[speaker001:] I wouldn't entirely agree, that the whole, that all of the purchasers are entirely just because of er their age
[speaker002:] no, no
[speaker001:] don't think you become entirely vulnerable just because you age, I hope not anyway
[speaker002:] so, so do I, but er at the same we said this much to Mr that you would except that many of the people who the company deal, deal with are old and concerned with a limited income on fixed pensions, you know that don't you?
[speaker001:] the, the majority of the people the company deal with certainly are er pensioners
[speaker002:] yes
[speaker001:] they come from all types of er social backgrounds
[speaker002:] I'm sure, but they're many of them are concerned about their budget because they live off a fixed pension...
[speaker001:] I don't know what the, the figures would be, er many of the residence actually had, had a considerable amount of er capital, because they had traded down into these properties
[speaker002:] erm, I understand that they might trade down, but equally there are a number and I can take you to the letters written to the if you like, are you saying you didn't realize that many of these people would have to budget, carefully budget
[speaker001:] I, I'd just, I'm not agreeing with the situation many, I'm not saying there wasn't anybody, clearly people were
[speaker002:] some
[speaker001:] some people were on fixed incomes
[speaker002:] right
[speaker001:] as I am
[speaker002:] well now let's, let's go back to it, some people... might rely on their savings and some might of been mislead, that's correct
[speaker001:] as I said earlier I don't believe anybody should of relied purely on the brochure, they had legal advisers
[speaker002:] oh I understand. Does it say anywhere in this brochure, do not rely on what is in this brochure, but contact your solicitor who will have more information, does it say that anywhere?
[speaker001:] it doesn't say about contacting a solicitor, but er, er each er purchaser had a solicitor appointed and further information was provided to that solicitor
[speaker002:] obviously we will come to that.... But Mr if you know that in the real world ordinary people will often rely on statements in a brochure like this, don't you agree?, that's the object of it
[speaker001:] I, I don't know, I certainly wouldn't rely on just a sales brochure if I was making a major trans
[speaker003:] no of course you wouldn't, I don't suppose Mr would, but the whole purpose of a brochure like this, is not necessary a dishonourable purpose, it's a hook the punter, to use Mr elegant word, he want to make it so simple to hook the punter and make him or her say to himself that's where we want to live and set their heart on it, that's all the purpose of this brochure in it? or is the
[speaker001:] yes it is, it's part
[speaker003:] it's like the television advertisement
[speaker001:] it's part of the sales process, yes
[speaker002:] yeah
[speaker003:] yeah well I mean so sure saves umbrage of course you didn't you'd be, er, I'm sure much more er careful, but then you're an experience er business man in the flash of youth....
[speaker002:] Mr so glad er generous compliment from my Lord
[speaker004:] [LAUGHTER] do you want to ask him something?...
[speaker002:] if you were aware that er when you voiced your concern Mr did clearly agree with you, right?
[speaker001:] subsequently in that instruction yes
[speaker002:] in your or about the break of nineteen eighty seven
[speaker001:] er correct
[speaker002:] but equally we now know until the Daily Telegraph published its article on the ninth of January nineteen eighty eight, some of these brochures with this representation or claim was still in circulation to the general public you know that?
[speaker001:] I've heard that evidence given, yes...
[speaker002:] well Mr says he discovered that after the Telegraph article... and to document of the papers that relates to it that supports that, did you discover that too?
[speaker001:] I didn't personally discover that...
[speaker002:] well if it was your concern that wanted that sentence out, was it your concern to see that the brochure was withdrawn?
[speaker001:] no, I'd voiced my concern and I understood the instruction had been given for the brochures or for that particular part of the brochure to be withdrawn and
[speaker002:] would it help for my Lord and the jury who's business would it be to ensure that it was withdrawn, who's business?
[speaker001:] Mr gave the instructions
[speaker002:] that doesn't answer my question, who's business would it be to ensure that the brochures were withdrawn?
[speaker001:] ultimately the sales and marketing director
[speaker002:] who was at the time?
[speaker001:] Mr
[speaker002:] thank you... so have we got this right beyond measure in the chain, the responsibility in the group of companies, you bring to the attention of your board and ultimately to Mr the fact of your concern about the centre piece
[speaker001:] correct
[speaker002:] he gives the instruction, the brochure should be withdrawn
[speaker001:] correct
[speaker002:] and it was Mr task to ensure that it's carried out
[speaker001:] as I understand it, yes
[speaker002:] thank you,... Now I go back to the table, let's try and er get down to some specific example, when would er, when was priced Westcliff on Sea?, when, when was that begun to develop er Mr
[speaker001:] er, I believe it would have been nineteen eighty five
[speaker002:] nineteen eighty five... and we can see the picture of it, or a drawing of it... on page seventy, I haven't looked to see how many apartments there is
[speaker001:] a hundred and thirty nine
[speaker002:] a hundred and thirty nine, so, oh yes I see it page seventy seven it tells us I think how many, a hundred and thirty nine, and this is obviously a pretty big development
[speaker001:] certainly is, yes
[speaker002:] is it at the top end of the, it starts at the top end of the slope?
[speaker001:] it would be yes
[speaker002:] and again approximately how long would it take er from the commencement of the building to completion, er approximately
[speaker001:] er in this particular case it was released in phases so
[speaker002:] yes
[speaker001:] it's probably, it, it may of been up to three years
[speaker002:] I understand... and you were responsible at all times for the figures which estimated the maintenance order and management services?
[speaker001:] correct
[speaker002:] were there a number of brochures therefore printed sir?...
[speaker001:] I believe the brochure had been updated, yes
[speaker002:] you believe, well what are we looking at here, page seventy eight, it's been produced by er for are we looking at the first brochure, or an updated version or what?...
[speaker001:] I imagine this is the first version
[speaker002:] why, why do you imagine?...
[speaker001:] because it, er because these statements still contained within it...
[speaker002:] oh you mean the statement?
[speaker001:] correct...
[speaker002:] well how often did you update the figures for home?... remembering when started in nineteen eighty five
[speaker001:] I don't recall the actual month the scheme opened in nineteen eighty five
[speaker002:] no
[speaker001:] I believe it was towards the end of the financial year, the figures probably would have been updated at er the end of nineteen eighty six
[speaker002:] so when would the first figures be given by you for the purpose of printing, approximately
[speaker001:] probably early in nineteen eighty five
[speaker002:] what was, before the Spring?
[speaker001:] probably er Winter to Spring nineteen eighty five
[speaker002:] you mean the Winter of eighty four, five?, Christmas eighty four
[speaker001:] say January eighty five
[speaker002:] right, in or about January eighty five?
[speaker001:] yes
[speaker002:] I'm not tying you to a specific month, but about January nineteen eighty five you would give the figures for the printing of the first brochure
[speaker001:] correct
[speaker002:] when would the last sketches er be around so to speak in broad terms to, to look for about
[speaker001:] oh, because there were so many units it was er a long selling period
[speaker002:] approximately what year were talking to?
[speaker001:] it probably would have sold out in nineteen eighty eight
[speaker002:] eighty eight... so are you saying the brochure was reprinted between nineteen eighty five and nineteen eighty eight?, by
[speaker001:] I imagine the first reprint would have been erm
[speaker002:] er it doesn't matter if you know
[speaker001:] no I don't know, but I, I, I imagine the er first reprint would have been September nineteen eighty six
[speaker002:] well as the person responsible for giving this information to the public... you would, you would be anxious to get it as accurate as possible wouldn't you?
[speaker001:] it would have been updated in September eighty six
[speaker002:] can I come back to the question if, you see if you don't answer it I'll repeat it, you as the person responsible for the figures would be anxious to make sure they were reaching the public accurately
[speaker001:] correct
[speaker002:] thank you. If you gave these figures in January nineteen eighty five, approximately by when would they be out of date and inaccurate and would require updating?, approximately when?
[speaker001:] they would have been updated in September nineteen eighty six
[speaker002:] oh, they may of been updated then, the question I asked you was a different one, when was the moment when they became inaccurate?...
[speaker001:] er, I, I can't say that they became inaccurate, they may well have been entirely accurate for the whole of the period from when they were first produced through to September nineteen eighty six
[speaker002:] what for twenty one months?
[speaker001:] yes, because it's only when the scheme actually starts to operate that you can er get a clear picture of what the cost are going to be, they are budgets, they are estimates and until you start incurring costs you can't be absolutely certain as to how the costs are gonna end up...
[speaker002:] I see, when would you start knowing what the actual costs were, when would you start knowing?
[speaker001:] er towards the end of the first full financial year
[speaker002:] give a month for the year please
[speaker001:] September eighty six
[speaker002:] you're saying until then you won't have no idea if these figures will be accurate or inaccurate
[speaker001:] that would be the most appropriate time to determine that, yes
[speaker002:] are you saying you wouldn't know whether they were accurate or inaccurate until twenty one months later?...
[speaker001:] I would say that they were accurate when they were produced and there produced on the basis of accuracy at the time and they would be reviewed after the first financial period
[speaker002:] are you saying, er, I'll put it a third time, are you saying or not that you do not know whether the figures that you published are accurate until twenty one months later?, is that what you're saying?
[speaker001:] the figures were accurate when they were produced and the figures
[speaker002:] how could they be accurate if they are an estimate?
[speaker001:] well they are an estimate of what we believe the running cost would be
[speaker002:] that's a different matter, when do you know whether they're accurate?, twenty one months later
[speaker001:] after the first er effectively after the first financial period
[speaker002:] twenty one months later
[speaker001:] in this case, yes
[speaker002:] well in your experience, after the first financial year, did the figures require adjustment?
[speaker001:] they would require adjust because we're then looking towards the next twelve months
[speaker002:] would they require adjustment?
[speaker001:] they would require adjustment for looking ahead, yes
[speaker002:] do you as a person responsible for the figures, ensure that they were adjusted?
[speaker001:] they would have been adjusted, yes
[speaker002:] yes, I'll ask you the question again, did you as the person responsible for these figures, ensure that they were adjusted?
[speaker001:] I would have requested the adjustments to be made yes
[speaker002:] to whom would you make that request?
[speaker001:] to the er sales and marketing people at
[speaker002:] of whom Mr is the most senior manager, at the time
[speaker001:] at the time, yes...
[speaker002:] so speaking from your knowledge, you would have made the request in or about September nineteen eighty six that should be updated?
[speaker001:] correct
[speaker002:] and provided it with a
[speaker001:] correct
[speaker002:] in order that the first brochure be published?
[speaker001:] yes
[speaker002:] was that done?
[speaker001:] as far as I can recall...
[speaker002:] what is there in this brochure that tells me whether it's the first edition, the second edition or the third edition?
[speaker001:] in this brochure it doesn't
[speaker002:] it doesn't... who's responsibility would it be to see that the old brochures were withdrawn and the new brochures were put on in there place?
[speaker001:] sales marketing, Mr ultimately
[speaker002:] Mr... with hindsight yeah, I think you would accept Mr a clearly, clearly is a vital thing to preserve the integrity of good name of to make sure if humanly possible these brochures are accurate and updated as possible, you'd agree with that?
[speaker001:] in hindsight I would
[speaker002:] yeah... and since the Daily Telegraph article indeed system has changed as you say, hasn't it, in eighty nine?
[speaker001:] many systems have changed since then
[speaker002:] no this system
[speaker001:] this system
[speaker002:] about updating these figures
[speaker001:] this system amongst others, yes
[speaker002:] maybe many others systems have changed
[speaker001:] indeed
[speaker002:] but in terms of what goes in the costs of the management charges in the brochure the systems changed since the Telegraph article hasn't it?
[speaker001:] yes
[speaker002:] and the changed is to have those charges automatically updated once a year
[speaker001:] correct...
[speaker002:] so let's go back to home for a moment... you say it was updated or should of been updated twenty one months later, as the first update
[speaker001:] yes
[speaker002:] was it updated a second time or did you ask for it to be updated a second time?...
[speaker001:] I can't recall precisely but I, I imagine yes it would have been up, I would have asked for it to be updated at September eighty seven as well
[speaker002:] well please don't rely on imagination... would it of been part of your duty to ensure it was updated in September nineteen eighty seven?
[speaker001:] yes
[speaker002:] are you in possession, that you're aware of any documents where you issue a request for the brochure to be updated in September nineteen eighty six or September nineteen eighty seven... is there any document either in your possession or one you would get by another, from your request for updating these brochures
[speaker001:] if it's not already been disclosed, probably not
[speaker002:] take it from me that I haven't seen one and if there is one I'd be grateful if somebody on your site would point it out, but to my knowledge no such document has been disclosed. Would it be done by a document?
[speaker001:] it would normally, if I recall correctly at the time, there would normally been a memorandum listing new charges for each development
[speaker002:] exactly, so it would be a document issued by the by you the with the intention of what Mr and in effect update brochure here and in charge
[speaker001:] it wouldn't of gone directly to Mr no it would have gone to his er regional sales staff
[speaker002:] who would you send it to?
[speaker001:] it would have gone to whichever region the sales manager responsible or the regional managing director
[speaker002:] well who would it go to?
[speaker001:] it would have gone to either the sales manager or the regional managing director of the Eastern region of at the time
[speaker002:] names please nineteen eighty seven
[speaker001:] I can't recall...
[speaker002:] will you promise to have a look er will
[speaker001:] there were a number of changes of er, in that position of regional managing director
[speaker002:] no, no, but were would the documents be in?
[speaker001:] I don't know, if they haven't been disclosed I, they, they probably have not been retained....
[speaker002:] Can you lay your hands on the second and third addition of the brochures then?, if there were a second and third edition...
[speaker001:] I personally don't keep copies of all of the brochures
[speaker002:] no, no, it was just a bound to be a... cos you see, let me explain something to you... until you gave evidence today, certainly I didn't and maybe others didn't realize in this court room that what were looking at is that one edition of the brochure which may of had several editions, do you understand?
[speaker001:] yes
[speaker002:] and you Mr revealed something new, I hope you don't, there may of been two if not three editions...
[speaker001:] of the costs possibly
[speaker002:] well you said the brochure had been reprinted
[speaker001:] why I don't think the whole brochure would have been reprinted
[speaker002:] page two
[speaker001:] I'm talking about the er
[speaker002:] page two
[speaker001:] the changes to the costs
[speaker002:] well is page seventy one, which you're will be reprinted... and it would require a what is it of er page seventy eight...
[speaker001:] yes
[speaker002:] so there are two pages what would have required a reprint, seventy one and seventy eight
[speaker001:] yes...
[speaker002:] the first reprint should of occurred twenty one months after the brochure was first printed and the second reprint about twelve months later
[speaker001:] I believe that to be true
[speaker002:] and the person ultimately responsible ensuring that happened of the system would be Mr is it?...
[speaker001:] well ultimately I guess, there is a regional managing director for each region who would er be responsible for their region
[speaker002:] are you able to help this jury with this simple matter, to your knowledge, on this development, on a hundred and thirty eight or so apartments... did you see the second addition of this brochure and the third?, did you personally ever see it?
[speaker001:] I don't recall...
[speaker002:] but this whole case is about management and service charges and you're person who erm assess them for the purposes of the brochure, you say you don't recall whether it's the second or third addition ever seen by you?
[speaker001:] not, not specifically, no...
[speaker002:] let me ask you something else... on a development Mr... I when I watched use the er help from time to time there are major items of expenditure, after the properties built, correct
[speaker001:] correct, yes
[speaker002:] let me give you one example, there are... many of these developments had flat roofs didn't they?, not all of them, but some had flat roofs
[speaker001:] a minority, yes
[speaker002:] a minority, they were covered with felt rather than ash felt were they not?
[speaker001:] in some cases, yes
[speaker002:] they would require replacing every seven years would they not?
[speaker001:] seven to ten years would be normal
[speaker002:] other major items of expenditure which would require replacement would be lift ropes is that right?
[speaker001:] correct
[speaker002:] corridor carpets...
[speaker001:] yes
[speaker002:] car park tarmac
[speaker001:] yes
[speaker002:] boundary walls
[speaker001:] yes
[speaker002:] warden call systems
[speaker001:] yes
[speaker002:] and alarm systems
[speaker001:] yes... after different periods of time there not all
[speaker002:] quite, quite obviously they don't all... There was in nineteen eighty seven before the Telegraph article no contingency fund in your budget was there?...
[speaker001:] no...
[speaker002:] when did the contingency fund first come into the budget?...
[speaker001:] erm...
[speaker002:] approximately
[speaker001:] we approximately... the subject we had been looking at for some time so I approximately, nineteen eighty eight, nineteen eighty nine
[speaker002:] oh no, it wasn't there at the time of the Telegraph article was it?
[speaker001:] are you talking about this particular scheme?
[speaker002:] I'm, no, no, no, I'm talking about the principal of putting in a contingency fund in the charges
[speaker001:] well as I say I recall it would have been nineteen eighty eight, eighty nine, I can't recall precisely
[speaker002:] after the Telegraph article...
[speaker001:] I believe that to be the case
[speaker002:] thank you.... You thought it was a good idea didn't you?
[speaker001:] yes...
[speaker002:] so it meant that for some time before contingency fund development was introduced... you must of had some concerns er about the accuracy of the figures you were putting forward for the publication, can, can I explain that a little more?... if after a few years a major repair needs to be carried out there was no contingency fund, it might mean sticking another two or three hundred pounds a year on the service charges, might it not, to cover a major repair
[speaker001:] in prac er, in practice er it is unlikely that there would be any major repairs at the cost of the residence within the first eight to ten years
[speaker002:] well you already agree with me that a flat roof might require replacing in seven
[speaker001:] it might in general
[speaker002:] might
[speaker001:] generally ten years, I don't recall any, replacing any flat roofs of less than ten years
[speaker002:] we needn't argue of seven or ten, but let's say eight, I don't care, but when that fell due it would mean wouldn't it, there would be a major charge to the there residence, whoever they were?
[speaker001:] unless don't agree to pick up the cost
[speaker002:] ah
[speaker001:] which they often did...
[speaker002:] come on Mr don't generally pass on the cost
[speaker001:] no, that is not correct, in many cases went well beyond what they were legally obliged to do
[speaker002:] why, because it would have been unfair to charge the residence?
[speaker001:] it depended on what the particular er problem was at the time, if something failed after four or five years it was then covered by insurance by the N H B C or by guarantees
[speaker002:] I see let take it from the other end, why did you have to take the insertion of the contingency fund of the estimates
[speaker001:] because I believe we should be planning for long term er to repair the
[speaker002:] exactly, but why wait until nineteen eighty eight to discover that, how long had you been doing these estimates for?, how many years have you been doing?
[speaker001:] on a limited number of schemes we have been doing the estimates for four or five years
[speaker002:] no not we, you I'm asking Mr you have been doing estimates for four or five years have you?
[speaker001:] yes
[speaker002:] by nineteen eighty eight?
[speaker001:] yes
[speaker002:] so you, that was, you started doing them in about nineteen eighty three?
[speaker001:] yes
[speaker002:] and approximately how many sites would you have given estimates for between eighty three and eighty eight? approximate number
[speaker001:] er, well that was changing all the time but we had erm like
[speaker002:] but is it twenty, thirty, forty, I just don't know
[speaker001:] oh it would be, been er probably eighty schemes
[speaker002:] eighty... obviously I'm not tying you to a figure we just want to get some idea, so seventy, eighty or ninety as maybe, about eighty schemes over five years you've given estimates for
[speaker001:] yes
[speaker002:] which didn't contain a contingency fund element
[speaker001:] no
[speaker002:] correct
[speaker001:] the main, er the usual recurring cost was er redecorating cost which we had introduced a fund for on the outset
[speaker002:] sorry can, can we get to the question again, want to see if I've got it right, correct me if I'm wrong, over the eighty schemes and the five years that you had put forward budgets for all, you hadn't included a contingency fund element?
[speaker001:] that's correct
[speaker002:] that's correct... and it was your suggestion that a contingency fund should be introduced after the Telegraph part
[speaker001:] in nineteen eighty, nineteen eighty nine, yes
[speaker002:] yes, did that require the approval of Mr or not?...
[speaker001:] again that would have been a matter raised at our board and passed on
[speaker002:] could you please answer the question, would your suggestion require the approval of Mr?
[speaker001:] ultimately, yes
[speaker002:] did he approve it?
[speaker001:] yes...
[speaker002:] readily or not?
[speaker001:] yes, I don't recall any argument
[speaker002:] right, Mr did it require his approval, as the, as it were officer in charge of brochures?
[speaker001:] no
[speaker002:] it didn't require approval
[speaker001:] no...
[speaker002:] and with hindsight, although, don't think I'm being over critical, although you put forward eighty or so estimates for different schemes, with hindsight it's clearly more prudent and fairer and accurate, more accurate to have a contingency fund isn't it?, in the, in the budgetary cost
[speaker001:] as a management principal one should include a contingency fund
[speaker002:] yes
[speaker001:] as earlier as is reasonably to do so
[speaker002:] what, it didn't need eighty schemes did it to be launched before you introduced it, it's something you'd been wanting to do wasn't it?...
[speaker001:] something we considered that er
[speaker002:] no, no, something you had been wanting to do, not we, you had been wanting to
[speaker001:] yes I, I wanted to introduce a contingency fund
[speaker002:] yes, had you met opposition to the introduction of that contingency fund?
[speaker001:] no
[speaker002:] well why wasn't it been done earlier?
[speaker001:] because I didn't I didn't raise it earlier
[speaker002:] I see.... You spoke to Mr er the journalist concerned didn't you?
[speaker001:] correct
[speaker002:] did you ever raise with him back in January nineteen eighty eight something that you and Mr had both raised before, namely that what goes into the brochure is not to be relied on you've got to look at the solicitors correspondence, to interpret what is in the brochure, did you?, did you ever raise that with Mr the solicitor's correspondence?...
[speaker001:] I don't recall that being a subject of my conversation, er
[speaker002:] is the answer no you didn't raise it with Mr?
[speaker001:] er we were given very little opportunity to raise anything with Mr
[speaker002:] is the answer you did not raise it with Mr?
[speaker001:] only because there was no opportunity
[speaker003:] Huh, er just, please help us, you know we get on much better, of course you can give an explanation, all Mr wants, you requested is said whether you did raise it, of course you could say, we didn't, I didn't because erm of so and so, because there wasn't an opportunity or whatever, but do tell us whether yes or no whether you raised it surely that's possible Mr isn't it?, isn't it?, am I trying to assist you, during my people are just not answering the questions, put it again in blunt form Mr would you please
[speaker002:] well the questions a very simple one, back in January nineteen eighty eight, on any occasion you spoke to Mr either before or after the first article did you ever raise this question with the solicitors letter?
[speaker001:] no
[speaker002:] thank you
[speaker003:] we give it if you say why?
[speaker002:] will you turn to page find one, thirty four,... What we're looking at is the accounts for Westcliff on Sea, the year ending thirty first of August nineteen ninety two, last year
[speaker001:] correct
[speaker002:] look please at item four, on page one, three, four... second paragraph, [reading] the contingency fund is designed to provide funds in order to pay for major repairs or replacements which may arise in the future... these accounts do not include the contingency fund despite strong recommendations from [], can you explain please Mr?
[speaker001:] yes the residence association at er did not agree to the introduction of a contingency fund
[speaker002:] I see, so you weren't able to have a contingency fund at
[speaker001:] there is one there now, but we weren't able at the time, no
[speaker002:] at the time... [cough] had you been strongly recommending it since eighty eight?
[speaker001:] we, eighty eighty to eighty nine as I
[speaker002:] yeah
[speaker001:] say can't recall, we would have been recommending contingency fund
[speaker002:] you you would
[speaker001:] yes
[speaker002:] yes I understand... Mr very much....
[speaker005:] You erm stay with T one, three, four please... just so that we er understand the point you're making and I would ask you if you'd be so kind as to keep your voice well up.... These are the er accounts that Mr put to you, are they audited accounts?
[speaker001:] Yes they are
[speaker005:] are they provided for the residence at
[speaker001:] each residence gets a copy
[speaker005:] we can see at the bottom of one, three, four... bearing in mind that these are the August nineteen ninety two accounts, we see at the top of one, three, four that there have in fact been an adjustment there for the previous year to August nineteen ninety one... so that there was in fact an amount of surplus created to the residence of a hundred and eight pounds, eighty P, is that right?
[speaker001:] that's correct
[speaker005:] so that the budgeted estimate for the previous year had been too high and there is an adjustment in favour of the residence for the following year
[speaker001:] that's correct
[speaker005:] when you've got a budget for an oncoming year, assuming you and I are here together in November ninety three and we're preparing a budget up till November ninety four, can you ever have precise figures which will be accurate to the last pound?
[speaker001:] no, simply because it is an estimate
[speaker005:] so that's your budget estimate, when we get to November nineteen ninety four you and I together we will then find out what has happened in practice
[speaker001:] correct
[speaker005:] in this particular twelve month period your budget estimate would be... wrong in that you needed to pay the residence back a hundred and eight pounds
[speaker001:] that's correct
[speaker005:] well then, let's stick with contingency fund shall we?... you've told us that you wish to have a contingency fund among others at
[speaker001:] that's correct
[speaker005:] a contingency fund will be a fund available for any particular unforeseen occurrence in the future
[speaker001:] unforeseen or, or knowing expenditure, what is unforeseen is when the expenditure is going to occur
[speaker005:] exactly, but who has to pay in to the contingency fund if it's agreed by the residence?
[speaker001:] the residence have to pay
[speaker005:] so their charges would go up if you had to have a contingency fund?
[speaker001:] correct
[speaker005:] does that go up as part of the management charge or part of the service charge which is not related to management?
[speaker001:] it would go up as part of the service charge, the management charge would not change as a result
[speaker005:] exactly...
[speaker002:] Are you leaving the accounts Mr?
[speaker005:] er my Lord I was going to
[speaker002:] can I just ask him one question about it, erm, I'm not an accountant and you probably, I'm sure you know a lot more about accounts than I do, but in fact if you look at the revenue accounts for the year we're talking about ended August nineteen ninety two at page a hundred and thirty two, do you see that?
[speaker001:] yes I do
[speaker002:] you see there are two columns, the second column is budget, that right?...
[speaker001:] yes
[speaker002:] and the first column, although it's not headed is, presumably actual expenditure, would that be right?
[speaker001:] er yes
[speaker002:] good, and if you rummaged over the details, if you look at the bottom... er, you'll see... er account, total costs a hundred thousand, sixty hundred and forty four pounds... budget... ninety six, eight, seven, four, so that er there in fact it looks as though the actual costs were something erm nearly four thousand pound er more than the budget, do you see?
[speaker001:] yes
[speaker002:] er, if you just to avoid doubt, it looks as though, as we presume we go back to one, three, four that's less than the income was the revenue from things like the guest room and er the lounge and so on, you see?
[speaker001:] that's correct
[speaker002:] so there you, you get on the accounts you get a, a er, apparently, income er extension of the scheme budget by nearly four thousand pounds, three, eight, then you go back with what Lord was asking you about and I just want you to explain it if you can, if you can't tell me, as he drew your attention to surplus per audited account at August ninety nineteen one, a hundred and eight, eighty, so that, in fact the year ending nineteen ninety two, along these accounts we're dealing with, in fact the expenditure of exceeded budget by nearly four thousand, the previous year er in nineteen ninety one er it had gone the other way that er
[speaker001:] that's is
[speaker002:] is that how I understand how it worked
[speaker001:] entirely right
[speaker002:] so you're talking about, the, the little note at the bottom of nine, of page one, three, four is not dealing with accounts er that relate to nineteen ninety two, which the rest of the three pages are, but dealing with the previous year, is that right?
[speaker001:] it's, it's for the previous years accounts, yeah
[speaker002:] yes it is
[speaker005:] can we just erm clarify that Mr, of course it's dealing with the previous years accounts, but until you get to the end of the previous year are you going to know whether you've over or under est estimated on budget?
[speaker001:] no, it's the same situation until you've complete the financial year and you audit the accounts you don't know precisely what the situation is
[speaker005:] so if at the bottom of page one, three, four there is the benefit to the residence of a hundred and eight pounds, when does that come into consideration in the year ending August nineteen ninety one, or the year ending August nineteen ninety two?
[speaker001:] they, they would normally of er received that during the year ending August nineteen ninety two
[speaker005:] thank you. We also see on page one, three, four and this is something you also mentioned Mr... that if you've got certain costs they will be covered and you gave a number of examples, one of them you said, er, we were covered by insurance
[speaker001:] yes
[speaker005:] now we can see that at one, three, four, about a third of the page down, can't we?
[speaker001:] yes
[speaker005:] now who actually insured the premises that the residence live in
[speaker001:] we insurance the premises on behalf of the residence
[speaker005:] you insurance them centrally as it were and each resident has to pay part of the insurance cost?
[speaker001:] through the service charge, yes
[speaker005:] thank you, is that through the service charge or through the management charge?
[speaker001:] through the service charge
[speaker005:] thank you and we see here that erm one thousand eight hundred and fifty six pounds had been claimed, that one thousand eight hundred and fifty six pounds thirteen had been received so the insurance cover had paid
[speaker001:] correct
[speaker005:] you mentioned another protection which is the N H B C, that's, National House Building Council guarantee how long does that run for when a scheme, from the commencement of a scheme?
[speaker001:] ten years...
[speaker005:] now at the end of the day, whatever your own views about a contingency fund are, bearing in mind that it's service, not management charged, if the residence don't agree can you simply dictate to them that they've got to have a contingency fund?
[speaker001:] er, I'd believe in theory we could because the lease provides us or gives us the opportunity to do so, but we would not go against the wishes of the residence
[speaker005:] thank you.... Now on the management charge which is what I want to ask you about, cos that's what you've said in the brochure, on the management charge, did you deliberately set the management charge too low to hook the punters?
[speaker001:] absolutely not...
[speaker005:] shall we just look at one or two erm documents that you've already looked at please, would you go to page twenty nine, just the illustration that seen... and this is the... I'm not sure whether a point is going to be made about this or not, but if you look at page thirty one there... there's a golf club on the left and a man fishing on the right
[speaker001:] this is a golf club?
[speaker005:] beg your pardon?
[speaker001:] it's a golf club?
[speaker003:] er, er I'm sorry we haven't had any evidence of that yet
[speaker005:] I thought it was suggested that
[speaker003:] yes, but he said he never, it was suggested but
[speaker005:] oh I'm sorry I asked
[speaker003:] Mr has great powers but he can't give evidence on this case
[speaker005:] not on this occasion
[speaker003:] no
[speaker005:] let's assume that Mr is right in the suggestion he put to you about the building on the left, that it's a golf course and we can see for ourselves without any evidence there's a man fishing on the lake at the bottom there, were you trying to suggest that as part of the deal at a lake would be provided or a golf club?
[speaker001:] no of course not
[speaker003:] well what's the point of the lake?, that's what's been worrying me, I was going to ask Mr what is the punter supposed to see?
[speaker005:] what do people do when they retire among other things, by way of amenities?
[speaker001:] they play golf and go fishing
[speaker005:] [LAUGHTER] thank you [] and if you walked around to look at the flat, would you find a lake and whacking big golf course in the middle of it?
[speaker001:] no...
[speaker005:] now let's erm just go on to something perhaps that's more to the point, you were asked on a number occasions er what information was given and so for and when, er can you see in fact on some of these documents that the brochures are indeed dated?, just look at er please, you can see that it's a printed brochure... it's got a number of er additions and then we look at page thirty seven... boldly state you have that as twenty sixth March eighty five, don't you?
[speaker001:] correct
[speaker005:] are you be able to tell us would that page at twenty six m, eighty five be part of the original brochure or part of something which erm was later brought out?, looking at the type and the print in the brochure, if you can't help us just say
[speaker001:] I couldn't be sure on that point
[speaker005:] look at erm page forty would you please, this is at... if you look at page forty one there you've got people playing bowls at the top there, maybe another retirement activity and at the bottom of the page forty two it's dated nine eighty five
[speaker001:] correct
[speaker005:] so that indicates print date of September eighty five?
[speaker001:] yes
[speaker005:] now unfortunately at page forty two there's a sticker originally that says forty two, but just let's look at that shall we?, cos you were asked about what was said to people and what they might know or understand, [reading] while these particulars are prepared with all due care [] and the word that's been stuck over is convenience [reading] while these particulars are prepared with all due care for the convenience of intended purchases, the information contained therein is intended as a preliminary guide only []
[speaker001:] correct
[speaker005:] did you know that was in the brochure?, that it was a preliminary guide only?
[speaker001:] yes...
[speaker005:] and do we find that in fact on the other brochures, for instance at page fifty two, I don't want to go through them all, I'm only giving an example or two, page fifty two there you see, a sticker unfortunately er obscured in part, same words, bottom of fifty two, [reading] while these particulars are prepared with all due care for the convenience of the intend purchasers, the information contained therein is intended as a preliminary guide only []
[speaker001:] correct
[speaker005:] now if someone therefore becomes interested in one of the developments, would they be any doubt buying the houses without having a solicitors assistance?
[speaker001:] that would be most unusual
[speaker005:] and even if they did buy without a solicitors assistance, what was the system about sending them the letter which we've looked at earlier which is at erm D one, five, two, remember this is the letter that goes to Mr solicitors... assuming you get a very rare person who does his or her own conveyance
[speaker001:] it would
[speaker005:] does that letter still go them?
[speaker001:] it would have gone to them and, rather to their solicitor, yes
[speaker005:] one of the things at the bottom of one, five, two is the N H B C agreement that you mentioned with Mr
[speaker001:] yes
[speaker005:] so let's just look again at one, five, three please... you see you were asked about whether or not the brochure would be updated and when it might be updated, in what particulars circumstances, do you remember Mr?
[speaker001:] yes I do
[speaker005:] shall we just look at er item four on one, five, three, because this is er sent out on the seventeenth of June eighty five, right, see that at page one, five, two, and it says at four [reading] the service charge, the estimated service charge for these flats for the year ending thirty one August eighty five is [] and then the flats are set out there, three hundred and eighty two, five, seven, five and seven, six, four, that's all in respect of because we know this was an flat, we can see that from page one, five, two, but when, whether or not the brochure is updated... when that letter goes out to their solicitors, have you seen other similar letters of this sort going out?
[speaker001:] yes it's pretty well a standard letter that goes out
[speaker005:] and if you're for instance dealing with a purchaser who's interested in buying around about December... what was the system that you had about saying what the service charges might be?, I mean do you relate to the brochure necessarily or does the
[speaker001:] no
[speaker005:] letter relate, does the letter relate to the time of purchase?
[speaker001:] well the letter would relate to the time of purchase
[speaker005:] thank you... and it said there in apportionment, page one, five, three again, [reading] calculated from the date of legal completion to the end of the then current half year, will be collected on completion, please note that these are estimated only and will be retrospectively adjusted when audited accounts are available [] now we've seen the reflection of that in practice this morning haven't we?
[speaker001:] correct
[speaker005:] on the accounts for
[speaker001:] yes...
[speaker005:] You were asked whether you told Mr about the solicitors letter...
[speaker001:] yes
[speaker005:] did he ever ask you about what information was given to solicitors?
[speaker001:] no
[speaker005:] would there of been any problem at all in your providing it?
[speaker001:] none what so ever
[speaker005:] would you have been willing to provide it?
[speaker001:] yes...
[speaker005:] how long was your conversation with Mr?
[speaker001:] approximately ten to fifteen minutes
[speaker005:] had you had any opportunity to prepare yourself for the sort of questions he might be asking?
[speaker001:] no, none
[speaker005:] when you offered a meeting which does not seemed to be in dispute, either you're travelling to London or making yourselves available in Corma were you offering a ten minute conversation or were you anticipating that you would be able to deal with any questions he might have?
[speaker001:] we were anticipating being able to explain in detail the entire procedure relating to accounting
[speaker005:] when you say the entire procedure, would that of included or not a solicitors letter which is set out?
[speaker001:] yes it would have done
[speaker005:] did he show any interest at all in having those details provided for him?
[speaker001:] he, he did not agree to a meeting...
[speaker005:] did he give you a reason why not?, did he say why?
[speaker001:] because he had a deadline to meet
[speaker005:] did he ever explain to you what the urgency of having to have the article in on the following Saturday was?, did he ev, did he ever tell you anything?
[speaker001:] er no, not, he didn't explain the urgency...
[speaker005:] You spoke about what was said in the brochure that management charges... had been or would be running at about a rate of inflation, we can see it on page fifty six, it's better if you look at it I think, rather than I parrot phrase, see fifty six if you so kind... now see fifty six is talking about... at Broadstone... [reading] will the management charges greatly increase [] the answer is no... [reading] management service, er, sorry has appointed U K leading management specialist for several reasons, firstly because of their professional caring attitude, secondly because time has shown that management charges, rises the rate either slightly below or at the levelled inflation [] when that brochure was produced in respect of that development was that statement true or was it not?
[speaker001:] it was true...
[speaker005:] you were asked a few questions about the contingency fund, was setting up the contingency fund, had it got any connection at all with the Daily Telegraph article?
[speaker001:] none what so ever
[speaker005:] the Daily Telegraph article comes out in January eighty eight, was the updating or the answering of the brochures periodically anything to do with the Daily Telegraph article?
[speaker001:] it was not
[speaker005:] had the updating gone on at all before the Daily Telegraph article came out?... which is in nineteen eighty eight
[speaker001:] yes...
[speaker005:] did Mr ask you any of the questions about updating or the historical pattern that had been shown by management charges?
[speaker001:] no...
[speaker005:] was there any discussion about the difference between the service charges and the management charge?...
[speaker001:] not at that time I recall...
[speaker005:] When you're dealing with people who may want to buy retirement homes, er how do you describe them?, they've been described by Mr as the punters you see, how'd you, what do you call them?
[speaker001:] precedence, or prospective purchasers at the time
[speaker005:] is that the way that treated people?, calling it hooking the punters?
[speaker001:] not at all, they were customers
[speaker005:] have you ever heard the word or the phrase hooking the punters, either at or or?
[speaker001:] never...
[speaker005:] if somebody comes as a resident to one of the developments that you now presently run... are they there normally for years or for months?
[speaker001:] they're normally there for years...
[speaker005:] if they're normally there for years, is there any purpose at all in trying to deceive them before they go and live there?
[speaker001:] there wouldn't seem to be any purpose it, wouldn't be right
[speaker002:] my Lord how that under my cross examination I don't know, I've never suggested that he was trying to deceive any resident
[speaker003:] no, I, there's get, a little confusion coming into this case I think, I'm not blaming anybody, as I understand your case Mr as put to er as put to Mr, you have expressly disavowed any suggestion to this witness that there was any deliberate attempt to deceive any prospective purchaser
[speaker002:] that is correct
[speaker003:] what you, your case is as I understand it, I've only intervened cos I think the question didn't dis perhaps a lack of understanding this by Lord allow me to say so, what you're saying is that erm, in fact, although not intentionally you're prepared to accept the format of the brochure in relation to the on going charges... was such as could reasonably be said by your newspaper to have mislead prospective purchasers
[speaker002:] that is so
[speaker003:] that is the point of the case
[speaker002:] and
[speaker003:] now the avoidance of doubt, when you've got to another aspect of the case quite different, namely the claim for special damages, you were suggesting to Mr that there, there was a deliberate attempt to and after all whereas you might not like my er use of the to swing on to the Daily Telegraph
[speaker002:] yes
[speaker003:] er the costs which would have been paid in any event that's all the case is
[speaker002:] your Lord, your Lordship's got it absolutely right
[speaker005:] I, I understand that my Lord, I
[speaker003:] yes but you were, forgive me Lord you were asking him about deliberate er deceit or there wouldn't be any point in deliberately, get the exact word, misleading the prospective purchaser
[speaker005:] of course because that's the way that the plaintiff's claim has and, and, and that's why
[speaker003:] oh yes I understand it
[speaker005:] and that's why it's A, sorry, that's why it's A relevant and B important
[speaker003:] right, well, I'm, I'm not worried about the point as to whether it arise out of cross examination, I seldom am because there is always erm can be an opportunity for further cross examination if the other party wants to, so er on the grounds of the objection I, I, I don't uphold it you can ask that if you like, but er I do want the jury always to keep their eye on that what really is the issue in the case er certainly from the defendants point of view, I know what you say
[speaker005:] but, erm the issue from the plaintiffs point of view of course is erm just
[speaker003:] well you say the article meant that your clients were being accused of deliberate deceit
[speaker005:] certainly
[speaker003:] and in the end the jury will have to say which of the two versions of the meaning they except
[speaker005:] and thereafter decide whether or not the meaning is made out
[speaker003:] correct, good, now, so ask your, do ask your question
[speaker005:] my Lord I've asked it and the witness has answered in fact
[speaker003:] oh, good, huh, I assumed the answer was no
[speaker005:] it was
[speaker003:] I was listening to Mr, yes, thank you
[speaker005:] yes, thank you Mr would you step down please
[speaker001:] thank you
[speaker003:] er one that occurs to me, no, no speaking on it myself, the jury might be interested, sometime I just like to get a feel of what a brochure looks like, not divided as it obviously has to be here, could, could we see a couple sometime, not, not now
[speaker001:] yes
[speaker003:] and then the jury, I can pass them to the jury, now then, sorry
[speaker005:] no, no, my Lord I have three applications to make in the light of the evidence given by Mr yesterday and this witness today, er the first is this in terms of this witnesses evidence, I don't know whether your Lordship appreciated it, but I certainly did in terms of evidence, that in cases of some brochures there were a number of editions, in other words first, second and maybe third edition
[speaker003:] well certainly I believe Mr he, I don't think he went into the same detail as Mr I, but Mr certainly left me the impression that some at least of the brochures were, went into more than one addition, yes
[speaker005:] er, my Lord there has not been disclosed by the plaintiffs anything more than one copy of the brochure for each site we've got in the my Lord might I therefore formally call for disclosures of each addition of the brochures that the jury have them
[speaker003:] well erm you can't no doubt do that at this moment, but I, I think it's as Mr undoubtedly said, quite apart from anything Mr said er, if there are a several addition er which strangest with the relation to the er... important part from our point of view, or an important part mainly these residence on going charges, that sounds reasonable
[speaker005:] good, er I think that's right, in fact erm a large number of brochures were in fact on our list of documents
[speaker003:] yes
[speaker005:] erm disclosed erm... there are dates on some of them as I established
[speaker003:] yes
[speaker005:] in evidence
[speaker003:] well could that be further looked into
[speaker005:] oh certainly
[speaker003:] and any
[speaker005:] any copies of that
[speaker003:] any suggestion because I think the jury would be interested particularly with the dates on them, but even if there aren't compare the figures in different editions
[speaker005:] certainly, and my Lord my problem is I'd liked to see them before I cross-examine Mr the er, the next witness cos he, he was the the officer in charge of brochures, er I don't know whether the defendants can get, the plaintiffs can get them before but er, I mention it now, the second application my Lord, er your Lordship recalls that Mr evidence is at a meeting of, he brought up his concerns about the accuracy of the inflation sentence in the brochure and a board meeting in, no board meeting to that effect has been disclosed
[speaker003:] no minutes you mean
[speaker005:] no minute... and I call for and ask your Lordship to order the production of any board minute meeting recording that concern of Mr
[speaker003:] yeah
[speaker005:] and more for completion the third application is this, yesterday Mr referred in his evidence
[speaker003:] not yesterday
[speaker005:] I beg your pardon, the last time before
[speaker003:] yes, the day before yesterday
[speaker005:] the day before, er Mr referred to in his evidence, you may remember to a company called
[speaker003:] mm
[speaker005:] the employer... and I asked him what documents they produced, what report they produced we have written a letter about it, but I formally call for any report or document from and the second thing he mentioned were letters from about twelve members of parliament that they received
[speaker003:] well I think he did say those ought to be in their file
[speaker005:] my Lord
[speaker003:] he said that, that they should be
[speaker005:] but I, I, I call
[speaker003:] yeah
[speaker005:] for production of those letters from the twelve members of parliament
[speaker003:] Lord you can't deal with that er at the snap of the fingers obviously, but I think you'd agree that er going from the number three upwards that if there is any reports from management er and if the letters from the members of parliament still exist in your clients file, they would be disclosable
[speaker002:] well my Lord I, I simply don't know, erm
[speaker003:] er no, if they don't exist so be it
[speaker002:] I simply, I simply can't deal with the question because some of these are, are raised now for the first time
[speaker005:] no I'm not, I'm sorry I said some of them are raised now for the first time, I was about to say I'm not complaining I'm simply pointing out, standing here without the instructions I can't deal with the matter
[speaker003:] no, of course you can't now, but will you have enquiries made and if er, there are an existence of twelve members of parliament ledgers, any report from crisis management and any erm, any er, er minute of a board meeting er at er directors at which the contingency... er, at the contingency fund was discussed or recor any recording of value, having enquiries make sure that they exist and then tell me er if, if, if you're prepared to disclose them
[speaker002:] my Lord sir
[speaker003:] that's all
[speaker002:] yes
[speaker003:] I don't expect you to do it before Monday anyway
[speaker002:] no, no, my Lord of course I do
[speaker003:] yes, I didn't think you'd make any objection at all cos
[speaker002:] no I'm not
[speaker003:] I'm not suggesting for a moment it doesn't cross my mind nor has Mr suggested that there has been any er deliberate failures to disclose something which was thought was, which you've got and was thought relevant, but it, things do turn out to be potentially relevant in the course of the court appearance
[speaker002:] well I I'm happy to have those enquiries there
[speaker003:] thank you, well you know the three categories, now what about erm, er, I'm very anxious to proceed today as far as we can, what about Mr er remind me erm reading with two and three er I'm afraid I've forgotten exactly what you, oh I know you wanted to know Mr, er before cross examine Mr you want to know about all the additions of the various brochures, is that right?
[speaker002:] my Lord the officer is he's the wonderful from who is closest to the brochures and therefore
[speaker003:] mm
[speaker002:] responsible for er, I never realized until the witness gave evidence, the last witness that there were different additions
[speaker003:] oh well I, I think it did, it did emerge but not so clearly, but it did emerge in Mr evidence
[speaker002:] my Lord be that as it may, if there are one, two or three additions of the same brochures, of the same development, clearly we, we should be entitled to
[speaker003:] oh
[speaker002:] all that's been disclosed is one as far as I know, erm your Lordship can see that I at some stage need to have a look at them, er before I complete in any way so I can cross examine Mr er my Lord may I just say this, on the seventeenth of November, that's two days ago, we asked for the documents of the necessary twelve M P's two days ago
[speaker003:] yes, but, er
[speaker002:] I'm not complaining about it, but I say I didn't raise it for the first time
[speaker003:] no, well, some of them might have been, don't do squabble about that
[speaker002:] no, no, my Lord I have raised for the first time the board minute
[speaker003:] yes
[speaker002:] er my Lord it wasn't, I wasn't raising it for the purpose of your Lordship mentioned, er namely er... er about er contingency fund, though indeed will be entitled to that, I raised a question of the minute, the board minute, to do with the concerned with Mr rest of the meeting about the placement
[speaker003:] mm
[speaker002:] that's why I was asking them for, I just want to make it plain my Lord
[speaker003:] thank you
[speaker002:] but my Lord that subject to that er I don't think we'll loose time because I'm sure by the time Lord has examined er Mr I'm going to reserve a little bit of cross examination, which is Monday
[speaker003:] mm, mm in any event members of the jury I, I forgot to mention to you earlier, er, thank you Mr you probably feel a wisdom of this having done several days of this case, two and a half hours is just about as long as anybody can be expected to sit and listen to evidence and er, what I was going to do, and I hope it doesn't inconvenience anybody, I was going, instead of going on for three hours till one o'clock, I was gonna break off about half past twelve to about half past one, to break up the day as you know, I hope that's alright, so what we'll do we'll go on now and, and I'm sure, I think it's doubtful if you would have got to that point by half past twelve, and then you and Lord sort it out and your learned duties as much as you can in the adjournment and then tell me afterwards what the brochure position is, I'm sure you've no objection to disclosing any brochures that you've got that erm, or can get er which relate to that point
[speaker002:] a lot of brochures have been disclosed
[speaker003:] yes
[speaker002:] difference that... for instance erm there were four house brochures
[speaker003:] there you are
[speaker002:] they've, they've been disclosed, it's eight, nine and ten
[speaker003:] they may they may have been in your list of documents, but copies of them may or may not of been handed over but
[speaker002:] simply don't know
[speaker003:] well could you try and sort that out
[speaker002:] of course
[speaker003:] when we have a break, preferably midday, alright so, I don't want to ask you to alter your chosen order of witnesses you see, er but equally we want to get on if we can
[speaker002:] oh entirely
[speaker003:] I know, I must see, you think or Mr can go on, right let's have Mr
[speaker002:] Mr
[speaker003:] and get as far as we can and break off about half past twelve for an hour...
[speaker002:] Could you hold the book in your right hand
[speaker003:] Just a minute, no, no, please just while those people, just the wrong moment to leave court, they should never yes, try again
[speaker002:] hold the book in your right hand and repeat the oath after the I swear by almighty god
[speaker006:] I swear by almighty god
[speaker002:] that the evidence I shall give
[speaker006:] that the evidence I shall give
[speaker002:] shall be the truth
[speaker006:] shall be the truth
[speaker002:] the whole truth
[speaker006:] the whole truth
[speaker002:] and nothing but the truth
[speaker006:] and nothing but the truth
[speaker003:] thank you
[speaker002:] Mr
[speaker003:] take a seat
[speaker002:] would you keep your voice up also please
[speaker006:] certainly
[speaker002:] towards the jury, thank you. What's your full name and your address please?
[speaker006:] Kevin erm
[speaker002:] is that in Dorset?
[speaker006:] that is, yes
[speaker002:] how old are you now?
[speaker006:] forty three
[speaker002:] what's your present occupation?
[speaker006:] I'm a self employed marketing consultant...
[speaker002:] just a little about your background please, I think you went to Dundee Polytechnic
[speaker006:] yes
[speaker002:] did you er obtain a Diploma in marketing in nineteen seventy five there?
[speaker006:] not there it was at er another college
[speaker002:] which was? thank you... I think you're a fellow at the institute of marketing
[speaker006:] that's correct
[speaker002:] and er you have on occasions, at various times, lectured on marketing at various institutes of education including Bournemouth university
[speaker006:] that is correct, I am currently doing that as well
[speaker002:] thank you.... When did you first become connected with any organization in the group?
[speaker006:] nineteen eighty four...
[speaker002:] which company did you go and work for?
[speaker006:] in nineteen eighty four there, there was only the one company they hadn't divisionalized, so I joined er company in nineteen eighty four
[speaker002:] what as?
[speaker006:] er a group marketing manager...
[speaker002:] did you stay in that position or do you erm change?
[speaker006:] in nineteen eighty six I think it was the company divisionalized and I was promoted to sales and marketing director of the erm, I think it was the developments division, which was, was the retirement housing division
[speaker002:] so that's
[speaker006:] that's correct...
[speaker002:] in er nineteen ninety one... did you become marketing sales director for the whole group and a main board director?
[speaker006:] that is correct...
[speaker002:] now in nineteen eighty seven, what did your job involve?
[speaker006:] well as a divisional sales and marketing director I had two particular jobs, one would be erm in developing if you want the alteration of sales and marketing and the other one would be looking at overall strategic in sales and marketing...
[speaker002:] did you have people working under you?
[speaker006:] I had at that time, and I'm trying to recall probably two or three people working directly for me, yes...
[speaker002:] Mr told us about regional offices, about how many of those were there in nineteen eighty seven?
[speaker006:] I think at that time there were seven regional offices
[speaker002:] would they also fall under your general control?
[speaker006:] no, not directly, each regional office would have a regional M D, managing director, who would actually be on the board, the divisional board with me, each regional M D would then have his own regional board on which there would be er finance er finance director, sales and marketing director, construction director, land director, not all of them, all seven had that board immediately, some developed that board, grew that board over a couple of years...
[speaker002:] apart from being marketing director for developments, er did you also deal with marketing of other aspects of the group?
[speaker006:] well not directly, erm because the whole purpose of the divisionalization was to put the skill and expertise into each division, at the initial stage of erm divisionalization there were no other marketing people immediately in those other divisions, I was occasionally called on to assist but progressively as they built up there own marketing expertise then my needs were less, they needed me less.
[speaker002:] in nineteen eighty seven were you familiar with the advertising budget and the advertising spend of and?
[speaker006:] yeah...
[speaker002:] prior to the Daily Telegraph article in January nineteen eighty eight, had or or had they been in the habit of spending large amounts of money on national publicity?
[speaker006:] most definitely not
[speaker002:] Mr er I think I saw a smile there, why were you smiling?
[speaker006:] because part of the reason why were very successful and profitable was because they're very cagey on money we spend and on, on the resources erm, they had been advertising but it was on a very small limited regional budget, national advertising is actually, they'd of been a or too
[speaker002:] what was Mr attitude to spending on national advertising in so far as you could work it out?
[speaker006:] we didn't think it was necessary and not necessary at that time, we were success advertising regionally....
[speaker002:] Er, were you familiar with the brochures that were distributed?
[speaker006:] yes...
[speaker002:] who's responsibility was the contents of the brochures?
[speaker006:] well there was two parts to the brochure, erm, the, there was the general part within the brochure about eighty percent of the brochure was general for every development, the other twenty percent which would prefer specifically to that development, so there was a corporate field to the brochure, but for each development it would have it's individual flavour, that would show pictures of the locality for example, hence the golf and the erm lake and the erm specific costs of running that, that responsibility would be the responsibility then of the region putting in, cos obviously at the centre I wouldn't know whether there was a golf course in that area or not.
[speaker002:] er, could you have erm the, agreed in front of you please and just look at C thirty... that's erm you can see the golf club in this one, at er the page thirty one and the man sitting on the lake at the top of thirty one, yes, I think we know the brochures, we've got erm leisure pursuits like bowls, that sort of thing.... Who would actually draw up the wording of the brochure?
[speaker006:] The wording referring to the specific location in the location description would by definition have to be drawn up the region, cos they would have intimate knowledge of the locality... that er sorry and the costs would be drawn up by the region because they would know as I say intimately they would know that specific development...
[speaker002:] would you er still look at page thirty one please... dealing with er, top right under the [reading] are there hidden costs?, the answer to this is definitely no [] and then there are charges set out there, there's the freehold security set up there and then the only other costs would be your apartment, local authority rates, individual electricity costs, even if this means too low... there's a freehold security set up there and then the only other costs would be your apartment, local authority rates, individual electricity costs, even if this means too low, small charge for using guest bedroom, use to keep the general running costs as low as possible, and then underneath them there's a block [reading] service apartment costs, all maintenance, warden and management services, freehold security [] and then personal costs in an estimated weekly total, er did you know that that went into the brochure?
[speaker006:] yes
[speaker002:] Could you look also please at page fifty six in the same tag... which is home which was forty nine, it carries on to fifty six, we can see there you've got the same thing but you've got a drawing there and not a photograph of something that's in the area, Court Castle in Dorset
[speaker006:] I see
[speaker002:] [reading] will the management charges greatly increase [] page fifty six, the answer is no and then we've read this several times, did you know that was in the brochure?
[speaker006:] that photograph, yes...
[speaker002:] one of the things said there is, [reading] time has shown the management charges rise at a rate either slightly below or at the level of inflation, a fine record not easily beaten [] what, what do you say about whether or not that was accurate in nineteen eighty five for instance?
[speaker006:] it wouldn't of been put in if it hadn't been accurate... at the time...
[speaker002:] now reverting again please if you would to the one we first looked at which is er, see the costs set out on page thirty one there... and we can see under personal costs with the star that refers [reading] please note that these charges are an average and depend on personal electricity consumption and are subject to verification and local authority assessment [], er did you understand the difference between the management charge and the service charge?
[speaker006:] yes...
[speaker002:] can you ever control the service charge component to make it level with inflation as opposed to the management charges?...
[speaker006:] no I would have said no
[speaker002:] thank you.... Did you yourself come to know about the article in the Telegraph?
[speaker006:] yes...
[speaker002:] prior to that article January eighty eight, was it being your personal desire for about whether or not in the year nineteen eighty seven going into the nineteen eighty eight or to have national or wider advertising, your personal view
[speaker006:] my personal view was that [clears throat] we, we should have some form of, two things, one is communicating the realities of the situation, it's a fairly new market, there was a lot of competitors in the market, coming into the market, there was a lot of confusion in the market there was a lot of confusion in the market as to exactly what it was that customer could buy, there was also a lot of confusion of as to, cos there are different types of customer, and over sixty five, there are about seven different categories, there was a need for someone and I believe it should therefore have been the market leader at that time to if you want to establish principals, establish what they, this was in the market and establish what the elderly would be, would, should look for when purchasing a retirement apartment.
[speaker002:] and what was your desire in nineteen eighty seven before the Telegraph article, about increasing on spending advertising, keeping it the same or decreasing?
[speaker006:] well I, I wanted therefore to put take project into the national press and to promote the product, given that that was the larger product in the market place and therefore if you want that would set the standards for the rest of the market place, that's what I, I felt we needed to do that with the increasing number of competitors moving into market place
[speaker002:] but in nineteen eighty seven that expansion of advertising and therefore ad advertising costs in what were you thinking of in terms of roughly in nineteen eighty seven?
[speaker006:] oh I can't, I can't remember, sorry
[speaker002:] are we talking about tens of thousands, or hundreds of thousands or what?
[speaker006:] if it was the national advertising campaign and knowing and er basically then, I wouldn't of thought I'd be talking anything above a hundred thousand, I would and, and I can't remember the exact figure but given
[speaker002:] no I understand
[speaker006:] the situation I wouldn't of thought I could of got away with anything much more than that
[speaker002:] did you propose in nineteen eighty seven as an increase advertising spend
[speaker006:] in specific terms I can't remember, I would have certainly of said that for the year er nineteen eighty eight we should build into our budget an amount, what that amount was I can't remember, but er that was, that was never given the go ahead
[speaker002:] how was it dealt with internally?, I mean you have the idea, you want to expand advertising, which means you've got to spend more money and you said it was never given the go ahead, who at the end of the day would decide about whether it had the go ahead or not?
[speaker006:] well the board would
[speaker002:] which board?
[speaker006:] er, first of all I would put it to my divisional board to my colleagues to ask for their thoughts and their advice erm, if they rejected it then it wouldn't go any further, if they approved it then it, because it was a budgetary item rather than just we can go out and spend it tomorrow, it was going into the following years budget, it would then go to the P L C board and they would have final say in whether that element should go into the, into next years budget
[speaker002:] and who is chairman of the board, who had the final say?
[speaker006:] John
[speaker002:] so that was not given the go ahead in nineteen eighty seven
[speaker006:] that's correct
[speaker002:] I therefore need to ask you about the article and what happened subsequently. Now you saw the article?
[speaker006:] yes
[speaker002:] it came out on a Saturday, do you remember where you saw it?
[speaker006:] yes, I was on a coach to the boat show erm at Earls Court when, when I read it
[speaker002:] was it on the day of publication?
[speaker006:] I think it must of been, it had to be on a Saturday I believe
[speaker002:] yes
[speaker006:] yes, that would have been the day of publication
[speaker002:] now we already know that there was a meeting which was called fairly promptly for the Monday of the following week which would have been the eleventh, did you attend that meeting?
[speaker006:] yes...
[speaker002:] Mr has told us there were well over twenty people there... was the article discussed then?
[speaker006:] that was the purpose of the meeting...
[speaker002:] did you yourself have to do anything follow the art following the article?
[speaker006:] following the article or following the meeting?, that meeting
[speaker002:] you're quite right following that meeting which was after the article
[speaker006:] I'm not sure there were too many decisions actually made at that meeting
[speaker002:] why was that?
[speaker006:] because at that meeting you can imagine that twenty people gathering then you end up not really making any decisions, far too many people, there was a lot discussed and aired and it concerns expressed and it was a case, and I'm going from recollection here, it was really a case of let's go away and think about it and calm down and look at it rationally
[speaker002:] er, we've already seen a press release which was put out as prompt step, what was your own view about what should be done after the Daily Telegraph article and it's comments about?
[speaker006:] well I think that, that the, the sending out of the press release immediately was, was quite correct, because obviously people had ride that, sorry people may have read that and something therefore had to be said, my personal view was that really this article is you had, if you like had undone everything that we had been trying to do, erm and put us in a bad light and it maybe my Scottish background, but I don't like people calling in to question my motives and the companies motives, erm and I felt that it went straight to what we were really standing for, given what I explained about my thoughts in nineteen eighty seven, it was hitting straight to the core of the whole proposition and everything that stood for, erm and that is what was the great concern and because it wasn't just like a, a mild slap in the face it was more like a knife in the ribs, it was therefore required a lot more thinking about as to the reaction that we would then have to come up with.
[speaker002:] Did you yourself give thought to the action that you thought would be required?
[speaker006:] yes...
[speaker002:] what conclusion did you come to?
[speaker006:] oh I came, came to several conclusions, erm, one, one of the problems that the article faced me with, if it had been a simple outburst, if, if the, the Daily Telegraph had simply taken an advert out as opposed to maybe editorials then I may of had less a problem, because the problem with editorials is that they are believed, companies adverts aren't believed, well they're partially believed, but an editorial carries a lot more weight... and therefore when it's written like that it tends to strike home much harder, therefore that, my immediate thoughts were that if were going to react, if we were going to find a way of cantering the problems we felt this had created, then we would not have to follow any normal course of action, we simply couldn't put an advert out because nobody would have believed it, we would have to look at it a different way of actually cantering and that's part of the reason for the time taking to think it through.
[speaker002:] Would you please go to tag L... two, six, six to begin with... just to lead you into the chronology, you have told us that in August nineteen eighty seven, er there was really no interest in national budgeting, er national advertising budget, we can see this is a memorandum from you Kevin dated the fourth of August and you're sending out to the regional marketing executives, there's no national advertising next year which would be eighty eight. Again marketing budget at two, six, seven, the point made there again, numbered item one in the bottom third [reading] no national advertising [] and then two sixty eight, this is a meeting of the twenty fifth of February nineteen eighty eight, present including Mr and yourself... [reading] today I send [] that's Mr [reading] pointed out that so far our reaction to the recent media criticism had been totally defensive in future these actions to be defended, but then attacked in order to regain our credibility [] were you indeed present at that meeting of the twenty fifth of erm February?
[speaker006:] yes...
[speaker002:] in February had your own thoughts begun to cristalize about what needed to be done in response to the article?
[speaker006:] yes
[speaker002:] what had your thoughts sir cristalize as?
[speaker006:] well my thoughts had cristalized that we would have to change the direction of er, we communicating with them as we've done in the past, we couldn't just use adverts that we might have used regional in a regional press, we had to pick out the point, in the, in the actual article so that four example there were six or seven points that had clearly been made, statements that had been made, I had to devise a scheme then, er, it was only a scheme in my thinking that actually, I had to devise a scheme that would pick up each of these points encounter them, now there was no way I could simply take an advert out and say, they said this, we say that because that would have had no credibility, so what I was thinking at that time is how we might be able to use some other form of being able to counter those six or seven points and I started to come up with an idea perhaps using a third party, because in our business, third party recommendation are very, very powerful and when selling to the elderly because they do not take, I'm sorry, they take a long time to come to a decision, they mull over it and such like, they take a lot of influence from people, take advise from family, accountants, solicitors, bank managers and such like, so the idea of having a third party in a sense recommend then would have allowed us to get over those particular points, so that's what was germinating in my mind at the time
[speaker002:] and is that the thinking that lies behind the eventual... getting of Terry Wogan and Angela Rippon?
[speaker006:] that is correct
[speaker002:] that's in an interview format isn't it? in the
[speaker006:] yes
[speaker002:] advertisement, and do they actually sit down in an interview or is that simply the way that the advertisement is projected
[speaker006:] well what in actual fact happened, it's not easy to get Terry Wogan at a moments notice to come and sit down, what in actual fact happens is that we draw up exactly what it is, that, that he would be saying and what the answer will be, he sees that and it's totally approved, understandably he's not gonna put his name to anything that he doesn't believe is, is correct and that is how it's done and
[speaker003:] I understood though I mean it, it looks from many of these er publications as though it's meant to convey that Mr and Mr Wogan are sitting down and having a conversation or Ms Rippon isn't it?, that's how it's presented, is that right?
[speaker006:] yes
[speaker003:] but it didn't, but, that isn't actually, that isn't what happened you're saying now
[speaker006:] it's meant to show that Terry Wogan is asking John a question and John is answering the question
[speaker003:] sorry I don't want to take, erm of course out of hand