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Potential sale of Gap Group to Enva sparked legal case against former employee

A judge has ruled partially in favour of Gap Group North East in a case against a former employee over an email which contained “unfounded” allegations, on the back of a row over the value of shares from a proposed sale of GAP Group to Enva.

The case was brought against Mr Nicholas Crabb, director of Courtside Recycling by his liquidators

The company was awarded an injunction and damages for wasted management time in dealing with the case. Mr Justice Martin Spencer also cleared Nigel Tomlinson, a regional manager for the compliance scheme Valpak, of any wrongdoing after he was mentioned in emails at the centre of the case.

The case summary released by the High Court showed that the dispute centred around an email sent on 23 January 2022 by the defendant Paul Palmer to 12 recipients which contained what the judge described as “unfounded” allegations of bribery and disclosing confidential information.

The court reports notes that Mr Palmer sent the email because he was unhappy with potential money owed to him in the event that Enva acquired Gap Group North East.

During a case heard at the High Court between 30 October – 8 November 2023, Gap Group North East sought “just over £20,0000” for wasted management time in dealing with the case and £465,894 in damages for the lost chance of securing Valpak’s Scottish fridge work, which Gap said occurred due to the email.

In a ruling handed down on 1 December, the judge, Mr Justice Martin Spencer, ruled in favour of the Gap Group for its claim for of lost/wasted management time and awarded it £18,000.

The judge also considered that interest should be awarded at 4% from 25 January 2022 to 31 July 2022 and at 8% from 1 August 2022 until judgment.

‘Grateful’

Peter Moody, managing director of Gap Group North East Ltd, told letsrecycle.com: “We are immensely grateful to have resolved this longstanding matter and for the Court to find that the allegations made against us, to be completely unfounded, clearing our name in the process. We would like to extend our deepest thanks to our clients and stakeholders for their unwavering support during this difficult time and look forward to getting back to business as normal.” 

A spokesman from Kleyman & Co Solicitors, provided on behalf of Mr Palmer, said: “Our client was disappointed in having to partake in these proceedings, as it has caused him unnecessary legal costs and unnecessary stress, but he takes great comfort that a large proportion of GGNEL’s damages were found to be without merit.

The awarded damages equate to approximately 3.6% of their alleged loss and was solely down to their time spent on the matter only. Indeed, even after their various heads of losses being found devoid of basis, their alleged loss of Management Time was also reduced.”

Case

According to the ruling, Mr Palmer was an employee until January 2022. Issues arose when Enva became interested in acquiring Gap Group in December 2021.

The judgment added that the following month, Enva’s interest began to “crystallise”. Gap’s finance director then sent an email attaching a spreadsheet which illustrated the outcome for all the shareholders in the event of Gap being valued at certain values between £60 million and £28.5m.

It added that at a sale of £40m, the defendant’s shares would be worth £1,820,000. At a sale of £35m, they would be worth £796,267. At a sale below £35m, they would be worth £0.

When it was later suggested the sale could be around £34 million, the judge said Mr Palmer was “extremely angry at what he perceived to be a betrayal”.

In retaliation on 25 January, the ruling outlined that Mr Palmer sent an email detailing allegations of bribery and disclosing confidential information of the company to 12 people including competitors, the Environment Agency and the Serious Fraud Office.

The relationship between the Gap Group and Mr Palmer was terminated and Gap Group sued for Mr Palmer for damages, the ruling said.

Gap was successful in proving that the claims of the email were “unfounded” and was awarded £18,000 for time, but it’s case for damages was not successful.

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