Claim No: IP-2021-000114 - [2023] EWHC 3153 (IPEC)

The Claimant’s case is that immediately after the 27 June Email, its business suffered immediately. Mr Hilbeck’s evidence in cross-examination is that from showing a steady growth in the previous 18 month period, the Claimant’s landscaping income “stopped overnight and Greenscape started to bank £10,000 for July 2021. Our trading results prove that after the email we suffered an instant downturn”.

At paragraph 25 of his witness statement Mr Hilbeck set out a. list of 14 clients from which, he says “business has almost certainly been lost by the 27 June email” showing amounts invoiced: in the 12 months before the 27 June Email; between 28 June 2021 and 27 June 2022: and between 28 June 2022 and 27 June 2023. That shows that 13 of those clients who were invoiced between about £2000 - £12,000 each in the 12 months before the 27 June Email have produced no work for the Claimant in the following two years. Five of those clients are known from the Defendants’ disclosure to have placed business with Greenscape.

The 14^th, and main client who was invoiced some £71,000 in the 12 months before the 27 June Email was Idverde. The Claimant invoiced Idverde c. £55,000 in 2021/22 and £33,000 in 22/23, an overall reduction in billings of some £84,000 in the first year after the 27 June Email and £106,000 the next. The Defendants disclose that Greenscape invoiced Idverde almost £50,000 over two years.

Mr Chapman provides evidence of a phone call he received from Laurence Vincent, Operations Director of Idverde on 22 August 2021 querying an invoice received from Greenscape for placement of a named individual, who had been put forward for the position by Mr Ludley when he was employed by the Claimant so the Claimant should have raised the bill. Mr Chapman describes that as a “clear example of the [Defendants] diverting business secured by the Claimant”. Mr Ludley accepted in cross-examination that he was not entitled to invoice Idverde for that placement and ended up issuing them with a credit note. However he said that the Claimant’s loss of business from Idverde was as a result of Idverde’s business difficulties which resulted in them imposing a recruitment freeze in 2021. This is unsupported by any documentary or other supporting evidence and given that Greenscape invoiced Idverde £45,000, and the Claimant £55,000, there does not appear to have been a freeze as the word is usually understood.

The Defendants set out a list of their clients who were clients of the Claimant at the time of the 27 June Email. In cross-examination Mr Ludley accepted that it was not a complete list as it does not include Scotscape, who Greenscape has invoiced £11,000. I am satisfied that it also omits Sky Garden.

At paragraph 29 of his witness statement Mr Hilbeck set out a table which was produced by his Finance Manager showing the total sums invoiced for projects won by the Claimant since the June 27 Email against the Claimant’s projected income figures. This purports to show that the Claimant suffered a loss referable to the June 27 email and its aftermath of £308,000 amounting to an approximate profit loss of £154,049, after deduction of overheads. In his oral evidence, Mr Hilbeck said that the overheads of the Claimant amounted to employee salaries, platform advertising, office rental and other general office expenses, but he was not able to provide any details as to those figures and they have not been evidenced. Mr Hilbeck’s evidence in cross-examination was that without Mr Ludley’s actions, there was no reason to think that the forecasted growth in the Claimant’s budget would not be achieved. He denied that this amounted to wishful thinking and Mr Ludley confirmed in cross-examination that he does not challenge the figures for loss of revenue and profit in the table at para 29 of the Mr Hilbeck’s witness statement.

It was put to Mr Hilbeck in cross-examination that the drop in business was because of the period of time that Mr Chapman was not working in the business until he returned in August 2021. Mr Hilbeck denied it, saying that anyone who called or emailed was being answered by the HR Manager Emma Patterson. It seems to me that Ms Patterson answering the phones was not going to get the job of recruitment done. Given Mr Hilbeck’s evidence that when Mr Ludley also left the Claimant effectively stopped trading until Mr Chapman returned, it seems likely that even if Mr Ludley had not sent the 27 June Email or taken the Claimant’s information there was going to be some drop in income by the mere fact that there were no recruitment consultants available to carry out any work for a period of 6 weeks.

Mr Hilbeck accepted in cross-examination that in September, October and November 2021 the Claimant had an extraordinary increase in sales improving its financial position, but in re-examination he said that this was attributed to entering two new markets, engineering recruitment and the care sector. He said, “We went from zero to £7-10k per month, a mix of landscaping, engineering and care”. I accept this evidence.

It was put to him in cross-examination that by the time of the 27 June Email the Claimant had already started to diversify out of the landscaping sector and into engineering recruitment, but he denied it, saying: (i) that did not start until after Mr Chapman had returned as Recruitment Manager, in September or October 2021; and (ii) he did it out of desperation about how many landscape clients, and associated income, he had lost as a result of Mr Ludley’s actions. Mr Chapman in cross-examination also said that they only diversified later from their “bread and butter business in the landscaping sector” because “we had to” following the 27 June Email, and the Claimant hired another recruiter, Ali, to do that work. It was put to both Mr Hilbeck and Mr Chapman that the Claimant was barely operating in the landscaping sector and had moved across to engineering, but they both gave convincing evidence that it continued to operate in both sectors, although the Landscaping sector had never fully recovered from the effects of the 27 June Email. I accept their evidence.

In cross-examination Mr Hilbeck also denied that PL London, a landscaping services company which trades as Panoramic Landscapes, competed with various of the Claimant’s clients and this might afford an explanation as to why the Claimant’s revenues from landscaping-related recruitment work had suffered such a deleterious downturn. This line of questioning was based on an email from a Sarah Dodd of Life Outdoors Limited to Mr Chapman, who said she would not engage the Claimant due to a potential conflict of interest. Although accepting that she considered there was a conflict, Mr Chapman did not agree that it was seen as a competitor by most of the Claimant’s clients, saying “PL London operate in an entirely different sector to most of our clients”. There does not seem to me to be any reason why a number of the Claimant’s clients might suddenly object to PL London’s business when they hadn’t previously. This appears to be the Defendants seizing on this email about a specific conflict to seek an alternative reason for the Claimant’s downturn in business other than what I am satisfied on the balance of probabilities was the primary one, which is that most clients took the 27 June Email at face value and continued to contact Mr Ludley on his new, Greenscape email address believing that Greenscape was the Claimant’s rebranded business.

Mr Ludley’s written and oral evidence is that his 27 June Email did not result in work coming to Greenscape, but rather he has gained work for that business from the fact that he cold-calls between 40 and 50 client prospects a day (and more when he first started Greenscape). He said that each time he reintroduces himself to clients and contacts, explains that he is now working for his own company and asks them for instructions to work on any vacancies that they have. His evidence that he has to reintroduce himself to clients and contacts each time is contradicted by his oral evidence in cross-examination that “These [clients] aren’t strangers. Most of them I have met, we have 2-3 calls a week, we discussed exactly what I was doing, they were happy to support me” and that he counted some of them, including Davinder at Scotscape, as a “close personal friend”. He said “In all cases where the client had a vacancy and used recruitment agencies, they were happy for me to work with them. Bear in mind however that no client ever works exclusively with one recruitment agency. A recruitment company will make a placement into only about 25% of the vacancies they work on”. It is also contradicted by the clear evidence of Ron Leto at Green Oak that he used Greenscape believing it was the Claimant.

In any event it is clear that the Defendants began working with clients of the Claimant almost immediately. For example, on 16 July 2021 he was putting forward candidates to Oxford Garden Design, who had three contacts on the Claimant’s Client List (so who I am satisfied on balance were likely to have received the 27 June Email). Greenscape issued its first invoice to Scotscape, a regular and frequent client of the Claimant, on 2 August 2021. It invoiced Green Oak, who Mr Ludley had worked for while at the Claimant as recently as May 2021, in September 2021. Mr Ludley said that he approached them after the 27 June Email and obtained work that way, but accepted there was no documentary evidence to support that and Mr Leto’s email shows that even if he did, he used Mr Ludley believing he was working for the renamed Claimant. I am satisfied that it is more likely than not that the 27 June Email misrepresenting that Greenscape was a new name of the Claimant did cause confusion with some of the Claimant’s clients which caused work to be diverted from the Claimant to Greenscape, and that Mr Ludley did nothing to correct that misrepresentation.

Finally the Claimant’s evidence is that Mr Hilbeck has incurred wasted management time in dealing with the investigation of Mr Ludley’s wrongdoings estimated at 15 hours since the 27 June Email, made up of time spent collating documentation for review, consulting with Mr Chapman over damage limitation and corresponding with the Claimant’s solicitors, and Mr Chapman has likewise incurred 18 hours of wasted management time. I am satisfied that it can be no less time than this and accept their evidence.

Issue 1 – Passing off. Has the Claimant suffered loss and damage and if so, how much?