United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	Mr David Griffith-Jones QC (One of Her Majesty’'s Counsel) Instructed by: Messrs Shaw and Croft Solicitors 115 Houndsditch London EC3A 7BR
For the Respondent	MR CHRISTOPHER CARR QC (One of Her Majesty’'s Counsel) MR JONATHAN SWIFT (Of Counsel) Instructed by: Messrs McDermott Will & Emery LLP 7 Bishopsgate London EC2N 3AR

SUMMARY

Public Interest Disclosure: Dismissal and detriment

A claim for detriment and unfair dismissal based on the “"whistle blowing”" provisions of the Employment Rights Act 1996 was dismissed when no legal obligation pursuant to s43B had been identified by the Claimant. Parkins v Sodexho [2002] IRLR 109 and Kraus v Penna [2004] IRLR 260 applied. No express legal obligation beyond that set down in a commercial contract existed between two commercial companies and no implied obligation required the executive chairman of one of them to inform the other when 50% of the shareholding was sold by its owner to Chinese companies.


 


HIS HONOUR JUDGE McMULLEN QC

1. In this case, the former executive chairman of a company complains that he has been subjected to a detriment, and unfairly dismissed, for having “"blown the whistle”" on wrong doing by his company. The issue is whether the allegation was one in law, of law breaking, for without that the claim must fail.
2. These reasons represent the reasons of all three members for the judgment given at the oral hearing.
3. We will refer to Dr Felter as the Claimant who was the chairman of the Respondent, Cliveden. The main actors are Cliveden’'s sole share holder and controlling mind, Mr Eronat; two directors who did what he said; two companies owned by the People’'s Republic of China (“"PRC”"); Encana, a Canadian company; and the Republic of Chad which does not recognise the PRC, favouring Taiwan. Cliveden and the Chinese companies are registered in the British Virgin Islands.

Introduction

4. It is an appeal by Dr Peter Felter, the Claimant in those proceedings, against a reserved judgment of an Employment Tribunal, sitting over 9-11 May and a day in chambers on 29 June 2005 at London (South) under the chairmanship of Mr R Lewis. It was registered with reasons on 14 July 2005. The parties were represented respectively by Mr David Griffith-Jones QC and Mr Christopher Carr QC who today leads Mr Jonathan Swift of Counsel.
5. In a claim presented on 5 May 2004 the Claimant claimed unfair dismissal arising on 19 February 2004, and he having previously been subjected to a detriment. The Respondent denied the claims and took preliminary points.
6. A Pre-Hearing Review was conducted over three days, leading to a reserved judgment of a different Chairman sitting alone on 2 February 2005. The Claimant was held to be an employee and was not, on the ground of illegality, debarred from seeking to enforce his unfair dismissal claim. There was no appeal. The second Tribunal dismissed the claim.

The legislation

7. The legislation relevant to the issues in this case are found first in Part IVA of the Employment Rights Act 1996 which gives effect to the Public Interest Disclosure Act 1998 so as to lay the foundation for the whistle-blowing jurisdiction. Its scope is determined, so far as relevant to the issue on appeal, by the following provisions.

“"43A Meaning of “"protected disclosure”"

In this Act a “"protected disclosure”" means a qualifying disclosure (as defined by section 43B) which is made by a worker in accordance with any of sections 43C to 43H.

43B Disclosures qualifying for protection

(1) In this Part a “"qualifying disclosure”" means any disclosure of information which, in the reasonable belief of the worker making the disclosure, tends to show one or more of the following—

…

(b) that a person has failed, is failing or is likely to fail to comply with any legal obligation to which he is subject”".

8. An employee is protected for whistle blowing against two forms of hostile action. The first is being subjected to a detriment:

“"47B Protected disclosures

(1) A worker has the right not to be subjected to any detriment by any act, or any deliberate failure to act, by his employer done on the ground that the worker has made a protected disclosure.

(2) this section does not apply where—

(a) the worker is an employee, and

(b) the detriment in question amounts to dismissal (within the meaning of Part X)”".

9. The second is dismissal and for this s103A is applicable.

“"103A Protected disclosure

An employee who is dismissed shall be regarded for the purposes of this Part as unfairly dismissed if the reason (or, if more than one, the principal reason) for the dismissal is that the employee made a protected disclosure”".

10. That form of unfair dismissal is known as an automatically unfair dismissal as opposed to an ordinary unfair dismissal where the root and remedies are different.
11. The Tribunal was directed to two authorities on the construction of s43B. In Kraus v Penna plc [2004] IRLR 260 EAT, it was held that a claimant who seeks to rely on the section must prove that there was or would be or had been an actual breach of a legal obligation. The words “"reasonable belief”" relate to a second issue and do not qualify the existence of the legal obligation.
12. In Parkins v Sodexho [2002] IRLR 109 it was held that the legal obligations in s43B include not merely statutory obligations but common law obligations such as those effected by contract. Before the Employment Tribunal and before us, no issue arises on those authorities but Mr Griffith-Jones reserved his right to argue that the former, and Mr Carr the latter, was wrongly decided.

The appeal

13. The Claimant appeals against the Tribunal’'s judgment. Directions sending it to a full hearing were given by HHJ Ansell in chambers.
14. By the end of the oral hearing, the sole issue in this case is whether a legal obligation was owed by any of the actors in this drama so that Dr Felter could allege a breach for the purposes of s43B – the construction point. The Tribunal decided the construction point against the Claimant and thus it was unnecessary for it to decide whether or not, if it were wrong, the Respondent subjected the Claimant to a detriment or to unfair dismissal on the ground that he had made a disclosure falling within s43B (a protected disclosure). Pages 18-27 of Mr Griffith-Jones’' Skeleton Argument dwell on this point but little time was spent at the hearing upon it. It got off to an unpromising start when he headlined it as “"the causation point”", for we reminded him of the approach of Lord Nicholls in Chief Constable of the West Yorkshire Police v Khan [2001] ICR 1065 HL at paragraph 29 which is as follows:

“"29. Contrary to views sometimes stated, the third ingredient (''by reason that'') does not raise a question of causation as that expression is usually understood. Causation is a slippery word, but normally it is used to describe a legal exercise. From the many events leading up to the crucial happening, the court selects one or more of them which the law regards as causative of the happening. Sometimes the court may look for the ''operative'' cause, or the ''effective'' cause. Sometimes it may apply a ''but for'' approach. For the reasons I sought to explain in Nagarajan v London Regional Transport [2001] 1 AC 502, 510-512, a causation exercise of this type is not required either by section 1(1)(a) or section 2. The phrases ''on racial grounds'' and ''by reason that'' denote a different exercise: why did the alleged discriminator act as he did? What, consciously or unconsciously, was his reason? Unlike causation, this is a subjective test. Causation is a legal conclusion. The reason why a person acted as he did is a question of fact”".

15. Mr Griffith-Jones asserted that the whistle blowing regime is an anti-discrimination measure and we agree. He accepted that the words “"on the ground that”" in s47B and “"if the reason…for the dismissal”" in s103A require the same approach. The approach is to consider the mental processes of the decision maker. He accepts that this approach involves a question of fact and further that no allegation of perversity meeting the high threshold required for success in such a claim can be made in this case: see Yeboah v Crofton [2002] IRLR 634 CA. The Tribunal’'s decisions on the marginalisation of the Claimant, and his subsequent dismissal, could only be overturned if perversity were proved, and it had not been alleged in this case.
16. To buttress this part of the appeal, a contention was made that the Tribunal had given inadequate reasons when a Tribunal is under a duty to provide such reasons: English v Emery Reimbold & Strick Ltd [2003] IRLR 710 CA at paragraphs 16, 19-21. It must be recalled that the 17-page judgment also incorporated the findings in the 16-page judgment of the Chairman on the PHR. The Tribunal amply discharged its duty to give reasons. Having heard the submissions of Mr Carr, Mr Griffith-Jones made no submission in reply, save to say that it was not necessary for us to decide the point.
17. Technically, of course, he is right, for this point represents an appeal against the Tribunal’'s alternative finding on the hypothesis that it was wrong upon its primary finding. Since we have decided that the Tribunal’'s primary finding is correct, we would be adding hypothesis upon hypothesis. Nevertheless, because the criticisms of the Tribunal’'s alternative findings, and its expression of reasons, form such a large part of the Claimant’'s appeal, we will decide it. We have no hesitation in accepting the submissions of Mr Carr that the Tribunal applied the correct test, made clear and cogent findings of fact and amply explained its reasons for rejecting the Claimant’'s case.
18. Since a number of serious criticisms was made of the Employment Tribunal, justice requires that we say more about them. A further non-issue, albeit raised in the Notice of Appeal and the Claimant’'s Skeleton Argument, is a criticism of the Tribunal for declining to entertain an alternative claim that his was an “"ordinary”" unfair dismissal. The Tribunal noted that the Claimant had been professionally represented for the purposes of five previous case management or pre-hearing decisions before the instant hearing and had not raised such a case. We can understand how Dr Felter may feel disappointed by the irony that, in the further alternative, the Tribunal held that it would have found in his favour on ordinary unfair dismissal since his dismissal had not been preceded by any proper and fair procedure. We do not understand why this issue was raised in the Notice of Appeal and the Claimant’'s Skeleton Argument, it being expressly eschewed as a matter of substance, and for the reasons given by the Respondent, we formally dismiss it. This legally represented lawyer-Claimant had not advanced the point before the Employment Tribunal. The Employment Tribunal was entirely right to confine its attention to the reason for dismissal being a protected disclosure and nothing else.
19. It is also suggested that the Tribunal lost its way when it gave its reasons for rejecting the unfair dismissal claim, before its reasons in respect of the detriment claim. This is a most unfair criticism. The claim form, drafted by junior Counsel, summarises the claims in precisely this sequence: see paragraph 30. The executive part of the Tribunal’'s judgment does the same. The way in which it presents its reasons is a matter for it to determine according to the way in which it wishes to manage the case. This, in itself, is not an error of law and we cannot see how it can contribute in any way to being one.
20. Finally, a criticism is made in the Skeleton Argument, but is not found in the Notice of Appeal, of the period of time (seven weeks) which elapsed between the close of the oral hearing and the meeting of the three members in chambers to consider the reserved judgment. This period of time, and more particularly, the period between the close of the oral hearing and the registration of the judgment (nine weeks) is well within the period of 3½ months vouchsafed to an Employment Tribunal Kwamin v Abbey [2004] ICR 841 EAT. No particular error of fact or appreciation has been drawn to our attention and we have no cause to believe that this judgment is undermined by the passage of this period of time. We have no doubt that this particular three day case would have been firmly in the mind of the three members when they met nine weeks later to make their judgment.

The facts

21. There was little dispute as to the facts which were first recorded by the Chairman at the PHR and adopted by the Tribunal and so far as relevant to the sole issue now on appeal are:

“"6.1. Dr Felter is a Danish national born in 1949. He is a qualified Danish advocate. He was awarded a Master of Law degree by the University of Copenhagen and a PhD by the University of Cambridge. He describes himself as an international lawyer. His specialist area is advising in relation to the oil and gas industry. He practised in this country at the law firm Clyde & Co. He became a senior equity partner in the firm. By 2001 he was the firm''s worldwide Head of Energy.

6.2. Mr Eronat was a client of Dr Felter at Clyde & Co. He is an American. He has a home in London. He is now a British Citizen. He has business interests in the oil and gas industry.

6.3. Cliveden is a company incorporated in the British Virgin Islands. It was originally wholly owned by Mr Eronat. At the material time it had associated companies. It owned Saraha Seismic Ltd, Cliveden USA Incorporated and Cliveden Petroleum Chad Ltd. Cliveden Petroleum SA is a company formed in Geneva (currently owned by Mr Antoni) through which Mr Antoni and Mr Christo Christidis provide their services to Cliveden. Cliveden Petroleum International UK Ltd is a UK based company. Nichem Ltd is another BVI company. With the possible exception of Cliveden SA. Mr Eronat controlled and was the driving force behind all these companies. He was at all material times the President of Cliveden and an employee of the UK company.

6.7. The Chad Convention owned by Cliveden was potentially of substantial value. It comprised eight or more geological basins. One significant oil discovery in one basin would turn Cliveden into a company of enormous value.

6.11. In September 2001 Dr Felter and Mr Eronat had several meetings. At that time Cliveden was not in a strong financial position. Attempts had been made ''farm in'' a partner for the Chad Convention. Dr Felter was interested in running a successful oil company. He could see the potential of Cliveden. And he thought that he could ''farm-in'' a partner from his own contacts.

6.12. Mr Eronat offered Dr Felter the chairmanship of Cliveden.

6.13. …. Dr Felter relied upon the trustworthiness of Mr Eronat and proceeded to take the necessary steps to retire from the partnership at Clyde & Co. He left on the 4 October 2001.

6.16 . On 21 December 2001 Mr Eronat gave instructions for the appointment of Dr Felter as Director and Chairman of the Board with effect from the 1 January in 2002 even though the contract with Dr Felter remained conditional. Mr Antoni was appointed a Director and Secretary of the company. Mr Felter later described himself as ''Executive Chairman''.

6.17 . From October 2001 Dr Felter negotiated with a Canadian corporation (''Encana'') as a result of which Encana committed $46.5m for 50% of the Chad Convention. The deal was finalised on the 25 February 2002.

6.27. Cliveden had cashflow problems particularly from February 2003 when there were commitments to drill wells. Dr Felter negotiated with ten parties for the sale of shares in Cliveden. On 16 December 2003 two Chinese state owned companies purchased 50% of Cliveden from Mr Eronat at the price of $45m. Dr Felter was confirmed in the post of Chairman.

6.31. As a result of a disagreement in December 2003 between Dr Felter and Mr Eronat in relation to the extent of disclosure to the Chinese investors the relationship between the two deteriorated badly.

6.35. On 19 February 2004 Mr Eronat wrote to Dr Felter as follows: The shareholders have unanimously decided to release you from your duties as Chairman and Member of the Board”".

22. The Agreement with Encana (cited at paragraph 6.17 above) is also known as the “"Farm Out Agreement”", the International Operating Agreement and in this judgment as the JOA (the Joint Operating Agreement).
23. The dispute in this case was but is no longer about clause 12.1(G) of the JOA which reads:

“"Any transfer of all or a portion of Participating Interest whether directly or indirectly by assignment, merger, consolidation, or sale of stock, or other conveyance, other than with or to an affiliate, shall be subject to the following procedure:

(1) Once the transferor Party and a proposed transferee (a third party or a Party) have fully negotiated the final terms and conditions of a transfer, such final terms and conditions shall be disclosed in detail to all Parties in a notice from the transferor. Each Party shall have the right to acquire the Participating Interest from the transferor on the same terms and conditions agreed to by the proposed transferee if, within thirty (30) Days of the transferor''s notice such Party delivers to all other Parties a counter-notification that it accepts the agreed upon terms and conditions of the transfer without reservations or conditions. [sic] ...""

24. That Agreement was modified by clause 9 of a letter dated 27 March 2003 which provides:

“"‘'From acceptance of this offer until termination of operations hereunder as contemplated in Clause 6 above, Cliveden will not independently market any participating interest in the Permit H Convention. This shall not, however, prevent Cliveden from pursuing financing alternatives which do not involve a transfer of a participating interest in the Permit H Convention.""

25. The relationship between the parties was described in 14.1:

“"The rights, duties, obligations and liabilities of the Parties under this Agreement shall be individual, not joint or collective. It is not the intention of the Parties to create, nor shall this Agreement be deemed or construed to create a mining or other partnership, joint venture or association or (except as explicitly provided in this Agreement) a trust This Agreement shall not be deemed or construed to authorize my Party to act as an agent, servant or employee for any other Party for any purpose whatsoever except as explicitly set forth in this Agreement. In their relationship with each other under this Agreement, the Parties shall not be considered fiduciaries except as expressly provided in this Agreement.”"

The Tribunal recorded the joint response of the parties that these agreements were “"impenetrable”" and that the Tribunal’'s attention was focused upon only certain provisions. These did not include Article 14.1 above but both Counsel before us made reference to it, Mr Carr observing that it would have been helpful to Cliveden if the Tribunal had referred to it. Mr Griffith-Jones did not reply in any way to this point. We assume therefore in Cliveden’'s favour that it is available as an aid to the construction of the other parts of the agreement. By Article 1.50 of the JOA, a “"participating interest”" is “"the undivided percentage interest”" of each party and the rights and obligations derived from the Convention and this Agreement”".

26. The Tribunal posed the question for itself in the following way:

“"14. … by advising the Respondent to tell Encana of the Chinese share sale before it took place, or immediately thereafter, was Dr Felter alerting Mr Eronat to a breach of an actual legal obligation; or, putting it slightly differently, by selling any shareholding in Cliveden without notifying Encarta in advance was Mr Eronat in breach of any legal obligation”".

27. In answering that question, it had to decide between two competing constructions of clause 12.1(G) and adopted Cliveden’'s which is summarised in this way:

“"16 …Article 12(1 )(g) dealt with the transfer of a portion of the participating interest, the participating interest being defined in accordance with the definition quoted above. In this instance, there was no transfer of the participating interest; the farm out agreement remained untouched, and the rights in it remained untouched. Indeed, the identity of the parties to the farm out agreement remained the same. The effect of the share sale was that any change took place at a further remove, namely in the identity of the shareholders in Cliveden; but that all else remained the same”".

28. On the road to deciding in favour of Cliveden’'s construction, it noted that the Claimant’'s contemporaneous position was the same as Cliveden’'s ultimate position. The share sale did not trigger the right of first refusal. The Tribunal noted that the position subsequently adopted by the Claimant’'s solicitors was to the opposite effect.
29. Having decided in favour of Cliveden on the express obligation, which is not challenged, the Tribunal went on to consider whether there was any implied obligation by anyone within Cliveden or Cliveden itself towards Encana. It came eventually to the conclusion that it would not imply obligations which contradicted or were at odds with the express provisions. We have a good deal of sympathy with the Tribunal’'s conclusion, dealing with not only the evidence of, but no doubt the legal submissions of, the Claimant (coming as they did from a former senior partner in a top City firm of solicitors). The Tribunal said this:

“"20. Dr Felter put this submission to us in a number of different ways, arguing, among others, that he was subject to fiduciary obligations, or obligations of good faith. We understood these to be alternative submissions based on the same material, expressing the same implied obligations in different ways.

21. In advancing this part of his evidence, and of his case, Dr Felter appeared to rely upon a model of business relations between Cliveden, Mr Eronat and Encana which we recognised as akin to the obligations of trust and confidence, and of good practice, which arise between employer and employee. However, we had difficulty reconciling that model with other aspects of this case. The relationships between these parties were not relationships of trust and confidence but relationships of business necessity and expediency, characterised by mutual suspicion. We fully accepted the evidence, unchallenged at the hearing, that none of the parties involved in the exploration in Chad had confidence in the Government of Chad; that there were concerns about the relationship between the Government of Chad and the new investors, as the People''s Republic of China was not recognised by the Government of Chad; that for a number of legitimate reasons, Encana would prefer not to do business with Chinese state owned corporations at all; and that for his part Mr Eronat appeared to go out of his way to keep all his business associates at as great a distance as possible. We noted too that we were concerned with agreements which were the product of protracted and costly negotiations at arms length between lawyers in three Continents, and we were therefore required to be persuaded to imply into those agreements terms which had been omitted.

22. In considering this aspect of the matter, we noted that in cross examination Dr Felter was able to speak at some length about his doubtless sincere views as to the standard of good business conduct, and the correct forms of behaviour to be observed between business colleagues; but was unconvincing when asked by Mr Carr to identify specific legal obligation or legal authority in support of his arguments. He was unable to identify any authority, whether statutory or in case law, which would effect the translation of his model of trust or good practice into an obligation enforceable at law.

“"23. We were in those circumstances inclined to accede to the submissions of Mr Carr, that in considering a submission based on implied terms, we must confine ourselves to those implied terms which were necessary for the conduct of the business, and which would not contradict express terms. The term argued for by Dr Felter was not sufficiently well defined as to be capable of ready definition; nor, as the facts turned out to show, was it necessary for the conduct of the business. Indeed, the evidence was that those involved in the business were robust in their dealings with each other when necessary, as illustrated by Encana''s response when it did receive the notification of the new shareholders: their response was to seek to turn the event to a business advantage for themselves. Mr Carr made a further point, which we found compelling, that the effect of Dr Felter''s arguments would be that while there was no express obligation to notify Encana of the sale, there would be an implied obligation to do so. We accepted his submission that this made little logical sense, and we agreed that we should be slow to imply an obligation into this contract which contradicted or was at odds with an express obligation”".

30. Those conclusions were based on findings by the Tribunal about what occurred in December 2003 as to which the following findings were made:

“"9.3 … the quest in 2003 for investors in Cliveden concluded with the two Chinese state owned companies, who in due course purchased together 50% of the shares in Cliveden.

9.4 Once this transaction had been agreed in principle, the negotiations of the agreements for the sale and purchase of shares in Cliveden was a substantial task. It lasted over a period of several months, involving the services of specialist legal advisors in London, Hong Kong and the United States (in addition to Dr Felter''s own contribution, acting this time both as expert lawyer and as client of the firm instructed by Cliveden). There was no challenge to Dr Felter''s evidence that he estimated that the legal work involved represented one thousand hours of fee-earning work and a cost of £500,000 for each of the three parties. The task was completed and the final agreements were signed on December 18 2003.

9.5 By early December 2003 at the latest, an issue had arisen as to whether or not, as a matter of law, the sale of Cliveden''s shareholding triggered a right of first refusal enjoyed by Encana. It was not disputed before us that if that were the case, then Encana would have to receive sufficient and sufficiently timely information, which would enable it to make an informed decision about whether to exercise that right.

9.6 Dr Felter expressed his concerns and views about this issue by memo and e mail to Cliveden colleagues.

9.9 Following completion of the share transaction, the question then arose as to how and when Encana should be told that it had happened. Clearly, Encana had to be informed that there had been a share sale. It was anticipated at Cliveden, and particularly by Dr Felter, that managers at Encana would react with concern, and perhaps even hostility, at finding themselves engaged in business with Chinese state-owned companies. There was disagreement between Dr Felter''s view, which favoured a formal and perhaps legalistic notification, and the view of Mr Eronat, who, seemingly wishing to downplay the issue, considered that a directors or a shareholders meeting would be the appropriate occasion at which to introduce representatives of the new shareholders to representatives of Encana.

9.10 After some disagreements within Cliveden, Dr Felter sent an email to Encana on December 22, 2003 (380), which, while notifying Encana of the appointment of additional shareholders, did not advise Encana fully of their identity or of the terms of their investment. Mr Hardy, Genera! Counsel of Encana, acknowledged receipt the same day (378).

9.12 On December 29, (390) Mr Hardy wrote to Dr Felter in fuller response to the email of December 22, to ask for information on the share transaction, so that Encana could form a view as to whether its right of first refusal had been activated; a more friendly email the following day from Mr Hardy contained the following sentence: ‘'It would be appreciated if you could provide information on the structure of the transaction so that I can satisfy our management that we don''t have any rights under the ROFR’' (391

9.14 By the first week of January 2004, the disagreement between Dr Felter and Mr Eronat as to what Encana should be told and how it should be communicated remained live.

9.15 However, almost immediately thereafter, it became known to Cliveden (427) that Encana management had learned through the business grapevine that state owned oil interests from the People''s Republic of China were the new shareholders in Cliveden. Subsequently (434) Dr Felter notified Encana of what it by then already knew, namely the identity of the new shareholders within Cliveden”".

And the relationship came to an end by 4 March 2004 when the Claimant was ‘'released’' from his duties.

31. The Tribunal rejected the Claimant’'s contention that he had been dismissed for whistle blowing and that he had been subjected to a detriment. The Tribunal said this:

“"32. ...We find that the Respondent''s reason for dismissal was that for a number of reasons, including spiralling financial demands, but not including having made what he considered a qualifying disclosure, Dr Felter had forfeited the confidence of all the shareholders. We consider that that reason is capable of constituting some other substantial reason within the meaning of section 98(1) (b) of the Employment Rights Act 1996”".

32. As to the detriment claim, the finding was this:

“"35 ...Mr Eronat, in our judgment, would not tolerate dissent, and to the extent that Dr Felter found himself marginalised, that was the reason for it. We find in those circumstances that had we come to consider the issue of detriment under section 478, we would have found with the Respondent that Mr Eronat''s conduct at the material time towards Dr Felter was not on the ground of Dr Felter having made a protected or qualifying disclosure”".

The Claimant’'s case

33. Two central arguments were made on behalf of the Claimant. First, that there was a legal obligation to inform Encana of Mr Eronat’'s share sale. Secondly, that there was a duty not to mislead Encana. In the Skeleton Argument, the relevant duties are referred to in seven different ways. In summary, they are:

(1) Cliveden owed a legal obligation to tell Encana;

(2) Mr Eronat and the directors owed a duty to Cliveden to ensure that Cliveden told Encana;

(3) duties are owed by the Directors of Cliveden to Cliveden, and by the Directors of Cliveden to each other.

34. It is contended that there is a duty not to deceive Encana pursuant to a plan drawn up by Mr Eronat that Encana should not know the identity of the new shareholders. Further, Cliveden had a positive duty to provide information to Encana. The Tribunal missed the point by looking merely for legal obligations and should have considered whether there were any implied obligations, the Tribunal focusing on the express obligations contained in the JOA. In addition, the Tribunal wrongly focused on legal obligations owed by Cliveden when there were other legal obligations owed by others. Finally, the Tribunal wrongly failed to appreciate the nature of the disclosures made by the Claimant.

The Respondent’'s case

35. Mr Carr contends that there is no basis for the assertion that the Tribunal failed to understand the nature of the disclosure. Indeed, the Tribunal noted that there was little dispute on this matter. It was wrong to suggest that the Tribunal had given consideration only to the existence of the share sale agreement, for by paragraphs 14-25 of the judgment, the Tribunal considered whether express or implied obligations existed requiring information to be provided to Encana after the share sale. The Tribunal did consider obligations owed by Cliveden as well as by others. These include the Claimant himself (see reasons paragraph 20) and other officers of whom the same obligations would apply. In addition, the Tribunal recorded the Claimant’'s case that obligations existed for Cliveden and Mr Eronat.
36. The Tribunal was correct in holding that legal obligations did not exist of the character argued by the Claimant.

Discussion and conclusions

37. We prefer the arguments of the Respondent and will dismiss the appeal. We agree with the Employment Tribunal’'s characterisation of the difficulty in reconciling the model for the existence of legal obligations as put forward by the Claimant (see paragraph 21 of its reasons above). The relationship between Cliveden and Encana was entirely a business transaction. There is no duty of trust and confidence as between these two. It is not necessary, according to any of the rules for the implication of terms, to imply an obligation by Cliveden to inform Encana if its principal shareholder divests himself of half his shares. We certainly reject the contention that in respect of the JOA “"the express term spawned an implied obligation to give Encana enough information to allow it to judge for itself that, indeed, the article was not triggered…”". Given that it is now common ground that what occurred was not the transfer of a participating interest, no duty under the JOA could arise. We have been shown no authority for the legal proposition of “"spawning”" implied terms. Nor can terms be implied by the officious bystander doctrine. What term would the parties have readily accepted had the issue of share sale been mentioned to them at the date the JOA was signed? Is the sale of any of Mr Eronat’'s shares to be subject to such a reporting obligation? If not, what proportion would trigger it? And since Cliveden still exists after the share sale, and still owns its 50% stake in the Chad Convention, it is difficult to see what function or purpose the suggested implied obligation would be necessary to fulfil. We accept the concession made by Mr Carr that Encana would need to be informed of the share sale at some stage for practical reasons but that, of course, is not by way of the imposition of a legal duty.
38. Since we hold that there was no legal obligation by Cliveden to Encana, an allegation falling within s43B was not made. It therefore cannot be said that the directors and/or Mr Eronat were under a duty to procure Cliveden to report the sale to Encana. The Claimant links what he describes as his implied obligation to the obligation owed by Cliveden to Encana and thus, on our finding that the latter does not exist, the former must fail, too.
39. The Claimant has not identified to us how a general duty to disclose information to each other arises by implication under the JOA. Mr Griffith-Jones accepts that there is not a fiduciary relationship between them. This was a simple commercial transaction. The JOA does make provision for one very important change in circumstance and that is 12.1(G) giving one party rights of pre-emption when the other takes or proposes certain action. Given that the parties turned their minds to such an occasion, it cannot be said that it is necessary to imply additional terms for other occasions.
40. With Mr Carr’'s assistance, we have analysed most carefully the seven ways in which the obligation is said by Mr Griffith-Jones to arise in respect of the Claimant and the other directors, but the result of this analysis is that each of these ways is in some manner contingent upon the existence of a duty as between Cliveden and Encana.
41. The same must be true of the contention that there were implied obligations not to deceive Encana. If there were actual deceit, or misrepresentation, or fraud, Encana would have the basis for a claim but it would not be on the basis of the kind of general implied obligations contended for in respect of the Claimant, Cliveden, the directors or Mr Eronat.
42. For the above reasons, we accept in full the arguments of Mr Carr and Mr Swift, would thank them and Mr Griffith-Jones for their submissions, and dismiss the appeal.