Barnetson v Framlington Group Ltd and Another
| Jurisdiction | England & Wales |
| Judge | Lord Justice Auld,Lord Justice Longmore,Lord Justice Toulson |
| Judgment Date | 24 May 2007 |
| Neutral Citation | [2007] EWCA Civ 502 |
| Docket Number | Case No: A2/2007/0133 |
| Court | Court of Appeal (Civil Division) |
| Date | 24 May 2007 |
[2007] EWCA Civ 502
The Right Honourable Lord Justice Auld
The Right Honourable Lord Justice Longmore and
The Right Honourable Lord Justice Toulson
Case No: A2/2007/0133
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
HIS HONOUR JUDGE RICHARD SEYMOUR QC
SITTING AS A HIGH COURT JUDGE
HQ06X02307
Mr Paul Nicholls (instructed by Slaughter & May) for the Appellant
Mr Peter Oldham (instructed by Ferguson) for the Respondent
Hearing date: 19 th March 2007
Lord Justice Auld
Introduction
This is an appeal from a decision of HHJ Seymour QC, sitting as a Judge of the High Court, on Friday 19 th January 2007, in which he declined to require the respondent/claimant, Mr Ian Barnetson, to re-serve his first witness statement, omitting from it certain passages that the appellants/defendants, (“Framlington”) contended referred to matters that were “without prejudice”.
The issue for the Court is whether and in what circumstances there may be a dispute prior to litigation or the threat of it, to which the “without prejudice” rule may apply to settlement negotiations between the parties.
The claim and the relevant facts
In the action, which Mr Barnetson began on 24 th April 2006, he claims damages against Framlington for wrongful dismissal from its employment on 31 st December 2005 as its Chief Operating Officer and for other alleged breaches of his contract of employment. Under the contract, which was in writing, the employment was for a term to 1 st April 2007. The contract permitted Framlington to terminate it earlier on making certain payments in lieu of notice, which Framlington, by letter of 20 th December 2005, purported to do with effect from 31 st December 2005. However, its Chief Executive Officer, Mr Robert Kyprianou, had told him, on 28 th October 2005, of what it intended.
The facts and the matters in Mr Barnetson's witness statement that Framlington seeks to exclude
To indicate the significance of the matters giving rise to the dispute that were to harden into threatened litigation and then litigation, I start with Framlington's engagement of Mr Barnetson in early March 2005 as its Chief Operating Officer and a number of exchanges at that time and over the ensuing months between him and Lord Douro, Framlington's Chairman, and others acting for it. These were detailed in Mr Barnetson's first witness statement in evidence before the Judge and accepted by him for the purpose of determining the issue before him. In summary, and so far as is relevant, his account was as follows.
On 7 th March 2005, Lord Douro orally offered Mr Barnetson the post of Chief Operating Officer at an annual salary of £172,500 with standard provision at his executive level for a car allowance, pension, holiday, health-care etc. Mr Barnetson also understood from the discussion that he would be entitled to two further significant benefits, namely allotment to him of restricted shares in Framlington (“the Restricted Shares”) and participation in its bonus scheme comprising guaranteed and discretionary sums. He accepted the offer and promptly took up the post, the orally agreed terms being left for later written confirmation.
However, in the course of protracted efforts by Mr Barnetson to secure such confirmation, the matter of the Restricted Shares and the content of the bonus benefits rapidly become bones of contention between him and Framlington, Lord Douro in particular. According to Mr Barnetson, at least two approaches to Lord Douro in March 2005 failed to secure the sought written confirmation.
Eventually, on or about 11 th April 2005, he was presented with two draft contracts, which he regarded as incomplete or inaccurate in a number of respects, in particular, as to allotment of the Restricted Shares and bonus. He raised his concerns about the drafts in a meeting with Lord Douro two days later, who indicated that he would have a further draft contract prepared. There were further meetings, at one of which, on 20 th April 2005, Mr Barnetson reminded Lord Douro that he had still not received the sought confirmation of his terms of employment, again mentioning the Restricted Shares; Lord Douro again indicated that he would attend to the matter.
On 25 th April 2005, Lord Douro handed Mr Barnetson a further document purporting to confirm the terms of his contract, and asked him to sign it. Mr Barnetson refused to do so, querying a number of matters in it, in particular, the absence of any mention of what he understood to be his entitlement to the Restricted Shares. Lord Douro's response was one of impatience; he threatened to withdraw Framlington's offer of appointment; he remarked that they would have a very difficult working relationship; and he said that the corporate shareholders would be unhappy with Mr Barnetson, since they needed formal confirmation of his role. As a result of that pressure, Mr Barnetson signed the document. He did so in the belief that Lord Douro would honour the terms he understood they had orally agreed on 7 th March 2005, making plain that he regarded the document as incomplete.
Further attempts by Mr Barnetson at the end of April 2005 to sort out the matter, this time with Lord Douro and Mr Alain Dromer, a board member of Framlington, were rebuffed. Over the ensuing months he was deterred from raising it again with Lord Douro because of the latter's generally overbearing attitude and because he believed that he would honour his word. However, in early August 2005, he mentioned it to the Chief Operating Officer of AXA Investment Managers, the second appellant, which was negotiating the purchase of Framlington.
Eventually, on 26th October 2005, Mr Barnetson wrote to Lord Douro and Mr Dromer seeking resolution of the matter. This gave rise to a telephone conversation on 27 th October 2005, in which Mr Barnetson expressed to Lord Douro in blunt terms his dissatisfaction. Lord Douro's response was to terminate the conversation.
On the following day Mr Kyprianou told Mr Barnetson that he would be dismissed at the end of the year, and sought to discuss terms for his departure. Mr Barnetson responded on 1 st November by presenting Mr Kyprianou with a sheet headed “Ian Barnetson-COO Framlington Settlement”, outlining his acceptable settlement terms for early termination of his contract, including what he sought by way of the Restricted Shares and bonus for 2005 and 2006.
There followed in due course the first of the following exchanges that Framlington seek to exclude as “without prejudice”, relating in the main to his pleaded claims for the Restricted Shares and bonus. These are set out by Mr Barnetson in paragraphs 51, 53, 54, 58, 59, 60 and 63 of his first witness statement, and include:
i) Framlington's counter proposals at a meeting on 18 th November 2005 with Ms Louise McMahon, a human resources executive employed by AXA Framlington Group Ltd, as Framlington had now become. According to Mr Barnetson, Miss McMahon put a figure to him for bonus, which he rejected as “rubbish”, and challenged his claim to the Restricted Shares. She presented him with a document in the form of a draft Compromise agreement, which he refused to read and returned to her, saying that he would deal only with Mr Kyprianou.
ii) Discussions between Mr Barnetson and Mr Kyprianou on 22 nd and 24 th November 2005 including, in particular, an offer by Mr Kyprianou of £175,000 by way of bonus, and Mr Barnetson's insistence on £200,000.
iii) A discussion on 1 st December 2005 in which Mr Kyprianou asked Mr Barnetson if he would accept £200,000 as a settlement figure for the bonus, if he, Mr Kyprianou, could agree it with his colleagues; to which Mr Barnetson assented conditionally on Framlington's acceptance of his claims to the Restricted shares and further bonus.
iv) Subsequent exchanges up to and including 20 th December 2005 proposing changes to the draft Compromise agreement first put to Mr Barnetson on 18 th November 2005, including a subsequent offer of £200,000 for bonus.
I should mention two further matters.
The first is Miss McMahon's claim in evidence that the “draft Compromise agreement” she presented to Mr Barnetson on 18 th November 2005 was marked with the words “without prejudice”, and that she drew his attention to that. Mr Barnetson, in evidence, denied any mention of “without prejudice” at the meeting, adding that, in any event, he would not have appreciated its significance. The Judge concluded that there was no evidence on which he could rely to find that there was any reference to the term “without prejudice” at the meeting. Even if there had been, as he recognised, given the wider issue between the parties as to the nature of the negotiations, it could not have been determinative either way, either as to the discussions that day or over the whole period of the negotiations from 28 th October 2005 to the end of the year.
The second matter is that Mr Barnetson, in a letter to Framlington of 13 th December 2005, threatened proceedings if the dispute between them was not speedily resolved. Framlington's response was to discontinue the negotiations and, on 20 th December, hand him a letter dismissing him as from 31 st December, purportedly in accordance with the provision in the contract for early termination on making payments in lieu of notice. That, in turn, prompted Mr Barnetson to issue these...
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