England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
(MR JUSTICE FOSKETT)

		Royal Courts of Justice Strand, London, WC2A 2LL
		12th January 2012

Lord Justice Davis:

1. The applicants seek to appeal from an order made by Foskett J sitting in the Queen's Bench Division, the order being sealed on 18 May 2011. The judge had given a considered judgment following a ten-day trial. The judgment was in favour of the claimant in respect of his claim in the sum of around £379,000 inclusive of interest. Tomlinson LJ had previously directed that the matter be listed as a rolled-up hearing; that is to say, as an application for permission to appeal, with the appeal to follow if permission were granted, and comes before the court in that way. In those circumstances the respondents to the proposed appeal have been represented by counsel, Mr Hill-Smith, who appeared below; Ms Anderson QC, who did not appear below, has represented the proposed appellants, leading Mr Lewis, who did appear in the court below.
2. The proceedings in question were commenced by the claimant on 27 January 2009. They represent part of a wider picture involving very hard fought litigation between the principal parties. Indeed, previous proceedings involving the protagonists had come before Cranston J on a separate, albeit related, matter. In those proceedings the respondent, Mr Deir, had had some degree of success, although by no means total success, and his evidence had there been in some respects criticised.
3. So far as the present proceedings are concerned, the position is that the claimant had worked for a long time in Saudi Arabia for the first defendant, Sheik Al Athel. On that employment coming to an end (and the other proceedings in part involve a dispute about the entitlement on termination of that employment) there was discussion about what the claimant was then to do for the Sheikh. The proposal was that the claimant should go and work for the Sheikh in the United Kingdom, specifically -- although not necessarily solely -- with regard to developing an airport at Lydd. In respect of that specific job, that is to say developing the airport, the claimant was engaged as Managing Director on written terms and conditions which in due course were set out in a document, the principal named company being London Ashford Airport Limited.
4. Put in a nutshell, the claimant's case was that the remuneration for that particular task would never have been sufficient, having regard to his tax-free payments in Saudi Arabia and other such things, to induce him to give up his position in Saudi Arabia and go to work for the defendant in the United Kingdom. His claim was based on what he says was a further oral agreement made between him and the Sheikh, to the effect that he should in addition be paid fees of £20,000 per year per company for acting as a director of a number of other United Kingdom companies in which the defendant was interested, and which might extend to companies which might thereafter be incorporated. By this means, the claimant said, he would receive a sufficient total package and inducement to persuade him to relocate to the United Kingdom and work for the Sheikh.
5. The essential position of the defendants was to deny that there was any such agreement. The position of the defendants, in essence, was that the only remuneration that the claimant was entitled to was that for acting on written terms of employment as Managing Director of the company operating Lydd Airport along with other activities as set out in the terms of employment. In addition, there were substantial counterclaims by the defendants (which included companies in which the Sheikh had an interest) to the effect that, as it was alleged, the claimant had misappropriated significant sums while acting as a director. The defendants had an amount of success on the counterclaim, although by no means total success.
6. The position of the claimant was that the oral agreement had been made on an occasion of a discussion between him and the Sheikh in Riyadh in Saudi Arabia on 21 December 2003. It was said that that agreement was further confirmed at a meeting at the Sheikh's London residence in Basil Street on 9 December 2004. That latter meeting was attended not only by the claimant and the Sheikh but also by others, including the Sheik's solicitor and the claimant's secretary. Notes were produced in respect of each such meeting, some of them being produced late in the day, and there was a fierce challenge of trial to the authenticity and accuracy of the various notes. A considerable amount of evidence in due course was given at the trial relating to these particular meetings.
7. In essence the judge, having carefully reviewed the evidence, found in favour of the claimant, and decided that there had been an oral agreement whereby the Sheikh had made a personal commitment to pay directorship fees at the rate of £20,000 per company per annum. The judge's essential findings as to the scope of the agreement are to be found in paragraphs 116 and following of his judgment, which it is not necessary here to set out. In paragraph 120, amongst other things, he said this:

"At all events, objectively speaking, that is what was agreed. I agree with Mr Lewis' submission that the intention could not possibly have been to embrace those companies where Mr Deir was to be appointed managing director and for which he was to be paid a salary. To the extent that Mr Deir sought to claim in respect of his role as director of LAA, he is, in my judgment, objectively speaking, not entitled to do so, whatever he may have thought subsequently. Equally, I do not consider that it is intended, whether subjectively or objectively, that mere appointment as a statutory director, with no effective duties, would carry with it an entitlement of £20,000 per annum by way of director's fees. The Sheikh would never have agreed to that and Mr Deir must have understood that. Objectively speaking, there could be no sense in it. However, given the underlying intention of the agreement, it seems to me that where more than merely nominal duties were carried out, the fee would be payable."

The judge then went on to make further important and detailed findings in paragraphs 123 and 124 of his judgment, which again it is not necessary to read out for present purposes.

8. In one sense it could be said that the requirement of what may be called active management in a sense had posed a further hurdle which the claimant had to leap and which, as the judge found, the claimant succeeded in leaping. But it is that particular aspect which has given rise to the principal grounds of this proposed appeal. As is nowadays common practice, the judge distributed a draft of his judgment for the parties' observations before handing it down. Mr Lewis at that stage then put in lengthy written submissions, amongst other things objecting in principle to the judge's conclusion that there had been active involvement or active management on the part of the claimant in respect of the various companies for which the judge had made the findings. It was said about that particular point about active involvement that it had never been pleaded, had never been put in issue by the claimant, and had never been relied upon by the claimant's counsel at the trial or in his closing submissions. It is said that in consequence the matter was not explored in evidence and unfair prejudice arose thereby, so far as the defendants were concerned, by virtue of the judge taking the stance he was proposing to take.
9. This further point having been raised before the judge, the judge then dealt with it by a substantive postscript which he added to his original judgment, he making it clear that that postscript formed part of his overall judgment. Amongst other things, he dealt with the points raised by Mr Lewis (and in effect repeated by Ms Anderson on this application at length) in particular at paragraphs 270 and 276 and paragraphs 286 and 287, which again it is not necessary to read out here. Ms Anderson further complains that the overall approach of the judge, particularly in the light of the postscript, was one which is confused, as she said, and that the judge had indeed misapplied his own test of active involvement.
10. Overall Ms Anderson submits that there was an error of law or serious procedural irregularity in the judge deciding this case, on this aspect of it, by reference to the notion of active involvement or active management in the way that he did: when, as she said, it had not been properly put in issue, had not been raised on the pleadings and had not been explored in the evidence. She makes a further complaint that when the judge did raise this in his draft judgment circulated, he then never gave a proper opportunity for Mr Lewis to address it by detailed submissions for proceeding to hand down his judgment. Ms Anderson says that what the judge did was simply not in accordance with the way the entire case had been run.
11. In my view there is nothing in any of those points, however they be formulated as they are in the first three grounds. The first point is that, as it seems to me, the matter was indeed there on the pleaded cases. It is quite true that in the Particulars of Claim the claimant was asserting that he would be entitled under the agreement, and the agreement was that he would be paid the sum of £20,000 per year for each company for which he acted as director. In the original defence as served, however, in paragraph 6 this is said as to the alleged agreement:

"There was no agreement to remunerate the Claimant as alleged or at all for his various directorships. As set out above, the Claimant received a salary for his Managing Directorship of D2 and D5, companies in which he was actively involved. The Claimant was not actively involved in D3, D4 or D7."

There was in due course a reply. Amongst other things the reply said this:

"The obligations on the Claimant were at no stage agreed to include his acting as director for separate legal entities without further and other compensation by way of monetary payment. Further, the Claimant was actively involved in the incorporation and subject management of the companies for which he is entitled to be rewarded as agreed as director..."

12. A request for further information was put in. One of the requests was this:

"Is it the Claimant's case that simply being appointed company director entitled him to £20,000 per annum per company, regardless of what the Claimant actually did in practice?"

The answer was this:

"It is the Claimant's case that the companies were established after discussions with and approval of the First Defendant, and that once appointed as company Director the Claimant was responsible for whatever the position required him to do and to assist the company in meeting its objectives."

Thereafter it is to be noted that the defence was amended, and in paragraph 6 it was amended, amongst other things, to say this:

"The claimant was [and then there are deleted the words 'not actively'] involved in D3, D4 and D7."

And then it went on to deal with the nature of the involvement.

13. Thus, to adopt a phrase used by Longmore LJ in the course of argument, this issue of active involvement was indeed in the arena. That is reflected by the evidence which was served by the claimant at various stages in the course of his lengthy witness statement; for example in paragraphs 49, 55, 90 and 96 he makes specific reference to his being actively involved in the companies he is there mentioning. Yet further, the position was touched upon in the course of cross-examination by Mr Lewis of the claimant. It is not necessary at this stage to go into details, and it is quite true that the cross-examination on this aspect was not extensive, but for example at pages 596 and 597 this issue was identified; and indeed, as the claimant explained in his oral evidence he had not claimed fees for one particular company of which he was director just because he had had no active involvement in that particular company. There can be no possible criticism of Mr Lewis for not exploring the matter in great detail; for one thing, one can apprehend he may have had little in the way of positive material to put to the claimant if he was going to dispute active involvement. For another, of course, that would have been entirely contrary to the primary case, which was that there was no agreement of any kind at all, as asserted by the claimant; one can see the tactical delicacy that might be involved in seeking to explore a matter which would be a complete alternative, and contrary, way of putting the defendants' position.
14. In my view, such considerations dispose of these first three grounds as advanced forcefully by Ms Anderson. It seems to me that the judge was entitled to approach the matter in the way that he did, this matter being properly open to him for consideration, and he was entitled to reach the conclusions that he did, having regard to his assessment of the evidence. The judge's rejection of the complaints of Mr Lewis in the postscript to his judgment seems to me to be entirely well-founded.
15. A fourth ground is raised on the grounds of appeal, but it is not necessary to say anything more about that because Ms Anderson has quite rightly abandoned it. Indeed, insofar as the point had any technical validity, the respondent had previously indicated that credit will be given in the appropriate amount.
16. The final ground raised is a quite different ground. In essence, the applicant seeks to challenge the judge's finding that the claimant would be entitled to director's fees of £20,000 a year from the relevant date in respect of two particular limited companies, Lydd Gold Club and Driving Range and Lydd Golf Club Limited. Ms Anderson has placed emphasis on the written terms of employment. The claimant was appointed on terms set out in a letter (headed "London Ashford Airport Limited") and amongst other things the stated position he is to hold is described as "Managing Director for London Ashford Airport, Lydd Air and Lydd Golf Club". The position is that the two particular companies in question existed at the time of his taking up of the appointment, although he was not appointed a director at that time, albeit he was appointed Secretary. Ms Anderson's essential point is that even if he was not appointed Managing Director at the time (it appears he was only appointed a director in October 2005) de facto he was acting as Managing Director; and given the terms of employment therefore, in the light of the judge's own conclusions as to the extent of the agreement, summarised in paragraph 120 of the judgment, he should not be entitled with regard to these two companies for any fees at the rate of £20,000 per annum. She said that, in truth, these two companies were all part of the "LAA picture", and therefore that further confirms that there should be no entitlement to fees of this kind. She further submits that it is irrelevant that he only became appointed director as such some 18 months after he took up his position in the United Kingdom.
17. Clearly, that was an argument that was indeed well open to be run with regard to these two companies. As I see it, the difficulty in the way of Ms Anderson's arguments is that the judge expressly addressed those very points in his judgment. He dealt with them in particular at paragraph 124 of his judgment. The position was then challenged, very much in effect on the basis that Ms Anderson has sought to advance today, by Mr Lewis in written submissions after the first draft of the judgment was received. The judge dealt further with that point in his postscript at some length. Again, it is not necessary for present purposes to read out the relevant paragraphs, but particular emphasis should be placed on paragraphs 274 and 275 in this context; and the judge further clarified why he considered that the claimant was entitled to the salary of £20,000 per year with regard to these particular companies even though they related to the golf club. In particular, the judge attached weight to the fact that the appointment as director had come so relatively late in the day, long after the initial involvement in the airport from the beginning of 2004. As it seems to me, those are findings of fact which were open to the judge, and this court is in no position to interfere and should not interfere. I do not agree with Ms Anderson that the judge is to be taken either to have forgotten or to have confused the test which he had previously set himself with regard to his findings as to what the agreement actually extended to. On the contrary he specifically addressed the very points raised by Mr Lewis and in effect repeated by Mr Anderson.
18. Overall, therefore, I consider that this application for permission to appeal should be refused on all grounds advanced.

Lord Justice Jackson:

19. I agree.

Lord Justice Longmore:

20. I agree also.

Order: Application refused.