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Cite as: [2008] EWHC 240 (QB)

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		Neutral Citation Number: [2008] EWHC 240 (QB)
		Case No: HQ07X033335

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

18/02/2008

B e f o r e :

THE HONOURABLE MR JUSTICE WYN WILLIAMS
____________________

Between:

	CRYSTAL PALACE FC (2000) LIMITED	Claimant
	- and -
	IAIN DOWIE	Defendant

____________________

Mr John Davies QC (instructed by Messrs Fladgate Fielder Solicitors) for the Claimant
Mr Andrew Hochhauser QC and Mr Vernon Flynn (instructed by Messrs Barker Austin) for the Defendant
Hearing dates: 4-5 February 2008
____________________

HTML VERSION OF JUDGMENT
____________________

Mr Justice Wyn Williams:

On 14 June 2007 Tugendhat J handed down judgment upon two preliminary issues tried in proceedings commenced by the Claimant against the Defendant by a Claim Form issued on 30 May 2006. The preliminary issues for determination by the Judge were as follows: -

a) whether or not the Claimant entered into a compromise agreement dated 22 May 2006 on the basis of alleged fraudulent representations by the Defendant in terms set out in identified paragraphs of the Particulars of Claim and

b) whether, if the answer to issue (a) was yes, the compromise agreement dated 22 May 2006 should be rescinded.

Tugendhat J answered the first of the preliminary issues in the affirmative but the second in the negative.

As a consequence of the judgment upon the preliminary issues a detailed Order was promulgated. It is to be found at Bundle 2 pages 245 to 248. The salient parts of the Order, however, can be summarised in the following way:-

(a) judgment was entered for the Claimant upon the first preliminary issue;

(b) judgment was entered for the Defendant on the second preliminary issue;

"3. As to costs which were reserved under previous Court Orders:-

a. The Defendant pay 50% of the Claimant's costs of the Claimant's application for specific disclosure dated 28 November 2006, the costs of which were reserved by order of 9 February 2007, to be assessed if not agreed;

b. The Claimant pay 50% of the Defendant's costs of the Defendant's application for specific disclosure dated 30 November 2006, the costs of which were reserved by order of 9 February 2007, to be assessed if not agreed;

c. There be no order as to costs in respect of the Defendant's application for security for costs dated 30 November 2006, the costs of which were reserved by order of 7 March 2007.

4. The Defendant pay the Claimant's costs of the preliminary issues on the indemnity basis, to be the subject of detailed assessment if not agreed.

5. The Defendant pay the Claimant the sum of £150,000 on account of the costs referred to in paragraph 4 above by 4.00pm on 3 August 2007."

(d) permission to appeal was refused as was a stay of the order for costs on account pending an application for permission to appeal to the Court of Appeal;

(e) directions were made with a view to a further trial on the issue of the quantum of damages which would properly flow from the finding of fraudulent misrepresentation.

In due course the Defendant sought permission to appeal from the Court of Appeal and a stay of the order for the payment of £150,000 costs on account. On 31 July 2007 Richards LJ refused the application for stay in relation to payment of the costs and, in consequence, shortly thereafter the Defendant paid to the Claimant the sum of £150,000. At that stage, however, the application for permission to appeal was not considered.

In the proceedings which I have described the Defendant was represented by the firm of Solicitors known as CMS Cameron McKenna LLP. However, at or about the time an application was made for permission to appeal to the Court of Appeal the Defendant decided to contact a second firm. On 18 July 2007 the Defendant's brother, Robert Dowie, made a telephone call to Mr Gary Austin, a solicitor and partner in the firm of Barker Austin. At the time Mr Austin was on holiday and consequently he informed Mr Robert Dowie that he would contact the Defendant upon his return from holiday. The choice of Mr Austin was not random. The Defendant and he had known each other since childhood.

Upon his return from holiday Mr Austin contacted the Defendant. In summary what transpired was that Mr Austin was instructed to make contact with the Claimant's solicitors with a view to exploring a settlement of the litigation existing between Claimant and Defendant.

Mr Austin's first attempts to contact the Claimant's solicitors were three telephone calls – two on 17 August 2007 and one on 20 August 2007. On each occasion he left a voicemail message to the effect that he would like to speak to Mr Buckley, the solicitor dealing with the claim on behalf of the Claimant. It suffices that I quote the verbatim transcript of one of Mr Austin's messages on 17 August 2007: -

"My name is Gary Austin of Barker Austin Solicitors. I have spoken with Mark Buckley about the matter of Ian Dowie and Crystal Palace. It is likely that I am going to be asked to replace Cameron McKenna on the record in this case but I thought I would have an opportunity of speaking to you before we do that to see if there is any common ground between the parties and I would appreciate it if you could perhaps give me a call back. If you need to speak to Cameron McKenna about this or if you feel you want to then by all means do that but my name is Gary Austin, my company is Barker Austin and telephone number is 020 7377 1933. I would appreciate a call. Thank you very much. Bye"

On 28 August 2007 Mr Buckley made contact with Mr Austin. For the fortnight preceding that date Mr Buckley had been on holidays, hence the delay. In his Witness Statement Mr Austin says that the two men spoke over the telephone in a call which began at 2.18pm and ended a little more than 4 minutes later. I should say at the outset that in his Witness Statement Mr Austin gives very precise evidence about the times and dates of relevant phone calls. I have no reason to doubt the precision since he has taken the times and dates from telephone logs that have been produced in evidence. Later in this judgment I will deal with the details of what was said during the course of this telephone call. It suffices that I say at this stage that it took place because the Defendant was interested in exploring the possibility of settling the litigation.

Following the telephone conversation on 28 August the two Solicitors discussed terms upon which their respective clients would be prepared to settle the proceedings and other matters ancillary thereto on two occasions on 29 August 2007, one occasion on 31 August 2007, two occasions on 6 September 2007, one occasion on 10 September 2007 and one occasion on 11^th September 2007.

During the course of the afternoon of 11^th September 2007 both Mr Buckley and Mr Austin discovered that Rix LJ had granted the Defendant permission to appeal against the judgment and orders of Tugendhat J. At 3.49pm on that same afternoon Mr Buckley sent a fax to Mr Austin which was short and to the point. It read: -

"Dear Sirs,

We accept your client's offer of £350,000 in addition to the costs of the Trial in full and final settlement of all matters."

As is obvious the fax purported to be an acceptance of an offer made by or on behalf of the Defendant to settle the litigation between Claimant and Defendant on the terms set out in the fax. In summary, the Claimant's case is that a binding contract was constituted upon the terms set out in the fax because (a) in one of the two telephone conversations between Messrs Buckley and Austin on 29 August 2007 Mr Austin had expressly agreed, on behalf of the Defendant, that the Defendant would pay the Claimant's costs of the litigation between them and (b) on 10 September 2007 Mr Austin had made an unconditional offer to Mr Buckley to the effect that the Defendant would pay £350,000 to the Claimant in respect of its claim for damages.

Almost as soon as the fax was received by Mr Austin, he disputed the existence of a binding agreement.

In these proceedings the Claimant maintains its stance that a binding agreement came into existence on the terms set out in the fax. With equal vigour, the Defendant resists that contention.

The resolution of this case depends upon my conclusions upon what was said between the solicitors during the course of the telephone conversations to which I have referred. I make it clear, at the outset, however, that I approach the oral evidence of both Mr Buckley and Mr Austin about what they actually remember of the conversations with a great deal of caution and circumspection. I stress that is not because I have reached a conclusion adverse to either solicitor about their credibility. I accept, without hesitation, that each of them is attempting to recollect what was said honestly and conscientiously. Having heard both give extensive oral evidence, mainly under cross-examination, however, I have reached the clear conclusion that neither has a good and accurate memory of precise words spoken during comparatively short telephone calls.

As it happens Mr Buckley made short notes of some of the relevant telephone calls. Mr Austin made fuller notes of all the relevant calls. Further, once the assertion of a binding settlement had been made on behalf of the Claimant both Mr Buckley and Mr Austin exchanged emails and wrote letters about their discussions. The letters were composed in the days after the relevant conversations.

It seems to me to be obvious in a case of this type that documents produced contemporaneously or very close in time to the relevant conversations and purporting to record what was said in the conversations are likely to be of very significant value in determining what, in truth, was discussed. However, it also seems to me that in making my assessment of the parties' respective cases it is also necessary to distinguish between documents generated by Messrs Buckley and Austin prior to there being a dispute between them about what was said and documents produced by them after the dispute arose. I say that since in this case there is no apparent or obvious reason why documents produced in advance of the dispute should contain inaccuracies save, perhaps, for unimportant mistakes in relation to details. On the other hand there is the possibility to be taken into account that letters generated by solicitors after a dispute has erupted will seek to promote a case rather than record in as much detail as possible the actual words spoken. Finally, I should record that in reaching conclusions of fact I have also borne very much in mind the probabilities of what was discussed, or not, as the they appear to me. Having set out the approach which I intend to take in relation to determining the critical conflicts of evidence, I turn to the detail of the telephone conversations between Mr Buckley and Mr Austin.

Mr Buckley and Mr Austin agree, in general terms, about much of what was said during their first telephone discussion on 28 August. Mr. Austin made typed notes of the conversation. He told me and I accept that he did so immediately after the conversation had ended. The attendance note reads:-

"Called him back – WP conversation. Explained pstn and said we were looking to get out of the procs if at all poss rather than me go on the record. Told him of CMCK's pstn. He said that they had tried to settle early on in the procs and he sounded suspicious of CAFC's input. Said we would need to agree a confid agreement. He said that it was a good time to settle prior to PTA being given. He asked if I'd heard in that regard and I said no. He will call me when he has taken instructions"

For those engaged in this litigation, of course, the meaning of some of the expressions in the attendance note is obvious. For the avoidance of doubt, however the letters WP refer to the phrase "without prejudice". CMCK is a reference to the solicitors then on the record for the Defendant. CAFC is a reference to Charlton Athletic Football Club and the letters PTA relate to the phrase permission to appeal. Hereafter I will refrain from "translating" obvious abbreviations in the solicitors' notes.

Mr Buckley made no attendance note of this conversation. However at 4.40pm he sent an email to Mr Simon Jordan who is the Chairman of the Claimant. The email reads as follows: -

"No news yet on Dowie's application for permission to appeal.

His new solicitor called me today. He is the same solicitor that acted for Bob.

He said he did not want to formally go on the record as there were preparations for the case which he was not in a position to comply with. He wanted to know if the case could be settled before any further steps were in fact taken.

He said that Bob told him that a settlement figure had been mentioned in the past and was that still on the table?

Can we discuss?"

In the respective Witness Statements of Mr Buckley and Mr Austin each, obviously, rely upon their attendance notes for the description of what transpired in this conversation. In his Statement Mr Buckley made no mention of a confidentiality agreement having been mentioned by Mr Austin. Mr Austin, in his Witness Statement, said that he had told Mr Buckley that any settlement would require agreement between the parties on the form of confidentiality or non-disclosure agreement so that both Mr Jordan and Mr Dowie could only report any settlement in agreed terms and go their separate ways.

When Mr Buckley was cross-examined by Mr Hochhauser QC on behalf of the Defendant he appeared to accept that Mr Austin had indeed raised the possibility of some form of confidentiality agreement. Mr Buckley, however, did not accept that Mr Austin was making it clear that any settlement had to incorporate such an agreement.

Following the telephone call, as I have said, Mr Buckley made contact with Mr Jordan. He sent the email to which I have referred and it seems probable that the two men spoke on the telephone. Mr Buckley said in his Witness Statement that he reported the contents of the conversation with Mr. Austin to Mr Jordan who told him that he had not been aware of the earlier proposed settlement figure. Mr Jordan had instructed Mr Buckley to telephone Mr Austin to find out what was proposed. In his evidence Mr Jordan confirmed that he had given those instructions.

On 29 August 2007 the two solicitors spoke on two occasions as I have said. They talked first at about 11.45am and the telephone call lasted for about 7 minutes. Mr Austin made a handwritten note of the conversation immediately following its occurrence and that note has been typed up for the purpose of these proceedings. The typed version of the attendance note appears at page 436 of Bundle 2. Mr Austin's account of the conversation, as set out in his Witness Statement, is, again, heavily influenced by his attendance note. He recollected that Mr Buckley told him that the Claimant's primary case was that as a result of the Defendant's misrepresentation it had lost the chance to claim the sum of £1,000,000 from another football club when the Defendant left to take up alternative employment. Mr Buckley also went on to say that the Claimant had paid £300,000 to another club in order to secure the services of a replacement for the Defendant and that it had to dismiss members of the first team management team, one of whom was the Defendant's brother Robert. Mr Buckley also said that the Claimant had paid Robert £200,000 and other persons who had been dismissed had also been paid although the sums did not amount to very much. Mr Austin's understanding was that the sums for these other employees amounted to less than £20,000. Mr Buckley went on to explain why it was that he thought that these payments to employees who had been dismissed might be the subject of a legitimate claim. In the conversation Mr Austin disputed the entitlement of the Claimant to make this claim.

The account given by Mr Buckley of this conversation is set out in paragraph 15 of his Witness Statement. It suffices that I say that his account as recorded in that Witness Statement is very similar to the account provided by Mr Austin. In my judgment nothing turns on such differences as exist between the two solicitors in relation to this conversation.

Following the conversation with Mr. Austin Mr Buckley spoke to Mr Jordan. They discussed how much the Claimant had paid to Mr Robert Dowie and how Mr Buckley could obtain information about the precise amount.

Just as Mr Buckley had spoken to Mr Jordan so Mr Austin spoke to the Defendant. Following Mr Austin's discussion with the Defendant he made calculations based upon his instructions in order to arrive at a figure to start negotiations. He calculated that the actual sums expended by the Claimant as a result of the departure of the Defendant was in the region of £440,000 and he had been told by the Defendant that he, the Defendant, was owed a sum of £225,000 relating to commission owed by the Claimant in respect of the sale of players. Mr Austin made a hand written note to this effect, a copy of which is at page 247 in the Bundle.

At 2.10pm that afternoon Messrs Austin and Buckley spoke again on the telephone. This call lasted for about 12 minutes. Mr Austin made a handwritten of the conversation immediately after it ended and in paragraph 39 of his Witness Statement he set out the relevant extracts from his note. It reads:-

"said not convinced dismissal could be laid at ID's door anyway. They chose to dismiss for their reasons. Not ours but for purposes of disc will take into account Suggested 440 – 225 for player sale if a & a bit for or employees. £220.

200K

Not enough but will go back & have a word &take instructions

Confid Ag so both could walk away with some sort of agreement in secrecy

3September LOD's suggested in view of discs we could agree xtnsn"

In paragraph 35 of his Witness Statement Mr Austin set out the purport of the attendance note. In summary Mr Austin told Mr Buckley that the sum of £220,000 was "a figure that Mr Dowie could go to." He did that after explaining how he arrived at that figure. He also asserted that he reminded Mr Buckley of the need for an agreement on confidentiality which would enable both parties to walk away with an agreement as to secrecy. Mr Buckley's reaction was to suggest that £220,000 would not be enough but he would take instructions.

Some things are common ground about this conversation. Mr Buckley accepts that some kind of confidentiality agreement was probably mentioned. He also accepts that he said nothing about it, one way or the other, when it was mentioned. Mr Buckley further agrees that a figure was mentioned to him as a possible settlement figure. He understood that the figure related to the damages payable by the Defendant to the Claimant and Mr Austin understood that to be the case as well. The two men depart, however, as to how it came to be that they had that understanding. Mr Buckley asserts that he understood that to be the case because when Mr Austin mentioned the settlement figure he, Mr Buckley, said to him "plus costs" to which Mr Austin replied "yes". Mr Austin denies that any mention was made of the issue of costs during the whole of this conversation. He readily accepts, however, that his figure for settlement - £220,000 - was a figure which related to damages and that in due course the issue of cost would also have to be negotiated.

One minor disagreement between the two men relates to the actual figure mentioned by Mr Austin. As I have said Mr Austin says that he suggested a figure of £220,000 whereas Mr Buckley asserts that the figure mentioned £215,000. In the context of the critical issues in the case the disagreement is meaningless although I am asked by Mr. Hochhauser QC to treat this as an example of a material inaccuracy on the part of Mr. Buckley which should influence my view of his accuracy of recollection more generally.

Such notes as Mr Buckley made of this conversation are contained on a sheet of paper a copy of which is at page 354 of Bundle 2 The relevant writing on the sheet is a reference to a figure of £215,000 and appears to accord with a discussion taking place between Mr Austin and Mr Buckley in which Mr Austin had described to Mr Buckley how he had got to that figure. The sheet contains no reference to whether the costs of the litigation were the subject of discussion.

Later that same afternoon Mr Buckley sent an email Mr Jordan. It is worth quoting it full: -

"Gary Austin came back and said they were thinking that £300K was paid for Peter Taylor and £141K to Bob Dowie less £225 commission that would have been paid on player sales to Iain which comes out at £215K.

I said that was too low and we were starting at £1M.

He then said Charlton won't pay anything towards the settlement because he asked them, that Iain was sacked because of the litigation and he wants to move on with no grudge with you.

I said I would get back to him.

I think he wants to do a deal. Shall I ask for £500K?"

In his Witness Statement Mr Buckley says that he sent that email after he had spoken to Mr Jordan on the telephone. Having described sending the email Mr Buckley then said this :-

"I spoke to Mr Jordan on 30 and 31 August 2007. He disputed the suggestion that Iain Dowie was entitled to any commission for player sales. We discussed the possible damages Crystal Palace would receive and the estimated costs of the damages trial. Simon Jordan then instructed me to ask for £600,000. Mr Jordan said that he did not want a confidentiality agreement. I did not mention the confidentiality point to him at this stage."

In his Statement Mr Jordan confirmed that he had spoken to Mr Buckley on 30 August and 31 August. He said that he had instructed him to go back with a counter offer of £600,000 which was a substantial discount on the compensation provision in Mr Dowie's contract.

It is to be noted that in his Witness Statement Mr Jordan said nothing about the possibility of a confidentiality agreement as part of a settlement with the Defendant. When cross-examined by Mr Hochhauser QC Mr Jordan denied telling Mr Buckley at any time in August 2007 that he did not want a confidentiality agreement.

This denial has to be seen in the context that on the sheet of paper upon which Mr. Buckley was making notes (page 354) there appear words to the effect that Mr. Jordan would not accept a confidentiality agreement. Mr. Buckley seemed at a loss to explain the circumstances in which the words came to be written. To repeat, however, in his own Witness Statement, Mr. Buckley stated unequivocally that Mr. Jordan had said that he did not want a confidentiality agreement.

The next telephone call between Messrs Austin and Buckley took place on 31 August 2007. It is common ground that it was a short conversation in which Mr Buckley indicated that the Claimant would agree to accept the sum £600,000. Mr Austin's contemporaneous note of the conversation puts some flesh on the actual discussion but, to repeat, it is common ground that the only thing of significance mentioned was the Claimant's willingness to accept £600,000.

No contact between Mr Buckley and Mr Austin took place from that telephone call to 6 September 2007. In the meanwhile Mr Austin had taken the Defendant's instructions upon a suggested settlement at £600,000. However, even in advance of speaking about it the Defendant had informed Mr Austin that he could not afford to pay such a figure. That is clear in the light of the Defendant's email of 31 August 2007 sent to Mr Austin at just after 4.00pm. However during the meeting which undoubtedly took place between Mr Austin and the Defendant on 5 September 2007 Mr Austin was given instructions by the Defendant to offer the sum of £350,000. Again, I stress that Mr Austin understood that his instructions were to offer that sum in respect of damages.

Mr Buckley and Mr Austin spoke on the telephone at 11.45am on the morning of 6 September. Again Mr Austin made a comparatively detailed attendance note immediately after the conversation had ended. The salient parts read:-

"Suggested sum of £350.00 as was a figure ID would go to subject to parties agreeing on appropriate form of agreement on Confid/Secrecy so that both parties could say they were satisfied with the o/c of the litigation etc

He said he would take ins & return

He asked if I'd heard from CoA. Said no.

He will come back to me."

Mr Buckley's account of this conversation is contained in paragraph 20 of his Witness Statement. It reads: -

"On 6 September 2007 Mr Austin called back and said Iain Dowie could not pay £600,000. He said that £350,000 was all that he could afford otherwise it was worth a bet going through with a trial on damages. There is no doubt in my mind that this figure was put forward as an offer to settle the litigation."

Mr Buckley did make some notes of the conversation. His handwritten note of what transpired is as follows: -

"Gary Austin – can't pay £600k

£350K is all he can afford

Otherwise is worth a bet"

This much is common ground between Mr Buckley and Mr Austin about this conversation. Firstly the sum of £350,000 was put forward as an offer to settle in relation to the issue of damages. It was intended as such an offer and it was understood to be such an offer. Secondly although there is no reference in Mr Buckley's handwritten note or Witness Statement to whether or not a confidentiality clause or agreement was raised, in his evidence (and indeed earlier in a letter before these proceedings commenced) Mr Buckley accepted that there was such a reference during the conversation.

Where the men depart is over the significance to be attached to the reference to a confidentiality agreement. According to Mr Austin his attendance note is accurate in that he made it clear and intended to make it clear that any proposed settlement must be upon terms as to confidentiality or secrecy which were acceptable to the Defendant whereas, according to Mr Buckley, the reference to a confidentiality agreement was no more than a passing suggestion.

Following the telephone call Mr Buckley took instructions from Mr Jordan who instructed him to suggest that the figure of £350,000 should be payable forthwith with a further sum of £150,000 payable in 6 months time. Those instructions were passed on to Mr Austin in a very short telephone call at about 3.00pm that afternoon.

There was a passage of some days before Mr Austin and Mr Buckley spoke again. Further, as I understand the evidence, Mr Austin did not speak to the Defendant about the proposal that he should pay £350,000 immediately and a further of £150,000 within 6 months. Mr Austin's recollection was that he had tried to contact the Defendant but had failed.

In any event at about 5.30pm on 10 September 2007, Mr Buckley and Mr Austin spoke over the telephone for about 10 minutes. Mr Buckley had instigated this call and he wanted to know whether Mr Austin had instructions on the offer which he had put on 6 September.

Mr Austin made a handwritten note of the conversation immediately after it ended and, again, a typed version was provided for these proceedings. The note reads:-

"Called MB at FF returning his call of earlier

Wanted to know if £500 was acceptable

Said ID could not afford it what with all other stuff

Explained CMCK's fee at £700k!

He said £400K theirs

Said ID might be just as well to run it as bankruptcy may be result so only worth it at certain level.

If it was worth his while to salvage something at £350 he would & suggested he spoke to client to ascertain position once and for all

CMCK have been acting not only for ID but also for CAFC in these proceedings".

In relation to this conversation Mr Buckley also took a note which was fuller than was his normal practice in relation to the conversations with Mr Austin. His note reads: -

"IAIN DOWIE

Cameron McKenna costs unbelievable

£700K...

£400K

cost for + against

bankruptcy???

If it were worth his while to salvage something @ £350K he would"

As is readily apparent the contemporaneous notes of Mr Buckley and Mr Austin are to similar effect albeit that Mr Austin's note is much fuller. In a typed note prepared by Mr Buckley on 11 or 12 September he also referred to the request made by Mr. Austin to explain the Defendant's position to his client. One potential difference of substance centres upon the words written by Mr Buckley "costs for + against". No one doubts that they were written as a consequence of words spoken between the two men. In his evidence Mr. Buckley said that the phrase meant that there was an acceptance on the part of Mr Austin that in any settlement the Defendant would have to pay his own costs of the litigation and the costs incurred by the Claimant. Mr Austin did not accept anything to that effect was said. The suggestion put on behalf of the Defendant in cross-examination was that Mr Buckley's phrase related to the fact that the order for costs made by Tugendhat J, in some limited respects, contained orders which were for and against the Defendant.

In the aftermath of this conversation Mr Buckley spoke to Mr Jordan who instructed him to request a schedule of assets from the Defendant. On 11 September 2007 Mr Buckley spoke to Mr Austin over the telephone to request such a list.

Later that same day the parties learned that Rix LJ had granted permission to the Defendant to appeal and, as I have recorded earlier in this judgment, shortly thereafter Mr Buckley sent the fax to Mr Austin purporting to accept an offer and thereby conclude a binding agreement.

The Claimant has disclosed an attendance note prepared by Mr Buckley of a telephone consultation which took place between Mr Jordan, Mr Buckley and leading counsel for the Claimant Mr John Davies QC. The telephone consultation took place after the Claimant had learned of the decision of Rix LJ to grant permission to appeal had been made but before the purported acceptance was sent by fax to Mr Austin. The attendance note of the telephone consultation has been redacted to some extent but it still makes interesting reading. The substance is as follows: -

"We explained that Dowie had been given permission to appeal but that we would not have the reasons for permission to appeal being granted for another two days. We would therefore be taking a bit of a flyer because the reasons could range from there being a slim chance of the appeal succeeding to there being a strong chance of the appeal succeeding. In any event the appeal will probably take six months and will involve the trial on quantum being delayed for a year. We may win the appeal but extra costs will be incurred. Alternatively we may lose the appeal which would be a disaster.

Technically the offer of £350,000 from the other side still on the table as it was an unconditional offer.

SJ was concerned that Iain Dowie could call a press conference to say he had been given permission to appeal which would take away the moral high ground.

MB confirmed there were no confidentiality clauses. SJ asked if it was the commercially sensible and pragmatic thing to accept the offer."

During the course of his cross-examination Mr Jordan flatly refused to accept that any discussion took place in his presence which categorised the losing of the appeal as a disaster. Further he did not seem disposed to accept that any discussion of the presence or absence of a confidentiality clause had taken place in his presence. Certainly, he asserted that he had not asked for confirmation that there was no confidentiality clause.

The receipt of the fax by Mr Austin produced a rapid response. The fax is timed at 3.49pm and at 5.04pm Mr Austin sent an email to Mr Buckley in which he asserted: -

"I acknowledge receipt of your client's purported "acceptance" of Mr Dowie's offer of £350,000. Such an offer was not open for acceptance.

The circumstances are that Mr Dowie's original proposal was not accepted and was rejected by your clients' counter proposal that they would be prepared to accept £350,000 now, followed by £150,000 over six months. You called me yesterday to ascertain Mr Dowie's view on your client's counter proposal and I notified you that the offer was not capable of acceptance in view of my client's financial position into which I went to some length. I suggested that you ask you clients to reconsider the situation and let me know once and for all the position they wished to adopt. No further offers were made. You then called me today at about 3.30 requesting certain information from Mr Dowie to enable your client to consider the position. Presumably, your client has now learned that permission to appeal has been granted and seeks to compromise the matter."

One hour later Mr Buckley responded: -

"I refer to your email. Mr Dowie's offer of £350,000 together with the costs of the first action was an unconditional offer open for acceptance when I sent my fax accepting this offer to you today.

It is correct that Mr Dowie's original proposal was rejected by my Client's counter proposal £350,000 now and £150,000 in six months time (rather than over six months). When I called you yesterday you told me that Mr Dowie could not afford to pay this level of settlement (not that the offer was "not capable of settlement"). You explained that Cameron McKenna's costs were £700,000 for the first trial and I told you that our costs, which Mr Dowie was liable for were in the region of £400,000. You told me that if the settlement figure on top of this was £500,000 then Mr Dowie might have to consider bankruptcy although you did qualify this by saying "I don't know". You said that "if it was worth his while to salvage something at £350,000 he would" and that the offer was still on the table. You asked me to inform my client of Mr Dowie's position and let you know one way or the other which I agreed to do. I attach my contemporaneous hand written note of the conversation which I have redacted to remove comments I made when discussing the position with counsel.

I then called you at 3.30 today to request details of your client's assets and salary in order that my client could consider your client's "offer" (not "the position") and you said that you would talk to him.

I then sent to you the fax accepting your client's offer. I agree that this acceptance was sent following our client learning that permission to appeal had been granted but do not think this affects the acceptance one way or the other."

The last email on 11 September 2007 was an email from Mr Austin to Mr Buckley in which he maintained his position that there had been no settlement but agreed to speak to the Defendant about whether or not he would be prepared to settle on the basis of paying of £350,000 plus the cost of the claim.

When parties carry on comparatively lengthy negotiations it may be hard to say exactly whether or when an offer has been made, what are the precise terms of any offer made and whether the acceptance relied upon is, in truth, an acceptance of the offer made to the offeree. As negotiations progress it is common for each party to make concessions or new demands. The task of the Court is to look at the whole of the negotiations and decide whether upon the true interpretation of what occurred the parties had reached agreement upon the same terms. If but only if it is established that the parties had agreed upon the same terms is there a contract.

In my judgment it is particularly important in this case to keep a proper focus upon the terms which the Claimant says were agreed. In the fax sent by Mr Buckley the terms allegedly agreed were that the Defendant would pay to the Claimant the sum of £350,000 in addition to the costs of the trial in full and final settlement of all matters. In paragraph 10 of the Particulars of Claim the Claimant asserts that "all matters" means "all matters in dispute between the Claimant and Defendant". It is clear from paragraph 8 of the Particulars of Claim that the Claimant's case is that the phrase "the costs of the trial" is not to be interpreted strictly; rather it is alleged to mean that the orders for costs made by Tugendhat J shall be complied with.

Notwithstanding the differences between the language used in the fax and the pleaded case I proceed on the basis that there is no tension between the two. That is how this case had been argued, in reality. Consequently my task is to ascertain whether or not the Defendant, through Mr Austin, ever expressed his willingness to pay £350,000 to the Claimant together with such sums as were due under the various orders for costs made by Tugendhat J with the intention (actual or apparent) that he should be bound by his words if they were accepted.

It is common ground that on 6 September 2007 Mr Austin offered to Mr Buckley the sum of £350,000 in respect of the claim for damages which was then outstanding. It is equally common ground that such an offer was rejected when Mr Buckley made his counter offer that the Claimant would accept £350,000 forthwith and a further payment of £150,000 in 6 months time. However Mr Davies QC argues that on 10 September 2007 the Defendant resurrected his offer to pay £350,000 in respect of the damages when Mr Austin said if it was worth his while to salvage something at £350,000 the Defendant would and, further, when Mr Austin asked Mr Buckley to speak to the Claimant to ascertain their position once and for all. Mr Davies QC also invites me to accept that during that same conversation there was an acceptance by Mr. Austin that the Defendant would pay the Claimant's costs in accordance with the orders of Tugendhat J but, even if that was not so, the issue of costs had already been agreed during the second telephone conversation between Mr Austin and Mr Buckley on 29 August 2007. In summary, Mr Davies QC submits that despite the various discussions which took place between the two men the only contractual terms upon which they were focusing were terms in relation to damages and costs.

On the basis that his submissions on the terms agreed are accepted Mr Davies QC further submits that it matters not that Messers Buckley and Austin did not discuss how the proceedings would be brought to an end in a formal sense. Once the parties had agreed the central terms, i.e. compensation and costs, a method of disposing of the proceedings would have followed as night follows day and, in consequence, the agreement was concluded once terms had been agreed upon compensation and costs.

Mr Hochhauser QC responds in a number of ways. He first submits that no offer at all was made on 10 September 2007. The words "if it were worth his while to salvage something at £350,000 he would" were, in his submission, not sufficiently precise or certain to constitute an offer. He next submits that there had simply been no discussion as to the issue of costs at all. Further, he strongly submits that this is not a case where a Court can or should infer what the parties agreed in relation to the issue of costs in the absence of an express agreement. And, to repeat, he and invites me to accept the evidence of Mr Austin that costs were never discussed at all. Thirdly, Mr Hochhauser QC submits that throughout the negotiations Mr Austin made it clear that the Defendant would compromise the litigation only if the agreement reached was subject to some kind of confidentiality clause. The Defendant's offer – if offer there was – was an offer to settle provided the parties agreed terms upon how, if at all, the settlement was to be portrayed to the public. Fourthly, in those circumstances, Mr Hochhauser QC also submits that no binding agreement could come into force unless and until an order was made which had the effect of disposing of the proceedings.

I deal firstly with whether or not the Mr. Austin made any offer which was capable of being accepted on 10 September 2007. I do that since if the words used by him were not capable of amounting to an offer in law that is the end of the case. Ultimately, this issue depends upon the legal effect of the word used by Mr Austin on that date. In my judgment, however, the legal effect of the words cannot be properly determined without looking at the context of the conversation in which they were spoken and also in the light of the previous discussions between Mr. Buckley and Mr. Austin.

Mr Hochhauser QC submits that in making an assessment of the legal effect of the words used by Mr Austin on 10 September 2007 I should have very much in mind the decision of the House of Lords in Gibson v Manchester City Council [1979] 1WLR 294. In that case Manchester City Council owned a house of which Mr Gibson was the tenant. He was also a long standing employee of the Council. From 1968 onwards Mr Gibson had been actively interested in buying his home from the Council. In 1970 the Council resolved to offer council houses for sale on favourable terms to sitting tenants and in November 1970 it sent Mr Gibson a form and a brochure giving details of how he could buy his house. In due course, Mr Gibson completed the form and returned it to the Council with an administration fee and request that he be told the price of buying the house. On 10 February 1971 the Council's treasurer wrote to Mr Gibson saying "the corporation may be prepared to sell the house to you at the purchase price of £2,725 less 25% = £2,180 (freehold). The letter also gave details of a potential mortgage but the letter went on to say that it was not to "be regarded as a firm offer of a mortgage" and Mr Gibson was told that if he wanted "to make formal application" to buy his council house he should complete and return the enclosed application form. Mr Gibson completed the form, leaving the purchase price blank, returned it in a covering letter asking for consideration to be given to defects in the parts of the house. On 12 March 1971 the Council wrote to Mr Gibson to say that the price had been fixed according to the condition of the property. On 18 March 1971 Mr Gibson replied asking the council to carry on with the purchase "as per my application". Thereafter the Council took the house off the list of tenant occupied houses for whose maintenance they were responsible and Mr Gibson did work to the house. Following a change in political control of the Council in May 1971 it resolved not to sell council houses to tenants except where legally binding contracts had been concluded and the council maintained the stance that no such contract had come into existence with Mr Gibson.

The House of Lords upheld that stance notwithstanding its rejection by the Judge at first instance and the Court of Appeal.

During the course of his short speech Lord Russell of Killowen gave one of the reasons for allowing the Council's appeal in the following terms: -

"My Lords, I cannot bring myself to accept a letter which says that the possible vendor "May be prepared to sell the house to you" can be regarded as an offer to sell capable of acceptance so as to constitute a contract. The language simply does not permit such a construction. Nor can the statement that the letter should not be regarded as a firm offer of a mortgage operate to turn into a firm offer to sell that which quite plainly it was not."