Crowson Fabrics Ltd v Rider and Others

JurisdictionEngland & Wales
JudgeMR JUSTICE PETER SMITH
Judgment Date20 December 2007
Neutral Citation[2007] EWHC 2942 (Ch)
Docket NumberCase No: HC07C02914
CourtChancery Division
Date20 December 2007

[2007] EWHC 2942 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Before

Mr Justice Peter Smith

Case No: HC07C02914

Between
Crowson Fabrics Limited
Claimant
and
(1) Paul Rider
(2) Warren Stimson
(3) Concept Textiles Limited
Defendants

Antony White QC (instructed by Gaby Hardwicke) for the Claimant

Ben Quiney (instructed by Stephen Rimmer & Co) for the Defendants

Hearing dates: 2nd 7th 8th and 9th November 2007

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

MR JUSTICE PETER SMITH

Peter Smith J:

INTRODUCTION

1

This action came before me on 2nd November 2007 being the hearing of an application (released by the Interim Applications Judge) issued by the Claimant dated 26th October 2007 seeking to restrain the Defendants from using confidential information pending trial and requiring them to deliver up copies of documents containing confidential information and to provide information about the use made by them of such confidential information. The estimate for the hearing exceeded the 2 hours provided by the Chancery Guide with the result that the case was released to me.

2

On that date I suggested to the parties that there should be a speedy trial of liability only in this matter. The parties agreed. I directed that the trial should start the following Wednesday i.e. 7th November 2007 and be heard over the next 3 days.

3

Obviously that put a tremendous strain on the parties and their lawyers. Nevertheless they responded with a commendable zeal and the trial duly took place (serving of the Defence, disclosure and witness statements having taken place on the Monday and the Tuesday.) The parties lawyers provided me with comprehensive skeleton arguments.

4

I was greatly assisted therefore by the way in which the parties and their lawyers addressed this task and I am grateful for that. Given the shortness of time allowances necessarily had to be made for errors and delays but I am satisfied that there was no injustice caused and all parties had a full opportunity to deploy their respective cases.

5

Unsurprisingly the evidence time table was tight and it was only finished by my sitting until 8pm on Friday 9th November. I am grateful to the Court staff and my Clerk Miss Supriya Saleem for sitting outside normal hours to enable this hearing to be concluded by that date.

6

Thereafter the parties served comprehensive closing written submissions and supplemental responses thereto.

EVIDENCE

7

The Claimant called two witnesses Christopher Worrall its Managing Director and Paul Maynard a solicitor and partner in the firm of Gaby Hardwicke the solicitors who represent the Claimant in the proceedings.

8

The Defendants called the First Defendant (Mr Rider) and the Second Defendant (Mr Stimson). The Third Defendant is a company which was incorporated in England and Wales in May 2007. Its sole directors are Mr Rider and Mr Stimson and they are the majority shareholders. It is alleged by the Claimant (not disputed by the Defendants) that any knowledge on the part of Mr Rider and Mr Stimson in relation to the allegations against them is attributed vicariously to it by reason of their office of directors.

9

I will make more detailed observations on the witnesses further in this judgment.

THE CLAIM

10

The First and Second Defendants are former employees of the Claimant they having left its employ on 8 th June 2007.

11

The Claimant is a company engaged in the design, production and supply of fabrics for home and commercial furnishing and decoration. It has a world wide customer base. When its transactions are effected in Europe they are often through commercial agents. Its commercial agents for Spain and Netherlands respectively at all material times were one Jose Basso and one Niels Groot.

12

The Claimant was founded in 1978 by its Chairman and sole shareholder Derek Crowson. Under his control it enjoyed substantial growth making it one of the worlds leading producers, designers and suppliers of home furnishings. It is asserted that it is very much a design led company boasting its own design studios producing the finest range of furnishing fabrics and complimentary products including wall coverings made to measure and ready made curtains, trimmings and accessories.

13

Its turnover peaked at £40,000,000 per year a few years ago and employing 200 people. Thereafter the turnover has declined in the past decade with turnover now of £10,000,000 approximately and the number of employees being around 65. Mr Crowson's expertise lies primarily in purchasing design development of fabric products. The Claimant is a wholesaler of fabrics to a large client base of retailers and distributers. Primarily it buys off the shelf but also works with manufacturers to modify or adapt bespoke orders. It also produces curtains and other fabric products to order and develops and designs fabrics in-house.

14

Mr Crowson had a serious illness a number of years ago and thereafter did not attend full time to the business of the Claimant. He now spends a considerable amount of time in the Caribbean and on his yacht. Nevertheless it is clear he maintains a hands on control by proxy. It was said in evidence that he was a strong willed and forceful individual and in effect made all the important decisions about Crowson albeit from afar.

15

Mr Crowson was not called to give evidence. That was the subject matter of criticism by the Defendants in their closing submissions. It was submitted that he had a central role in respect of the allegations and that I should draw a negative inference from his absence. This was based on the decisions of Karis v Lewis [2005] EWCA Civ 1637para 33 and Baigent v The Random House Group Ltd [2006] EWHC 719 (Ch)paras 213–217. In both of those decisions I drew an adverse inference from the fact that a key witness was not called and no explanation was given for that witness' absence.

16

I have no doubt that Mr Crowson is a strong willed and powerful individual. Self made businessman usually are. Equally I have no doubt that whilst he is absent abroad for significant periods of time he maintains a tight control over the Claimant and very few decisions are made without his approval. I do not see that this is relevant to any of the subject matters of the dispute before me. What is important is to examine the role that Mr Rider and Mr Stimson respectively had and the conclusions to be arrived at in the light of that role and what duties they owed to the Claimant. In the light of those duties it is then necessary to examine what they did and whether their actions once examined are a breach of any of those duties.

17

I do not therefore see that Mr Crowson has any input in that analysis. I therefore reject the Defendants' submission that I should draw an adverse inference from his absence.

18

Equally I reject the Claimant's contention that there was anything as structured as the organisation described in the action as the “Senior Management Team” (“SMT”). In my view it was a creation for the purpose of this litigation. There was in my view no such formalised structure and decisions were made on an ad-hoc basis as regards the Claimant's operation. I have already commented that Mr Crowson undoubtedly had the ultimate decision making process but equally depending on the nature of the topics discussed Mr Worrall, Mr Rider and Mr Stimson would participate in that decision making process but ultimately any final decision would be that of Mr Crowson.

MR RIDER

19

Mr Rider was first employed by Crowson as a purchasing assistant on 15th February 1988 on a salary of £13,500 p.a. His written Statement of Terms of Employment are brief. They refer to various appendices. None of those appendices was actually produced during the trial and the Claimant accepts that there are no provisions which are relevant to the dispute before me. Thus there are no provisions in those appendices which deal with Mr Rider's duties generally and as regards the use of information and his obligations upon termination of employment. Equally there are no restrictive covenants applying post termination.

20

By the time of his termination of employment Mr Rider was obliged to give 12 weeks notice.

21

By a memo dated 8th November 2004 Mr Rider was appointed Product and Distribution Director with an increase of salary of £5,000 p.a. but whilst he was appointed a Director it was stated somewhat unusually that it “[had] no legal responsibilities”. He never became an officer of the Claimant (unlike Mr Worrall). His duties were summarised as being applicable to commercial activities, purchasing support, studio, warehouse and distribution and quality control. By the time of his termination he was earning a salary of £50,000 p.a. He received various bonuses over the years but none was particularly large. Mr Worrall by contrast received a salary of £60,000 p.a.

MR STIMSON

22

The only evidence of the Terms of Employment of Mr Stimson was a letter of offer dated 4th April 2005. By that letter he was offered a salary of £50,000 p.a. for an appointment as UK and Export Sales Manager. In cross examination Mr Stimson said his high relative salary was due to his successful negotiating at the time of employment. That letter also referred to appendices A-6. Thus he was required to give 4 weeks notice on termination of employment.

THE COMPANY HANDBOOK

23

The Claimant contends that both Mr Rider and Mr Stimson were bound by the terms of a Company Handbook. This document had been in preparation from 2006. Both Mr Rider and Mr Stimson were aware it was being prepared for issue. This contains some express restrictions not to be found in the earlier documentation...

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