Aviva Life & Pensions UK Ltd v Strand Street Properties Ltd

This appeal is brought by the Defendant from an order of Morgan J following a judgment handed down on 20 May 2009 after a seven day trial. In the proceedings the Claimant, which I will call Norwich Union (despite its subsequent change of name), sued the Defendant Strand Street Properties Ltd (SSP) as well as another company, London & Paris Estates Ltd (LPE), to recover half of substantial professional costs which it had incurred in relation to a contemplated development in Bristol. Norwich Union asserted that SSP had agreed, by LPE as its agent, to bear half of these costs incurred from the beginning of 2001 up to 16 July 2001. It sued LPE in the alternative, but by the time of the trial LPE was in liquidation, and Norwich Union did not seek judgment against it.

SSP defended the proceedings on a number of different bases. It disputed that any binding agreement had been reached at all, arguing both that the parties had never reached a sufficient consensus and that, even if they had, there was no consideration for the agreement. It disputed that, if there had been a binding agreement at all, it was binding on SSP, because it denied that LPE had authority on its behalf. This argument too was presented on several bases: first that LPE had no authority at all, its only authorised agent having been another company called Topside Properties Ltd (Topside), and that company’s authority having expired before the date on which the agreements alleged were reached, and that whatever authority had been conferred, it did not extend to making a binding agreement as alleged. Norwich Union’s counter-argument of ratification was also denied. Lastly, a point was taken on the cause of action (if any) namely that the action lay, if at all, not in debt but for an account, since it was agreed that Norwich Union would also bear half of any professional fees incurred by SSP or LPE.

In his full and careful judgment Morgan J considered and rejected each of these points. He held that a consensus had been reached in July 2001 as alleged by Norwich Union, that there was consideration for the agreement, that, even if Topside was SSP’s agent, it was free to and did in fact sub-delegate to LPE, that the extent of its authority was sufficient to cover the agreement which he found had been reached, and alternatively that if it had not been, SSP ratified the agreement, and that the claim was properly brought in debt.

The judge refused permission to appeal to SSP, as did Stanley Burnton LJ considering the matter on the papers. On an oral renewal, however, I granted permission to appeal on seven points. I will list these (and consider them) in what seems to me the most logical order. The first goes to the question of agreement on the facts. It is that the judge’s finding of the necessary consensus was vitiated by his failure to address in that context a letter from LPE dated 5 July 2001, or his failure to explain why his finding was consistent with that letter. Next it is said that the judge was wrong to find consideration for the agreement. On that point Norwich Union has served a Respondent’s Notice seeking to uphold the judge’s decision on additional grounds not mentioned by him. Then points are taken on authority. It is not disputed that, if Topside had authority, that authority could be sub-delegated to LPE, nor is reliance now placed on the expiry of the authority conferred, but it is said that Topside’s authority did not extend to making the agreement alleged. Several points are taken in relation to ratification, focussing both on the knowledge attributed by the judge to SSP, and on its conduct said by him to amount to acts of ratification. It is also said that the contract sued on was so disadvantageous to SSP that, even if one of its directors did have the necessary knowledge, that should not be regarded as sufficient for ratification. Moving away from the issue of authority, it is also said that the claim was not properly brought in debt and should have been for an account. Mr McGhee Q.C. for SSP argued that this is the effect of the agreement, if there was one, namely that the sums should be done on or as at 16 July 2001, a balance being struck, if necessary, and that the party which was found to have overpaid would then be entitled to payment of half of the balance.

Thus, the issues can be seen as falling into three groups:

The judge reviewed the factual history in detail. Given the more limited focus of the issues argued on the appeal, I can describe them more briefly, but I must give enough detail to explain and address the first point taken, namely that the judge’s factual finding of consensus was wrong.

The site in Bristol which was the subject of the development proposals was known as the St Mary le Port site, from the name of an adjacent ruined church. It included several buildings, one known as Norwich Union House, another referred to as the Bank of England building or Bank House, and further bank premises. It had had a very lengthy planning history. The freehold was owned by Bristol City Council. Norwich Union held a long lease of Norwich Union House. The Bank of England had held a long lease of Bank House. In 1998 this was acquired by London & Paris Investments Ltd (LPI), a sister company of LPE. In April 2000 SSP acquired the shares in LPI, and at about the same time it took an assignment of the lease from LPI. The lease was subject to some long underleases, one of them in favour of Lloyds Bank. The other bank premises were also the subject of a long lease to the Bank of England (and a shorter tenancy held by Lloyds Bank which occupied both premises for the purposes of its business). LPI negotiated to acquire this lease from the Bank, but eventually these negotiations were taken over by SSP, which took an assignment of the lease at the end of 1999.

Norwich Union was a part of the Norwich Union group of companies. In or about May 2000 Norwich Union plc merged with CGU plc to form CGNU plc, now called Aviva plc. Before the merger, fund management of investment activity on behalf of the Norwich Union group was undertaken by Norwich Union Investment Management Ltd (NUIM), and a similar function was performed within the CGU group by Morley Fund Management Ltd (Morley). After the merger Morley took over that function on behalf of the merged group, NUIM being merged into Morley. In terms of relevant individuals, Mr Andrew Peacock had been a manager with NUIM and moved to Morley. He was active in relation to the development proposals for the site up to early July 2001, handing over at the end of June 2001 to Mr Jon Ashcroft. Mr Bob Delafield worked first for NUIM and then for Morley. He too was active on behalf of Norwich Union in relation to the development proposals until April 2001. At that stage he left Morley and moved to LPE where he continued to be concerned with the proposals, but on behalf of LPE instead. Mr Peacock, Mr Ashcroft and Mr Delafield all gave evidence at the trial.

SSP was incorporated in the Isle of Man. At the time of the trial its directors were Mr Costain and Mrs Riley. Each of them gave evidence at the trial. Mr Costain became an alternate director for another in January 2001, and became a full director in 2004/5. Mrs Riley was appointed on 30 October 2001. At the material time, one of the directors was Mr Shrives, who had been appointed in 1996. He features in the correspondence in the case. He was based in the Channel Islands. The other directors at the relevant time (ignoring alternates) were Mr Smalley, and Mr Green (to April 2001) and Mr Biscoe (from that date).

According to Mr Costain’s evidence, SSP was formed for the benefit of Ronald Berger and Peter Davidson. The shares appear to have been held, since 1994, for the benefit of the trustees of a settlement of which it seems likely that Mr Berger was the settlor. The correspondence shows that Mr Berger was informed from time to time by Mr Shrives, as well as by Mr Christopher Dymond, whom I am about to introduce, about the progress of the development proposals.

Until its acquisition by SSP in April 2000, LPI was a subsidiary of Adaptdart Ltd. LPE was also, and remained, a subsidiary of Adaptdart Ltd. In 2000 and 2001 its directors were Mr Christopher Dymond and Mr Davidson. Topside was another subsidiary of Adaptdart Ltd. In 2000 and 2001 its directors were Mr Davidson and Mr Dymond.

It seems that Adaptdart Ltd itself was owned at the material time as to 80% by Mr Davidson, and as to 20% by Mr Dymond.

In 2002 Mr Dymond made a witness statement on behalf of SSP in proceedings brought by Lloyds TSB Bank plc against SSP seeking an order for a new tenancy of premises within the development site. The contents of this witness statement were relied on by Norwich Union as one of the acts of ratification. He described the development proposals, in order to make good SSP’s stated intention to demolish the premises occupied by Lloyds Bank under the tenancy and to carry out substantial works of construction on the site. He referred to expenditure incurred by SSP in preparation for the development. The outlay which he described was calculated on the basis that SSP was liable for half of what Norwich Union had incurred.

Discussions between those interested in the bank premises on the one hand and Norwich Union on the other started in or by January 1998. At that early stage LPI was the relevant counterparty to Norwich Union, and LPE acted on its behalf. During 1998 each of LPE and Norwich Union incurred its own professional costs in relation to the project. LPE asked Norwich Union in September 1998 whether it would be prepared to assist in providing funds for the necessary costs of taking the scheme forward to the planning application stage. In 1999 Norwich Union proposed that matters should proceed on a somewhat more formal basis as between the two interested parties.

On 25 August 1999 Mr Green, one of the then directors of SSP, wrote to LPE (Mr Dymond) to appoint LPE as project managers in relation to its interest in the proposed development. The letter also referred to taking over the negotiations with the Bank of England and taking an option to acquire the shares in LPI. This letter of appointment was superseded by another dated 9 November 1999, once the contract with the Bank of England had been exchanged and the option granted. This letter was from Mr Shrives of SSP and addressed to Mr Dymond at Adaptdart Ltd and referred to the appointment of Topside as project manager. As already mentioned, nothing turns on that detail. I will revert to that letter on the question of the scope of the authority granted, although it had itself been superseded by the relevant time.

In September 2000 Mr Dymond, for LPE, told Mr Delafield for Norwich Union that LPE had incurred almost £116,000 of professional costs up to that date, which were listed. From an internal memorandum of Norwich Union in October 2000 it appears that Norwich Union’s costs incurred were almost the same amount.

LPE’s authority to act on behalf of SSP was due to expire at the end of September 2000. On 28 September Mr Dymond, for LPE, wrote to Mr Shrives of SSP, reporting on the position as regards the property and the proposed development project and inviting a renewal of the appointment. He expressed a degree of optimism about the development prospects, for which a key element was the attitude of the Court Service to taking part of the proposed development for a new Civil Court Centre for Bristol. Among the matters which were identified as requiring attention was the discussion of “funding arrangements with Norwich Union”. Mr Shrives replied on 3 October 2000 proposing to renew the appointment, though on less favourable terms financially, until 30 June 2001. That was agreed, and that was the relevant letter of appointment at the time of the agreement alleged by Norwich Union. I will return to it later.

In January 2001 the topic of sharing costs was again raised between LPE and Norwich Union (or rather, by then, Morley). Mr Delafield, for Morley, wrote to Mr Dymond, for LPE on 8 January. He said, on this point:

“I have begun to prepare the way forward for Morley to give authority to incur further expenditure here. We have, of course, discussed the principle of sharing costs during this stage at the meeting with Jim and there is clearly an expectation by the team that appointments and fee proposals will follow on fairly quickly.

From Morley’s point of view we will need to ensure that the appointments are on an appropriate basis and since they are likely to be joint we need to agree whether or not you are happy with our standard form. This potentially means that Dave Wagstaff is the best person to move forward with the responsibility to co-ordinate the project management of the design up to the planning application stage.”

The project began to require attention from a number of professionals. Mr Wagstaff, whose task it was to procure and coordinate these, felt under pressure. (He had once worked for Norwich Union (or Morley) but by this time he was working as an independent consultant on his own.) On 11 March 2001 he sent an email to Mr Delafield (for Morley) and Mr Dymond (for LPE) commenting that he was attempting to procure fifteen different firms of consultants for the project but that, not being the client, he could not issue letters of appointment. He proposed a way to deal with this, to be agreed by both parties, and put forward possible documentation for the purpose. He returned to this subject on 26 April 2001 in an email to Mr Delafield (by then at LPE) and Mr Dymond. He mentioned the unsatisfactory position as regards costs at several points in the message:

“(ii)

Invoicing procedures – the Team still do not know who to invoice or the invoice approved structure. Some Consultants are invoicing me direct, as I issued the original Letters of Intent (even though they were told to invoice the Client). Those who have followed what I thought was the correct procedure, have had their invoices returned. This has not been good for Team relationships, particularly when a lot of hard work has been executed on your behalf.

…

(vi)

Letters of Comfort – were to be issued by yourselves to underwrite the anticipated design costs. My e-mail 28^th February 2001 refers. As you will recall, our Team have been uneasy about the lack of written Client confirmations for some time. This letter has never been issued.

…

The Team have covered a lot of ground over the past three months and I am sure the progress will be even better in the future once the key block plans are signed off by yourselves next Tuesday. However, the Team do now need certainty, need contracts and do need to be paid if future commitment and progress is to be expected.”

On the next day he sent an email to the various professional firms (copied to Mr Delafield and Mr Dymond at LPE) describing the procedure to be followed. Invoices were to be addressed to Norwich Union c/o LPE for Mr Delafield’s attention, with a copy to Mr Wagstaff at the same time. Mr Delafield would then ask for Mr Wagstaff’s confirmation that the invoice should be paid. Mr Delafield and Mr Dymond would then authorise the invoice and issue it to Norwich Union. Norwich Union would process the invoice and pay it direct. From time to time Norwich Union would invoice LPE (as SSP) for “any necessary balancing accounts”.

On 3 May 2001 Mr Delafield wrote to Mr Peacock at Morley attaching a number of fee invoices, describing the procedure as set out in Mr Wagstaff’s email of 27 April. As regards the last point, Mr Delafield said “NULAP then should invoice London & Paris for 50% of the amount (including VAT) on the basis that we have agreed to share costs during this stage.” On 14 May 2001 Mr Delafield wrote again to Mr Peacock about progress on the project in a number of respects. In the last paragraph, under the heading “Budget – Fees”, he said this:

“There is now urgency to pay fees to the team, following their not inconsiderable efforts over the last 3 months. Dave is producing a statement of the position to date and the budget required to move forward. I attach a letter which I hope is self-explanatory in terms of the proposed procedure and invoices. You will no doubt be able to discuss these with Dave on Friday.”

The issue of payment to consultants remained live. On 4 June 2001 Mr Wagstaff sent an email to Mr Delafield and Mr Dymond prompted by a letter from Halcrow Fox (traffic and transport consultants). In it he said:

“As you are aware, no formal written instruction has ever been issued on this project. This is becoming an increasing concern. Much of my time is spent cajoling designers to proceed on the current verbal basis.

I am surprised we have got this far. From the tone of Halcrow’s letter it seems they will not be giving a full commitment to undertake the essential highways work until such an instruction is issued.”

Again on 13 June he wrote to Mr Delafield and Mr Dymond about the state of account with many of the professionals. He ended his message as follows:

“It is becoming a matter of increasing concern with all consultants that no invoices have yet been paid via the new system (i.e. since you have left Norwich Union). Several parties are also asking for Letters of appointment from yourselves in order that they have the necessary re-assurances to properly prioritise this scheme. As you are aware, you have yet to respond to any of my recommendations for formal acceptance of any consultant. Please can you process the above invoices for payment via Norwich Union, and also chase them to ensure that previous invoices are paid as quickly as possible.”

Much the same point was made at a project team meeting on 19 June by representatives of Fielden Clegg Bradley (architects). No representative from Morley or Norwich Union was present at that meeting. Mr Wagstaff agreed to chase Morley for payment.

A meeting to be attended by representatives of both Morley/Norwich Union and LPE was due to be held on 2 July 2001. It had been agreed that the architects would present the scheme to Morley in the morning, and that in the afternoon Morley and LPE would deal with contractual matters. This is the meeting at which, so Norwich Union says (and the judge held), the agreement sued on was made. In advance of the meeting Mr Delafield for LPE wrote to Mr Peacock for Morley on 21 June. Among other things he discussed the financial structure, recording that Morley’s preference was to see both parties sharing risks through the development period, carrying the respective equity risks and sharing future development profits. He also noted an inequality in the ownership position, in that SSP owned more of the site than Norwich Union did. He suggested that a limited partnership might provide a suitable way of carrying the development through. Later in the letter, under the heading Expenditure, he said this:

“A number of invoices have been sent to you and marked for payment, a number of others are also attached. I suspect the problems you have had with the changeover from ECS has not helped matter, however, there is now some need to process payment as soon as possible.

From Strand Street’s point of view, with financial resources obviously more limited than yours, we need to discuss the current state of play and how we might move forward. As you know Strand Street have to date [shared] costs 50/50 in addition to purchasing the surrounding buildings (with Prudential Buildings now under offer also).”

On the next day, 22 June, Mr Wagstaff returned to the subject of professional fees in another email to Mr Dymond and Mr Delafield. He reported that Halcrow Fox did not want to undertake any further work without a formal instruction from LPE, and said that he was amazed that other consultants were not taking the same position. He went on to say this:

“The appointment situation and queries relating to the non-payment of invoices now take up a significant amount of the time I have available to spend on your Bristol project. Effectively, I am now spending more and more of your money (i.e. my fees) trying to cajole the Team into working on your project because London & Paris have basically chosen to ignore my repeated requests/recommendations to enter into any form of Contract, issue any confirmations of agreement, or even issue the promised Letters of Comfort, to anyone. My records indicate that these requests have been issued by myself regularly over the past five months. I appreciate that London & Paris may feel vulnerable about formalising arrangements with the consultants until some form of risk sharing arrangements are also formalised with Morley. However, some quite complex deals have been struck with all the principal professions (with your agreement) and they need to be followed through.”

He also said that, unless the position was satisfactorily resolved with all the consultants, he would, with regret, have to report his concerns to Morley when Mr Peacock returned to his office. He concluded by saying that some of the consultants “are owed very significant sums of money and have no guarantee of being paid”.

Mr Wagstaff sent a further email to Mr Delafield on 28 June, again on the subject of Halcrow Fox’s unwillingness to proceed without payment of their outstanding fees. He also said this:

“To further compound our woes, Morley have stated that they will not pay any further invoices until London & Paris have reimbursed them for 50% of those already paid. This is likely to have a further demotivating effect on the remainder of the Team, many of whom have significant outstanding monies due at present.”

One piece of good news was that, on 29 June, the Court Service stated that they were appointing Morley as preferred bidder for the Civil Justice Centre project, subject to contract.

The meetings took place on 2 July as planned. As the judge noted, there are no reliable notes and no minutes of the financial meeting. On the next day, however, Mr Ashcroft for Morley wrote to Mr Dymond for LPE (with a copy to Mr Delafield among others) to follow the meeting up. Evidently there were concerns on both sides as to the time and expense involved. Another meeting was to be held on 17 July, following another significant milestone, namely a “Stakeholders’ Workshop” on 16 July. The parties were to meet after that session in order to review the position generally. In the fourth paragraph of his letter dated 3 July 2001 Mr Ashcroft said this:

“We have agreed that fees to date and up to 16/7/01 are being split 50/50 however looking forward we like you are unwilling to speculate further fees without a clear understanding of the overall viability of the project, the potential for phasing and importantly the financial structure and risk profile to achieve these.”

Mr Dymond wrote to Mr Ashcroft on 4 July, but that letter does not refer to Mr Ashcroft’s letter and presumably crossed with it in the post. On 5 July 2001 Mr Delafield wrote to Mr Ashcroft. He referred to the letter dated 3 July 2001 but also to a telephone conversation which Mr Delafield had had with Mr Peacock on 5 July. The letter is as follows:

“Dear John

Re: St Mary Le Port

For Strand Street Properties Limited

Thank you for your letter dated 3^rd July, addressed to Chris.

Following on from today’s telephone conversation with Andrew he has asked me to confirm London & Paris’s agreement to sharing fees on a 50/50 basis. As you know Dave Wagstaff is preparing a schedule indicating likely costs and fees to date and also those to be incurred in the near future. We have established a budget allowance of £200,000 to cover these initial costs and we will obviously have to review this when we have the information from Dave. This is, of course, in addition to the £150,000 we have already expended.

We are however increasingly coming under pressure to pay fees owed to the team for work already carried out and as discussed at the recent meeting these fees should now be paid.

Mark Seymour the Court Services Department has again confirmed agreement to the principle of a ‘lock out’ agreement and I have briefed Jamie Davey of the situation.

Yours sincerely”

This is the letter which Mr McGhee submitted the judge had not taken into account, or at least had not explained, when making his finding of an agreement reached on 2 July. The letter came by fax, the cover sheet bearing a note from Mr Delafield to Mr Ashcroft as follows: “John, I will reply in detail to your other points. Andrew asked for this a.s.a.p. Regards Bob”. We were not shown any other reply to the letter dated 3 July.

The copy of the letter which is in evidence has a handwritten note by Mr Peacock on it, referring to a telephone conversation between Mr Peacock and Mr Delafield on 6 July. The note is:

“He confirmed L&P would pay 50% of all invoices passed for payment to date.”

On 16 July, Mr Ashcroft wrote to Mr Delafield, in advance of the meeting to be held on the following day, expressing concern about the rate of fee expenditure, which was to be reviewed, noting that “up to that point we have previously agreed that fees will be split on a 50:50 basis” and that a large proportion had been invoiced to LPE. After the meeting Mr Dymond made it clear to Morley that SSP could not continue the 50/50 sharing of professional fees and associated costs that they had done until then. At that stage the professional team was stood down for the time being, pending a review of the project by both principal parties. In response to this, Symonds Group Ltd (responsible for project management) prepared a status report with proposals for the future development of the project dated 27 July 2001, which was sent to Morley, to LPE and to other members of the professional team. One of their comments was as to the need, if the matter was to be pursued, for formal agreements with consultants, identifying the client and setting out basic matters such as scope of duties, programme, basis of fees and cashflow. They commented that “some assurances on security of fee payments may be necessary in light of earlier delays and uncertainties.”

The future of the project remained a matter under consideration and discussion between Morley and LPE during the summer. Eventually at a meeting on 4 October Mr Ashcroft informed LPE that Morley was not prepared to continue funding or leading the scheme, nor to negotiate with LPE at all until the outstanding money due under the fee-sharing arrangement had been received. On 8 October Mr Jones of Morley wrote to Mr Dymond of LPE to confirm this position. He referred specifically to the failure of LPE to honour the fee-sharing arrangement.

In the meantime there was continuing contact between LPE and SSP. On 14 August 2001 Mr Berger wrote to Mr Dymond, commenting that the situation was becoming very complicated as regards the Bristol project. He noted that several things, including “the progress on planning”, were constantly moving targets requiring immediate decisions on the part of SSP. He said “I am happy to continue to deal with all these as we have been over the telephone (as opposed to writing to me or Robin [Shrives] on each occasion) and with meetings from time to time”, but he asked for something in writing “in connection with where Strand Street stands at this moment in time, on all the various aspects of the proposed development”. In response, Mr Dymond, for LPE, wrote a long letter to Mr Berger (with a copy to Mr Shrives) on 29 August 2001. For present purposes two passages matter, one dealing with the funding of costs and the other with LPE’s own role on behalf of SSP. These are as follows:

“Turning to development funding, up until quite recently you have been covering costs on a 50/50 basis with Norwich Union/Morley and we established a latest budget of a further £200,000 with you in respect of such costs. With the architectural teams recently having been stood down as detailed above, a significant number of invoices have now been received and these are currently being coordinated with Norwich Union/Morley. The agreed process is that Norwich Union will pay them in the first instance and then invoice yourselves for 50%. As the project has been greatly advanced over the past few months expenditure has moved ahead of the budgets previously established and thus one of the key discussions with NU/Morley on September 6^th will be to reach agreement on covering these costs. We have made it clear to NU/Morley that your company has limited resources to fund costs such as these and indeed we have put forward your argument that by pursuing the purchase of Prudential Buildings (which is essential in unlocking Lloyds TSB and thus allowing the scheme to proceed) you are in fact investing significant further monies in the project which should be taken into account when assessing these initial cost sharing arrangements. The next stage is to establish the most economical budget to planning application stage and we would propose to seek to negotiate that NU/Morley as the likely project funder should now take over the role as development financier with Strand Street undertaking the role of “developer”.

…

Project Management

It is now appropriate to re-establish the basis of our project management appointment where our old Agreement ‘technically’ expired in June 2001. Since then, with your agreement, we have continued to advise you and indeed the work load has significantly increased due to both activity on the St Mary Le Port project and also the purchase of Prudential Buildings.

As the St Mary Le Port project is now approaching a very active phase with the potential of going ‘fully live’ in the next few months, we have increased our resources in house to cover the extra work load. Currently, including my time, we have approximately two full time persons working on the project. ”

Mr Berger replied by letter dated 4 September 2001, in the course of which he said this:

“Thank you for your letter of the 29th August summarising the current position. I have no particular additional comments to make since from our frequent telephone calls I am fully aware of all the present circumstances. However, it is certainly helpful to have a written recapitulation.

There are, of course, still a number of points of concern, not the least being the level of the professional fees and the willingness of Morley to shoulder the main burden of these costs. However, if the Limited Partnership idea is accepted the problem should resolve itself. I shall be very interested to hear of the result of the meeting on the 6th of September.”

The meeting fixed for 6 September was deferred by a week because the required information and appraisal was not ready. Mr Ashcroft wrote to Mr Delafield on 6 September to confirm this. He mentioned in conclusion that he understood that Mr Delafield was arranging for payment of Morley’s invoices. Later in September SSP did pay one invoice from Morley, as demanded. No other payment was made.

I will need to refer to some of the documents already mentioned in more detail when I come to the question of authority and ratification, and also to mention some further matters. But the summary set out above provides the necessary material for the other issues on the appeal.

Norwich Union alleged that the parties agreed at the meeting on 2 July 2001 that the existing fee-sharing arrangement would continue until 16 July 2001 but no longer. The judge held that this was correct. He heard the evidence of Mr Ashcroft and Mr Peacock for Norwich Union, both of whom were present, and of Mr Delafield for SSP, who was also present. He did not have evidence from Mr Dymond who would have been a witness for LPE if it had been in a position to take part in the trial. He did not criticise either party for not calling him. He held that Mr Ashcroft and Mr Peacock were reliable witnesses, even though they had little independent recollection of the events, and were therefore heavily reliant on the documents. He held that Mr Delafield was not a reliable witness.

The judge considered Mr Peacock’s oral evidence at paragraphs 167 to 173. He referred to the meeting of 2 July, to Mr Ashcroft’s letter of 3 July and Mr Delafield’s letter of 5 July and to the telephone conversation which he then had with Mr Delafield on 6 July. He then dealt with Mr Ashcroft’s evidence at paragraphs 174 to 178. He referred to the meeting and to the letter dated 3 July which Mr Ashcroft said was intended to record faithfully the agreement which had been reached the previous day. I need not deal with the judge’s discussion of Mr Delafield, at paragraphs 179 to 185, since he did not find Mr Delafield reliable, and this conclusion was not challenged on the appeal. At the end of paragraph 185 the judge said:

“I prefer the evidence of Mr Peacock and Mr Ashcroft to that of Mr Delafield and in particular I accept the evidence of Mr Peacock and Mr Ashcroft as to what was said at the meeting on 2^nd July 2001 and in the telephone conversation on 6^th July 2001.”

Later in his judgment he made his findings, relevantly at paragraphs 206 and 207:

“206.

I find that LPE and Norwich Union agreed at the meeting on 2^nd July 2001 that the fees up to that date and thereafter up to 16^th July 2001 would be split 50/50 between the two sides. I accept the evidence of Mr Peacock and Mr Ashcroft on that point and I reject any evidence from Mr Delafield to the contrary.

207.

I find that on 6^th July 2001, Mr Delafield of LPE agreed with Mr Peacock of Norwich Union that LPE would pay 50% of all the fees invoices passed for payment to date. I hold that this agreement is not referring to the same fees as would be the subject of the agreement that all fees up to 16^th July 2001 would be shared 50/50 but, instead, I hold that the agreement of 6^th July 2001 was referring to the invoices that had been passed to Norwich Union up to 6^th July 2001 and which Norwich Union were being asked by LPE to pay. However, I also find that the agreement made on 6^th July 2001 was not by way of a variation of the earlier agreement or agreements as to fee sharing but was a specific agreement which was in relation to a specific group of invoices which Norwich Union was about to pay.”

Mr McGhee’s submission on this first point is that this conclusion cannot stand because the judge did not, at that point in his judgment, refer to the letter of 5 July 2001 which, he submitted, is inconsistent with that conclusion. The judge had, of course, referred to the letter in the course of his survey of the facts, at paragraph 120. He said there:

“The letter of 5^th July 2001 did not itself record any such agreement or commit LPE to paying fees on a 50/50 basis. Instead, the letter appeared to be designed to avoid giving that commitment.”

The letter and this argument have to be seen in the proper context. Part of that is that LPE had undoubtedly been committed to sharing fees on a 50/50 basis before 2 July 2001. Another part of it is that, although Mr Delafield did not in his letter confirm the agreement as requested, neither did he or Mr Dymond deny it, then or at any other time, beforehand or afterwards. Moreover, as is apparent from the letter itself, LPE was extremely anxious that Morley should pay the outstanding professional fees, in order to ensure that the various professionals would continue working on the project.

Given the extensive reference to the letter dated 5 July in the judge’s account of the facts, and in particular in the passage in which he reviewed the oral evidence and explained why he preferred the evidence of Mr Peacock and Mr Ashcroft to that of Mr Delafield (paragraphs 167 to 185), where it is mentioned at paragraphs 171, 173 and 182, I cannot accept the submission that the judge overlooked the letter when he came to make his finding that agreement was reached on 2 July as Norwich Union asserted. The letter is not so plainly incompatible with the finding of an agreement that the judge had to refer to it specifically. In the letter Mr Delafield failed to provide the confirmation requested, but he did not deny the assertion in Mr Ashcroft’s letter of 3 July that agreement had been reached, nor did Mr Dymond, then or later. Mr McGhee is entitled to rely on the letter but in its terms Mr Delafield evaded rather than confronted Norwich Union’s unequivocal assertion that agreement had been reached. Accordingly, it is not a fair criticism of the judge’s judgment that he ought to have explained why he reached his finding despite the letter.

Mr McGhee also submitted (in this respect going beyond his grounds of appeal) that the agreement reached on the telephone on 6 July, as found by the judge at paragraph 207, was inconsistent with there having been a binding agreement on 2 July, since if there had been, the further agreement would not have been needed. The judge’s conclusion in paragraph 207, other than the factual finding in the first sentence, is a little puzzling, because Norwich Union did not allege or sue on any separate agreement. It matters not, as it seems to me, and I reject Mr McGhee’s argument that the agreement on the telephone was inconsistent with there having been a prior binding agreement. The telephone conversation was intended to get over the prevarication shown by the letter of 5 July. Norwich Union had to cope with the situation in which LPE would not confirm in writing that they had made the agreement which Norwich Union had asserted, not with a situation in which LPE denied having reached any such agreement. Mr Peacock wanted to put pressure on LPE to ensure that, if Norwich Union paid the invoices, as LPE was urging them to do, in that very letter, LPE would pay the share due from them.

I therefore reject this first ground of appeal. The judge’s finding of fact that a consensus was reached at the meeting on 2 July 2001 was properly reached and properly explained.

The next point is whether, despite that, there was no legally binding agreement because there was no consideration. The contention is that Norwich Union was already legally bound to pay the consultants and that the other party to the agreement (whether LPE or SSP) derived no benefit from Norwich Union’s agreement to do that which it was already obliged to do. (In speaking of the other party to the agreement, I leave aside the later question, whether SSP is bound by LPE’s acts. For the sake of brevity, I will refer to LPE alone in this part of the judgment.) The judge rejected this argument at paragraph 210:

“The submission presupposes it was completely clear that only Norwich Union and not LPE/SSP had a liability to the third parties to pay their fees. In fact, the evidence from the documents shows that the person who had instructed the third parties, and whether it was LPE/SSP or Norwich Union or both of them, was completely obscure. The benefit which LPE/SSP obtained from an agreement that Norwich Union would pay 50% of all of the fees owed to third parties was that LPE/SSP avoided a situation where LPE/SSP could end up having to pay 100% of a fee claimed by a third party who claimed that it had been instructed by LPE/SSP.”

I agree. The passages from the emails from Mr Wagstaff which I have referred to and quoted above show that there was great uncertainty among the professionals as to who their client was, and who was liable for their fees, not least because the position had been inadequately documented. Mr McGhee argued that the position became clear once Mr Wagstaff told the professionals of the correct procedure for rendering their accounts, on 27 April 2001. That instruction may have assisted the process of billing, but it is very far from clear that it removed the doubt that had evidently existed before that date as to who was liable as client. Later emails from Mr Wagstaff showed that several of the firms remained uncertain as to the position, because they still had not had proper documents of instruction.

Norwich Union served a Respondent’s Notice on this point, seeking to support the judge’s conclusion on the additional basis that, first, there was in any event benefit to LPE in Norwich Union agreeing to perform its obligation to pay, even if that was clearly its own sole obligation, or secondly because there was a pre-existing agreement to share the fees equally, and there was benefit to LPE in this being brought to an agreed end as at 16 July 2001. Both of those points seem to me to be valid. In particular I find unconvincing Mr McGhee’s submission that there was no benefit to LPE in Norwich Union agreeing to pay the consultants, when LPE was urging Morley that this should be done, for example in Mr Delafield’s letter dated 21 June. The point was evidently still live on 5 July, from the terms of the letter of that date itself.

The second point is also well taken. Mr McGhee submitted that it was of no benefit to LPE to bring the arrangement to an end with a fortnight’s notice, since it could have been terminated at once. So be it, but it presumably suited both parties that the termination date should be in a fortnight’s time because of the imminent meeting at the end of that period. If it suited both parties to adopt that date as the time beyond which LPE was not committed to bearing half the fees, then there is no reason not to regard the arrangement as being of benefit to both parties, and therefore as supported by consideration.

I reject this separate ground of appeal (the fourth in the original grounds).

On that basis, a legally binding agreement was reached between Norwich Union and LPE. The next question is whether the agreement is binding on SSP as having been entered into by LPE as its agent, either with actual authority, or as having been ratified. I deal first with actual authority.

SSP did confer express authority (on Topside) to act on its behalf by two relevant letters, dated 9 November 1999 and 3 October 2000. The judge examined these and I will do so as well. However, it does not seem to me that the relationship between SSP as principal and its agent, and the scope of the agency, is necessarily confined to that conferred expressly by these letters. I have referred at paragraphs [36] and [37] above to Mr Berger’s letters to Mr Dymond, from which it is apparent that there had been “frequent” telephone communication between Mr Berger and Mr Dymond on the subject of the development project, and that this was seen as an alternative to written communication between the two men directly or via Mr Shrives. That gives the lie to SSP’s position in its Defence where, at paragraph 16, it said:

“If it is impliedly suggested that [LPE] liaised with [SSP] over progress of the proposed redevelopment, this is denied.”

It also shows how well made was Norwich Union’s response in paragraph 15(ii) of the Reply to SSP’s Defence:

“The denial in the second sentence to paragraph 16 is incredulous. [SSP] is seeking to maintain a position that from 9 November 1999 and for a period of approximately two years thereafter (to the date when [Norwich Union] in October 2001 informed [LPE] it was no longer proceeding with the Development scheme) [LPE] was at all times acting without instructions and without [SSP] having any knowledge as to what was being said in its name or (presumably) without any knowledge as to what was happening with respect to its properties at St Mary Le Port, Wine Street, Bristol and/or the continuing evaluation of the Development Scheme, Topside having taken no active role with respect to project managing those properties.”

Norwich Union’s incredulity at that proposition was justified. Mr Berger’s letters, together with the other correspondence, show that LPE did liaise with SSP regularly about the development scheme, both directly with Mr Berger and also with Mr Shrives. Accordingly, while attention must first be given to the express authority conferred by the letters, I would not accept that the scope of LPE’s actual authority was necessarily limited to that which the letters conferred on their true construction.

By the letter dated 9 November 1999, Topside was appointed as SSP’s project manager for the development. They were to receive an annual fee in any event, and if the development were to proceed, Topside would also participate in the profits, to the extent of 20%. Topside’s tasks as project manger were described in the letter as follows:

“As from the 13^th October until the 30^th September 2000 Topside Properties Ltd are appointed as our project managers at the annual rate of £50,000 for continuing to manage the properties, for co-ordinating the professional team, reporting all progress to us and, if so required, to our bankers, preparing appraisals and negotiating financial and lease terms with the other principles involved in the development.”

The letter also referred to the option to purchase the shares in LPI. SSP was to pay £1 for these and also to discharge all debts of the company plus any further debts incurred wholly and exclusively in the furtherance of the proposed scheme between then and the expiry of the option. The letter referred to entering into a joint venture with the other principals as soon as possible, subject to satisfactory agreement. Those were the terms on which LPE acted from then on until 30 September 2000. The appointment was renewed by the letter dated 3 October 2000. The relevant paragraph is as follows:

“As for your request for the extension of our arrangement, I have given this a considerable amount of thought and in view of the current situation I am prepared to give your company an extension of the current arrangements. However, your request for a new date of December 2001 is too far into the future and the maximum extension I could contemplate would be the 30^th June 2001. In addition, in view of the substantial costs incurred by us which are well beyond those anticipated, I suggest that your fee be reduced to £25,000 from now until 30^th June 2001. Please let me know if this is acceptable to you.”

The judge held that this letter did confer authority on LPE to make an agreement with Norwich Union under which professional costs borne by either side were to be shared equally.

Mr McGhee submitted that this was wrong, and that there was nothing in the terms of the authority set out in the earlier letter, even when read in the context of the later letter, which authorised LPE to deal with professional costs on behalf of SSP at all, let alone agreeing to bear half of those incurred by Norwich Union. He submitted that “co-ordinating the professional team” was one thing, but selecting them, instructing them, or dealing with arrangements about paying them (other than in a purely administrative manner) was not within the scope of these words. Similarly he contended that “negotiating financial … terms with the other principals involved in the development” was limited to negotiation in principle and did not extend to binding SSP to any such agreement. It is a fair point that SSP appeared to reserve to itself, at least, the decision whether to enter into a joint venture agreement with the other principals, including Norwich Union. Consistently with that, when Mr Dymond reported to Mr Shrives on 28 September 2000, he said that draft heads of terms had been prepared for a “re-alignment of the existing interests” so as to permit the redevelopment of the site, and he asked for instructions on the Heads of Terms. In the course of that letter Mr Dymond reported, among other things, on the negotiation of a rent review with Lloyds Bank under the latter’s long lease. One firm of surveyors had been instructed originally, but they were said to take a pessimistic view of the prospects. Mr Dymond said that, because of this, he had sought a second opinion from another firm, in the hope of being able to achieve a higher rent on the review. In his reply on 3 October 2000 Mr Shrives noted this, with implicit approval. Thus, he can be taken to have accepted that LPE acted properly and within its authority in instructing the second firm to advise without prior reference to SSP.

The judge expressed a provisional view as to the effect of the first letter at paragraph 230-1:

“230.

… I think there is a strong argument for holding that on the balance of probabilities it was expected that LPE would appoint the professional team, which it was given the responsibility to “co-ordinate”. If I accepted that argument, then I would hold that Topside/LPE had implied actual authority to appoint the professional team.

231.

If I held that Topside/LPE had authority to appoint the professional team, then I would also be prepared to hold that Topside/LPE had implied actual authority to agree the fees payable to the professional team. Further, I would be prepared to hold that Topside/LPE had implied actual authority to agree with Norwich Union to share the expense of those fees. The letter of 9^th November 1999 refers to the possibility of developing the site together with Norwich Union. If Topside/LPE had authority to appoint a professional team on terms that SSP would pay the fees involved, then it must have been implicit within that authority that the professionals could be appointed on terms that the fees would be borne as to 50% by SSP and as to 50% by Norwich Union.”

He considered, rightly in my view, that the issue turned not on the 1999 letter but on the 2000 letter. As to that he said at paragraph 232:

“By that time, certain professionals and consultants had already been appointed. The letter of 3^rd October 2000 expressly refers to “the substantial costs” incurred by SSP being beyond those anticipated. The reference to anticipated costs indicates that the costs referred to were the costs of progressing the development project rather than, for example, the costs of acquiring SSP’s interests in the site. Accordingly, with this background to the letter of 3^rd October 2000 and a continuing instruction to “co-ordinate” the professional team, in my view, it is proper to imply into the appointment authority to off load some of the costs which might be involved in respect of the professional team by agreeing with Norwich Union that it would bear 50% of the costs of the professional team, of course in return for SSP bearing 50% of the total costs.”

Mr McGhee accepted that professionals had been appointed, some he said by Norwich Union and others by LPE or possibly by SSP, but he argued that a project manager would not normally have authority to choose which professional to instruct. He might make recommendations, and he might handle an appointment once the principal had decided on it, but it would not normally be up to him to choose the adviser or representative for the principal. Equally, while an agreement between two parties operating in an informal collaboration of this kind to share fees incurred by each might not be unusual or surprising, it would be significant, and it should be expected to be a matter for the principal to decide on, rather than something which the project manager could commit the principal to without specific reference or authority.

As to that, it does not seem to me that one can safely proceed on the basis that there is any general or normal rule as to the scope of the authority of a project manager, or that if there is it casts any light on the authority conferred by SSP on LPE in this case. It seems to me that at least two features of the correspondence between LPE and SSP to which I have referred support the judge’s conclusion. One, albeit a fairly minor point in itself, is that LPE clearly did appoint the second firm of surveyors to advise on the rent review, without reference to SSP, and SSP did not complain about that having been done. That was known to both parties by 3 October 2000 and is therefore directly relevant to the interpretation of the letter of that date.

The second is that, in the letter dated 28 August 2001, LPE referred to the fee sharing arrangement as having applied “until recently” and SSP made no objection to that. This is a point relied on by way of ratification, but it is also telling, as it seems to me, in casting light on what had been done under the authority previously conferred, and on the principal’s attitude to that when it was reported. Even if this might be said to be inadmissible as regards the interpretation of the letter dated 3 October 2000, as being conduct of the parties subsequent to the date of the letter, it is revealing of the basis on which the parties were in fact proceeding. If it does not count for the interpretation of the 3 October 2000 letter, it nevertheless shows that, in practice, the authority conferred did extend to making such an agreement on behalf of SSP.

For those reasons, in addition to those given by the judge, with which I agree, I would reject the argument that LPE did not have authority on behalf of SSP to enter into the fee-sharing agreement, either originally or as varied on 2 July 2001.

That being so, I do not strictly need to deal with ratification. I will do so only briefly.

The first point is whether it was open to Norwich Union to rely on ratification. It was not pleaded expressly, in the Particulars of Claim or in the Reply, though some of the matters alleged in paragraph 15(ii) of the Reply (set out at paragraph [55] above) could be relevant to a plea of ratification. In his skeleton argument in advance of the trial, Mr Clark made points which were more clearly relying on ratification. Correspondingly, Ms Hayes put forward brief arguments as to why ratification was not available on the facts in her written opening submissions.

The trial opened on Monday 26 January 2009. At the outset Ms Hayes applied for an adjournment on the grounds of the late and unsatisfactory delivery by Norwich Union’s solicitors (then only recently instructed) of bundles for the trial. She also complained of Mr Clark having raised a new issue in his skeleton argument, relying on knowledge of Mr Shrives and of Mr Ronald Berger as being imputed to SSP, arguing that it was not open to Norwich Union on the pleadings as they stood, and saying that, if there was to be an amendment, time would need to be allowed in which SSP could prepare to deal with the point. At that stage the judge did not deal with the second point. He said that he would deal with it either when Mr Clark applied for leave to amend or when Ms Hayes contended that he could not run that part of his case without having amended. Mr Clark’s opening of the case continued through Monday and Tuesday, and the judge then adjourned to Thursday 29 January. During further submissions on that morning Mr Clark made it plain that he did not seek to amend, and Ms Hayes said the same. At the judge’s request she listed the defences that she relied on, which included that there was no actual authority on the part of LPE to bind SSP to the agreement alleged “and as a corollary to that, that there was no ratification”. Just before the first witness was called, the judge said this:

“I can indicate to both parties that I will only consider the issues on the pleadings. Although there may have been things said this morning, I am not regarding that as a substitute for pleadings. The pleadings bind each party until they are amended. I am not suggesting, or hinting darkly, that there is a need. I am leaving it to counsel to decide what pleaded case to run. If one party persuades me that an issue is not pleaded, then I will not rule on that issue.”

The hearing of the evidence concluded on the morning of Wednesday 4 February. Counsel made oral submissions on the issues, which were then followed up by written submissions. At the start of Ms Hayes’ oral submissions she handed in to the judge a first brief written submission. Towards the end of Mr Clark’s oral submissions, having dealt with actual authority, he said that in the alternative he relied on ratification. The transcript of his submissions on that point extends over about 16 pages. In the course of this the judge said to him that his case on ratification “is not very clear on the pleading” but went on to say that “no objection is being made to your arguing ratification”. Ms Hayes had only a few minutes at the end of the day to reply to Mr Clark’s points, and it was therefore agreed that Counsel could put in further written submissions within 14 days. In her written closing submissions put in that day she dealt briefly with ratification on its merits. Neither there nor during the oral submissions on 4 February did she take the point that it was not open to Mr Clark to rely on ratification, despite what the judge had said to Mr Clark, which I have just quoted.

Ms Hayes put in two further documents by way of written submissions following the trial. The first, dated 18 February, was quite brief. In it she dealt with ratification on its merits, and did not contend that the point was not open to Norwich Union. In the second, dated 9 March and prompted by the length and substance of the written submissions put in for Norwich Union on 18 February, ratification was again dealt with on its merits, at somewhat greater length. Again, it was not said that this point was not open to Norwich Union.

In those circumstances, given the terms in which the judge expressed himself on Thursday 29 January as to points not pleaded, and given Ms Hayes’ failure at any stage after the first day of the trial to object to the point being argued, despite having a daily transcript of the hearing (so that she was in no doubt as to what the judge had said) and despite the exchange between the judge and Mr Clark in the course of his concluding oral submissions, I reject the submission that it was not open to Norwich Union to argue ratification and not open to the judge to decide the case on that point. Ms Hayes did not take the point and therefore the judge did not have occasion to rule as to whether it was open to Mr Clark or not.

Coming to the substance of the point, it is sought to be put in several ways. Mr McGhee submitted that, quite apart from points that might be taken as to the knowledge of one individual or another that might be attributed to SSP, there was no sufficient act of ratification. He did not criticise what the judge said about the principle in this respect at his paragraph 237:

“237.

The acts which will constitute ratification are discussed in Bowstead & Reynolds at para. 2-070. Ratification may be express or by conduct. An express ratification is a clear manifestation by one on whose behalf an unauthorized act has been done that he treats the act as authorized and becomes a party to the transaction in question. The express manifestation need not be communicated to the third party or to the agent. Ratification will be implied from conduct where the conduct of the person on whose behalf the unauthorized act has been done, is such as to amount to clear evidence that he adopts or recognizes such act or transaction and such can be implied from the mere acquiescence or inactivity of the principal. The adoption of part of a transaction operates as a ratification of the whole.”

He argued, however, that neither of the acts relied on satisfied this test. The first was SSP’s failure to object, whether to LPE or to Norwich Union, in response to Mr Dymond’s letter dated 29 August 2001 in which SSP was told that the agreement had until recently been to share expenses 50/50 and was also told about the agreed procedure for payment. The second was the terms of a witness statement made by Mr Dymond on behalf of SSP, which I have mentioned at paragraph [13] above.

As to the failure to object after receiving the letter from Mr Dymond, Mr McGhee argued that the letter dated 29 August 2001 did not clearly inform SSP of an agreement reached at the beginning of July to share invoices for work done up to 16 July. He pointed to two passages, in particular, within the text which I have quoted at paragraph [36] above: “until quite recently” and “over the past few months”. He argued that these phrases were not consistent, or not necessarily so, with a commitment reached at the beginning of July to cover costs on a 50/50 basis, even if only up to 16 July. I disagree. Not only is the letter wholly consistent with the agreement in fact reached, but it is also entirely inconsistent with the position now adopted on behalf of SSP, namely that LPE had no authority to commit SSP to sharing costs with Norwich Union at all. I have already mentioned this point in the context of actual authority. If, contrary to my primary view, LPE did not have adequate actual authority, this letter put SSP on notice that LPE had been committing SSP to such cost sharing, and SSP’s acquiescence in that, by its failure to object, was sufficient to amount to ratification of the agreement which had in fact been reached.

In these circumstances, and since ratification is in any event not necessary to my decision, I do not propose to take further time by dealing with the witness statement, save to say that I agree with the judge’s reason for holding that it was another act of ratification, at paragraph 246 of his judgment.

It fell to Ms Hayes to present oral submissions on SSP’s remaining ground of appeal about ratification. This was to the effect that the agreement relied on was “so disadvantageous” to the principal “that the knowledge of only one of its directors ought not to be attributed to the company”. It is not clear what would be necessary for the company to have knowledge of such a contract attributed to it for this purpose. This is not a point which was taken before the judge. Accordingly he did not consider either the legal question whether there was a principle of law requiring more than a single director to have knowledge of the act of the agent for it to be validly ratified after the event by the principal, or the factual question whether the contract was seriously disadvantageous so as to fall within such a legal principle, however it might be formulated. In those circumstances it seems to me that this is not a point which is open to SSP on the appeal. New points may be allowed to be taken on appeal if they do not involve any additional factual enquiry and if the course of the evidence below could not have been different if the point had been taken at that stage. That is not the case here. Ms Hayes pointed out that permission to appeal was given to argue this point. That is true but it does not follow from such a grant that the point can properly be raised when the matter comes to be argued between the parties. I will therefore say only, first, that this point cannot be argued on appeal for the first time, in the absence of a finding of fact by the judge as to whether the contract was so disadvantageous as to fall within the principle advanced by Ms Hayes and, secondly, that I am very doubtful as to whether such a principle exists as a matter of law. On behalf of Norwich Union Mr Thornton presented oral submissions on this point, but I do not need to take time by referring to his arguments on the merits of the point.

I turn then to the nature of the cause of action arising from the agreement. It ought not to matter, but it does, for one reason. The Claim Form was issued on 4 June 2007, seeking payment of the amount of the invoices rendered by Norwich Union to LPE for SSP, as a claim in debt. As such, if this was the correct claim, it was not barred by limitation. The point was taken at trial that it should have been a claim for an account, and for payment of any balance shown to be due. Mr Clark declined to seek leave to amend to claim an account. If he had done, in January 2009, the judge would have had to have decided whether permission to amend should be given even though a new action for an account, brought at that stage, would have been out of time. Since Mr Clark pinned his colours to the mast of debt, the judge did not have to address the question that would have arisen under CPR rule 17.4, and nor do we.

The judge rejected this argument for SSP at his paragraph 212:

“I do not accept this analysis of the fee sharing agreement and of the rights under it. In my judgment, LPE/SSP owed an obligation to Norwich Union under the fee sharing agreement to pay to Norwich Union when demanded 50% of the fees paid by Norwich Union. If LPE/SSP had itself paid fees which came within the fee sharing agreement, then it was open to LPE/SSP to demand 50% of those fees from Norwich Union. If LPE/SSP was entitled to be paid sums by Norwich Union then it was entitled to set off that entitlement against its liability to Norwich Union. On the facts, the only claim before the court is Norwich Union’s claim for 50% of the sums it has paid. There is no cross claim or set off in relation to 50% of sums which SSP allegedly paid. The reason appears to be that SSP does not allege that it paid any fees in respect of which it can claim to be entitled to be paid 50% by Norwich Union. Further, SSP’s argument that Norwich Union only ever had a right to an account (which it has not claimed) is contrary to the express agreement made on 6^th July 2001, although I accept that that agreement does not cover the full extent of the invoices on which Norwich Union now relies.”

Mr McGhee reformulated the argument on the appeal. He argued that the nature of the agreement was such that the remedy was a claim to an account. His point was that the parties agreed on 2 July 2001 that the arrangement should come to an end in two weeks’ time, at a stage when both parties intended to review the position for the future. They would need to assess the costs incurred to date at that stage. It would be natural, he argued, that a calculation should be made then which would bring into account all payments made by either side, strike a balance and ascertain how much was due from which side to the other. That would presuppose that, although Norwich Union (for it was always likely to be that party) would pay professional fees as urged by LPE within the fortnight, in addition to those which it had already paid, LPE/SSP would not be liable to bear its half share of those until after 16 July. I cannot discern any reason to interpret the agreement in that way. Before 2 July the arrangement was one under which Norwich Union could demand payment from LPE/SSP at any time and from time to time, having paid the professional’s fees. That is shown by Mr Wagstaff’s description of the procedure for payment in his email dated 27 April: see paragraph [20] above. It could not have been said at that stage that the only entitlement was to an account, and to payment of the amount shown as due on the account being taken. I see no reason to suppose that when, on 2 July, the arrangement was altered by being brought to an end as at 16 July, the nature of the entitlement was at the same time altered, so that the payer of relevant costs could not immediately seek payment of a half share from the other party. Nothing in the express agreement found by the judge has that consequence, nor does it seem to me to follow as a necessary implication.

I would reject this point, which was the second of the original grounds of appeal.

For the reasons set out above, I hold that agreement was in fact reached as is alleged by Norwich Union on 2 July 2001, that there was consideration for the agreement so that it was legally binding, that it was binding on SSP because it was within the actual authority of LPE (whether directly or delegated by Topside) and, if it had not been, it would have been ratified by SSP, and that it gave rise to a claim in debt rather than a claim for an account.

I would therefore dismiss the appeal.

I agree.

I also agree.