hayes to Mr. Canfield

Para. 195


The trip to see Rebekah Caudwell

Para. 200


The problem with Barclays

Para. 209


Events at Pure Jatomi

Para. 213


Mr. Caudwell’s expression of discontent with Ms. Dauriac

Para. 220


The commencement of the investigation into Mr. Wilson’s expenses

Para. 222


Inquiring into Ms. Dauriac’s CV

Para. 225


The expenses investigation

Para. 229


Commencement of Ms. Dauriac’s “review” of her expenses

Para. 229


Para. 229

How the expenses were kept

Para. 231

The evidence of Ms. Cooper

Para. 236

The evidence of Ms. Tarbet

Para. 239

The evidence of Ms. Olszewska

Para. 240

The evidence of Ms. Dauriac

Para. 241

The evidence of Ms. Degruttola

Para. 245


Para. 250


Obtaining the first set of Ms. Dauriac’s expense records

Para. 252


Efforts to maintain the integrity of the records

Para. 260


Mr. Canfield provided the USB to Mr. Maycock for analysis

Para. 265


The “green light” for urgent investigation

Para. 266


Mr. Maycock’s initial analysis

Para. 274


The request to obtain copies of Ms. Dauriac’s expense forms

Para. 276


The manner in which the Dauriac V.2 expenses were compiled

Para. 287


Para. 287

The evidence of Ms. Cooper

Para. 288

The evidence of Ms. Tarbet

Para. 291

The evidence of Ms. Dauriac

Para. 293

The evidence of Ms. Degruttola

Para. 294

The documentary evidence

Para. 297


Para. 298


Mr. Maycock’s review of the Dauriac Expenses V.2

Para. 299


The meeting at Mr. Caudwell’s house on the evening of 12 November 2014

Para. 304


The visit to Signia’s offices on 13 November 2014 and consequential events on 13 November 2014

Para. 315


Ms. Dauriac tries to regain the initiative

Para. 324


The next steps in the investigation

Para. 331


The first draft of Mr. Maycock’s report

Para. 340


A proposed visit to Signia by Mr. Maycock

Para. 344


Mr. Maycock’s “main changes” sheet

Para. 353


Conclusion of the investigation into Mr. Wilson’s expenses

Para. 355


Ms. Cooper seeks time to make more submissions

Para. 356


Further information is provided by Signia

Para. 364


The termination of Mr. Wilson’s employment at Signia

Para. 374


Ms. Dauriac’s attempt to document to work done in relation to her expenses

Para. 377


The 2014 regulatory capital shortfall

Para. 382


Mr. Maycock’s next report

Para. 388


The telephone call from Ms. Lee

Para. 392


Consideration of the terms on which Ms. Dauriac could stay on

Para. 395


Ms. Dauriac enquires about the applicable expense policy

Para. 402


Mr. Stoebe’s offer to take a lie detector test

Para. 403


Putting the terms to Ms. Dauriac and her reaction

Para. 404


Next steps by Mr. Canfield

Para. 416


The telephone call between Mr. Canfield, Mr. Lester and Ms. Dauriac on 16 December 2014

Para. 418


Ms. Dauriac seeks legal advice

Para. 422


A meeting between Mr. Caudwell and Ms. Dauriac on 16 December 2014

Para. 423


The next iteration of the Statement of Culpability

Para. 425


Interviews with Signia staff

Para. 428


Ms. Dauriac’s suspension

Para. 439



Para. 443


The statement of the investigation

Para. 451


Further interviews

Para. 452


Ms. Dauriac queries her on-going suspension

Para. 453


Ms. Degruttola complains of pressure

Para. 454


Invitation to a disciplinary hearing

Para. 456


Ms. Dauriac writes accepting constructive dismissal

Para. 457



Para. 459


The pleaded case

Para. 459


The law

Para. 462


The similar fact evidence in this case

Para. 468


The primary case: the conspiracy allegation

Para. 468


A secondary case: disparaging and offensive comments

Para. 469


A third point: admission by Mr. Caudwell

Para. 475


Considerations in evaluating the conspiracy allegation

Para. 478


The witness evidence

Para. 479


Mr. Caudwell and Mr. Canfield

Para. 479


Mr. Fenton and Mr. Balfour

Para. 480


Ms. Gehlan

Para. 481


Ms. Burger

Para. 485


The conspiracy allegation

Para. 488


No evidence of a “conspiracy” at Pure Jatomi

Para. 489


No similarity with events at Signia

Para. 493


Factual unreliability

Para. 495


The alleged admission by Mr. Caudwell

Para. 496



Para. 500



Para. 503



Para. 506



Para. 511


Types of Leaver

Para. 511


The definition of a Good Leaver

Para. 513


Issued arising

Para. 517


General employment law principles

Para. 520


Was Ms. Dauriac constructively dismissed?

Para. 521


Ms. Dauriac’s case

Para. 521


Points that arise

Para. 526


Was Ms. Dauriac a whistleblower?

Para. 528


Was the expenses investigation a “sham”, initiated with an intention to remove Ms. Dauriac from her position within Signia?

Para. 532


Was the expenses investigation so poorly conducted as to amount to a breach of the Trust and Confidence Term?

Para. 535

The issues

Para. 535

Repudiatory breach

Para. 537

Acceptance of repudiatory breach

Para. 541


Did Signia have the right summarily to dismiss Ms. Dauriac?

Para. 544



Para. 544


Alleges breaches of the Service Agreement entitling Signia to terminate Ms. Dauriac’s employment summarily

Para. 546


The relevant provisions of the Service Agreement

Para. 549

Clause 15 and clause 9 of the Service Agreement

Para. 549

The meaning of clause 15

Para. 552

Dishonesty or something less?

Para. 556


The test for dishonesty

Para. 560


The approach to assessing dishonesty

Para. 563


Matters which do not assist when considering the question of dishonesty

Para. 564

“Concessions” made by Mr. Maycock

Para. 564

The “admissions” made by Ms. Dauriac during the course of the expenses investigation

Para. 567

Contemporary regulatory advice received by Signia did not identify a clear regulatory breach as regards expenses

Para. 569

The fact that Ms. Dauriac’s original expenses were poorly recorded

Para. 571


The nature of the expenses actually submitted by Ms. Dauriac and the explanations advanced by Ms. Dauriac in relation to those expenses

Para. 573

The trip to see Ms. Caudwell

Para. 573

Mad Lillies Hair Salon

Para. 581

Mr. Stoebe’s birthday cake

Para. 591

Flights to Malaga for Dawn Ward’s birthday

Para. 600

Flights to Alicante for “detox week”

Para. 607

Travel expenses incurred to see Mr. Caudwell

Para. 612


The nature of Ms. Dauriac’s reaction when she concluded that her expenses might be investigated

Para. 623

The pre-November 2014 review

Para. 623

The post-11 November 2014 review

Para. 626


The manner in which Ms. Dauriac’s explanation for her expenses changed over time

Para. 627


Dishonesty and Signia’s right to dismiss Ms. Dauriac summarily

Para. 629


The operation of the Leaver provisions

Para. 637



Para. 637


Good Leaver under Limb A

Para. 641



Para. 641


Notice to terminate

Para. 642


Not be in breach of his or her terms of employment

Para. 643


A period five years after the Employment Start Date

Para. 645



Para. 646


Good Leaver under Limb B

Para. 647



Para. 647


Summary dismissal by Signia

Para. 648



Para. 650



Para. 654



Para. 656



Para. 657


The appropriate measures of value

Para. 657


Fair value

Para. 666


Determination of Fair Value by the Board and the Investor

Para. 668


Who determines Fair Value?

Para. 668


Determination of Fair Value in this case

Para. 671


Determination of Fair Value by the court

Para. 676


The approach of the experts

Para. 676

Mr. Sharp’s approach

Para. 677

Dr. Shi’s approach

Para. 680


Points in issue

Para. 685


Augmenting the definition of “Fair Value”

Para. 686


Elucidating the meaning of “Fair Value” by reference to Article 6.6.2

Para. 689


The effect of the requirement not to take account of the fact that the Shares comprise a majority or minority interest

Para. 693


The extent to which Signia’s dealings with Mr. Caudwell were on an arm’s length basis and the effect this might have on “Fair Value”

Para. 700


The extent to which other provisions in the Articles affecting or limiting the rights of Shareholders were relevant to the question of “Fair Value”

Para. 708


The extent to which “Fair Value” needs to take account of Signia’s debt

Para. 715



Para. 721


Para. 721


Para. 722

Other factors or methods of assessment

Para. 729

My approach

Para. 734

Signia’s value based upon a “normalised” or “steady state” EBITDA

Para. 740

Additional factors

Para. 744

The value of the Dauriac Shares

Para. 747

Postscript: Mr. Sharp’s AUM-based valuation

Para. 748



Para. 751





Annex 1

Terms and Abbreviations used in the Judgment

Referenced in para. 1, fn 1

Annex 2

Organogram of Signia

Referenced in para. 49

Annex 3

Metrics relating to Signia provided by the experts under cover of a letter dated 5 December 2017

Referenced in para. 139

Annex 4

Analysis of Signia’s discretionary AUM and hedge fund AUM

Referenced in para. 142

Annex 5

Analysis of expenses

Referenced in para. 275




Table 1

Shareholders in Signia immediately prior to the compulsory transfer

Para. 13

Table 2

Signia’s Assets Under Management and the revenue derived therefrom

Para. 139

Table 3

Breakdown of the source of discretionary AUM

Para. 142(2)

Table 4

Breakdown of the source of hedge fund AUM

Para. 142(2)

Table 5

Fees paid for Signia’s discretionary AUM services

Para. 142(3)

Table 6

Fees paid for Signia’s hedge fund AUM services

Para. 142(3)

Table 7

Proportions of Signia’s revenue: discretionary AUM

Para. 142(4)

Table 8

Proportions of Signia’s revenue: hedge fund AUM

Para. 142(4)

Table 9

Signia’s costs

Para. 143

Table 10

Signia’s total revenues

Para. 144

Table 11

Signia’s profit/loss and EBITDA

Para. 148

Table 12

Changes in the description of Ms. Dauriac’s expenses

Para. 626(3)

Table 13

Adjustments to the actual EBITA

Para. 741




Mr. Justice Marcus Smith:



1.          The Claimant, Signia Wealth Limited (“Signia” href="#_ftn1" name="_ftnref1" title="">[1]), is a private company limited by shares registered in England and Wales with company number 07044573. Signia was incorporated on 15 October 2009. Its articles of association (the “Articles”) have been amended, most recently by written resolution passed on 14 August 2013.[2] All references in this Judgment to “Articles” are to these, amended, articles of association.

2.          The Articles describe a number of different shares (“Shares”, held by a “Shareholder”) in Signia. They are as follow:

(1)        “A Ordinary Shares”, being A ordinary shares of £1.00 each in the capital of Signia.

(2)        “B Ordinary Shares”, being B ordinary shares of £1.00 each in the capital of Signia.

(3)        “C Ordinary Shares”, being C ordinary shares of £1.00 each in the capital of Signia.

(4)        “D Ordinary Shares”, being D ordinary shares of £0.001 each in the capital of Signia.

The Articles define “Ordinary Shares” as comprising A, B, C and D Ordinary Shares.

(5)        “Preference Shares”, being preference shares of £1.00 each in the capital of Signia.

3.          The Articles define the “Investor” as the holder(s) of the A Ordinary Shares. At all material times, the holder of the A Ordinary Shares in Signia was the Fourth Party to these proceedings, Grecco Limited (“Grecco”). Grecco was set up by Mr. Caudwell, the Fifth Party to these proceedings. Grecco is a company registered in Guernsey. Grecco holds the A Ordinary Shares on trust for Mr. Caudwell’s children.[3] Grecco also holds, on trust on the same terms, 1,000,000 Preference Shares. Mr. Caudwell is an entrepreneur who, as will be described, invested in Signia.

4.          The Second Defendant is Ms. Nathalie Dauriac. Ms. Dauriac was, until recently, married to a Mr. Konrad Stoebe and, when married, went by the name of Ms. Dauriac-Stoebe, the name in which she has been claimed against in these proceedings. I shall refer to her, as she was referred to during the course of the trial, as Ms. Dauriac.

5.          Prior to the termination of her employment – which is a matter that will have to be considered in due course in this Judgment – Ms. Dauriac was employed as the chief executive officer of Signia. The terms of her employment are set out in a written service agreement (the “Service Agreement”), signed on 12 February 2010.

6.          The Articles from time-to-time make reference to a “Manager” (see, for instance, Article 6.2). Manager, according to the Articles, has the meaning given to it in the “Shareholders’ Agreement”. “Shareholders’ Agreement” is itself not a defined term in the Articles of Association. I consider – and so find – that the reference to a Shareholders’ Agreement is a reference to an agreement of that name dated 15 February 2010. The Shareholders’ Agreement defines Ms. Dauriac as “Manager”. Grecco is defined as the Investor – using the same term as used in the Articles.[4]

7.          The following Shares were allocated by Signia to Ms. Dauriac on the following dates:

(1)        On 15 February 2010:

(a)          20,000 B Ordinary Shares;

(b)          78,000 C Ordinary Shares.

(2)        On 8 April 2011:

(a)          20,000 re-designated B Ordinary Shares;

(b)          78,000 re-designated C Ordinary Shares.

8.          These Shares, which I shall refer to as the “Dauriac Shares”, were transferred by Ms. Dauriac to the original First Defendant in these proceedings, Marlborough Trust Company Limited (“Marlborough”), to be held on trust for her. That trust is known as the “Cap Ferret Trust”. Marlborough was succeeded as trustee of the Cap Ferret Trust and as First Defendant by Vector Trustees Limited (“Vector”).[5] Vector was then succeeded as trustee by New Street Trust Limited (“New Street”).[6] Permission to amend the pleadings so as to replace Vector with New Street was given on Day 1 of the Trial (17 October 2017).[7]

9.          The Dauriac Shares (at that time held by Marlborough) were transferred away from Marlborough (pursuant to a procedure that is described below) on 30 June 2015. Neither Vector nor New Street ever held the Dauriac Shares pursuant to the Cap Ferret Trust or had any proprietary interest in those shares, although (as I have described) each was a trustee of the Cap Ferret Trust. The trustee – now New Street – is a party to these proceedings because some of the claims in these proceedings involve the trust, rather than Ms. Dauriac personally.[8]

10.       Article 6.2 of the Articles provides that (subject to certain exceptions), “no Manager being a Shareholder may during the period of seven years from becoming a holder of Shares except with Investor Consent (which shall not be unreasonably withheld in the case of a transfer to the trustees of a trust for the benefit of the Transferor and his or her family or to a transfer on a change of trustees (any such transfer being a “Permitted Transfer” and the transferee being a “Permitted Transferee”) transfer any Shares whilst the Investor is a Shareholder”.

11.       In this case, it was common ground that Ms. Dauriac’s transfer of the Dauriac Shares to Marlborough was “a transfer to the trustees of a trust for the benefit of the Transferor and his or her family” within Article 6.2. Although I was shown no evidence of Investor Consent to these transfers, it was admitted on the pleadings that such transfers had taken place,[9] and I proceed on that basis.

12.       The Dauriac Shares were compulsorily transferred away from Marlborough to Grecco pursuant to a procedure set out in Articles 6.21ff, at a (total) price of £1.00 for the B Ordinary Shares and a (total) price of £1.00 for the C Ordinary Shares. The date of transfer was 30 June 2015.

13.       The Shareholders (disregarding the Preference Shares) immediately prior to this process of compulsory transfer were as follows:


A Ordinary Shares

B Ordinary Shares

C Ordinary Shares

Total (%)





204,000 (51%)





196,000 (49%)





400,000 (100%)

Table 1 Shareholders in Signia immediately prior to the compulsory transfer

14.       It will be necessary to describe this process of compulsory transfer in some detail, and to identify and resolve a number of issues that this process gives rise to. For the present, all that needs to be noted is that whether this process was properly followed is controversial.

15.       In these proceedings, as pleaded in its Particulars of Claim, Signia seeks various declarations regarding the compulsory transfer process. In very brief summary, taken together, they amount to a declaration that the compulsory transfer process was properly carried out and that the value of the Dauriac Shares is as attributed by that process. The Defendants – New Street and Ms. Dauriac – have filed a detailed Defence disputing Signia’s claims.

16.       By a Part 20 Claim, Ms. Dauriac makes various claims against Signia, New Street, Grecco and Mr. Caudwell. The details are pleaded in Re-Re-Amended Particulars of Additional Claim (the “Part 20 Particulars”). In her turn, Ms. Dauriac seeks various declarations in respect of the compulsory transfer process, but also damages for breach of various agreements, damages for the tort of procuring these breaches of contract and damages for conspiracy to injure. Although it will be necessary to consider these additional claims in their own right, the validity and strength of these claims essentially turns on the same or similar issues as those which arise out of the declarations sought by Signia in the Particulars of Claim and by Ms. Dauriac in the Part 20 Particulars.[10]

17.       Although there are multiple parties to this dispute, there are only two sides: Mr. Caudwell (comprising Signia, Grecco and Mr. Caudwell himself) and Ms. Dauriac (comprising Ms. Dauriac herself and New Street). Save where it is necessary to do so, I shall not differentiate between the various parties comprising each side, but shall refer to Mr. Caudwell and Ms. Dauriac.

18.       It is necessary for this Judgment to begin with an analysis of the compulsory transfer process pursuant to which Grecco acquired the Dauriac Shares. The relevant provisions regarding this process are described in Section B(1). Section B(2) then identifies a number of issues that arise out of this compulsory purchase process.


(1)     An analysis of the compulsory transfer process

(a)     The triggering event

19.       Article 6.21 of the Articles describes the “Transfer Events” that serve to trigger the compulsory transfer process. Article 6.21 identifies five Transfer Events, only one of which is relevant in these proceedings, which is that set out in Article 6.21.3.

20.       Article 6.21.3 provides that a Transfer Event exists, in relation to any holder of B Ordinary Shares, C Ordinary Shares or D Ordinary Shares (or, where the relevant Shares are held by a nominee or have been transferred to a Permitted Transferee, the original holder of the relevant shares), where a holder becomes a Leaver.[11]

21.       The Articles define a “Leaver” in the following terms:

“a holder who is an individual and who is or was previously a director or employee of [Signia] ceasing to hold such office or employment and as a consequence no longer being a director or employee of [Signia] unless the Investor notifies [Signia] within one month of the matter coming to his attention that such event is not a Transfer Event in relation to that holder for the purposes of Articles 6.21 to 6.25”.[12]

22.       Article 6.25 provides, in relation to when a holder becomes a Leaver:

“For the purpose of Article 6.21.3 the date upon which a holder becomes a Leaver shall be:

6.25.1         where a contract of employment or directorship is terminated by the employer giving notice to the employee of the termination of the employment or directorship, the date of expiry of that notice (whether or not a payment is made by the employer in lieu of all or part of the notice period required to be given by the employer in respect of such termination);

6.25.2         where a contract of employment or directorship is terminated by the employee by giving notice to the employer of the termination of the employment or directorship, the date of expiry of that notice;

6.25.3         save as provided in Article 6.25, where an employer or employee wrongfully repudiates the contract of employment and the other accepts that the contract of employment has been terminated, the date of such acceptance;

6.25.4         where a contract of employment is terminated under the doctrine of frustration, the date of the frustrating event;

6.25.5         where a contract of employment or directorship is terminated for any reason other than in the circumstances set out in Articles 6.25.1 to 6.25.4 above, the date on which the action or event giving rise to the termination occurs.”

(b)     The Deemed Transfer Notice

23.       Upon the happening of a Transfer Event, the holder in question is (by virtue of Article 6.22) “deemed to have immediately given a Transfer Notice in respect of all the Shares then held by him”. This is described as a “Deemed Transfer Notice”.

24.       A Deemed Transfer Notice is to be contrasted with a “Transfer Notice”, which is a term defined in Article 6.5.

(c)     The process of sale of the Shares the subject of the Deemed Transfer Notice

25.       Article 6.23 states that “[t]he shares the subject of any Deemed Transfer Notice shall be offered for sale in accordance with Articles 6.5 to 6.13 as if they were Sale Shares in respect of which a Transfer Notice had been given save that…”. There then follow various provisions that serve to modify or exclude the application of the provisions in Articles 6.5 to 6.13.

26.       “Sale Shares” are the Shares the subject of a Transfer Notice under Article 6.5.

27.       It is proposed to set out the material provisions of Article 6.23, before considering which parts of Articles 6.5 to 6.13 pertain:

(1)        Article 6.23.1 provides that a “Deemed Transfer Notice shall be deemed to have been given on the date of the Transfer Event or, if later, the date upon which the Investor becomes aware that the relevant event is a Transfer Event and has notified [Signia] that the relevant event is a Transfer Event”.

(2)        Article 6.23.5 provides that “the Prescribed Price shall be as set out in Article 6.24”. As to this:

(a)          Article 6.24 provides as follows:

“6.24 The Prescribed Price for any Sale Shares which are the subject of a Deemed Transfer Notice given as a consequence of a Transfer Event shall be:

6.24.1       in the case of a Good Leaver:

A Ordinary Shares = the lower of Fair Value and Exit Value

B Ordinary Shares = the lower of Fair Value and Exit Value

C Ordinary Shares:

Within 24 months of Employment Start Date – Issue Price

Within 36 months of Employment Start Date – 20% the lower of Fair Value and Exit Value

Within 48 months of Employment Start Date – 40% the lower of Fair Value and Exit Value

Within 60 months of Employment Start Date – 60% the lower of Fair Value and Exit Value

Within 72 months of Employment Start Date – 80% the lower of Fair Value and Exit Value

Within 84 months of Employment Start Date – 100% the lower of Fair Value and Exit Value

Thereafter – the lower of Fair Value and Exit Value

D Ordinary Shares = the lower of Issue Price and Fair Value; and

6.24.2       in the case of a Bad Leaver:

A Ordinary Shares = the lower of Fair Value and Exit Value

B Ordinary Shares = the lower of Issue Price and Exit Value

C Ordinary Shares:

Within 36 months of Employment Start Date – Issue Price

Within 48 months of Employment Start Date – 25% of the lower of Fair Value and Exit Value

Within 60 months of Employment Start Date – 50% the lower of Fair Value and Exit Value

Within 72 months of Employment Start Date – 75% the lower of Fair Value and Exit Value

Within 84 months of Employment Start Date – 100% the lower of Fair Value and Exit Value

Thereafter – the lower of Fair Value and Exit Value

D Ordinary Shares = the lower of Issue Price and Fair Value; and

6.24.3       in the case of an Incapacitated Good Leaver the lower of Fair Value and Exit Value, irrespective of the class of the Sale Shares.”

(3)        The Prescribed Price laid down by Article 6.24 thus turns upon a combination of factors: (i) the type of Leaver that a Shareholder is; (ii) the type of Ordinary Share that he or she holds; and (iii) the length of time since the Leaver’s Employment Start Date. The first two factors determine which of “Fair Value”, “Exit Value” or “Issue Price” is used for the purpose of valuation. The third factor can affect whether only a percentage of that price is to be paid.

(4)        Article 6.24 makes reference to a number of defined terms:

(a)          There are three types of Leaver:

(i)           A “Good Leaver” is:

“a person who is a Leaver as a result of:

(a)     his/giving notice to terminate their employment when not in breach of their terms of employment and where such notice of termination will expire five years or more after the Employment Start Date; or

(b)     summary dismissal or service by [Signia] of notice to terminate the employment of a person when (1) [Signia] has no right to summarily dismiss such person without notice or (2) such person is not an Under Performer as defined in his contract of employment”.

(ii)           An “Incapacitated Good Leaver” is:

“a person who is a Leaver as a result of:

(a)   death; or

(b)  Serious Ill Health or permanent disability; or

(c)   summary dismissal in accordance with a person’s contract of employment for mental incapacity or long term absence”.

(iii)         A “Bad Leaver” is:

“any Leaver who is not a Good Leaver or an Incapacitated Leaver”.

(b)          The “Employment Start Date” means “the date that the relevant person becomes an employee and/or director of [Signia]”.

(c)          As noted, Article 6.24 references three different Share values – “Fair Value”, “Exit Value” and “Issue Price”:

(i)           “Fair Value”:

“for the purposes of these Articles means as determined between the Board and the Investor; save that where a Leaver indicates that he does not agree with such valuation, as determined by an Independent Valuer as at the date of the Transfer Event (such valuation to be on the basis of a willing buyer and a willing seller and shall not take any account of whether the Shares comprise a majority or a minority interest nor the fact that transferability is restricted by the Articles)”.

(ii)          “Exit Value” means:

“the aggregate of the consideration received or unconditionally to be received from the purchaser by the holders of the Shares on or following an Exit”.

“Exit” means:

“the sale of the whole of the issued share capital of [Signia] to a third party for value which includes a payment for each Preference Share of the Issue Price thereof”.

(iii)          “Issue Price” means:

“in respect of a Share in the capital of [Signia], the aggregate of the amount paid up (or credited as paid up) in respect of the nominal value and any share premium”.

(5)        Article 6.23.6 provides that “the share certificate for any Shares for which no buyers are found, will be deposited by the Proposing Transferor with [Signia] pending an Exit and pending such Exit all Shares the subject of a Deemed Transfer Notice shall carry no rights to vote at any meeting or class meeting of members of [Signia].”

28.       Articles 6.5 to 6.13 operate in accordance with Article 6.23, but subject to and not in derogation from the compulsory transfer procedure:

(1)        Most of Article 6.5 – which relates to an actual Transfer Notice, as opposed to the Deemed Transfer Notice under the compulsory transfer procedure – is inapplicable. The exception is that part of Article 6.5 constituting Signia the agent of the Proposing Transferor.

(2)        Article 6.6 is excluded by the provisions of Article 6.24.

(3)        Articles 6.7 and 6.8, which provide for the offering of Shares for sale following the ascertainment of the Prescribed Price are applicable.

(4)        Article 6.9 expressly does not apply, by virtue of Article 6.23.2.

(5)        Articles 6.10 to 6.13 are applicable.

(2)     Issues arising out of the compulsory transfer process

29.       The compulsory transfer process gives rise to a number of the issues between the parties which are important for the determination of these proceedings. It is helpful to identify them now, even though I do not propose to resolve them until later on in the Judgment:

(1)        Bifurcation between the Leaver and the holder of the Dauriac Shares. As I have described, the Dauriac Shares were properly transferred by Ms. Dauriac to Marlborough. Thus, although Ms. Dauriac was, according to Signia, a Leaver, the shares the subject of the compulsory transfer process were not held by her, but by Marlborough pursuant to a Permitted Transfer by Ms. Dauriac. It is necessary to consider whether this bifurcation affects the operation of the compulsory transfer process.

(2)        Leaver or non-Leaver? On the face of the pleadings, it is in dispute as to whether Ms. Dauriac was a Leaver within the meaning of the Articles.[13] During the course of the trial it appeared to be accepted by Ms. Dauriac that she was a Leaver. Nevertheless, given the fact that the point was not formally conceded, it is appropriate briefly to consider and determine the point.

(3)        Good Leaver or Bad Leaver? Whilst the fact that Ms. Dauriac was a Leaver became relatively uncontentious, what was disputed is the type of Leaver Ms. Dauriac was. Neither party contended that Ms. Dauriac was an Incapacitated Good Leaver. Signia contended that Ms. Dauriac was a Bad Leaver; and Ms. Dauriac contended that she was a Good Leaver.

(4)        The date of the Transfer Event. The timing of the Transfer Event determines when the Deemed Transfer Notice is deemed to have been given. This involves consideration of precisely when Ms. Dauriac’s employment with Signia ceased.

(5)        The date of Ms. Dauriac’s Employment Start Date. As has been described, the duration of Ms. Dauriac’s employment (i.e. the temporal gap between her Employment Start Date and the date of the Transfer Event) is one of the factors affecting the value that is attributed to the Dauriac Shares.

(6)        The value to be ascribed to the Dauriac Shares. As has been noted,[14] the Articles contain three different valuation approaches or measures. Which measure applies turns upon some of the issues identified in this paragraph. Essentially, the following questions arise:

(a)          First. what is the appropriate measure?

(b)          Secondly, has that measure appropriately been applied so as to properly obtain a value for the Dauriac Shares? In other words, has the compulsory transfer process properly been followed so that the value attributed to the Dauriac Shares by Mr. Caudwell binds Ms. Dauriac?

(c)          Thirdly, if not, what value is to be attributed to the Dauriac Shares, applying that measure?


30.       This Judgment deals with the following matters:

(1)        Section D describes the witnesses who gave evidence before me.

(2)        Sections E, F and G set out a detailed factual history of Signia and Ms. Dauriac’s relationship with Signia. An understanding of this history is essential in order to be able to determine the issues arising out of the compulsory transfer process. These sections are necessarily lengthy. Specifically, they consider:

(a)          The events surrounding the establishment of Signia, including a description of a number of documents and instruments important to understanding the foundation and operation of Signia (Section E).

(b)          The financial performance and metrics of Signia between the date of its establishment in 2010 to Ms. Dauriac’s departure in December 2014/January 2015 (Section F).

(c)          The events of 2014 (Section G). Section G considers the events that lead to Ms. Dauriac’s departure from Signia. One of the main topics to be covered is an inquiry conducted into Ms. Dauriac’s expenses. That inquiry features centrally in the allegations between the parties as to why Ms. Dauriac left Signia, and necessarily must be considered in detail. But the events preceding that inquiry also matter, and this section therefore considers the events of 2014 quite generally.

(3)        As part of her Defence, Ms. Dauriac relied upon “similar fact” evidence, concerning events at another company in which Mr. Caudwell had an interest, Pure Jatomi Fitness (“Pure Jatomi”). Section H considers this similar fact evidence, including questions relating to its admissibility and its relevance.

(4)        At this point in the Judgment, it is possible to return to, and determine, the various questions and issues arising out of the compulsory transfer process. Sections I to N consider these issues in the order they have been set out in paragraph 29 above.

(5)        Section O considers the declarations that it is appropriate to make in light of the findings in the Judgment. Section O also deals with the related breach of contract and tort claims advanced by Ms. Dauriac.


(1)     Introduction

31.       I heard evidence from a number of factual witnesses. Additionally, I heard evidence from two experts in the valuation of companies, Mr. Robert Sharp (who was called by Ms. Dauriac) and Dr. Min Shi (who was called by Mr. Caudwell).

(2)     Factual witnesses called by Mr. Caudwell

(a)     List of witnesses called

32.       Mr. Caudwell called the following witnesses in the following order:

(1)        Mr. David Canfield.

(2)        Mr. Timothy (Tim) Maycock.

(3)        Mr. John Caudwell.

(4)        Ms. Katherine (Kate) Cooper.

(5)        Ms. Janet Tarbet.

(6)        Ms. Rebekah Caudwell.

(7)        Ms. Victoria Olszewska.

(8)        Mr. Paul Lester.

(9)        Mr. David Hayes.

(10)      Mr. Daniel Ward.

(11)      Mr. Michael Fenton.

(12)      Mr. Michael Balfour (who was, however, interposed and called after Ms. Dauriac had given her evidence).

(b)     Mr. David Canfield

33.       Mr. Canfield is by training an accountant and, after a career with (amongst others) British Leyland, the Volvo Bus Corporation and British Nuclear Fuels, he was introduced to and began working for Mr. Caudwell in 2007. From late 2007 until the spring of 2008, Mr. Canfield transitioned from his role at British Nuclear Fuels to a new role that Mr. Caudwell offered him. Mr. Canfield’s new role became full-time when he left his employment with British Nuclear Fuels on 31 March 2008.

34.       Mr. Canfield operated as Mr. Caudwell’s right-hand in relation to his business and financial affairs. In 2011, Mr. Caudwell caused to be incorporated a company called JDC Investments Limited (“JDC”). JDC employed Mr. Canfield and others (such as Mr. Maycock) and it provided accountancy and other support services to Mr. Caudwell and his interests. Mr. Canfield was a director of JDC and of a number of other Caudwell companies, including Signia.

35.       Mr. Caudwell was a delegator. In any new venture, it was his practice to be heavily involved in the strategic planning, and then to adopt a hands-off approach. His approach appears to have been similar if some problem emerged out of his business interests: he would be involved in the strategic issues but would delegate the detail. One of the persons to whom the important detail was delegated was Mr. Canfield.[15]

36.       Mr. Canfield made two witness statements, the first dated 9 March 2017 (“Canfield 1”) and the second dated 5 September 2017 (“Canfield 2”). Mr. Canfield gave evidence on Days 2 and 3 of the trial (18 and 19 October 2017).

37.       Mr. Canfield presented as a careful and competent person. He gave his evidence clearly and, within his limits, honestly. By this I mean that Mr. Canfield was a very loyal servant to Mr. Caudwell, with all the advantages and disadvantages that this entails. Mr. Canfield was assiduous in furthering and protecting Mr. Caudwell’s interests. But, conversely, he was – entirely unsurprisingly – disinclined to cross his boss, even if Mr. Caudwell’s interests required this. This can clearly be seen in the investigation that Mr. Canfield commenced, in 2014, into Ms. Dauriac’s expenses. It is obvious – as is described in greater detail below – that Mr. Canfield was deeply reluctant to inquire into Ms. Dauriac’s conduct at Signia until it was clear that such an inquiry would not discombobulate Mr. Caudwell. Mr. Canfield was – again, entirely unsurprisingly – unwilling to acknowledge this in his evidence, but this meant that his explanations as regards the commencement of his inquiry into Ms. Dauriac (the inquiry, at this stage, proceeded either slowly or not at all) were unsatisfactory, indeed non-existent.

38.       Mr. Caudwell described Mr. Canfield as “hugely respected amongst everybody, all our associates. I’ve never found him anything other than the most honest, diligent and fair person…”.[16] Subject to the proviso that everything that Mr. Canfield did was to further or defend Mr. Caudwell’s interests, and to ensure that he (Mr. Canfield) did not incur Mr. Caudwell’s displeasure, I would agree with this description.

(c)     Mr. Tim Maycock

39.       Mr. Maycock is an employee of JDC, reporting to Mr. Canfield, but he dealt face-to-face with Mr. Caudwell when occasion arose.[17] He trained and qualified as an accountant at PwC.

40.       Mr. Maycock made one witness statement, dated 9 March 2017 (“Maycock 1”). Mr. Maycock gave evidence on Days 3 and 4 of the trial (19 and 20 October 2017).

41.       Mr. Maycock was a self-confident and articulate witness. He gave his evidence clearly and, as I consider, entirely reliably. Although employed by Mr. Caudwell – through JDC – his evidence was not, in my judgment, affected by this fact. Mr. Maycock was straightforward and impartial in his evidence.

(d)     Mr. John Caudwell

42.       Mr. Caudwell was a successful entrepreneur, having developed and then sold the mobile telephone retailer, Phones 4U, for around £1.5 billion. Since 2006, when Phones 4U was sold, Mr. Caudwell has focussed on charitable and philanthropic activities, but he has retained interests in various businesses, including Signia.

43.       Mr. Caudwell made two witness statements, the first dated 3 March 2017 (“Caudwell 1”) and the second dated 5 September 2017 (“Caudwell 2”). He gave his evidence on Days 4 and 5 of the trial (20 and 23 October 2017).

44.       Mr. Caudwell was a formidable man, who clearly knew his own mind and was, in my judgment capable of acting decisively, even ruthlessly. As I have described Mr. Caudwell was a delegator: he would take the broad strategic decisions and leave it to others to implement. However, I do not consider that Mr. Caudwell would allow his delegation of work to operate in an uncontrolled manner. The evidence in this case shows that Mr. Caudwell – as one would expect – kept a supervisory eye on what his subordinates were doing.

45.       Mr. Caudwell was also an emotional man. He and Ms. Dauriac had obviously formed a close friendship, which unravelled and then ruptured – in circumstances that I will have to consider in some detail – in the course of 2014. Mr. Caudwell did not seek to minimise his own upset at this rupture and what he regarded as a betrayal by Ms. Dauriac. I obviously must bear in mind the extent to which these events have coloured Mr. Caudwell’s recollection. I have no doubt that they did, but I consider that Mr. Caudwell, in giving his evidence, was doing his best to be as objective as he could.

46.       As a witness, Mr. Caudwell was clear and articulate. It was suggested, in cross-examination, that he had come pre-prepared with certain speeches or points that he would deploy at appropriate points in his cross-examination. I reject that suggestion: I consider that – subject to the qualification I have made about Mr. Caudwell’s objectivity being clouded by emotion – Mr. Caudwell’s evidence was reliable.

47.       In his first statement, Mr. Caudwell stated that he suffered from Lyme disease: one of the symptoms of this disease is that it can impact upon memory.[18] In both his statements and his oral testimony, Mr. Caudwell was careful to say when he could not remember something. He was also careful to differentiate between his actual recollection and reconstruction (i.e. what, based on the documents and the evidence of others, he considered he would have done or said, but without specific recollection).

(e)     Ms. Kate Cooper

48.       Ms. Cooper was, at all material times, an employee of Signia, although when she gave evidence to the court her role had become that of a consultant to Signia. href="#_ftn19" name="_ftnref19" title="">[19] Ms. Cooper was the chief compliance officer of Signia.

49.       Ms. Cooper was one of a number of employees or former employees of Signia to give evidence. The others (described further below) were Ms. Tarbet, Ms. Olszewska, Mr. Hayes, Mr. Ward and Ms. Degruttola. An organogram, setting out the structure of Signia, is appended hereto at Annex 2.

50.       The investigation into Ms. Dauriac had a polarising effect on the Signia employees. At some stage in the process – and for some it was earlier than others – they were forced to choose or to change sides between Mr. Caudwell and Ms. Dauriac. For Ms. Cooper, this occurred during the process of the investigation, when she stopped assisting Ms. Dauriac and began to assist Mr. Canfield. The point at which this occurred can be timed very precisely, from the date of her conversation with Mr. Canfield on 17 December 2014.[20] The difficulties in recollection and impression that this gives rise to is a matter I have taken into account.

51.       Although Ms. Cooper was giving evidence for Mr. Caudwell, and against Ms. Dauriac, I found her to be a measured and objective witness. I consider that she was, justifiably, proud of her position in Signia and her performance in that position. She gave her evidence carefully, and I consider that I can place reliance on it.

52.       Ms. Cooper made one witness statement in these proceedings, dated 9 March 2017 (“Cooper 1”). She gave evidence on Day 6 of the trial (24 October 2017).  

(f)      Ms. Janet Tarbet

53.       Ms. Tarbet was, at all material times, Signia’s chief operating officer. She made one witness statement, dated 9 March 2017 (“Tarbet 1”) and gave evidence on Day 6 of the trial (24 October 2017).

54.       Ms. Tarbet was one of those who began assisting Ms. Dauriac in responding to the expenses investigation, but who ended up giving evidence for Mr. Caudwell. I have borne this in mind. I find that Ms. Tarbet was a straightforward witness, doing her best to assist the court.

(g)     Ms. Rebekah Caudwell

55.       Ms. Caudwell is Mr. Caudwell’s daughter and was, at the material times, a friend of Ms. Dauriac. As Mr. Caudwell’s daughter, giving evidence on his behalf, I was naturally alive to a pre-disposition in favour of Mr. Caudwell. When giving evidence, Ms. Caudwell was frank, clear and careful in her evidence, and I find that she gave her evidence objectively. I found her evidence transparent, both in terms of its clarity and its neutrality.

56.       Ms. Caudwell made one witness statement dated 27 February 2017 (“R. Caudwell 1”) and gave evidence on Day 6 of the trial (24 October 2017).

(h)     Ms. Victoria Olszewska

57.       Ms. Olszewska was employed by Signia as a receptionist for five months. She reported to Ms. Dauriac’s personal assistant, Ms. Degruttola. She assisted in processing expenses and in filling out expenses forms.

58.       Her evidence was limited in scope and ambit and she gave it honestly. She made a single witness statement dated 30 January 2017 (“Olszewska 1”) and gave evidence on Day 6 of the trial (24 October 2017).

(i)      Mr. Paul Lester

59.       Mr. Lester was the non-executive chairman of Signia. His role was an advisory one, and he was at the material times neither a director[21] of nor a shareholder in Signia. He presented as an experienced and competent businessman.

60.       Mr. Lester was drawn into the later stages of the expenses investigation. He saw his role very much as a mediator or middleman, steering a course between Mr. Caudwell and Mr. Canfield on the one part and Ms. Dauriac on the other. Ms. Dauriac took him into her confidence on certain matters.[22] Mr. Lester described his role as follows:[23]

“…I think it should be recognised that my non-executive capacity was supposedly two days a month, so the advice doesn’t exactly come every day, it comes in bits and drabs, usually when you get a phone call, sometimes you haven’t got the full facts in front of you, but part of the job of a chairman is to be on the side of the shareholder when that’s necessary and on the side of management. You end up as that person in the middle, and so I played that role a little bit, which this is an example of, and then I played other roles of trying to solve problems that Nathalie had and the business had so that she could get on with what she did best, which you pointed out she was very good in going out and getting business.”

I consider that this very aptly states the role that Mr. Lester played.  

61.       Mr. Lester made one statement dated 8 March 2017 (“Lester 1”) and gave evidence on Day 6 of the trial (24 October 2017).

(j)      Mr. David Hayes

62.       Mr. Hayes is now the managing director of Hyde Park Finance Limited, a business he established (with the assistance of Mr. Caudwell[24]) in February 2015. Prior to that, Mr. Hayes had been employed by Signia as the head of debt structuring and real estate. He resigned from Signia on 16 October 2014.

63.       Mr. Hayes was involved in the investigations into the expenses of both Ms. Dauriac and Mr. Wilson (another employee of Signia, who also gave evidence[25]). In the case of Ms. Dauriac, he was the whistleblower who provided information in relation to Ms. Dauriac’s expenses to Mr. Canfield. In the case of Mr. Wilson, Mr. Hayes fanned the flames of an expenses investigation.

64.       It was apparent that Mr. Hayes did not like either Ms. Dauriac or Mr. Wilson, and it was this dislike that I find was his prime motivator in his actions against them. I have therefore treated his evidence with a measure of care, in case this dislike influenced his evidence. When giving evidence, however, my impression of him was that he was doing his best to assist the court, and he gave his evidence straightforwardly. Nevertheless, on points that are material, I have sought to cross-check his evidence against other evidence in the case.

65.       Mr. Hayes made one witness statement dated 23 February 2017 (“Hayes 1”) and he gave evidence on Day 7 of the trial (25 October 2017).

(k)     Mr. Daniel Ward

66.       Mr. Ward was employed by Signia as financial controller between 10 October 2011 and 12 December 2014. He made one witness statement in these proceedings dated 23 February 2017 (“Ward 1”) and he gave evidence on Day 7 of the trial (25 October 2017).

67.       Although I consider he gave his evidence honestly, Mr. Ward was unimpressive as a witness. In his evidence in-chief, he made a correction to paragraph 14 of his witness statement, correcting the date there stated from “July 2014” to “November 2014”. The change was material in terms of the narrative of events. Obviously I accept that errors can be made in witness statements. I make no criticism of Mr. Ward in this regard. But Mr. Ward did not seem to take very seriously the importance of at least attempting to ensure that his evidence was accurate and reliable:[26]

Q (Mr. Plewman, Q.C.)

That’s quite a big change, July to November. Any comment on that?

A (Mr. Ward)

Well, a couple of months.

Q (Mr. Plewman, Q.C.)

A couple of months. You made a very specific point in your witness statement that you had already been asked to do this in July and then referred, from paragraph 15 on, to some further involvement in November. You now say that you were only involved from November? Is that right?

A (Mr. Ward)

That is correct, yeah. It’s a big witness statement. Having one error on a date is, in my opinion, acceptable.

Q (Mr. Plewman, Q.C.)

It’s not a big witness statement. It’s 24 paragraphs.

A (Mr. Ward)

Well, I’ve never written a witness statement before, so for me it was big.

Q (Mr. Plewman, Q.C.)

So how did you come to the date of July?

A (Mr. Ward)

It was an error.

Q (Mr. Plewman, Q.C.)

Well, it wasn’t a typographical error. How did you come to believe that that had happened in July?

A (Mr. Ward)

I can only say it was a typographical error. I was not involved in July, I was only involved from November, so that’s all I can put it down to.


I place limited weight on Mr. Ward’s evidence.

(l)      Mr. Michael Fenton

68.       Mr. Fenton was a director of Pure Jatomi and his evidence related solely to the similar fact evidence considered in Section H below. Mr. Fenton made one witness statement dated 6 September 2017 (“Fenton 1”) and gave evidence on Day 7 of the trial (25 October 2017).

69.       I provide my views on the evidence given by Mr. Fenton – together with that of the other witnesses whose evidence related solely to Pure Jatomi (Mr. Balfour, Ms. Gehlan and Ms. Burger) – in Section H.

(m)    Mr. Michael Balfour

70.       Mr. Balfour was a minor shareholder in Pure Jatomi. He was also, at times, chairman, CEO and director of Pure Jatomi. His evidence related solely to the similar fact evidence considered in Section H below. Mr. Balfour gave one witness statement dated 31 August 2017 (“Balfour 1”) and gave evidence on Day 9 of the trial (30 October 2017). I consider the evidence he gave in Section H.

(3)     Factual witnesses called by Ms. Dauriac

(a)     List of witnesses called

71.       Ms. Dauriac called the following witnesses in the following order:

(1)        Ms. Dauriac herself.

(2)        Ms. Kelly Degruttola.

(3)        Ms. Tracy Gehlan.

(4)        Ms. Suzette Burger.

(5)        Mr. Martin Wilson.

(b)     Ms. Nathalie Dauriac

72.       Ms. Dauriac made two witness statements, the first dated 10 March 2017 (“Dauriac 1”) and the second dated 13 September 2017 (“Dauriac 2”). She gave evidence on Days 7, 8 and 9 of the trial (25, 26 and 30 October 2017).

73.       Ms. Dauriac was appointed the managing director of Signia on 9 November 2009. She tended to be referred to as the chief executive officer of Signia, and it is by that title that I shall refer to her in this Judgment. She was, according to her evidence, very much a hands-on manager in Signia. href="#_ftn27" name="_ftnref27" title="">[27]

74.       Ms. Dauriac’s honesty was, in many respects, central to these proceedings. It was alleged against her that various expenses that she charged to Signia’s account as expenses had not only been improperly charged, but dishonestly so. It was also alleged that when it became clear that her expenses were going to be investigated, and during the course of that investigation, she deliberately and dishonestly sought to cover up her improprieties.

75.       These are, obviously, most serious allegations, and they are considered in detail in the course of this Judgment. I do not, at this point in the Judgment, express any conclusion as to Ms. Dauriac’s honesty: that, as it seems to me, is a matter that needs to be considered in light of all the facts, when those facts have properly been laid out.

76.       Allegations of dishonesty apart, Ms. Dauriac was a remarkably unsatisfactory witness for a number of reasons. In cross-examination, Ms. Dauriac gave long and generally not very responsive answers to questions that were put to her. She tended to the argumentative and – particularly when dealing with difficult points – was combative and aggressive in her answers. She was also prone to exaggeration.

77.       Her memory of events did not appear to be especially good, and on a number of occasions the evidence she gave appeared to be more based upon what Ms. Dauriac thought would improve her case than on genuine recollection.

78.       This was most evident when Ms. Dauriac was questioned in relation to individual expenses. Of course, giving evidence is not a memory test. However, Mr. Caudwell had fully pleaded the expenses that were alleged to have been improper, and Ms. Dauriac (and her legal team) had had every opportunity to consider these allegations in light of the disclosure. They took that opportunity, both in the Defence and in Ms. Dauriac’s witness statements, and there was, in these documents, a detailed refutation of the allegations against her. In these circumstances, it was troubling that Ms. Dauriac’s evidence as to why the expenses had been incurred changed over time. Even in the witness box, Ms. Dauriac tended to advance fresh explanations for the challenged expenses and seemed to be making up her explanations as she went along.

79.       I can, for these reasons, place very little reliance on Ms. Dauriac’s evidence. That does not mean – I stress – that a finding of dishonesty in relation to the expenses must follow. It is perfectly possible for Ms. Dauriac to give unsatisfactory evidence in relation to perfectly proper expenses, although it is equally possible for inferences to be drawn from a failure satisfactorily to explain facts. As I say, I consider the question of Ms. Dauriac’s dishonesty separately, in light of all the evidence, later on in this Judgment.

(c)     Ms. Kelly Degruttola

80.       Ms. Degruttola was, at the material times, Ms. Dauriac’s personal assistant at Signia. She left Signia on 16 January 2015[28] and – at the time she gave evidence – was again working for Ms. Dauriac as her PA at Hay Hill Wealth Management.[29]

81.       Ms. Degruttola made one witness statement, dated 10 March 2017 (“Degruttola 1”) and gave evidence on Day 9 of the trial (30 October 2017).

82.       Like Ms. Cooper and Ms. Tarbet, Ms. Degruttola was one of those staff caught in the cross-fire between Ms. Dauriac and those investigating Ms. Dauriac. Unlike Ms. Cooper and Ms. Tarbet, Ms. Degruttola stayed with Ms. Dauriac. I consider that Ms. Degruttola was – between November 2014 and January 2015 – under considerable stress because of the investigation. She wanted to tell the truth; but she did not, out of loyalty to Ms. Dauriac, want to say anything that might prejudice Ms. Dauriac’s position. She was also quite prepared herself to take the blame for matters that were not necessarily her fault.

83.       In short, Ms. Degruttola was a devoted and loyal employee, but I consider that that loyalty and devotion was primarily to Ms. Dauriac the person rather than to Signia the organisation. This coloured Ms. Degruttola’s evidence and, although I consider that Mr. Degruttola was doing her best to provide the court with clear and honest and objective evidence, she lacked objectivity, and this affected her evidence.

(d)     Ms. Tracy Gehlan

84.       Ms. Gehlan was, until her dismissal, the chief executive officer of Pure Jatomi. Her evidence related solely to the similar fact evidence considered in Section H below. Ms. Gehlan made two witness statements in the course of the proceedings. One, dated 13 September 2016, was made in support of Ms. Dauriac’s application to adduce the similar fact evidence (“Gehlan 1”). Ms. Gehlan did not, in her evidence in-chief, affirm the truth of Gehlan 1, but she was cross-examined on this statement.

85.       Ms. Gehlan’s second statement, dated 6 September 2017 (“Gehlan 2”), constituted her evidence in-chief at the trial. Ms. Gehlan gave evidence on Days 9 and 10 of the trial (30 and 31 October 2017).

86.       I consider the evidence Ms. Gehlan gave in Section H.

87.       After the trial, I received, via my clerk, an unsolicited communication from Ms. Gehlan on 12 March 2018, enclosing certain documents which Ms. Gehlan had (so her communication said) obtained pursuant to a request made by her under the Data Protection Act. Her communication was copied to the solicitors instructed in these proceedings and – on 15 March 2018 – I received a detailed response in regard to Ms. Gehlan’s communication from Mr. Caudwell’s solicitors, Mishcon de Reya LLP. Whilst I have read both of these communications, I consider that (with the exception of material that I specifically requested, notably the material described in paragraph 139 below) the evidence has closed and it would be inappropriate to have regard to post-trial material. I have, therefore, paid no regard to this material for the purposes of this Judgment.

(e)     Ms. Suzette Burger

88.       Ms. Burger was the former chief marketing and brand officer of Pure Jatomi. Her evidence related solely to the similar fact evidence considered in Section H below. Ms. Burger made one witness statement in the course of the proceedings dated 5 September 2017 (“Burger 1”). She gave evidence on Day 10 of the trial (31 October 2017). I consider the evidence Ms. Burger gave in Section H. Shortly before this Judgment was handed down, Ms. Burger wrote to me in terms similar to Ms. Gehlen. For the reasons stated in paragraph 87 above, I do not consider it appropriate to have regard to this material,

(f)      Mr. Martin Wilson

89.       Mr. Wilson was formerly employed by Signia, where he was head of wealth structuring. He made one witness statement dated 10 March 2017 (“Wilson 1”) and gave evidence via video-link on Day 10 of the trial (31 October 2017). Whilst at Signia, he had been professionally close to Ms. Dauriac.

90.       The video-link connection was less than satisfactory: quality was poor, and the connection was subject to multiple interruptions. On a number of occasions, parts of Mr. Wilson’s replies to questions were lost because the connection broke down without Mr. Wilson appreciating this; and, for the same reason, questions put to Mr. Wilson by Ms. Carss-Frisk, Q.C. were not transmitted to him. This meant a great deal of repetition on the part of both sides to the cross-examination, and it is of great credit to Mr. Wilson’s and Ms. Carss-Frisk Q.C.’s persistence that usable evidence was obtained.

91.       It was, for this reason, quite difficult to pick up the nuances of Mr. Wilson’s evidence. Subject to the technical problems with the video-link, Mr. Wilson came across as a rather definite witness, who was inclined not to differentiate between actual recollection and reconstruction. Given that his evidence went to matters substantially undocumented – specifically, oral conversations with Ms. Dauriac – this is a matter of some importance. I consider that Mr. Wilson was inclined to be over-definite in relation to these points. Whilst Mr. Wilson gave his testimony honestly, this tendency towards definite (but perhaps wrong) recollection is a matter I bear in mind.

(4)     The expert witnesses

92.       The question of the value of the Dauriac Shares was considered by two experts: Mr. Robert Sharp of Valuation Consulting LLP (who was called by Ms. Dauriac) and Dr. Min Shi of Oxera (who was called by Mr. Caudwell).

93.       The experts’ reports were exchanged sequentially, with Mr. Sharp going first. The reports that I saw were as follows:

(1)        The first report of Mr. Sharp dated 27 October 2016 (“Sharp 1”).

(2)        The first report of Dr. Shi dated 20 December 2016 (“Shi 1”).

(3)        A supplemental report of Mr. Sharp, responding to Shi 1, dated 27 March 2017 (“Sharp 2”).

(4)        A supplemental report of Dr. Shi, responding to Sharp 2, dated 15 June 2017 (“Shi 2”).

(5)        A third report of Mr. Sharp dated 11 August 2017 (“Sharp 3”).

94.       The experts made a joint expert statement dated 13 October 2017 (the “Joint Expert Report”). Additionally, under cover of a letter from Signia’s solicitors dated 5 December 2017, the experts provided me with a set of agreed metrics regarding Signia’s performance.

95.       Dr. Shi gave evidence on Days 10 and 11 of the trial (31 October and 1 November 2017). Mr. Sharp gave evidence on Days 11 and 12 (1 and 3 November 2017).

96.       I consider the evidence of the experts more specifically in Section N below.


(1)     The background to Mr. Caudwell’s and Ms. Dauriac’s relationship

97.       Mr. Caudwell and Ms. Dauriac first met in 2006, when Mr. Caudwell became a client of the Private Office of Coutts Bank, following his sale of his “Phones 4U” mobile telephone business for around £1.5 billion. The Coutts Private Office, where Ms. Dauriac held the position of senior client partner, was awarded a mandate to manage roughly £300 million of Mr. Caudwell’s assets.

98.       Ms. Dauriac impressed Mr. Caudwell, both in the management of the assets entrusted to the Coutts Private Office and in the assistance she provided in relation to his personal financial affairs. During this time, Mr. Caudwell and Ms. Dauriac developed a strong professional relationship and a personal friendship, which included sharing family holidays, regular dinners and invitations to other social engagements.

99.       In around 2009, Ms. Dauriac decided to leave Coutts and pursue setting up an independent wealth management firm. The proposition was that this firm would be managed by Ms. Dauriac, together with a colleague from Coutts, Mr. Gautam Batra, who already managed a significant proportion of Mr. Caudwell’s assets.  Accordingly, she approached Mr. Caudwell with this proposal to seek investment to assist in establishing what ultimately became Signia.

100.     Mr. Caudwell was willing to consider such a proposal:[30]

Q (Mr. Plewman, Q.C.)

She had been your banker at Coutts and the relationship had developed from then?

A (Mr. Caudwell)

It had


Q (Mr. Plewman, Q.C.)

While she was in that role, that’s your banker at Coutts, you say at [Caudwell 1/para. 7] that she regularly went the extra mile of being of assistance, even on matters way outside her remit.

A (Mr. Caudwell)

She did.

Q (Mr. Plewman, Q.C.)

That really is one of the things that made her successful in what she did, isn’t it?

A (Mr. Caudwell)

It’s one of the things that made me really admire her and respect her, like her.

Q (Mr. Plewman, Q.C.)

…You appreciated, as other clients appreciated, her dedication and selflessness on a wide range of matters.

A (Mr. Caudwell)

I did.


Q (Mr. Plewman, Q.C.)

Certainly, at that stage, your relationship was by then close enough for you to consider the possibility of going into business with her?

A (Mr. Caudwell)

It was.

Q (Mr. Plewman, Q.C.)

And you already had, I think, not merely business interaction but social interaction?

A (Mr. Caudwell)

We did.


Q (Mr. Plewman, Q.C.)

I would suggest that one of the reasons that you ultimately decided to back her in an investment management business was because you recognised not only her professional abilities, but also her social abilities?

A (Mr. Caudwell)

Her professional ability was what interested me.

Q (Mr. Plewman, Q.C.)

You expected that in an investment management business that you might start, she would be able to turn that same dedication and selfless commitment into a profitable business?

A (Mr. Caudwell)

I expected her to perform in a very professional way and to win clients and succeed as a consequence.

Q (Mr. Plewman, Q.C.)

Yes, and to win clients by applying what I’ve described as being that dedication and selfless assistance on a wide range of matters?

A (Mr. Caudwell)

No. There is a point here, because when she did all these extraordinary things for me whilst working at Coutts, I had just – I mean, on the one hand, I was very, very pleased that I was getting this help. On the other hand, I just had a slight discomfort wondering whether Coutts would actually approve her going to the extent that she was to satisfy my – she didn’t even satisfy me, she volunteered them and helped out dramatically. So I had a discomfort, and I would never have wanted her to work like that in my company or my relationship.

Q (Mr. Plewman, Q.C.)

You regarded her at that time as very charismatic, correct?

A (Mr. Caudwell)


Q (Mr. Plewman, Q.C.)

And very professional?

A (Mr. Caudwell)


Q (Mr. Plewman, Q.C.)

And so, in fact, your suggestion that there was some professional criticism at that time is wholly contrary to what you say in [Caudwell 1/para. 7]?

A (Mr. Caudwell)

No, it’s not wholly contrary at all, my Lord. I saw a huge amount of positivity in Ms. Dauriac. I saw huge drive, huge effort at that time, and had this one little qualifying niggle in the back of my brain, but it’s not inconsistent. I still admired her and respected her.

Q (Mr. Plewman, Q.C.)

You did more than that. You considered her to be very professional in her approach?

A (Mr. Caudwell)

I did.


(2)     The objective of the collaboration

101.     The proposal was for both Mr. Caudwell and Ms. Dauriac to contribute – in very different ways – to the establishment and operation of a new wealth management company. Ms. Dauriac would provide her services (at a salary) as the chief executive officer of the new venture.[31] Mr. Caudwell was to provide a substantial quantity of assets for the new venture to manage. This would provide a foundation from which the business could launch and begin to trade. It would assist Ms. Dauriac in attracting other investors so as to build the new venture into a successful business.

102.     The plan was for the new business to be sold, when successful, at a profit to both Mr. Caudwell and Ms. Dauriac.

103.     Whilst the new venture was establishing itself, Mr. Caudwell would, of course, have to fund its costs. It will be necessary to consider this aspect of the venture in some detail, but essentially the necessary funding could be achieved in three ways, which could be used either individually or in combination:

(1)        Equity funding.

(2)        Debt funding.

(3)        Funding through management fees charged to Mr. Caudwell for the management of his assets. It is a convenient shorthand to refer to the assets managed by a wealth management company as “Assets Under Management”. This is a measure that is of some significance in these proceedings.

104.     Although, as has been described, the equity in Signia was owned 51% by Mr. Caudwell and 49% by Ms. Dauriac,[32] Mr. Caudwell did not want to fund the venture through equity, simply because (in the case of insolvency) he would be most unlikely to recover his investment. His preference was for debt funding, by loans procured by him. These loans were provided by Grecco.

105.     Mr. Caudwell was less keen on funding Signia through the fees charged to him for the management of his assets. As will be seen, however, to an extent Signia was financed in this way.

(3)     Mr. Caudwell’s practice

106.     As has been noted, Mr. Caudwell was a delegator. It was Mr. Caudwell’s practice to be heavily involved in the strategic planning of a new venture, and then to adopt a “hands-off” approach. It was common ground that this is what he did in the case of Signia, both in terms of setting up Signia, and in terms of its operation after being set up.[33]

107.     On this occasion, once the strategic planning was done, Mr. Caudwell handed the process over to Mr. Canfield to work with Ms. Dauriac to develop Signia into a business that was ready to trade. But, during the initial strategic planning, Mr. Canfield’s role was minimal.[34]

(4)     The Indicative Terms

108.     The essential commercial aspects of the venture were informally agreed between Mr. Caudwell and Ms. Dauriac[35] on 25 August 2009 in a document headed “Nathalie and Gautam Agreement”, and which I shall refer to as the “Indicative Terms”. These provided:

Salary – first year:

Commence 1 January 2010 - £200k basic / £200k bonus.

Bonus to be paid for achievement of £250 million AUM.

First £100k bonus to be paid month after achievement of target.

Remaining £100k bonus to be paid month following end of year.

If needed, a 12 month period for bonus qualification to be extended by 3 months.

Salary – second year:

Full bonus to be paid for a PBT breakeven performance, and to be paid in the month following the 12 month period.


Nathalie to invest £200k for 5% class A shares.

Gautam to invest £100k for 2.5% class A shares.

Rest of shares taking total shareholding to 40% to be on a linear scale in line with final company valuation, between £75 million base price and £175 million target, so that the intention is that both ND and GB will end with 20% each in total of class A and B shares, provided that target is achieved.

9% of shares to be available to motivate new Managers coming into the business. Should the £175 million target be achieved and no extra shares given away, then the 9% will revert equally back to ND and GB.

JC to make a loan of up to £6 million interest accruing at 3% over 3 month libor, accruing until the business is cash flow positive, or will make a loan of £6.5 million interest to be paid quarterly.

Some of the above loan will actually be made as share capital and not interest bearing, and at the time of writing it is thought this would have to be equivalent to 3 months worth of overheads.

Good leavers and share treatment:

Good leaver events:


Serious illness and permanent disability.

A leaver who leaves amicably.

Share treatment:

Class A shares valued at fair market price.

Class B shares are calculated at fair market price x 20% (to a maximum of 100%) for each year of service, excluding the first 2 years.

Bad leaver and share treatment less than 2 years employment:

Bad leaver events:

All others.

Share treatment:

Class A shares paid at investment value or fair market price whichever is the lower.

Class B Shares nil value.

Bad leaver and share treatment more than 2 years employment:

Bad leaver events:

All others.

Share treatment

Class A shares paid at investment value or fair market price whichever is the lower.

Class B shares are calculated at fair market price x 25% (up to a maximum of 100%) for each year of service, excluding the first 3 years.

These values will be calculated at the point of employee termination and will be paid upon the sale of the business or earlier if the Board plus JC decides to.

Fair market valuation will be determined by the shareholding Board plus JC.

If the departing employee does not agree with the valuation, a valuer may be appointed completely independent of both parties and his cost shared 50/50.

JC investment

The business to take over the Coutts investment portfolio and it is expected that this investment will remain for several years, but will be subject to performance.

No management fee to be charged for the first 2 years.

Performance fee will be considered.”

109.     A number of points emerge from this. It is clear who was calling the shots: Mr. Caudwell was providing the finance and the AUM. The indicative terms reflect this fact. Whilst, I am sure, Mr. Caudwell had great appreciation for Ms. Dauriac’s talents, and great liking for her at this stage, this did not override his businessman’s instincts. The Indicative Terms are commercial: fair, but not generous.

110.     Thus, we see that Mr. Caudwell was the main investor and in control. The good leaver/bad leaver provisions in the Articles are foreshadowed, as is the aim to sell the company in due course.

111.     Apart from the (fairly limited) equity investment, the company would be funded by a loan (interest-bearing) of £6 million. Although Mr. Caudwell would transfer his AUM from Coutts to Signia, the Indicative Terms stated that no management fees would be charged for the first two years.

112.     Mr. Caudwell said this about the Indicative Terms:[36]

Q (Mr. Plewman, Q.C.)

You can see that the focus in starting this business was to achieve AUM and growth in AUM. Would you agree with that?

A (Mr. Caudwell)

The focus on bonus was to do with AUM, but the business plan was to do with profit.

Q (Mr. Plewman, Q.C.)

Well, you are ultimately going to achieve profit by growing AUM?

A (Mr. Caudwell)

No, that’s absolutely incorrect. To grow any business and manage it properly, you have to manage both turnover and profitability.

Q (Mr. Plewman, Q.C.)

…There were to be shares – I think you put in £300,000 of equity – and you were to make at that time a £6 million or £6.5 million loan to the business until it was cash flow positive?

A (Mr. Caudwell)


Q (Mr. Plewman, Q.C.)

And the business would take over your portfolio from Coutts as an initial seed business, if you like?

A (Mr. Caudwell)


Q (Mr. Plewman, Q.C.)

But you required it not to charge management fees for two years?

A (Mr. Caudwell)

That’s correct?

Q (Mr. Plewman, Q.C.)

Which, of course, necessarily implies that there would be management fees thereafter?

A (Mr. Caudwell)

It doesn’t imply that at all, no, because the agreement, right from Day 1 was that I expected to pay no or very little management fees and that the whole success of this business was to do with attracting outside investors to make the business profitable so that my money was actually irrelevant and if I wanted to take it somewhere I also could do [so] without damaging the business, and that the fee income from my portfolio was not necessary either.


(5)     The Investment Term Sheet

113.     An “Investment Term Sheet” – which was expressly subject to contract – was concluded on 22 September 2009. This was a lengthy document, expanding upon the Indicative Terms, which set out Mr. Caudwell’s position on a range of subjects concerning the project. The following points are of significance for present purposes:

(1)        Signia would be funded by a loan of either £6 million or £6.5 million, with repayment when “free cash permits” (Point 10).

(2)        As regards future funding, the company was free to borrow in the ordinary course of business, and Mr. Caudwell (whilst not obliged to provide further funding) would give a request for further funding “reasonable consideration” (Point 12.1).

(3)        The company’s affairs were to be conducted in accordance with “good corporate governance and arm’s length dealings” (Point 12.2).

(4)        Point 12.8 concerned the use of Mr. Caudwell’s management fees to defray Signia’s expenses. Mr. Caudwell’s position is recorded as follows: “[Mr. Caudwell] is sympathetic to this proposal provided it works legally in a tax efficient manner”.

(6)     Incorporation

114.     Signia was incorporated on 15 October 2009 (as “True Wealth Limited”) and was renamed as “Signia Wealth Limited” on 20 October 2009.

(7)     Kinetic Partners’ advice on regulatory capital

115.     Kinetic Partners was a firm that was engaged to advise on the regulatory aspects of the new venture.

116.     On 29 October 2009, Kinetic Partners sent an email to Ms. Dauriac entitled “Regulatory capital and financial projections”. The email attached financial projections for 2010/2011. These showed – unsurprisingly for a new venture – that Signia would be loss-making and would be dependent on loans from Mr. Caudwell (in the event, provided via Grecco). This, as has been seen, was already anticipated by Mr. Caudwell and Ms. Dauriac in the Indicative Terms and the Investment Term Sheet.

117.     However, the email went on to say that the loans – whilst they would ensure Signia’s solvency – would not ensure that Signia was compliant with the requirements in relation to regulatory capital. The email explained:

Further explanation following our conference call

If a business makes a loss, this must be deducted from the Share Capital immediately before this capital can be assessed against the Regulatory Capital requirement. Conversely, if the business makes a profit, this can only be included as Regulatory Capital once it has been externally verified – i.e. after an audit.

It is not possible for Signia to meet its Regulatory Capital requirements with Share Capital and Long Term/Short Term Subordinated Loans alone. The business initially makes a loss, which must be deducted from the Share Capital before it can be assessed against the Regulatory Capital requirement. To qualify as Regulatory Capital, even Subordinated Loans have restriction on their values. These restrictions are based upon fixed percentages of the Share Capital, so, as the Share Capital is reduced by the business’ losses, any loans are also reduced proportionately. The certain outcome therefore is that if a business is making a loss and its Share Capital is reducing accordingly, in time there is a breach.


It is necessary to charge a 45bp management fee on the £350m seed capital in order to prevent the business from making a loss in the initial months (Note: the above bulleted reductions to the business’ costs have reduced this from 50bp). This preserves the £612k Share Capital for assessment against the Regulation Capital requirement. As you are aware, the Requirement itself is one quarter of your first year’s fixed expenses – which are £3,206k – making the Requirement £802k.

A further capital injection is therefore needed in addition to the £612k Share Capital to cover this shortfall. This capital injection can either be in the form of Long-Term or Short Term Subordinated Loan and it must be at least £190k.

We would recommend that a buffer of one month's expenses was added to this figure and that the actual amount of Subordinated Loan that was placed in the business as Regulatory Capital was £350k. The loans maturity can either be Long-Term or Short-Term – the major difference being that the latter offers more flexibility.

We understand that your seed investor intends to put more capital into the business than the £962k (Share Capital of £612k + £350k Sub Loan) that is required to meet the Regulatory Capital Requirement. An additional amount can be put into the business at your discretion, and as a loan if this is preferable based on the legal and tax advice you receive, but we would not recommend that it be put in as Regulatory Capital (i.e. further Share Capital and/or Subordinated Loans) as this would place restrictions on its subsequent removal and future flexibility of the business.”

118.     Ms. Dauriac forwarded this email to Mr. Canfield on 1 November 2009, commenting as follows:


Please find below, the solution we found to fund the business. We aimed for John to put as little as possible cash and as max as a loan. However, we needed to find a solution that will meet the Regulatory requirement for the FSA (the issue is that any losses is added to the capital requirements so in order to reduce the loss we needed to produce additional income to the business).

So the following proposed solution should satisfy John and the FSA. The requirements based on this solution is £802k which could be funded as below:

£612k Share Capital (including my £200k and £100k from Gautam) which should make easy the capital structure. As the requirement itself is £802k and to avoid putting additional cash, the difference of £190k can be put as a Subordinated loan (I did ask to increase the amount of capital that was supplied through a loan but FSA regulations restrict the amount of permitted regulatory capital that can be met through a loan to 250% of the Share Capital and, as the share capital is reduced by the losses on a monthly, the corresponding amount of capital allowed as a loan is also reduced until such a point as the regulatory capital requirement is breached). However see below they recommend that a buffer of one month’s expenses was added to this figure and that the actual amount of Short term (more flexible) Subordinated Loan that was placed in the business as Regulatory Capital was £350k.

However that solution of £802k is based on finding additional income to cover the losses to comply with the regulator. Therefore, we have found the solution of charging [Mr. Caudwell’s] portfolio 45bp management fee based on his £350m we discussed. The only key downside for you is that the fees invested in the business cannot be recovered as easy as a piece of senior debt. On the business front, it would allow us to market our business without mentioning of side letters/special deals on fees or explaining why [Mr. Caudwell] has a different treatment. Second, it would help substantially with the clarity of the track record and the generation of an audited investment record. The only downside is that VAT will be payable on the management fee (unless we manage his funds offshore as it will avoid VAT but Gautam and I would prefer to use the Vestra platform in the UK as it is robust).

The remaining amount can be put into the business as a loan.

For clarification, I assume the £6.5m we agreed included interest payable on the loan and excluded the money that Gautam and I were putting in the business. Please find attached the proposed split based on all the above assumptions.”

119.     Thus, Mr. Caudwell’s aim to fund Signia maximally by loans, with as little cash injection as possible, received a setback in the form of this unanticipated regulatory capital requirement. The anticipated solution was to charge Mr. Caudwell for the management of his assets, contrary to the original plan.[37]

(8)     Ms. Dauriac’s Service Agreement

120.     Ms. Dauriac concluded the Service Agreement with Signia on 12 February 2010.

121.     The relevant provisions were as follow:

(1)        Clause 2.1 provided that Signia appointed Ms. Dauriac and Ms. Dauriac agreed to act “as Managing Director from the Commencement Date upon and subject to the terms of this Agreement”. The “Commencement Date” is a defined term and was typed as “11 January 2010”, but that date was amended by hand to “09/11/09”, i.e. 9 November 2009. By the end of the trial, it was common ground that this was the Commencement Date.

(2)        Clause 3.2 provided:

“You shall perform all the duties (including but not limited to exercising all the powers) of the position of Managing Director (or such other position as you may hold from time to time). The following is a non-exhaustive list of your duties. You will:

(a)     as soon as reasonably practicable in the first quarter following the end of the Financial Year, cause to be prepared and delivered to the Board an Annual Business Plan and obtain the Board’s approval thereto making such changes to such Annual Business plan as may be necessary for obtaining such approval;

(b)     be responsible for the day to day management of the Business of [Signia];

(f)      ensure that you conduct your affairs with fidelity and with the highest standards of ethics and integrity…”

(3)        Clause 5.1 provided that Ms. Dauriac’s principal place of work was Signia’s principal place of business (then 14 Cornhill, London), but that (on giving reasonable notice) Signia might require Ms. Dauriac to work anywhere, whether temporarily or permanently.

(4)        Clause 5.2 provided:

“You shall make all journeys, whether in the United Kingdom or abroad, as may be required for the proper performance of your duties, whether inside or outside normal working hours.”

(5)        Clause 6.1 provided that Ms. Dauriac would receive a salary of £200,000 per annum. Clauses 7.1 and 7.2 set out the criteria for the payment to Ms. Dauriac of a bonus of up to £200,000 for the years 2010 and 2011. Clause 8 provided for a “a Discretionary Bonus scheme, which will apply to you in the third calendar year of your employment i.e. from 1 January 2012 and thereafter. The Board will determine in its absolute discretion at the end of the relevant calendar year whether any bonus is to be awarded in respect of that year, and if so, the form, amount and any conditions attached”.

(6)        Clause 9 made provision for expenses:

“[Signia] will reimburse you for all reasonable out-of-pocket expenses (including travel, subsistence and entertainment expenses) necessarily and wholly incurred by you in the proper performance of your duties, provided you claim such expenses and produce receipts or other evidence of actual expenditure.”

(7)        Clause 15 provided for termination of the employment relationship:

(a)          Clause 15.1 set out the rights of Signia to terminate the employment relationship. So far as material, clause 15.1 provided:

“[Signia] may terminate the Employment:

(a)     by giving you 3 months’ notice if you are an Under Performer;

(b)     without notice on grounds which merit summary dismissal. The following is an exhaustive list of the grounds which merit summary dismissal in the event of such a breach:

(1)     In connection with the performance of your duties, you are guilty of:

1.      serious or repeated breach of your obligation due to gross negligence; or

2.      gross or wilful neglect.

(2)     You are guilty of a gross breach of any fiduciary duties owed by you to [Signia].

(3)     You commit any act of gross misconduct.


(b)          Clause 15.2 provided that Ms. Dauriac could “terminate the Employment for any reason by giving [Signia] at least 3 months’ notice”.

(c)          Clause 15.3 provided that the employment relationship would terminate automatically at Ms. Dauriac’s 65th birthday (the normal retirement age for employees of her position).

(d)          Clause 15.4 provided:

“There will be no right to give notice of termination of, or otherwise terminate, the Employment other than under clauses 15.1, 15.2 and 15.3.”

(8)        Clause 20 provided:

“20.1 [Signia] does not have its own disciplinary and dismissal procedures but intends to comply and expects you to comply with the ACAS Code of Practice on Disciplinary and Grievance Procedures (the “Code”). The Code does NOT form part of this Agreement. If you are dissatisfied with any disciplinary decision relating to you, you should first attempt to resolve this by discussion with the person who took the decision. If, having taken this step, you remain dissatisfied with the disciplinary decision you should appeal in writing to the Board, whose decision on the matter will be final.

20.2   [Signia] does not have its own grievance procedure but intends to comply and expects you to comply with the ACAS Code of Practice on Disciplinary and Grievance Procedures (the “Code”). The Code does NOT form part of this Agreement. If you wish to seek redress of any grievance related to your employment, you should write to the Board with details of the basis for the grievance. If the grievance is not resolved to your satisfaction, you should appeal in writing to the Board, which will allocate an appropriate individual to deal with it. The decision on appeal will be final.”

(9)     The Shareholders’ Agreement

122.     The Shareholders’ Agreement was concluded on 15 February 2010 between (amongst others) Grecco, Ms. Dauriac and Signia. href="#_ftn38" name="_ftnref38" title="">[38]

123.     The Shareholders’ Agreement:

(1)        Provided that Ms. Dauriac would submit a business plan to Grecco for its approval (clause 4.2).

(2)        Made provision for the appointment of directors (clause 4.4).

(3)        Made provision for the funding of Signia (clause 5). In particular, clause 5.1 provided that Signia would be financed by “the Loan Agreement, the Subordinated Loan Agreement and the ND Loan Agreement”.

(4)        Clause 6.2 provided:

“The management of [Signia] shall be vested in the Board provided that the day to day management of [Signia] will be the responsibility of the Manager. Without prejudice to the generality of the foregoing, the Board will determine the general policy of [Signia] and the manner in which that is to be carried out (subject to the express provisions of this Agreement) and will reserve to itself all matters involving major or unusual decisions. In particular, but without limitation to the generality of the foregoing, the Board will procure that:

6.2.1 [Signia] shall transact all its business on arm’s length terms…”

(10)   The loan agreements

124.     Clause 5.1 of the Shareholders’ Agreement specified that Signia would be funded by three loan agreements – the “Loan Agreement”, the “Subordinated Loan Agreement” and the “ND Loan Agreement”.

125.     It is unnecessary to describe these loans in any detail, save to note that they were entered into. Subsequently, other loans were made available by Mr. Caudwell to Signia. It will be necessary – in Section F below – to explore in greater detail how Signia was funded over time. As will be seen, this was from a combination of sources, including – but not restricted to – loans and fees for the management of AUM.

(11)   The Articles of Association

126.     The Articles were described in paragraph 1 above, and the compulsory transfer process provided in the Articles described in Section B above.

(12)   The early operation of Signia

127.     Signia initially operated from the premises of Vestra Wealth at 15 Cornhill, London,[39] before moving to its current premises in the summer of 2011.[40]

128.     Mr. Canfield was appointed a director of Signia on 16 October 2009 as Mr. Caudwell’s nominated board director. Mr. Canfield continues to hold this appointment.

129.     Ms. Dauriac was appointed as director of Signia on 28 October 2009 and was employed as chief executive officer of Signia from 9 November 2009, a position she held until her employment ended on 21 January 2015.

130.     It was common ground that Mr. Caudwell acted as a shadow director of Signia through Mr. Canfield. But he was not a de facto director. It was contended by Mr. Caudwell that, in these circumstances, he was not able to bind Signia and that his conduct could not be attributed to Signia. href="#_ftn41" name="_ftnref41" title="">[41] To the extent that it matters, I am prepared to accept this submission. On the facts, however, I do not consider that these questions of agency and attribution arise: Mr. Caudwell tended to act through and with others – notably Mr. Canfield – whose actions and words are undoubtedly attributable to Signia. 


(1)     Signia’s business activities and the revenue derived therefrom

131.     There was, unsurprisingly, a high degree of agreement between the parties as to the nature of Signia’s business activities. The following description of Signia’s business activities is taken from Dr. Shi’s first report, but I did not understand Mr. Sharp materially to disagree with this description.

132.     Dr. Shi suggested that the main business activities of Signia during 2010 to 2014 could be split into three types:[42]

(1)        What she termed “core activities”, covering the management of clients’ investments (including hedge fund management services from 2014 onwards) and cash holdings.

(2)        What she termed “secondary activities”, covering predominantly brokerage services where Signia introduced clients to borrowing and private equity opportunities.

(3)        What she termed “other” – or perhaps “tertiary” – revenue generating activities, which chiefly consisted of rental income from renting out excess office space.

133.     In my judgment, the secondary and tertiary activities of Signia can, for the purposes of this Judgment, be disregarded. It is obvious that a newly-established business must concentrate on its core activities, because these are the key revenue-generating activities. Revenue from other sources, whilst no doubt welcome, would not be worth diverting substantial resource to. It is on the core activities of Signia that the focus must be.

134.     Signia earned fees from investing its clients’ money.[43] These are known as “discretionary” services, where in essence the expertise of Signia is deployed in determining how funds should be invested. These fees comprised three elements:

(1)        Management fees, generally calculated as a fixed proportion of the Assets Under Management per annum from each investor.

(2)        Custody fees through rebates from certain custodian banks chosen by the clients.

(3)        Performance fees, paid when the returns of the investment exceed an agreed benchmark.

135.     A less remunerative form of service is where a client’s assets are “under supervision”. “Assets Under Supervision” are client assets not managed by Signia, but for which Signia had some administrative or supervisory responsibility.[44]

136.     Signia also managed clients’ cash and charged an annual management fee of around 0.1%. Unlike in the case of investment and hedge fund assets under management, Signia did not charge performance fees on the cash it managed.[45]

137.     Hedge fund management services are services relating to the management of hedge funds, pooled investment structures that adopt a wide variety of alternative investment strategies often using gearing, futures and options. Hedge fund management services are generally remunerated at a level at or above discretionary services. Signia began offering hedge fund management services in the second half of 2014, after hiring Mr. Rosenthal.[46]

138.     The term “AUM” (for Assets Under Management) is used in this Judgment to describe all assets under Signia’s management, namely:

(1)        Discretionary;

(2)        Hedge fund;

(3)        Assets under supervision;

(4)        Cash and custody.

139.     The experts provided a variety of (unagreed, incomplete and not reconcilable) measures of Signia’s performance over time in their reports. I invited them to set out, in a single document, agreed figures for each class of business over time. Although not completely agreed, the experts’ response was provided under cover of a letter dated 5 December 2017. A copy of this data is at Annex 3 to this Judgment. The essential elements of that data are set out below:

Type of Assets Under Management (“AUM”)

End 2010

End 2011

End 2012

End 2013

End 2014









Total AUM







Total revenue







Hedge fund[49]







Total AUM







Total revenue







Assets Under Supervision







Total AUM







Total revenue







Cash and custody[50]







Total AUM













Table 2: Signia’s Assets Under Management and the revenue derived therefrom

140.     Although the hedge fund AUM did not generate much revenue, this was partly because it was a new venture for Signia (the service was provided for the first time in 2014, and then only for the latter half of that year) and partly because (as will be seen) Mr. Caudwell provided the bulk of this class of AUM and paid very low fees for the service. The revenue for 2014 of £224,000 in Row B[2] of Table 1 is thus unrepresentatively low. More importantly, the evidence was that although a new service for Signia, it did perform extremely well.

141.     In my judgment, the essential parts of Signia’s business lay in its discretionary and hedge fund AUM. Although, no doubt, AUS and cash management services were services that Signia, as a wealth management company, had to offer to its customers, these services were not the profit centres that (if it was to be a success) Signia needed to develop. The same is true for the secondary and tertiary forms of business described in paragraph 132-133 above.

142.     So far as discretionary AUM and hedge fund AUM is concerned, further analysis of the figures is in order. This set out in Annex 4 to this Judgment. Annex 4 provides a more detailed breakdown of the figures contained in Table 1 above. As to the data in Annex 4:

(1)        The discretionary and hedge fund AUM is broken down according to AUM provided by Mr. Caudwell as a client of Signia and AUM provided by third parties. As has been seen, it was anticipated that Mr. Caudwell would himself be a substantial client of Signia, and that proved to be the case. However, in addition to Mr. Caudwell, persons related to him (his brother and his ex-wife) were also clients of Signia. Essentially, fee arrangements Mr. Caudwell negotiated for himself were extended to these “Caudwell-related” parties.[51] The extent to which these parties were so tied to Mr. Caudwell so that, were Mr. Caudwell to leave Signia, they would leave also, is a matter that it will be necessary to consider later on in this judgment.[52]

(2)        As regards discretionary AUM, the AUM provided by (i) Mr. Caudwell, (ii) parties related to Mr. Caudwell and (iii) third parties, expressed as a percentage of total AUM were as follows:

Discretionary AUM

End 2010

End 2011

End 2012

End 2013

End 2014













Third party






Table 3: Breakdown of the source of discretionary AUM

The percentages for the hedge fund AUM were:

Hedge fund AUM

End 2014





Third party


Table 4: Breakdown of the source of hedge fund AUM

The lion’s share of the AUM (particularly when Caudwell-related AUM is taken into account) came from Mr. Caudwell.

(3)        However, Mr. Caudwell and those related to him paid less for Signia’s services than did third parties. Typically, wealth management companies charge their clients a percentage of the Assets Under Management, generally measured in “basis points” or “BPS”. One basis point is equivalent to 0.01%. The fees paid by the various parties (derived by calculating revenue as a percentage of AUM) were as follows:

Discretionary AUM

End 2010

End 2011

End 2012

End 2013

End 2014













Third party












Table 5: Fees paid for Signia’s discretionary AUM services

The equivalent figures for the hedge fund AUM were:

Hedge fund AUM

End 2014





Third party


Table 6: Fees paid for Signia’s hedge fund AUM services

The evidence was that one might expect to pay 50-100 BPS for discretionary AUM services and 70 or more BPS for hedge fund AUM services. Obviously, rates are negotiable and (in a competitive market) I do not consider that it is possible to establish a “market” rate for these services. Nevertheless, Mr. Caudwell clearly achieved competitive rates for his (and for the Caudwell-related) AUM, both when compared to the rates that one might expect to pay and (more importantly) when compared with what third parties were charged by Signia.

As regards the hedge fund AUM, I should say that I do not regard the fees charged by Signia as being commercial rates. They are far too low for that. I anticipate that the explanation for the low rates is simply that this line of business had only started up in 2014, and the figures are simply not representative.

(4)        The effect of the lower rates charged to Mr. Caudwell and the Caudwell-related parties is evident when one compares the proportion of AUM contributed by Mr. Caudwell and the Caudwell-related parties (as set out in Tables 2 and 3 above) with the proportion of Signia’s revenue that they contributed:

Discretionary AUM

End 2010

End 2011

End 2012

End 2013

End 2014













Third party






Table 7: Proportions of Signia’s revenue: discretionary AUM

The percentages for the hedge fund AUM were:

Hedge fund AUM

End 2014





Third party


Table 8: Proportions of Signia’s revenue: hedge fund AUM

In revenue terms, the proportions contributed by third parties is substantially higher, and the proportions contributed by Mr. Caudwell and the Caudwell-related parties significantly lower, than when the measure is AUM.

(2)     Signia’s total costs and total revenue

143.     Signia’s costs, as they appear from Signia’s management accounts and as agreed by the experts[53] were as follows:



End 2010

End 2011

End 2012

End 2013

End 2014


Employee costs







Cost of sales and administration costs














Interest costs













Table 9: Signia’s costs

144.     The totality of Signia’s revenues – including, but not limited to, those set out in Table 2 – were as follows:



End 2010

End 2011

End 2012

End 2013

End 2014


Total revenue






Table 10: Signia’s total revenues

(3)     Signia’s profit/loss

145.     From Tables 9 and 10, it is possible to ascertain Signia’s profit/loss: this is the difference between Row E in Table 9 and Row A in Table 10. This difference is set out in Row A of Table 11 below.

146.     “EBITDA” stands for Earnings Before Interest, Taxes, Depreciation and Amortization. Self-evidently, the items recorded as costs in Table 9 include items that would not form part of EBITDA.[54] The experts have helpfully calculated what Signia’s EBITDA would be, on the basis of the figures in Tables 9 and 10.[55] These figures are set out in Row B of Table 11 below.

147.     Finally, the EBITDA as recorded in Signia’s management accounts is set out in Row C of Table 11 below. It will be noted that these differ from the EBITDA in Row B, but not materially.

148.     Table 10 thus shows that Signia had a modest loss in 2010, modest profits in 2011 to 2013, and a significant loss in 2014:



End 2010

End 2011

End 2012

End 2013

End 2014


Signia’s profit/loss according to Tables 9 and 10







EBITDA according to Tables 9 and 10







EBITDA according to the management accounts






Table 11: Signia’s profit/loss and EBITDA

(4)     Signia’s sources of finance over time

(a)     Introduction

149.     Clearly, as a start-up company, making relatively small profits in 2011 to 2013, a small loss in 2010, and a significant loss in 2014, Signia was dependent upon the sources of finance described in paragraph 103 above. It is now necessary to describe, in greater detail and by reference to actual events, how Signia was financed over this period.

150.     At Coutts, Mr. Caudwell paid a fee of 50 BPS for each £ managed.[57] As has been seen, the plan was for Mr. Caudwell to pay no management fees during the first two years of Signia’s operation, and thereafter for his fees to be negotiated.[58] That would, self-evidently, deprive Signia of fee income, but Mr. Caudwell planned to fund Signia through loans.[59]

151.     The need to maintain regulatory capital (which was pointed out by Kinetic) required a reconsideration of this approach.[60] In order to preserve the share capital of Signia for assessment against Signia’s regulatory capital requirements, Signia advised charging a 45 BPS management fee on the £350 million AUM that Mr. Caudwell was proposing to place with Signia. The fee income this was expected to produce to Signia was deducted from the amount of the loan facility that Mr. Caudwell was extending to Signia. Thus, the amount of the loan intended to be made available by way of the Loan Agreement was reduced from £6,000,000 to £4,263,000. Thus, the monies Mr. Caudwell was paying – or at least making available – to Signia remained the same; but, of course, Signia would not be obliged to repay the fees it received (which, of course, was why Mr. Caudwell preferred the structure of a loan).[61]

152.     This, at least, was the plan. The following paragraphs describe how Signia was actually financed over time.

(b)     Financing of Signia in 2011

153.     On the assumption that Mr. Caudwell would place £350 million with Signia and pay a fee of 45 BPS, this would produce fee income of £1,575,000. In the event, in 2011, Mr. Caudwell placed £471 million AUM with Signia, paying fees of £1,586,354, at an implied[62] rate of 34 BPS.[63] Of course, Signia also received fees in respect of Caudwell-related and third-party AUM.

154.     In the event, with the loan facilities made available to Signia, Signia was solvent and satisfied the regulatory capital requirements for this year.[64]

(c)     Financing of Signia in 2012

155.     For 2012, Mr. Caudwell only wanted to pay a rate of 25 BPS and he wanted the same rate for the Caudwell-related parties.[65] On 16 March 2011, Signia agreed with Mr. Caudwell that, from 1 January 2012, he would pay a reduced management fee of 25 BPS and a performance fee of 10% of performance above 5% on his portfolio.

156.     However, he also increased the loan facilities available to Signia by some £10 million to provide further capital for the growth of the business and to make further hires.[66]

157.     In 2012, Mr. Caudwell placed £463 million AUM with Signia, paying fees of £1,109,900, at an implied rate of 24 BPS.[67]

158.     In 2012, Signia’s fees were insufficient to meet its regulatory capital requirements – although, because of the loans available, it remained solvent. The regulatory capital deficit was addressed by Mr. Caudwell waiving an introduction fee that would have been payable to him by Signia, and which he permitted Signia to retain. This, in addition to a £600,000 rebate, enabled Signia to meet its regulatory capital requirements for 2012.[68]

(d)     Financing of Signia in 2013

159.     The arrangement that Mr. Caudwell – and the Caudwell-related parties – pay 25 BPS for Signia’s services continued into 2013.

160.     Mr. Caudwell placed £475 million AUM with Signia, paying fees of £1,135,246 at an implied rate of 24 BPS.[69]

161.     Signia’s revenue – including, but not limited to, the fees paid by Mr. Caudwell – was not sufficient to prevent an issue arising in relation to regulatory capital in 2013.[70]

162.     The potential for a regulatory capital shortfall was identified (at the latest) around 7 January 2014, when there was an email exchange between Mr. Wilson, Mr. Canfield, Mr. Ward and Mr. Maycock.[71] Mr. Wilson’s role was to provide guidance to Mr. Canfield on how to satisfy the regulatory capital requirements.[72]

163.     The shortfall in regulatory capital was addressed by Signia raising, for payment by Mr. Caudwell, two invoices, both dated 31 December 2013:

(1)        The first invoice – “Invoice S01145” – was in the amount of £950,000. VAT was not said to be payable. The invoice was in respect of “Introducers fee: Final fee for introduction to HSBC for lending on Hedge Fund Portfolio”.

(2)        The second invoice – “Invoice S01146” – was in the amount of £750,000. VAT was not said to be payable. The invoice was in respect of “Successful introduction to RBC for property loan on Ancaster House & 3 Audley Square”.

164.     The evidence regarding the generation of these invoices was as follows:

(1)        Although both dated 31 December 2013, these were backdated invoices generated in January 2014.[73] They were paid on 31 January 2014.[74]

(2)        The invoices were generated by Mr. Ward, in conjunction with Mr. Wilson.[75] Mr. Hayes describes the background in the following terms:[76]

“12.   I have been shown a copy of the email I sent to Nathalie on 9 November 2013…This email relates to the proposed fees to be charged by [Signia] to [Mr. Caudwell] in relation to certain loans. Nathalie probably asked me to send her this information.

13.     With regard to the loans, I recall coming under pressure from both Martin and Nathalie to get the deals approved before the end of 2013, so that they could immediately raise the fees for [Mr. Caudwell] for this work. I thought this was strange as normally a fee for this type of introductory work would only be raised when the loan had actually been drawn down, not merely when the loan arrangements had been approved by the lender.

14.     I now understand that [Signia] raised invoices for a total of £1,700,000 for introducing [Mr. Caudwell] to Royal Bank of Canada and HSBC for the purposes of loan re-financing. Whilst this is clearly significantly more than the sums proposed in my email, I can confirm that the narratives of the invoices do relate to the introductory work I carried out for [Mr. Caudwell] in 2013…I can also confirm that I was unaware of these invoices at the time and I did not discuss them with [Mr. Caudwell, Mr. Wilson or Ms. Dauriac].”

(3)        Mr. Ward recalled a number of conversations with Mr. Wilson regarding these invoices. He said that he “had a number of calls and conversations with [Mr. Wilson] during December 2013 in relation to the issue and how exactly the invoices should be raised and the payments should be made”.[77] He did not, however, have any conversations (or other communications) with Ms. Dauriac about the invoices.[78] His understanding was as follows:[79]

“I understood at the time that [Mr. Wilson] was having regular conversations with Nathalie about these issues. I therefore find it surprising that Nathalie should profess to have had no knowledge of all the circumstances regarding the payment of £1.7 million into the business in January 2014…until in or around October 2014, Nathalie generally kept herself up to date with matters of this nature and it is unlikely in my experience that these transactions would have proceeded without her full knowledge and authority.”

(4)        Mr. Wilson recalled that Ms. Dauriac was aware of the £1.7 million regulatory capital deficit:[80]

Q (Ms. Carss-Frisk, Q.C.)

What do you say was Ms. Dauriac’s position as to how the £1.7 million would be raised at the end of 2013/early 2014?

A (Mr. Wilson)

Ms. Dauriac said I should discuss raising a management invoice with Mr. Canfield.

Q (Ms. Carss-Frisk, Q.C.)

You’re saying she specifically referred to a management fee invoice, are you?

A (Mr. Wilson)

Yes, I believe that was the discussion, because that’s how we’d previously rectified the position.

Q (Ms. Carss-Frisk, Q.C.)

You believe that was the discussion. Is it possible that she actually didn’t specify whether it would be a management fee or some other kind of fee?

A (Mr. Wilson)

No. At the time when I raised the £1.7 million with her, she said: “Speak to David Canfield regarding a management fee”.

Q (Ms. Carss-Frisk, Q.C.)

If that was her, as it were, instruction to you, you would have presumably wanted to implement that instruction, wouldn’t you?

A (Mr. Wilson)

Yes, I would have gone away to implement that instruction.

Q (Ms. Carss-Frisk, Q.C.)

And you certainly would not have done something different without discussing it with Ms. Dauriac, would you?

A (Mr. Wilson)

That’s – no, that’s not correct. By then, the chain of events was then I went to speak to Mr. Canfield, and I didn’t really discuss the matter in any detail with Ms. Dauriac post that, because myself, Mr. Ward and Mr. Canfield then took forward the implementation of the capital adequacy.

Q (Ms. Carss-Frisk, Q.C.)

Are you seriously saying that having been told, as you’ve described, by Ms. Dauriac that the fee should be a management fee, you then go and do something different without discussing it with her at all?

A (Mr. Wilson)

Yes, I then went and discussed in detail with Mr. Canfield, who is a director of the business and directly liaising with Mr. Caudwell. We had then agreed the plan of action. There was no need at that point to discuss it any further. I was talking directly with the representative director of our shareholder.

Q (Ms. Carss-Frisk, Q.C.)

Are you suggesting that Ms. Dauriac wasn’t interested to find out exactly how the £1.7 million would be raised?

A (Mr. Wilson)

Ms. Dauriac simply asked me to keep her updated as to the progress of the £1.7 million and the capital adequacy; we didn’t discuss details as we went along.

Q (Ms. Carss-Frisk, Q.C.)

If she wanted to be updated as to progress, I would suggest it’s inconceivable that you would not have mentioned to her that a different solution was going to be adopted from the one that you claim she had instructed you to use?

A (Mr. Wilson)

No, that’s not inconceivable. I was dealing with a director of the business, as I said, that I had dealt with on matters before in relation to Mr. Caudwell…

Mr. Wilson was, himself, at the time satisfied that these were “perfectly legitimate invoices to raise”.[81]

165.     In the pleadings and in correspondence between the parties, these payments were described as “ex gratia” payments.[82] In cross-examination, Mr. Canfield sought to qualify this position:[83]

Q (Mr. Plewman, Q.C.)

…So, the case at that stage that was put up was these are ex gratia fees?

A (Mr. Canfield)

I think the case that was put forward was that these were fees that Mr. Caudwell could have refused to pay.

Q (Mr. Plewman, Q.C.)

They were ex gratia fees. We don’t have to gloss that proposition. They were fees he didn’t have to pay but chose to pay and this is what was put up?

A (Mr. Canfield)


Q (Mr. Plewman, Q.C.)

Whereas a genuine introduction fee would be something that he would have to pay, at least in whatever its amount may be?

A (Mr. Canfield)

I think that’s the point. It’s the extent of that introduction fee.

Q (Mr. Plewman, Q.C.)

It’s not what it says. It says that the invoice as a whole was an ex gratia fee, Mr. Canfield.

A (Mr. Canfield)

But in both instances he had already paid some fees, certainly for the HSBC hedge fund loan, he had already paid fees in 2013. This was an additional fee.

Q (Mr. Plewman, Q.C.)

So, in the further information and in the Eversheds’ letter, the instructions which you were involved with obtaining, the position was taken that Mr. Caudwell paid these fees ex gratia, correct?

A (Mr. Canfield)


Q (Mr. Plewman, Q.C.)

Whereas the position that is now contended is that they were genuine introduction fees, even if inflated?

A (Mr. Canfield)

I genuinely don’t see the difference between the two.


166.     Mr. Caudwell took the same line as Mr. Canfield: that the invoices were inflated, but that they reflected actual liabilities of Mr. Caudwell, albeit in a lesser amount.[84] He knew that the invoices had been raised to sort out a regulatory capital issue but was not closely involved.[85]

167.     It is necessary to bring out the circumstances in which these invoices were produced, because it is these invoices that form the basis for Ms. Dauriac’s contention that Mr. Caudwell (with Mr. Canfield) sought to get rid of Ms. Dauriac in the latter part of 2014. The point is considered and determined fully later on in this Judgment, but essentially Ms. Dauriac’s contention (about which I express no view for the present) was as follows:[86]

(1)        Everyone accepted that there was a regulatory capital shortfall in Signia for 2013.

(2)        It was anticipated by everyone – including, in particular, Ms. Dauriac – that any regulatory capital shortfall would be addressed by raising invoices payable by Mr. Caudwell for managing his AUM. Such invoices, however, would have attracted VAT.

(3)        In order to avoid paying VAT, Mr. Caudwell and Mr. Canfield procured that the invoices were raised in respect of matters that did not attract VAT. Ms. Dauriac was unaware of this.

(4)        When Ms. Dauriac became aware of this, she was concerned at the dishonesty and the position this put Signia in. She raised the matter with Mr. Canfield and, as a consequence of her doing so, triggered the events that lead to her departure from Signia. In short, the expenses inquiry and the investigation into her were shams, simply designed to get rid of her.

Clearly, therefore, the circumstances in which the issue of the propriety of the invoices was raised by Ms. Dauriac is a matter of some factual importance in this case, and the reason I have described in some detail how Invoices S01145 and S01146 came to be raised. 

(e)     Financing of Signia in 2014

168.     It is not necessary to consider the specifics of Signia’s funding in 2014. The events of 2014 are considered in detail in Section G below. However, the issues of regulatory capital shortfall that might have arisen in 2014 were overtaken by the events surrounding the termination of Ms. Dauriac’s employment with Signia, and there is no need to consider this issue for the purposes of this Judgment.

169.     It was during the course of 2014 that Signia established – at some cost (mainly to recruit Mr. Rosenthal) – its hedge fund capability.[87]

(f)      Signia’s debt as at the end of 2014

170.     As has been described, various loan facilities were made available to Signia over time, and Signia drew down on these.[88] The detail of these drawdowns is immaterial: it only needs to be noted that, as at the end of 2014, Signia had debt outstanding of £1.5 million, but also a cash holding of £90,000 – so net debt stood at around £1.4 million.[89]

171.     Signia drew significantly on the loan facilities in 2015, after Ms. Dauriac had left the business.[90]

(5)     Ms. Dauriac’s bonuses

172.     Ms. Dauriac was paid a bonus of £200,000 in both 2010 and 2011.[91]

173.     In 2012, the growth in Signia’s AUM decreased: total discretionary AUM was down from £782 million to £768 million. Part of this was due to a reduction in Mr. Caudwell’s own AUM with Signia (which fell from £471 million to £463 million), but (perhaps crucially) third party AUM did not rise. It fell from £220 million to £214 million. Caudwell-related AUM remained constant.[92] Ms. Dauriac was not awarded a bonus in 2012, although Mr. Canfield considered she should have been. The decision not to pay a bonus would have been the decision of Mr. Caudwell.[93]

174.     For 2013, Mr. Canfield again recommended a bonus, but again Mr. Caudwell did not agree, and no bonus was awarded.[94]

175.     In an email dated 17 June 2014 from Ms. Ohbi (Signia’s General Counsel) to Mr. Canfield (copied to Ms. Dauriac), Ms. Ohbi stated:

“Further to conversations between Nathalie and John last week, John has confirmed that Nathalie shall be entitled to a bonus of £300,000 every year from 2014 going forward. The remaining terms of her employment contract will remain unchanged.”

176.     Ms. Dauriac contended that – on the basis of this communication – Mr. Caudwell had promised a bonus of £300,000 every year, irrespective of performance.[95] I reject this suggestion of bonus as salary as entirely implausible. When the point was put to him, Mr. Caudwell said that:[96]

“I would never, ever, agree to unconditional bonuses other than in very extreme circumstances like somebody joining the business and doesn’t know what the business targets might be and I might, for a very short period of time, guarantee a bonus. I would never guarantee a bonus ongoing to an employee in a failing business, and this business was failing dramatically at the time…”

I accept this evidence. At most, there was a conversation between Mr. Caudwell and Ms. Dauriac as to the sort of level of bonus she might hope to achieve in 2014. But I find that the terms of Ms. Dauriac’s contract of employment – as I have set them out in paragraph 121 above – remained unchanged. In other words, Ms. Dauriac’s bonus was to be individually negotiated each year.


(1)     Setting the scene

177.     At the beginning of 2014, Signia had been in business for just over three years. Performance had, perhaps, not been as Mr. Caudwell might have wished, and a good deal of the evidence adduced by Signia went to the disappointing nature of Signia’s performance and, inferentially, the lacklustre leadership of Ms. Dauriac as Signia’s chief executive officer.

178.     Save for the purpose of valuation (which is considered separately in Section N below), I am disinclined to place very much – if any – weight on such points regarding performance. This is not so much because I reject them as because I do not consider that they were material factors in the circumstances that resulted in Ms. Dauriac’s departure from Signia. In my judgment, had these circumstances not pertained, then Mr. Caudwell might well have pressed Ms. Dauriac to cause Signia to perform better; but her employment relationship with Signia would not have ended.

179.     For this reason, it is not necessary for me to consider the extent to which Signia did, or did not, meet the requirements of the various business plans that were produced. That is probably just as well, because the management of Signia was conducted very informally indeed. Formal business plans were not agreed, and Signia’s performance against those plans was not monitored. There were no board meetings. Although Mr. Canfield was a director of Signia, his role was peripheral until the events that I come to describe in this Section.

180.     Ms. Dauriac, as I find, ran the show, and she preferred to engage with Mr. Caudwell, rather than his subordinates, including Mr. Canfield. More specifically:

(1)        Ms. Dauriac was quite autocratic in how she ran Signia. She was the boss, and she did not appreciate interference in what she regarded as her “baby”. In the words of Mr. Canfield, she “exercised a high degree of control”.[97] Mr. Canfield did not regard that as a good thing:[98]

Q (Mr. Plewman, Q.C.)

Do you agree that the exercise of that high degree of control that you refer to is a feature of the energy and selfless commitment that she applied to the business?

A (Mr. Canfield)

Not necessarily.

Q (Mr. Plewman, Q.C.)

You don’t. Well, why else do you think she was doing it?

A (Mr. Canfield)

Because she wanted to control the business herself, because she objected to any intervention from anyone else.


(2)        In terms of who she reported to, this was Mr. Caudwell rather than Mr. Canfield. That was because of their very close relationship.[99] Since their relationship began in 2006, Mr. Caudwell and Ms. Dauriac had enjoyed an “extremely close”[100] friendship, transcending their business relationship. Mr. Caudwell regularly invited Ms. Dauriac, Mr. Stoebe and their daughter to join him and his family on holiday in Vail or on his yacht. Mr. Caudwell employed Mr. Stoebe at Pure Jatomi, another business in which Mr. Caudwell was a majority shareholder. Mr. Caudwell was godfather to Ms. Dauriac’s first child. In cross-examination, Mr Caudwell recognised that Ms. Dauriac had been extraordinarily supportive of him and Kate Caudwell (his then wife) when she (Mrs. Caudwell) was suffering from cancer.[101] In her oral evidence, Ms. Dauriac said she “look[ed] after him like a father”;[102] in his, Mr Caudwell agreed that “in a friendship sense, she loved [him] and [he] loved her”.[103]

(3)        In these circumstances, Mr. Canfield was, inevitably, kept somewhat out of the loop.[104] Although Mr. Canfield said he regarded Ms. Dauriac as a friend,[105] his relationship with Ms. Dauriac was not an easy one:[106]

Q (Mr. Plewman, Q.C.)

…You say that Ms. Dauriac was routinely confrontational, uncooperative and evasive?

A (Mr. Canfield)

I do.

Q (Mr. Plewman, Q.C.)

And that, despite the fact that at the end of December 2013/beginning of January 2014 you had a high regard for her and regarded her as a friend?

A (Mr. Canfield)

I did.

Q (Mr. Plewman, Q.C.)

And I would suggest you would not have regarded her as a friend or had a high regard for her if she was routinely confrontational, uncooperative and evasive?

A (Mr. Canfield)

I maintain that that was a characteristic of Nathalie’s management of the company.


It will have been difficult for Mr. Canfield to prevent the experiences of 2014 from colouring his views of Ms. Dauriac prior to this. My conclusion is that prior to the events of 2014, Mr. Canfield had little to do with Signia, but that on those occasions when he did, it was made clear to him that he did not have a role, and that Ms. Dauriac reported to Mr. Caudwell. I am sure that relations between Mr. Canfield and Ms. Dauriac were cordial; I doubt they were particular friends. I am also sure that their relationship was particularly informed (i) by the fact that Ms. Dauriac was on excellent terms as a friend with Mr. Caudwell and (ii) that Mr. Canfield knew this very well. I have no doubt that it was this relationship that forced Mr. Canfield to cede to Ms. Dauriac an autonomy in relation to Signia that she would not otherwise have had.

181.     Having set the scene, the events of 2014 fall into two, broad, chronological parts:[107]

(1)        The events leading up to the investigation into Ms. Dauriac’s expenses; and

(2)        The expenses investigation itself, and its consequences.

(2)     Events leading up to the investigation into Ms. Dauriac’s expenses

(a)     The Mayfair Project and its effect

182.     During the course of the summer of 2014, the dynamic in Mr. Caudwell’s relationship with Ms. Dauriac began to change:[108]

Q (Mr. Plewman, Q.C.)

You say in paragraphs 7 to 9 of your witness statement that you had an extremely close relationship with Ms. Dauriac until the dispute which gives rise to these proceedings?

A (Mr. Caudwell)

Yes, that’s very nearly accurate but not quite.

…there was this issue with Mr. Babaee that caused me to go a little bit cooler towards Ms. Dauriac. The relationship was still good, but not as close as it had been.

Q (Marcus Smith J.)

It’s really the words “until the dispute which gives rise to these proceedings”. You're suggesting there was a cooling off –

A (Mr. Caudwell)

Yes, there was a cooling off.


183.     The issue with Mr. Babaee arose in the following way.

184.     In early 2012, prior to Mr Hayes’ employment with Signia, he had worked on a deal together with Signia and a Mr. Babaee, a property developer, to acquire a property at 25 Culross Street, Mayfair, London (“Culross Street”), for £7 million. Mr. Hayes performed due diligence on the transaction and acted as the key point of contact between Signia and Mr. Babaee.

185.     According to Mr. Hayes,[109] when carrying out this due diligence, he discovered some invoices at Culross Street from the previous year (2011), which were addressed to the “K10 Group”, Mr. Babaee’s property development business. The invoices related to some rubble which Mr. Babaee had had removed from the premises. When Mr. Hayes asked about this, Mr. Babaee explained that, in 2011, he had the benefit of a contract to purchase Culross Street and that he ultimately surrendered this contract because he was unable to line up a buyer for the property at a higher price. Instead, he introduced the deal to another buyer in return for receiving a commission for brokering the deal.[110] Culross Street was sold for £5 million in this 2011 transaction.

186.     Mr. Hayes accepted that he was aware of Mr. Babaee’s prior involvement in the project and he considered that Mr. Wilson was too.[111] There is no suggestion that either told Ms. Dauriac. It was only in June 2014, some two years after the transaction, that Ms. Dauriac became aware of the fact that Mr. Babaee had been involved in the 2011 transaction relating to Culross Street, before working on the 2012 transaction with Signia. Although Mr. Babaee had no interest in Culross Street when it was sold to Signia, Ms. Dauriac considered that he should have disclosed his previous interest. Her point was that that failure had caused Signia to pay more for the property than it was worth (i.e. £2 million more than the 2011 sale price).[112]

187.     Ms. Dauriac raised this issue with a number of people on a number of occasions, making serious allegations of financial impropriety against Mr. Babaee. These allegations of wrongdoing were vigorously denied by Mr. Babaee.

188.     It is unnecessary for me to reach any view as to the soundness of these allegations. What matters, for the purposes of this Judgment, is the way in which the making of these allegations by Ms. Dauriac affected her relationship with others in the months leading up to the expenses investigation.

189.     Ms. Dauriac raised the issue with Mr. Canfield, who initially was wholly supportive of Ms. Dauriac’s concerns. However, Mr. Canfield suggested that it soon became clear to him that “she was becoming quite obsessive about this issue and was turning the episode into something of a witch hunt”.[113]

190.     In an attempt to resolve the issue, Ms. Dauriac and Mr. Hayes met with Mr. Babaee on or about 1 July 2014. Although Mr. Babaee remained calm throughout the meeting, Mr. Babaee reacted to Ms. Dauriac’s comment that she would bring these allegations to Mr. Caudwell’s attention by saying something like “if you step on my toes then I will step on yours”.[114]

191.     Ms. Dauriac interpreted this or chose to interpret this as a threat of physical violence against her, specifically a threat to break her fingers.[115] In his statement, Mr. Hayes said:[116]

“I met Nathalie in the car outside and she was red-faced with anger. She asked me if I had heard his threat to “break her fingers”. I explained to Nathalie in the taxi back to the office that he had not threatened to break her fingers and that the phrase Kam had used was merely a figure of speech that had been used during an admittedly quite heated business meeting. Despite me telling her this, she called her husband and said Kam had physically threatened her. I think Nathalie understood my explanation but chose to pretend not to understand it, as it suited her purposes to paint Kam as the oppressor and herself as the victim.”

192.     Ms. Dauriac deployed the episode in a conversation with Mr. Caudwell. Mr. Babaee was also a friend, or at least acquaintance, of Mr. Caudwell’s. Mr. Caudwell’s reaction to what Ms. Dauriac told him was as follows:[117]

“I very clearly remember a meeting, that she came back to see me and said, “Kam is an animal, he’s an absolute ogre and he’s threatened to break my fingers”. Now, I know this guy quite well, and I couldn’t really imagine that that was the case, but at the same time I did trust – at that stage trusted Ms. Dauriac totally and had sort of no reason to disbelieve her, but at the same time it didn’t make sense…I really, at that point, was really struggling to work out whether I’d got one friend that was fraudulent, or a friend that was just destructive and malicious, or whether I’d got both…I didn’t feel quite the same because I wasn’t confident in the situation, so I distanced both of them at the same time because I just didn’t know the truth…That caused me to be a little bit cooler with Ms. Dauriac…The relationship was still good, but not as close as it had been.”

193.     Such was the severity of the fallout from this episode that Mr. Babaee bought a defamation claim against Signia, which was settled later in 2014.[118]

194.     For present purposes, the significance of this episode lies in the effect it had on the relationship between Mr. Caudwell and Ms. Dauriac. Although the episode did not cause “terminal” damage to Mr. Caudwell’s relationship with Ms. Dauriac, it led to Mr. Caudwell being “wary and suspicious”.[119]

(b)     Provision of information by Mr. Hayes to Mr. Canfield

195.     In early July 2014, Mr. Hayes and Mr. Canfield exchanged text messages and phone calls regarding Ms. Dauriac’s activities at Signia. These included – but did not relate solely to – expenses. Mr. Canfield’s witness statement states that Mr. Hayes identified “a number of very serious concerns”, which he listed as follows:[120]

“(a)    It was an open secret within Signia’s office that [Ms. Dauriac] charged significant non-business expenditure to the company…

(b)     He said that [Ms. Dauriac] had arranged for Signia to take a very considerable fee relating to a loan that Mr. Caudwell had made to a famous sportsperson, introduced by Signia, without disclosing this to Mr. Caudwell.

(c)     That [Ms. Dauriac’s] father, Christian Dauriac, who runs a vineyard in Bordeaux, was involved (as sole Négotiant) with Signia’s wine investment fund. For obvious conflict reasons, the rules of the wine fund specifically prevented any purchase of Dauriac family estate wines by the fund unless specific approval was obtained from Signia’s independent advisory board and with the consent of a majority of investors.

(d)     That [Ms. Dauriac] routinely manipulated the reporting of client portfolio performance to hide the true poor performance and/or losses that had been incurred and had on a number of occasions held out to clients that she personally was invested in specific investment schemes which she was trying to persuade clients to participate in.

(e)     That a succession of senior employees had left or were in the process of leaving Signia, disillusioned by her dictatorial management style.”

196.     In addition to text messages and phone calls, screen-shots of Ms. Dauriac’s expense claims were sent to Mr. Canfield by Mr. Hayes.[121]

197.     On 16 July 2014, Mr. Hayes and Mr. Canfield met in a pub off Oxford Street to discuss Ms. Dauriac’s expenses. Between 28 and 31 July 2014, there were further email exchanges between Mr. Hayes and Mr. Canfield regarding Ms. Dauriac’s expenses.

198.     A number of points must be noted about this “whistleblowing” in relation to Ms. Dauriac:

(1)        Mr. Canfield and Mr. Hayes deleted the texts, messages and screenshots that they sent to each other. Mr. Canfield was unclear when exactly this deletion occurred.[122]

(2)        Mr. Canfield explained that the reason he deleted these documents – despite their importance to any investigation into Ms. Dauriac – was to preserve Mr. Hayes’ status as a whistleblower, i.e. to protect his identity:[123]

Q (Mr. Plewman, Q.C.)

And we established this morning that allegations of expense abuse against the chief executive officer would be very serious indeed?

A (Mr. Canfield)


Q (Mr. Plewman, Q.C.)

And we established this morning that it would be very important that you then conducted a rigorous examination of all the evidence?

A (Mr. Canfield)


Q (Mr. Plewman, Q.C.)

And that you preserve all of the evidence?

A (Mr. Canfield)


Q (Mr. Plewman, Q.C.)

And yet the first thing you did was to delete all of the texts that you say were sent to you?

A (Mr. Canfield)

I deleted the texts because I needed to protect Mr. Hayes as a whistleblower.

Q (Mr. Plewman, Q.C.)

Nobody’s got your phone, Mr. Canfield. Why does the need to preserve his anonymity as a whistleblower mean that you’ve got to delete the evidence?

A (Mr. Canfield)

I decided to do that.

Q (Mr. Plewman, Q.C.)

Yes, but why did you decide to do it?

A (Mr. Canfield)

I think I’ve already explained why I decided to do that.


Whilst it is perfectly comprehensible that Mr. Canfield should have wished to ensure that Mr. Hayes’ identity was protected, it would surely have been possible to maintain this confidence whilst maintaining a copy of the evidence that Mr. Hayes was providing.

(3)        Some communications – mainly emails – going between Mr. Canfield and Mr. Hayes survived the cull. These communications consist of Mr. Hayes identifying specific expenses or conduct of Ms. Dauriac, and Mr. Canfield commenting on these:

Mr. Hayes to Mr. Canfield

(at 3:44pm on 28 July 2014)

£1650 to fly Juliette to the Bahamas. A legitimate business expense?

Mr. Canfield to Mr. Hayes

(at 4:46pm on 28 July 2014)

F**k me, that’s atrocious.


Mr. Canfield to Mr. Hayes

(at 11:14am on 29 July 2014)

Hi David,

Do you know if there were any claims re the trip to [Mr. Caudwell’s] boat in May 2014?

Also, do you know what the South African expenses were about from Feb? Were they there on business?

Mr. Hayes to Mr. Canfield

(at 11:54am on 29 July 2014)

No claim yet or it may well have been paid for on her corporate credit card, in which case I wouldn’t be able to see it.

[South Africa] was their annual Christmas holiday. She will always “meet” someone out there to legitimise it as a business trip.

Mr. Canfield to Mr. Hayes

(at 12:24pm on 29 July 2014)

I suspect she won’t have claimed the one in May as it was a short cheap EasyJet flight. But I’m probably being naïve!

This woman is morally bankrupt.


Mr. Canfield to Mr. Hayes

(at 4:24pm on 31 July 2014)

[This is a surviving fragment of an email chain, and so reads incompletely.]

Jesus, it all falls into place, although she would probably say that she was just introducing them…


(4)        Of the allegations described in paragraph 195 above, Mr. Canfield only pursued the expenses allegation. Even that he did not pursue immediately – but, as will be described, only after a period of some months. He was asked about this in cross-examination:[124]

Q (Mr. Plewman, Q.C.)

Now, going back to July, serious allegations are raised. Did you not think it was imperative that you investigate them immediately?

A (Mr. Canfield)

At that point, I was still deciding what to do. It was a very difficult situation because of the relationship between Mr. Caudwell and Ms. Dauriac. I needed to be – as I said, I needed to be absolutely certain that what I was being told was reliable.

Q (Mr. Plewman, Q.C.)

Well, on your version, you are sent some mysterious screenshots in July 2014, which evidence claims which Mr. Hayes considers to be abusive.

A (Mr. Canfield)

That’s correct.

Q (Mr. Plewman, Q.C.)

So you have the material. All you’ve got to do is investigate it?

A (Mr. Canfield)

That’s correct.

Q (Mr. Plewman, Q.C.)

But you did nothing?

A (Mr. Canfield)

I wouldn’t say I did nothing. I didn’t – as I said, I didn’t get the USB stick from Mr. Hayes until late, that’s clearly evident. But there were other matters going on at the time…


(5)        Mr. Canfield did not communicate this information to Mr. Caudwell. At most, he might have mentioned “that there was an issue that I had been given some information. I wouldn’t at that stage disclose any detail because I at that point had been unable to verify the accuracy and reliability.”[125]

199.     It is clear from the surviving email exchanges between Mr. Canfield and Mr. Hayes that Mr. Canfield took the allegations made by Mr. Hayes quite seriously. He should have investigated them, and as a director of Signia – albeit not as someone with day-to-day involvement – he could have done. He did not do so. I find that the reason he did not do so was because of his perception of Mr. Caudwell’s relationship with Ms. Dauriac. He was, as I find, concerned that if he moved overtly against Ms. Dauriac, that might backfire against him. Whether he was right in his assessment of Mr. Caudwell matters not: it is his perception that counts for this purpose.

(c)     The trip to see Rebekah Caudwell

200.     Ms. Dauriac was a friend of Ms. Caudwell, but she also arranged or helped with a loan facility that Ms. Caudwell wanted. The details of this facility are immaterial, but I consider that Ms. Dauriac could fairly describe Ms. Caudwell as a “client”.[126] However, it was Ms. Caudwell’s evidence, which I accept, that the assistance provided by Ms. Dauriac had already been provided by the time of this trip.[127]

201.     On 1 September 2014, Ms. Dauriac and Mr. Stoebe had dinner with Ms. Caudwell. One of the subjects that came up was the recommendation of a doctor in New York. Ms. Caudwell emailed Ms. Dauriac and Mr. Stoebe on 2 September 2014 to give them the details of the doctor. Mr. Stoebe described this as “[n]ot only a good excuse to come to New York”. In the email chain which followed (between 8 and 12 September 2014), Ms. Dauriac and Mr. Stoebe agreed to take premium economy flights to New York to spend Halloween (31 October – 2 November 2014) with their “dear friends” Ms. Caudwell and her husband, staying at their house.

202.     In an email dated 12 September 2014, Mr. Stoebe identified the premium economy flights he proposed that he and Ms. Dauriac should take to New York, noting that this would cost around £1,000/person. Ms. Degruttola – who was copied in – inquired “shall I book these on the corporate card”, to which Mr. Stoebe responded in the affirmative. Ms. Dauriac was copied in on this exchange.

203.     Ms. Dauriac referred to the trips as “party time”, and a trip to have a “fun time with you guys”. Ms. Dauriac did, however, when asked whether she was free on the Saturday night in New York for dinner or whether she needed to see clients, ask if it was okay to invite another couple to dinner that evening.

204.     It was Ms. Caudwell’s evidence that this was a social trip:[128]

Q (Ms. Ford, Q.C.)

Your evidence is that as far as you were concerned you considered the trip to be social in nature. Do you consider that the fact that that the trip was a social trip from your perspective doesn’t mean that it was social from Ms. Dauriac’s perspective?

A (Ms. Caudwell)

I suppose I could – yes, I certainly could accept that. But actually, in the case of this trip, there was such a trail of conversation in which Nathalie said, you know – and I’m quite quoting her that, “Party time, we just want to have fun with you guys, we just want to see you”, you know, at some point I said, “You’ll probably have client work to do” and she said, “No, we just want to see you”, and she was also coming to see a doctor as well – that I’d fail, I don’t know, I struggle to see that it could be seen as a business trip when there was such a clear trail of it being personal.


205.     Of course, Ms. Dauriac might travel to see potential clients (including herself), and this was put to Ms. Caudwell:[129]

Q (Ms. Ford, Q.C.)

And you would be aware that travelling to meet clients in a social context is a means for Ms. Dauriac to strengthen the relationship with existing clients and so to increase the likelihood that they might provide new business?

A (Ms. Caudwell)

Well, yes, of course I can see that that would be relevant for her, but I, in fact, was in England sort of very, very, very frequently at the time, we’d obviously just had dinner, which was where the whole idea of this trip had initiated when we talked about doctors, we’d had three weeks prior, or it might have been four weeks, I forget the actual date, I in fact was in London just before the trip to New York, I actually arrived in New York after Nathalie and Konrad on the 30th. They beat me out there. So I came out to New York purely to see them in New York, and then I was only there for five days, and then I flew back to London again.


206.     In cross-examination, Ms. Dauriac was asked about the business justification for this expense.[130] She could not identify any specific business purpose. Her justification was altogether more general:

Q (Ms. Carss-Frisk, Q.C.)

So the trip was not held at the request of Rebekah Caudwell, you accept you don’t recollect, or at any rate you accept that there wasn’t a discussion, or may not have been a discussion of significant foreign exchange transactions?

A (Ms. Dauriac)

So, to answer your first point, in terms of request, it’s how you interpret request, and how it works in my industry. She definitely invited us – that’s why we went there – very kindly.

It’s – part of the job, my Lord, is to be part of clients’ life, and spending weekends with them, spending time outside the normal course of an office is how you develop a relationship. So, for me, going and spending time with people in their own house and having our families together helped building those relationships.

So I will not apologise for doing my job.

207.     By contrast, the Defence pleaded as follows:[131]

“The item of expense dated 17 March 2014 was a travel expense incurred in respect of a business development trip by [Ms. Dauriac] and her husband to New York over the Halloween period to meet Mr. Caudwell’s daughter, Rebekah Caudwell…The said trip was held at the request of [Ms. Caudwell] who was a client of [Signia] and one of the ultimate beneficial owners of [Signia] via Grecco. [Ms. Caudwell] and [Ms. Dauriac] discussed a series of significant foreign exchange transactions on which [Signia] had been engaged on [Ms. Caudwell’s] behalf. [Ms. Dauriac] also arranged a substantial loan of in excess of $3 million from Credit Suisse to [Ms. Caudwell] and her husband, secured against the assets of her mother…”

208.     I find that this paragraph contains significant inaccuracies:

(1)        The trip was not at Ms. Caudwell’s “request”: Ms. Caudwell gave an invitation, which Ms. Dauriac and Mr. Stoebe accepted. It is only if one attaches an extremely wide meaning to the term “request” that the use of the word is defensible. This, Ms. Dauriac sought to do:[132]

“And in terms of the request, this is how I work in the industry, my Lord. People ask me to come, an invitation. It’s how we build relationships, so again I will not apologise for it. However, you can interpret the word “request” as you want.”

(2)        Business was not discussed with Ms. Caudwell on the trip. Nor is there any evidence of business being discussed with anyone else on the trip.

(d)     The problem with Barclays

209.     The relationship between Mr. Maycock and Ms. Dauriac also came under strain at this time. An employee at Barclays had disclosed to Ms. Dauriac information relating to the performance of Mr. Caudwell’s portfolio at Barclays, despite neither the relevant Barclays employee nor Ms. Dauriac properly having the right to access this information.

210.     Mr. Maycock then investigated this issue on behalf of Mr. Caudwell, which caused a degree of tension between himself (and Mr. Canfield) and Ms. Dauriac. On 12 September 2014, Ms. Dauriac emailed Mr. Canfield to complain:

“David, see attached, it is self-explanatory. I do not want another issue, but Tim [Maycock] should be respectful when he calls my team, about me or any members of the team. The mess he has created at Barclays is not great. Let’s move on, but I find it unacceptable and my friend has lost is [sic.] suspended as a consequence…”

211.     Once again, the precise rights and wrongs of this issue are nothing to the point. The relevance of the incident lies in the fault-lines it exposed or created between the various actors. Mr. Canfield had a long text message exchange about this with Ms. Cooper. He forwarded the chain on to Mr. Maycock, with the comment:

“See below a copy of a text conversation with Kate Cooper last night and this morning. The bare faced lies are staggering.”

212.     In cross-examination, Mr. Canfield recognised this issue as an indication of “rising tension” between himself and Mr. Maycock, and Ms. Dauriac.[133]

(e)     Events at Pure Jatomi

213.     In late September/early October 2014, an expenses investigation was launched at Pure Jatomi, another company in which Mr. Caudwell was a majority shareholder and of which Mr. Canfield was a director. Within 24 hours of that investigation commencing, Mr. Stoebe resigned from Pure Jatomi.

214.     In an email to Mr. Caudwell dated 6 October 2014, Mr. Stoebe sought to set Mr. Caudwell’s mind at rest, telling him not to be “concerned about the expenses” and that he had in fact resigned because the investigation demonstrated a “loss of trust” in him, as opposed to any recognition of any misconduct regarding expenses:

“Hi John,

Thank you for your email last week and sorry for the late reply. I think in general it would be best if we discussed this in person, I will ask Michele for a meeting in London on Wednesday if that works for you.

I also fully appreciate your concern and disappointment around the business – I am in the same position and do not find anything more frustrating than this, especially taking into account where this business could be with the right leadership. A new team will get this business to the next level, I am absolutely sure.

Please be not concerned about the expenses – Mike and Jatomi’s CFO Nigel have had a very hard lid on this and I can vouch for Nigel’s integrity.

My reaction was based on your loss of trust and, in hindsight, myself being embedded in the business is probably the key reason for that, as it might have felt too close for you. Please be assured that I always had my best interest in mind with this investment and that I believe that it has all the potential to become a big success story under the right management.”

215.     Yet again, it is neither possible, nor desirable, to seek to plumb the rights and wrongs of this episode. The event is significant for its effect on relations between Ms. Dauriac, as Mr. Stoebe’s wife, and Mr. Caudwell.

216.     Mr. Caudwell’s response to Mr. Stoebe’s email was on the same date, 6 October 2014. Although Mr. Caudwell rejected any “loss of trust”, his email demonstrated hostility and suspicion towards Mr. Stoebe:

“Dear Konrad,

Firstly, the information I have on the expenses is that they have been frivolously treated at best.

Secondly, I had no loss of trust in you. I sent Michael because the business was in such a serious mess to give me a second opinion.

When he asked to see the expenses apparently you became very irrational and emotive which, of course, raises the question why?

Given your significant financial commitments, I find it very peculiar that you would so irrationally give up your income. This suggests you have already found another job?

I hope you can put my mind at rest, but at the moment what I am seeing is not very pretty.”

217.     Mr. Stoebe forwarded this email chain to Ms. Dauriac on the same day:

“Now he has overstepped it.

Very simply – you will cancel the dinner on Wednesday and secondly I will find you a buyer.”

218.     Clearly, relations between Mr. Caudwell and Mr. Stoebe were rather frosty at this stage, and Ms. Dauriac knew it. Mr. Stoebe’s reference to finding Ms. Dauriac a buyer would appear to be a reference to Signia, suggesting that Mr. Stoebe at least was contemplating a parting of the ways between Ms. Dauriac and Mr. Caudwell.

219.     So far as Ms. Dauriac is concerned, I doubt very much that she would have attached any weight at this stage to the suggestion that Mr. Caudwell’s interest in Signia be bought out.[134] However, I do consider that she would have noted from the exchange between Mr. Stoebe and Mr. Caudwell Mr Caudwell’s concern about expenses at Pure Jatomi. It would be surprising if Mr. Stoebe had not kept his wife informed about the events at Pure Jatomi, and I find that he did.

(f)      Mr. Caudwell’s expression of discontent with Ms. Dauriac

220.     On 9 October 2014, Mr. Caudwell sent an email to Ms. Dauriac expressing his discontent with her regarding the handling of the Mayfair project, another project[135] and the level of staff turnover:

“Dear Nathalie,

This dispute between Kam and you is getting increasingly out of hand.

Whilst I can agree with lots of things that you say, you then lose my support arguing about a point that has been my life time’s work, buying cheap and selling dear. There is no reason on earth why somebody should not buy for £5 million and sell for £7.5 million in a sort space of time, and that is a fact. Whether there was some corrupt activity is another point, but you should not use the uplift in value as an indication that this has happened, only as an indication that it could have happened. It is not helpful to you or anybody else to argue points that are irrelevant and not justifiable, and this does tend to detract from the main issues.

I am now even more concerned about this whole thing, but have just had information on another matter that has really worried me.

Some weeks ago when the newspapers were getting involved in Signia you told me that John Moulton had not resigned, but may not be very active. He rang David up yesterday to make it crystal clear to David that he had resigned, but had allowed his photograph to remain.

Furthermore, you told me a few weeks ago, at the same time, when the newspapers were talking about high staff turnover that only one person had left in the last 12 months. I am now told that 15 people have left in the last year. I have no way of knowing whether this is true at the moment but, needless to say, I am very worried about these two pieces of information.”

221.     Ms. Dauriac’s reply, later that day, is a combination of the defensive and the aggressive. It concludes:

“I am not sure where this conversation is going and I am getting seriously offended and propose we meet to discuss. I am happy to come to your house before the party tonight or early tomorrow.

I can assure you that I will do all my best to take all emotions away.”

(g)     The commencement of the investigation into Mr. Wilson’s expenses

222.     Mr. Hayes was also involved in the investigation into Mr. Wilson’s expenses, which began at about this time. Mr. Wilson was Ms. Dauriac’s effective deputy, and someone she trusted and relied upon.

223.     A meeting was held between Ms. Ohbi, Mr. Hayes, Ms. Cooper and Ms. Tarbet on 9 October 2014. This meeting was recorded by Mr. Hayes and a transcript subsequently obtained.[136] At this meeting, it became clear that Mr. Hayes had evidence that Mr. Wilson had been expensing lunches with Signia employees which he paid for on his corporate card, having already been reimbursed in cash by the other attendees for their proportion. Mr. Wilson was then pocketing the cash whilst also being reimbursed by Signia. This investigation resulted in Mr. Wilson's dismissal on 11 December 2014.

224.     At the meeting, Ms. Ohbi, Ms. Cooper and Ms. Tarbet were all concerned to ensure that Ms. Dauriac did not discover that they had been investigating Mr. Wilson’s expenses. Thus, at the start of the meeting, the attendees discussed potential excuses to give to Ms. Dauriac as to where they had been, should she notice that were all away from their desks at the same time.

(h)     Inquiring into Ms. Dauriac’s CV

225.     In an email to Mr. Canfield from a Mr. Moulton (a client of Signia and investor in a project Mr. Stoebe, Ms. Dauriac and Mr. Canfield were involved in[137]) dated 13 October 2014, Mr. Moulton stated:

“An employee fed me the remarkable allegation that [Ms. Dauriac’s] assertions about Cambridge University education on the web might be a little expansive – alleged to be Summer School in Cambridge, but not a University course.”

226.     Mr. Canfield clearly asked Mr. Maycock to investigate this allegation. Mr. Maycock reverted as follows:

"Can’t find anything on the course she lists – it certainly doesn’t exist anymore.

The dates between her internship at Lazard (Aug 99 – Sep 99) and then going back for a proper job (Aug 00 – Jul 01) imply she was at Cambridge for the entire year.

But, impressively, she was working for Credit Lyonnais in London (Nov 98 – May 99) at the same time as her degree from Bordeaux (1996-1999).”  

227.     Mr. Canfield reverted to Mr. Moulton via email with the following:

“…the reality is that, according to her CV (which I have), she achieved a post grad diploma in management studies at the Judge Institute Cambridge. That’s not ‘Finance’ and also not, as the website seems to seek to suggest, an Oxbridge degree. Her degree is from somewhere in Bordeaux. Interesting!”

228.     In cross-examination, Mr. Canfield denied that this amounted to investigating Ms. Dauriac’s CV:[138] but it is difficult to see how any other description could pertain.

(3)     The expenses investigation

(a)     Commencement of Ms. Dauriac’s “review” of her expenses


229.     It is important, but difficult, to separate the work Ms. Dauriac caused be done in relation to her expenses before Mr. Canfield notified Signia that there was to be a review of expenses (and requested copies of the expense records of Signia) on 11 November 2014 and the period after 11 November 2014.

230.     In the following paragraphs, I set out the relevant evidence as regards the pre-11 November 2014 period and then state my findings.[139]

How the expenses were kept

231.     Signia’s records were ultimately kept on its Sage accounting system. These records, at year end, were fixed – they could not be amended or tampered with.[140] None of the records here in issue involve the Sage system.

232.     Expense forms were generally filled-in by personal assistants or receptionists.[141] In the case of Ms. Dauriac:[142]

Q (Ms. Carss-Frisk, Q.C.)

So, who do we have then that was responsible for managing your expenses, Ms. Dauriac?

A (Ms. Dauriac)

The way we had my expenses done was claim forms were issued, made by the receptionist and Kelly, and Janet would – I will sign it, and Janet will approve it.

Q (Ms. Carss-Frisk, Q.C.)

So there we have it: Janet would approve it.

A (Ms. Dauriac)

Yes. I’m not sure if all the forms were even signed for me at the time. As I say, the expenses on my side was a mess, there’s no point in saying something otherwise, in terms of paperwork.


233.     Ms. Degruttola described the process of completing Ms. Dauriac’s expense sheets in the following terms:[143]

“5.     A small number of people at Signia, around 4 or 5, had corporate credit cards. During my time as a receptionist (until 2013), I would receive the statement for the credit card and check the description for each item of expense which appeared on the statement. If I had not been provided with supporting receipts by the relevant person who had incurred the charge, I would ask for them. This was one of the standard tasks of the receptionists.

6.       People also sometimes incurred business expenses in cash, or on their personal credit cards. In such cases, the relevant person gave me or one of my colleagues the receipt. Most of the time as a receptionist, I would be given a description of the expenses, but if not I would look at the diary for the relevant person and try to work out a description for the expense that way. Ordinarily, there was sufficient information in the diary to identify the client and the receipt itself would tell me everything else I needed to know. If I could not obtain enough information through my own review, I would simply ask the relevant person to give me more information. It was not considered to be a problem and people did not mind if I had to ask them.[144]

7.       Once I had gathered enough information, I would fill out the expenses spreadsheet that was kept on the company shared drive, input the description, price and date of the expense then print it and give it to either Janet Tarbet (as COO) or Kate Cooper (as Head of Compliance). They were in charge of the expenses of the firm and as far as I knew had the final sign-off authority. So far as I am aware, one of them would then check it and then get the relevant expense sheet signed by the person making the claim before processing the payment. However, I do not know what happened to the expense sheets once I passed them to Ms. Tarbet. So, once they had been completed, they would be given to the claimant to sign and also signed off by Janet Tarbet or Kate Cooper and I would then receive the completed and signed form back from them for the purposes of scanning and saving. I cannot recall any of [Ms. Dauriac’s] claims for expenses ever being queried by Ms. Tarbet or Ms. Cooper during my entire time at Signia.

8.       Once I became [Ms. Dauriac’s] personal assistant, I no longer had responsibility for submitting or processing expenses for Signia employees, but helped out from time to time if needed. [Ms. Dauriac] would give me her receipts and I would sort them into piles of expenses on her corporate card and personal card and then hand them over to the receptionists who would be inputting the expenses on a claim form…”

234.     Thus, the process of recording expenses in Signia expenses was as follows:

(1)        An “expense form” was completed. The expense forms were on an Excel template. They were completed electronically, and then printed out.

(2)        The printed form was signed and countersigned.

(3)        That form was then uploaded back onto the system, but a paper copy was also kept.

235.     I am quite prepared to accept that Ms. Dauriac’s expense forms, as originally completed, were not completed by her, but by Ms. Degruttola or by receptionists, the receptionists having had that work delegated to them by Ms. Degruttola and/or Ms. Dauriac. I am also prepared to accept that Ms. Dauriac’s original expense forms contained errors.

The evidence of Ms. Cooper

236.     In her witness statement, Ms. Cooper stated:[145]

“In October or November 2014, Nathalie mentioned to me that [Mr. Stoebe] had resigned from Pure Jatomi…At the time, I was unaware of the circumstances of his departure, but in the following weeks I became aware that there was an expenses review at Pure Jatomi following his resignation. At around the same time (but I cannot recall exactly when), I overheard [Ms. Degruttola] asking Janet to re-sign a number of amended expense forms because, as Kelly put it, they had been amended to remove John Caudwell and his family. I also overheard Janet refuse to re-sign the forms and express concern about why [Ms. Degruttola had made the changes…”

237.     As she said, Ms. Cooper was uncertain about the timing, but she clearly placed these events before 11 November 2014.[146] In cross-examination, Ms. Cooper was able to add a little more information:[147]

Q (Ms. Ford, Q.C.)

And it’s fair to say, isn’t it, that Ms. Degruttola was being completely open about the changes that had been made to those forms, there wasn’t any secrecy about it?

A (Ms. Cooper)


Q (Ms. Ford, Q.C.)

And you did not, at that stage, as compliance officer, express any concerns about what you had understood to have taken place?

A (Ms. Cooper)

We advised Kelly that it wasn’t a good idea to be removing names from expense sheets, which was why it led to the names being put back into the expense forms.

Q (Ms. Ford, Q.C.)

You haven’t mentioned that in this paragraph, have you?

A (Ms. Cooper)

No, I have not.

Q (Ms. Ford, Q.C.)

When you say “we”, you say you and…?

A (Ms. Cooper)

And Janet Tarbet.

Q (Ms. Ford, Q.C.)

And was that at this stage or at some later stage?

A (Ms. Cooper)

At this stage.


238.     Ms. Cooper explained what was involved in removing names from expense forms:[148]

Q (Marcus Smith J.)

Ms. Cooper, just so I understand the mechanics of this, some records are clearly electronic, they’re scanned in?

A (Ms. Cooper)


Q (Marcus Smith J.)

And some records are clearly on paper, not scanned in?

A (Ms. Cooper)


Q (Marcus Smith J.)

Are those two sets of documents mutually exclusive or are there some records which might be kept in paper form and also scanned?

A (Ms. Cooper)

There should be paper copies in a file, and they should also have the same copy in electronic version. So a scanned version with the signatures on them.

Q (Marcus Smith J.)

So you should have duplicates?

A (Ms. Cooper)

You should have duplicates, correct.

Q (Marcus Smith J.)

But not necessarily in practice?

A (Ms. Cooper)


Q (Marcus Smith J.)

So in terms of the process of alterations that you’re just giving evidence about, how would that work? Would the process be different depending on whether you had a paper or an electronic copy?

A (Ms. Cooper)

The process of making changes to those sheets meant you’d have to reprint -

Q (Marcus Smith J.)

If this was an electronic copy?

A (Ms. Cooper)

Yes, well, the process that took place was that you reprint – they were reprinted.

Q (Marcus Smith J.)


A (Ms. Cooper)

They were handwritten on and Kelly was then updating those back into the Excel version. Then you reprint, get them signed and scanned back in.

Q (Marcus Smith J.)

I see.

A (Ms. Cooper)

So you are creating the expense sheets in an Excel template. You would normally print those, get them signed and scanned back in. So the scanned version is the signed version by two people.

Q (Marcus Smith J.)

So when you’ve got an amended version, you make the amendments electronically on the Excel spreadsheet?

A (Ms. Cooper)


Q (Marcus Smith J.)

You print them out?

A (Ms. Cooper)


Q (Marcus Smith J.)

The physical copy is then signed and then that is scanned and rendered into an electronic version.

A (Ms. Cooper)

Correct, and then those records are passed on to the finance team and those are uploaded into Sage, which is an accounting system which at the end of the year can’t be amended or tampered with.

Q (Marcus Smith J.)

I see. What happened to the old scanned version of the form?

A (Ms. Cooper)

I have no idea. Possibly deleted.

Q (Marcus Smith J.)

But you can’t speak to that.

A (Ms. Cooper)

I can’t speak for that, no.


The evidence of Ms. Tarbet

239.     Ms. Tarbet’s evidence was as follows:[149]

“In or around October 2014, Kelly asked me to re-sign several months of Nathalie’s corporate expenses claim forms for 2014. She provided copies of the forms she was asking me to re-sign. I could immediately tell from memory that the forms had previously been submitted but for whatever reason the descriptions in a number of the forms had been amended. The main changes related to the deletion of [Mr. Caudwell’s] name and/or the names of members of his family from the description, so that such sections would have generic descriptions such as “client lunch” or “client travel”. I asked Kelly why I was being asked to sign-off forms that had already been submitted, and she told me that the forms had been amended at Nathalie’s request to make them clearer. I did not understand why these names had been removed because, rather than clarifying the description, and contrary to what Kelly told me, the amendments made them less clear. As amended, I could not tell which clients related to which expenses.”

It is clear – both from Ms. Tarbet’s statement and her cross-examination – that this was before 11 November 2014.[150] Ms. Tarbet declined to re-sign the expense sheets.[151]

The evidence of Ms. Olszewska

240.     In her statement, Ms. Olszewska stated:[152]

“On 3 October 2014, Kelly approached the reception desk where I was sitting with the other receptionist, Eva Woodroof, and asked us to change all of Nathalie’s expense forms which related to John Caudwell. She provided us with a large quantity of forms going back to 2010. Specifically, we were told by Kelly to delete all references on the forms going back to 2010. Specifically, we were told by Kelly to delete all references on the forms to Mr. Caudwell’s name and replace it with the word “client”. I cannot recall why, but Eva Woodroof told Kelly she was unable to do this, so Kelly informed me I would have to do it. Kelly expressly told me that I was not to tell anyone what I was doing.”

Ms. Olszewska was not comfortable with this instruction.[153] Ms. Olszewska was then asked, a few days later, “to reverse what I spent the last few days doing, in other words to add Mr. Caudwell’s name back onto the expense forms I had already amended.”[154]

The evidence of Ms. Dauriac

241.     Ms. Dauriac’s evidence as to what she asked Ms. Degruttola to do was as follows:[155]

Q (Ms. Carss-Frisk, Q.C.)

We know, I think, and agree that you were notified on 11 November that Mr. Canfield had indeed decided that there should be an investigation into your expenses and indeed those of other staff, too. That’s right, isn’t it?

A (Ms. Dauriac)

That’s correct.

Q (Ms. Carss-Frisk, Q.C.)

But it’s also right, isn’t it, that at that time you had already started your own, as you call it, review of your own expenses?

A (Ms. Dauriac)

That’s correct, too.

Q (Ms. Carss-Frisk, Q.C.)

Can we turn up, please, the way you put it at [Dauriac 1/para. 98]. You say there:

“Given my focus on the expenses process at Signia at this time, I asked Ms. Degruttola to initiate a review of all my expenditure on the company credit card, as well as those items of business expenditure which I had spent on my personal credit card and for which I had then claimed reimbursement.”

Just to be clear, the review involved you instructing your PA, Ms. Degruttola, that all references to John Caudwell should go on a separate spreadsheet. That’s right, isn’t it?

A (Ms. Dauriac)

That’s correct.

Q (Ms. Carss-Frisk, Q.C.)

And be removed from the main spreadsheet?

A (Ms. Dauriac)

To be honest, I didn’t really specify that, but I did ask her to take them off, so I guess the answer is yes.


242.     Later on in her cross-examination, Ms. Dauriac was asked about a specific transaction – a birthday cake for Mr. Stoebe[156] – where the reference to Mr. Stoebe was removed. Ms. Dauriac gave the following, more general, explanation of both stages of the process:[157]

Q (Ms. Carss-Frisk, Q.C.)

That change was made out of a policy on your part, wasn’t it, to ask Ms. Degruttola to remove references to members of your family from entries in these forms?

A (Ms. Dauriac)

So, my Lord, originally I asked to remove just John Caudwell, and when we had the 24 hours to give the spreadsheet, it is fully correct that I asked Kelly to remove – first of all, I asked her to check, to be honest, if – who was there on which flight and on which event, but then we became so pressurised by time I am the one who asked her to take the name of Konrad or anybody of my family out…

243.     Ms. Dauriac was asked why she initiated this review prior to the 11 November 2014 communication from Mr. Canfield:[158]

(1)        Ms. Dauriac accepted that one of the reasons for doing so were the events at Pure Jatomi.[159]

(2)        Ms. Dauriac contended that another reason had been her discovery that the flights to New York to visit Ms. Caudwell had been expensed. As to this:

(a)          This was an explanation that she gave at a meeting on 13 November 2014 (described in paragraphs 315ff below) to Mr. Canfield and Mr. Maycock:[160]

“Two weeks ago, I’m telling you what really happened for the fifteenth time, two weeks ago, when I booked my flight, when I asked Kelly to book my flight to go on holiday to see the Caudwell children, okay to go and see a doctor, Kelly booked it on the corporate card and told me, “Oh, I’ve booked it, it’s all fine”, and I said to her, “Please make sure its on the personal front”, and this is when she said “If its on the personal front, what do you want me to do with all the Caudwell thing?”, and I said go through everything and make sure that every Caudwell thing goes on a reimbursement form, and that’s what she has done.”

In cross-examination, Ms. Dauriac maintained this explanation, even though it did not appear in her first witness statement.[161]

(b)          The problem with this explanation is that at trial, Ms. Dauriac was maintaining that these expenses (i.e. the Caudwell expenses and the trip to visit Ms. Caudwell) were legitimate expenses. It is therefore difficult to understand why – if Ms. Dauriac had always believed this to be the case – these expenses served as the trigger for her expenses review.[162]

(3)        Finally, Ms. Dauriac said this by way of explanation:[163]

Q (Ms. Carss-Frisk, Q.C.)

The truth of the matter, as we now know, and as set out in your witness statement, is that you became concerned – after your husband had resigned from Pure Jatomi – you were concerned that the spotlight would fall on you, and that is why you started looking into your own expenses, but you failed to tell Mr. Canfield that at the time.

A (Ms. Dauriac)

No. The reason I – to explain you, my Lord, what happened, is I asked Kelly to remove everything with Mr. Caudwell’s name for three reasons.

One was that Mr. Caudwell was becoming completely irrational over the last few months. It was my opinion at the time.

He had a personal problem, which I will not divulge here and be polite, but he’s asked me to do some stuff which I wouldn’t have liked to do in my professional capacity. The way he fired the board of Pure Jatomi when he got rid of, basically, of Mr. Balfour, who was the founder of the business and Mr. Richardson, I didn’t feel was appropriate.

The third reason was he was becoming increasingly hostile with me and my husband and I was scared. It was my baby [this was a reference to Signia] and I didn’t want him to have anything that he would view as inappropriate which I view as appropriate. I completely believed that my expenses were legitimate. I thought that he may not see it that way, so I didn’t want to take any risk, and I ask, on an open plan office to everybody, to refund those expenses in advance.


The point that Ms. Dauriac was making was that whilst she did not consider her expenses to be illegitimate, she wanted to be above any criticism that Mr. Caudwell might make. This, according to her, was the rationale for the commencement of the review and, indeed, for her offering a refund of certain expenses. In relation to the trip to see Ms. Caudwell – where the flight costs were expensed, but where Ms. Dauriac offered a refund – Ms. Dauriac said this:[164]

Q (Ms. Carss-Frisk, Q.C.)

So you offered it for refund and, I would suggest, for the very good reason that it was indeed a personal expense that you shouldn’t have claimed?

A (Ms. Dauriac)

As I say to you, absolutely not. The reason I’ve put it in the refund form was that I didn’t want Mr. Caudwell to have any reason for him and I to have a disagreement over expenses. So, for a small amount of expenses, I said I will refund them. And I’ve offered to do that, I’ve started this process, before I was even asked to do so. So, as I said to you, the reason that I’ve done this is because if they didn’t believe that all those expenses were purely legitimate, I didn’t want to have an argument with Mr. Caudwell and my risk with my company.


244.     Ms. Dauriac accepted that the work on the review commenced on 3 October 2014.[165]

The evidence of Ms. Degruttola

245.     Ms. Degruttola was uncertain when the review exercise was initiated by Ms. Dauriac, but considered that it commenced in “the middle to the end of October”,[166] although it could have been earlier.[167]

246.     In terms of understanding the process, it is probably best to start with what Ms. Degruttola told Mr. Canfield and others over time. At the interview with Mr. Canfield and Mr. Maycock on 13 November 2014, Ms. Degruttola had said that they had deleted all references to Mr. Caudwell in the expense forms and placed them on a separate reimbursement form.

247.     That, substantially, remained Ms. Degruttola’s account at subsequent interviews, namely those on 18 December 2014 and 13 January 2015.[168] The clearest account is at the 13 January 2015 interview:

Q (Mr. Canfield)

…Obviously, you know that on 11 November [2014], I asked for copies of expense claim forms. Before that request, before I asked for them formally, were you ever asked to amend the forms by Nathalie after they had already been submitted?

A (Ms. Degruttola)

Yes, so once the Rebekah Caudwell flight was booked, I was asked to start pulling John’s name off and putting it onto a form for her to reimburse. I was also asked to take his name – at a different point, I was asked to take his name off all of her expense forms, and then I was asked to put them all back on.

Q (Mr. Canfield)

So you mentioned then once when you booked the Rebekah Caudwell flight, now what was the significance to the Rebekah Caudwell flight?

A (Ms. Degruttola)

I mentioned to her that I had booked it, just saying to her “I booked your flights for Rebekah”, and I must have said booked them on your corporate card, and she said “Why did you book them on my corporate card?” and I just looked at her. She said, “Everything for John is personal, take everything that I ever spent on my corporate card off, and put it on a separate form for me to reimburse”.

Q (Mr. Canfield)

That suggests, well let me ask you in a different way, did Nathalie know you were routinely using her corporate card for all of her flights, whether it was to John’s boat or wherever?

A (Ms. Degruttola)


Q (Mr. Canfield)

She did. So when she asked you why you were using her corporate card, it seems strange?

A (Ms. Degruttola)

I don’t know what to say. I just sort of looked at her, and she said “Why have you put that on my corporate card?”, and I just looked, and she said “Everything for John, take it off, and put it on a form for me to reimburse”.

Q (Mr. Canfield)

Yet you believe she knew you were always using the corporate card?

A (Ms. Degruttola)


Q (Mr. Canfield)

Ok, do you know when that was?

A (Ms. Degruttola)

It was a while before you came into the office.

Q (Mr. Canfield)

A week?

A (Ms. Degruttola)

Weeks, months, I don’t know, I really can’t remember.

Q (Mr. Canfield)

So, having had that conversation, clearly there was a process undertaken of amending the claim forms. What reason did Nathalie give you for amending those forms?

A (Ms. Degruttola)

For taking the names on and off?

Q (Mr. Canfield)


A (Ms. Degruttola)

She didn’t give me a reason, she just told me to do it.

Q (Mr. Canfield)

Can you describe what amendments she asked you to make, as it was clearly more than just John Caudwell’s name?

A (Ms. Degruttola)

Was this when before?

Q (Mr. Canfield)

This was before.

A (Mr. Degruttola)

So, before you had sent your email, I was told to take John Caudwell’s name off all her expenses, and just change to client. Then I was told, “No, actually, put them all back in, how they were originally. And then I was told to pull it all off to be put on a separate form to be reimbursed, everything relating to John.

Q (Mr. Canfield)

So, just to clarify, that in the first instance you were asked to take off all of the expenditure in relation to John Caudwell, to take it off or to amend the name?

A (Ms. Degruttola)

Sorry, to amend it to “client”, not actually to take it off the form.

Q (Mr. Canfield)

And that was, what, a month before…?

A (Ms. Degruttola)

 A month or so, I don’t know.

Q (Mr. Canfield)

You were then asked to remove all those that originally referred to John, but now referred to client, you were asked to remove them on to a separate form?

A (Ms. Degruttola)

No, then I was asked to put John’s name back. So they were “John”, then they were “client”, then they were “John” again, and then to take them off and put them on a claim form.


248.     In both her witness statement at trial (Degruttola 1) and in cross-examination, Ms. Degruttola sought to resile from this account, suggesting that she had, in some way, been forced to give a false account.[169] The account she gives in her witness statement, whilst consistent with the account in the 13 January 2015 interview, is significantly less detailed:[170]

“13.   At around the end of October 2014, [Ms. Dauriac] asked me to undertake a general review of the expense claims she had submitted to Signia. I cannot now recall if I was asked to review for the period of the past two years or a longer period of time.

14.     [Ms. Dauriac] specifically asked me to look through all her expenses and to identify any expenses claimed in relation to Mr. Caudwell’s family so that they could be recorded on a separate spreadsheet. [Ms. Dauriac] said to me that she wanted to reimburse Signia for these expenses, although she did not explain why (nor would I have expected her to).

15.     I asked one of the receptionists (Victoria Olszewska) to print all of [Ms. Dauriac’s] corporate card expenses from the shared drive for me to look through and I then changed the ones relating to John Caudwell and replaced his name with “client”. I then noted down each of these to put on a separate spreadsheet for [Ms. Dauriac] to reimburse. However, I did not get round to completing this by the time the investigation into [Ms. Dauriac’s] expenses started two weeks later, as I had a lot of other work to do and just didn’t get round to finishing it.”

249.     This account is broadly consistent with Ms. Degruttola’s previous statements, but (as I have noted) is significantly less detailed. Given her suggestion that the account to Mr. Canfield was untrue and obtained under pressure, it was necessary to understand Ms. Degruttola’s version of events in greater detail, resulting in the following exchanges:[171]

Q (Marcus Smith J.)

Well, let’s start, what document would you have been looking at at this time? Would it have been a schedule of expenses, a list?

A (Ms. Degruttola)

So, at the beginning – yeah, all of Nathalie’s expenses. Nathalie told me to go through…

Q (Marcus Smith J.)

I’m just trying to picture what documents you would have been looking at. So, would these have been the expense forms?

A (Ms. Degruttola)


Q (Marcus Smith J.)

And are they paper or are they electronic?

A (Ms. Degruttola)

I think they’d been printed out at that point, so…

Q (Marcus Smith J.)

So, you’ve got the paper expenses forms in front of you?

A (Ms. Degruttola)

Mm hmm.

Q (Marcus Smith J.)

And what do you do? Do you go through them with a pen or pencil and mark them up?

A (Ms. Degruttola)

No, first of all, I asked the receptionist Victoria to go onto the system and change everything that related to John Caudwell to “client” and then print them. Once she’d done that, I could identify each of the Caudwell entries.

Q (Marcus Smith J.)

That puzzled me earlier. How could you identify Caudwell entries if the reference was a generic “client”?

A (Ms. Degruttola)

It was because there were so many and none of the other expenses were just generic “client”. So, just in my head, it was easier to then go, right, this one’s on the reimbursement spreadsheet. It just made it easier for me in my brain.

Q (Marcus Smith J)

Wouldn’t it have been easier to simply have the reference to Mr. Caudwell there in plain sight so that you could know that that was something you needed to move over?

A (Ms. Degruttola)

At the time, there were just so many different Caudwells, different John Caudwell and the other Caudwells. Just for me, it was the logical way in my head to get around it.

Q (Marcus Smith J.)

Okay. So what the receptionists were doing was, on the electronic version of the expense forms, changing “John Caudwell” to “client”?

A (Ms. Degruttola)

Yeah, correct.

Q (Marcus Smith J.)

So then you get these back?

A (Ms. Degruttola)


Q (Marcus Smith J.)

Again, in printed form or electronic form?

A (Ms. Degruttola)

I can’t really remember.

Q (Marcus Smith J.)

That’s fine. So, what did you do then?

A (Ms. Degruttola)

Then I list – I go back through, and I list – I take off everything that’s now “client”, put it on the reimbursement form.

Q (Marcus Smith J.)

When you say “take off”, do you actually delete the entries from the expenses or not?

A (Ms. Degruttola)

I think I did, yeah.

Q (Marcus Smith J.)

You’re not sure?

A (Ms. Degruttola)

As far as I can remember.

Q (Marcus Smith J.)

Right. And what happens next?

A (Ms. Degruttola)

Then, next, I started going through them, because I noticed there as a lot of Caudwell expenditure. And, when I was checking them, I thought, these can’t be right, they weren’t adding up, the receipts, they weren’t matching back to the diary and everything. So, then I thought, right, I need to start again and look through Nathalie’s expenses properly because the receptionists have been doing them for the past couple of years and they weren’t correct, they were all over the place. So then we changed everything back to how it originally was, so that then I could go back through the diary and match up and find out exactly to make them all correct.

Q (Marcus Smith J.)

Right, so the expense forms are all changed back electronically, from “client” to…

A (Ms. Degruttola)


Q (Marcus Smith J.)

…whatever they said before?

A (Ms. Degruttola)




250.     The evidence is somewhat inconsistent, and all of the witnesses had only their unaided recollections to go on. There was no clear paper trail to assist recollection.

251.     I make the following findings:

(1)        The process of reviewing Ms. Dauriac’s expense sheets began on 3 October 2014. With the possible exception of Ms. Degruttola, all of the witnesses were comfortable with the date,[172] Ms. Olszewska positively asserted this date, and I consider her evidence reliable.[173]

(2)        The reason the review process commenced was because of the expenses investigation at Pure Jatomi. The timing fits – the investigation at Pure Jatomi and Mr. Stoebe’s resignation occurred very shortly before 3 October 2014[174] – and Ms. Dauriac knew about this.[175]

(3)        I do not accept Ms. Dauriac’s explanation that the expenses for her trip to visit Ms. Caudwell were in some way the trigger for the review for the reasons I give in paragraph 243(2) above.

(4)        For the present, I reserve judgment as to why the review was commenced. The cause, as I have said, was what had happened at Pure Jatomi, but that does not answer the question of what Ms. Dauriac’s motivation was. That is a question to which I return when I consider the honesty of the review process.

(5)        Ms. Olszewska was told to alter the expense sheets by deleting “Caudwell” and inserting “client”. That entailed:

(a)          Identifying the expense sheets that needed to be changed (which may have been done using the paper or the electronic files);

(b)          Deleting in the electronic files the references to “Caudwell” and replacing this with “client”;

(c)          Printing out the revised expense sheet; and

(d)          Presenting that to Ms. Tarbet for signing.

This was the clear evidence of Ms. Olzewska,[176] Ms. Cooper,[177] and Ms. Tarbet.[178] Ms. Dauriac’s and Ms. Degruttola’s version of events at trial was more muddled, and to the extent that it differs with the evidence of Ms.  Olzewska, Ms. Cooper, and Ms. Tarbet, I do not accept that evidence. Significantly, Ms. Degruttola’s account on 13 January 2015 is consistent with the version of events that I have found.[179]

(6)        The process came to a halt when Ms. Tarbet refused to sign the newly-created expense forms and expressed concern about the process.[180] At this point, the process was reversed, and Ms. Olszewska spent the next few days adding Mr. Caudwell’s name back into the expense sheets.[181]

(b)     Obtaining the first set of Ms. Dauriac’s expense records

252.     At some point in time, Mr. Hayes accessed Signia’s expenses system and downloaded a copy of Ms. Dauriac’s expenses records. I shall refer to these downloaded records as “Dauriac Expenses V.1”.

253.     There was considerable confusion as to when Mr. Hayes downloaded the information comprising the Dauriac Expenses V.1, put that information on a USB stick, and provided it to Mr. Canfield.

254.     Until the first day of trial, Signia maintained that Mr. Hayes had sent the USB stick to Mr. Canfield in August 2014. This was asserted in Mr. Hayes’ witness statement[182] and in Signia’s written[183] and oral opening submissions.[184] A forensic IT analysis was conducted of the data on the USB stick by Ms. Dauriac. The date of that download was put at 4 October 2014, which date Signia did not seek to contest.[185] It therefore follows that Mr. Canfield can only have been provided with the USB stick after 4 October 2014, and not (as Mr. Canfield’s statement implied) earlier on in July 2014.[186]

255.     Mr. Hayes resigned from Signia by a letter dated on 16 October 2014 giving three months’ notice. In his witness statement, he recalled citing these reasons to Ms. Dauriac:[187]

“…her dispute with Kam over the Mayfair Property, the bad performance appraisal that I had subsequently received from her for not supporting her in relation to her dispute with Kam, the dysfunctional and demotivated culture in the business and the fact that I had lost all professional regard for her at this stage.”

256.     I accept this as a statement of Mr. Hayes’ views; whether they were justified is another matter. Ms. Dauriac’s (very different) views appear in an email she sent to Mr. Caudwell on 17 October 2014.

257.     According to an email sent by Ms. Ohbi to Mr. Sullivan (Signia’s solicitor at Grosvenor Law) on 17 November 2014, Mr. Hayes was told when he resigned on 16 October 2014 to go home and not return to the office unless asked to do so. That email, however, also discloses an apparent further visit by Mr. Hayes’ to Signia. Ms. Ohbi’s email states:

“…David resigned to Nathalie on the morning of Thursday 16 October 2014. At that meeting, she told him he was to go home straight away and not to come into the office unless he was asked to. (I am not sure she confirmed that he was on gardening leave, she just said he was not to come in until we called.)

On Saturday 18 October 2014, he came into the office and accessed the expenses folder for 2013.

On Monday 20 October 2014, Martin [Wilson] and I met David on the second floor and confirmed with him that he was not to speak to clients or staff unless it was to handover on projects. He was on gardening leave and he was to provide Martin with a list of the projects he was working on. I followed this up with an email stating that although he was on gardening leave he was to simply state that he was out of the office until an official line was agreed about his departure.

I am not sure it was clear enough to him that he was on gardening leave when he accessed the file on Saturday, nevertheless it is weird that he would come into the office on a Saturday and print off all these documents which have nothing to do with him.”

258.     The obvious question is whether Mr. Hayes downloaded or printed out some information relating to Ms. Dauriac’s expenses. The answer is unclear: Ms. Ohbi’s email is unequivocal, but I was shown no evidence establishing how Ms. Ohbi knew which files Mr. Hayes had accessed. Equally, the date of this episode does not fit with the date of the material on the USB stick. When it was put to Mr. Hayes in cross-examination that he accessed this material in order to give the records to Mr. Canfield, he said that he could not recall this and that it was “very, very unlikely”.[188] Mr. Canfield had no knowledge of the episode,[189] and neither did Mr. Caudwell.[190]

259.     It seems to me quite likely that Mr. Hayes did enter Signia’s premises with a view to have a further look at Ms. Dauriac’s expenses. However, I can find no hint of such material feeding into the expenses investigation. I conclude that the material provided by Mr. Hayes to Mr. Canfield were the Dauriac Expenses V.1. Indeed, apart from the screenshots provided to Mr. Canfield in the summer and deleted by him, this was the only material provided by Mr. Hayes to Mr. Canfield.

(c)     Efforts to maintain the integrity of the records

260.     On 5 November 2014, Mr. Canfield messaged Mr. Ward “out of the blue”[191] on hearing that he (Mr. Ward) was leaving Signia. From the subsequent text messages,[192] Mr. Canfield appeared to be quite anxious to speak to Mr. Ward as soon as possible.

261.     Mr. Canfield’s objective was to request that Mr. Ward obtain a copy of Ms. Dauriac’s expense records. In a message dated 11 November 2014, Mr. Canfield made the following request:

“That’s great, Dan, please make sure you have secure and independent copies of all those claims and if possible an electronic copy of the 2013 and 2014 accounts with all the historical detail. Thanks again for your assistance, it is appreciated. David.”

262.     In cross-examination, Mr. Ward said that he was not acting as Mr. Canfield’s “mole”, rather he was providing information about certain expenses which Mr. Canfield was concerned about. He also said he did not provide copies of the expenses records himself.[193] I accept this evidence, particularly when there is no hint in the documents of further records being provided by Mr. Ward to Mr. Canfield.

263.     As I find, Mr. Canfield was not seeking additional information, he was seeking to preserve the integrity of the record. I infer two things from this:

(1)        Mr. Canfield wanted a cross-check on the material that Mr. Hayes had provided him with. He wanted to be assured that, if and when recourse needed to be had to the Signia data, that data would be reliable. In short, whilst Mr. Canfield considered the information Mr. Hayes was providing to be credible, he wanted to be able to verify the information for himself by going to Signia’s records.[194]

(2)        Mr. Canfield did not trust Signia – and specifically, Ms. Dauriac – to leave the records untampered with. The reason for this appears to be a communication Mr. Canfield received from Mr. Hayes. Mr. Hayes’ evidence was:[195]

“In October 2014,[196] I came into the office one day and saw Nathalie’s expenses sheets printed out and all over the reception desk where the PAs were sitting and there seemed to be a lot of activity and urgency about it. By chance, I had a meeting with [Ms. Cooper and Ms. Ohbi] that morning in a boardroom on the second floor. During the meeting, I asked them what was going on with the expenses sheets and whether Nathalie was getting the PAs to amend them. In response, they raised their eyes and sighed. I phoned David and told him what I had seen and that it appeared that Nathalie was getting the PAs to amend the expense forms.”

The only oddity is why Mr. Canfield waited so long – about a month – before taking steps to protect the records. I assume the delay was for the same reason as Mr. Canfield’s other delays in investigating Ms. Dauriac: he did not want to proceed until he was confident that Mr. Caudwell would not disapprove.

264.     When it was put to Mr. Canfield in cross-examination that he could have openly asked Signia for this information himself, he recognised that there was nothing stopping him from doing so.[197] This is a fair point, so far as it goes: but, in my judgment, it mistakes why Mr. Canfield acted as he did.

(d)     Mr. Canfield provides the USB to Mr. Maycock for analysis

265.     In early November 2014, Mr. Canfield provided the USB containing the Dauriac Expenses V.1 to Mr. Maycock, for Mr. Maycock to undertake a detailed analysis.[198] Mr. Maycock describes the circumstances as follows:[199]

“39.   In early November 2014, [Mr. Canfield] gave me a USB stick with Signia’s expenses on it. He asked me to look at it and in particular to see what Nathalie had spent and claimed as business expenses. David told me that he had been given the USB stick by David Hayes, who had told David that it had some “outrageous stuff” on it.

40.     When David first handed it to me I did not think it was particularly important and so did not prioritise it. Due to other business commitments, I did not do anything with the USB stick for about a week or so. David then chased me about this at the weekend and said that it was now urgent. As a result, I ended up spending most of Sunday 9 November 2014 reviewing all the documents on the USB stick.”

(e)     The “green light” for urgent investigation

266.     The reason for the urgency described by Mr. Maycock in Maycock 1/para. 40 was because of the intervention of Mr. Caudwell. On the morning of 9 November 2014 (which, as Mr. Maycock has noted, was a Sunday), Ms. Dauriac sent the following “WhatsApp” messages to Mr. Caudwell at 8:44am:

“John, it has been very hard over the last few weeks and I would really ask you for all the years we had together to just give me an hour to understand what I have done wrong. I am not sure if it is about Kam, or Claire, or the business, but I cannot think what it is. As far as I know, I have been the most loyal person and love you with the bottom of my heart. Please let me know when you can meet today or please call me. I am just asking for an hour, just the 2 of us. It means so much to me. With all my love xxx thank you for tonight.”

267.     From the documents before me, it does not appear that Mr. Caudwell responded to this message. However, two minutes later (at 8:46am), Mr. Caudwell sent the following message to Mr. Canfield:

“Ho, David. It’s getting impossible now. We have to act soon with whatever we have. J.”

268.     Clearly, this implies some knowledge of the expenses issue on the part of Mr. Caudwell, but not necessarily very much. As has been described, Mr. Canfield told Mr. Caudwell something – but not very much – about his communications with Mr. Hayes in the summer. Mr. Caudwell was essentially content to allow Mr. Canfield to carry on and brief him as necessary.[200]

269.     Mr. Caudwell was (understandably, in my view) vague about what he was told when:[201]

Q (Mr. Plewman, Q.C.)

So at what point did you learn more detail about the allegation?

A (Mr. Caudwell)

The initial was in the summer, and I really can’t recall when the next – when I was next told something, but I think it was probably – probably early autumn that Mr. Canfield told me that there was going to be information forthcoming in written format, or in some format, that would enable him to have a look and investigate the expenses difficulty.

Q (Mr. Plewman, Q.C.)

Well, I would suggest to you that since you say that you were outraged and devastated by these allegations, the moment they were given any degree of detail, you must have felt that outrage and devastation.

A (Mr. Caudwell)

I did.

Q (Mr. Plewman, Q.C.)

And you would then immediately have wanted to take action?

A (Mr. Caudwell)

I would have wanted to take action, but I couldn’t. I had to be patient, because Mr. Canfield first of all said he was absolutely on word of honour not to disclose the person’s identity that was going to forward us the information, and secondly said he hadn’t got the information in full, but that the information looked very, very worrying. So, of course, yes, I was very concerned, but you know, at this stage – and this is somewhere round about August/September maybe, I still felt very, very close to Ms. Dauriac. I felt an incredible sense of loyalty towards her, and I was really hoping, all the time hoping that whatever had been reported was going to prove to be incorrect.


270.     Whilst I do not consider that the dates in this narrative can necessarily be relied upon, I consider the broad thrust of Mr. Caudwell’s narrative to be reliable. He was told something in the summer; he was told more, when Mr. Canfield received the memory stick. But he remained essentially loyal – if troubled – towards Ms. Dauriac, and that – for reasons that have been described – was Mr. Canfield’s problem. He did not want to probe areas that Mr. Caudwell did not want to have probed so far as Ms. Dauriac was concerned.

271.     This is clear from the exchanges between Mr. Canfield and Mr. Caudwell that arose in response to Mr. Caudwell’s message of 8:46am, described above. Mr. Canfield responded about half an hour later, resulting in the following exchange:

Mr. Canfield

(at 09:23am)

Hi John. Can I ask what has happened to escalate this? Clearly something last night. I’ve thought about this all weekend as I have done for months and, although I’m convinced  there has, from my perspective at least, been serious wrongdoing, my concern is that I only have irrefutable proof in respect of issues which, when to be frank when we’ve spoken, I don’t get the sense you completely share my perspective on the seriousness of. I need to be totally open as I’ve thought for some time that if I get this wrong it will make my position with you completely untenable and that may be how this ends. Nevertheless, I owe it to you and to myself (as my integrity and reputation mean more to me than anything) to act on what I already have. I will need a few days though to pull together my thoughts into something coherent. David.

Mr. Caudwell

(at 09:36am)

Hi David. Nothing happened last night other than she continually asks what she has done wrong and it gets increasingly difficult to say nothing is wrong in light of info from you. So I fob in a way that clearly leaves her feeling that I am unhappy! I don’t understand where your own tenability comes in unless you feel that you might have acted inappropriately and I don’t feel that you have. I don’t feel that this is a matter of you being right or wrong and nor should it be. It’s a matter of trying to get to some of the truth and acting appropriately and in the least damaging way. You seem to have your own role in this out of perspective! John.

Mr. Canfield

(at 09:54am)

Hi John. I agree up to a point and I am absolutely sure I have not done anything wrong, but this is incredibly difficult because of the nature and apparent strength of your relationship with Nathalie. So at each step I have to make sure what I’m being told is reliable and not in itself poisoned by the motives of those who have provided the information and also that the allegations are serious enough to warrant action from both our perspectives. My point was that if I make an error of judgement in relation to those then to be brutal, I’m fucked. Maybe I’m not making sense and maybe I’m sounding irrational, but it is a horrible situation to be in and it is very stressful. Probably better to talk face-to-face, can we please do that tomorrow? I have to take my son to school as Michelle has an appointment first thing, but I will be in around 9 if it’s convenient for you. David

Mr. Caudwell

(at 10:02am)

David, this should not be about you taking a position. It should only be about dealing with the facts. It should not be about you convincing me, but about us looking at the evidence and acting in unison together in the most appropriate way. You seem to be getting this out of perspective. I have no doubt there is a significant issue here. It’s all about how we handle it. All the same, I believe that Nathalie may be cracking up!

Mr. Canfield

(at 10:05am)

Fully understood, John. David.

Mr. Caudwell

(at 10:06am)

We will meet as soon as you arrive tomorrow.

Mr. Canfield

(at 10:07am)

OK, will be there as soon as I can. David.

272.     The following things are, in my judgment, clear:

(1)        First, it was Mr. Caudwell’s unease at being pressed by Ms. Dauriac as to what was “wrong” that triggered his decision to make clear to Mr. Canfield that his (Mr. Canfield’s) investigation had to proceed swiftly.

(2)        Secondly, the conversation that Mr. Canfield had with Mr. Caudwell cleared the air as regards any inhibitions Mr. Canfield had regarding an investigation into Ms. Dauriac’s expenses. Indeed, Mr. Canfield must have been clear, in his mind, that this was now an urgent matter. Certainly, he proceeded as if the matter was very urgent, as subsequent events make clear.

(3)        Thirdly, I do not consider that the outrage and devastation that I accept Mr. Caudwell felt at some point had, at this stage, set in. Mr. Canfield had the documents: but he had not looked at them. He can only have given Mr. Caudwell the most general sense of what was suspected, because Mr. Canfield knew no more than this himself.

273.     It was in these circumstances that Mr. Maycock was told by Mr. Canfield to move quickly to analyse the Dauriac Expenses V.1.

(f)      Mr. Maycock’s initial analysis

274.     Mr. Maycock’s first analysis of the Dauriac Expenses V.1 was conducted on 9 November 2014. There were various communications from him to Mr. Canfield:[202]

(1)        Email at 4:29pm attaching an Excel spreadsheet entitled “Analysis sheet.xlsx”. The email simply stated “this one has all the data in one list and a few tables of analysis”. The spreadsheet contained a list of expenses, described under the following columns:

(a)          “Expense type”;

(b)          “Details”;

(c)          “Date”;

(d)          “Client”; and

(e)          “Amount”,

This represented the original Dauriac Expenses V.1 data. Superimposed on this, Mr. Maycock had provided a (limited) analysis:

(f)           Some entries he had highlighted yellow or green. Yellow denoted where there was a PDF copy of the expense sheet. Green denoted an expense of Mr. Stoebe.

(g)          In a final column, headed “TM code”, where Mr. Maycock had provided a limited analysis. Thus, for instance, he had identified expenses to do with Mr. Caudwell with the initials “JC”.

(2)        Email at 4:34pm attaching an Excel spreadsheet entitled “ND Expenses Main sheet.xlsx”. The email stated:

“This one has every claim sheet – it is a bigger file, but should allow you to print the lot in one go. Big file, so might take some time to come over the server.”

The spreadsheet was an evolution of the spreadsheet referred to in paragraph 274(1) above, containing more entries and a little more analysis. But, as the covering email notes, the file contained copies of the actual expense sheets also.

275.     Annex 5 sets out, in tabular form, the various ways in which the same expense was described by Ms. Dauriac over time. Column (3) in the table at Annex 5 sets out the descriptions on the expense sheets as they were in the Dauriac Expenses V.1 data.

(g)     The request to obtain copies of Ms. Dauriac’s expense forms

276.     On 11 November 2014, Mr. Canfield emailed Ms. Dauriac in the following terms:

“Hi Nathalie,

Hope you are well.

We have recently undertaken an in-depth review of the level, nature and appropriateness of the business expenditure being incurred within one of the companies under John’s ultimate ownership and this has identified some quite serious issues regarding the governance and financial control being exercised within this organisation; particularly in relation to travel and subsistence and entertainment expense.

In light of that we are now broadening this review out to all the entities under John’s family’s control, including of course Signia Wealth.

We’ll be in touch in due course to organise this review with you but in the meantime and in anticipation of your meeting with John which I understand is taking place on Thursday, we would like to start with a review of the expense claims of the key personnel within the business.

As a matter of priority can you therefore please arrange for someone to send us electronic copies of your personal and corporate card expense claims and those of the members of the Executive Committee (including those who have left in the last 12 months) for the past 2 years, being 2013 and 2014 to date. I assume these will already be held electronically on file so hopefully this doesn’t present a logistical difficulty.

Any problems, please let me know. It would be preferable to have this to early timescales and well in advance of Thursday’s meeting.”

277.     This email was somewhat disingenuous. Whilst it is true to say that matters at Pure Jatomi had thrown up expenses issues, the matter of Ms. Dauriac’s expenses had been on Mr. Canfield’s radar since the summer, and the work being done by Mr. Maycock – at Mr. Canfield’s request – was focussing on Ms. Dauriac, and not on key personnel generally.

278.     Ms. Dauriac forwarded this email, without written comment, to Ms. Ohbi. I have no doubt that they spoke.

279.     It is to be inferred that either Ms. Dauriac or Ms. Ohbi also spoke to Ms. Degruttola about this email because, on the same day, Ms. Degruttola emailed Ms. Olszewska in the following terms:

“Don’t speak about it to anyone, I need you to please print off every single expense form there is, put a post-it note on each of them, with the month, year and whose it is, and then also print-off every single expense form there is for Nathalie personal expenses and I need them also asap please”

280.     At 11:23am on 12 November 2014, Mr. Maycock emailed Ms. Tarbet (and Mr. Canfield, for information) to explain that “David [Canfield] has asked me to facilitate the submission of a number of documents to the office here at Broughton”.

281.     At 1:36pm on 12 November 2014, Ms. Tarbet emailed Mr. Canfield (copying in Ms. Cooper and Ms. Dauriac, but not Mr. Maycock) identifying the employees for which she would be sending expenses records. The email continued:

“I would mention that as part of the expenses process, Nathalie makes a separate payment for her own personal expenses not payable by the firm and she reimburses this on an annual basis. For 2014, this payment will be made in December.

As you know, she entertains at her house on a regular basis and does not make any allowance for additional cleaning costs, providing accommodation to employees and clients who would otherwise be charged to the firm.”

282.     It will be necessary to consider this claim about reimbursement in greater detail. In her witness statement, Ms. Tarbet said this about the sending of this email:[203]

“During a meeting to discuss our progress and to prepare a response to David’s email, Nathalie told me it was her usual practice to reimburse Signia for her personal expenses incurred on her corporate card and I made a note of Nathalie’s comment that this was her usual practice. I recall that I made this note on a piece of loose paper which unfortunately I have been unable to locate. I had no knowledge of Nathalie ever making reimbursements to Signia, but at the time this made sense to me, as I had seen the comment “Nathalie to reimburse” on a few corporate card entries on claim forms submitted by Nathalie over the course of the year. For this reason, I took Nathalie on her word [and sent the email described in paragraph 281 above]. Nathalie reacted furiously to my email to David. She shouted at me on the office floor and then called me into a meeting room and shouted at me again asking why I had sent the email to David. I had never seen her as angry as this before and I thought that she was going to fire me. I did not understand why she was so angry as she had mentioned only earlier that day that she made annual reimbursements of personal expenses. If anything, I thought my email helped to demonstrate that she had not done anything untoward. I now realise that she was angry because, contrary to what she told me in the meeting, she had in fact never made any substantial reimbursement payments to Signia. I am aware that in the course of this investigation, no evidence has been found of Nathalie reimbursing any significant corporate expenses claims.”

283.     Later that day (at 3:23pm), Mr. Canfield emailed Ms. Tarbet (copying in Ms. Cooper) asking her to focus on Ms. Dauriac’s expenses:


I’m running out of time, can you please send me the residue of these claims asap. If you need to prioritise please send me Nathalie's first.



284.     Given that the request for this information had only been made the day before, this was a not entirely reasonable request. It underlines two things: first, the pressure under which Mr. Canfield was operating; and, secondly, the fact that Ms. Dauriac was the real focus of the inquiry.

285.     In a series of emails later that day, Ms. Tarbet sent to Mr. Canfield three emails containing Ms. Dauriac’s expenses records:

(1)        Email 1 of 3 at 04:12pm, with multiple attachments;

(2)        Email 2 of 3 at 4:23pm, with multiple attachments; and

(3)        Email 3 of 3 at 4:28pm, with multiple attachments.

286.     I shall refer to this expense information as the “Dauriac Expenses V.2”. As will become clear, the content of the Dauriac Expenses V.2 is not the same as that of the Dauriac Expenses V.1. It is necessary to explain why this is the case.

(h)     The manner in which the Dauriac Expenses V.2 were compiled


287.     Again, it is necessary to consider the evidence, before stating the findings of fact. However, in this case – in contrast to the work that was done prior to Mr. Canfield’s letter of 11 November 2014 – the witnesses’ accounts were broadly consistent. There was also more documentary evidence