Gruber & Ors v AIG Management France, SA & Ors

The parties on each side propose that they should be granted permission to appeal to the Court of Appeal against the order that will now be drawn up by reference to the judgment I have handed down this morning.

In relation to the claimants' application for permission to appeal, that is limited to the dismissal of the claims made in tort against AIG Inc. As Mr Oudkerk QC reminds me, those claims travelled successfully a fair distance towards a favourable conclusion for the claimants. However, they became derailed at the last by my conclusion that, ultimately, and taking account of all the matters that had been relied on by the claimants, they had not proved a necessary state of mind at parent company level that AIG Inc required to have for any of the ways in which the claimants said liability in tort arose.

It seems to me that that is firstly, by nature, very much a decision on the facts by reference to the specifics of the evidence that was before me at trial, and having regard to the gaps in that evidence, such as is highly unlikely to be regarded by the Court of Appeal as a matter for interference. But secondly, in addition, it is a conclusion that I reached, not solely by reference to this, but significantly assisted by the assessment I was able to make, and did make, of the principal witness called by the defendants, Mr Dooley, as a witness, and his sincerity in that regard. It seems to me in those circumstances there is no prospect that the Court of Appeal will feel able or wish to consider interfering with that key conclusion.

So although, as I said, the claims travelled a certain way favourably to the claimants, the fact that they did fail, ultimately, at the final hurdle, is not a matter for which there should be any permission to appeal.

In relation to the defendants' application for permission to appeal, Mr Hunter QC is correct, so far as this submission goes, to remind me that the test is only whether his clients would have a real, that is to say more than a fanciful, prospect of success, and that the points he would wish to pursue before the Court of Appeal are arguments of construction concerning the meaning and effect of the key written contract documents which I determined by reference to the principles of construction applicable under Connecticut law that were, so far as relevant, agreed between the parties and their expert witnesses, and that are, in any event, very familiar principles to an English lawyer. In those circumstances, I apprehend that he is correct, in contrast to the ground of appeal proposed by the claimants, to say that, in principle, the grounds of appeal his clients would wish to pursue are matters where the Court of Appeal may feel that they are freer in their ability to take their own view.

That said, and having considered carefully the submissions Mr Hunter QC presented by reference to very helpful draft grounds of appeal, it seems to me that this is a case in which there is no realistic prospect that the Court of Appeal would differ from the detailed conclusions reached in the judgment in this court as to the meaning and effect of the somewhat complex, in parts, but clearly one-off and bespoke language adopted by the AIG Group for the deferred bonus plans I considered.

Only very briefly to add at this stage, in this court, I would say as follows concerning the individual avenues of proposed appeal.

The first concerns the approach I took to the December 2008 amendments. It is said that there is room for an appeal by reference to the requirement under Connecticut law that Mr Hunter QC is correct is not given any prominence in the judgment, that the amendment must advance a core purpose of the contract. As to that, it was the claimants who, at least as regards one aspect of the amendments, sought to argue that they did not advance a core purpose of the contract. That was part of their argument seeking to persuade me that the amendments were invalid and, as a result, ineffective to affect their clients' rights. On that point they (the claimants) lost. I regarded the amendments as valid, but the question was: what did they mean; what was their effect? That is the reason why the judgment does not give separate consideration to the question of the advancing or not of a core purpose of the contract. As it happens, however -- looking back at my judgment and the conclusion I reached as to the meaning and effect of the amendments -- they plainly did advance core purposes of the contract. First and foremost, so far as the material amendments are concerned, and as I said in terms in the judgment, they plugged a possible gap or removed a possible need for implication as to when precisely there was any cut-off to AIG-FP's relevant obligations in relation to restoration and payment of reduced balances; they also sought to cater for a possible difficulty arising in relation to US taxpayers over section 409A.

It seems to me, in part for the same reason, that there is no realistic room for any argument (other than an argument that the Committee might have misconstrued the Plans) for saying that the amendments, if indeed they have the effect I held them to have, produced a plan that was not more favourable to the participants.

As then to the meaning and effect of the language of the plans, in my view I have done nothing more than straightforwardly apply, as regards the key language affected by the 2008 amendments, the plain words of the contract, taking account of what was, as I recorded in the judgment, common ground as to the content and effect of section 409A of the US tax law that was the background or part of the background against which the amendments were made.

The second proposed avenue for an appeal concerns my conclusions as to meaning of the primary reduction provision, Section 4.01(b)[1]. It seems to me -- although I acknowledge that the importance of this emerged and developed during the course of the trial in part through the encouragement of the court in the light of the parties' submissions, as much as directly out of those submissions, at least, as originally formulated by the claimants -- that ultimately the contrast drawn in the language between the ‘losses’ by reference to which there was to be a reduction and other matters that, in a different context, form part of the distributable income calculation, and, for that matter, the several other features of the language to the scheme to which I referred, meant that the conclusion I reached as to the meaning of ‘losses’ for the purposes of that provision was, again, no more than an application of what the language really has to mean if it is to have sensible meaning at all.

In that regard, therefore again, as it seems to me, I have done no more in the judgment than be loyal to the language of the scheme. I recall, in that regard, in particular -- and in a sense notwithstanding all and any further detail or subtlety there may be in the judgment -- at one level the judgment represents agreement with a submission of the claimants, at the outset and throughout, that the two big points in the case were that the language did not provide for negative balances and that the language required restoration and payment. In my judgment, that is indeed what the language required.

The third suggested ground of appeal concerns the timing and content of the restoration obligation, as to the word ‘subsequently’, as to matters of commercial workability, and, if and to the extent this would be pursued, possible reliance on the fact that the net effect is now de facto a requirement for AIG Inc to fund any restoration and payment. There, it seems to me that Mr Oudkerk QC, with respect, is right to suggest that those are matters where what has been presented to the court as the likely shape of an appeal is little more than a re-argument of the detailed consideration of the language I undertook by the judgment. In the context of this type of case with this type of contract, I take the view that there is no realistic prospect that the Court of Appeal will wish to re-open the view that this court has formed with the benefit of the argument at trial.

For all those reasons, I do not grant permission to appeal to the defendants. If and to the extent that either claimants or defendants wish, nonetheless, to pursue the possibility of an appeal, that is an application they will need to make to the Court of Appeal.