David Joseph v Deloitte NSE LLP
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Whipple |
| Judgment Date | 05 December 2019 |
| Neutral Citation | [2019] EWHC 3354 (QB) |
| Date | 05 December 2019 |
| Docket Number | Case No: QB-2019-003810 |
| Court | Queen's Bench Division |
[2019] EWHC 3354 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mrs Justice Whipple
Case No: QB-2019-003810
Jonathan Cohen QC and Alexander Robson (instructed by Farrer & Co) for the Claimant
Paul Goulding QC and George Molyneaux (instructed by Freshfields Bruckhaus Deringer LLP) for the Defendant
Hearing date: 27 November 2019
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
The Claimant is an equity partner at Deloitte NSE LLP (“Deloitte”) pursuant to the terms of an LLP agreement dated 1 June 2017 (the “ LLPA”). Cl 16.2 of the LLPA confers a power on the Board of Deloitte to expel a member by issuing a “Notice of Retirement”. The member has a right to ask the Board to reconsider the decision to issue a Notice of Retirement. The member also has a right to put his case to a special meeting of the full partnership (“partners' meeting”). In this case, Deloitte issued a Notice of Retirement to the Claimant. The Claimant asked the Board to reconsider the decision to issue a Notice of Retirement. The Board did that at its meeting on 2 October 2019. The Board's decision on its reconsideration was communicated to the Claimant on 11 October 2019. The Board upheld its earlier decision and decided not to withdraw the Notice of Retirement. Meanwhile, by email dated 10 October 2019, confirmed by email dated 12 October 2019, the Claimant asked for a partners' meeting to be convened.
The issue in the case is whether Deloitte is obliged to convene a partners' meeting as the Claimant has requested.
The Claimant asserts that his request was within time, on a proper construction of the LLPA or as a result of the necessary implication of a term extending the time to ask for a partners' meeting. Alternatively, he asserts that Deloitte is estopped from now denying his request.
Deloitte resists, arguing that the Claimant is out of time under the LLPA, properly construed; that no term can or should be implied in relation to the time for requesting a partners' meeting; and that Deloitte is not estopped from taking the time point against the Claimant.
Thus, the issues can be grouped under two headings: contractual analysis and estoppel. I shall deal with the issues in that order.
This case was expedited for trial. The urgency arises because as things currently stand, under the Notice of Retirement the Claimant's partnership will terminate on 31 January 2020. If he was to succeed in this claim, it would be necessary to convene a partners' meeting in advance of that date, if his remedy was to be effective. The matter was therefore listed for trial on 27 November 2019. I am grateful to all counsel and their supporting teams for getting this case ready for trial in what has been a very short period of time since the dispute crystallised in early October 2019, noting that the Claim Form was issued on 25 October 2019, barely a month ago.
Facts
Clause 16 of the LLPA is headed “Retirement” and deals with the retirement of equity partners. Clause 16.1 permits a partner to give notice of retirement. Clause 16.2 permits the Board of Deloitte to give a Notice of Retirement to the partner, whose period of notice will in most cases be not less than 6 months. The relevant parts of clause 16.2 are set out at Appendix A. The clause involves three distinct stages:
i) Stage 1, where the Board gives a Notice of Retirement.
ii) Stage 2, where the partner “feels aggrieved” in respect of the Board's decision to give him a Notice of Retirement, the partner has the right within 7 days after receipt of the Notice of Retirement to make his or her point of view known to the chairman of Deloitte and to present his or her case to a meeting of the Board by way of written memorandum or personal presentation. At least 7 days' notice of the Board meeting must be given to the partner. Thus, this is a right to ask the Board to review its earlier decision (“Board's review”).
iii) Stage 3, where “the Board has not withdrawn the Notice of Retirement” and the partner is “still aggrieved”, that partner may “within seven (7) days of the date of such Board meeting” notify the chairman of Deloitte that he or she wishes the Board to convene a partners' meeting “to review the Board's decision to issue a Notice of Retirement”, in which case the Board shall convene a partners' meeting within 14 days.
On 24 May 2019, the Board decided to give the Claimant Notice of Retirement. The Notice was dated 23 July 2019. The Notice stated that the Claimant's retirement as an equity partner would become effective on 31 January 2020. It also stated that if he felt aggrieved, he had the right within seven days of receipt of the Notice to present his case to a meeting of the Board. He was told that the next meeting of the Board would be in Oslo on 3 October 2019.
On 1 August 2019, the Claimant emailed the chairman of Deloitte, Mr Denayer, saying that he had received the Notice of Retirement that day. He asked to present his case to the next Board meeting in Oslo, because he was aggrieved by the decision of the Board. No issue arises over this part of the story: the request was in line with stage 2, as outlined above.
The Claimant's request was acknowledged by the General Counsel and Managing Partner of Deloitte, Ms Longley, by email dated 18 August 2019 in which Ms Longley said she would confirm the practical details for the Board meeting in due course. Her email was copied to the Claimant's legal advisors, Quinn Emanuel.
On 18 September 2019, Ms Longley again emailed. This is an email on which the Claimant places great significance. These are the relevant passages:
“Further to my email below, this email is to confirm the practical details for the upcoming board meeting in Oslo, as well as to provide you with the relevant documentation.
The meeting of the NSE Board will be held on 2 October 2019 at 5:30pm (local Oslo time) at the Deloitte offices in Oslo, Norway (please note that this date has been amended since my email to you below).
[…]
The Board Meeting will commence at 5:30pm and I would be grateful if you were available outside the meeting room before this time. Please note that the time allocated to you is expected to be from 5.50pm to 6.10pm. The final Board decision following this meeting will be communicated to you by no later than 9 October 2019.”
On 1 October 2019, the Claimant wrote to Mr Denayer attaching a copy of a written presentation compiled with the assistance of his counsel at Quinn Emanuel and (by now) Farrer & Co. He said that he would not attend the Board meeting, now fixed for the following day, in person, because he had health problems and he referred to his physician's medical advice. He invited the Board to consider his presentation and reverse the decision to issue him with a Notice of Retirement.
On 2 October 2019, the Board met and considered the Claimant's presentation.
Both Mr Denayer and Ms Longley gave evidence at this trial. They both explained (and neither was challenged on this) that at its meeting on 2 October 2019, the Board decided to uphold its earlier decision to give the Notice of Retirement; Ms Longley was asked to draft a letter to be sent by Mr Denayer to the Claimant which told him of the outcome of the Board's review; Ms Longley did prepare a draft of a letter in the days following the Board meeting but then she became occupied on another urgent matter so the letter was not sent on or before 9 October 2019, despite her assurance in the email dated 18 September 2019 that the Claimant would be told the outcome of the Board's review by that date.
On 10 October 2019, the Claimant wrote to Mr Denayer asking to know when he would receive the Board's decision and noting that he had been told that he would have it by 9 October 2019, which date had now been and gone. Further he said:
“In the event that the Board has decided not to withdraw the Notice of Retirement and pursuant to my rights under the LLP Agreement, I would request that the Board convene a “special meeting of all the Partners” within 14 days to review its decision to issue the Notice of Retirement.”
On 11 October 2019, Mr Denayer emailed the Claimant to tell him the outcome of the Board meeting on 2 October 2019. It is now established that this email had been drafted for Mr Denayer by Ms Longley. In that email, Mr Denayer apologised for the delay. He said that the Board had decided to uphold the decision to issue a Notice of Retirement. That meant that the Notice dated 23 July 2019 was not withdrawn. As to the Claimant's request for a partners' meeting, Mr Denayer wrote “That is, of course, your right under the firm's Partnership Agreement” but that the Board had now considered the matter on two occasions and the Claimant should take some time to consider his request, because it would be highly unusual in this sort of case to ask for a partners' meeting, and further the Claimant should be aware that confidentiality could not be assured if there were to be such a meeting. Mr Denayer suggested that the Claimant should take the weekend to think about it. Mr Denayer noted that the Claimant's lawyers had been in touch and he would respond separately to them.
On 12 October 2019, the Claimant responded to Mr Denayer. He said he did not need the weekend to think about it. He confirmed that he wanted Mr Denayer to convene a partners' meeting on or before 24 October 2019, by reference to the LLPA.
It is perhaps necessary at this point to interpose that a Deloitte partners' meeting is a substantial undertaking. There...
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