Elliston v Glencore Services (UK) Ltd

It is axiomatic that this court only very rarely reverses a trial judge’s findings of primary fact, and then only if it is satisfied that the trial judge was plainly wrong. The authorities cited by Mr Choudhury, if authority is needed for the proposition, make that manifestly clear. The question, however, is whether, in the light of the arguments presented to us on each side, we can be so satisfied in this case.

I make the further point that it is all too easy for an appellate court to criticise individual sentences or infelicities of language or reasoning of a trial judge, notwithstanding that at the end of the day his judgment on the entirety of the evidence may well have been correct. A judgment should be looked at in the round, particularly where the outcome depends on the judge’s assessment of the credibility of the respective witnesses. It should not be picked over or construed as though it were a piece of legislation or a complex commercial contract. Nor should a judge be criticised for not mentioning every item of evidence.

It is with these salutary warnings in mind that I approach the arguments presented by Mr Craig on behalf the appellant and those presented by Mr Choudhury in response.

The critical issues which the judge had to decide were:

I turn therefore to consider the appellant’s arguments that the judge’s findings in relation to the first issue were plainly wrong.

Mr Craig’s first argument was that the judge had misunderstood the appellant’s case and that this had wrongly affected (indeed Mr Craig argued that it “infected”) his approach to the evidence of Mr O’Brien. Mr Craig submitted that the judge had effectively decided against the respondent’s case on a pleading point – or, at the least, was hostile towards it - before he came to consider the evidence.

At paragraph 15 of the judgment, which I have quoted above, the judge addressed the appellant’s pleaded case. I agree with Mr Craig that the judge’s approach to the pleading was not merely over-technical but was also wrong. First of all the judge seemed to envisage that what was required was an express oral agreement between the parties that the service agreement “should be varied to the effect that clauses 9.4, 9.5 and 9.6 of the [service agreement] be deleted” and that the absence of such an allegation of express agreement was fatal to the appellant’s case. That, in my judgment, was an overly technical approach. All that was required was an agreement to the effect that, if the respondent accepted the Transaction Bonus, he accepted that he could not claim the Prescribed Sum under the service agreement in the event of termination of his contract after the Xstrata merger with Glencore. That depended, in the first instance, as to whether Mr O’Brien made it clear at the meeting on 10 December that payment of the Transaction Bonus was subject to the condition; and, in the second, whether the respondent accepted the condition.

Second, the judge stated:

I agree with Mr Craig’s submissions that both of these statements were wrong and indeed reflected a fundamental misunderstanding by the judge of the appellant’s case. As Mr Craig submitted, the appellant’s pleaded case in respect of “offer” and “acceptance” was clear:

In my judgment, paragraph 23 of the Amended Defence made this clear.

As Mr Craig submitted, and as I accept, the pleaded case was not, therefore, that the respondent had accepted the terms of the offer by his “silence”. Paragraphs 15 to 17 of the Amended Defence, to which the judge referred in support of his conclusion that the pleaded case was that there was acceptance by silence, simply set out the factual description of what happened at the meeting between Mr O’Brien and the respondent. The legal case on variation and acceptance was set out at paragraph 23. I thus disagree with the judge’s statement in paragraph 15 that:

“But however analysed, it was difficult to see how the pleaded legal consequences could flow, as a matter of law from the alleged facts set out at paragraph 17 and paragraph 19 of the Amended Defence.”

The pleaded legal consequences clearly could so flow.

Further, the judge’s reference in paragraph 15 to the word “informed”, and his belittling remarks that:

“Mr O’Brien could “inform” Mr Elliston of whatever he liked, but unless such information took the form of an offer to vary the Service Agreement in terms to which Mr Elliston agreed, the giving of the “information” was a futile waste of time”

again display a misunderstanding on his part of the appellant’s defence. As a matter of law, if the respondent had been told (i.e. “informed”) that the gratuitous Transaction Bonus “would be in substitution for the Claimant’s entitlement to a Prescribed Sum”, then it would follow that the respondent could not accept the Transaction Bonus on any other basis.

Despite Mr Choudhury’s arguments to the contrary, I agree with Mr Craig that the effect of the judge’s misunderstanding of the appellant’s case was significant because it appears, wrongly, to have affected the objectivity of the judge’s approach not only to Mr O’Brien’s evidence, which was critical, but also to the entirety of the appellant’s case at trial. Apart from the passages in paragraph 15 which I have already cited, that is clear from inter alia passages in the remainder of paragraph 15, and paragraphs 16, 25 and 30 of the judgment which I have emphasised in the citation of the relevant paragraphs above.

I have difficulty both with the judge’s view as to the inadequacies of the appellant’s pleaded case and his view that because, as he saw it, Mr O’Brien’s evidence “improved” the appellant’s pleaded case, that necessarily undermined his credibility. First, as I have attempted to demonstrate, the judge wrongly analysed the appellant’s pleaded case; and second, in my view, he was wrong to suggest that Mr O’Brien’s evidence had “improved” that case: on the contrary, Mr O’Brien’s evidence was entirely consistent with it. This court has had the benefit of the transcripts of the evidence given below. It is clear from the transcript of his evidence that Mr O’Brien’s evidence was entirely consistent with what had been pleaded; namely that he had told the respondent during the meeting on 10 December 2012 that the Transaction Bonus was being paid in lieu of the Prescribed Sum and he would, therefore, not have any entitlement to the Prescribed Sum. Nor did the judge explain how Mr O’Brien’s evidence was said to be an “improvement” on the pleaded case, other than to say that it was a bit more “definite”.

These criticisms, taken on their own, would not in my judgment have led me to reverse the judge’s finding as to what was said at the meeting on 10 December 2012. However there are various other aspects of the judgment which Mr Craig criticised, and it is to those which I now turn.

Mr Craig’s argument under this head was that the judge had made three critical and obvious mistakes in relation to the evidence as to the date at which the respondent first knew that the Transaction Bonus was being paid in lieu of the Prescribed Sum:

Mr Craig also criticised the judge for failing, in assessing the respondent’s credibility, to give any adequate weight to the fact that he had changed his story on frequent occasions as to the date on which he first learnt that the Transaction Bonus was said to be subject to the condition that it was being paid in substitution for the Prescribed Sum.

It is necessary to set out the pleaded position and the evidence in some detail to determine whether Mr Craig’s points are well made.

In his reply, where he responded for the first time to the appellant’s allegation that the condition had been imposed on payment of the Transaction Bonus, the respondent’s primary pleaded case was that the meeting with Mr O’Brien had taken place after transfer of the Transaction Bonus into his bank account and that no conditions could be attached to such payment retrospectively; his secondary pleaded case was that, if the meeting had taken place before 14 December (which he denied), the words which he admitted had been said by Mr O’Brien ("we prefer that people don’t double-dip") were “far too vague and/or unclear” to amount to the imposition of any condition. He further pleaded: “No more was said on the issue of the Transaction Bonus.”

However, in paragraphs 26 and 30 of his witness statement the respondent made it clear that actually much more had been said in the conversation with Mr O’Brien. There he said:

It is necessary to quote paragraph 26 in full. It read as follows:

“26.

Following the discussion about the promised Consultancy Agreement with Mr O’Brien, I said I was surprised/delighted to be paid a Transaction Bonus, at which point Mr O’Brien said “we prefer that people don’t double-dip or waste money on legal fees”. I was confused by this statement for the reasons that:-

(a)

the Transaction Bonus letter that I had already received prior to any meeting with Mr O’Brien, was clear and explicit;

(b)

the Transaction Bonus amount was equal to the MIA (which I knew had been turned down by shareholders) and my immediate thought was that this was paid in lieu of the MIA Initial Retention Bonus contrary to shareholders’ wishes;

(c)

the amount of the Transaction Bonus was neither the same amount as the Prescribed Sum would be if it became payable in 2012 or 2013.

I decided, in that moment, simply to change the subject to other matters, for example to the status of the competition authority approvals and the likely completion dates.”

"MIA" was a reference to previous proposals for "management incentive arrangements” which had been offered in successive formal letters dated 28 March, 28 June 17 and 29 September 2012 to the respondent and other employees. They involved payment inter-alia of an “Initial Retention Bonus” which, in the case of the respondent, was the sum of £487,925 - i.e. precisely the same amount as the subsequent Transaction Bonus. All the arrangements had been subject to an express requirement that employees should forego their entitlement to the Prescribed Sum for a period of two years. The first letter (to which the others also expressly or by implication referred) had stated that:

"In order to ensure you do not unfairly double-recover and receive both the Prescribed Sum and the retention arrangements in respect of the same period in the same circumstances, it is a condition of the retention arrangements set out in this letter that the right in your existing employment contract to claim the Prescribed Sum is suspended for the two-year period from the Effective Date so that in that period you’ll have no right to receive the Prescribed Sum irrespective of the circumstances of the termination of your employment. "

Each letter was required to be signed by the respondent or other recipient, in which he acknowledged and agreed that:

“it is a condition of payment of the Retention Arrangements that I will have no entitlement to the Prescribed Sum for the period of two years following the Effective Date save as set out in the letter”.

The subsequent letters, which amended the previous arrangements, also contained such acknowledgement. They also contained an express statement that they were effectively an amendment to the respondent’s contract of employment with Xstrata. The MIA were not approved by the Glencore shareholders and accordingly never came into effect.

In relation to the first point, I accept Mr Craig’s submission that the transcript shows that, in cross-examination, the respondent effectively admitted that he appreciated that the condition on the receipt of the Transaction Bonus was being imposed by Mr O’Brien at his meeting with him on 10 December 2012. The passage, in which the respondent is being cross-examined on paragraph 26 of his statement, reads as follows:

“Q. You then reflected on the matter. You said that you were confused at the meeting and you thought you would take it away. What did you think it meant?

A. There were things that were wrong with this, were there not? Let us take one of the things that were wrong. We were being asked -- told there is some sort of change; something is going to be qualified; something is different for this. It is a bonus letter, a transaction bonus letter, which has been issued by the Chief Executive, and someone comes along and tells you this, not in writing. You wonder why it is that the transaction bonus was written in the way it was. Why was it not clear about what it was, that there was apparently now a condition attached to it, indeed, a very important one, or an explanation that in receiving the transaction bonus letter you were, effectively, amending your employment contract. I mean, there are so many things that are wrong with this and you wonder why I am confused. I received a transaction bonus letter which is not the same as a retention bonus, which is the prescribed sum”.

This seems to me to be an effective - and important - admission by the respondent that he was told that there was a change to the Transaction Bonus letter, that there was a “qualification” to that letter and that a “very important condition” was being attached to it. The “someone coming along” and telling him about this, but not putting it in writing, was self-evidently, in the context of this cross-examination, a reference to Mr O’Brien. It was on any basis a highly material admission.

But in my judgment, the judge failed to address this important item of evidence at the relevant points in his judgment where he was making findings in favour of the respondent. Thus, in coming to the conclusion which he did in e.g., paragraphs 68 and 71 of the judgment (to the effect that he preferred the respondent’s account of his conversation with Mr O’Brien), he makes no reference to the admission. Likewise, although at paragraph 80 of the judgment, the judge obliquely referred to the passage from the transcript, when citing from Mr Craig’s closing submissions, he did not quote the evidence or make any comment about it, let alone make any factual finding.

The passage in cross-examination which I have quoted above was not only relevant to the appellant’s primary case that Mr O’Brien had expressly imposed a condition on the Transaction Bonus, but also to the appellant’s alternative case that, objectively, a reasonable person having the relevant background knowledge would have clearly understood from what he had been told by Mr O’Brien that the condition was being imposed on the Transaction Bonus. But, as I conclude below, nor does the judge address this evidence in the context of that second issue. Accordingly, I am concerned that the judge apparently failed to take into account this evidence at all in reaching his conclusion, or to address its implications, notwithstanding that the passage featured in Mr Craig’s written and oral closing submissions. Moreover the judge was clearly well aware of the importance of the issue, as he refers in paragraph 81 of the judgment to the fact that if he had been:

“persuaded on the evidence that Mr. Elliston could only have known by the time of his meeting with Mr. Burton on 5 February 2013 of the notion that the December Bonus was supposed to be in lieu of a “Prescribed Sum” because Mr. O’Brien had so informed him at their meeting on 10 or 11 December 2012, then obviously that would have affected my conclusion as to whose evidence as to that meeting to accept.”

However, contrary to Mr Choudhury’s submissions, that passage does not, in my view, demonstrate that the judge addressed, or properly addressed, this important bit of evidence in coming to his conclusions.

I address the consequences of this error on the judge’s part, and, in particular, whether the failure to deal with the evidence invalidates the judge's conclusion that the respondent was not aware of the condition prior to his receipt of the Transaction Bonus, below, after I have considered the totality of Mr Craig’s arguments in relation to the judge’s alleged errors in respect of the first issue.

As I have summarised above, the second submission made by Mr Craig was that the judge failed, or failed adequately, to take into account a critical passage of the respondent’s evidence, and that of Mr Burton, in relation to what the respondent during the course of a discussion with Mr Burton at a lunch on 5 February 2013, accepted he had been told and understood in relation to the fact that the Transaction Bonus was being paid in lieu of the Prescribed Sum.

The respondent’s primary case was that he had not been told that the Transaction Bonus was being paid in substitution for the Prescribed Sum until after the Transaction Bonus had already been paid on 14 December 2012. Thus in summary the respondent’s pleaded case was that:

the meeting between him and Mr O’Brien took place on 14 December 2012;

the (non-contractual) promise to pay the Transaction Bonus had, by that time, “already been performed by transfer of the Transaction Bonus into the respondent’s bank account and no conditions could be attached to it retrospectively”.

As Mr Craig submitted and as I accept, the respondent’s account as to the date of his discussion with Mr O’Brien shifted repeatedly. Thus, at the time of his Reply, the respondent’s case was that the discussion was on 14 December 2012, but in any event this was after payment of the Transaction Bonus into his bank account. In paragraph 15 of his witness statement he said that, in a conversation with Mr Burton, Glencore’s Company Secretary, on 18 April 2013, the respondent told Mr Burton that his conversation with Mr O’Brien had been “about 2½ weeks after the Transaction Bonus had been paid”. That would have put the date of the conversation as about 31 December 2012. In paragraph 22 of his witness statement he was rather more equivocal as to whether the conversation with Mr O’Brien had occurred before or after payment had taken place. He stated that the conversation with Mr O’Brien took place on “Thursday or Friday, 13^th or 14^th December 2012.” As I have already said, in cross-examination (Footnote: ²) the respondent ultimately, but very reluctantly, finally accepted that the conversation with Mr O’Brien must have taken place on 10 or 11 December 2012, but in either case before the payment was made to, and accepted by, the respondent on 14 December.

In paragraph 34 of the respondent’s witness statement, he referred to a discussion with Mr Burton on 5 February 2013, where he informed Mr Burton that he (the respondent) had been told that the Transaction Bonus was being paid in lieu of the Prescribed Sum “at a much later date”. His evidence was:

“He [Mr Burton] said that Mr O’Brien had told everyone on receipt of the bonus that this was instead of the Prescribed Sum. He asked me what my view of it was. I told him that, in my case, I had not been told immediately but that this had been suggested at a much later date.”

The respondent accepted, therefore, that he had been told that the Transaction Bonus was being paid instead of the Prescribed Sum. His position was that he had, however, been told this at “a much later date”, i.e. after payment of the Transaction Bonus.

That was consistent with Mr Burton’s evidence as to the conversation on 5 February 2013, who said in his witness statement:

“9.

I met with the Claimant on 5 February 2013 to discuss matters relating to the Merger, including a possible role for the Claimant within Glencore after the Merger.

10.

At the meeting I told the Claimant that [Mr O’Brien] had informed me about the payments made to the Claimant and other Xstrata executives in December 2012. I asked the Claimant to confirm that each of the recipients who had a Prescribed Sum entitlement under their contract of employment had been spoken to [by Mr O’Brien] or [Mr Mehra] in order to explain to them that the Transaction Bonus was not an additional payment but was being paid in substitution of any future entitlement to a Prescribed Sum.

11.

The Claimant denied that he had been informed that the payment had been made in substitution of the Prescribed Sum prior to receiving the payment. The Claimant explained that he had been so informed by [Mr O’Brien] after receiving the payment. The Claimant stated that as this conversation had come after receipt of a letter which stated that the Transaction Bonus was paid for his work in relation to the Merger, he did not regard this as legally removing his entitlement to the Prescribed Sum under his contract of employment.”

In cross-examination Mr Burton described the conversation that he had with the respondent about this issue, in which the respondent accepted that he had been told that the Transaction Bonus was being paid in lieu of the Prescribed Sum, but maintained that this conversation came after payment and was therefore too late to be effective:

““Q. Just looking at paragraph 11 of your statement; “the claimant denied that the had been informed that the payment had been made in substitution of the prescribed sum prior to receiving the payment. The claimant explained to me that he had been so informed by Dominic O’Brien after receiving the payment.”

In fact, I would suggest that Mr Elliston didn’t mention the date of payment or receiving the payment at all. He simply said that he was only told afterwards that he could not claim the prescribed sum. Isn’t that a more correct account of the conversation?

Mr Craig: My Lord, I rise because you will have seen from paragraph 35 of the claimant’s own evidence that his case is that he said to Mr Burton that he was told this at a much later date. So I don’t understand the basis, I mean, that question has clearly been put on a false basis.

MR CHOUDHURY: I apologise if it was unclear. What I am suggesting he didn’t mention was the words “prior to him receiving payment”.

A.

No, actually, my Lord, quite the reverse. I think this is very crucial. This was a lunch between two experienced lawyers…I have no doubt in my mind he had a very clear purpose. He was making a point in the conversation that he got the letter, he then received payment, then Mr O'Brien spoke to him, seeking to impose conditions. He did that very clearly and I think for very obvious legal reasons, which your Lordship would appreciate…So I think that it was clear that that was Mr Elliston's case, that he only had the conversation after receiving payment, so as to put it beyond doubt in his initial legal case that the conversation subsequent to payment could not impose retrospective conditions on receipt of that payment.

Q: I would suggest there was none of the legal detail that you seek to put on that conversation now, back in February 2013.

A: And may I remind your Lordship that as Mr Elliston said in evidence yesterday, he had already instructed solicitors at this point in relation to this matter, and I think it is highly relevant in terms of exactly what he said to me.”

As Mr Craig submitted, and as I accept, the only difference between the two accounts of this conversation, was that Mr Burton’s evidence was that the respondent had said that Mr O’Brien had told him that the Transaction Bonus was being paid in lieu of the Prescribed Sum; whereas the respondent’s account did not state unequivocally who had told him this (although even on his evidence it came in the context of what Mr O’Brien had told people).

Mr Craig’s principal submission was that the judge had wholly failed to consider, or weigh in the balance, Mr Burton’s evidence to the effect that the respondent had said that it was Mr O’Brien who had given him the information about the condition. Mr Craig submitted that, whilst in paragraph 85 of the judgment the judge referred to the respondent’s attendance note of the meeting on 5 February with Mr Burton, he simply did not address the evidence which supported the appellant’s case that the respondent’s knowledge had come from Mr O’Brien; viz. the respondent’s own admission in cross-examination and Mr Burton’s evidence to that effect. Mr Craig submitted that, in the absence of any proper analysis of all the relevant evidence by the judge, one could not characterise paragraph 85 of the judgment as a decision by the judge in effect to prefer the evidence of the respondent to that of Mr Burton. He also submitted that the judge was wrong to rely on the respondent’s attendance note of the lunch meeting on 5 February as in any way supporting the respondent’s account since (a) the attendance note was self-serving and prepared not only after the lunch meeting but also after the date upon which the respondent had instructed solicitors in relation to his claim; and (b) the attendance note in any event carried the implication that Mr O’Brien had been the person who had communicated the condition to the respondent.

I agree with Mr Craig that it is extremely unsatisfactory that the judge did not specifically address the evidence of Mr Burton (and indeed the respondent’s admission in cross-examination referred to above) in reaching his conclusion at paragraph 85 that the respondent only became aware “of the contention that the December Bonus was intended to be in lieu of a “Prescribed Sum”" on 8 January 2013. I address the consequences of this, and, in particular, whether the failure invalidates the judge's conclusion that the respondent was not aware of the condition prior to his receipt of the Transaction Bonus, below, after I have considered the totality of Mr Craig’s argument in relation to the judge’s alleged errors.

As I have already stated, the third mistake which Mr Craig submitted that the judge made was to find that the respondent had in fact first been told of the condition by Mr Wall on 8 January 2013, in circumstances where, according to Mr Craig, there was no evidence whatsoever to support such a finding and substantial evidence to support the appellant’s case that he had first been told by Mr O’Brien at the meeting on 10 December 2012.

I accept that the judge made an error in this respect. There was nothing in the respondent’s witness statement to suggest for a moment that the vital information, namely that the Transaction Bonus was said to be subject to the condition - which the respondent himself described “as a very important condition” - had been communicated to him by Mr Wall, let alone that this was the first occasion upon which he had been informed about the condition. Nor did he refer to the reaction which he might have had on receiving this information. In his witness statement the respondent referred to every conversation of substance that he had about the relationship between the Transaction Bonus and the Prescribed Sum. He did not refer to any substantive conversation between his discussion with Mr O’Brien on 10 December 2012 and his conversation with Mr Burton on 5 February 2013.

Whilst the respondent did refer to a conversation with Mr Wall “on or about 8 January”, he did not suggest that anything of substance had been said at that meeting and he did not trouble to make any attendance note of the meeting. Thus he said at paragraph 31 of his witness statement:

“I met with Ian Wall, the Group Treasurer on two occasions at my initiative to understand more about the Transaction Bonus. The first occasion was on or about 8th January 2013 when I asked him if he knew anything about the circumstances surrounding the Transaction Bonus and the second occasion was 26th April 2013 when Ian Wall told me that he had suggested the payment of the Transaction Bonus to Mr Reid, as a means of ensuring that the amount of the Prescribed Sum was paid. I recorded this in a contemporary hand written note.”

I find it inconceivable that, if this occasion was really the first occasion on which the respondent had discovered that the Transaction Bonus was said “now” to have attached to it what he regarded as “a very important condition” “effectively, amending [his] employment contract” (Footnote: ³), the respondent did not say so in his witness statement, or at least say that this must have been the relevant occasion. Given the condition’s importance, it is surprising, to say the least, that he would not have remembered the occasion.

Moreover the respondent effectively accepted in cross-examination that there had been no substantive discussion about the relationship between the Transaction Bonus and the Prescribed Sum between his conversation with Mr O’Brien on 10 December 2012 and his conversation with Mr Burton on 5 February 2013. He said:

“Q. Can I ask you please about your later discussions that you had about the relationship between the prescribed sum and the transaction bonus please. To put it neutrally, you spoke to Mr O’Brien in the week commencing 10 December 2012, yes?

A. Oh yes, sorry, yes.

Q. You tell us, I think at paragraph 40 of your witness statement, that the next time you spoke to Mr O’Brien about the transaction bonus and the prescribed sum was on 20 February?

A. Yes.

Q. You tell us that you spoke to Mr Wall in April of 2013?

A. No, I said I spoke to Mr Wall on 8 January 2013.

Q. It is paragraph 31 of your statement.

A. 8 January and 26 April.

Q. It is the 26 April, when you say that he told that you he had suggested that payment of the transaction bonus, he had suggested as a means of ensuring that the amount of the prescribed sum was paid. That was in April?

A. Yes.

Q. As I understand it, after your discussion with Mr O'Brien in the week of 10 December, the next discussion you had about the relationship between the bonus and the prescribed sum, the transaction bonus and the prescribed sum, was with Mr Burton; is that right?

A. Yes, after -- first of all, 8 January and then 5 February.

Q. You do not tell us anything about the discussion you had on -- Mr Wall said anything of significance to you on 8 January; is that right? (Footnote: ⁴)

A. Yes.

Q. The next substantive discussion you had about the prescribed sum and the transaction bonus was about eight weeks later on 5 February 2013, correct?

A. Yes.”

I accept Mr Craig’s submission that one should read those passages as the respondent clearly accepting that:

The point was revisited later in the cross-examination when the respondent suggested, for the first time, that somebody might have told him that the Transaction Bonus was being paid in substitution for the Prescribed Sum at some point over the few weeks following the discussion with Mr O’Brien on 10 December 2012, which he then said could be the conversation with Mr Wall. But the respondent was then taken back to his account of his conversations with Mr Wall in his witness statement, and, at that stage, he apparently appeared to accept in the light of that statement that he had not had a substantive discussion with Mr Wall in January 2013 (from which it would follow that the respondent must have been told that the Transaction Bonus was being paid in lieu of the Prescribed Sum by Mr O’Brien on 10 December 2012, since he had expressly denied hearing about the condition through rumours in the office or through communications with colleagues):

“Q. Who were you talking about?

A.

Whoever it was that conveyed that information to me.

Q. Who do you say that was?

A. Well, I do not know. I do not think I – I am almost certain I did not rush around the office asking everybody, you know, straight after this, but probably in the weeks that followed I did have conversations with various people. I mean, I have not put down conversations which I have had with every single person.

Q. It would be an extremely important conversation in the context of this litigation, if somebody had told you in terms that the transaction bonus had been paid in lieu of the prescribed sum, would it not? This would be a very important conversation?

A. This could be referring to the conversation with Ian Wall.

Q. This suggest could be referring to the conversation with Ian Wall?

A. Yes.

Q. You told us just before that on 8 January nothing really substantial was said. It was on 26 April 2013?

A. Sorry, you have to read the last three lines of that paragraph.

Q. Is it now your evidence-

A. What do the last three lines of paragraph 31 say?

Q. Let us read them out:

‘The second occasion was on 26 April-”

A.

I beg your pardon.

Q. It was on 26 April?

A.

I misread that.”

Subsequently in his cross-examination (see pages 116- 122 of the transcript of 14 October 2014), it is clear that the respondent appreciated (or, as Mr Craig put it to him in cross-examination, “the penny dropped”) that his apparent acceptance that he had not had a substantive discussion with Mr Wall in January 2013, but only in April 2013, led to problems with his case as to when he was first informed of the condition and whether that was by Mr O’Brien. So he then attempted to resile from his previous answers.

There was nothing in the evidence of Mr Wall upon which the judge could base such a finding of fact. Mr Wall had no recollection of even speaking to the respondent in January 2013. He only recalled a discussion in April 2013. Importantly, whilst it was put to him in cross-examination by Mr Choudhury that “[Mr Wall] would have no information to dispute [the] dates” of the meetings in January and April, it was not suggested to Mr Wall in cross-examination either: (a) that he had informed the respondent during the course of the January meeting that the Transaction Bonus was subject to a condition that it was paid in lieu of the Prescribed Sum; or (b) that the respondent said, or Mr Wall appreciated, that was the first time the respondent had been told about the condition; or (c) that it was at least possible that such a conversation had taken place. Nor was Mr Wall cross-examined in any way as to what the respondent’s reaction to the receipt of that piece of information had been. Indeed there was no cross-examination whatsoever of Mr Wall as to what had allegedly been said by either the respondent or Mr Wall at that meeting.

The only possible explanation for the omission on the part of Mr Choudhury, as experienced counsel, to put to Mr Wall in cross-examination either that he had informed the respondent about the condition at the January meeting, or that it was possible that he had done so, and that this was the first time the respondent had learnt of the condition, is that Mr Choudhury had no instructions from the respondent to put such a case.

In those circumstances, I accept Mr Craig’s submission that the judge’s finding at paragraphs 84 and 85 of the judgment that:

“I am inclined to find that Mr Elliston actually found out about the December Bonus being supposed to be in lieu of a ‘Prescribed Sum’ from Mr Wall in the conversation of which Mr Elliston spoke on 8 January 2013.”

is unsustainable. There was, in reality, and contrary to Mr Choudhury’s submissions, no evidence to support that finding, and it was contrary to other evidence, namely both that of Mr Burton and the respondent, which the judge failed to take into account in this context. The fact that the judge did not regard Mr Wall as a satisfactory witness (see paragraphs 82 to 83 of the judgment) was irrelevant in relation to this particular issue, since he was not cross-examined about any aspect of the discussion at the meeting in January 2013, nor was it suggested to him that he was lying when he said in cross-examination that he did not recall the conversation in January. Further, in my judgment the judge wrongly took into account as a relevant consideration (see paragraph 82 of the judgment) the fact that Mr Wall did not deny having a conversation with the respondent on 8 January 2013. But that went nowhere in the absence of any cross-examination of Mr Wall as to what was, or might have been, said at that meeting and in the absence of any proper consideration by the judge of Mr Burton’s and the respondent’s evidence. The fact that Mr Wall did not remember such a conversation is hardly surprising – even on the respondent’s evidence, nothing of substance was said that day.

I also accept Mr Craig’s submission that, in coming to this conclusion, the judge failed to address Mr Burton’s unequivocal evidence that on 5 February 2013 the respondent told him that Mr O’Brien had informed him that the Transaction Bonus was being paid instead of the Prescribed Sum, but that this had been at a much later date (the respondent seemingly having in mind at around that time that the discussion was on New Year’s Eve, even though he ultimately accepted that it was 10 or 11 December 2012). I agree with Mr Craig that, if the judge was going to reject Mr Burton’s evidence on a critical issue in the case, then he needed to explain why, but he failed to do so. He made a passing reference to Mr Burton’s evidence (see paragraph 74 of the judgment), but said nothing more about it. He made no findings about the credibility or veracity of Mr Burton’s evidence or his demeanour as a witness. In circumstances where there were serious inconsistencies in the respondent’s own evidence (including, for example, that earlier in 2013 he had told Mr Burton that Mr O’Brien spoke to him for the first time on New Year’s Eve, 2½ weeks after payment was made, and in his pleaded case (and evidence in chief) that the conversation was on 14 December 2012, but nonetheless after payment of the Transaction Bonus had been made), that omission was in my judgment significant.

I address the consequences of this mistake, and, in particular, whether the failure invalidates the judge's conclusion that the respondent was not aware of the condition prior to his receipt of the Transaction Bonus, below.

I turn now to consider the consequences of my conclusion that the judge made various errors in relation to his approach to the appellant’s pleaded case and in relation to his findings of fact in relation to the first issue.

Mr Choudhury submitted that it was immaterial (if indeed it were the case) that the judge had failed specifically to address certain aspects of the evidence, or even that he had made an error in concluding that the respondent had been informed by Mr Wall of the condition in January 2013; the evidence taken as a whole (which was a matter for the judge to assess) was overwhelmingly in favour of the respondent’s account, and that it was simply not possible to say that the judge’s conclusion that he should prefer the respondent’s evidence over that of Mr O’Brien’s was “plainly wrong”. Mr Choudhury further submitted that the judge’s overall conclusion that the respondent had not been told prior to payment of the Transaction Bonus that it was subject to the condition could not be faulted for a number of reasons. These included the following:

Despite Mr Choudhury’s careful and forceful submissions, I have concluded that this is one of those very rare cases where an appeal court is able to say with confidence that the judge was plainly wrong in the conclusion which he reached in relation to the first issue, namely as to what the respondent was told at the meeting with Mr O’Brien on 10 December. In my judgment, whatever precise words were used by Mr O’Brien, the evidence before the judge overwhelmingly supported a finding that, viewed on any objective basis, Mr O’Brien had said enough to make it clear to the respondent that any acceptance of the Transaction Bonus was subject to the condition that the recipient would not also claim the Prescribed Sum in the event that his employment came to an end and the other applicable conditions were satisfied.

Contrary to Mr Choudhury’s submissions, my reading of the full transcripts of both the evidence and the argument, and the judgment itself, does not suggest that:

“the judge’s decision was firmly based on his assessment of the credibility of the respondent and Mr O’Brien as a result of their respective performances in the witness box”.

I am well aware that a trial judge has the indubitable advantage of seeing the witnesses in real-time and judging their demeanour. But where a trial judge has clearly gone wrong in his approach to, and evaluation of, the evidence and an appellate court has the benefit of a full transcript, this so-called advantage can be overstated. In my judgment, the judge’s decision was wrongly based, not on legitimate assessments of the credibility of witnesses, but rather on:

I should supplement the last three points which I have not previously addressed.

First, the relevant context was the evidence relating to what the respondent and others had repeatedly been told when Xstrata was considering paying the Management Incentive Arrangements (MIA) earlier in 2012 (which arrangements were later voted down by Xstrata shareholders) as set out in the correspondence and his own evidence. This evidence showed:

Second, in my judgment, the judge was naive to place so much reliance on the existence, or accuracy, of an attendance note compiled by the respondent. It was clear that the respondent did not start to make attendance notes until after he had consulted solicitors in early 2013 - the first such attendance note being of the meeting which he had with Mr Burton on 5 February 2013. In such circumstances it was not at all surprising that he had not made an attendance note of his meeting with Mr O’Brien on 10 December 2012. Likewise if the judge was going to attach importance to the absence of any attendance note of that meeting (Footnote: ⁹), it was inconsistent of him not to do so in relation to what the judge found was the critical meeting with Mr Wall on 8 January 2013 when, according to the judge, the respondent first discovered that the Transaction Bonus was said to be subject to the condition. Furthermore, the logic in the last half of paragraph 85 of the judgment that reliance could be placed on the statement in the respondent’s attendance note of the meeting with Mr Burton on 5 February 2013 that he learned of the condition “at a much later date” because:

“Consequently, it seems to me to be realistic to proceed on the basis that what Mr. Elliston recorded himself as having said to Mr. Burton was not merely what he did in fact say, but also was believed by him to be true at the time he made the relevant statements to Mr. Burton. If he had lied to Mr. Burton he would scarcely have recorded such lie in his own attendance note.”

is incomprehensible. Not only had the respondent engaged solicitors by this time but also any attendance note was inevitably likely to be self-serving.

Third, although, in paragraph 85 of the judgment, the judge said that he recognised that

“…… over time, Mr. Elliston has given different dates as the date upon which he became aware of the contention that the December Bonus was supposed to be in lieu of a “Prescribed Sum”. I also recognise that Mr. Elliston has advanced different dates at different times as to when exactly his meeting with Mr. O’Brien took place. Actually the date of the meeting with Mr. O’Brien was not important unless it was after the payment of the December Bonus, and only one version of Mr. Elliston’s account, that in the Reply, contended for that”

the reality was that whether the date of the meeting with Mr O’Brien occurred before or after payment of the Transaction Bonus was a highly important issue in the case, as was the issue as to the date on which the respondent first learnt that the Transaction Bonus was said to be subject to the condition. The respondent’s vacillating evidence about when these dates occurred was clearly a critical matter to be taken into account when assessing his credibility. The judge appears – wrongly in my view – to have placed no importance on these matters which were, on any basis, important factors in assessing his credibility,

None of the additional matters relied upon by Mr Choudhury, as set out in paragraphs 74(iii)(a) above – (h) persuaded me that the judge’s findings of fact could be supported. Indeed some of the findings were the subject of the appellant’s third ground of appeal and detailed submission by Mr Craig. I do not address all the points but, in particular, it can be observed that, contrary to the judge’s view:

Many, if not all, of these points were not primary findings of fact by the judge, but rather evaluations by him of the effect of what was said in documents, and, in my judgment, they did little to support his view as to the credibility of Mr O’Brien on the principal issue.

For the above reasons I conclude that the totality of the evidence before the judge clearly established that, whatever precise words he used, Mr O’Brien made it clear to the respondent at the meeting on 10 December that, if the respondent was going to accept the payment of the Transaction Bonus he would not be entitled to claim the Prescribed Sum. In my judgment the judge was plainly wrong for the reasons which I have given not to reach this conclusion. The findings which he did make were not open to him on a proper analysis of the evidence. For these reasons I would allow the appeal and give judgment for the appellant.

The appellant’s alternative case was that:

Mr Craig’s submissions under this head were:

Mr Choudhury’s response was that the appellant’s alternative case was not even pleaded. It was nonetheless properly considered by the judge as was patently clear from paragraphs 86-88 of the judgment (which had to be read with paragraphs 67 and 68 as that was where the further explanation to which the judge refers was contained). In paragraph 88 the judge explained why the alternative case could not succeed; namely because the words which the judge found had been said by Mr O’Brien could not have the effect contended for by the appellant. The judge did not need to go any further.

I accept Mr Craig’s submission that the judge did not adequately address the appellant’s alternative case which, if not expressly pleaded as an alternative case in the Defence, was certainly clearly on the table by the time of closing submissions. However, I would not allow the appeal on this ground.

The alternative case, as presented by Mr Craig in this court, was closely allied to the principal defence, namely that the words which Mr O’Brien had used at the meeting on 10 December were objectively sufficient to amount to the imposition of a condition. I have already concluded that that principal defence succeeds. The appellant’s alternative case, if a true alternative, must assume that the primary case fails. The argument on the alternative case has to assume that nothing was said to the respondent other than “We prefer that people don’t double dip or waste money on legal fees.” If Mr O’Brien meant “require”, “prefer” was an inappropriate word to use to convey to the respondent that the bonus was conditional on foregoing the Prescribed Sum, even taking into account the background context of the MIA proposals. But if one takes into account all the matters that Mr Craig submitted should have been taken into account by the judge in addressing the alternative case (such as, for example, the respondent’s admission in cross-examination that he appreciated that he was effectively being told by Mr O’Brien that there was a change to the Transaction Bonus letter, and that a “very important condition was being imposed”), and one reaches the conclusion that what was actually said by Mr O’Brien was sufficient to convey the message that people could not take the Prescribed Sum as well as the Transaction Bonus, that, in my judgment, simply goes to prove the primary case, rather than the alternative case.

For these reasons it is not necessary for me to address Mr Craig’s criticisms of the manner in which the judge dealt with the appellant’s alternative case.

The appellant’s last ground of appeal was that if, and insofar as, the judge held at paragraph 92 of his judgment that, even if Mr O’Brien had told the respondent that the Transaction Bonus was being paid in lieu of the Prescribed Sum, the respondent nevertheless accepted the Transaction Bonus without that condition, because the acceptance was not unequivocally referable to the relevant offer, the judge was wrong to do so.

It does appear from paragraph 92 that the judge took the view that, even if the condition had been imposed by Mr O’Brien on the gratuitous Transaction Bonus, in the conversation between him and the respondent on 10 December, it was nonetheless open to the respondent to keep silent and accept the money without the burden of the condition. The judge appears to have thought that, in the absence of an express withdrawal of the offer made in the letter dated 4 December, the respondent was entitled to say that his acceptance of the money was referable to the offer contained in the original letter.

In my judgment that is clearly wrong in principle. The offer was a unilateral, gratuitous offer and could be amended by the respondent at any time before the money was transferred or accepted. If the condition had indeed been imposed, then there was no offer for the respondent to accept other than the offer to take the Transaction Bonus in substitution for the Prescribed Sum. And the respondent’s conduct in accepting payment of that sum was unequivocally referable to that revised offer. Accordingly the judge was wrong to conclude that this point would in any event be a bar to the success of the respondent’s defence.

For the above reasons I would allow this appeal and give judgment in favour of the appellant. This is not a case where it would be appropriate to remit the matter for trial before another judge.