England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		12/12/2008

Mr Justice Tugendhat :

1. Mr Frank Warren, the claimant, is the well known boxing promoter. For a period of about three years between 1996 and 1999 he promoted the career of Mr Herbie Hide, who became a world champion boxer. The last fight that Mr Warren promoted for Mr Hide was against Vitali Klitschko on 26^th June 1999 at the London Arena. The issue in this action is whether Mr Warren still owes to Mr Hide £50,000 from the purse for that fight.
2. The proceedings were commenced by the issue of a Claim Form by Mr Warren as long ago as 2001. The Particulars of Claim were amended in July 2003. Mr Warren claims a declaration that there is no remaining liability between himself and Mr Hide, that a payment made to Mr Hide in cash on 12^th February 2000, was a part payment of the sum due from him in respect of the purse, alternatively repayment of that £50,000, and other alternative relief.
3. In his evidence to me, Mr Hide stated that on 4 January 1999 he was adjudged bankrupt in the Norwich County Court. On 8 January 1999 Mr Millar was appointed Trustee. On 15 February 1999 Mr Hide signed a proposal for an Individual Voluntary Arrangement ("IVA"). On 16 March 1999 there was a meeting of creditors and Mr Millar was appointed Supervisor of his arrangement as well as being Trustee. Mr Hide states that his bankruptcy was annulled in December 2000.
4. There was an earlier dispute between Mr Warren and Mr Hide as to the purse for the Klitschko contest. Mr Hide claimed that the purse was £500,000 plus VAT less expenses, making a total of £385,000. Mr Warren contended that the purse was £385,000 before deduction of expenses. The difference between the two parties was submitted to the British Boxing Board of Control Limited ("BBBC") under regulation 24 of its Rules, and a hearing took place on 2^nd February 2000.
5. Mr Hide was represented by counsel. Counsel told the tribunal that a bankruptcy order had been made against Mr Hide in January 1999 and that subsequently an IVA had been entered into. Counsel stated that it was expected that the bankruptcy order would be set aside or annulled. At the conclusion of the hearing, the Southern Area Council of BBBC ("the Council"), which was the tribunal under the Rules, decided that the agreed purse was £385,000 as contended for by Mr Warren. The Council decided that after appropriate deductions had been made, the amount due to Mr Hide was a total of £192,970.90, including a sum of £6,475 in respect of interest. This sum was to be paid by 11^th February 2000.
6. On 11^th February 2000 Mr Hide and Mr Warren each signed a letter of agreement ("the 11 February agreement"). The letter was on the headed paper of Sports Network, which is the name under which Mr Warren carries on business. So far as material it read as follows:

"This letter sets out the terms of the agreement you have reached today 11 February 2000 with Frank Warren ("Mr Warren") regarding your complaint for outstanding monies which was considered by the board on Wednesday 2^nd February 2000. …

In consideration of Mr Warren entering into the obligations set out below you have agreed to the following;

1. You have agreed that the Sum as determined by the Board is correct and represents a full and entire sum due to you from Mr Warren and that this agreement deals with all and any claims you consider you may have against Mr Warren;

2. You have further agreed to accept payment of the Sum by Mr Warren as follows;

1. the sum of £50,000 to be paid by Friday 18 February 2000;

2. the sum of £6,000 to be paid to Neil Featherby in respect to outstanding and agreed training fees and £3,000 in respect to outstanding transport fees, the full details of which are to be provided by you.

3. the remaining balance of £133,979.90 to be paid in monthly instalments of £20,000 until final settlement.

Both you and Mr Warren accept and agree that all these payments will be made directly to Nigel Millar of BDO Stoy Hayward, the appointed Supervisor of your estate.

Both you and Mr Warren agree enter into immediate negotiations for a new three fight promotional agreement and that in respect to those negotiations you will both act in good faith….

Both you and Mr Warren have agreed that the terms of this agreement may only be disclosed with the consent of both parties…"

7. That agreement was not executed.
8. On Saturday 12^th February 2000 Mr Hide attended the offices of Sports Network in Hertford. Mr Warren had drawn up in his own handwriting on his business paper a document which reads as follows:

"Received from Sports Network

1. Fifty thousand pounds cash

2. Three cheques for the sum of (1) £3,000 OBI (2) £6,000 N. Featherby (3) £8,000 G.Everett".

9. The document is signed by Mr Hide and was witnessed by Mr Warren's personal assistant. The £6,000 to Mr Featherby and the £3,000 to OBI correspond to the sums referred to in paragraph 2.2 of the 11 February agreement. Mr Everett is Mr Hide's trainer. The £8,000 too is a figure which was discussed and agreed by all concerned before the Council on 2 February 2000. Mr Everett attended that hearing in person. It follows that the three cheques represent payments which Mr Warren agreed to make pursuant to paragraph 2 of the 11 February agreement. But there was a departure from that agreement in that the cheques were handed to Mr Hide and not made directly to Mr Millar, the Supervisor, as was provided for in that agreement.
10. The issue in this action is whether the £50,000 cash was the part payment of the £192,970.90 which is referred to in paragraph 2.1 of the 11 February agreement as Mr Warren contends, or whether it is a payment for another purpose as Mr Hide contends.
11. It is Mr Hide's case that the £50,000 was agreed to be paid by Mr Warren in consideration for Mr Hide affording to Mr Warren credit in respect of the balance of £133,979.90. The credit was the agreement for that sum to be paid in monthly instalments of £20,000 as provided in paragraph 2.3 of the 11 February agreement.
12. On 17^th February 2000 solicitors wrote stating that they acted for Mr Millar "the Supervisor of Mr Hide's voluntary arrangement and Trustee in bankruptcy of the earlier estate". They had received from Mr Hide's solicitors a copy of the 11 February agreement. The solicitors stated that there could be no compromise of the outstanding debt without the prior written consent of Mr Millar. They noted the proposal to make a payment of £50,000 by Friday 18 February, and stated there was no reason why that payment should not be made in any event. The Supervisor had not been told of the payment in cash.
13. On 25 February 2000 a cheque was drawn in Mr Warren's office and sent to the Supervisor in the sum of £50,000. It bears Mr Warren's signature, but he told me in evidence that he had placed his signature on a number of blank cheques before he left for holiday in Portugal on 12 February and that he had not himself drawn up and sent the cheque.
14. On 29 February 2000 solicitors for the Supervisor acknowledged receipt of the cheque, but stated that he did not accept the validity of the 11 February agreement. The solicitors stated that Mr Millar was only prepared to receive the payment of £50,000 on condition that it was made on account of Mr Warren's indebtedness to Mr Hide generally, and did not itself constitute an acknowledgement or acceptance of the terms of 11 February agreement. They asked for confirmation that the cheque could be presented on that basis.
15. No such confirmation was given. But there was an exchange of correspondence between solicitors for Mr Millar and solicitors for Mr Warren, in which Mr Warren disputed that he was aware of the IVA terms or the continuance of the bankruptcy.
16. At some point in April 2000 the Supervisor nevertheless presented the cheque for payment. It appears that this must have been on or before 11 April 2000, because on that date Mr Hide wrote to the Area Secretary of the BBBC. He wrote to lodge a new complaint against Mr Warren. He said:

"I have still not received any money despite your ordering the money to be paid. Frank Warren has paid one instalment by cheque, the cheque has subsequently bounced leaving me in the same position as before the hearing."

17. On 14 April 2000 the in-house solicitor for Sports Network wrote to the Supervisor stating that on 13 April they had been told by their bankers that the Supervisor had presented for payment the cheque in the sum of £50,000 which had been sent six weeks previously. He wrote that, given the outstanding issues which had been raised in the correspondence between solicitors, Sports Network had instructed the bankers to stop payment. The principal issue was, of course, that the Supervisor had not accepted the validity of the 11 February agreement.
18. On 28 April 2000 the in-house solicitor for Sports Network wrote to the BBBC to respond to the letter of Mr Hide dated 11 April 2000 which had been forwarded to them. The letter included the following:

"As I explained below, an arrangement has been reached between Mr Hide and Mr Warren for the settlement of that purse. However, the parties have not been able to give effect to that agreement as a result of a position taken by the Supervisor…

On 11 February 2000 an agreement was reached between Mr Warren and Mr Hide to give effect to the Board's adjudication made on … 2 February 2000…. As that agreement records it was agreed that all payments would be made directly to [the Supervisor].

….. In accordance with the terms of our agreement a cheque in the sum of £50,000 was duly sent to Mr Millar.

We were, however, notified by Mr Millar's solicitors that he did not accept the validity of the agreement we had entered into but failed to supply any evidence to support that claim….

Mr Hide has referred to a bounced cheque. This is not an accurate statement of the position. On 14 April 2000 we were notified by our bankers that Mr Millar had presented for payment the cheque for £50,000 which had been sent to him six weeks previous. We were given no notice of this by Mr Millar nor were we given any explanation as to why given his previous position he had chosen to present the cheque. Consequently, given the position he had taken over the agreement we felt we had no option but to instruct our bankers to stop this payment…. I have since been informed by Mr Hide, (although I have not been able to confirm this) that he has now reached a settlement with his creditors which may involve the ending of his IVA and the assignment of this liability to Nigel Millar. … "

19. On 23 May 2000 Mr Warren personally wrote a letter to the BBBC enclosing a cheque in the sum of £133,979.90 made payable to Mr Millar in respect of the balance due for the Klitschko fight. The letter added:

"that the payment I am making represents the sum of £192,979.90 as held by the Board on 2 February 2000 less the sum of £59,000 paid directly to Herbie Hide on 12^th February 2000 by myself. I attach the receipt for that payment as signed by Mr Hide".

20. Mr Giles, who appeared for Mr Hide, noted that that is the first occasion that it had been alleged on behalf of Mr Warren or Sports Network that the sum of money for which Mr Hide signed a receipt on 12 February was a part payment of the £192,979.90. It is Mr Hide's case that the letters sent by the in-house solicitor prior to that date are inconsistent with that contention. On the other hand Mr Crystal, who appeared for Mr Warren, advances the case that Mr Hide had falsely stated to the BBBC that he had received no money from Mr Warren, whereas on any view he had received the three cheques for which he signed the receipt in addition to the disputed £50,000 cash.
21. Mr Hide maintained his position in a letter of 9 June addressed to the BBBC. Referring to the decision of 2 February 2000, he wrote:

"So far Frank Warren has only paid £135,000 to yourselves, the outstanding amount of £57,979.90 is yet to be paid".

22. However on 17 July the BBBC replied to Mr Hide that they had received evidence (that is to say the receipt) from Mr Warren that full and final payment had been paid and they decided the matter was now closed. They wrote that since Mr Hide disputed receiving the payment of £50,000 plus in cash he should pursue the matter by a separate complaint.
23. After further correspondence, on 11 September 2000, Henry Brandman and Co, solicitors for Mr Hide, wrote to the BBBC setting out Mr Hide's grounds for complaint. The letter included the following:

"1. On 2 February 2000 Mr Warren was ordered to make payment to our client of £192,979.90.

2. Mr Warren sought to enter into a new agreement with our client under which our client would continue to fight for him and would be paid the outstanding debt in instalments.

3. The proposed agreement was put to BDO Stoy Hayward, supervisors of our client's voluntary arrangement. That firm was unhappy with the agreement and it was not entered into.

4. Mr Warren is asserting that he made payment to our client of £50,000 to enter into the agreement. Our client's position is that he categorically denies receipt of that sum. As stated above, the contract was not entered into but in any event he did not receive the said sum.

5. We understand that in respect of his outstanding indebtedness to our client, Mr Warren has paid to the BBB of C £135,000, leaving an outstanding debt of £57,979.90".

24. Paragraph 4 of that letter appears to be a mistake. It is Mr Hide who has subsequently been asserting that Mr Warren made the payment of £50,000 in consideration of Mr Hide entering into the agreement for payment by instalments. But the letter is consistent with Mr Hide's previous statement that he denied receiving not only the £50,000, but also the sums represented by the three cheques for which he had also signed a receipt on 12 February.
25. On 1^st November 2000 the BBBC held a further hearing to consider Mr Hide's fresh complaint. Mr Hide appeared with Mr Henry Brandman. Mr Warren did not attend but was represented by the in-house solicitor of Sports Network. The record of the hearing prepared by the BBBC records that Mr Brandman stated that Mr Warren claimed he had made a payment of £50,000 under the new agreement but Mr Hide denied receipt of that sum. The solicitor for Mr Warren referred to the receipt.
26. At that point the document records that a council member asked Mr Hide if he had actually received the £50,000 he claimed he had not been given but had allegedly signed for on 12 February 2000. The record continues:

"Mr Hide agreed he had received that money, but claimed he had been offered another £50,000 in addition to the monies owed, the £50,000 collected had been part of the Southern Area Councils decision on payment in February 2000.

27. The document also records that another Council member asked Mr Warren's solicitor whether Mr Warren knew that Mr Hide was bankrupt and that all monies should been received by his supervisor. The solicitor replied that he had no instructions on this
28. At the close of the hearing the Council decided that the cash payment of £50,000 made on 12^th February 2000 was for a separate agreement than that of the original dispute heard by the Council on 2 February 2000. The Council made no finding as to what that separate agreement was. The Council invited the parties to submit further statements setting out payments made and sums outstanding within seven days.
29. Mr Crystal asked Mr Hide about the sentence in the record which states that Mr Hide agreed that 'the £50,000 collected had been part of the Southern Area Councils decision on payment in February 2007'. Mr Hide replied that that must be a mistake because he had not said it, and if he had said it then the Council would not have reached the decision that they did reach, namely that it was for a separate agreement. I accept Mr Hide's evidence on this. It must be a mistake.
30. On 13 November 2000 Mr Warren by his in-house solicitor gave notice of appeal against the Council's decision. The main ground of appeal was that, during the hearing, Mr Hide had for the very first time stated that he had received £50,000 but that it related to a separate matter. Mr Warren had not had notice of this, or an opportunity to respond to this.
31. The appeal hearing took place on 16 October 2001. Mr Warren's contention was that the £50,000 cash payment was the first instalment of the total due, and that the balance had been discharged by the other cheques already referred to. It is recorded in the judgment prepared by the BBBC that Mr Hide's contention was that "the £50,000 was a 'sweetener' - Mr Hide's word in evidence - agreed to be paid as an inducement to sign the agreement of February 11^th".
32. The judgment records that Mr Hide had explained his denial of receiving the £50,000, saying

"this was a secret arrangement between Mr Warren and himself, and would not be made known to BDO Stoy Hayward … Mr Hide being bankrupt at the time".

33. It also records 'that at the material time, Mr Warren's business in his own words,

"'was being crippled by huge legal bills', and that he wished to pay the sum due to Mr Hide by instalments. Mr Warren disclosed to us the amount of monies due to [another promoter] following the settlement of litigation between them".

34. The judgment further records Mr Warren's explanation in evidence for the fact that the letters from his solicitor concerning the cheque for £50,000 did not refer to the cash payment as being due to "a cock up" in the office.
35. The judgment concludes:

"Having considered all the evidence put before us, and bearing in mind the burden of proof and where it lies, our majority decision is as follows:-

1. That whatever Mr Warren's state of mind may have been at the material time, he led Mr Hide to believe that the £50,000 cash payment was in consideration of Mr Hide agreeing to payment of the sum due by instalments as per the agreement of February 11^th 2000;

2. That at no time prior to his signing the receipt of February 12^th was Mr Hide ever informed that the said payment was the first instalment under the February 11^th agreement.

Mr Hide's complaint is therefore made out and the Appeal fails. Accordingly we order that Mr Warren must pay the outstanding amount of £50,000 to Mr Hide within the next 28 days.

Finally we would add this. Our consideration of this appeal and the decision reached is based solely on the question of whether or not Mr Warren has discharged in full the Southern Area Council's order that he pay Mr Hide £192,979.90. It is not within our province to decide, and we say nothing as to whether Mr Warren can recover the £50,000 cash payment without relying on what was clearly in our view an illegal arrangement. That would be a matter for further proceedings in a Court of Law, and one which Mr Warren and his legal advisors can consider if they so wish".

36. Mr Warren has made no further payment to Mr Hide since that judgment. Nor has Mr Hide sought to enforce that judgment, at least until very recently. I am told that proceedings were issued by Mr Hide. But Mr Crystal submitted these were outside the limitation period for enforcing an arbitration award, if that is what those proceedings are. I was told that those proceedings had been stayed pending the outcome of the trial before me.
37. It is not clear to me to what illegality the judgment of 16 October 2001 refers. No point on illegality has been raised before me. It may be that all that it was intended to say is that the £50,000, if it was part of the purse, should have been paid to the Mr Millar and not to Mr Hide direct.
38. In any event, Mr Hide has resolved his financial difficulties. Mr Millar has not intervened in any way in the proceedings before me.
39. In evidence before me Mr Warren accepted that on 11 February 2000 his business was being crippled by huge legal bills being incurred in several actions in which he was then involved. It was therefore true that he wished to enter into an agreement with Mr Hide whereby he would be paid in instalments. However, Mr Warren stated that it was in fact Mr Hide who requested that he be paid in instalments. The reason for this was that Mr Hide was challenging his bankruptcy. Mr Warren understood that Mr Hide wanted to be paid in instalments because if he did successfully have his bankruptcy set aside he could keep the unpaid portion of the purse. It was thus an arrangement that suited them both. Mr Warren said that Mr Hide also said that if Mr Warren agreed to the payment by instalments then he, Mr Hide would agree to be promoted by Mr Warren in the future.
40. According to Mr Warren, it was after the agreement had been executed that Mr Hide said that he desperately needed the first payment of £50,000 by that Saturday in cash. The meeting was arranged as it was because Mr Warren was due to travel to Portugal. Mr Warren states that at no stage during the meeting on 12 February or prior to that meeting, was there any discussion between himself and Mr Hide that could have led Mr Hide to believe that the £50,000 cash was anything other than the first instalment from the sum due to be paid from the Klitschko contest. He said that he offered no inducement to Mr Hide to accept payment by instalments. He left for Portugal after the meeting with Mr Hide, and did not advise his in house solicitor of the payment he had made to Mr Hide. It was only later when he received letters from the Supervisor's solicitor that he learnt that the cheque for £50,000 had been sent to the solicitor. In the event he derived no benefit from the agreement of 11 February.
41. Mr Hide contends that he did have the right to enter into the agreement of 11 February. He stated in evidence that Mr Warren told him that if he agreed to being paid by instalments Mr Warren would, in consideration for him entering into the agreement, pay Mr Hide the sum of £50,000 in cash immediately, in addition to the Klitschko purse. Mr Hide said in evidence that that part of the 11 February agreement that related to proposed negotiations for Mr Warren to promote further fights for Mr Hide, was simply there to make the agreement seem more of a commercial deal to the Supervisor. He stated that Mr Warren was well aware that Mr Hide was not keen for him to be his promoter in the future. Mr Hide said that Mr Warren asked him to come to his office the next day to collect the £50,000 cash. Mr Hide said that Mr Warren told him that there would be nobody else in the office and he could hand the money over to Mr Hide privately. No one else would know about it.
42. As noted above, Mr Hide states that his bankruptcy was in fact annulled in December 2000.
43. I prefer the evidence of Mr Warren. The only consideration which Mr Hide has said was given for the payment for £50,000 in cash on 12 February was his agreement to enter into the 11 February agreement. By this agreement Mr Warren was to obtain the benefit of paying the balance of £133,970.90 in monthly instalments of £20,000. The credit envisaged is thus for a period of less than 8 months. Whatever difficulties Mr Warren may have been in, it is to be recalled that on 12 February he in fact paid £50,000 in cash, that he gave cheques totalling £15,000, and that he paid the balance of £133,970.90 on 23 May 2000. I do not find it credible that on 11 February Mr Warren agreed to pay £50,000 to obtain such little credit.
44. Nor do I find credible Mr Hide's explanation for why he denied receiving £50,000 in the way that he did over so long a period. Once Mr Warren had told the BBBC, as he did on 23^rd May 2000, that he had paid £50,000 directly to Mr Hide plus the cheques (for all of which Mr Warren enclosed the receipt), it made no sense for Mr Hide to continue to deny receipt of that money on the footing that it was a secret between himself and Mr Warren. In any event it never had been a secret in the sense that, contrary to what Mr Hide suggested in his evidence, there was Mr Warren's personal assistant in his office on 12 February and she had witnessed the signature of Mr Hide to the receipt. The repeated denial by Mr Hide, up to and including 11 September 2000 and the start of the hearing on 1 November 2000, that he had received any payment at all directly from Mr Warren seriously undermines his credibility.
45. It became clear in the course of cross examination that Mr Hide continued to harbour a grievance against Mr Warren over the first dispute that had arisen between them, namely the dispute over the amount of the Klitschko purse, whether it was £500,000 as Mr Hide contended or £385,000 as Mr Warren contended and as the Council decided. It was clear to me that Mr Hide still feels that he was owed the higher figure he claimed for that purse, in spite of the decision of the BBBC.
46. I also find unconvincing the explanation (that it was all a "cock up" in Mr Warren's office), given by Mr Warren to the Council and to myself, for the sending of the £50,000 cheque to the Supervisor and for the omission to mention before May 2000 that there had been a payment in cash. But whatever the reason for that may be, it does not seem to me materially to undermine the strength of Mr Warren's case. Mr Warren's case is inherently more probable than Mr Hide's.
47. That is not the end of the matter. It is common ground that the 11 February agreement was never performed. Payments were not made by instalments. And Mr Hide did not enter into the negotiations which are stated to be part of the consideration. Even if I had accepted that the £50,000 had been paid to Mr Hide in consideration for him having entered into the 11 February agreement, I would have held that there was a total failure of consideration, and that the £50,000 was repayable by Mr Hide to Mr Warren. Mr Giles submitted that the 11 February agreement had not been executed because Sports Network stopped the cheque that they had sent to Mr Millar. But I find that the reason why the cheque was stopped, and the agreement not executed, was because Mr Millar did not accept the validity of the agreement.
48. Mr Warren relies on two further points in support of his claim. He submits that Mr Hide had no authority to enter into the 11 February agreement, and that, in the alternative, Mr Hide induced Mr Warren to enter into it by the misrepresentation that he was prepared to negotiate with Mr Warren for Mr Warren to promote Mr Hide in the future. In his defence Mr Hide denies any misrepresentation. But in his evidence as already noted, he asserts that that part of the agreement was a sham to mislead the Supervisor. In the event I do not need to reach any decision on either of these points.
49. For these reasons Mr Warren is entitled to the declaration that he seeks namely that there is no remaining liability upon him to Mr Hide in respect of the purse for the Klitschko fight in 1999 and that the payment of £50,000 made in cash on 12 February 2000 was made in part payment of that purse.