England and Wales Court of Appeal (Civil Division) Decisions

IN THE HIGH COURT OF JUSTICE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
The Hon. Mr Justice Jack
[2010] EWHC 71 (QB)

		Royal Courts of Justice Strand, London, WC2A 2LL
		16/12/2010

Lord Justice Moses :

1. On 19 April 2008 Joe Calzaghe CBE defeated Bernard Hopkins and became Ring Magazine Light-Heavyweight world champion. This was the last fight in which Joe Calzaghe was promoted by Sports Network Limited. Sports Network Limited ("SNL") was the "alter ego" of Frank Warren, the well-known boxing promoter. He was the ultimate beneficial owner and chief executive officer. There has never been any dispute but that Mr Warren was the privy of SNL.
2. Under the promotion agreement SNL agreed to promote Mr Calzaghe's fight on terms that the boxer was to receive 80% of the net profits made by SNL. Mr Calzaghe was not paid. On 27 June 2008 SNL claimed against Mr Calzaghe damages for breach of an alleged oral agreement that SNL should promote his next fight. Mr Calzaghe counter-claimed for monies he said he was owed in respect of the Hopkins fight. Following an eight-day trial, on 16 March 2009 Wyn Williams J gave judgment, [2009] EWHC 480, for Mr Calzaghe in his claim against SNL. He concluded that SNL owed Mr Calzaghe the sum of £1,813,055 plus interest and costs and that there had been no oral agreement between SNL and Mr Calzaghe that SNL would promote any fight following the Hopkins fight.
3. Just over a month later, on 24 April 2009, Mr Warren placed SNL into administration. Mr Calzaghe had received only £260,000 under the judgment. SNL was refused permission to appeal, both on the papers and orally on 17 June 2009. On 3 June 2009 Mr Calzaghe sought to join Mr Warren as a party to the action brought by SNL and pursue additional claims against him for wrongfully causing SNL to dissipate the proceeds due to Mr Calzaghe from the Hopkins fight and alleged that monies were held by SNL on trust for Mr Calzaghe and that Mr Warren had interfered with that trust. Since the action against SNL had been stayed by virtue of the administration, Mr Calzaghe did not pursue paragraphs in Mr Calzaghe's amended defence and counter-claim against SNL which alleged, for example, breach of fiduciary duty and liability to make equitable compensation.
4. Mr Smith, on behalf of Mr Warren, objected to joinder on the ground that the judgment against SNL in an action in which Mr Warren was not a party was not binding upon Mr Warren personally and that the attempt to join him was, in Mr Smith's words, an attempt "to lever Mr Warren into the proceedings".
5. The outcome of the application was an order, the relevant parts of which read:-

"And upon the defendant undertaking through his counsel to issue a Part 7 Claim Form within seven days of the date of this Order setting out relief sought by the defendant against Mr Frank Warren ('the Warren proceedings')

And upon the defendant, the claimant and Mr Warren having agreed and acknowledged that the judgment of the Court of 16 March 2009 in these proceedings (HQO8XO2447) is not binding on Mr Warren it is ordered that:

1) Following the issue of the Claim Form in the Warren proceedings, the Warren proceedings be consolidated with the present proceedings (HQO8XO2447) and, subject to paragraph 11, the directions set out in paragraphs 2-10 below shall apply to such consolidated proceedings;".

6. On the same day, on 3 June 2009, Mr Calzaghe issued fresh proceedings (HQO9XO2357) against Mr Warren alleging that he wrongfully caused SNL to dissipate the proceeds from the Hopkins fight and amongst other things that the monies were held by SNL on trust for Mr Calzaghe and Mr Warren interfered with that trust.
7. On 6 July 2009 Mr Warren served his defence, which was subsequently amended, on 12 January 2010. Mr Calzaghe alleged among other things that Mr Warren had knowingly given false evidence before Wyn Williams J in support of SNL's claim. The defence and amended defence denied that Mr Warren had knowingly given false evidence and asserted that the defendant believed that SNL had entered into a binding agreement with Mr Calzaghe on 15 January 2008 that SNL would promote Mr Calzaghe for future fights (see paragraphs 36.1 and 36.4 of the amended defence, amended by way of substitution).
8. Mr Calzaghe sought, by way of application dated 21 October 2009, to strike out those parts of the defence which denied knowingly giving false evidence and which sought to re-assert the making of an oral agreement for future promotion, on the grounds of estoppel and abuse of process. The application also sought summary judgment on the grounds of the lack of any real prospect of success.
9. On 20 January 2010 Jack J gave judgment under CPR Part 24 in relation to specified paragraphs of the amended defence. Those paragraphs were set out in schedule I to the Order. In order to understand the effect of the Order it is necessary to set out the relevant pleadings. Paragraph 28 of the amended particulars of claim (amended by way of substitution) read:

"28. In the judgment, Wyn Williams J found (amongst other things) that the allegation that Mr Calzaghe had agreed with Mr Warren at the 15 January meeting that SNL would promote him for his future fights, and the evidence of Mr Warren to the same effect, were false, holding that SNL's claim had 'been raised as a smokescreen by [SNL] as an attempt to avoid payment by [SNL] to [Mr Calzaghe] of a very substantial sum of money. "

10. Paragraph 36 of the amended defence read:-

"36. As to paragraph 28 of the amended particulars of claim:

(i) The defendant denies that Wyn Williams J found his evidence to be false. Wyn Williams J did, however, prefer the evidence of the claimant's witnesses on the balance of probabilities.

(iv) The defendant believed and does believe that Sports Network Limited entered into a binding agreement with the claimant of 15 January 2008 meeting that Sports Network Limited would promote the claimant for future fights.

Except as above, paragraph 28 of the amended particulars of claim is denied."

11. Thus, Mr Calzaghe succeeded in obtaining a judgment, pursuant to CPR Part 24, which precluded Mr Warren from contending that he had not knowingly given false evidence but had genuinely believed that SNL had entered into a promotional agreement. Jack J's judgment also precluded Mr Warren from contending that any such promotional agreement for future fights had been contracted and precluded Mr Warren from denying that SNL's claim had been raised as a smokescreen in order to avoid payment to Mr Calzaghe of the proceeds of the Hopkins fight.
12. Jack J reached his conclusion on the grounds that there was no real prospect of Mr Warren succeeding on the issue of whether Mr Warren's evidence was honest or whether SNL's claim was a "smokescreen". But Jack J rejected the alternative grounds on which Mr Calzaghe relied. He concluded that although the judge's finding was capable of founding an estoppel and although it would be an abuse of process to re-litigate those issues, Mr Calzaghe had entered into an agreement, recorded in the 3 June Order, that Mr Warren should not be bound "in any respect" by the judgment of Wyn Williams J and accordingly Mr Calzaghe could not rely upon issue estoppel or abuse of process against Mr Warren (paragraph 31 of the judgment).
13. Mr Warren now appeals, with leave, against the conclusion of Jack J as to his prospects of success and Mr Calzaghe cross-appeals, with leave, against Jack J's conclusion as to the effect of the agreement recorded in the Order of 3 June 2009.
14. I shall start with the grounds upon which Mr Calzaghe succeeded, namely, the Order by Mr Justice Jack for summary judgment under CPR part 24. It is vital to resolution of that issue to appreciate that by the time of the application under CPR Part 24 Mr Warren did not dispute that SNL owed Mr Calzaghe the sum of £1,813,055 plus interest and costs without the deductions identified in the Order. The essence of Mr Smith's argument on behalf of Mr Warren was that if Wyn Williams J's judgment was not binding on him then another judge might come to a different conclusion on the issues of Mr Warren's honesty and as to the existence or otherwise of the oral agreement as to future promotion which Mr Warren asserted. Jack J himself said:-

"The correct approach to this issue is not simply to say that another judge would, in reality, be certain to follow the conclusion of Wyn Williams J." (Judgment, paragraph 34)

But the judge had failed to follow that approach.

15. This submission ignores the concessions made, for the purposes of the application, on behalf of Mr Warren. There was no live issue as to whether SNL had concluded an oral agreement with Mr Calzaghe on 15 January 2008 in relation to the promotion of future fights. Mr Warren had conceded that SNL did not. In those circumstances the only issue in relation to promotion of future fights was whether Mr Warren might have honestly believed that SNL had entered into such an agreement.
16. It is necessary to recall Mr Warren's evidence in relation to the oral agreement alleged to have been made at a meeting on 15 January 2008. Mr Warren had contended in the trial before Wyn Williams J that he was present at the meeting at which the alleged agreement was made. The evidence is recorded by Wyn Williams J as follows:-

"98. Mr Warren and Mr Simons disagree with this version of events. They assert that what happened was as follows. Following their return to the room in which the meeting was taking place it became clear that the parties were heading for an impasse. Consequently, Mr Warren made the suggestion that the Defendant and his father should speak to Mr Warren and Mr Simons in the absence of Mr Williams. Mr Simons went off to ask Mr Abbey whether a room was available for this discussion. Mr Abbey confirmed that such a room was available and, accordingly, the four men left Mr Williams and proceeded to discuss matters between themselves in a separate room. Within minutes, apparently, agreement had been reached. The agreement alleged by the Claimant is that it would pay the Defendant 80% of its share of the profits from the fight with Mr Hopkins and that the Defendant would permit the Claimant to promote all his future fights – also on the basis that he would receive 80% of the Claimant's share of the profits generated by those fights.

99. In his oral evidence in cross-examination Mr Warren described in his own words what was said (and I here quote from the transcript):-

'We went into a separate room and at that stage we hadn't resolved anything. I said to him, 'Joe, if you look me in the eye and tell me that …' – remember at the meeting he had already said about me being the best promoter, etc. and what Enzi said: 'Look me in the eye and tell me that we are moving forward together and I'll continue to promote you to the end of your career and we will have a deal'. We shook hands and we hugged and came out of the room and went back into the first meeting room.'"

17. In those circumstances there is no room whatsoever for any mistake. As Jack J put it:-

"(g) [Mr Warren] is either lying about there being such a meeting and agreement, or there was such a meeting and agreement. There is no possibility of anything else." (Judgment, paragraph 32)

18. Once it had been conceded that there was no agreement for the promotion of future fights it was inevitable that Mr Warren, who said he was there, and said that there had been such an agreement, would be found to be lying about the agreement. No judge could reach a different conclusion. In those circumstances it profits nothing to contend that had that concession not been made a different judge might have reached a different conclusion as to what occurred on 15 January 2008. The concession made on behalf of Mr Warren killed any such possibility.
19. In those circumstances, in my view, Mr Warren had no real prospect of successfully defending the issue of his honesty and the judge was correct to give judgment on that issue and on the non-existence of any oral agreement for future promotion pursuant to CPR 24.2(a)(ii). I would dismiss Mr Warren's appeal on that ground.
20. I should mention that Mr Warren had sought to adduce what he described as fresh evidence in relation to his belief. It is unnecessary further to consider whether he should be permitted to do so or, indeed, whether in reality any of the evidence was "fresh".
21. In the light of my conclusion it seems to me unnecessary to deal at any great length with Mr Calzaghe's cross-appeal. It is important to emphasise that Mr Warren did not dispute that, apart from the agreement, he was SNL's privy and would have been estopped from disputing Wyn Williams J's conclusion that there was no oral agreement as to future promotion and that the allegation that there had been such an oral agreement was "raised as a smokescreen by [Mr Warren] as an attempt to avoid payment by [him] to [Mr Calzhage] of a very substantial sum of money". (Wyn Williams J, paragraph 155, cited by Jack J, paragraph 15.)
22. The cross-appeal, accordingly, turns on whether there was an agreement which prevented Mr Calzaghe relying upon issue estoppel or abuse of process. The agreement was said to be recorded in the recital to the Order of Wyn Williams J of 3 June 2009. But to identify what was agreed it is necessary to look at the transcript of the submissions made to Wyn Williams J on 3 June in order to resolve what a reasonable person, having all the background knowledge which would have been available to the parties, would have understood the parties to mean (see, e.g., Investors' Compensation Scheme Limited v West Bromwich Building Society [1998] 1 WLR 896, 912-913 and Chartbrook Limited v Persimmon Homes Limited [2009] 3 WLR 267, 274 at paragraph 14).
23. Mr Calzaghe's application was to join Mr Warren to the proceedings brought by SNL so as to pursue personal claims made in the counter-claim against him. The objection made on behalf of Mr Warren was as to Mr Calzaghe's attempt to join Mr Warren in the existing proceedings as opposed to commencing fresh proceedings. Thus:-

"There has then been a judgment to which Mr Warren is not a party and is not bound by, and now post-judgment there is now an attempt, if you like, to lever Mr Warren into the proceedings. What we are particularly concerned about is that the whole purpose of attempting to do that rather than commence fresh proceedings is to rely on the effect of the judgment as against Mr Warren personally when it does not bind him." (Pages 4-5 of the transcript.)

The judge suggested that to avoid what he described as "sterile procedural debates" Mr Calzaghe should undertake to issue a Claim Form and then rely upon the existing re-amended defence and counter-claim as the statement of claim (see page 11 of the transcript). The judge thought consolidation would be necessary, in the event that SNL's pending application for permission to appeal was successful. Mr Smith then turned to the question of the draft order:-

"All I'm going to then say in response to that is that some wording ought to be inserted into the draft order for the avoidance of doubt to make clear that by reason of the consolidation it is not intended that the previous judgment should thereby become binding on Mr Warren. Now your Lordship will no doubt say to me that is self-evident anyway, but in my submission that is not the reason why wording to that effect should not be inserted into the draft order because, as I said to your Lordship –

Mr Justice Wyn Williams: 'subject to what Mr Green may wish to say, I am happy for a preamble for the order to record the parties' agreement that my judgment in the case of Sports Network Limited v Calzaghe is not binding upon Mr Warren, that is what everybody has said in this –'

Mr Smith: 'Exactly. I do not see my learned friend can have any objection to that because he, I think, accepts that –'"

(page 12 of the transcript)

24. It is now suggested that in return for agreeing that the personal claim against Mr Warren should be consolidated in the existing claim so that Mr Calzaghe could rely upon the existing re-amended defence and counter-claim, Mr Calzaghe gave up any entitlement he might have had to rely upon Wyn Williams J's findings as to the non-existence of any oral agreement. Jack J observed that it would be surprising if Mr Calzhage gave up the advantage achieved by reason of Wyn Williams J's judgment with the consequence that he would have to establish that SNL owed him £1.8m (judgment, paragraph 29).
25. It would have been not only surprising, but absurd. No reasonable person could think that for the purpose of allowing the proceedings to be consolidated and certain paragraphs of the re-amended defence and counter-claim to stand as the statement of claim Mr Calzaghe would give up his entitlement to rely upon Wyn Williams J's findings of fact as to the crucial issue of the existence of the oral agreement. Had Mr Calzaghe decided to start new proceedings without consolidation there could have been no question but that he would have been entitled to rely upon Wyn Williams J's findings. There would plainly have existed a sufficient degree of identification between Mr Warren and SNL to make it just to hold that a decision against SNL should be binding in proceedings in which Mr Warren was a party (see Spencer Bower and Handley: Res Judicata, 4^th Edition, paragraph 9.45). No reasonable person would conclude that the parties intended that Mr Calzaghe should give up that advantage on it being agreed he should consolidate his claim with the existing claim in which he was a defendant. Any reasonable person would conclude that to interpret the exchange between the parties on 3 June in that way was absurd.
26. Mr Smith contended that to interpret the agreement as meaning no more than that the judgment against SNL could not be enforced against Mr Warren was merely a statement of the obvious and was unnecessary. But, in my view, having regard to the nature of the exchange and the purpose of Mr Calzaghe's application, the agreement was no more than a statement of the obvious, or to use Mr Smith's own expression, "self-evident".
27. I would dismiss Mr Warren's appeal and allow Mr Calzaghe's cross-appeal.

Lord Justice Toulson:

28. I agree.

Lord Justice Thomas:

29. I also agree.