Duncan Macleod v Mears Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Hamblen |
| Judgment Date | 07 October 2014 |
| Neutral Citation | [2014] EWHC 3140 (QB) |
| Docket Number | Case No: HQ13X03240 |
| Court | Queen's Bench Division |
| Date | 07 October 2014 |
[2014] EWHC 3140 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Rolls Building, Fetter Lane, London, EC4A 1NL
Mr Justice Hamblen
Case No: HQ13X03240
Patrick Hennessey (instructed by Payne Hicks Beach) for the Claimant
Richard Leiper (instructed by Eversheds LLP) for the Defendant
Hearing dates: 26 September 2014
CONSEQUENTIAL RULING
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
This is the hearing of matters consequential upon my judgment handed down on 8 th July 2014. The relevant background is set out in the judgment. The Claimant, Mr Macleod, made a claim against his former employer, Mears Ltd, for some £2 million which he contended to be due to him under a profit sharing bonus agreement.
A split trial had been ordered and the trial in June concerned liability only. The principal issues which arose were (1) whether a binding agreement was made; (2) the terms of any such agreement, and (3) whether it was varied or superseded.
As set out in my conclusions at paragraph 96 of the judgment I found that:
(1) "The T/A and accompanying documents involve a contractually binding bonus agreement.
(2) The bonus agreed was for Mr Webb's and Mr Macleod's teams rather than for them individually.
(3) The allocation of 75p in the pound only applied until April 2008.
(4) The agreed terms were only applicable until December 2008.
(5) The agreement did not include a bonus cap.
(6) The agreement was not subsequently varied or superseded."
During the course of the judgment I found that, contrary to the defendant's case, there was a contractual agreement made but that, contrary to the claimant's case, the agreement was that a bonus would be provided to the claimant's team rather than to him personally.
In paragraphs 52–54 of judgment I said as follows:
"52. For all these reasons, and those given by Mears, I conclude and find that the bonus agreed in the T/A was a pooled bonus for the benefit of Mr Webb and Mr Macleod's teams, and not an individual bonus.
53. Mears submitted that this shows that T/A was not meant to be contractual. It did not confer a personal entitlement; it simply set out the arrangements for the calculation of pool bonuses. However, in my judgment the approval of the T/A was intended to have and did have contractual effect. That is clearly the case in relation to Mr Webb and Mr Macleod being Grade 8 employees, the benefits conferred thereby and their salary. An entitlement to claim a share of a specified bonus pool is a recognised right, even if distribution is discretionary. Further, Mr Miles accepted in evidence that Mears was bound by the agreement he had made and would keep its promises.
54. Mears further submitted that this is not how the claim has been advanced and that the sole claim made is for a specified sum due personally. There is some force in this but that does not mean that, subject to permission being granted, a claim to a share in a bonus pool could not be made. For the avoidance of doubt, I have not made any final findings as to the basis upon which any discretionary distribution was to be made — this was not a matter in issue."
The Issues
In the light of the judgment, and in particular the unresolved issues referred to in paragraph 54, the following consequential issues arise for determination:
1. Does the claim as currently pleaded include a claim for a share in a bonus pool?
2. If not should the claimant be granted permission to amend his claim to include such a claim?
3. If a claim for a share in a bonus pool is permitted to proceed what directions should be given the outstanding issues to be resolved?
4. What order should be made in relation to costs?
(1) Does the claim as currently pleaded include a claim for a share in a bonus pool?
The relevant passages from the pleadings are as follows:
Particulars of Claim
"7. The principle effect of the Agreement was that a percentage of net profit generated by the managed projects would form the Claimant's (and Mr Webb's) bonus payments. …
8. By clause 10, it was a further express term of the Agreement that from April 2008, the first £100,000 of profit would form the Claimant's (and Mr Webb's) bonus payment and the remainder would be split on a 50/50 basis between the Claimant and Mr Webb and the Defendant.
….
13. Accordingly, the Claimant is entitled under the Agreement to:
13.1 75% of the net profit generated by St Georges Estate between 01 November 2007 and 31 March 2008 …;
13.2 The first £100,000 of the net profit generated by St Georges Estate from 01 April 2008 to completion plus 75% of the remainder …;
13.3 75% of the net profit generated by Phipps House between 01 April and 31 December 2008 …;
13.4 50% of the net profit generated by Welwyn & Hatfield between 01 April 2008 and 31 December 2008 …."
….
23. In breach of the Agreement the Defendant has failed and refused to pay the sums due to the Claimant and has thereby caused the Claimant to suffer loss and damage as aforesaid.
….
And the Claimant claims:
(1) £2,318,723.06 in respect of his contractual entitlement to an incentive payment bonus….
Reply
"The specific nature of the claim
3. … For the avoidance of doubt, the Claimant's claim arises solely from his entitlement to bonuses based on a percentage share of net profit in respect of the 3 specific projects identified and referred to in the Particulars of Claim.
….
9.1.1 Clause (5) sets out the general percentage principle of the profit sharing and expressly provides for a greater profit share for the Claimant and Mr Webb in respect of the Keller liability projects …"
In addition, there is the following exchange from the Defence and the Reply:
Defence 7(b)
"By clause (5) of the Terms of Agreement, the incentive payments produced (if any) were to be identified by team and to be distributed amongst the team working on the applicable projects. The Claimant specifically acknowledged this in an email dated 18 August 2008, writing 'Distribution of the bonus within the business units is at the discretion of the Project Directors as agreed with the MD.'"
Reply 8.1 & 8.2
"… There was never any intention, which is why there is no express term to that effect, that the bonuses which were the subject of the Agreement should be pooled or further distributed;"
"The allegation that the Claimant 'acknowledged this is an email dated 18 August 2008 …' is wholly misconceived and does not bear scrutiny."
The defendant's position is that these pleadings show that the claim was one for an individual bonus of a specified sum due personally to the claimant but not one for a pooled bonus.
The claimant relies on the general terms in which the claim was put in the claim form. However, that was superseded by the Particulars of Claim in the terms in which to which I have already referred.
In essence the claimant's position is that the greater includes the lesser, that he made a claim for personal entitlement to the full sum, and that that claim includes a claim for the same or a lesser sum on the basis of being entitled to all or part of a pool bonus due to his team.
I consider that a claim made for part of a pool bonus is different to a claim for personal entitlement to a bonus. For the purpose of making a pool claim it is necessary to identify the basis upon which it is said that you are entitled to a share of that pool bonus, to identify what share you claim to be entitled to and to explain why. Further any claim for breach will be different. The breach is not a failure to pay a sum personally due but a failure to set up or pay from a pooled bonus.
In my judgment it is therefore necessary for the claimant to amend if he wishes to pursue a claim on the basis of an entitlement to, or damages for failing to pay from, a pooled bonus.
This is supported by the way the case was put at trial. The claimant's written evidence was clear that the agreement was that he should be paid the bonus personally rather than it should be paid to his team. Moreover, when asked by the court during submissions about the possibility of it being a group bonus the claimant's counsel's response was that that "cannot be right".
In my judgment therefore, this is a case in which an amendment needs to be made and permission given if this claim is to be pursued.
(2) Should the claimant be granted permission to amend his claim to include such a claim?
The first issue which arises is whether the proposed amendments put forward by the claimant in July following my judgment cover a claim for a share in a pool bonus. The defendant contends that they do not and that therefore the proposed amendment should be refused on that ground alone. Again in my judgment the defendant is correct about this.
The proposed amendment adds to paragraph 13.5 of the Particulars of Claim the wording: "or in the alternative such a share and such sums under the agreement as the court determines". That, however, does not explain or aver how it is alleged the agreement gives rise to any entitlement other than that already alleged in paragraphs 7 and 8 of the Particulars of Claim.
The draft re-amended Reply adds a new 8.6:
"Accordingly to the extent to which it is found the claimant's pleaded entitlement to "a percentage of net profit generated by the managed projects" is not to the percentages contended for and/or subject to any implied further distribution, the nature and the extent of that distribution was and is it is at the claimant's sole discretion".
However, that is contained in the Reply; it is not an amendment to the claim and the way in which the...
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