BL-2022-002117 - [2025] EWHC 2794 (Ch)

Both sides called a number of witnesses to give evidence of events in 2016 or earlier and were cross examined mainly by Mr Solomon KC and Mr Segan KC. I was pleased, however, to see each of the junior barristers cross examining particular witnesses, in accordance with the guidance from the senior judiciary in November 2023 for greater participation by junior barristers in suitable hearings.

As observed in the Civil Procedure Rules, human memory is not a “snapshot” which fades with time but is fluid and malleable and vulnerable to being altered by a range of influences; see CPR PD57AC. The process of civil litigation itself subjects the memories of witnesses, particularly witnesses who are parties, to powerful biases and influence, which may not be conscious; see Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC 3560 per Leggatt J (as he then was) at [19]. It is perfectly possible for an honest witness to have a firm memory of events which the witness believes to be true, but which in fact is not correct. The approach I take is to weigh each witness’s evidence in the context of the reliably established facts (including those which can be safely distilled from contemporaneous documentation bearing in mind that the documentation itself may be unreliable or incomplete), the motives and biases in play, the possible unreliability or corruption of human memory and the inherent probabilities.

In section C below I set out the facts of this case as I find them from the evidence I have seen and heard, except on the issue of malice which I consider in section E. In this section I make some general observations about each of the witnesses of fact and their evidence.

The Claimants called Andrew Palmer, who was the managing director of the Company between September 2013 and October 2015. He is a good example of an honest witness whose recollection was shown from time to time, by reference to contemporaneous documentation, to not be accurate. His recollection of the change of control process being quick, simple and routine for the Inflexion acquisition (referred to further below) and another provider called Learndirect was not borne out by the contemporaneous documents. I considered his evidence to be reliable as to the bigger picture, including his evidence that the SFA regarded colleges more favourably than private training providers (“PTPs”).

Mr Robert Kilpatrick was also called. He was a straightforward, honest witness, although I did not find his evidence (of the change of control process of a different company under a different contract with the SFA in 2018) of much assistance.

A more significant witness was Tony Allen who was head of the Large Contract Unit at the SFA dealing with the largest providers. I considered him to be an honest witness, although his recollection of events was often not in line with the contemporaneous documents, and I am conscious that he may be partisan. He appears to have been a supporter of Peter Marples and the Company in his time at the SFA, providing letters of intended support for growing the SFA funding by £10 million at the time of the Inflexion deal, and attending the Company’s board meetings to indicate further support for increased funding of £45 million. After he left the SFA he worked for the Company as a consultant, and he remains friends with Peter Marples. I accept the tenor of his evidence that Sir Peter and others at the SFA looked less favourably on PTPs than colleges. His evidence of being told by Sir Peter that he would not tolerate SFA staff sitting down to have tea and cake with PTPs was not likely to be either misremembered or concocted and I accept it.

Another important witness for the Claimants was Karim Khan of Private Acquisitions Ltd, who was the financier who brokered the Trilantic deal and whose view was that the Decision Letter rendered the Company unsaleable. He was a patently honest witness, doing his best to recollect, and with no agenda except perhaps a sense of grievance that the Trilantic deal had not gone through. However, on important issues, like the question of saleability of the Company his evidence was really his opinion or speculation, and I have had to consider carefully what the reality actually was.

Patrick Tucker, a consultant in the Further Education and Higher Education sector, was called by the Claimants to give evidence. He had been instructed by Peter Marples after the liquidation of the Company to prepare a report by way of an independent review of the SFA allegations of deliberate data manipulation. The report was sent to the Official Receiver and concluded, amongst other things that there appeared to have been a deliberate manipulation of data to improve QAR but there was no funding overclaim, and no sums due to the SFA as a consequence of such data manipulation. It is not clear what material he looked at to prepare his report, but he did not look at the underlying records. I considered him an honest witness, but he was partisan, defending Peter Marples at every turn during cross-examination by Mr Cleaver.

Peter Marples gave evidence. He was well prepared, had reviewed the documents in the case and had anticipated the areas on which he was likely to be questioned. Much of his evidence was reconstruction after reviewing the documents and mulling over this case over the last decade. It did not seem to me that Peter Marples would have volunteered or conceded any point which he thought undermined his case. For example, his evidence that Star Capital had only proposed a loan was self-serving and untrue – it was contradicted by the company’s board minutes. Together with the evasion and dishonesty in relation to his input into the expert report and joint experts’ report (see below), I consider that I must treat his evidence with considerable caution.

Lee Marples gave evidence which dovetailed closely with Peter Marples’s evidence. Like Peter Marples he had come carefully prepared and having anticipated many of the questions he would be asked. Like Peter Marples he was not willing to concede any point which undermined his case. There were times when it seemed he would argue that black was white if he thought it would assist his case, for example when he denied that the Inflexion and Trilantic acquisition documents showed the Company was making significant profit above the cost of delivery of training. His evidence in relation to data manipulation was often not credible. His explanation that systematic data manipulation at the Company was not possible without a host of people across the Company being involved fell apart on probing. All that was required was one individual with access to the return to make a manual change before the return was submitted. His attempt to attack the basis of the SFA conclusion (that it was statistically not feasible that the 97.5% of adjustments made to a sample of 3000 learners to the Company’s advantage could all have had the same striking features), was based on a misreading of paragraph 11 of the relevant report. That both he and Peter Marples made exactly the same point suggests it was a response discussed and pre-agreed between them and reinforces my concerns about their evidence. I treat his evidence with caution.

Sir Peter was obviously the most important witness for the Defendant. He was well prepared and had reviewed the documents carefully. It gradually became apparent, however, that Sir Peter’s evidence was not consistent with the contemporaneous documentation which he then resorted to reinterpreting. This happened repeatedly, and his answers sought to “spin” the documents to fit the case or the evidence that he was now seeking to advance. I give specific examples below as they arise in the findings on the facts. I treat his evidence too with caution.

Keith Smith was at the time the Funding and Programmes Director at the SFA. He was a poor witness whose principal concern was to distance himself from responsibility for the Decision Letter and the change of control process. His attempts to argue his lack of involvement were not credible given his contemporaneous emails throughout the process, his involvement in the drafting of the Decision Letter, and the fact that he was giving explicit directions to his subordinate who reported to him (Ms Forton) as to what to do. When faced with his clear emails at the time, he too resorted to implausible reinterpretion, finding ambiguity where none existed. However, on matters not concerned with the Decision Letter and change of control, I considered him more reliable. He denied making the statements about Peter Marples and the Company which Tony Allen attributed to him, and I preferred his evidence to Tony Allen on that issue.

Kirsty Evans, a senior official at the SFA in 2016, was an honest, careful witness. She had limited recollection of events beyond what was recorded in the contemporaneous documents but I was left satisfied that she would have been careful to be accurate in what she said in emails and conversations at the time about the proposed changes to the apprenticeship system.

David Smales and Keith Hunter were honest, straightforward witnesses who gave their evidence about the investigation of the allegations of data manipulation with care and to assist the court. The Claimants asserted that they were partisan and zealous in their investigation of the Company, but in reality they were simply doing their job.