"I would have pulled the transaction"

Thursday 19 January 2023

A Director of the company that bought the two former Organic Kids nurseries has told the Royal Court there is "no way" he would have recommended buying the business if he had been made aware of certain regulations by the former owner.

Stephen Eccleston, group development director of Busy Bees, was giving evidence on the third day of a hearing in the Royal Court.

The nurseries' previous owner, Dawn McLachlan, is fighting a legal expert's determination that she should pay Busy Bees £1.6 million because of a limit on the number of children that one of the nurseries, Organic Kids Castle Quay, was allowed to accommodate and an issue over the number of staff that would be needed.

Mr Eccleston was asked by Advocate Stephen Alexander, representing Busy Bees, when he first learnt of the cap on numbers. He replied: "Shortly after we acquired the nursery."

Advocate Alexander then asked: "Had you known about the cap, what would your recommendation have been?"

He answered: "I would have pulled the transaction. There is no way I would have recommended buying the business under the circumstances."

However, in his summing up, Advocate Olaf Blakeley, representing Mrs McLachlan, repeated his claim that the £1.6 million sum she had been ordered to repay was "irrational".

Pictured: The case is being heard in the Royal Court.

He said: "There was one key breach, that there was a cap which restricted an increase of numbers past 46, without first seeking confirmation from the Children and Early Years Service that there were sufficient staff.

"Busy Bees thought they were getting a nursery that could go up to 69 children. They did get that. Busy Bees thought they were getting a nursery that was subject to ratio requirements. They did get that. Busy Bees thought they were getting a business that could determine for itself whether it had the right number of staff. It didn't get that.

"What it got was a nursery that had to verify its staff was adequate by picking up the phone to CEYS. That cannot rationally be worth £1.6 million."

But defending the sum awarded, Advocate Alexander said: "The straight-line loss of profit to Busy Bees has no bearing on the damages. The cost of bringing in extra support staff from the UK and accommodating them in Jersey is not relevant.

"The parties agreed on the rules. How can it be unfair if the expert is following rules that the parties agreed?"

Commissioner Sir William Bailhache was presiding with Jurats Charles Blampied and Robert Christensen.

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