David De Jongh Weill and Mean Fiddler Holdings Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Lightman,Lord Justice Tuckey,Lord Justice Ward |
| Judgment Date | 25 July 2003 |
| Neutral Citation | [2003] EWCA Civ 1058 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A2/2003/0929 |
| Date | 25 July 2003 |
[2003] EWCA Civ 1058
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH
DIVISION HIS HONOUR JUDGE COLES
Royal Courts of Justice
Strand,
London, WC2A 2LL
Lord Justice Ward
Lord Justice Tuckey and
Mr Justice Lightman
Case No: A2/2003/0929
A2/2003/1001
Mr Andrew Onslow QC & Mr David Head (instructed by Addleshaw Goddard, 25 Cannon Street, London EC4M 5TB) for the Claimant
Mr Stephen Moverley Smith QC (instructed by Harbottle & Lewis, 14 Hanover Square, London W1S 1HP) for the Defendant
INTRODUCTION
There are before the court: (1) an appeal by the Defendant Mean Fiddler Holdings Limited ("the Defendant") against the judgment dated the 26 th January 2003 ("the First Judgment") of His Honour Judge Bruce Coles QC ("the Judge") given at the trial of the issue of liability in this action holding that a document dated the 19 th August 1999 ("the Signed Document") signed by the Claimant Mr Weill ("the Claimant") and the Defendant constituted a binding contract between the parties; and (2) an appeal by the Claimant against the judgment of the Judge dated the 10 th April 2003 ("the Second Judgment") holding that the costs of the trial of the issue of liability should be reserved until after the trial of the outstanding issues in the action. The issue on the Defendant's appeal against the First Judgment is one of construction. The issue on the Claimant's appeal against the Second Judgment is whether the Judge in refusing the Claimant's application for an immediate order for costs in his favour exercised his discretion wrongly and in a manner which entitles this court to interfere.
FACTS
The Claimant is a financial adviser and consultant. The Defendant owns and operates venues for talent in the music industry. The Defendant was at all material times owned by Mr Vince Power ("Mr Power"). The only other relevant participant in business of the Defendant was Mr James Prior ("Mr Prior"), an associate of Mr Power, who through a family trust lent £1 million to the Defendant convertible into ordinary shares if and when the Defendant became a public company.
In 1999, when Mr Power was considering the flotation of the Defendant, Mr Prior introduced the Claimant, who was a neighbour, to Mr Power as a person who could add value to the Defendant by reason of his financial expertise, his connections and his familiarity with the internet and the opportunities which it offered the Defendant. The three met for lunch on the 17 th May 1999 and discussed the opportunities which the internet was offering. Following this meeting, on the 24 th May 1999 the Claimant wrote to Mr Prior stating that there was a large scope to develop further the Defendant's business "via the Internet" and offering consultancy services to this end in return for an initial retainer, a monthly fee of £2,000 per month for six months and the grant to a family company of options to purchase 2% of the Defendant at the current mutually agreed valuation, 3% of the Defendant at a valuation 50% higher than the current valuation and 5% of the Defendant at a valuation 100% higher than the current valuation for four years.
Mr Prior replied by letter dated the 26 th May 1999 stating that he and Mr Power would welcome the Claimant's participation in the development and expansion of the Defendant in general and in the internet in particular; that he had difficulty with the retainer; that the equity option had definite merit; that the Claimant, Mr Power and he should meet to agree the valuation; that a simple option agreement should be drawn up; and that if the Claimant agreed to the reservation about the consultancy, he (Mr Prior) would very much like to have an amended letter in substantially the same form as the letter dated the 24 th May 1999.
The same day the Claimant wrote back to Mr Prior. He said that the retainer and monthly fee were certainly not deal-breakers and that he would work for a token monthly payment in the United Kingdom and equity options granted to the off shore family company.
The Claimant thereafter prepared two documents, one headed "Company Proposal" and the other headed "Project Proposal" both dated the 21 st June 1999 which he sent with no covering letter to Mr Prior and Mr Power. The Project Proposal was headed "Subject to Contract". Both documents related to the means by which the Defendant could achieve its potential for commercial success. Neither contained any proposed terms for a contract between the Claimant and the Defendant. No doubt correctly the Defendant never advanced any case before the Judge that the use of the phrase "subject to contract" on one of the documents had any relevance or legal effect on the issue to be tried. If the Defendant had done so, that issue would have had to be investigated. Possibly further evidence might have been called. It is too late for the Defendant to seek to make such a case for the first time in the course of the argument on this appeal.
On the 26 th July 1999 a meeting took place between the Claimant, Mr Power and Mr Prior during which terms for the Claimant's consultancy were further discussed, but (as held by the Judge) no contract was concluded at this meeting.
On the 5 th August 1999 the Claimant wrote to Mr Prior a letter about how things were progressing at the Company and his activities on its behalf. The concluding paragraph read as follows:
"On a housekeeping note I include a general commencement letter that I would appreciate to have signed and returned that simply reiterates the terms that we discussed [on the 26 th July 1999]. I am happy to work out the details of a contract later but would appreciate this just as a friendly letter to have in hand, as in some ways I am representing the company."
The enclosure addressed to Mr Prior read as follows:
"This letter is to confirm our discussion of 26 th July.
It is a pleasure to formally commence a consultancy relationship with the Mean Fiddler Group. My brief is to develop the internet presence of the company to include web sites, internet communities and e-commerce solutions; and to familiarise myself, and add value to, the normal day to day operations of the company.
Compensation for this activity is to include a fee of £2000 per monthly plus reasonable expenses and warrants to purchase shares in the Mean Fiddler by a company representing my family interests for 2% of the company at the current mutually agreed valuation of £22 million, 3% of the company at a valuation 50% higher than the current valuation, and 5% of the company at a valuation of 100% higher than the current valuation for 4 years.
I look forward to formalising our relationship under contract and am very pleased to be part of such an exciting and growing company."
At Mr Prior's request the Claimant sent to Mr Power a letter in the terms of the enclosure addressed to Mr Power. On receipt of this letter Mr Prior wrote to Mr Power stating that there had been discussion of a valuation of the Defendant at £25 million and that Mr Prior thought that the Claimant could add "a lot of additional value" to the Defendant.
On the 7 th August 1999, the Claimant wrote to Mr Prior that he thought it "a good idea to discuss a commencement letter with terms so that we can all be clear on this"; that he saw the contract to be for six months at £2,000 per month with options granted to his family company for which purpose the Defendant should be valued at £22 million; and that if they could not come to terms, they should remain good friends and neighbours.
On the 11 th August 1999 the Claimant wrote a letter to Mr Power and Mr Prior in which he said:
"I suggest that we all sit down together early next week. I believe that both of you appreciate that to continue this project, we must clarify our relationship and document the nature of an agreement between ourselves….
Just to be absolutely clear, the value created by re-positioning the company into a media company as well as a media facilitator should accrue completely to the Mean Fiddler Group. Hence I wish to be involved, through warrants, in this entity."
Having received no reply, on the 18 th August 1999 the Claimant wrote again to Mr Prior. Under the heading: "Where are we?", he said that he was concerned that no movement had been made to agree terms and, if they were not to be agreed, he would bow out. He concluded: "There are plenty of fish in the sea!"
The Claimant gave evidence that on his receipt of this letter Mr Prior telephoned him to say that he had spoken to Mr Power, that Mr Power had suggested a valuation of the Defendant at £22.5 million rather than £22 million and that, if the Claimant sent Mr Power another engagement letter, he would sign it. Mr Prior in his evidence recalled no such conversation and denied inviting the Claimant to send another engagement letter or suggesting a valuation of £22.5 million. He described the Claimant's evidence as a "concoction". The Judge in the First Judgment made no finding whether he accepted the Claimant's or Mr Prior's evidence regarding this telephone conversation, and neither party thereafter asked him to make a finding.
On the 19 th August 1999 the Claimant sent to Mr Power what was to become the Signed Document already signed by him for signature by the Defendant. The letter read as follows:
"Dear Sir
This letter is to confirm our discussion of 26 th July 1999.
It is a pleasure to formally commence a consultancy relationship with the Mean Fiddler Group. My brief is to develop the internet presence of...
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