Humphreys v Norilsk Nickel International (UK) Ltd
| Jurisdiction | England & Wales |
| Judge | HIS HONOUR JUDGE RICHARD SEYMOUR Q.C.,His Honour Judge Richard Seymour Q.C. |
| Judgment Date | 22 July 2010 |
| Neutral Citation | [2010] EWHC 1867 (QB) |
| Docket Number | Case No: HQ09X03935 |
| Date | 22 July 2010 |
| Court | Queen's Bench Division |
[2010] EWHC 1867 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Before: His Honour Judge Richard Seymour Q.C. (Sitting as a Judge of the High Court)
Case No: HQ09X03935
John Mehrzad (instructed by Charles Russell LLP) for the claimant
Akhlaq Choudhury (instructed by Salans LLP) for the defendant
Hearing dates: 13 and 15 July 2010
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.
His Honour Judge Richard Seymour Q.C.:
Introduction
The defendant company, Norilsk Nickel International (UK) Ltd. (“Norilsk”) is a company incorporated in England and Wales and is a subsidiary of a company incorporated in the Russian Federation called, in English, Open Joint Stock Company “Mining and Metallurgical Company Norilsk Nickel” (“the Russian Parent”). Norimet Ltd. (“Norimet”), a company also incorporated in England and Wales, is another subsidiary of the Russian Parent.
At Note 1 to the consolidated financial statements of the Russian Parent for the year ended 31 December 2008 (“the Accounts”) the principal activities of the Russian Parent and its subsidiaries were described as “exploration, extraction, refining and sale of base and precious metals”.
The claimant, Dr. David Humphreys, is an economist. For many years he has specialised in the mining industry. He studied economics and politics at the University of Wales, graduating in 1974. He then undertook doctoral studies, again at the University of Wales. He was awarded his doctorate in 1978. For the next nine years he was employed in the public service in the United Kingdom, for six of them in the British Geological Survey. Between 1986 and 2004 he was employed by Rio Tinto Plc (“Rio Tinto”). From 1996 to 2004 he was the chief economist of Rio Tinto.
Towards the end of 2003 Dr. Humphreys was approached by, or on behalf of, the Russian Parent with a view to joining the Russian Parent as chief economist. He agreed to move to the group controlled by the Russian Parent. In fact he entered into an agreement (“the Norimet Agreement”) in writing dated 10 August 2004 with Norimet under which he agreed to be employed by Norimet.
In the Norimet Agreement Norimet was called “the Company” and Dr. Humphreys was called “the Executive”. For present purposes the material terms of the Norimet Agreement were:-
“1.1 In this Agreement, unless the context otherwise requires, words and phrases the definitions of which are contained or referred to in Part XXVI of the Companies Act 1985 as amended shall have the same meanings thereby attributed to them and the following expressions shall have the following meanings:
“Board”
the Board of Directors of the Company (or any director or committee of Directors duly authorised by the Board);
…
“Commencement Date”
a date on or before 19 November 2004, such date to be mutually agreed by the Parties;
…
“Expiry Date”
the third anniversary of the Commencement Date;
“Group Company”
any company which is for the time being a subsidiary of the Company or a holding company of the Company or a subsidiary of such holding company (and “Group Companies” shall be construed accordingly);
2.1 The Company hereby appoints the Executive and the Executive hereby agrees to serve the Company to the best of his ability as its Chief Economist and as Chief Economist of such Group Company as the Company shall from time to time nominate and notify in writing to the Executive during the term of his engagement under this Agreement.
2.2 The Company shall employ the Executive and the Executive shall serve the Company and any applicable Group Company from the Commencement Date (and compliance with the Commencement Date is a condition of this Agreement) for a period of 3 years (subject to the provisions of clauses 3.5, 7 and 14) (“the Fixed Term”) until the Expiry Date except that either Party may terminate this Agreement by giving not less than 6 months’ written notice to the other Party to expire at any time. …
3.1 The Executive shall faithfully and diligently perform the duties of Chief Economist of the Company. The Executive hereby acknowledges and accepts that he shall be provided with a list of duties in writing from the Company which shall not be exhaustive and that he will be required to perform, in addition, such duties as are consistent with his position and exercise such powers in relation to the business of the Company and any Group Company as may from time to time be assigned to or vested in him by the Board. Such duties may relate to the Company or any Group Company and will be performed by the Executive subject to such restrictions (consistent as aforesaid) as the Board may from time to time impose.
3.2 The Executive shall report to Mr. Michael Prokhorov, the President of the Company's parent company MMC Norilsk Nickel, when reasonably required by Mr. Prokhorov and to such other persons as directed by the Board.
…
4.1 The Company shall pay to the Executive during the term of his employment a salary at the rate of £420,000 (four hundred and twenty thousand pounds) per annum (less all appropriate deductions). Such salary shall be paid in equal monthly instalments in arrears on or before the 20th day of each month and shall be subject to review by the Board (with no obligation to award an increase in salary) during the last 3 months of the Fixed Term.
…
4.3 The Company shall pay to the Executive a Performance Bonus (less all appropriate deductions) in respect of each calendar year of the Executive's employment with the Company. Each Performance Bonus shall be payable by 28th February in the following calendar year. Subject to clauses 4.4 and 4.5, for the period from the Commencement Date to 31st December 2004 the amount of the Performance Bonus shall be fixed at £100,000 (one hundred thousand pounds). For the period from 1st January 2007 to the Expiry Date, the Performance Bonus will be pro-rated to the number of days worked. The amount of the Performance Bonus will be assessed by Mr. Prokhorov and the Board and depending on the performance level decided upon by Mr. Prokhorov and the Board, the Executive will be entitled to the following Performance Bonus:-
For the avoidance of doubt:
(a) Subject to clauses 4.4 and 4.5 the amount of the Performance Bonus for the year 2005 shall not be less than £200,000 (two hundred thousand pounds); …”
| Performance Level | Amount of Award in £ | ||
| Grade | 2005–2006 | 2007 | |
| ‘Unsatisfactory’ or ‘Fails to meet Expectation’ | 1 | £0 | £0 |
| ‘Satisfactory’ or ‘At Expectation, meets all agreed objectives’ | 2 | £200,000 | £139,800 |
| ‘Above Average’ or ‘Exceeding Expectation on 25% of agreed objectives’ | 3 | £360,000 | £251,640 |
| ‘Excellent’ or ‘Exceeding expectation on 50% of agreed objectives’ | 4 | £440,000 | £307,560 |
| ‘Outstanding’ or ‘Exceeding expectation on 75% of agreed objectives’ | 5 | £520,000 | £363,480 |
| ‘Superior’ or ‘Exceeding expectation on 100% of agreed objectives’ | 6 | £600,000 | £419,400 |
Dr. Humphreys was awarded a Performance Bonus in each year of the Norimet Agreement. His performance was assessed as Grade 4 on the table set out in clause 4.3 of the Norimet Agreement in each of 2005 and 200In 2007 his performance was assessed as Grade 5. It was unclear exactly how the assessments were made. It seemed that there may have been “agreed objectives”, at least at some period, but, if so, what they were did not emerge.
As the termination date of the Norimet Agreement approached the question arose of Dr. Humphreys's employment continuing for a further year. Both sides were agreeable to that course, and a second agreement (“the Norilsk Agreement”) in writing dated 19 November 2007 was made. The parties to the Norilsk Agreement were Norilsk and Dr. Humphreys.
In the Norilsk Agreement Norilsk was called “the Company” and Dr. Humphreys was called “the Executive”. The Norilsk Agreement included the following provisions which were material to the issues in this action:-
“1.1 In this Agreement, unless the context otherwise requires, words and phrases the definitions of which are contained or referred to in Part 38 of the Companies Act 2006 shall have the same meanings thereby attributed to them and the following expressions shall have the following meanings:
“Board”
the Board of Directors of the Company (or any director or committee of Directors duly authorised by the Board);
…
“Commencement Date”
the date hereof;
…
“Expiry Date”
31 December 2008;
“Group Company”
any company which is for the time being a subsidiary of the Company or a holding company of the Company or any subsidiary of such holding company (and “Group Companies” shall be construed accordingly);
…
2.1 The Company hereby appoints the Executive and the Executive hereby agrees to serve the Company to the best of his ability as its Chief Economist and as Chief Economist of such Group Company as the Company shall from time to time nominate and notify in writing to the Executive during the term of his engagement under this Agreement.
2.2 The Company shall employ the Executive and the Executive shall serve the Company and any applicable Group Company from the Commencement Date (subject to the provisions of clauses 3.5 and 13) until the Expiry Date (“the Fixed Term”). The Executive's employment with the Company shall terminate instantly and without further notice being given by the Company on the Expiry Date. …
3.1 The Executive shall faithfully and diligently...
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