City Diary: Van de Berg special

By The PMA Team

- Last updated on GMT

Related tags Real property Jdw

Martin: impressive witness
Martin: impressive witness
The PMA Team looks at some highlights of JD Wetherspoon's recent court victory over its former property agent Van de Berg.

Braun and the missing millions

Van de Berg received more than £14,000,000 in fees in the time it worked for JD Wetherspoon. Christian Braun set up his company in 1989 and began working for JDW when he was 21 and Wetherspoon founder Tim Martin was 31. During the heyday of JDW expansion, the company was on a retainer of as much as £2m a year. Mr Justice Peter Smith concluded that Van De Berg was essentially Christian Braun, and elevating colleagues Richard Harvey and George Alridge to directorships was little more than a "sop" or a "status symbol". "The reality is that Van de Berg was Christian Braun's ship and Richard Harvey and George Aldridge were passengers," he says. Of Christian Braun, the judge is scathing. He notes Braun found his 15 days in the witness box "an ordeal". But this didn't stem from the length of his testimony. "It stemmed from the repeated destruction of his evidence in cross-examination," he says. Unfortunately, though, the judge notes Braun seems to have few assets, despite years of big sums earned from JDW. "Christian Braun has sworn an affadavit of means, which apart from money owed to him by companies he says can't pay him. His only interest appears to be a half-share in the matrimonial home, which may be worth £750,000 in the current market, and is subject to a claim by his wife in divorce proceedings."

The damning Folkestone deal

The judge found a property deal in Folkestone the most telling piece of dishonesty by Christian Braun. Mr Justice Peter Smith found a freehold was bought for just £150,000 by Paul Ferrari, Braun's first employer at Ferrari Howe in Harrow, behind JDW's back, thanks to Braun. Later, JDW paid £400,000 for the freehold, leaving Paul Ferrari with a £245,000 profit. "The only conclusion I can draw is that the whole freehold position was concealed from him (Tim Martin) by Van de Berg/Christian Braun to enable Paul Ferrari to intervene to take the freehold and make a profit... it is the most obvious example of fraud and dishonesty on the part of Van de Berg/Christian Braun," the judge said.

The absurd Van de Burg criticism

The 167-page judgement on the fraud case is full of interesting detail. For example, Van de Berg was critical that former JDW managing director Mark McQuater wasn't called to give evidence. Mr Justice Peter Smith was having none of it: "This, in my view, borders on the absurd. Mr McQuater left JDW and formed Barracuda. There are no realistic prospects of him being willing (and Tim Martin wanting) Mr McQuater to go anywhere near this litigation."

The chief exec with little to say

JDW certainly won a thumping great victory over Van de Berg, but the company doesn't get it all its own way in the judgement. Mr Justice Peter Smith hammers JDW for fielding witnesses that were of little help. Of chief executive John Hutson, the judge said: "The more his evidence went on, the more it seemed to me that he was put up because he had nothing to say. As a chief executive, he appeared to know so little about the history of JDW and its actual operations that I could not believe what he saying."

Not so impressive professionals

It's fair to say that Mr Justice Peter Smith was less than impressed by many of the property professionals that appeared before him.

Of one witness, he says: "His evidence was called for the purpose of attempting to show that JDW bullied and was aggressive. But all the evidence showed in cross-examination was that he was like that and he assumed everybody else was

simply the same. His evidence was of no use although it was instructive in the morals of people operating in the property market. It goes beyond the old phrase about "gentlemen's agreements being made by people who turn out subsequently not to be gentlemen. I am no longer surprised at the antics people indulge in (even the most respectable of people) to maximise their return in property transactions at the expense of anybody else".

Director Harvey's trousered bonus

One interesting piece of information popped up in regard to Van De Berg director Richard Harvey, who topped up his £36,000 per annum salary in 1996 by pocketing a £24,200 cash bonus behind the back of both his employer, Van De Berg, and his client, JDW, after a freehold pub site was bought by a firm called Rican Securities, thanks to JDW signing up to a £50,000 a year lease in what amounted to a major conflict-of-interest. Mr Justice Peter Smith notes: "Richard Harvey was acting dishonestly at a significant time. I can't see any honest basis for it and he did not put one forward. Merely saying, as he did, that it was greed and was taken on the spur of the moment is insufficient."

The trusting big-picture man

Mr Justice Peter Smith found JDW founder Tim Martin "in many ways a very impressive witness". What emerged during the trial was how Martin relied on direct communication with Van de Berg's Christian Braun and his associates, seldom, if ever, checking internal documents on property deals or leaving a written record of his decisions. The

judge didn't hold this against him. "Tim Martin was not a documents man, not a details man, but a big-picture man. This is not a criticism; it's the way of many successful businessmen. I do not see that Tim Martin can be criticised for trusting what

Christian Braun was saying to him."

Related topics Professional Services & Utilities

Property of the week

Follow us

Pub Trade Guides

View more