[2025] EWHC 2684 (KB)

Between 2002 and 2007 Mr Bull was employed by Lloyds Development Capital (“LDC”), an equity arm of Lloyds Bank. LDC was approached by a firm of accountants in Norwich to fund a management buy-out of Chancellor Care Limited and agreed to do so. The deal was completed in May 2005 and he became a director on the board of directors alongside David Prior (Chairman) and the Claimants.

Mr Bull stated in his witness statement for this action (signed on 19^th May 2016) that LDC considered the company to be a health care company with a difference and that

“…It was made clear to us right from our initial assessment of this proposal that the hospital did not operate the commonly used nursing practise of one to one nursing or specialling as it was known. We were told of research that demonstrated that specialling was detrimental to patient care. We were also told that the therapeutic community approach as adapted by Chancellor Care since 1999 had much greater clinical benefits for patients.”

Mr Bull also stated within the statement that LDC had instructed PwC to carry out due diligence into the company and that;

“The due diligence process took several weeks following which PWC produced a report of over 300 pages. Chancellor Care Limited’s alternative to specialling provided for the more difficult patients to have access to generally higher quality staff and more attention, albeit not on an oppressive basis. This led to a tiered charging structure to the PCTs whereby a patient either attracted just the core charge or the core charge plus an additional charge which was known as “extra care”. Extra care was mentioned over one hundred times within the PwC report. No attempt had been made by the management buyers to hide or distort extra care and any such attempt to have done so would have been fruitless, bearing in mind the depth with which PWC investigated. PWC expressed no qualms or concerns with the concept of extra care.”

As regards the PWC report Mr Bull conceded in cross-examination that it was compiled on the basis of such documents that were then available and that he had set out in his police statement that;

“I don’t know the level of detail that the PwC team went into when they looked at extra care but they did compare the fees that Chancellor charged compared to both independent and NHS facilities and did not conclude the Chancellor's charges were unusually high.”

In his Police statement Mr Bull stated that;

“Prior to the investigation my understanding of extra care is exactly what it says in the (PwC) report in that “patients tended to have been specialled and therefore were particularly difficult patients who responded well in our conditions. I was also told that it was a clinical decision. In my mind it reflected the patient group we took in.”

And

“My understanding was that “extra care” was effectively a risk premium for the most acutely ill patients. What I couldn't do was carry out an audit trail on an individual patient on “extra care” what was delivered for these services. What was clear to us was “extra care” was quite an important part of the business pre LDC coming in but the business plan going forward less important. This was partly because it looked like the market would change with the PCTs were looking for an all inclusive price and there was more competition. At board meetings there was never any discussion of the amount of patients on extra care needed to achieve budget.”

Mr Bull stated that in early 2006 discussions took place at board level with regard to LDC realising their investment by way of selling the business. Another firm of accountants Deloitte was brought in to advise the board on a potential sale and they valued the business at approximately £55 million based on the existing and future profitability of the business. LDC moved to put a plan in place whereby the sale could take place in around May 2007. In his Police statement Mr Bull had set out that

“At the time of the MBO (the Claimants) intended to run the business for a further five years before selling it but their thinking changed when they realised that the prices being paid for healthcare businesses were at an all time high and there was a strong possibility that they could make a very large capital gain after a relatively short period of time.”

Mr Bull explained that in November 2006, a “bomb” which “ultimately ruined the business”, was dropped on AD Care Limited by way of the police investigation into Cawston Park and also that:

“Shortly after the arrests, I was contacted by telephone by a police officer by the name of Brownsell. I remember this particular conversation for its duration, I was outside the railway station at Norwich, walking backwards and forwards in front of the station building. He made it very clear to me that fraud had been taking place within the company and I was left in no doubt that this officer considered the accused were guilty and would definitely be going to court.”

Following a complaint by Mr Breeze that DS Brownsell had made an unprofessional comment to Mr Bull before (and not, as Mr Bull set out in his statement, after) his arrest that the case was going to Court (the complaint being that this was before he had been charged or informed that he was to be charged and that this comment led directly to his dismissal) an e-mail was sent by Mr Bull to Mr Fernandes on 22^nd October 2009.

“I would make the following comments in respect to the issues you have raised: as far as I can recall at no point did DS Brownsell advise me the case was going to court. My understanding of the process was that the CPS was the body that would make the decision on whether the case would come to court and there was no contact between the CPS and LDC. With regard to the reasons for Mr Breeze’s dismissal it was not as a result of his arrest.”

Mr Bull stated that the e-mail was “purportedly” sent by him but in fact was drafted by Nick Bacon at LDC and a legal advisor Toby Starr of Starr Legal and was sent due to desire not to get into a protracted dispute. It is a rather remarkable assertion that the compliance officer of LDC (as Mr Bacon was) and a lawyer deliberately sent what on Mr Bull’s evidence in his witness statement in this action was, a wholly false and misleading e-mail.

Mr Bull also set out in his witness statement that over the following weeks after the arrests he believes that he was visited at least twice by DS Brownsell and another officer who he believed was called Baker. He said that his two “lingering recollections” of the statement process were firstly that the officers took a disproportionate interest in anything that could possibly give a positive slant to the prosecution or a negative slant to the accused (one example being the fact that the company had changed its name) and, secondly, that the officers failed to understand even some of the most basic financial or business detail and that it appeared that they had made-up their minds about what had happened and were disinterested in his explanations. Mr Bull stated at paragraph 11. that:

“LDC were left in no doubt by these officers that if we wished to protect our investment in A D Care Limited, it would be beneficial if Andrew and Dominic were removed from the business. I cannot remember the specific words used but there was definitely a strong intimation from the police that us removing Andrew and Dominic from their posts would be to our (LDC and the police’s) mutual benefit.”

Mr Bull said that this caused “considerable internal struggle” as no one believed the accusations against the Claimants but due to the need to protect LDC’s investments a decision had to be taken that they should be suspended. LDC promoted Richard McKenzie to run the business, (I have already set out Mr McKenzie’s comments about extra care) alongside an interim financial director John Greenhalgh and an non-executive director Lesley Reardon-Denton. Mr Bull explained in his witness statement that;

“A report was requisitioned by Christopher Hird from which LDC were able to contend that Andrew and Dominic had not kept a robust audit trail for extra care and had put their co-directors in a position whereby they too could be arrested. The official reason for their dismissals was therefore incompetence.

However, the reality was that they were dismissed because of the ongoing police investigation and the certainty in our minds, by reason of what the police officers had said, that this matter was going to trial which would have been disastrous for the business and hence LDC’s investment. As stated above, this caused me a significant degree of personal anguish…”

Mr Bull described the Claimants’ dismissal for incompetence as “a somewhat engineered reason” and that they were dismissed because of “the damage done to the business, and hence LDC’s investment caused by the police investigation” and that the reason of incompetence was used to expedite them leaving the business.

Mr Bull stated that within the Police statement making process he made it clear that he did not think that there was any fraud at Cawston Park and three matters pointed away from any offence; specially that;

Mr Bull recollected making “several amendments” to the draft statement before he was satisfied that the statement reflected what he had said to the police. He conceded during cross -examination that he had been given a clear warning that he must carefully check his statement and ensure that it was accurate.

The Claimants’ pleaded case is that;

“On or around the 25th of September 2007, the claimants were formally dismissed from their positions by Leslie Denton on behalf of LDC because of the pending allegations against them. This was as a direct result of the Defendants officers telling the companies to carry out this action to protect their investment…”

Mr Breeze stated within his witness statement that:

“Shortly after the arrest of myself and Dominic, DS Brownsell and DC Baker suggested to LDC that if LDC wished to protect their investment in AD Care it would be beneficial if Dominic and myself were to leave the business. As a result of this Anthony informed us that we could either recuse ourselves or be dismissed.”

It was Mr Breeze’s evidence that LDC suspended him on the advice of Police officers (as opposed to the company’s own lawyers) and dismissed him as a result of an engineered report (the report of Mr Hird). In arriving at this view Mr Breeze would have relied on what he was told by Mr Bull (Mr Bull stated he had explained matters to Mr Breeze in May 2007 at a meeting at a hotel).

Having carefully considered Mr Bull’s oral evidence, his statements and the interview transcript I formed the view Mr Bull was far from an accurate or reliable historian. I also have doubts that he was truthful in what he said to Mr Breeze in relation to the need to take action in respect of his involvement with the company.

Mr Bull accepted that he was not interviewed by DS Brownsell as he has set out in his witness statement for this action ( he was interviewed by DC Flynn and DC Baker). He was then taken in cross-examination to the transcript of the interview and it was suggested that there was nothing unusual in the questions asked by the officers about the history or value of the company. He was specifically taken to the limited questions about the new company post buy-out and he could not explain how this displayed “a disproportionate interest” and/or “excited them”. He conceded that his comments were not a fair criticism.

Mr Bull was also unable to explain his assertion that the officers appeared to have made their minds up about what had happened and were disinterested in his explanations.

As for his comments (at paragraph 11 of his witness statement compiled for this action) that LDC were left in no doubt by the interviewing officers that if LDC wished to protect its investment, it would be beneficial if Andrew and Dominic were removed from the business, he said that he could not remember words but it was a “strong intimation”; not just given during the interview but in conversations after the interview. However when the interview (the relevant parts of which were played) was put to him it was inconsistent with what Mr Bull said in his witness statement for this action. He referred in the interview to DLA Piper, which was already acting for the company acting for the Claimants and no reference to conversations with any officer and said;

“I then raised the issue of conflict with them straight away because you could see a scenario that basically the directors had been arguing one thing…And the company's interest was clearly very different. Have this argument with them for at least the first two or three weeks. They basically saying that the company's interest would be prejudiced if they are not the same as the individuals, but they saw the company, companies guiding mind being Breeze (and Wilson) whereas LDC are saying forget them, you know , innocent, guilty, we don't care we have a business to run now and the interest of the business you know, we have to act in the best interest of the business so we basically split from DLA. ”

And

“…As of the raid, Breeze and Wilson, basically got them out of the business. Em they are voluntarily out of the business. The reason why, you know, it's not in the best interest of the company if they're running the business…If there was a way, without saying there was a way to sack them that we would, because it cannot be in the interest of the company those guys coming back.”

And

“When they were out of the business, the board majority…Thought we need to instruct…because there were all sorts of things coming out there which are things like the PwC report. You know you guys asked us to disclose that. I have no issue in disclosing it, DLA sort of were giving the view “well it may not be in the best interests of Andrew and Dominic to disclose it…And I'm saying well bluntly “I don't give a…”. Exactly so em it was clear that there was going to be conflict in certain areas and that, you know, the companies interest may, may diverge quite radically.”

Mr Bull then continued within the interview to indicate that there was a loss of confidence in Mr Breeze in any event i.e. separate to the investigation. He said that he had a meeting with the Claimants and

“em I said I didn't have confidence in the way the business was run. It was clearly clear that David didn't either…And something had to change and I thought that something was Andrew should step down from the chief exec role. He asked me to think long and hard about it…and then to be honest we got overtaken by events…you know we couldn't be removing him whilst, so you know, all other investigation is going on. So I think you know, had your investigation been 8 weeks later Breeze would not have been chief exec…I don't know whether he would still have been in the business because I felt he still had a role to play…”

Having considered the transcript Mr Bull conceded that paragraph11 of his witness statement in this action was wrong and unfair.

In my judgment the assertion that the Claimants were dismissed not only because of the ongoing police investigation but because of “the certainty in our minds, by reason of what the police officers had said, that this matter was going to trial” is not supported by what he said in the interview.

In my judgment it is highly likely (given the other involvement of LDC’s legal advisors following knowledge of an investigation) that steps taken in relation to the Claimants (including the commissioning of an independent report) were carefully thought through and the suspensions and/or dismissals of the Claimants were not knee jerk, or even direct reactions to any “certain” belief that the case would proceed to trial.

Mr Bull could also not point out where he had made the three points which he said that he tried to make during the taking of his witness statement. He stated that he could not remember if this was during the interview or not.

Mr Bull did remain firm in his evidence that an officer had telephoned him and that he was left in no doubt that the matter would be going to court; although he stated that this was after the arrests of the Claimants. Having heard DS Brownsell’s evidence on this issue (that he would definitely not have said the matter was going to court as that was the decision of the CPS) I prefer it to that of Mr Bull. I find that he did not make such an explicit and certain comment.

In relation to extra care Mr Bull was taken to the following exchange;

In respect of the “engineering” of reasons for dismissal Mr Bull stated during his oral evidence that he had no concerns about the independence or expertise of Mr Hird who was the external healthcare expert who was commissioned to prepare a report. He said that he believed that they asked for a hard hitting report and that he did not believe that the Board went into the exercise with the view of dismissing the executives. This conflicted with the belief of Mr Breeze that it was some form of conspiracy using a non-independent expert.

In any event it was the Board that commissioned the report and there was no suggestion by Mr Bull that the content of Mr Hird’s was deliberately misleading, false or dishonest. In my judgment this content of the report, which was critical of the Claimants was accurately summarised by DS Brownsell within his summary (and it has not been suggested otherwise).

DS Brownsell made reference to Mr Bull’s evidence in the summary in relation to the profits made before the buyout (Mr Breeze made about £1.2 million which he reinvested in the new company receiving a share of 29.4% and Mr Wilson also reinvested receiving the same share. Dr Barker did not reinvest his profit). At first blush this conflicts with the suggestion that neither of the Claimants made any money from the buyout.

DS Brownsell was not cross-examined in relation to the relevant extracts of the summary; but I note that he did not make reference to either Mr Bull’s comments about extra care which were not favourable to the Claimants or his statement that he believed that it was a risk premium which was favourable. In my view those matters should have been included, but their omission was not down to a deliberate attempt to mislead. In any event in his advice note Mr Tarrant stated of Mr Bull that;

“He understood extra care is one to one nursing support but told by Breeze, Wilson, Chancellor and Barker that specialling is destructive. His understanding was that “extra care” was effectively a risk premium for the most acutely ill patients; important parts of business pre LDC but business plan going forward less important as PCTs were looking for an all inclusive price (654).”

And in respect of Mr Breeze

“…First meeting was with Breeze and Wilson and v impressed. It was clear to Bull that the main motivation of Breeze was to improve lives that were blighted by mental illness and hoped to use money to rebuild a hospital in India where he had been born.”

And Mr Bull’s view of Mr Wilson

“very intelligent and able but a little too confident in his abilities.”

So although DS Brownsell made only a limited reference to Mr Bull in the summary it is clear that Mr Tarrant considered the witness statement which it appears was page 654 in the bundle accompanying the advice.