Murray v Yorkshire Fund Managers Ltd and Another
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE NOURSE:,LORD JUSTICE SCHIEMANN:,SIR JOHN VINELOTT: |
| Judgment Date | 11 December 1997 |
| Judgment citation (vLex) | [1997] EWCA Civ J1211-15 |
| Docket Number | QBENF 95/1785/C |
| Court | Court of Appeal (Civil Division) |
| Date | 11 December 1997 |
[1997] EWCA Civ J1211-15
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
MANCHESTER DISTRICT REGISTRY
MERCANTILE LIST
(His Honour Judge Kershaw QC)
Royal Courts of Justice
Strand, London WC2
Lord Justice Nourse
Lord Justice Schiemann
and
Sir John Vinelott
QBENF 95/1785/C
MR D WAKSMAN (instructed by Messrs Eversheds, Leeds) appeared on behalf of the Appellant Second Defendant.
MR T E SHANNON (MR W POTTS 11.12.97) (instructed by Messrs Mainman Heywood, Manchester) appeared on behalf of the Respondent Plaintiff.
MR S COLES (instructed by Messrs Davies Arnold & Cooper, London EC3) appeared on behalf of the Respondent First Defendant.
Thursday, 11th December 1997
This is an action for breach of confidence brought by the plaintiff, Drummond Murray, in which, on 20th September 1995, His Honour Judge Kershaw QC entered judgment against the second defendant, Michael Edward Hartley, for damages to be assessed, the action as against the first defendant, Yorkshire Fund Managers Ltd. ("YFM"), being dismissed on the ground that it had made no use of the confidential information. Mr Hartley now appeals to this court. Mr Murray has not appealed against the dismissal of the action as against YFM.
Several grounds of appeal are relied on by Mr Hartley. Without objection from the parties, we have started by hearing argument on the question whether, on the facts admitted or as found by the judge, there was a breach of confidence in law, it being agreed that if that question is answered in the negative the appeal must succeed and no other question need be argued. We now give judgment on that question.
The facts can be taken mainly from the judge's judgment and many of them can be stated in his own words. In 1991, when the material events occurred, Mr Murray had for several years been involved in the purchase of companies, his expertise being in the field of marketing. At that time he and Mr Mark Fielding were on a register of people looking for investment opportunities which was maintained by Robson Rhodes, a well known firm of chartered accountants. Mr Fielding's background was in accounting, finance and management. Robson Rhodes regarded Mr Murray and Mr Fielding as being complementary to each other by reason of their different fields of expertise. In March 1991 they suggested to them that they might be interested in a buy-in/buy-out of the assets of a company called Serviscope Electronics Ltd. ("Serviscope").
At the beginning of 1990 Serviscope, which had a nation-wide depot network from which warranty and after sales service was provided to major UK manufacturers, distributors and retailers of domestic appliances and home entertainment equipment, was a subsidiary of Granada plc. However, it had been losing money and in January 1990 Granada sold all the shares in it for a consideration of £1 to a company called Computec Electronics Service and Maintenance Engineering Ltd. ("Computec"), which had been established in 1985 by Mr Michael O'Brien and whose business was the repairing of appliances and equipment of the kind serviced by Serviscope.
After the acquisition of Serviscope Mr O'Brien approached various possible sources of working capital. One of them was YFM, for whom Mr Hartley was then working as an investment manager. Over a period of about four months in 1990 Mr Hartley, on behalf of YFM, spent quite a lot of his time investigating the Serviscope business. In the end, Mr O'Brien was unable to raise money from YFM or elsewhere and on 14th February 1991 administrative receivers were appointed of both Computec and Serviscope. They advertised the goodwill of Serviscope together with the benefit of leasehold interests in its various depots. It was at that point that Robson Rhodes approached Mr Murray and Mr Fielding.
It was obvious that any buy-in/buy-out of the assets of Serviscope would have to be accomplished quickly if the goodwill of the company was to be preserved. A team was quickly put together consisting, in addition to Mr Murray and Mr Fielding, of four existing employees of Serviscope, Mr Wills, Mr Rickard, Mr Wilkinson and Mr Stimpson. Mr O'Brien himself was very keen to be included, but was regarded as a liability rather than as an asset and was therefore excluded. The initial plan was that a new company should be incorporated or an existing company acquired off the shelf, in which Mr Murray would invest £70,000 and have 20 per cent of the shares and the other five members of the team would each invest £20,000 and have 10 per cent of the shares. The remaining 23 per cent of the shares would be available as equity participation to any provider of venture capital, who would also provide the necessary working capital by way of loan. Mr Murray would be the managing director of the new company.
Robson Rhodes looked on Mr Murray and Mr Fielding as their clients and wrote them a letter dated 7th March 1991 in which they set out what they would do and what they would charge. They also prepared a fact sheet bearing the same date, which they sent within a few days to various providers of venture capital, with some of whom they were able to arrange meetings. On 13th March there was a meeting with a potential investor, whose representative told Robson Rhodes on the telephone afterwards that they did not wish to proceed with an investment and that Mr Murray gave them particular cause for concern. That was not at that stage reported to Mr Murray or Mr Fielding. Meanwhile, a business plan was prepared by the team, Mr Murray contributing to the section which dealt with marketing. The judge said:
"That section is short, but its importance is not to be measured by its length. Any provider of loan capital would obviously want to know about not only the way in which a potential borrower proposed to set about making money but also about any outlay of money on the marketing side of the business, and it does not take long to express a conclusion that little or no outlay is proposed."
The final version of the business plan was prepared by Robson Rhodes and sent to several potential investors on 14th March.
In the week commencing Monday 18th March there were several meetings with potential investors. There were meetings on 18th and 19th March, the first of which led to no interest in lending and the second which led Robson Rhodes and Mr Murray to think that there was a prospect of 50 per cent funding for the project from the investor concerned.
On Wednesday 20th March there was a meeting with YFM, which was represented by its managing director, Mr Philip Cammerman, and Mr Hartley. The business plan was discussed and also the price to be paid for the assets, which had been reduced by negotiation from the initial asking price. After that meeting Mr Cammerman spoke on the telephone to Robson Rhodes. He said that YFM liked the proposals and would seriously consider support, but had serious question marks over Mr Murray, though that was not necessarily a deal breaker. On Friday 22nd March there was a meeting in London with another potential investor. Although the judge found that Mr Murray gave his best performance at that meeting, on Monday 25th March the investor telephoned Robson Rhodes to say that they were interested in the proposal but did not feel that they could support it at all if Mr Murray was involved because they did not think that he would be an appropriate chief executive.
Also on Friday 22nd March there was contact between Mr Fielding and Mr Hartley when, as the judge found, they discussed the possibility of Mr Hartley's replacing Mr Murray as the proposed managing director of the new company and that overtures to the other members of the team began on that day and continued through the following week-end. That finding is challenged by Mr Hartley, but he accepts that its outcome does not affect the question of law. The judge also thought it far more likely that Mr Hartley, rather than Mr Fielding, initiated the proposal that Mr Hartley should become the managing director, and with it the idea that funding would be more likely to be available to a team led by him.
I proceed on the footing that Mr Hartley initiated the proposal and that he and Mr Fielding between them approached the other four members of the team over the week-end of 22nd to 24th March. Mr Cammerman's evidence was that he received a telephone call from Mr Hartley on the evening of Sunday 24th, in which the latter suggested that he might offer himself in place of Mr Murray. Mr Cammerman said that he would consult his colleagues, which he duly did, and on Monday 25th March he told Robson Rhodes that, without any suggestion or encouragement from YFM, Mr Hartley had offered to leave and get involved with the new company. Mr Cammerman told Robson Rhodes that YFM saw Mr Murray as a weak link and was unlikely to invest with him in the team, though he did not "push" Mr Hartley by saying that if the team wanted money from YFM they would have to take him. The judge accepted Mr Cammerman's evidence that he knew nothing of Mr Hartley's plan until the Sunday and then knew of it only as an idea in his mind.
On 27th March Mr Fielding told Mr Murray that he had been replaced as prospective managing director by Mr Hartley and he made Mr Murray an offer of compensation for his time and expense. Not surprisingly, Mr Murray was shocked and angered by what he heard. We were told that Mr Fielding paid him £5,000 on that or the...
To continue reading
Request your trial
-
PH Hydraulics & Engineering Pte Ltd v Intrepid Offshore Construction Pte Ltd and another
... ... Murray v Yorkshire Fund Managers (1997) 1 WLR ... 951 (“ ... ...
- Lee Ewe Poh v Dr Lim Teik Man
-
Nigel Cayzer v Robert Beddow
...of the parties in the company to be formed, were too vague to be legally enforceable: see Murray v. Yorkshire Fund Managers Limited [1998] 1 WLR 951 at 959. 53 For the same reasons the alleged affirmation and implementation of this agreement on 27 July 1998 was ineffective and the judge was......
-
Common law divergences.
...423; William Swadling, 'Understanding Resulting Trusts' (2008) 124 Law Quarterly Review 72. (25) Murray v Yorkshire Fund Managers Ltd [1998] 1 WLR 951, 960 (Schiemann LJ). For, to Australian eyes, a stunning example, see Baird Textiles Holdings Ltd v Marks and Spencer Pic [2002] 1 All ER (C......