The honesty, credibility and competence of senior government officials came under attack as the Marples family’s case against the Department for Education closed in the High Court.
Meanwhile, Peter Marples was himself labelled as “someone who is extremely prone to blaming his misfortunes on others” as government lawyers delivered their closing arguments in the hotly anticipated case.
KCs for both sides spent a day each putting their final arguments to judge Eason Rajah KC following two weeks of testimony which involved 12 witnesses and two experts.
Marples and three members of his family, who were shareholders in apprenticeship giant 3aaa, are suing the DfE for £37 million, plus interest.
They claim negligence and misfeasance in public office, alleging the DfE’s then Skills Funding Agency acted with malice when refusing to sign off on a change of control that scuppered a planned sale to Trilantic Capital Partners (TLP) in 2016.
It could take months before the judge delivers his verdict.
What is it you’re complaining about?
Adam Solomon KC, representing the Marples family, said the SFA – especially then-CEO Sir Peter Lauener – expected TLP to walk away from the deal as a result of its refusal letter and “intended that to happen because he did not wish the claimants to profit from their shares”.
He claimed the SFA “misunderstood” its powers, by “wrongly believing and acting as though it had the power” to refuse a change of control.
“What it could have done, if it had genuinely had concerns, is set out the concerns and say: we reserve the right to terminate,” he added.
Solomon admitted there is no claim for breach of contract after the judge pointed out the refusal letter had no legal effect.
Judge Rajah told Marples’ KC: “They [the SFA] haven’t exercised a contractual power, they’ve done nothing. So what is it you’re complaining about? They’re not exercising a statutory function.
“You keep saying that as if there’s some magic to the fact that they’ve assumed a power. They didn’t suddenly, when they wrote the letter saying we refuse permission, have any more power than they had before. They didn’t acquire anything.”
Solomon argued there was instead a “practical effect” whereby SFA chiefs “granted themselves the ability” to act as if they had the power to refuse a change of control that would “have the effect of crashing the deal”, meaning “we get home on negligence and misfeasance”.
Solomon added: “The fact it has no legal effect is not a factor against me.”
What prejudice?
James Segan KC, for the DfE, hit back. He said although Marples’ lawyers made it the “centrepiece” of their negligence claim that the SFA “took on itself a non-existing power to allow or prevent the claimants selling their shares”, the “clear evidence” was that references to “approval for change of control” were “simply a commonly-understood shorthand for the process of seeking an assurance that the SFA would not exercise its right of termination”.
He added: “The SFA’s decision was based principally on a concern that the business plan put forward by Trilantic made unrealistic expectations as to future growth that failed to reflect the impact of imminent changes in the funding environment, such that the pursuit by a new buyer of that level of growth would undermine the stability of the company and jeopardise the stable provision of services.
“That concern was reasonable, justified and held in good faith.”
Judge Rajah said he struggled to see what prejudice there would have been to the delivery of the contract if TLP had bought the business.
Solomon rejected the suggestion of “shorthand”, claiming SFA staff “never once stated their powers correctly and were obviously confused about them”.
“The SFA had no intention of terminating 3aaa’s contract in 2016-17 and never indicated that it would do so,” he added. “It therefore cannot have meant to indicate in the refusal letter that it would terminate if the change of control went ahead.”
Solomon reiterated claims that Sir Peter considered and was “obsessed” with “irrelevant factors” when making his decision, such as how much money the family would make from the sale.
But Segan said documents show Trilantic’s withdrawal from the proposed acquisition was primarily the result of a reassessment of the funding environment, rather than the SFA’s refusal to give an assurance.
He told the court that Peter Marples’ own evidence was TLP “believed there was a risk to the business based upon what Mr Lauener had told them. Quite clearly, Mr Lauener spooked them, and that’s ultimately why we’re here today”.
Segan concluded: “If that is right, then the decision on the change-of-control request was not the reason why the transaction did not complete, and the claim fails.”
Judge questions duty of care
Segan also batted away claims there was a “duty of care” to the claimants since the SFA’s contract was with the training provider, not its shareholders.
Judge Rajah said that if Solomon, Marples’ KC, is to be believed then Sir Peter’s true purpose was to torpedo the sale and harm all who stood to gain from it, which would have included all shareholders, not just the claimants, as well as TLP.
Solomon said the fact the other shareholders and TLP have not brought a claim against the DfE is “irrelevant”.
Marples was ‘self-defeating’
Segan attacked Peter Marples’ witness evidence, stating it was “clear” the 3aaa co-founder “nurtures a powerful grievance against the SFA, among numerous others”.
He added Marples’ evidence was “self-defeating” because his criticisms “are so extensive and wide-ranging that the overriding impression is simply that Mr Marples is someone who is extremely prone to blaming his misfortunes on others”.
Segan pointed to claims that date back over two decades from Marples that multiple public servants “disliked him because of his wealth”, as well as descriptions of SFA officials as “wankers”, “bastards” and a “shambles”, while 3aaa chair Derek Mapp was a “bully”.
Compromised expert evidence should be revoked
Solomon defended Peter Marples, claiming he gave “clear and cogent evidence”.
But not even his own KC could justify the fact that Marples had made 150 contributions to the evidence of Vivian Cohen, who was supposed to be an “independent” accounting expert uninfluenced by the wishes or interests of the instructing parties, who then adopted Marples’ views as his own.
The changes were made without the knowledge of law firm DWF, which represents Marples, and it was even revealed that Marples had instructed Cohen to disable a ‘track changes’ feature that records any amends made.
During cross-examination, Segan put to Cohen: “You knew it was important to keep his [Peter Marples’] involvement in the joint statement secret because you knew that the joint statement is intended to be uninfluenced by the parties, yes?”
Cohen replied: “Yes.”
Segan said Marples’ refusal to accept the “obvious reason” why he wanted Cohen to delete the fact of his contributions to the joint statement was “similarly incredible”.
Segan has requested the judge revoke Cohen’s “compromised” submissions.
Marples had known Cohen through matrimonial valuation work he had carried out as a single joint expert, instructed by his divorce firm Fair Result.
Solomon told the court: “It is accepted that Mr Cohen should not have done this – but any criticism should fall on him (as the expert with duties to the court) and not on Peter Marples, who was only doing what he was asked by an expert.
“It was the first time Peter Marples had litigated with party experts (rather than a single joint expert) and he had never seen a joint statement before.”
Sir Peter’s ‘handful of comments’
Marples’ team, after the close of evidence, dropped misfeasance claims against former senior SFA officials Karen Sherry and Kirsty Evans.
Segan said it remained “wholly unclear” what alleged acts by other ex-SFA senior staff Keith Smith or Sharon Forton were relied on as constituting the misfeasance, adding that there was “no coherent pleaded case” in that regard.
He added the case against Sir Peter was “also hopeless”.
Segan said it was “clear Sir Peter had faithfully sought to discharge the responsibilities of his office, and that he had no animus towards Mr Marples, the claimants, the company, or private providers generally”.
He pointed to early 2016 when Sir Peter expedited a multi-million-pound payment to 3aaa to stop it going into administration.
The DfE’s KC highlighted the claimant’s “attempt to construct an allegation of bad faith from a handful of comments or turns of phrase in the thousands of documents disclosed”, such as one email referring to his blood pressure rising after seeing 3aaa profits, and another that said “then we stand back and wait for the fireworks” once the refusal letter was sent.
Segan said Sir Peter’s answers, including that one of the emails was a bit of “banter”, were “credible and fair: he accepted that some of the language was informal but rejected the attempt to characterise them as evidence of inveterate hostility”.
Solomon, for Marples’ side, took a different view.
He described Sir Peter as an “unsatisfactory witness, whose recollection was heavily clouded by his attempts to argue the case he wanted to advance in oral evidence, and to defend his actions, rather than to assist the court with his recollection of events”.
“Equally incredible” was his “insistence that he knew what the SFA’s rules said at all times, despite asking Mr Smith and Ms Forton ‘what do our rules say’ about various matters”.
The KC added that Sir Peter’s “lengthy answers to simple questions seem to have been intended to obscure rather than illuminate, further undermining his credibility”.
Harsh criticism of other witnesses
Solomon alleged Keith Smith was a “very poor, and often obviously dishonest, witness who sought to evade and obfuscate his role, rather than assist the court”.
Smith’s attempts to argue that he only had limited involvement in or knowledge of the 3aaa change-of-control process “lacked credibility – especially given his emails throughout the process, his involvement in the drafting of the refusal letter, and the fact that his direct superior (Sir Peter) and subordinate (Ms Forton) were both central to that process”.
Segan denied this and told the court Keith Smith was a “competent civil servant” who spoke of his “respect” for 3aaa.
Tony Allen, the former head of the large contracts unit at the SFA, was described by Solomon as one of the “most important witnesses” to Marples’ case, claiming he was “independent and gave clear and credible evidence on central matters” such as on “past change of control processes” which “survived cross-examination fully intact”.
But Segan criticised Allen for giving evidence that was “not only extremely compromised but demonstrably wrong”.
Allen, who worked with Marples as a consultant after leaving the SFA, gave evidence about his involvement in the change-of-control process in respect of two providers, Lifetime and Babington, even though documents “made clear that he was not and could not have been involved in those processes”.
Andrew Palmer, who worked at 3aaa as managing director before leading another large provider Learndirect, was meanwhile accused by Segan of “attempting to spin or recast his written evidence when it was shown to be wrong”.
SFA director Kirsty Evans was said to be “honest and credible” by Segan, while Solomon added that her evidence was “generally clear and reasonable”.
Karim Khan, who acted for 3aaa’s shareholders in relation to the proposed Trilantic acquisition, told the judge during his evidence that no private equity firm would touch 3aaa after a change of control refusal. He was described as someone “with no skin in the game” by Solomon, adding that he was impressed with his “fluency, knowledge and ability to deal clearly and coherently with the facts and the market in general”.
‘Partisan’ SFA investigators
Allegations of fraud that led to 3aaa’s collapse in 2018 have played a part in the Marples’ family lawsuit, even though it was two years after the change-in-control issue at the heart of the case.
Lead SFA investigator David Smales and his boss Keith Hunter gave evidence.
“His flawed and incompetent investigation led to the closure of 3aaa’s business when, he now admitted for the first time in oral evidence, that he had no proof for his allegations,” Solomon said about Smales.
The KC added Hunter was “even more trenchant in his view that 3aaa had committed fraud, despite not having carried out the investigation”, telling the court he “came across as a zealot who ignored his superiors by launching an investigation into 3aaa out of a vendetta, without evidence”.
Segan said that since Smales was giving evidence about a “thoroughly documented investigation, rather than any disputed events in relation to which the court would need to decide between competing recollections, that evidence was of doubtful utility”.
He also criticised Marples’ KC for an “odd” cross-examination of Hunter, which, after giving some “clearly knowledgeable answers about the exercise that had been performed and why the result was consistent only with deliberate manipulation”, ended “abruptly after less than an hour”.
Lee Marples, the nephew of Peter Marples and who was 3aaa’s resources manager and a claimant in the trial, was at the centre of data manipulation claims and all cross-examination of him focused on this.
Solomon said Lee Marples “only had limited involvement in or knowledge of those matters” and claimed the defendant’s case on this had “wholly failed on the evidence”.
But Segan said Lee Marples’ attempt to explain “innocent errors” or “anomalies” rather than admitting to evidence of deliberate manipulation was “unconvincing”.
Where was Sarah’s and Thomas’s evidence?
The DfE’s KC also said the absence of evidence from Sarah and Thomas Marples, the remaining claimants, was “potentially highly significant” because documents show the vast majority of cash proceeds of the sale to Trilantic “were going to be paid to them, rather than to Peter or Lee Marples”.
Segan said: “It is not possible simply to proceed on the basis that all four individuals fall to be analysed in the same way, particularly because of the way in which the claimants put their case on assumption of responsibility.”
