JD Wetherspoon is suing its former property advisor Van de Berg for fraud and breach of contract. The PMA Team went along to watch founder Tim Martin in the witness box a week ago on Wednesday.
Anyone who has attended a court hearing knows how unglamorous they are. But also strangely compelling.
There's little in the way of intemperate Judge Judy-style outburts, plenty of relentless trudging through voluminous piles of paperwork and re-reading of long-forgotten memos as the heyday of Wetherspoon (JDW) expansion is recalled, where property-finding was key to the company besting its high-street rivals.
JDW founder Tim Martin spent more than a week in the witness box last week as he gave evidence alleging that his former property advisor Van de Berg and its directors Christian Braun, Richard Harvey and George Aldridge defrauded his company.
The claim is a simple one. JDW paid Van de Berg £14m between 1989 and 2005 to find the company the best pub sites during a period in which it was expanding like mad.
It did so, JDW claims, but also, in respect of 13 pubs, lined up a third party, without expressly telling JDW, to buy the freehold rather than offer it to the company. This course of action tended to provide a big windfall for the third-party buyer of the freehold because having JDW as a tenant produced a big uplift in the value.
The claim is that Van de Berg actions were fraudulent and a breach of contract, while Van de Berg denies the claims and is seeking damages for the termination of its contract.
The case is being heard quite literally in the highest court in the land, Court 61, on the 10th and top floor of the High Court's modern extension, the Thomas More building. Famously, Tim Martin trained as a barrister although opted to open a pub in London's Muswell Hill in 1979 rather than practise. The case is providing gainful employment for a fair slug of the legal world's top wigs — each of the Van de Berg directors has one and JDW is represented by Catherine Newman QC with a couple more in support.
As Martin was cross-examined by barristers for the Van de Berg directors last week, there were hints about what kind of barrister Martin would have made: less the whizzy George Carmen-type given to dazzling rhetorical flourishes, more the calmly plodding grind-out type. The sheer volume of paperwork in Court 61 —
I counted 50 ring-binders of evidence related to the case — hint at Martin's doggedness in pursuing this case.
Martin, renowned for his dislike of suits and ties, in particular, had dug deep in wardrobe terms and was smartly dressed in a blueish suit and tie. (His Queen's Counsel was overheard in the lift telling Martin's daughter, a law student in Cardiff, that he had to be discouraged from wearing a Guinness tie he'd been given as a gift.)
To hear Martin's evidence was to be transported back to the heady days of the mid-1990s when JDW was competing, with the likes of Bass and Allied Domecq and many others, in a headlong rush to find sites across the country. The court heard how Martin had broken from a walking holiday on the Cotswolds Way to ring Van De Berg director Christian Braun to tell him that JDW "ought to have an outlet" in tiny Dursley, Gloucestershire (a Google search reports a population of 5,814 in the 2001 census). From 1994 onwards Martin was involved in attending countless licensing hearings around the country as JDW sought to win licensing approval to convert buildings to pubs.
Under cross-examination, Martin stressed over and over that the company was putting complete trust in Van de Berg to act in the company's best interests — Van de Berg was described as JDW's "out-sourced property department" by Newman.
JDW preferred freeholds after its flotation, but also accepted that it had to take a lot of leasehold sites to reach its expansion goal of 1,500 pubs. Nevertheless, it would have expected Van de Berg to tell JDW when a freehold was available.
"We didn't have a scheme for finding freeholds — we dealt with that on trust," Martin told the court. The suggestion came from Richard Harvey's barrister that, in one pub deal, Van de Berg had been involved in finding a "white knight" buyer of a freehold where JDW took the lease. Martin said: "We didn't ask for a white knight, we didn't need a white knight."
Martin indicated that JDW suspicions grew when a member of its legal department noticed that, in some deals, the freehold was being bought back-to-back with JDW signing up for the lease. It was a hint that a third-party property investor was buying the freehold to piggy-back the deal.
In 1998, Martin wrote a letter to Christian Braun raising his concerns. Martin also told the court there was one other occasion when he wondered about the quality of the job Van de Berg was doing for his company. He had visited Cradley Heath in Birmingham, where JDW was taking a pub on a leasehold basis with a rent of £42,000pa. "I went to Cradley Heath and half of it was shut down," Martin told the court.
"It didn't look like a place where you can't buy a freehold. It never crossed my mind that the freehold had been referred to a third party, but I thought [Van de Berg] had been lazy."
Overall, Martin said that Van de Berg was granted virtual autonomy. "I assumed [Van de Berg] negotiated the best deal they could and wasn't checking on this further."
George Aldridge's barrister argued, poring through a series of letters, that JDW's property and legal department was being told of contingent property deals. The barrister asked rhetorically whether Martin wanted these "lit up like the lighthouse of Alexandria" or put "in neon".
Martin stressed that letters were always ambiguous at best and that Aldridge needed to make it obvious that he was acting for someone else in the same deal — that there was a conflict of interest. "It was important for him (Aldridge) as a chartered surveyor that he made it very clear," said Martin. The case continues.