Baker Tilly v Makar
| Jurisdiction | England & Wales |
| Judge | Lord Justice Jackson,LORD JUSTICE HUGHES,Lord Justice Leveson,The Chancellor |
| Judgment Date | 21 December 2010 |
| Neutral Citation | [2010] EWCA Civ 197,[2010] EWCA Civ 1411 |
| Court | Court of Appeal (Civil Division) |
| Date | 21 December 2010 |
| Docket Number | Case No: A2/2009/1711 |
[2010] EWCA Civ 1411
IN THE HIGH COURT OF JUSTICE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
QUEENS BENCH DIVISION
His Honour Judge Seymour QC
Before: The Chancellor Of The High Court
Lord Justice Hughes
and
Lord Justice Leveson
Case No: A2/2009/1711
HQ08X02310
Ms Marion Smith (instructed by The Bar Pro Bono Unit) for the Appellant
Mr Christopher Semken (instructed by Reynolds Porter Chamberlain) for the Respondent
Hearing dates: 11 th and 19 th November 2010
Miss Makar was the defendant to an action brought by the claimant firm of accountants for fees. She had engaged the accountants to provide forensic accounting services for her. On any view there was a contract to provide an expert report and, if necessary, expert evidence for a claim she was making in the Employment Tribunal (“ET”). She settled the ET claim with her opponents. The question in this present litigation was what if any contractual obligation the parties had undertaken other than the provision of a report for the ET; on that depended whether the accountants were entitled to the fees they claimed. The judge held that they were. Miss Makar appeals.
Miss Makar, who is herself an accountant, was immersed in a dispute with a public company called Triad Group PLC (“Triad”). By the time the claimant firm, Baker Tilly, came into the picture the dispute was well advanced. So far as litigation went, it took the form of her claim for unfair dismissal and associated relief made to the ET. It was not, however, a conventional unfair dismissal claim and Miss Makar had been far more than a simple employee. She had been chief executive officer, executive deputy chairman and finance director of Triad, and she was a substantial shareholder with, so it appears, some 29.9% of the issued share capital. In her evidence at the trial she made it clear that she regarded herself as having been the effective creator of Triad, although if so she was certainly no longer in control of it. There was a major boardroom dispute between herself and other directors. It arose because she asserted (and believed) that there had been serious financial irregularities in the company, to the extent of some £5m. She asserted that the result was that the company had gone from showing a profit to showing a loss, and that there had been breaches of fiduciary duty by officers of the company which prejudiced the shareholders, including herself. She had made public her concerns, speaking to the company's brokers —without it would seem the agreement of the Board – and indeed had unilaterally instructed private enquiry agents to investigate some of the company's affairs. She had been first suspended from her position as CEO, and eventually, on 8 December 2005, removed, as both CEO and director. Her claim to the ET included the claim that she had been victimised as a “whistleblower” and that the disclosures were, for the purposes of the relevant law, protected. It ought to be recorded that in due course it was accepted by the company that she had reasonable grounds for her anxiety and that the circumstances in which she was dismissed were unfortunate, although not that there had in fact been any impropriety, nor that the fall in the company's share price was attributable to fault.
The claim to the ET was launched on 6 March 2006, three months after her dismissal. The first contact with Baker Tilly was an exploratory telephone enquiry made on her behalf by her brother on 24 August 2006, and the first and only time she herself met them prior to the ET hearing was a long meeting on 7 September. By then the ET claim was well advanced and a hearing was expected in the Autumn. Soon afterwards, on 19 September, it was fixed to start on Monday 6 November. The potential dimensions of the issues raised by Miss Makar can perhaps be gauged by the fact that the ET set it down for no less than 34 days, or seven weeks. Before there was any contact with Baker Tilly there had been three case management hearings. At the third, on 1 August, the ET had given leave for expert evidence to be adduced and had issued directions for service of reports by 13 October.
Miss Makar's instruction of Baker Tilly was to act for her as forensic accountants in this dispute. A large measure of the disagreement at trial was exactly what it was the parties agreed that Baker Tilly should do. It was common ground that they agreed to provide an expert report for the purpose of the ET proceedings, and to give evidence if necessary before the Tribunal. Miss Makar's case was that her aims had not been limited to the ET proceedings. It is and was clear that from her point of view that was so. The judge accepted that she harboured additional potential purposes to which she wished to put any report obtained, and indeed the principal witness from Baker Tilly, Mr White, conceded as much. It is plain that she was determined to prove that she was right and the company wrong, although exactly what her wider aims consisted of was a good deal less clear. Her evidence suggested a somewhat scatter-gun approach, but the linking factors were, plainly, a desire to vindicate her reputation on the national commercial stage and a wish, as she put it at the trial, “to restore Triad to its previous glory”. Amongst her targets were the existing directors of Triad, and its audit committee. But en route to her general objectives, she also proposed an attempt to demonstrate what she believed were serious shortcomings in the professional behaviour of both the company auditors and the company solicitors. She seems to have contemplated making a case to a number of different regulators and/or professional bodies, including (but not limited to) the Financial Services Authority, the Law Society, the Institute of Chartered Accountants and the DTI. Her case throughout was that she had reached a concluded agreement with Baker Tilly for them to provide the necessary report for these additional purposes as well as for the ET proceedings. Whether this was so or not was the dispute which lay at the heart of the trial before HH Judge Seymour QC in the High Court. It mattered, because as things turned out the ET proceedings were settled late at night on 3 November 2006, 48 hours before they were due to begin, after a day-long mediation meeting which did not involve the accountants. The occasion for providing a report to the tribunal accordingly disappeared.
The Judge heard a good deal of evidence, including that of Miss Makar and her brother, and those at Baker Tilly who had dealings with her. He also had a number of documents, which included in some instances the contemporaneous notes made by Mr White, of Baker Tilly, who was the principal point of contact for the Makars. In due course the judge held that the contractual position had to be analysed into three parts:
i) An initial agreement, made on or about 17 October 2006, under which Baker Tilly agreed to read into the case pending the agreement of formal instructions to provide a report for the ET proceedings. That contract, the judge found, was formed by Miss Makar's employment solicitors, Messrs Burges Salmon, inviting such action in an Email of 17 October and then sending the documents which needed to be read, and by Baker Tilly accepting it by starting work. No fee or fee scale was at that point agreed, so the implied agreement was to pay a reasonable sum. Nor was it known at that point exactly which topics would need to be covered by the expert evidence, because that was being debated before the ET, with a further hearing shortly expected.
ii) An agreement made on 30 October 2006, under which Baker Tilly agreed to “prepare a written independent expert report addressed to and for production to the Tribunal, and, if required, to give evidence at the hearing.” That contract, the judge found, was formed by two letters. The first was a letter of formal instruction issued on that date on Miss Makar's behalf by Messrs Burges Salmon, containing the precise terms which I have just set out, as well as much detailed further instruction as to the scope of the evidence required. The second was a letter which amounted to an acceptance of the first, written the same day by Mr White of Baker Tilly. The judge rejected Baker Tilly's assertion that this, the crucial, contract was not formed until Baker Tilly had sent its own standard terms of engagement to Burges Salmon the next day. By then the parties were in contract. The exchange of letters which did form the contract did not, however, deal with the important matter of the fee. That was negotiated directly between Miss Makar and Mr White, at her request. It was common ground at the trial that by the time the terms of Baker Tilly's formal instructions were agreed, there was agreement between Miss Makar and Mr White that Baker Tilly's charges should be “capped” at £30,000 plus VAT, which cap should apply also to the reading-in, although not to attendance at the hearing if that should be necessary. This contract, the judge held, was brought to an end by the solicitors telephoning Baker Tilly on the morning of Saturday 4 November, immediately after the late-night settlement, to tell them that the ET claim had settled.
iii) An agreement made after the ET claim was settled. The judge held that this arose because Mr Britton, Miss Makar's solicitor, told Mr White on Monday 6 November that she still wanted a “preliminary report”, and within the cap, and that although Mr White responded that that was “a different ballgame” he had accepted...
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