Tesco Stores Ltd v Simon Pook and Others

JurisdictionEngland & Wales
JudgeMr Justice Peter Smith
Judgment Date14 April 2003
Neutral Citation[2003] EWHC 823 (Ch)
Docket NumberCase No: HC 2C00931
CourtChancery Division
Date14 April 2003
Between
Tesco Stores Limited
Claimant
and
(1) Simon Pook
(2) Natasha Kersey Pook
(3) Universal Projects (uk) Limited
Defendants

[2003] EWHC 823 (Ch)

Before

The Honourable Mr Justice Peter Smith

Case No: HC 2C00931

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Miss Linden Ife (instructed by Berwin Leighton Paisner) for the Claimant

Mr Donald Broatch (instructed by L. E. Law) for the Defendants

Hearing dates : 1 st and 2 nd April 2003

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 Mr Justice Peter Smith

INTRODUCTION

1

This is a trial of part of the claim brought by the Claimant ("Tesco") against the First and Third Defendants ("Mr Pook") and ("Universal Projects") respectively. The claim against the Second Defendant Mr Pook's wife has been settled by consent on terms that she acknowledges that she has no claim in respect of the property 3 Beldams Gate, Bishop's Stortford, Hertfordshire CM23 5RN, ("the Property") which was acquired using partly monies provided by her and Mr Pook in May 2000.

2

The main claim against Mr Pook arose out of the submission of false invoices by Universal Projects to Tesco ostensibly for services rendered. The amount in question was £512,236. Mr Pook who was employed by Tesco's from 29 December 1983 until 23 April 2002, was from 10 January 1999 the New Grocery Development Manager in Tesco's e-commerce department, and from 1 November 2001 he was employed in a similar position in South Korea.

3

Part of his duties involved the approval of invoices, and he concocted on behalf of Universal Projects, false invoices in that sum, and approved them for payment. Inevitably, he consented to a Judgment in that sum together with interest of £34,082.85 to 1 August 2002 with a daily rate of £112.27 thereafter, with an order for costs. Such order was made by consent on 7 August 2002.

4

Tesco discovered what was happening in early April 2002 and on 9 April 2002 obtained the Freezing Order and Search Order from Lightman J. The Freezing Order was extended until after Judgment by Laddie J. on 2 May 2002.

5

Subsequent to the commencement of the proceedings Mr Pook was convicted of theft and sentenced to three years eleven months imprisonment, which he is currently serving.

THE RESIDUAL CLAIM

6

The residual claim is a sum of £323,749.99 which Tesco submits was a bribe paid to Universal Projects by a company which did business with Tesco, Delta Computer Systems (UK) Ltd. ("Delta").

7

Mr Pook denies he is liable.

COUNTERCLAIM

8

Mr Pook has brought a Counterclaim arising out of his entitlement to exercise share options granted to him under an Executive Share Option Scheme for employees.

9

Mr Pook was suspended on 10 April 2002 by Tesco (the day after they obtained the Freezing and Search Orders). There was an investigation into his conduct in which he did not participate in the sense that he did not provide any answers, which led to an interview on 23 April 2002 and he was formally dismissed at the end of the interview. The dismissal was confirmed by a letter dated 25 April 2002.

10

On 22 April 2002, before the actual termination of his employment Mr Pook applied to exercise the options but Tesco refused to allow the options to be exercised. Mr Pook contends that he would have made a profit on the exercise of the option (which he intends apparently to utilise to satisfy his liability to Tesco under the Consent Order).

11

The value of the Counterclaim if any has been agreed at £51,156.58.

THE BRIBE ALLEGATION

12

The pleaded allegation brought by Tesco is that Mr Pook received the monies totalling £323,749.99 around March or April 2000. The first payment was apparently £293,750.00 and, according to invoices to which I shall make more reference in this Judgment, was received on 28 March 2000. The second payment was a figure of £25,531.91 with VAT making a total of £29,999.99, which was received on 31 May 2000. A third payment was made on 27 June 2000 in the sum of £40,000.00 but that was repaid to Delta.

13

The second and third payments are round sum figures after the application of VAT. This is somewhat unusual and shows that in reality Mr Pook was interested in receiving the gross sums. This is a relevant factor when it comes to the question of the quantum (if any) of the monies, which Mr Pook is obliged to repay.

14

The payments were applied in accordance with the schedule and annexed to the Amended Particulars of Claim. The largest payment (£198,476.19) was made to a firm of solicitors Austin Ryder and Co. solicitors who were acting for Mr and Mrs Pook when they purchased the Property.

15

The Property cost around £500,000.00. Mr Pook funded that by a partial sale of some other shares, a mortgage of £300,000.00 and the balance from the monies received from Delta. At that time his salary was £56,000.00, together with bonuses. It is quite clear that he could not have borrowed £500,000.00 on that level of income. Thus the acquisition of the property would only have been possible with the benefit of the monies received from Delta.

16

In the Amended Particulars of Claim it is alleged in paragraph 15 that the purpose of the payment was made to Mr Pook in an effort to ensure that Delta continued to be engaged by Tesco to carry out services for it and in a further breach of Mr Pook's duty and fidelity to Tesco.

17

Tesco made an application to amend those Particulars, but Master Bragge on 14 March 2003 refused it permission to amend. Tesco chose not to appeal that decision. The reason was set out in a letter sent to Mr Pook's solicitors. Having considered the matter, Tesco was of the opinion that the paragraph contained an immaterial averment, in that on the authorities, the motive behind the bribe did not have to be proven.

18

Its stance from that time was therefore that motive was irrelevant. Mr Broatch who appears for Mr Pook and Universal Products submitted that Tesco should be required to prove the case as it is pleaded, and ought not to be allowed to proceed on the basis that proof of motive is irrelevant.

19

He suggested that to allow otherwise would be unfair to the Defendants, as they have come to meet a particularly pleaded case. In fact, they were put on notice by the solicitors' letter that Tesco intended to change its case. I see no disadvantage to the Defendants in having to deal with a case, where no evidence of motive is gone into. I cannot see that it makes any difference to the presentation of the conduct of the Defence.

20

If on the law (and for the reasons that I set out in this Judgment, I accept that that is the position) the Claimant is not required to prove motive that is a question of law and it should not be disadvantaged because it included a pleading which it is not necessary for it to prove. It would be an incredibly unjust result if Tesco establishes a bribe but fails to recover because it fails to establish something, which in law it is not obliged to establish.

21

In any event, on the facts as I shall set out in this Judgment, I have come to the conclusion that Mr Pook did receive a bribe and he received it for the purposes set out in paragraph 15 of the Amended Particulars of Claim. It is not necessary however, based on the authorities cited to me for Tesco to establish that.

EVIDENCE OF PAYMENT

22

Mr Pook has produced some invoices, which evidence the payments he received. In addition Tesco obtained from Delta what ought to have been the counterparts to those invoices. Somewhat surprisingly they are not identical.

23

Mr Pook's invoices described the services having been provided as "sales consultancy … initial business set up payment based upon future business returns". His second invoice is the same except that it is described as the second business set up payment.

24

Delta's copies of the invoices just refer to sales consultancy.

25

The format of Mr Pook's relevant invoices appears different from the format of the other invoices which Universal Projects produced for obtaining the false payments from Tesco.

26

Equally, I can see no reason why Delta would wish to doctor the invoices by deleting the initial business set up payment, but I can see compelling reasons why Mr Pook would wish to insert such services.

27

On one basis it does not matter, because the invoices (whichever version) are false and fraudulent. No services of any kind were provided by Universal Projects to Delta. Mr Pook's case is that the payment was a loan. He admitted in cross examination that the invoices were false. He also admitted (inevitably) that if his evidence was to be believed, namely that it was a loan, there was no basis for claiming VAT on it. There has been therefore an offence in relation to the invoices and false VAT returns submitted. In net terms it may be that Customs and Excise has suffered no loss. Delta will have claimed repayment or off set of the VAT element against its input VAT so Delta's VAT liability will have been reduced by the false invoices whatever the status of the payments i.e. bribe or loan. Mr Pook caused Universal Projects to pay the VAT out of the monies it received although the figures vary slightly.

28

I should say something about the evidence Tesco relied upon. The difficulty it faced of course was that being a victim it is difficult to obtain live testimony from any alleged wrong doers. Mr Pook clearly would not assist. As regards the other party to the transactions Tesco interviewed Louis O'Connell a director of Delta on 10 May 2002. There was a transcript of the interview, which was accepted, as authentic. In those circumstances I decided that it was not necessary to hear the tape.

29

Tesco...

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