England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CHANCERY DIVISION
(HIS HONOUR JUDGE TETLOW AND DEPUTY DISTRICT JUDGE YUILLE)

		Royal Courts of Justice Strand London WC2A 2LL Friday 10 May 2002

1. LORD JUSTICE CLARKE: This is an appeal by the claimants, Mr and Mrs Knight, from an order of His Honour Judge Tetlow, made on 12 June 2001, dismissing their action against the defendants. The defendants were originally Mr Fazelynia and his wife as first and second defendants. By the time of the trial, two companies had been added as third and fourth defendants, namely AAA (Euro) Limited and AAA (Manchester) Limited respectively.
2. The appeal is brought pursuant to permission which I granted in this court on 20 November 2001. On that occasion Mr and Mrs Knight appeared in person but I am pleased to say that today they have been represented by Mr Derek Spitz of counsel, thanks to the good work of the Bar Pro Bono unit. I would like to pay tribute to him for all his efforts in what is by no means an easy case. The respondents have been represented by Mr Peter Southeran, who is a solicitor/advocate, who has also been of considerable assistance.
3. Mr Knight had known Mr Fazelynia for some years. In about May 1997 Mr Fazelynia engaged the claimants to design shops for him and his companies in and around Manchester. The judge said that it was common ground that contracts with the first defendant and his companies kept the claimants fully occupied, as he put it, certainly in the earlier part of 1998 until the first defendant terminated the relationship in November 1998.
4. In this action the claimants originally claimed in respect of four invoices, each prefixed "PTFF" and numbered 12, 19, 30 and 34 respectively. All the invoices were originally addressed to Mr Fazelynia personally and were dated 22 February 1999. Number 12 was for £5,940 and related to works said to have been involved with an improvement scheme at a house called Holly Rise in Alderley Edge; number 19 related to work said to have been done at 24 Great Marlborough Street, Manchester for £10,833.33; and number 30 for £1,454 related to work done to with regard to a charity event at the BBC in Oxford Road, Manchester.
5. The action against the first and second defendants was originally fixed for trial on 2 January 2001. However on 16 November 2000, the claimants issued an application that the two companies which are now the second and third defendants be added as third and fourth defendants.
6. On 24 November the matter came before District judge Yuille. The claimants were acting in person, the first and second defendants were represented by a solicitor and the proposed third and fourth defendants were represented by counsel. The action against the first and second defendants was settled on terms set out in a schedule, namely, that the first and second defendants would pay the claimants £5000 inclusive of interest and costs in full and final satisfaction of the claimants' claims against them. The claimants were given permission to add the third and fourth defendants, and various directions were given as to the future conduct of the action.
7. The claimants subsequently issued an amended claim form limited to the sums claimed in invoices 19 and 30, namely £10,833.33 and £1,454 respectively. It was in these circumstances that the trial judge was concerned only with those two claims relating to 24 Great Marlborough Street and the BBC charity event respectively.

BBC Charity Event

8. The claimants claimed £1,454. Their case was that they carried out certain work for the event pursuant to a request made on behalf of one of the companies and that they were entitled to be paid for it. Both Mr and Mrs Knight accepted that the price was not agreed beforehand but both said in evidence that it was not agreed that the work would be done for nothing. However, the judge held that:

"...this was gratuitous work undertaken on behalf of the charitable event in effect."

9. He held that when the claimants agreed to do the work, there was no intention to create legal relations. He thus rejected the claim on those grounds. He also held that the work had no value and was worthless, although he said that if that was wrong he would have awarded £500. Finally, the judge held that the claimants had failed to establish that one of the companies was liable. Mr Spitz submits that each of those conclusions was wrong, although he accepts that if the claimants are entitled to a payment, the appropriate amount would be the figure of £500.
10. In these circumstances, it is convenient to consider the issues by reference to four questions helpfully posed by Mr Southeran:

1. Was the work done on a charitable basis?

2. Who instructed the claimants?

3. What was the value of the work done?

4. On whose behalf was the work done.

11. Before considering those questions, it is helpful to put the issues in context. The following is common ground and I take it in large part from the defence of the third and fourth defendants.
12. The claimants were concerned in the provision of design consultancy and related services. They held themselves out as experts in that field. The third defendant was concerned in the provision of telecommunication services (excluding retail supply of equipment) to members of the general public for reward. The fourth defendant was concerned in the retail supply of mobile telecommunications and related equipment to members of the general public for reward. It was admitted that on occasion the fourth defendant, through the first defendant, caused or commissioned professional services from the claimants, although no admissions were made as to the terms, nature or quality of the work.
13. It is clear that the claimants did a good deal of work at the request of the first defendant until their relationship came to an end in about November 1998. It was however denied that the claimants were at any time commissioned to perform any work for the third defendant, or that the third defendant was the beneficiary of any services provided by the claimants. I believe I am right in saying that most, if not all, of the work done by the claimants in the ordinary course was done for the fourth defendant. Thus, at about time of the charity event which took place on 24 March 1998, the claimants were carrying out various works for one or more of the first defendant's companies pursuant to instructions given by the first defendant or on his behalf.
14. The judge had a difficult task to perform because it is clear that he did not think that either the claimants' evidence or that of the first defendant was entirely reliable. Mr Southeran submits with considerable force that the judge rejected the claimants' case essentially because he formed the view that their evidence was not credible. He further submits that, in those circumstances the court should not interfere with his decision. In this regard I should say that this court will only very rarely interfere with conclusions of fact reached by a judge which depended on his view of the credibility of witnesses whom he has seen giving evidence.
15. However, as will appear, the resolution of questions of Mr Southeran's questions 1 and 2 does not seem to me to depend on the credibility of the witnesses. It is convenient to consider the first two questions together:

(1) Was the work done on a charitable basis and

(2) Who instructed the claimants?

16. The first document which described the claimants' case as advanced at the trial was dated long after the events. It was a letter written by the claimant dated 16 February 1999 and addressed to the first defendant at his address at Holly Rise, Alderley Edge. It related expressly to the Jewish charitable event at BBC Studios, Oxford Road, Manchester in the following terms:

"We refer to the above event which was supported by yourself and in respect of which you required us to carry out the necessary design and presentation work.

We attach hereto the details of our involvement, and upon confirmation of the details provided we will Invoice you accordingly.

As far as we are aware, the price was not agreed beforehand, and nor did we agree or accept that the work should be goodwill/gratis, as the only beneficiary would be the 3 a's Telecomm Companies.

If we do not hear from you in early course, we will invoice upon the time/cost details as attached."

17. Attached was a document entitled "For Invoice". It contained a number of dates which the judge subsequently held, to my mind correctly, were entirely wrong. It included the following:

"Brief: AK/JK to design Banners for stage and back/drop with program page for Jewish Charity Event at BBC [Manchester].

26 February 1998: Instruction from Farid to AK/JK to attend a meeting at Pugh Davies office Mcr to meet Andrew Davies. This meeting set out 3A Telecom requirements to support the charity event 6 hours

Car mileage20 miles1 hour"

18. There then followed a number of other alleged meetings on the 3rd, 4th, 5th and 6th March. The document asserted that a considerable number of hours were worked. The total number of hours worked was 46½ hours at £30 an hour making a total of £1,395 which, together with mileage, made the grand total of £1,454, which was the figure on the invoice to which I have referred.
19. The first claimant told the judge in the course of his evidence that the dates and hours came from two site diaries which were no longer in the claimant's possession because they were in the possession of the solicitors for the first and second defendants. The only diary produced by the claimants did not cover the 26 February or indeed the early part of March 1998.
20. In the course of his evidence, the first claimant described the meeting of 26 February at which he said the first defendant and Mr Joseph were present. The judge described the first claimants evidence as follows:

"The first defendant asked the claimant to go to the BBC's premises to measure up for banners to be hung up in the arena and reception areas where the event was to take place, and then to liaise with the first defendant's manager a Miss Ridgway at that time, now Mrs Fazelynia, in that regard. Nothing was said - and this is common ground - about whether the claimants were to be paid for this work or not and if so how."

21. Miss Ridgway had become Mrs Fazelynia, not because she married the first defendant, but because she married the first defendant's brother.
22. The first claimant accepted in evidence that, in the light of the diary entries of others, the dates of his quote or invoice document may well not have been accurate and that the figures were simply put in for negotiating purposes. They were to a considerable degree a "try on".
23. The first claimant also gave evidence that he subsequently met Miss Ridgway. He further said that the claimants prepared sketches which were put before the court. He said that he prepared art work which was shown to Miss Ridgway who said that she only wanted the banners and nothing else. The only relevant entries from a diary produced by the claimants were entries for 24 March 1998, which include "Jewish Charity Event" and "Farid banners". The judge concluded on the basis of the evidence of Miss Ridgway, which he accepted, and of the entries in her diary, that the meeting with her took place on 24 March and that the claimants did very little work, much less than was spoken to by the first claimant, let alone the amount set out in the "For Invoice" document. However he did accept that some work was done.
24. The judge was also struck by the fact that the claimants did not prepare an invoice for their work for the charity event until long after the events. The judge said:

"At all events no invoice was prepared in relation to this work until after the termination of their contract with the defendants in November 1998. To be precise it was on 4 November 1998, I was told, that the first defendant orally told the claimants that they were, in effect, dismissed. And he said to them words to this effect: 'Invoice me for everything, leave nothing to friendship, I will decide whether you get paid or not.' It is fair to say that in the various statements produced by the first claimant those words are reiterated but without the words: '....I will decide whether you get paid or not.' Those words were said by the first claimant in evidence before me.

There is a letter I have not seen of 4 December 1998 from the solicitors, Eversheds, which confirmed that there was to be a parting of the ways. I do not think the contents of that are otherwise material to the issues before me so far as I understand it.

That prompted what the first claimant called an interim invoice.... It is undated and the relevant part refers to: Design of stage banners, attend meeting at BBC Oxford Road, briefing at Pugh Davis' offices, amount due £500. The first claimant says that invoice was handed by both of them to Amanda Littlof, I think it is, at the defendant company's head office in November or December 1998, probably towards the latter end. It produced no response. The first defendant's evidence as to that is that he has no recall of being shown that invoice and has made enquiry of Amanda Littlof who has no recall of it being handed to her either. Be that as it may"

25. That invoice (described as invoice number MOS 3) is the first written document evidencing a claim for work done at the BBC. It was addressed to the fourth defendant, perhaps because the fourth defendant was the company for which the claimants did most of their work. It was, moreover, the basis, in part, of the judge's alternative conclusion that he would have awarded £500 if he had thought that anything was due.
26. The judge also observed that the first claimant said that he would have been content to accept £500. However, no response was received and the claimants subsequently wrote the letter of 16 February and sent the invoice number 30, dated 22 February, to which I have referred. The judge observed that none of the claimants' statements, pleadings or other documents contained any clear statements of the basis upon which they were entitled to payment. That is undoubtedly so, although it must be recognised, as I am sure the judge did, that the claimants were acting in person.
27. This account of the claimants' evidence shows that there are a number of respects in which their evidence was unsatisfactory and, indeed, not credible, as the judge thought. On the other hand, some things appear to be clear, including:

(i) certain work was carried out, viz the preparation of banners;

(ii) work can only have been carried out at the request either directly of the first defendant or If someone on his behalf, either for him personally or for one or other or both the companies; and

(iii) although no-one mentioned a price, equally no-one suggested that the work should be done for nothing.

28. To my mind it is not possible to hold, on the basis of the claimants' evidence, that the claimants expressly agreed to do the work for nothing. I shall return to the question of what inferences can properly be drawn in that regard.
29. What of the defendants' evidence? Like the claimants' evidence, it, too, was in some respects unsatisfactory. In paragraph 5 of his defence the first defendant admitted attending the charity event to which the AAA companies (the third and fourth defendants and AAA (UK) Limited) donated the sum of £2,000 in return for which they were entitled to hang a banner with the words "3a Telecom", which was the trading name of the AAA companies. Paragraphs 7 and 8 of the defence were in these terms:

"It is admitted that the First Plaintiff took some measurements for the dimensions of the banner. It is denied that the First Defendant requested the Plaintiffs to provide the measurements for the banner. It is averred that the First Plaintiff voluntarily offered to provide the measurements in the knowledge that the banner was for use at a charity event. It is admitted that the First Plaintiff provided these measurements to the firm responsible for manufacturing the banner.

The First Defendant orally agreed with the First Plaintiff that as the banner was being used for the purposes of a charity event the taking of measurements by the First Plaintiff would be done at no charge. The First Defendant denies that he agreed on his own behalf, or on behalf of any of the AAA Companies, to make any payment to the Plaintiffs in respect of the measurements. The First Defendant understood at all material times that the work was being undertaken gratuitously and voluntarily by the First plaintiff and denies liability to make payment to the Plaintiffs in respect of such work."

30. In cross-examination the first defendant said that he gave information to his solicitor which led to the preparation of the defence and that he would have seen the defence before it went out. Shortly after that, the judge asked him, with regard to paragraph 8 of the defence:

"That rather suggests that you were -- before he did the work, rather than after doing the work, you actually personally agreed that with him. Is that right or not?

A. No, it's not right to the point that I retract from saying that I agreed with him that there was no charge, because I don't recall ever having a conversation with him regarding this, or the charges, what I may would have meant - I may have meant in this, would be that I was advised by my people that Alan was doing the work at Charlotte Street and other jobs and we provide - and there's no charge. My understanding would have been that because it was always accepted that there was no charge because he was working for us."

31. It is not easy to understand the last part of that answer. It seems to me that if the claimant was indeed "working for us" one would expect him to be paid. I will return to the appropriate inferences to be drawn from all the relevant material in due course.
32. In the first defendant's witness statement which, like the defence, was prepared before he sold his companies and before he settled the claims against him personally, the first defendant said that he never asked the claimants to do any work in relation to the charity event and that his involvement with the publicity was his conversation with Francis Zadan whom he left to sort out the publicity. Mr Zadan was the managing director of the third defendant.
33. In cross-examination, when he was asked about his statement that he never asked the claimants to do any work in relation to the charity event, he said:

"I agree to the statement to the tone that it was not something that I have directly given you as a task to go and do a job for me as such. The reasoning behind this comment is that at the time you were in charge of doing the signs for the Charlotte Street branch, now part of the job of doing the Charlotte Street branch meant that there was some artwork for the signs in there and I wanted some artwork to be provided, or some embroidery - sorry - some graphics to be provided for the charity event. It was not a job that: 'Can you go and take this task on and charge me for it.' It was a charity event, it was done as an insignificant kind of task: 'Can you just draw up this for them and do it.'"

34. A little later the following exchange occurred:

"JUDGE TETLOW: Yes, well I can understand that, if you've paid the money you might as well get something out of it. What I'm getting at is this, as I understand your statement you say: 'I was out of the country at the time, I gave instructions to the accountant to pay the sponsorship money.' And you weren't aware until after the event that Mr Knight had been involved in creating the banner or whatever?

A. I couldn't swear by that, sir, because if I did I would be lying under oath, but I don't remember personally instructing Mr Knight to go and do this for me. Now subsequently maybe I have had conversation with him over the phone whilst I was abroad, I would have maybe authorised Francis Zadan to do so, but I don't recall. I may have done it, but I cannot swear by it, but I don't recall ever standing in front of Mr Knight or Mrs Knight and advising them could you go ahead and do this for me."

35. By the time of the trial, these events had taken place some three years earlier. However, that evidence does not seem to me to amount to a denial that the claimants were asked to do some of the work. On the contrary, it suggests an acceptance that the claimants, who were working on the Charlotte Street branch, were, or may have been, asked to do some artwork or graphics for the charity event albeit as "an insignificant kind of task". The strong impression which comes across to me from that evidence is that the claimants were probably asked to do some work. The first defendant did not suggest in evidence that the claimants agreed to do the work for nothing. On the contrary, in the earlier passage which I quoted, he disavowed the statement that the claimants had made any such agreement.
36. The judge, however, placed reliance on the evidence of Mr Zadan and Miss Ridgway. Mr Zadan did not give oral evidence, but his statement was admitted because he was out of the jurisdiction. In his statement he referred to a telephone conversation he had with Andrew Joseph of Pugh Davies, he said;

"8. ....I do recall that during this conversation Andrew Joseph mentioned that because we were making a contribution we could have some kind of presence or publicity at the event. I thought it would be a good idea, if we were paying some money, for 3a Telecom to get some mileage out of the event. I arranged the meeting for the next day and made a note of Pugh Davies' address in my diary.

9. I didn't really know what I wanted but I thought it would be a good idea for 3a Telecom to have a visual presence there. As far as I am concerned, this was my idea as a result of Andrew Joseph's suggestion that Euro could have a presence. I do not believe anyone in 3a Telecom had previously talked about publicity."

37. He said that he then telephoned the first defendant back to tell him that he, Mr Zadan, would like 3a Telecom to get some publicity from the event. The first defendant said that he was happy for Mr Zadan to go ahead. Mr Zadan then described his conversation with Alan Knight. He said:

"11. Later that day, I bumped into Allan Knight at 3a Telecom's head office where I was based... At this time, the Claimants had been commissioned by the retail side of 3a Telecom to coordinate the refurbishment of a shop of Charlotte Street in Manchester City Centre. The Claimants were working for 3a Telecom on a full time basis at Charlotte Street and were at the shop or in our offices virtually all day every day....

....

13. I had a casual chat with Allan Knight and I explained that I wanted to get some 3a Telecom presence at the event. I knew the Claimants must know people who could print signs. I asked him if the signage people he dealt with would be able to do anything and Allan said he was happy to come along to the meeting and find out what it was all about. I certainly didn't insist that he come to the meeting, but Allan was quite happy to oblige.

14. I thought it would be a good idea to take him along with me to see Andrew Joseph. I certainly did not commission the Claimants to do any design work for the event. This was not why I had mentioned it to Allan Knight. I just thought he might be able to help with the printing through their contacts from their work for 3a Telecom on Charlotte Street. He volunteered to help and there was never any mention of money."

38. Under the heading of "The Claimants' Invoice", he said:

"The Claimants were always aware that 3a Telecom were sponsoring the event and that the publicity was going to be for 3a Telecom. I was the person who mentioned it to them and not Farid. I didn't agree on any payment by 3a Telecom and it was always understood the Claimants were not going to be paid. This was just something they agreed to do as a favour whilst they were working for 3a Telecom full time at Charlotte Street."

39. He also said that he asked Amanda Ridgway to go to the studios and told her that he had arranged a time to go with Andrew Joseph and Allan Knight. He told her that he wanted her ideas for a 3a Telecom presence at the studios. He understood from her that she came up with the idea of two vertical banners, and that Allan Knight had agreed to help, but understood from her that in the end he did not help very much.
40. That statement confirms that the first claimant was asked to help and that there was no mention of money. However, I do not read the statement as saying either that it was expressly agreed that the first claimant would help for nothing or, indeed, that the first claimant said anything from which it could be inferred that he agreed to work for nothing.
41. Mr Spitz relies on the evidence of Mr Andrew Joseph who gave a statement to the third and fourth defendants, but who was in the event called to give evidence by the claimants. He was the organiser of the charity event. He wrote a letter on 10 July 2000 to the first claimant in which he said:

"3a Telecom Ltd had kindly agreed to sponsor the event and my contact at 3a Telecom Ltd was one of its Directors, Mrs Freddie Fazelynia.

I recall that you [Mr Knight] attended my offices at 29 Dale Street and that your role was to provide artwork/design advice for the inclusion of 3a Telecom's name at the function, which subsequently was done by way of two ceiling-mounted banners.

I recall that on a subsequent occasion to our original meeting that you also attended a meeting at the BBC Studios.

The event did take place and the banners were hanging at the event."

42. In his witness statement he confirmed that what he said in the letter was correct. He also said that it was agreed that because 3a Telecom was making a contribution, it could have some kind of presence or publicity at the event. It is plain from his evidence that that had been agreed before the claimant attended his office at 29 Dale Street. He also said in his statement:

"7. I recall that Mr Knight attended my offices at 29 Dale Street. I presumed he had come on behalf of 3a Telecom. I do not recall if anyone else attended with him, although possibly Francis Zadan attended also. At the meeting we discussed the publicity 3a Telecom was to have at the charity event. I believe that this meeting lasted no more than 45 minutes.

8. I recall that on a subsequent occasion Mr Knight attended a further meeting at the BBC Studios. Again, I do not recall if anyone else attended with him, but it is possible someone did. I believe I spent no more than 1 hour with Mr Knight at this meeting.

9. The event took place in March 1998 and I recall that 3a Telecom's publicity at the event consisted of two long drop banners hanging from the ceiling and an advertisement in the event's programme."

43. His oral evidence was to the same effect. I refer to two short passages. At page 157E, by reference to Mr Knight, he said:

"Simply I understood that you had come along to provide the artwork role for the event to promote 3a's name as they'd kindly agreed to sponsor the event."

44. He also said at page 159D:

"As an incident to that event I recall having said to Mr Fazelynia there's no point sponsoring the event without having at least some presence there, and Mr Knight then came to my office and came along to the BBC TV Studios in order to do these banners that were going to advertise 3a Telecom, just to get their name across."

45. Mr Spitz relies on that as evidence that the first defendant was the person dealing with the event and as confirming the first claimant's evidence that it was the first defendant who asked him to help. Mr Spitz submits that the judge should have so held, in part because of the evidence of Mr Joseph. In fact the judge held that it was Mr Zadan who did so. To my mind it is not necessary to decide whether or not the judge was right so to hold because it is plain that either the first defendant or Mr Zadan spoke to the first claimant and asked the claimants to help.
46. As I see it, the essential facts are these and do not depend on the credibility of the witnesses:

(1) The claimants were working for one of the first defendant's companies, probably the fourth defendant.

(2) The first defendant decided to sponsor the event and that the third defendant should pay £2,000 to do so.

(3) It was decided, either by the first defendant or by Mr Zadan, or both, that 3a Telecom should take advantage of the sponsorship for publicity purposes.

(4) The first claimant attended a meeting at Mr Joseph's offices on 16 March at which Mr Joseph, and either the first defendant or Mr Zadan (but probably Mr Zadan) was present.

(5) Either the first defendant or Mr zadan asked the first claimant to assist with the publicity.

(6) On the one hand nothing was said about payment, but on the other hand the first claimant was not asked to help for nothing.

(7) The first claimant subsequently attended a meeting at a BBC studio and later went with Miss Ridgway to the venue of the event.

(8) Some measurements were taken and other work was done of a limited nature, to which I will return under question 3.

(9) Banners were used for publicity purposes at the event.

(10) No invoice was sent out until after the first defendant broke off his relationship with the claimants.

47. It seems to me that in these circumstances the question whether the claimants were entitled to be paid for what they did depends on the inference to be drawn from those facts, tested at the time of the request or perhaps at the time the work was done.
48. There may be circumstances in which it can be said that an employer is asking a favour of a contractor working for him where it is reasonably to be inferred that he was not to be paid. There may be many circumstances in which an independent contractor working for an employer complies with a request to carry out some different work. The circumstances may be such that it can be inferred that, in doing so, the contractor is agreeing to do so for nothing, perhaps as a favour or for some reason of his own. On the other hand, there may be circumstances in which it is to be inferred that the contractor is to be paid a reasonable amount for the extra work he agrees to do.
49. What inference should be drawn will depend on the circumstances as they are objectively determined, in particular upon what is said and done judged against the surrounding circumstances. It will not depend upon the subjective intentions of either party not communicated to the other.
50. What inference is to be drawn here? Mr Southeran submits that the inference to be drawn is that the claimants were agreeing to what was on any view very limited work for nothing. He submits that that inference is reinforced by the fact that no invoice was sent out for months, and might never have been sent at all but for the termination of the relationship. Mr Spitz submits, on the other hand, that it is properly to be inferred that the claimants were to be paid.
51. I have reached the conclusion that Mr Spitz's submission is to be preferred for these short reasons. The claimants were working professionally for the defendants' company or companies. It appears to me that the reasonable inference from a request for further but different work is that they would be paid a reasonable further fee in respect of it. There is no reason why they should work for nothing without being asked to do so. The help which was wanted was in connection with publicity which would be solely for the benefit of 3a Telecom. The officious by-stander would, to my mind, say that the claimants could reasonably expect to be paid for their part in helping with publicity for the benefit of 3a Telecom.
52. In these circumstances I have reached the conclusion that the judge was not justified in holding that the work done by the claimants was such that it was "gratuitous work undertaken on behalf of the charitable event in effect". This was not work on behalf of the charitable event. On the contrary, the purpose of the banners was the entirely proper one of providing publicity for the 3as, including the third and fourth defendants. The claimants who were already engaged on other work for the companies were asked to help with the publicity; they were not asked to work for nothing. In my judgment, they were entitled to be paid a reasonable sum for what they did.
53. I do not think the judge addressed the problem in quite the way I have suggested. If he had, he would, in my opinion, be likely to have reached the conclusion which I have myself reached. He placed some reliance upon the evidence of Miss Ridgway. He gave this brief summary of it:

"She says she attended the BBC premises with the claimants. She understood the claimants were to organise banners for the event. That attendance was on the 19th March as shown by her diary entry exhibited to her statement.

In the event, she says, the claimants organised nothing, because when she asked about it Mrs Knight confessed as much, and therefore there was a hurried meeting between Mrs Knight and Miss Ridgway and between them they produced, by cutting out and pasting, the design for the banners; they managed to do it very much at the last minute and to provide the information to the printers just in time.

What Miss Ridgway, as she then was, says is that no artwork was produced to her whatsoever nor sketches, nothing was produced, and that is why there was this last minute difficulty. That is of course a matter in dispute."

54. Mr Spitz submits that there is nothing in her evidence which touches upon the question whether the claimants were carrying out gratuitous work or not. Her evidence was not directed to that, but to the amount of work which was done. I agree. For the reasons I have given, I would answer question 1: was the work done on a charitable basis, "No". I would answer question 2: who instructed the claimants, "Either the first defendant or Mr Zadan".
55. I turn to question 3 -- what was the value of the work done? This is a short point. The judge accepted the defendant's case that the claimants did much less than they claimed. Indeed the claimants themselves accepted that their "for invoice" document was a "try on". The question is whether he was justified in holding that the work was worthless. Mr Spitz submits that he was not. Miss Ridgway gave a certain amount of evidence about this, both in her statement and in her oral evidence. The judge focused, in particular, on her oral evidence where she stressed how little work had been done, especially on the final day when she said that she had done the bulk of the work herself.
56. Miss Ridgway's evidence must, however, be put in its context. It is to my mind plain from the evidence, particularly that of Mr Joseph to which I have referred, that the first claimant attended the meeting at Mr Joseph's office. He subsequently went to the BBC studio. He then accompanied Miss Ridgway to the venue. She says:

"I remember that in the reception room there was some kind of metal lattice framework on the wall. Allan Knight came up with the idea of printing an 'a' in a circle which was part of the 3a Telecom logo, on squares of material and hanging these squares in the metal framework. I vetoed this idea because the reception room was only being used for drinks before the evening event....."

57. She then gave her reasons for that and continued:

"I came up with the idea of having two large banners dropping down vertically either side of the stage.... I decided that the banners would have to drop down into the scenery....

I did have a discussion with the Knights about the drop for the banners."

58. A solution was reached in the light of which she was able to decide on the size of the banners.
59. While I entirely accept Mr Southeran's submission that comparatively little was done, to my mind it is unjust to hold that the work done by the claimants was worthless. In these circumstances the question is, what figure should be put upon the work? The judge said that, if he had awarded any sum, he would have awarded £500 which was, after all, the figure which was included in the first invoice sent before the claimants misguidedly thought it in their interest to inflate the claim. While I might have arrived at a lower than that, I can see no reason for interfering with the estimate which the judge gave on the basis it was appropriate to make some award.
60. I, therefore, to question 4. On whose behalf was the work done? I would rephrase the question by asking, on whose behalf were the claimants instructed to do the work? It is true that the claimants said, by reference to the invoice of 22 February, that at that time they thought that the personal liability was that of the first defendant, although the evidence suggests that they had previously sent an invoice to the fourth defendant. It is, in my judgment, clear that the work was done for the benefit of one or more of the companies, not of the first defendant personally. The work was requested by the managing director of the third defendants and, as Mr Southeran quite properly recognises in his skeleton argument, the first defendant said in cross-examination that, if anyone was liable, it would be the third defendant. Mr Zadan said in his statement that he received an invoice addressed to the third defendant for £2000 for the orchestra for the event, which the third defendant paid. Since it was either Mr Zadan, as managing director of the third defendant, or the first defendant who requested the work in connection with an event sponsored by the third defendant, the reasonable inference is that the third defendants would pay the claimants' reasonable charges.
61. In all these circumstances, I would allow the appeal with regard to the charity event and give judgment for the claimants for £500.

24 Great Marlborough Street

62. On 15 February 1999, the first claimant wrote to the first defendant personally a letter which included the following:

"Re 63 Mosley Street, Manchester and 24 Great Marlborough Street, Manchester.

We refer to the work carried out by ourselves upon your instructions relative to your proposals for a speculative development upon each of the above two sites, and we attach hereto details of the times spent upon the design/feasibility/costing aspects.

We have based our proposal for charging upon a percentage fee, and if we do not hear from you to the contrary and with your alternative charging proposal, we will render our invoices, in these instances directly to yourself at Holly Drive, for payment by yourself.

However, as one of the schemes for 24 Malborough Street was for the premises to be refurbished/converted for use as AAA's Head Offices, it may be that you would want part of the charges for that scheme to be invoiced to the Company."

63. Attached, under the heading "24 Great Malborough Street" was a comparatively long document in which the first claimant set out the factual position as he saw it at the time. It concluded by saying that:

"The Knights believe that they are entitled to be paid for the work which they carried out, and suggest the percentage fee of 5 per cent based upon their estimate of the building works at £325,000."

64. They added:

"This was generally not for Mr Fazelynia's Telecomms business, but as the proposal that it may be used as Head Offices was part of the scheme, we would suggest that the calculated fee be split three ways."

65. On 22 February the claimants sent a further invoice (number 19) to the first defendant relating to 24 Great Malborough Street, which asserted:

"Account for providing the Design Service at the above premises for the conversion to Residential, or Offices for the Group Companies, as per our letter dated 15th February, 1999 but proportionally chargeable to the three companies and to Mr Farid Fazelynia for the Residential proposals.

Proportional Charge to Mr Farid Fazelynia £10,833.33."

66. The claimants also issued invoices dated the same day addressed to the third and fourth defendants and to AAA (UK) Limited, each in the sum of £1,805.56. A total of all four invoices amounts almost exactly to 5 per cent of the figure of £325,000. The irony is that the claim in the present action is not in respect of any of the invoices for £1,805.56, which were directed to the companies, but for the figure of £10,833.33 in respect of the invoice directed to the first defendant personally. It was that sum which the claimants sought to recover from the third and fourth defendants at the trial.
67. The judge summarised the first defendant's evidence in this regard in this way:

"....At a meeting in February or March 1998 at the defendants' company's offices, held between the claimants and the first defendant with respect to ongoing contracts, the claimants were given to understand that a proposed move of the company's headquarters to 63/65 Moseley Street had fallen through. It is common ground that it had.

The first defendant requested that that claimants find him a city centre building which the claimants presumed would act as an alternative headquarters. The first claimant said that he thought the first defendant might also be interested in a building conversion to residential use. At all events it was the second claimant who found number 24 Great Marlborough Street.... The first claimant went and saw it and then telephoned the first defendant to say it would be suitable as a headquarters, or even better for residential use. The first claimant said that the first defendant had had an interest in 1997 in the conversion of premises in Princes Street to residential use. He thought it was a joint venture.

The first defendant instructed the first claimant to approach the estate agent and let him know when an appointment to view had been made....At the beginning of March the claimants, the first defendant and Mr Maleki, who was a friend of the first defendant, and a representative from the estate agent viewed the premises. They discussed its ideal quality for 16 luxury flats and the first claimant told the first defendant that £345,000 plus about a million pounds for conversion costs would lead to a profit of about £500,000. The first claimant said that the first defendant was very interested.

The first claimant advised that a feasibility study would be necessary; and during the tour of the building the first defendant authorised the employment of a quantity surveyor. As a result the first claimant instructed a Mr Britten.

The first defendant gave authority for his employment and told the first claimant to tell the quantity surveyor to submit his fee note to the fourth defendant. He wanted the figures as soon as possible. The first defendant and Mr Maleki went off for lunch.

The claimants stayed on and took measurements of the floor areas; they took measurements on other occasions as well. These they gave to Mr Britten who, it seems, never did any measurement at the site himself.

The claimants said they checked by enquiring of other estate agents that the scheme was viable, or they checked with the local authority that planning permission allowed for the proposed development."

68. The first claimant's evidence was, further, that he did instruct Mr Britten, although he did not tell him to submit his invoice to the fourth defendant, but to the claimants. In fact, no invoice has been submitted by Mr Britten. The claimants say that they presented layouts and prospectives for the first defendant who said, "Leave it with me", but he never came back to them. The first claimant also said in evidence that he understood that, if they found a building, they would be entitled to a finder's fee.
69. As to the second claimant's evidence in this regard, the judge said:

"Mrs Knight, the second claimant, gave evidence and confirmed what her husband had said. She also said that on one or two occasions between March and November 1998 they had asked the first defendant about payment for the work they had done on Great Marlborough Street and for the charity event but he would fob them off saying: 'Don't worry, I'll take care of you'. Or words to that effect. They would ask about payment on other contracts as well; the second claimant says that the first defendant was their sole employer...."

70. Mr Britten also gave evidence on behalf of the claimants, although it is fair to say that his evidence did not carry the matter very far. The judge described the defendants' position in this way:

"The difference, quite simply, between the defendants and the claimants is that when Moseley Street, the proposed building there fell through (he was gazumped according to the first defendant) the first claimant said to him that if he heard of a building he would let him know. The next that he heard about the matter, says the first defendant, was receiving a telephone call on his mobile from the first claimant to the effect that could he look at a building at Great Marlborough Street in 10 minutes time.

He was at that point, it is common ground, about to take a friend from Iran, Mr Maleki, to lunch, but they called round at this building. The first defendant did not think the building was suitable for the head office purposes. The first claimant, he recalls, did say that if it was no good as an office it would be good for residential purposes. The first defendant told me he did not have the cash flow for such a venture at that time and would not have been interested in figures or in making an offer.

He recalls the estate agent saying that he had an offer for £325,000 and would not be interested in anything less than an offer of £345,000 if success in the bidding process was wanted.

The first defendant says he did not say he was interested nor did he say the opposite. He really was obliging the claimants by going around the building and he was not going to say yea or nay.

Mr Maleki whose statement has been put in under the Civil Evidence Act, again he is overseas, would corroborate that piece of evidence.

The first defendant said he did not and would not in the circumstances have told the first claimant that he could instruct a quantity surveyor.

Mr Maleki in his statement says that whilst they were driving away from the premises after viewing it on their way to lunch, the first defendant said in effect he was not interested in the building."

71. The judge subsequently identified the issues between the parties as being whether an instruction was given to the claimants to look for a property, or whether he simply volunteered that he would look out for one and let the first defendant know if something turned up.
72. The judge resolved that issue in favour of the defendants. He expressed his conclusions as follows:

"It is common ground that the claimants found the property in great Marlborough Street. I can accept that Mr Britten was instructed to do some work, and that the claimants produced some sketches and layout drawings - or layout drawings were adapted from the Princess Street property at about this time. I say that with some misgiving as to the adaptation of the layout drawings being adapted at this time rather than later, but I am prepared to accept on balance that that was done at this time.

What I do not accept is that the first defendant was interested in this building. On any view, whether from the claimants or the defendants, he was not interested in this building as an office and I so find.

I can also accept his evidence, and it sounds probable, that he did not have the cash flow for a residential conversion at this time. I know he has since sold his companies to Vodaphone, I know not at what profit, but at this time he was not a vendor of a company, he was running the company, or he was the owner of them.

I can accept that the claimants thought that they might interest the first defendant in a residential conversion but I conclude that that venture on their part was speculative and that they were, as it were, doing something about it in the hopes that it might lead to further work.

Casting their bread upon the water. I get support for that not only from what the first defendant told me in evidence, which I accept, but from Mr Britten's statement which I have already referred to. That has the hint that there the claimants were looking out for a building and hoping that if it did not work as a head office they cold interest the first defendant in a bit of residential conversion speculation.

Although I accept some work was done, firstly by Mr Britten, and although I accept that some work was done by the claimants, I have come to the conclusion that it was not as great as the diary entries which appear at page 334 would suggest, or the document produced I think as a result of the order of the court, setting out the details of the work would suggest. I have to say, as I have already observed, that the diary entry does indeed not square with the phrase of slotting in with the other work they were doing at Charlotte Street or John Dalton Street and other places. They were occupied fully and slotting in does not give an indication of doing eight hours work per weekday and then 10 hours at the weekends.

That also makes me wonder, as I say, about whether the layout drawings were prepared at this time or later. But as I said, I am just prepared to accept that they probably were made contemporaneously.

I am satisfied, for the reasons I have already given, that there was no request made for payment or any invoice between March and November 1998. Again I have come to the conclusion that but for the November parting of the ways I doubt that any request for payment would have been made. I am quite satisfied from the evidence, and where there is a conflict between the two sides I prefer the evidence of the defendants, that there was no intent to create legal relations whereby there should be payment for what the claimants did as regards Great Marlborough Street.

There is a further point, if a finder's fee was due as the first claimant suggests, then there is no means of determining what the fee should be. It was a matter for negotiation says the first claimant. If that be so it is difficult to see how there was any agreement for reward made. It seems to me quite impossible to say that a finder's fee was due. And I reject, I have to say, the notion that a finder's fee would be due in the circumstances put forward by the claimant. I see no basis for saying that the mere agreeing to look around the property, or just looking round the property would mean that the person doing that would have to pay. That seems to me to be contrary to any implication that one could draw in law; also on the evidence given by the first claimant it seems to me difficult to see how one could construe any such agreement as entitling the finder to a fee.

I can accept if the first defendant made a request, or permitted or authorised the quantity surveyor to be retained, then that would attract a fee for a reasonable sum for that work, but as to that I prefer the evidence of the first defendant that he did not give any such authority or instruction either when going round the building or at any other time.

The way in which various figures have been put forward as to the reward for finding the property - the various percentages and sums put forward in the documents and in evidence, persuades me that there was no agreement or promise to reward the claimants made by the first defendant if a building was found. In short I prefer the defendants' evidence, particularly the first defendant's evidence as to this matter where there is conflict between the claimants and the defendants.

If I am wrong as to my primary findings then it seems to me there can be no finder's fee; Mr Britten's fee is wholly unknown and therefore not provided to any value. The most that could be achieved would be the 41 hours at £15 per hour making some £615, that is probably far too hight but that is the best I could do on the figures before me if I were wrong.

Again the compromise of all claims with the first and second defendants means that there is in any event no way of pursuing the third or fourth defendants. There is no convincing evidence before me as to which of those two defendants, the third or the fourth, would have been the principal, and if that cannot be shown on the balance of probabilities then the person who is liable remains the first defendant, who undoubtedly, if I am wrong on everything else, would have been the agent on behalf of a defendant company principal, or maybe one other company of his. And if one cannot say who that is then it is the first defendant who would remain liable; that claim has been compromised. And that, it seems to me, can be said with greater force in the case of the invoices as regards Great Marlborough Street, is a final hurdle which cannot be overcome.

Therefore, for the reasons I have endeavoured to give it seems that there was (a) no liability to pay; and (b) no liability as against these defendants, the third and fourth defendants."

73. The judge reached those conclusions after hearing evidence of on both sides. He plainly regarded the evidence of the claimants as less than credible and preferred the evidence of the first defendant. The issue which arises on this part of the appeal is not in any way similar to the issue which arose on the first part of the appeal. This issue did not depend upon what inferences could be drawn from evidence, which was reasonably clear. It depended upon the judge's view of the credibility of the witnesses. In these circumstances I can see no basis upon which this court could hold that the judge was wrong to reach the conclusions which he did. In any event, I agree with the judge that it is almost impossible to hold that the third or fourth defendants were liable for any particular sum which might be due.
74. I would dismiss the appeal with regard to Great Marlborough Street.
75. LORD JUSTICE SWINTON THOMAS: I agree.
Order: Appeal in relation to BBC Charity Event allowed. Judgment for the appellants in the sum of £500. Appeal in relation to 24 Great Marlborough Street dismissed. Costs below to be paid by the respondents to the appellants on the basis that the case proceeded in the small claims court. Respondents to pay appellants' costs of the appeal.