Benedetti v Sawiris
| Jurisdiction | England & Wales |
| Judge | Lord Clarke,Lord Kerr,Lord Wilson,Lord Reed,Lord Neuberger |
| Judgment Date | 17 July 2013 |
| Neutral Citation | [2013] UKSC 50 |
| Date | 17 July 2013 |
| Court | Supreme Court |
[2013] UKSC 50
Lord Neuberger, President
Lord Kerr
Lord Clarke
Lord Wilson
Lord Reed
Appellant
Mark Howard QC
ndrew Twigger QC
Jennifer Seaman
(Instructed by Herbert Smith Freehills LLP)
Respondent
Laurence Rabinowitz QC
Richard Hill QC
Gregory Denton-Cox
(Instructed by Kirkland & Ellis International LLP)
Heard on 26, 27 and 28 February 2013
Lord Clarke (with whom Lord Kerr and Lord Wilson agree)
This is an unusual case. It involves a claim for unjust enrichment and, in the course of the argument, has led to a wide ranging discussion of the principles relevant to an aspect of unjust enrichment which has been the subject of lively debate among academics. It will be necessary to give consideration to at least some of the principles but, as is so often the case, the appeal can be determined on the facts without the necessity for the Court to express a final view on all the legal issues which have been the subject of argument.
Mr Benedetti is an Italian citizen resident in Switzerland. Mr Sawiris is an Egyptian and American national and was at all material times the Chairman and CEO of Orascom Telecom Holding SAE ("Orascom"), an Egyptian company quoted on the Egyptian Stock Exchange and (through Global Depositary Receipts) on the London Stock Exchange, which operates a telecommunications business concentrated in the Middle East, Africa and South East Asia. Cylo Investments Ltd ("Cylo") is Mr Sawiris' BVI registered company. April Holding ("April") and OS Holding ("OS") ("the Holding Companies") are Cayman Island companies set up by Mr Sawiris' brother and father respectively (who had held the shares in Orascom before the two companies were created), and held under discretionary trusts for the benefit of the wider Sawiris family. Immediately before the relevant events, Cylo had a holding of 4.1% in Orascom, April had a holding of 34.6% in Orascom and OS had a holding of 17.7% in Orascom; so that, between them, they held about 56.4% of Orascom's shares, with the remaining 43.6% of the shares being publicly held.
Mr Benedetti issued these proceedings in August 2007. In them he made a very large claim against all the respondents. At its most extravagant it amounted to €3.7 billion. He put his claim in a number of ways. His primary claim was made in contract under an agreement dated 31 January 2004 ("the Acquisition Agreement"). His alternative claims were variously based on an alleged oral understanding (which he said was enforceable in equity by reason of the principle in Pallant v Morgan [1953] Ch 43), collateral contract, breach of fiduciary duty, unconscionable receipt, estoppel and quantum meruit. All the claims were in the same amount. The trial came before Patten J as he then was ("the judge") and lasted for some 31 days in the first half of 2009. In a very impressive judgment of 576 paragraphs, which was handed down on 15 June 2009, the judge dismissed all Mr Benedetti's claims except the claim for quantum meruit. He awarded Mr Benedetti €75.1m.
The judge rejected the principal ways in which Mr Benedetti had put his claim for quantum meruit but held that he was entitled to the sum of €75.1m on the basis of a proposal first made on behalf of Mr Sawiris in June 2005.
Ironically, this alternative claim was only made by Mr Benedetti at a very late stage of the trial. Until closing submissions it had been maintained on his behalf that the offer of €75.1m was irrelevant and inadmissible. This had the effect, which can now perhaps be seen as unfortunate, that the evidential basis for the claim which ultimately succeeded was not as fully explored as might otherwise have been the case. However that may be, the judge rejected the submission made on behalf of Mr Sawiris that it was too late for Mr Benedetti to alter his case to rely upon it. The judge held that all the respondents were jointly and severally liable to Mr Benedetti in that amount.
Mr Benedetti appealed to the Court of Appeal on the ground that the amount awarded was calculated on the wrong basis and should have been more. Mr Sawiris and Cylo cross-appealed on the basis that the sum should have been nil and, in any event, argued that it should have been less than €75.1m. The Holding Companies cross-appealed on the same basis. The Court of Appeal (Arden, Rimer and Etherton LJJ) handed down their judgments on 16 December 2010. So far as relevant in this appeal, Arden LJ identified the issues as being (1) whether the court should use the Acquisition Agreement as a template for determining the award by way of quantum meruit; (2) whether the judge should have taken Mr Sawiris' offer of €75.1m into account in valuing Mr Benedetti's services; (3) whether any award should have been made given the payment of the sum of €67m brokerage fee and, if so, what; and (4) whether the Holding Companies should be held liable.
The Court of Appeal answered the questions raised by issues (1) and (2) in the negative. The Court held that the correct approach was to take, at least as a starting point, the ordinary market value of the services in fact rendered by Mr Benedetti, which the judge held to be €36.3m. However, they held that Mr Sawiris had not been unjustly enriched in that amount because Mr Benedetti had already received a sum of €67m. They rejected the submission that, given that the figure of €36.3m was less than €67m, Mr Benedetti was not entitled to anything. Rather, in relation to issue (3), it was held that he was entitled to €14.52m calculated as follows. The judge had held that the figure of €67m was referable to 60 per cent of the services in respect of which Mr Benedetti was claiming a quantum meruit in this action. The Court of Appeal held that it followed that Mr Benedetti had been paid for 60 per cent of those services and that Mr Benedetti was therefore entitled to receive the market value of the remaining 40 per cent of the services, that is to say 40 per cent of €36.3m, namely €14.52m. The Court of Appeal accordingly reduced the amount which Mr Sawiris was liable to pay Mr Benedetti from the €75.1m ordered by the judge to €14.52m. In relation to issue (4), the Court of Appeal held that the Holding Companies were not liable.
There were a number of other issues before the Court of Appeal, including issues of interest and costs, but they are not relevant in this appeal. The issues in this appeal as between Mr Benedetti and Mr Sawiris and his company Cylo are whether the judge and the Court of Appeal were correct to disregard the Acquisition Agreement ("the Acquisition Agreement point"), whether the judge was correct to have regard to the offer of €75.1m ("the €75.1m point"), both of which arise on Mr Benedetti's appeal, and whether the Court of Appeal were correct to award anything to Mr Benedetti, which arises on Mr Sawiris' and Cylo's cross-appeal. Permission to appeal and cross-appeal respectively was in each case given by this Court. Mr Benedetti also appealed against the part of the decision of the Court of Appeal in which they held that the Holding Companies were not liable to him. However, shortly before the hearing of this appeal he abandoned that part of his appeal.
It is common ground that the correct approach to the amount to be paid by way of a quantum meruit where there is no valid and subsisting contract between the parties is to ask whether the defendant has been unjustly enriched and, if so, to what extent. The position is different if there is a contract between the parties. Thus, if A consults, say, a private doctor or a lawyer for advice there will ordinarily be a contract between them. Often the amount of his or her remuneration is not spelled out. In those circumstances, assuming there is a contract at all, the law will normally imply a term into the agreement that the remuneration will be reasonable in all the circumstances. A claim for such remuneration has sometimes been referred to as a claim for a quantum meruit. In such a case, while it is no doubt relevant to have regard to the benefit to the defendant, the focus is not on the benefit to the defendant in the way in which it is where there is no such contract. In a contractual claim the focus would in principle be on the intentions of the parties (objectively ascertained). This is not such a case. Mr Benedetti did initially argue that Mr Sawiris, Cylo and the Holding Companies were in breach of the Acquisition Agreement, on the basis, inter alia, that an implied variation had taken place (see para 31A of the amended particulars of claim) or that they were in breach of a collateral contract. Those claims did not, however, rely on an implied term requiring the payment of a reasonable sum. In any event, those arguments were rejected by the judge and there has been no appeal against his judgment in that respect. Mr Benedetti does not now rely upon a contractual claim, whether on the basis of a request for the services or otherwise. The focus is only on the law of unjust enrichment.
It is now well-established that a court must first ask itself four questions when faced with a claim for unjust enrichment as follows. (1) Has the defendant been enriched? (2) Was the enrichment at the claimant's expense? (3) Was the enrichment unjust? (4) Are there any defences available to the defendant? See Banque Financière de la Cité v Parc (Battersea) Ltd [1999] 1 AC 221 at 227 per Lord Steyn; Investment Trust Companies v HMRC [2012] EWHC 458 (Ch) at para 38, per Henderson J.
On the facts of this case it is common ground that the first three of those questions must be...
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