Cable and Wireless Plc and Pender Insurance Ltd and Christopher Robin Valentine and Others
| Jurisdiction | England & Wales |
| Judge | MR. JUSTICE COOKE,Mr. Justice Cooke |
| Judgment Date | 16 March 2005 |
| Neutral Citation | [2005] EWHC 409 (Comm) |
| Docket Number | Case No: 2004/250 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 16 March 2005 |
[2005] EWHC 409 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Mr. Justice Cooke
Case No: 2004/250
Jonathan Hirst Q.C., Andrew Mitchell & Patrick Goodall (instructed by Clifford Chance LLP and Barlow Lyde & Gilbert) for the Claimant
Jonathan Sumption Q.C. & Colin Wynter (instructed by Lovells) for the 16 th and 17 thDefendants (the Willis Companies)
Hearing dates: 11 th March 2005
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
In this action the Claimants, "C&W/Pender" (Pender being C&W's captive insurer) claim damages from a number of parties in respect of an alleged fraudulent scheme by certain employees of the C&W Group to divert premium income to companies beneficially owned by themselves. Mr. Foulger was an employee of the 17 th Defendant ("Willis UK Limited") and was also a director of Pender and the 16 th Defendant ("Willis IOM") at the relevant time. It is alleged that he assisted the authors of the scheme (essentially the first to 5 th Defendants) to carry it out. Willis IOM nominated Mr. Foulger as Pender's underwriting manager and he is alleged to be the person primarily responsible for performing the obligations of Willis IOM under an agreement dated 26 th November 1993 by which Willis agreed to provide management services to Pender. In this judgment I refer to Willis UK and Willis IOM together as "Willis".
C&W and Pender contend that an agreement was reached between 24 & 26 th November 2004 in exchanges between Mr. Bowden, the Group General Counsel of Willis and Mr. Garard, the Group General Counsel and Company Secretary of C&W. There was statement evidence from Mr. Garard and from Mr. Mitchell of C&W, who was also involved, but there was no evidence from Mr. Bowden, whether directly or indirectly in relation to these matters. The argument centres upon a letter signed by Mr. Bowden and Mr. Garard on 24 & 26 th November respectively and an e-mail from Mr. Bowden on 24 th November which, it is accepted by C&W/Pender was accepted as a qualification to that agreement. That qualification was accepted in a telephone call on 25 th November, on the uncontradicted evidence of Mr Garard, and was confirmed in a later e-mail of 26 th November, albeit that, by the time the confirming e-mail was sent, an issue had arisen as to whether or not a binding agreement had been concluded.
Willis has applied for summary judgment for a declaration that there is no binding agreement between the parties whilst C&W and Pender have applied for summary judgment seeking a declaration to the contrary. In this context I bear in mind the test for summary judgment as set out in CPR 24.2 and the decision in Swain v Hillman [2001] 1 AER 91.
In the Re- Re-amended Particulars of Claim, Mr. Foulger is alleged to have committed a breach of fiduciary duty, to have dishonestly assisted others in breach of their fiduciary duty, to be in knowing receipt of funds obtained in breach of trust, to have procured breaches of duty by C&W employees and to have conspired with those wrongdoers. He is alleged to be a constructive trustee and to be liable to account. He is also alleged to be liable in damages on a joint and several basis with the other wrongdoers. C&W and Pender contend that Willis is liable for these breaches by Mr. Foulger, although it is not alleged that they are liable to repay the alleged bribe of £100,000 which he received.
Apart from the claims made in these proceedings (the Misfeasance proceedings) at the time of the exchanges in question both parties were aware that C&W/Pender maintained that they had other claims against Willis.
The background to the exchanges
On 29 th March 2004 C&W/Pender commenced proceedings against the first to 11 th Defendants. In April, Mr. Garard met Mr. Bowden and the Chairman of Willis, Mr. Plumeri in New York, seeking assistance in obtaining documents from Willis to ascertain information about the activities of those Defendants and the fraud which it said had been committed. In consequence a large number of documents was disclosed by Willis to C&W/Pender's solicitors. In addition Willis permitted four interviews of Mr. Foulger to take place with C&W/Pender's solicitors in which he admitted knowledge of the activities of the other Defendants and receipt of £100,000, whilst denying dishonesty. Mr Garard's unchallenged evidence is that, in consequence, Willis in the person of Mr Bowden, appeared to accept that it would be liable for Mr Foulger's misdeeds and would have to make a payment in settlement of that liability.
In consequence of the newfound knowledge, C&W/Pender joined Mr. Foulger as a Defendant in the Misfeasance proceedings on 30 th July and Amended Particulars of Claim were served on 5 th August. Thereafter consideration was given by C&W/Pender to joining other Defendants, including Willis.
On 3 rd November 2004, Mr. Garard in London sent Mr. Bowden in New York a copy of the Amended Particulars of Claim and a Summary of the claims that C&W and Pender considered they had against Willis arising out of the facts pleaded at that stage. In addition paragraph 1.2 of the note referred to "a range of additional claims and potential claims by Pender/C&W against Willis which have as their origins other errors and omissions which do not hinge upon misfeasance". The letter accompanying these documents spoke of the need to talk about "numbers" (i.e. the amount that Willis would pay to C&W and Pender) and the need to meet to discuss this as a matter of some urgency because of the running of statutes of limitation and because of the trial date which was fixed for October 2005, which necessitated imminent joinder of Willis if the date was to be kept. The claims against Willis were for the entirety of the loss which C&W/Pender considered they had suffered in accordance with the claims pleaded against Mr. Foulger, for whom it was said that Willis were vicariously liable.
As the case management conference scheduled for 26 th November drew near, Pender/C&W chased Mr. Bowden for a response. There were discussions between Mr. Mitchell and Mr. Goodinge, Willis's General Counsel in the UK on 18 th November in which Mr. Goodinge sought to obtain a better understanding as to what C&W/Pender were looking to obtain from Willis in order to avoid Willis being joined in the proceedings. Mr. Mitchell referred to the need for a standstill agreement in relation to all claims and/or to a settlement in relation to the amounts claimed from Willis as set out in the summary of claims provided on 3 rd November.
On 19 th November C&W/Pender's solicitors sent Mr. Goodinge a draft Re-amended Claim Form and draft Re-amended Particulars of Claim setting out the claims against Willis, again mentioning in the accompanying letter that there were other claims against Willis which would require separate proceedings.
This resulted in two telephone conversations between Mr. Mitchell and Mr. Bowden on 23 rd November in which Mr. Bowden made it clear that it was Willis's preference to deal with the consequences of Mr. Foulger's defaults without Willis being joined in the proceedings. In order to achieve this he proposed that Willis would accept legal responsibility for the conduct of Mr. Foulger and "would not argue the facts". He made it clear that he was referring to all acts and/or omissions of Mr. Foulger, including those which might found any other breach of contract and negligence claims outside the existing proceedings. He referred to the need for a mechanism for quantifying the extent of Willis' liability, such as arbitration. He also suggested a comprehensive standstill agreement in relation to all claims that C&W/Pender considered that they had against Willis. The conversations concluded with Mr. Mitchell telling Mr. Bowden that he would arrange for solicitors to draft something for the parties to sign.
At about 4:30pm GMT on 24 th November, Mr. Garard, with Mr. Mitchell, telephoned Mr. Bowden and informed him that he would be sending through a draft letter of agreement for his approval and signature. Mr. Bowden again said that he wished to avoid Willis being joined to the proceedings and that he had discussed the issue with Mr. Plumeri who agreed with the approach which Mr. Bowden had proposed to Mr. Mitchell the previous day.
The Critical Exchanges
At 6:36pm GMT on 24 th November, Mr Garard e-mailed a draft letter of agreement to Mr. Bowden for him to sign. That letter was in the following terms: —
"Dear Bill
Cable & Wireless Plc and Pender v Christopher Valentine and Others
Claim No. 2004 Folio 250
I set out below the terms on which Cable & Wireless PLC ("C&W") and Pender Insurance Limited ("Pender") are prepared to defer the joinder of Willis UK Ltd ("Willis UK") and Willis Management (Isle of Man) Ltd into the above proceedings. If you are content with these terms, please sign a copy of this letter and return it to me overnight via pdf and courier.
1 Willis UK and Willis (Isle of Man) Ltd accept legal responsibility to C&W and Pender for the acts and omissions and breaches of duty of Peter Foulger, whether pleaded in Claim No. 2004 Folio 250 (the "Misfeasance Proceedings") or otherwise and will not seek to assert in any negotiations or proceedings (including the Misfeasance Proceedings) that they do not have legal responsibility for his acts and/or omissions and/or breaches of duty as regards C&W and Pender.
2 Save to the extent that in the Misfeasance Proceedings an...
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