Speed Investments Ltd & Anor v Formula One Holdings Ltd & Anor

FOH is an English company which owns directly or indirectly a number of 100 per cent subsidiaries, most of which are also English companies. The business of the group as a whole is to control and regulate Formula One motor racing. The Chief Executive of the companies is Mr Ecclestone. The case concerns the composition of the Board of Directors of FOH. FOH itself is the first named defendant but it has taken no part in the hearing. It will abide by the decision of the court. The effective dispute is between the first claimant, Speed, and the second defendant, Bambino. Speed is now the indirect owner of a 75 per cent interest in FOH, and Bambino is the indirect owner of a 25 per cent interest.

As I will explain later, the disputed issues in this case had been crystallised in all essential respects by 11 November 2002. There have been a few resignations of directors and appointments of new directors in their place since that date, but they do not matter, and it is, I think, convenient to outline the case in this introductory overview by reference to matters as they stood on 11 November 2002. Initially, however, going back a few years before then, I record that FOH became active (though only in its holding company role) in 1998, but it adopted new Articles of Association on 12 May 2000. Under those new Articles the maximum number of directors is eight. The Articles provide for A directors and B directors, and they do not exclude the possibility of a director being neither an A director nor a B director. Such a director has been referred to in argument as an “ordinary” director.

On 11 November 2002, when the issues had crystallised, there were certainly eight directors. The parties agree about the identity of six of those eight, though they do not agree about the status of two of those six. They disagree about the identities of the remaining two of the eight directors. More specifically the parties agree that four persons were directors and were A directors. Their names can be seen in the Dramatis Personae: Ms Saunders, Mr Klatten, Dr Wuerthenberger and Mr Bernard. The parties agree that two other persons, Mr Ecclestone and Mr Mullens, were directors. But Speed says that they were B directors, whereas Bambino says that they were ordinary directors. Speed says that the other two directors, making up the eight, were Mr Diederichs and Mr Mann, and that those two were ordinary directors. Bambino says that Mr Diederichs and Mr Mann were not directors at all. It says that the other two directors were M. Argand and Mme Argand-Rey (together “the Argands”) and that they were B directors. Speed says that the Argands were not directors at all.

The company secretary accepted Bambino’s viewpoint and acted in accordance with it. Thus she regarded the Argands as directors and Mr Diederichs and Mr Mann as not being directors. Speed has disputed that position since 2002, but for some time attempts were made to resolve the issue by agreement. However, negotiations came to nothing and in March of this year Speed commenced this action. It seeks declarations to the effect that the Board of FOH is constituted as it contends, not as Bambino contends.

A few months passed with disputes raised by Bambino and the Argands to the jurisdiction of the English court. I ought to mention for completeness that the Argands are the third and fourth defendants. Lewison J and the Court of Appeal have held that the English court has exclusive jurisdiction to determine the issue. The case has now come before me. Speed, which has been represented by Miss Jones QC and Mr Harrison, applies for summary judgment under CPR 24.2(a)(ii) on the ground that Bambino and the other effective defendants, the Argands, have no real prospect of successfully defending Speed’s claim. The defendants, represented by Mr Rosen QC and Mr Parfitt, submit that the case is not suitable for summary judgment and that the issue should go to a full trial. However, I agree with Miss Jones and Mr Harrison. In my judgment it is clear that Speed’s contentions are correct, and I shall therefore make the declarations which it requests.

The case is about the composition of the board of FOH, but in my opinion it is helpful to begin by describing the corporate shareholding structure of the several companies which matter. It is best to begin at the lower tiers of companies and then to work upwards. This structure is illustrated in the diagram annexed at the end of this judgment. I have added the diagram at the stage of editing the judgment which I delivered orally. The diagram should assist a reader in following the next few paragraphs.

At the lowest tier which I need to consider the two main operating companies in the Formula One group of companies are FOA and FOM. Both are English companies, and Mr Ecclestone is the Chief Executive of each of them. I interpose that in the proceedings before me no-one questioned in any way the importance of Mr Ecclestone to the underlying business. There are some disputes about the board compositions of FOA and FOM, but they are not before me in this case. They may become the subject matter of other proceedings which have not been commenced yet. FOA is a directly owned 100 per cent subsidiary of FOH. FOM is an indirectly owned 100 per cent subsidiary of FOH. Those relationships have remained unchanged in all relevant respects from 1998 to the present time.

FOH, as I have already said, is an English company and is a holding company. It does not trade itself, but it is an important company because it has control of the operating subsidiaries, especially FOA and FOM. At all times from 1998 to the present FOH has been a 100 per cent subsidiary of a company which I have not mentioned yet but which is very important in this case. That company is SLEC.

Moving up another level in the tiers of corporate ownership, I come to SLEC. It is a Jersey company. There have been several changes in the way that its shares have been owned. There have been four phases: (1) at the end of 1998 SLEC was 100 per cent beneficially owned by Bambino. I will say more about Bambino in the next paragraph. That continued until 17 December 1999. (2) From 17 December 1999 until 12 May 2000 SLEC was owned as to 75 per cent by Bambino and as to 25 per cent by Speed. I will say more about Speed in the next paragraph but one. (3) On 12 May 2000 SLEC came to be owned as to 50 per cent by Bambino and as to 50 per cent by Speed. But Speed had an option to purchase a further 25 per cent from Bambino. Before I move on, I mention now that the events and documents of 12 May 2000 are critical to the issue in this case. The structure which those documents created continued from 12 May 2000 until 30 March 2001. (4) From 30 March 2001 to now SLEC has been owned as to 75 per cent by Speed and as to 25 per cent by Bambino. Speed had exercised its option to purchase a further 25 per cent, bringing its shareholding up from 50 per cent to 75 per cent.

I move another level up the corporate ownership tree. At the level above SLEC there are two parallel companies, Bambino and Speed. Bambino is a Jersey company. I do not know much about it. I assume that its principal function is simply to hold its shareholding in SLEC. That shareholding, it will be recalled, started at 100 per cent, then reduced first to 75 per cent, second to 50 per cent, and third to 25 per cent. Speed believes that Bambino is owned by a non-United Kingdom trust called the Bambino Trust with which Mr Ecclestone’s wife has some connection, the nature of which I do not know and do not need to know. Mr Ecclestone says that he has no ownership interest of any kind in Bambino.

Finally I come to Speed which, in terms of the corporate tree, is at the same level as Bambino. Speed has, since 17 December 1999, owned the percentage shareholding in SLEC which was not owned by Bambino, a percentage which started at 25 per cent, then rose to 50 per cent, and then rose again to 75 per cent. Back in 1999 Speed was owned by a Morgan Grenfell company which was itself an agent for a venture capital vehicle of some sort. At a date which I do not think that I know exactly but which was probably on or just before 12 May 2000, Speed was acquired by a German media company called EMTV. EMTV later entered into some sort of relationship with another German media group call Kirch. I do not know the details and I do not need to. What I do know is that some two years later, in April or May 2002, the Kirch group and other companies in Germany entered into insolvency proceedings. I do not know whether the insolvency was caused in any way through EMTV having made the investment in Speed. However, whatever the cause, one outcome of the insolvency proceedings is that Speed is now owned by three banks which had been creditors of the German companies. In the Dramatis Personae I record the names of “the Banks”. However, their specific identities do not matter.

It might help if I briefly recapitulate the following paragraphs, but this time in the reverse direction, starting at the top of the corporate tree and working downwards. At the top the banks own Speed, and in parallel the Bambino Trust owns Bambino. Speed and Bambino own SLEC in proportions which are now 75 per cent and 25 per cent, but earlier were 50 per cent each, earlier still were 25 per cent and 75 per cent, and even earlier were 100 per cent to Bambino. SLEC owns 100 per cent of FOH and has done so at all relevant times. FOH owns directly or indirectly 100 per cent of the operating companies in its group, especially FOA and FOM. That too has been the position at all relevant times.

After that account of the shareholding structure, it is necessary to examine some details of the documents which took effect on 12 May 2000. Three need to be referred to: a shareholders’ agreement, amendments to the Articles of Association of SLEC and amendments to the Articles of Association of FOH. The commercial background was that Speed was being acquired, or perhaps had just been acquired, by German media companies; that Speed, in its new ownership, was increasing its shareholding in SLEC, the owner of the whole of FOH, from 25 per cent to 50 per cent; and that as a corollary Bambino was to reduce its shareholding in SLEC from 75 per cent to 50 per cent, so becoming an equal shareholder with Speed. The Shareholders Agreement is a long document, most of which, mercifully, I need not examine, but some parts of which are important. The companies with which it was primarily concerned were SLEC and FOH. In broad terms it introduced into SLEC an A shares/B shares structure reflected by provisions for A directors and B directors on the boards both of SLEC, and of FOH. There were also changes affecting the boards of the lower tier operating companies, FOA and FOM, but they do not arise in this case.

There were five parties to the Shareholders Agreement; Bambino, Speed, SLEC itself, FOH itself and EMTV. There are numerous definitions in the Agreement, including ones of “A FOH director”, “A SLEC director”, “B FOH director” and “B SLEC director”. For example the definition of “B FOH director was: “a B director of FOH appointed in accordance with the FOH Articles or this Agreement”. There were corresponding definitions for the other categories of directors. Clause 3 of the Shareholders Agreement dealt with directors. Clause 3.1 related to directors of SLEC, and clause 3.2 related to directors of FOH. The two sub-clauses essentially mirror each other; I will quote clause 3.2 so far as relevant:

Other provisions of the Agreement record that Speed was the holder of the A shares in SLEC and that Bambino was the holder of the B shares. So the effects of clause 3.1 and 3.2 were that each of SLEC and FOH could have only eight directors, that Speed could appoint four A directors of SLEC and also four A directors of FOH, and that Bambino could appoint four B directors of SLEC and also four B directors of FOH. Two observations on the subparagraphs are as follows. First, although Speed and Bambino were not shareholders in FOH (since it was SLEC which owned the shares in FOH), nevertheless, it was Speed and Bambino – so to speak, FOH’s grandparent companies rather than its parent companies – which could appoint A and B directors of FOH. Second, the Articles did not prohibit the appointment of ordinary directors, not being A or B directors. However, if there were already four A directors and four B directors, the maximum permitted number (eight) was already reached, and there was no room left for any ordinary directors.

So much for clause 3.1 and 3.2. Those sub-clauses were intended to regulate the position as long as SLEC was owned in 50/50 proportions between Speed and Bambino. However, clause 17 contained, among other things, an option for Speed to purchase a further 25 per cent of the shares in SLEC. If Speed exercised the option SLEC would come to be owned as to 75 per cent by Speed and 25 per cent by Bambino. What was to happen to the boards of SLEC and FOH in that event? The matter was covered partly by clause 3.6 and partly by a subparagraph in clause 17. Omitting words which do not matter, clause 3.6 provided that upon exercise of Speed’s option:

Clause 17.8(b)(v) provided that, on exercise of the option, one of the things which was to be done at completion was as follows:

I have nothing more to say about clause 3 of the Shareholders Agreement. Clause 4 introduces Schedule 1 and it is of fundamental importance in this case. However, I will pick up a few other relevant matters before I return to it. Clause 5 provides as follows:

Before I return to the vital clause 4 of and schedule 1 to the Shareholders Agreement, I should refer briefly to the amended Articles of Association, both of SLEC and of FOH, which clause 5 of the Shareholders Agreement required the parties to adopt and which they did adopt. The provisions as to A and B directors reproduced the effect of clause 3 of the Shareholders Agreement. In each company, that is to say in SLEC and in FOH, there could not be more than eight directors. As long as Bambino’s B shares in SLEC were 50 per cent of the total shares, it could appoint four B directors to each company and Speed could appoint four A directors to each company. If Bambino’s shares in SLEC fell below 50 per cent (which would happen and in the event did happen if Speed exercised its option to buy another 25 per cent) Bambino could appoint only two B directors to each company but Speed could still only appoint four A directors. The Articles, however, did not prevent Speed from appointing or electing ordinary directors, but subject to the overall maximum number of directors of eight. All of that properly and necessarily reproduced in the Articles the contents of clause 3 of the Shareholders Agreement.

In the case of each company, however, the Article about appointing A and B directors contains a sentence dealing with one matter which is not also covered by the Shareholders Agreement, namely the mechanical process by which appointments should be made. In the case of FOH Article 14(A) reads in part:

From the Articles I should also set out the provision for a quorum at a meeting of directors. In the case of FOH it is Article 15(a):

Now I can return to clause 4 of and Schedule 1 to the Shareholders Agreement. Clause 4 is headed “Bambino Covenants”. Only clause 4(a) is directly relevant:

That takes us to Schedule 1. Part 1 of Schedule 1 gives details about SLEC, and Part 2 gives similar details about FOH. The Parts give information about the following matters: the company name, the company number, the date of incorporation, the authorised and issued share capital, the identity of the shareholder or shareholders, the registered office, the directors, the company secretary, the accounting reference date, and the name of the auditors. So far as this case is concerned the vital item is the one about the directors. Against “directors” two lists are given, headed “A Directors” and “B Directors”. Four names are set out in each list. In the case of FOH the following are stated by Part 2 of the Schedule to be A directors: Robin Saunders, Thomas Haffa, Florian Haffa, Dr Nicholaus Becker; the following are stated to be B directors: Bernard Ecclestone, Stephen Mullens, Marco Piccinini, Helmut Werner. Part 1 of Schedule 1 (relating to SLEC) is exactly the same in principle. Again four names appear as A directors and four different names appear as B directors. The names are not all the same as those specified in Part 2 relating to FOH, but the nature of the presentations in the two schedules is identical.

So much for the documents. I now return to the events which have happened, with particular reference to how they concern the identity of directors of FOH. I will describe the events in numbered subparagraphs, beginning about 17 months before the vital changes which were made on 12 May 2000.

In September 1998 FOH’s Articles did not provide for A and B directors. There were just ordinary directors. Mr Ecclestone, Mr Mullens, Mr Piccinini and Mr Werner were appointed directors. It appears that they were appointed a few weeks before Bambino acquired the shares in FOH, but I think it is obvious that the four persons were appointed in anticipation of the acquisition.

In December 1999 Ms Robin Saunders was appointed a director. She was an appointee of a German bank, West LB. West LB is not one of “the Banks” (the three banks which now own Speed). I imagine that West LB was a major provider of finance to companies in FOH’s group. So after Miss Saunders’ appointment there were five ordinary directors.

On 11 May 2000 (the day before both the Shareholders Agreement and the adoption of amended Articles of FOH) Mr Thomas Haffa, Mr Florian Haffa and Dr Nicholaus Becker were appointed directors by resolution of the existing board. These three gentlemen were officers or employees of EMTV. So now there were eight directors. They were all ordinary directors, since the Articles which provided for A and B directors had not yet been adopted.

On the next day, 12 May, the Shareholders Agreement and the new Articles which I have described earlier came into effect. The central dispute in this case concerns what the effect was, and in particular what effect the changes had on the status of FOH’s directors. Speed’s case, explained by Miss Jones, is that the eight existing directors continued to be directors, but now four of them were A directors and four of them were B directors. She says that that was the consequence of the documents, especially Part 2 of Schedule 1 to the Shareholders Agreement. Bambino’s case is, if I understand Mr Rosen correctly, that the four persons named as A directors in Part 2 of Schedule 1, that is Ms Saunders and the three gentlemen to whom I referred in (iii) above, did become A directors, but the four gentlemen named as B directors, who included Mr Ecclestone and Mr Mullens, did not become B directors; rather they continued to be ordinary directors. Either way, there were still eight directors. Either there were four A directors and four B directors, which is Speed’s argument, or there were four A directors, no B directors and four ordinary directors, which is Bambino’s argument.

On 30 July 2000, Mr Piccinini, who was either a B director or an ordinary director (depending on which argument one accepts), resigned. Bambino could have appointed a new B director in his place, but did not do so. So FOH at this point had seven directors, of whom four were A directors and three were either B directors, as Speed says, or ordinary directors, as Bambino says.

On 28 February 2001 Speed exercised its option to acquire from Bambino a further 25 per cent of the shares in SLEC. The transfer was completed on 30 March 2001. If three of the seven directors of FOH were B directors, then under clause 17.8(b)(v) of the Shareholders Agreement Bambino should have removed one of them from office. However, that did not happen.

On 20 June 2001, Mr Werner, who was either a B director or an ordinary director, resigned. There were now six directors, four of whom were A directors and two of whom, Mr Ecclestone and Mr Mullens, were either B directors or ordinary directors.

Over the next year or so there were a number of changes, in the form of resignations or removals of A directors and appointments of new A directors in their place. In one case an A director who resigned was not replaced. So immediately before 9 October 2002 there were five directors: three were A directors, and two were either B directors or ordinary directors. Those two were Mr Ecclestone and Mr Mullens.

On 9 October 2002 Bambino sent to the secretary of FOH a notification that it appointed the Argands as B directors of FOH. Speed has always maintained that the appointment was invalid, but the company secretary accepted it and entered the names of the Argands in the register of directors. The validity or otherwise of the appointment depends on whether Mr Ecclestone and Mr Mullens were B directors or rather were ordinary directors. If they were B directors, Bambino, being by then entitled to appoint only two B directors, could not appoint the Argands as additional B directors, and their purported appointment would have been invalid. If Mr Ecclestone and Mr Mullens were ordinary directors, Bambino could appoint two B directors so that the Argands would have been validly appointed. The practical result at this stage is that the total number of directors was either five or seven. The company secretary was proceeding on the basis that there were seven.

On 11 October 2001 one of the A directors resigned. So at that stage there were either four or six directors. They were as follows: two of them were A directors; two, being Mr Ecclestone and Mr Mullens, were either B directors or ordinary directors; and possibly the Argands were a further two directors. If they were, they were B directors.

After some technical difficulties which I need not describe for the purposes of this judgment (though they were certainly important in other contexts), on 30 October 2002 Speed succeeded in appointing Dr Wuerthenberger and Mr Bernard as A directors. So there were now either six or eight directors: six if the Argands had not been validly appointed, and eight if they had.

On 11 November 2002 SLEC, as sole shareholder of FOH, purported to appoint Mr Diederichs and Mr Mann, whose names I have already mentioned in the overview, as ordinary directors. The company secretary refused to accept the appointment on the ground that FOH already had eight directors and that the Articles did not permit it to have ten. Whether she was correct in that respect depends on whether the Argands had been validly appointed. If they had been she was correct; if they had not been she was wrong.

I apologise for the heavy-going nature of the foregoing account, but I hope that it explains how the issue has arisen. The really critical question is whether on 12 May 2000 Mr Ecclestone and Mr Mullens became B directors or rather simply continued to be ordinary directors. If they became B directors, the Argands were not validly appointed in October 2002, and if the Argands were not validly appointed, Mr Diederichs and Mr Mann were validly appointed. Conversely, if Mr Ecclestone and Mr Mullens on 12 May 2000 continued to be ordinary directors, the Argands were validly appointed and Mr Diederichs and Mr Mann were not.

There is no dispute about the principles which I should follow in determining whether this case is a suitable one for summary judgment or not. Under CPR 24.2:

It is accepted that this case depends on (a) and not on (b). To defeat Speed’s application for summary judgment, Bambino must show that it has a real prospect of success. “Real” has been contrasted in some of the cases with other adjectives like “fanciful” or “imaginary”. Bambino’s case must be better than merely arguable, but Bambino does not need to go so far as to show that it would probably win at a full trial. A summary judgment hearing is not a mini trial; it is conducted on the basis of written evidence, usually, as in this case, without cross-examination. But that does not mean that the court has to accept without thinking everything that is said in the witness statements. For a fuller account of these uncontroversial points see the note at paragraph 24.2.3 of the 2004 edition of the White Book.

Speed’s case is that, when the new Articles of FOH were adopted on 12 May 2000, providing for the company to have A and B directors, the Shareholders Agreement, and in particular Part 2 of Schedule 1, had the effect that the eight directors who were in office immediately beforehand were designated as four A directors and four B directors. Two of the four B directors were Mr Ecclestone and Mr Mullens. On Speed’s case it follows, for the reasons which I explained earlier, that, although Mr Ecclestone and Mr Mullens are still directors of FOH, they are B directors and not ordinary directors. It also follows that the Argands were not validly appointed as B directors, but that Mr Diederichs and Mr Mann were validly appointed as ordinary directors. Miss Jones has advanced a number of reasons in support of Speed’s case. I will describe them in the next section of this judgment.

Miss Jones accepts that Part 2 of Schedule 1 to the Shareholders Agreement was not quite within the words found in Article 14A of FOH’s new Articles of Association: “Such appointment … shall be made in writing signed by … in respect of a B director the holders of a majority in nominal value of the SLEC B shares and sent to the registered office of the company”. However, she relies on the well known Duomatic principle that, where all the persons whose approval is required under a company’s constituent documents for some step to be taken have clearly assented, the step will not fail by reason merely of the non-observance of a procedural formality: see Re Duomatic Limited[1969] 2 Ch 365, and for a recent example of another application of the principle, Euro Brokers Holdings Limited v Monecor London Limited[2003] 1 BCLC 506, [2003] EWCA Civ. 105.

Bambino’s case begins with the undoubted proposition that, when Mr Ecclestone and Mr Mullens first became directors of FOH in 1998, they were ordinary directors. Mr Rosen then argues that Part 2 of Schedule 1 to the Shareholders Agreement did not have the effect of making them B directors. He refers to witness statements of Mr Ecclestone and Mr Mullens to the effect that they, and Mr Ecclestone in particular, did not agree to become B directors. Mr Ecclestone says that he would not have agreed to be a representative of Bambino.

Mr Rosen’s second argument is that, if Part 2 of Schedule 1 to the Shareholders Agreement did, as a matter of construction, have the effect of making Mr Ecclestone and Mr Mullens B directors of FOH, that was a mistake, and a court should correct it by rectification. I do not have a claim for rectification formally in front of me, but Mr Rosen submits that I should still refuse summary judgment, so that in the pleadings for a full trial Bambino could counterclaim for rectification.

The question is whether the documents of 12 May 2000 had the effect, on their proper construction, of causing all the persons who were listed in Part 2 of Schedule 1 to the Shareholders Agreement as A directors or B directors, to become in law A directors or B directors, or whether the documents failed to have that effect, at least as regards Mr Ecclestone and Mr Mullens. I agree with Miss Jones that they did have that effect and that the effect applied to Mr Ecclestone and Mr Mullens just as much as it did to the four persons named as A directors.

The three principal documents which came into effect on 12 May 2000 were the Shareholders Agreement, the new Articles of FOH, and the new Articles of SLEC. They were plainly interdependent and they should be construed together and by reference to each other. SLEC was dividing its shares into two classes: A and B shares. Both FOH and SLEC were changing the constitutions of their boards in two principal respects: by limiting the total number of directors to eight, and by providing for the A shareholder in SLEC to appoint up to four A directors and the B shareholder in SLEC to appoint up to four B directors.

For board meetings of FOH or SLEC to be valid, the new articles required a quorum of at least one A director and one B director. The new constitutional structure would not work unless, upon its adoption, there were both A and B directors of each company. It is not, in my judgment, an answer to the point on the quorum to say that, in the events which happened over the next few years, there was no significant board meeting, either of FOH or SLEC, where the existence or otherwise of a quorum was important. The critical point is that the draftsman of the documents plainly must have intended that they should work, yet they would not have worked, so far as having a quorum at board meetings was concerned, unless there were A and B directors in existence from 12 May 2000 onwards.

Further, in my judgment it is indisputable that one of the purposes of the Shareholders Agreement was to secure that the existing eight members of the boards of each company were nominated as either A or B directors and to secure that they were so nominated by the Shareholders Agreement itself. The definitions in the agreement make that very clear. I take one example, “B FOH director” is defined to mean “a B director of FOH appointed in accordance with the FOH articles or this agreement”. Note especially “or this agreement”. Identical words appear in the definitions of A FOH director, of A SLEC director and of B SLEC director. The wording has plainly assumed that the agreement would have the effect of appointing the initial complement of four A directors and four B directors.

Further and in any event, I agree with Miss Jones that, if the A or B directors of either company had to be appointed in accordance with the Articles rather than simply being appointed by the Shareholders Agreement itself, the Duomatic principle would overcome any argument that some formal non-compliance with the small print of the relevant Article invalidated the appointments which the Shareholders Agreement intended to make. The non-compliance would be truly trivial and formal. Under FOH’s new Article 14(a) (as under SLEC’s new Article 79), the appointment of, for example, a B director: (1) had to be made in writing; (2) had to be signed by the holders of the majority in nominal value of the SLEC B shares; and (3) had to be sent to the registered office of the company. As respects (1), the Shareholders Agreement was in writing. As respects (2), it was signed on behalf of Bambino which held all the SLEC B shares. As respects (3), although it was not sent to the registered office of FOH, FOH certainly knew all about it, and indeed itself signed the agreement. To go through the exercise of sending a copy to the registered office of FOH would have been the purest formality and nothing more. More generally it is worth noting that the Shareholders Agreement was signed by or on behalf of both of the companies regulated by it (FOH and SLEC) and by all of the shareholders in each company. It was signed by SLEC, the sole shareholder in FOH, and it was signed by Bambino and Speed, the sole shareholders in SLEC.

With respect to Mr Rosen, he appeared to me to take an unmaintainable position on this aspect of the argument. He said at one stage that his clients accepted that in general the Duomatic principle applied; therefore he did not argue that Part 2 of Schedule 1 to the Shareholders Agreement was ineffective to nominate the A directors of FOH, or that Part 1 of the Schedule to the Shareholders Agreement was ineffective to nominate the A directors and the B directors of SLEC. Yet he did argue, unless I have misunderstood, that Part 2 of the Schedule was ineffective to nominate the B directors of FOH. The distinction which Mr Rosen makes seems to me to be impossible. The provisions of the Schedule were identical for all four types of nomination. I cannot see how they can have been effective for three of the types but not for the fourth.

It may be that Mr Rosen was saying that whether a particular nomination purportedly made by the schedule was effective or not depended on whether, after the event, the person nominated and/or the nominating SLEC shareholder was prepared to concur in the effectiveness. At the level of SLEC, the effectiveness of the appointments of all of the directors, both A directors and B directors, has been accepted by (i) the persons nominated as A directors, (ii) the persons nominated as B directors, (iii) Speed, the shareholder who nominated A directors, and (iv) Bambino, the shareholder who nominated B directors. At the level of FOH, the effectiveness of the appointments of the A directors has been accepted by (i) the persons nominated as A directors, and (ii) Speed, the nominator of A directors; but the effectiveness of the appointments of the B directors has not been accepted by (iii) the persons nominated as B directors and (iv) Bambino, the nominator of B directors. If I follow the argument, Mr Rosen says that in those circumstances Schedule 1 to the Shareholders Agreement did effectively nominate the A and B directors of SLEC and the A directors of FOH, but did not effectively nominate the B directors of FOH.

In my judgment that cannot be right. As a matter of construction, the two Parts of the Schedule were effective to nominate the directors in all four categories or in none. It is in any event extraordinary that Bambino which, by clause 4 of the Shareholders Agreement covenanted with and undertook to Speed that the details set out in Schedule 1 were in all respects true, complete and accurate, should now seek to say that one of those details, namely that four persons, including Mr Ecclestone and Mr Mullens were B directors of FOH, was untrue and inaccurate. Bambino says that it made a mistake. That could be relevant to an argument about rectification, but cannot have any bearing on the construction of the relevant documents.

I must mention two other points put forward by Mr Rosen, neither of which, in my opinion, makes any difference. The first is that, if Schedule 1 to the Shareholders Agreement did effectively nominate the four named persons as B directors of FOH, then, when Speed exercised its option to purchase a further 25 per cent of the SLEC shares from Bambino, so increasing its shareholding to 75 per cent, Bambino should have procured the removal of one of the three B directors then remaining: see clause 17.8(b)(v) of the Shareholders Agreement. However, Bambino did not do that and no-one complained at the time. Factually what Mr Rosen says is correct, but in my judgment it is not an indication that the four persons never were effectively named as B directors; it is merely an instance of one obligation under the Shareholders Agreement not being complied with. Further, it was not a non-compliance which made any difference at the time, since two and a half months later one of the B directors, Mr Werner, resigned anyway, and, as far as I can see, there had been no FOH board meeting in the meantime.

Second, Mr Rosen draws attention to Mr Ecclestone’s witness statement in which he says that he never agreed to be Bambino’s representative or appointee. He says that if he had been asked he would have refused. Mr Rosen asks: how can Mr Ecclestone, who was an ordinary director of FOH, have his status changed to being a B director without having consented to it? However, my view is that the B directors, when present at board meetings of FOH or otherwise acting as directors, were and are simply directors of the company, as are the A directors. Bambino has power to appoint or remove them, but when they are in office they are not Bambino’s representatives. In any case Mr Ecclestone was already a director, and his consent was, in my judgment, not needed for him to be designated as a B director. The consents of FOH’s shareholder, SLEC, and possibly of SLEC’s shareholders, Speed and Bambino, may have been needed, but those consents were obtained in the form of signatures to the Shareholders Agreement. If it is indeed the case that Mr Ecclestone did not realise that he had been designated as a B director, then if he did not like it when he learned about it, he could have resigned. It cannot be argued that he had not become a B director.

For all the foregoing reasons, I accept Miss Jones’ submission that, as a matter of construction, Mr Ecclestone and Mr Mullens on 12 May 2000 became B directors of FOH and have been B directors ever since. I also consider that the position is clear and that Bambino has no real prospect of successfully maintaining a case to the contrary.

I do not believe that this is a matter on which live evidence would make any difference. Therefore, subject to the arguments about rectification which I consider under the next subheading, Speed’s claim is, in my view, suitable for summary judgment.

Before I turn to rectification, there is one last matter to mention. Speed, as an alternative to its arguments on construction with which I agree anyway, has pleaded that Bambino should in any event be estopped from denying that Mr Ecclestone and Mr Mullens are B directors of FOH. If it was necessary I would agree with that argument also. Bambino, having expressly covenanted with and undertaken to Speed that Mr Ecclestone, Mr Mullens and two other persons were B directors of FOH at 12 May 2000, surely cannot now, at least in the absence of rectification, be heard to assert against Speed that they were not. Further, minutes of the small number of SLEC and FOH board meetings which have taken place show that the directors (or at least some of them) were fully conscious that two classes of directors existed and that the classification had consequences of potential significance for the quorum at board meetings. I do not accept that Bambino can now assert that the two classes did not exist. However, I base my decision on this part of the case, not on estoppel, but on the construction of the relevant documents and especially clause 4 of and Part 2 of Schedule 1 to the Shareholders Agreement.

On behalf of Bambino Mr Rosen says that, even if he is wrong on construction of the Shareholders Agreement, as I have held that he is, I should not give summary judgment in favour of Speed. He says that, if the case goes to trial, Bambino will advance a counterclaim seeking rectification of the Shareholders Agreement so that Mr Ecclestone and Mr Mullens would not have been designated by it as B directors of FOH, but rather would have continued to be ordinary directors. Miss Jones accepts that, if the claim for rectification would have a real prospect of success, I should not give summary judgment now. However, she submits that the argument for rectification does not have a real prospect of success. I agree with her. Indeed, in my judgment, the argument for rectification borders on the hopeless.

A claim for rectification would need to establish several things which, in my opinion, Bambino would have no chance of establishing. It would have to prove that, before the Shareholders Agreement was made, the parties had a mutual intention, outwardly manifested, that Mr Ecclestone and Mr Mullens, and presumably also Mr Piccinini and Mr Werner, were to continue as ordinary directors of FOH, not becoming B directors, and that the parties or their legal advisers by a mistake caused the relevant documents to take a different form. It would also be necessary to show with precision the form of the Shareholders Agreement which would have corresponded to the parties’ mutual intention and to which it should be rectified. Further, the above matters must be shown by “convincing proof” (see Russell LJ in Joscelyne v Nissen [1970] 2 QB 86 at 98).

Bambino’s evidence stops far short of that standard and indeed is convincingly refuted by evidence adduced by Speed. Bambino’s only witness who says anything of substance on this matter is Mr Mullens. He is a solicitor, a sole practitioner,and describes himself as a special adviser to Bambino. In his first witness statement he wrote:

Mr Ecclestone says in his witness statement that he was not involved in any way with the preparation of the Shareholders Agreement and was not consulted about the contents of the agreement at all. So on this point Mr Ecclestone’s evidence could not help Bambino to secure rectification.

Mr Rosen seeks to rely on a recent letter from Mr Thomas Haffa. In 2000 Mr Haffa was a key individual in EMTV, the German media company which at the time owned Speed. He became an ordinary director of FOH on 11 May 2000 and an A director on 12 May 2000. Mr Haffa’s letter is, in my opinion, vague and does not get near to showing that there was a mutual intention that Mr Ecclestone and Mr Mullens should not be B directors. The furthest that it goes is to say that Mr Ecclestone was not prepared to appear to be a representative of Bambino. However, Mr Ecclestone could be a B director without being a representative of Bambino. Ms Saunders, for example, was an A director but she was not a representative of Speed, the A shareholder in SLEC: she had been appointed a director back in 1999 at the instigation of West LB, so if she represented anyone she represented West LB.

Having briefly referred to the evidence which Bambino did put forward, I comment on the evidence which it did not. Who has the real authority to take decisions for Bambino? There was no evidence from a director of the company. In any event, being a Jersey company owned (as I believe) by a Jersey Trust, it is likely that the directors were and are local professionals. In my experience such persons may well be conscious that they should not allow their roles as directors to be treated lightly. They may be careful to ensure that board meetings are real occasions and not just rubber stamping sessions, but in general they do not take initiatives. Rather they will look for suggestions and guidance to others who, in a broad sense, are the persons who really stand behind the company. And in any event I repeat that if the position that is adopted is that the directors of Bambino are in all respects the persons in charge of the company, there is no evidence from any director of what Bambino’s intentions were in May 2000. If the directors look for guidance and suggestions to others, who are those others? Mr Ecclestone is adamant that he is not one of them, but neither he nor anyone else says who is. If Bambino, in support of a claim for rectification, wishes to say that, as respects the B directors of FOH, the Shareholders Agreement failed to give effect to its (Bambino’s) prior intention, it needs to adduce evidence from the individual or individuals who was or were responsible for forming that intention. It has adduced none and I do not even know who that individual or those individuals is or are.

Bambino would also need to produce, but has not produced, evidence to show that the intention was a mutual intention, in the sense that Speed, the other principal party to the Shareholders Agreement, knew about it and had the same intention itself. Although in the case of an essentially unilateral document like a settlement evidence of the unilateral intention of the maker of the document may be enough to found a claim for rectification, that is not so in the case of a bilateral or multilateral document like the Shareholders Agreement.

Further, Speed, in contrast to Bambino, has produced evidence of precisely how the relevant provisions of the Shareholders Agreement came to be made. For the purpose of the negotiation and drafting of the Agreement and associated documents, like the Articles of Association of FOH and SLEC, each party instructed solicitors. Mr Sackman, a partner in Norton Rose, acted for EMTV and thus, as it seems to me, effectively also for Speed. Mr Sweet, a partner in Marriott Harrison, acted for Bambino. Mr Sackman has made a witness statement in which he describes what happened, supporting it by copies of the contemporaneous documents. The witness statement and the documents show the following.

By March 2000 work was in progress on drafting the documents. At one stage the draft Shareholders Agreement, which was being worked upon by Mr Sackman and by Mr Sweet for the other prospective party, did not provide for A and B shares or for A and B directors. Mr Sackman and Mr Sweet then had a discussion about adopting an A shares/B shares structure within SLEC. Mr Sweet then sent to Mr Sackman a revised draft which did provide for A and B shares, but at that time did not provide for A and B directors, either within SLEC or within SOH. Mr Sackman, following instructions from the corporate affairs director of EMTV, wrote some suggested manuscript amendments on the draft. One of the amendments was to list the directors of FOH in Part 2 of Schedule 1 as A directors or B directors, precisely as the final form of the agreement appeared. Mr Sackman sent the draft with his manuscript amendments to Mr Sweet. Later it came back to him with the relevant manuscript amendment having been typed into the text. He and Mr Sweet did not discuss the point. It was simply a case of Mr Sackman for Speed suggesting something (the concept of A and B directors) and Mr Sweet for Bambino accepting it, in so far as he could do so in his role as solicitor.

Mr Sackman’s witness statement is dated 12 July 2004 and was presumably served on Bambino’s solicitors at around that date. The hearing before me began on 22 November 2004, a Monday. At 8pm on Friday, 19 November, Speed’s solicitors received a witness statement of Mr Sweet. The text occupies less than a page and, in my respectful opinion, adds nothing to and subtracts nothing from Mr Sackman’s statement. Mr Sweet confirms Mr Sackman to the extent that he does not recall the two of them discussing Schedule 1 to the Shareholders Agreement. He does say that, as far as he was concerned, it was not the purpose of the Shareholders Agreement or, as far as he was aware, the intention of the parties to it, to carry out the appointment of A and B directors to FOH by the Agreement. I am unimpressed by that. What does Mr Sweet think was the purpose of the words “or by this Agreement” in the various definitions of kinds of directors? How does he think that the quorum provisions of FOH’s revised Articles could work if, when the Articles took effect on 12 May 2000, there were no A or B directors? Given the very late service of the witness statement and the scanty nature of it, there has of course been no opportunity to point out these questions in case Mr Sweet should have any answer to them.

At all events, I assume that Mr Sackman and Mr Sweet reached agreement between themselves on the final drafts of the Shareholders Agreement and the revised Articles of the two companies. Plainly one of the details on which they reached such agreement was that the directors of FOH should be listed in Part 2 of Schedule 1 as either A directors or B directors. I also assume that they provided the final drafts in the forms which they had agreed to their clients, and that the clients duly signed the Shareholders Agreement and caused the new Articles to be adopted. In my judgment, in such a case a solicitor’s clients are bound by the agreements and other legal documents which they sign. If such a document contains a drafting detail which a client of one of the solicitors (the client being a signing party to the agreement) did not notice at the time but later is unhappy about, that party is bound by the agreement and it is no use his saying that, although the draft had been agreed between his solicitors and the other party’s solicitors and although he, the client, signed it in the form so agreed, nevertheless, if he had noticed the detailed point on the draft he would have wanted to have it changed. That is the highest that Bambino could ever hope to put its case for rectification. It falls far short in many ways of what the law requires.

In my judgment, if Bambino brought a claim for rectification it would fail. In the terms of CPR 24 (the summary judgment rule) it would have no real chance of succeeding. Therefore Mr Rosen’s submissions about rectification do not cause me to refrain from awarding summary judgment to Speed now.

For the foregoing reasons Speed’s claim succeeds, and I will make the declarations which it seeks.