The Court of Appeal has criticised an email, believed to have been sent by DAC Beachcroft on behalf of a client, for including threats that amount to blackmail.
The email was sent on behalf of businessmen Stuart and Warren Ferster, who had brought a High Court claim against their brother Jonathan for breaching his fiduciary duty as a director of gaming site Interactive Technology Company (ITC).
The brothers instructed DAC to represent them during a mediation process, in which they offered to sell their shares in ITC to Jonathan.
Following the mediation DAC sent an email retracting the offer and increasing the price of the shares. The emails included a “thinly-veiled threat” to reveal allegations about Jonathan, according to the judgment.
The email, which was ruled not subject to privilege by the court, read: “We have increased our offer because we have become aware of further wrongdoings by Jonathan. Jonathan knows the extent of his wrongdoings and our client believes that Jonathan is in very serious trouble which will also have serious implications for Jonathan’s partner by reason of Jonathan’s actions.”
It went on to say that it was in Jonathan’s interest to “wrap this up speedily and quietly”. The letter continued that if the deal was not settled within two days there was a “real risk that such a settlement may no longer be possible”.
Mr Justice Floyd stated the threats made in the email “were blackmail”.
Herbert Smith Freehills disputes partner Alan Watts, who represented Jonathan Ferster, claimed that DAC authored the email. Watts wrote to DAC asking for full details of the allegations made against Jonathon Ferster.
DAC’s reply read: “Contrary to your emails of yesterday, our client neither sought nor intended that committal proceedings would be issued or allegations of perjury made if the offer was not accepted. Contrary to the suggestion in your email, our client did not know, and to be clear does not make, any threats as to what will happen if the parties do not reach a settlement agreement.”
In the initial High Court ruling, Mrs Justice Rose concluded that DAC’s reply was an attempt to “repair the damage” caused by the first email.
The emails have come to light after Jonathan Ferster made a claim to the Court of Appeal that his brothers bought ITC in order to pressure Jonathan into buying the shares at an inflated price.
A spokesperson for DAC said: “The judgment in this case was handed down this week. DAC Beachcroft has taken the steps it considers appropriate. As you will appreciate, we will not be making any further comment at this point in order to protect the rights of the various individuals involved.”
The legal line-up
For the appellant, Jonathan Ferster
Brick Court Chambers’ Charles Hollander QC, instructed by DAC Beachcroft
For the respondents, Stuart and Warren Ferster
7KBW’s Christopher Butcher QC and Sushma Ananda, instructed by Herbert Smith Freehills partner Alan Watts
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