Worldspreads v Foley

LORD JUSTICE LONGMORE: This is a renewed application for permission to appeal following an earlier paper refusal of the application by Hallett LJ.

The Applicant, Mr Connor Foley, is the former Chief Executive Officer of Worldspreads Limited, an English company originally incorporated in September 2003 with the name Sharespread UK Limited. Its principal activity, as I understand it, before it was placed in special administration, was the provision of online financial spread betting services. That company is the Claimant in these proceedings and I shall call it the English company. The English company is only a subsidiary of Worldspreads Group PLC, an Irish company which was originally incorporated in March 2001 under a another name and I shall call it the Irish company. That company is currently in liquidation.

Mr Foley was the Chief Executive Officer of the Irish company from its incorporation in 2001. He was also the Chief Executive Officer, as I have said, of the English company. He held that post from 2006 until he resigned in March 2012, although for a 6 month period in 2010 the role was performed by another individual so far as the English company was concerned.

His contract of employment was solely with the Irish company. The terms of that employment are set out in a written agreement called "service agreement" of 25 July 2007. Clause 2.1 describes Mr Foley's duties as including serving the Irish company as the Chief Executive Officer and also of such group companies as are notified to him from time to time by the board of directors of the Irish company. The phrase group companies, of course, includes the English company. The agreement sets out his period of employment, its commencement date and the terms of his remuneration to be paid by the Irish company.

Between April 2008 and February 2012, Mr Foley asked people in the accounts department of the English company to make a number of payments to him or for his benefit. There was a total of 81 requests made by Mr Foley. That resulted in payments by the English company to him amounting to £540,409.

In 69 out of those 81 requests, as the judge found, Mr Foley indicated specifically when he made the request that he would provide repayment of the sums he required to be paid to him. In 23 cases, he in fact made repayments to the English company amounting to £231,000 odd.

The shape of the proceedings is that the English company seeks to recover what it has paid out less what it has received from Mr Foley in the sum of about £309,000, a sum for which ultimately the judge effectively gave judgment.

Mr Foley disputed his liability to pay that sum or indeed any sum and there were a great number of arguments advanced at trial, in relation to some of which the judge undoubtedly showed some skepticism.

But at the heart of the matter was Mr Foley's contention that he was in fact owed by way of salary a considerable sum of money by the Irish company and he should be entitled to set off that sum he is owed against the amounts owed to him by the English company. No doubt if matters had proceeded in an ordinary way, some arrangement would have been made, but now that the companies are both in either liquidation or special administration the legalities of the matter have to be looked at.

The arguments advanced by Mr Foley at the trial included matters which are now the subject of this application, namely that there was an estoppel by convention, that the English company had been unjustly enriched by the events that had occurred, that there was an agreement for the sums due to be reconciled, and that there was an agreement that there would be a severance arrangement.

To all those matters which are said to be the subject of a proper appeal is added the allegation that the judge's skepticism amounted to apparent bias because he appeared to have predetermined those questions.

In relation to that, I asked Mr Watson-Gandy to show me his two best examples as they appear in the transcript, while acknowledging of course that just dipping into a transcript is not an entirely satisfactory operation in general.

Nevertheless, I have read the whole of the transcript and I am quite satisfied that there was no apparent bias or predetermination. The judge, with some skepticism certainly, was asking questions of counsel then appearing for Mr Foley in a way that any judge does in order to understand the case that was being made.

Where there were a number of defences, many of which were ultimately in fact abandoned, a judge is entitled to be skeptical since it is often the case that if a points of claim or a defence has to be formulated in many different ways, the legal position is, to say the least, uncertain.

But anyhow, as I have said, there is no question to my mind that there is a case of any apparent bias.

That leaves the four matters on which Mr Watson-Gandy in his admirably economical argument rightly concentrated.

He put at the forefront of his argument the fact that there had been an agreement to reconcile the amounts and he criticised the judge for taking the Oxford English dictionary definition of reconciliation rather than the generally accepted accountancy sense of reconciling figures and to create an equal balance.

It can be seen that this is very largely a question of fact for the judge seeing and hearing the witnesses. But the judge decided against Mr Foley on this matter, not just by reference to a dictionary definition, but by the realities of the matter. The judge concentrated very much, and quite rightly in my judgment, on the fact that Mr Foley had in numerous cases said that he would be paying the money back.

In any event, it is all very well to talk about a reconciliation, but that of itself is not a legal concept even in an accountancy context because even if there is a reconciliation, there still has to be some understanding or agreement as to what is to happen in the event of a reconciliation. There was no evidence of that unless the estoppel by convention argument got off the ground. One is usually rather skeptical of arguments about estoppel by convention because estoppel is not a doctrine that enables parties to get by estoppel what they cannot get by contract.

Here the judge was clear that there was no agreement for reconciliation and payment as a result of any reconciliation, whichever way the matter went. Likewise, it seems to me it is very difficult to say in those circumstances that there was any common assumption that the debts not only would be reconciled but the payment would be made by the either the Irish company or the English company in such a way that would entitle Mr Foley to set off against the Claimant's claim the amount of salary that he is owed.

The judge (again this is very largely a matter of fact) found there was no such common assumption and I am confident this court would not interfere with that finding.

The unjust enrichment argument is a very similar argument in one sense because it is said that the English company was unjustly enriched by Mr Foley not receiving the full amount of his salary from the Irish company. The judge quite rightly asked how can it be said that the English company is unjustly enriched?

Mr Watson-Gandy submits that the Irish company put in a lower claim to the English company as a result of Mr Foley's salary not being paid, but it does not seem to me that that amounts in any real sense to an unjust enrichment for the purpose of giving rise to any cause of action in restitution.

Lastly, we have the assertion on an express agreement on severance that Mr Foley would be paid his salary said to be in such a way that is binding on the English company.

Again, that is almost entirely a matter of fact. The judge expressed himself not satisfied, the onus being on Mr Foley, that any such agreement was reached, albeit there was some discussion of the matter showing Mr Foley's aspirations in relation to it, but the judge said that did not amount to an agreement. Once again, I fear I am satisfied that this court would not interfere with that conclusion.

That is quite apart from the difficulty that the negotiations were taking place always subject to the authority being required from the Irish company to confirm it, which never actually appeared.

Mr Watson-Gandy on Mr Foley's behalf says the remuneration committee must have been ostensibly authorised to make any such agreement. Well, that is an argument, but in the absence of any clarity in relation to that agreement it is not in fact one which goes anywhere.

Having said all that, it is clear that I am now going to refuse this application. I am not at all without sympathy for Mr Foley in the position that he finds himself. But the truth of the matter is that he is seeking to evade the doctrine of corporate personality by the numerous ways in which he has put his defence to this claim.

It is his misfortune that in the situation in which he finds himself in which the English company is in special administration and the Irish company is in liquidation that the legalities of the matter have to be dealt with a proper formal legal way. That is all that the judge did in this case.

There is no real argument for any appeal and I fear I have to dismiss this application.

I should compliment Mr Watson-Gandy on the way in which he developed the argument in his 20 minutes in what is an important case for his client and a case which is not totally free from difficulty.