Enterprise Plus Ltd. v Wagenmann

This is a claim for fees said to have been charged at a daily rate by the Claimant for the services of its sole professional employee, namely Dr Peter Muth, in respect of work done at the end of 1997 in connection with proposals for certain privatisation projects in contemplation in Pakistan.

The claim was originally brought against two Defendants, namely Dr Bernard Wagenmann and the United Bank of Kuwait (UBK). By the time of the trial, which began on 8 July 2003, it appeared to be confined to Dr Wagenmann on the basis of breach of warranty of authority. What is alleged by Dr Muth is that at some point Dr Wagenmann had given him an assurance that he had authority to enter into an oral contract on behalf of UBK to pay his fees, irrespective of whether any of the privatisation projects came to fruition. Dr Muth says he did and Dr Wagenmann that he did not. Essentially I have to resolve that conflict of evidence.

It is right to say that the case against Dr Wagenmann has fluctuated somewhat as time has gone by. At first it was claimed that the commitment by UBK was given on 15 December 1997 (by which time the bulk of Dr Muth's work on the privatisation proposals was already completed). It was said that UBK was then stepping into contractual obligations undertaken by Dr Wagenmann on behalf of his previous employer on 23 October 1997. Part way through the trial, however, this was changed and it was to be argued that the commitment of 23 October 1997 had been given all along on behalf of UBK – albeit six to seven weeks before Dr Wagenmann took up his employment with them. When the trial began before me, UBK were no longer being pursued; the claim was put the sole basis that Dr Wagenmann was in breach of a warranty of authority he had given (to the effect that he had power to bind UBK). By the end of the trial, a new twist was introduced by way of alternatives; namely, that Dr Wagenmann had undertaken to pay the fees personally.

Both the principal witnesses are highly intelligent and experienced men of business. Both, I understand, were respected in their specialist fields. I came to the conclusion at a relatively early stage of the evidence that each was an honest witness doing his best to give as full an account of events and conversations in late 1997 as was now possible.

There is no doubt, however, that recollections are imperfect on both sides, and Dr Wagenmann especially emphasised his lack of memory for many of the critical meanings. He had left UBK in 1999 and the claim, originally put forward in the spring of 1998, was not revived until 2001. The events in question he had put to one side, therefore, as of no continuing significance. It is my view that the clashes of evidence in this case are explicable on the basis of misunderstanding, confused or imperfect recollection, and a certain amount of wishful thinking.

The chronology of events between June and December 1997 is very important. It is fair to say that it is in some respects obscure or controversial, but a general pattern emerges with reasonable clarity.

In the early part of 1997 it began to look as though there would be lucrative opportunities to take advantage of privatisation policies in Pakistan. Shortly before, the IMF had made loans to the Pakistan government, to be supervised by the World Bank. It was a condition of these loans that a number of projects had to be undertaken, including a programme of privatisation. Two people with a particular interest in this area were Saad Raja of IBJ International Plc, a United Kingdom investment bank ("IBJI") which was a subsidiary of the Industrial Bank of Japan ("IBJ"), and Saleem Malik, a member of the English Bar, at that time employed by McKenna & Cuneo ("MKC"), an international law firm with an office in London. Both have given evidence before me, called on behalf of the Defendant. They seemed to me to be shrewd, realistic and accurate witnesses. Mr Raja explained to me that he was at the time an Associate Director at IBJI and in charge of the South East Asia and Middle East interests, with a speciality in Islamic banking. At that time he worked closely with Dr Wagenmann, who was joint head of the asset management group and chief investment officer, and also a member of the board. Together they had developed an Islamic investment banking advisory group. Mr Raja had the idea of putting together a small group of people with specialist knowledge and experience, with a view to bidding for privatisation work from the Pakistan government.

Mr Raja introduced Dr Wagenmann to Saleem Malik and Mr Patrick Doyle, a colleague at MKC. It is not disputed that Mr Raja, Mr Malik and Dr Wagenmann had good contacts in Pakistan. Mr Raja told me that the formation of this group, which was later referred to, somewhat loosely, as The Privatisation Group (or "TPG"), was originally his idea. The plan was that IBJI would be responsible for the banking or privatisation aspects of any projects that presented themselves, but it would be necessary to "buy in" on some basis specialist privatisation expertise in order to fulfil those obligations. That is where the Claimant company and Dr Muth come in, because of his established track record on privatisation – in particular, in the former Soviet Union.

There may have been a brief initial meeting at IBJI on 21 April 1997 between Dr Muth and Dr Wagenmann, followed by another on 9 May 1997. At about this time, I understood a draft Memorandum of Understanding ("MOU") came into being, of which I have seen an unsigned copy, although it was apparently signed on 10 June 1997. The parties to that document were IBJI and MKC. It was formally recorded at Clause 3.1 that IBJI was to be "responsible for the financial, merchant banking, equity placement and such other functions normally associated with a financial institution as well as for the range of professional services required to prepare, structure and implement a privatisation".

Dr Wagenmann explained that IBJI's approach to the TPG venture was initially cautious, and it was "out of the question" to hire a firm to assist with the privatisation aspects. Nor did they wish to bring in a large institution such as Schroders or Lazards because it would probably have meant that MKC and IBJI were reduced to the status of junior partners. It was therefore decided to look for "a more equal partner". Dr Wagenmann originally thought of an old friend called Dr Eugen von Keller of Roland Berger & Partners, but he was unavailable and put forward the name of Dr Muth of Enterprise Plus Limited ("EPL").

In June 1997, there was no formal structure, such as a joint venture company, since it was largely a speculative venture which involved pitching for business and there was obviously no certainty of being awarded any privatisation projects. There seems to have been a general consensus that more formal arrangements would only be implemented as and when a project was awarded. The evidence of Dr Wagenmann, Mr Raja and Mr Malik was that those involved would carry their own costs of putting the bids together, and submitting what were called "Expressions of Interest" (or "EoIs"), and that they would only look for reimbursement from the retainer fee if a privatisation project was in fact awarded. Their understanding was that there was to be an equal split of any profits on the basis of one third to IBJI, one third to MKC and one third to EPL. It was a speculative venture and no payment would be received until the first mandate was obtained from the Pakistan government.

It is, of course, Dr Muth's case in these proceedings that he received a contractually binding assurance via Mr Raja and/or Dr Wagenmann that EPL would be paid come what may (apparently by IBJI in the first instance) for his time in putting together the proposals. There is no doubt that this was going to involve hard and intensive work on his part, in the period between the expressions of interest (if shortlisted) and the ultimate grant of a mandate (if any of the proposals was accepted). It turned out that the period during which Dr Muth carried out this work on the various different projects was 14 November to 15 December 1997. He rendered his first invoice in April 1998 and, in due course, launched these proceedings in 2001 with a view to recovering his fees for that work.

Dr Wagenmann's defence, and his evidence together with that of Mr Raja and Mr Malik, is quite simply to the effect that no such agreement was entered into; it would have been wholly inconsistent with the nature of the project. In particular, it would not have been consistent with the agreement that the profits (if any) should be split three ways. It was noticeable that all three of the defence witnesses were incredulous at the suggestion that anyone would agree to Dr Muth's "having his cake and eating it", in the sense that he would not only share in profits on an equal basis, if the venture came to fruition, but would also be paid for his fees in any event.

Dr Wagenmann explained that no budget had been allocated within IBJI for expenditure on the project; hence, "the option of hiring a firm was out of the question". None of these witnesses disputed that Dr Muth was concerned in September and October 1997 about his position, and that of EPL, because the commitment of time and work meant that other prospects had to be abandoned. He therefore asked that he should receive recompense for this. They all agreed, however, that he was told that no one could receive payment until the first mandate had been received. What was conceded, however, in recognition of his position, was that he should have first call on any funds that came in at that stage. His "partners" IBJI and MKC were willing that he should be first in the queue. This was agreed by Mr Raja and Mr Malik respectively.

When Dr Muth's claim was initially put forward in correspondence, on 7 April 1998, in the sum of 63,425 US dollars, Dr Wagenmann submitted it straight away to one of the in-house lawyers at UBK, where he had been working since 1 December 1997. He received advice from a Carl Gilbert on 12 May, whose reaction was the same as Dr Wagenmann's; that is to say, "that Dr Muth was trying it on". That impression was confirmed as time went by as the claim was not pursued. It was revived in 2001 and these proceedings launched, by which time Dr Wagenmann had been gone from IBJI for some three and half years and from UBK for two years.

It has never been suggested that the agreement to pay Dr Muth his fees for the work in November and December 1997 was ever reduced into writing, either before the work was done or afterwards. Reliance is placed on an oral agreement entered into by Mr Raja and/or Dr Wagenmann on behalf of IBJI, or by Dr Wagenmann on behalf of UBK, or (most recently) by Dr Wagenmann entering into a personal commitment of his own. Needless to say, the burden is squarely upon Dr Muth to prove one or other of these accounts on the balance of probabilities.

There are some contemporaneous notes or memoranda relied upon by Dr Muth in which he says that the various contracts were recorded. Indeed, in his opening, Mr Treasure on the Claimant's behalf placed considerable reliance on these documents and suggested that, unless fraudulently prepared (in particular the one dated 23 October 1997), they provided very strong support for his client's case. First, there was a document of 6 October 1997 relating to a meeting said to have taken place in Dr Wagenmann's office between 4.30 and 4.45 p.m., at which only Dr Wagenmann and Dr Muth were present. Dr Wagenmann says that he has no particular recollection of the meeting, but does not believe he could have arrived before 5.00 p.m. because his diary records a dental appointment which, if fulfilled, would have prevented his earlier arrival.

The critical passages are as follows:

What is so striking is that Dr Wagenmann is recorded by Dr Muth as saying that he understood Dr Muth's position but he could make no commitment then and there, and that matters could be discussed if TPG was short-listed (i.e. after the receipt of the expressions of interest). Nevertheless, he confirmed that there could be no commitment to pay EPL "until a first mandate was obtained". That is exactly in line with Dr Wagenmann's case and the evidence of his witnesses, and it was recorded by Dr Muth himself. On its face, therefore, it strongly supports Dr Wagenmann.

In order to overcome this difficulty, Dr Muth now says that he made a mistake in what he recorded. What he should have recorded is that Dr Wagenmann said that there would be no commitment to pay Dr Muth until they had been short-listed, and the time came for proposal writing. That seems to me to be wishful thinking on Dr Muth's part. He clearly knew the distinction between that stage and the obtaining of the first mandate. On such a central issue, I simply cannot believe that Dr Muth would have made a mistake. He was put forward as a meticulous note-taker, and I have no reason to doubt it.

In any event, it is quite clear that no contractual commitment came into being at that stage on Dr Wagenmann's part.

There came a time when Dr Wagenmann decided that he would resign from IBJI and move to UBK. The evidence is that he formally resigned from IBJI on 14 October 1997, although a draft service agreement came into existence between him and UBK dated 7 October (i.e. the day after the meeting I have just described). Dr Wagenmann explained that he did not take up his employment until 1 December 1997 (as was the intention expressed in that written agreement) and, meanwhile, his employment was conditional upon his passing a medical – which did not take place until, I believe, 12 November.

At some point, as to which Dr Muth is unclear, there was a brief meeting at IBJI at which Dr Wagenmann introduced him to a senior Japanese executive. Dr Wagenmann has no recollection of this at all. At all events, until the trial began, it seemed that Dr Muth was under the impression that he had met the chief executive. After Dr Wagenmann explained that the chief executive had his office some three floors below the room described by Dr Muth, he was prepared to accept that it might have been someone else – perhaps a Mr Tanaka. Nevertheless, the importance of this meeting to Dr Muth was that the senior executive became very angry at the mention of TPG and made it clear, in no uncertain terms, that IBJI had no interest in the project. Whenever it took place, therefore, it would have been quite apparent to Dr Muth thereafter that Dr Wagenmann had no authority to enter into any commitment on behalf of IBJI in respect of that project and that, if matters were to go ahead, it could only be on the basis that some other institution would take over the role intended originally to be undertaken by IBJI – including, of course, responsibility for providing specialist privatisation expertise (which was of direct concern to Dr Muth).

Dr Muth never claimed that he could put a precise date to this meeting with the Japanese executive, but his evidence was given originally on the basis that he thought it had taken place on or about 13 November 1997. He now suggests that it must have been significantly earlier than this, since Dr Wagenmann told the court that he would have been treated as a non-person after 31 October 1997, which was the date of his official farewell meal at IBJI. He therefore now transposes the meeting back in time several weeks, and says that "it must have" taken place prior to 23 October. In any event, Dr Muth's evidence is that, after this embarrassing scene, he was told by Dr Wagenmann that this would speed his departure from IBJI.

The significance of 23 October is that it was the date of a further meeting, at which Dr Muth suggests a binding oral contract was entered into to pay his fees. Originally, it was argued that Dr Wagenmann entered into this contractual commitment on behalf of IBJI (confirming an agreement entered into earlier on the same occasion by Mr Raja).

Naturally if, as Dr Muth now believes, he had already had the "dusty" response from the Japanese executive by that time, he would hardly be in a position to suggest either that Dr Wagenmann had actual authority to contract in respect of the Pakistan privatisation project on behalf of IBJI, or that Dr Wagenmann would be stupid enough to warrant that he had such authority.

Permission was therefore sought on 10 July, after the court adjourned early on 9 July to enable him to consider his position, for the particulars of claim to be amended to allege that the contractual commitment, said to have been given on 23 October, was actually given by Dr Wagenmann on behalf of UBK rather than IBJI.

In evaluating this claim, for which I gave permission, it is necessary to have in mind that Dr Wagenmann had not yet taken up employment with UBK and was not intended to do so until 1 December. Moreover, his employment was conditional in any event – at least to the extent that he had to pass his medical (nearly three weeks into the future at that time).

Against these uncertainties, therefore, Dr Muth decided to cover himself by alleging, in the alternative, that Dr Wagenmann had given the commitment on behalf of himself. In other words, even though he was cautious enough, or may have been, not to enter into any commitment on behalf of UBK, or to warrant his authority to do so, he is to be taken as being incautious enough to commit his own personal funds to pay Dr Muth's fees. The suggestion seems to be some personal guarantee to this effect: "Whether or not I take up employment with UBK, and whether or not UBK takes over the planned responsibilities of IBJI in connection with TPG, I will personally see that your fees are paid". This is in my view another example of wishful thinking.

It is necessary also to remember that Dr Wagenmann is said to have been merely confirming a contractual commitment already given by Mr Raja at the 23 October meeting before he himself arrived. Whatever else Mr Raja was in a position to do, he was not conceivably authorised to enter into a commitment to pay Dr Muth's fees on behalf of UBK, or on behalf of Dr Wagenmann personally. In those circumstances, it must be Dr Muth's case that, far from confirming a contract entered into by Mr Raja, what Dr Wagenmann was doing was entering into a fresh contract on behalf of a different party (either UBK or himself) without any reference back to Mr Raja. This seems to me to be verging on the realms of fantasy.

Nevertheless, against this unpromising background, I must turn to the documentary record of 23 October meeting relied upon. By that time, the TPG project was looking quite good, because the expressions of interest had apparently been well received, and TPG was short-listed to submit a proposal for the privatisation of the Bank of Pakistan. Dr Muth therefore suggested that he should now proceed, without delay, to prepare a first draft. He is then recorded as having referred (as he had on 6 October) to the "significant risk" he was taking "... as he would abandon a solid position in the market for EPL's traditional business in favour of a new market opportunity which brought with it the prospect of significant success fees".

Dr Muth then records himself saying to Mr Raja:

It is to be noted that here he speaks of "charging TPG" – not of charging IBJI, UBK or Dr Wagenmann. It is clear from the MOU that TPG had originally been perceived as consisting of IBJI and MKC. This would appear to suggest that Dr Muth wanted to be indemnified in respect of his fees by MKC and whichever entity was going to step into the IBJI banking and privatisation role. (On his latest evidence, it cannot have been IBJI because he had already had the "dusty" meeting with the Japanese executive.) He was therefore speaking very loosely.

Mr Raja and Mr Malik were asked about this note, and they accept that the subject could have been raised, but as before their position was simply that Dr Muth would have first call as and when the first mandate was received and the income stream began. Mr Malik said that one crucial word was missing. It should read that "... TM would get paid first for his work related to the proposals".

There is an additional note at the foot of the page to the following effect:

That would make perfect sense if Mr Raja had been passing on an agreement to a general principle that EPL be paid first in the event of fruition. It makes no sense if Mr Raja was agreeing on behalf of IBJI to pay weekly or monthly fees as they fell due. According to Dr Muth's latest evidence, he knew already that Mr Raja's employer would not participating in the project, and thus that neither he nor Dr Wagenmann was in a position to bind IBJI to such a specific ongoing commitment. He cannot have believed at the time that Dr Wagenmann had power to bind UBK either, because it was only on 10 July 2003 that he first suggested that the commitment of 23 October 1997 had been entered into on UBK's behalf. Nor did he record in the 23 October note any reference at all to UBK, which suggests that it had not entered into his consciousness by that time.

It is to be noted also that Dr Muth must have been surprised by the brush off he got from the Japanese executive – whenever it happened. There is no suggestion that he knew that IBJI was unwilling to participate prior to that occasion. It must have appeared to him that there had been, to say the least, a breakdown in communication between Dr Wagenmann and his then employer. To a prudent businessman it must have surely have occurred thereafter that nothing could be taken for granted, and that he would need to go to the relevant horse's mouth for confirmation of any binding commitment. Up to that time, he had apparently been proceeding on the basis that Dr Wagenmann and Mr Raja could speak on IBJI's behalf in relation to TPG. It would be natural for him, therefore, to approach any proposed successor to IBJI for formal confirmation on the principle of "once bitten, twice shy". Instead, he told me that he believed at some point that Dr Wagenmann had authority to bind UBK – even before he left IBJI – and he trusted him in this respect because he believed "he would not make the same mistake twice". I did not find that very convincing. It seems to me to be another example of wishful thinking or ex post facto rationalisation.

If Dr Muth believed he had a binding oral contract with someone to pay his fees between 14 November and 15 December 1997, because of EPL's vulnerability and the need for cashflow, I find it difficult to understand why he did not seek to implement that agreement by confirming it in writing or by rendering regular invoices. No invoice was sent until 7 April 1998, by which time it must have become clear that nothing was going to come of privatisation in Pakistan – at least for the time being. One interpretation of his conduct is that he then sought to make the best of a bad job by rewriting history – not dishonestly, but because he had persuaded himself that his conversations the previous Autumn would bear more weight that he had attributed to them at the time.

There seems to be no doubt that Dr Wagenmann hoped that when he moved to UBK it would take over the role contemplated at the outset for IBJI. What is more, Mr Malik's senior colleague at MKC, Patrick Doyle, had been to see them as a matter of some urgency in early November. He gave evidence for the Claimant, having come over especially for the purpose from South Carolina. He had been told originally of UBK's potential involvement by Mr Raja, and when he went to see them they were "delighted" to be stepping into the shoes of IBJI on the Pakistan project. He could not recall who he spoke to at that stage but it may well have been Mr Chris Keene (the general manager of UBK).

This would be entirely consistent with the fact that by 28 October 1997 alterations were being put in hand to the draft TPG brochure to accommodate the changeover from IBJI to UBK. Dr Wagenmann thinks he would have announced his imminent change of employment shortly after the meeting of 23 October (although, according to his witness statement, he believed at one stage that he had imparted the news to his TPG collaborators at the meeting of that date). He now thinks it would have been on or about 25 October. That is consistent both with the fact that Dr Muth's note of the meeting makes no mention of UBK and with the amendments being made shortly afterwards to the draft brochure.

In any event, it seems clear that by the time the proposals were being drafted, from mid-November onwards, it was on the basis that UBK was going to be a participant in TBG and make the commitment to see through the banking privatisation obligations to the Pakistan government in the event that a mandate was granted.

This was considered important as no one wished to give the impression that there was any doubt about having the capacity to carry it through. This would therefore appear to be consistent with Dr Wagenmann having the authority to act on UBK's behalf, at least in that connection, prior to the date of his appointment on 1 December 1997. But I cannot accept that he warranted his authority to act on their behalf, as now alleged, on 23 October. Dr Muth's own note, in a negative sense, bears out UBK's not being mentioned until later. Indeed, he himself claimed until 10 July 2003 that it was IBJI that Dr Wagenmann represented on 23 October 1997.

I am quite satisfied that not only was he not in breach of warranty of authority at that meeting, but that he made no commitment on behalf of UBK to pay EPL's fees on unconditional time basis – irrespective of whether a mandate was received from the Pakistan government. It made no commercial sense for him to do so, as his witnesses also agreed. If a mandate was received, the money would start to flow. It may have been some time in coming as Mr Raja pointed out, because payments in that environment were not always made promptly. Hence, Dr Muth would have first call on the monies as they came in. If a mandate was not received, the gamble would not have paid off and the costs of getting to that stage would have to be written off by the participants. (Mr Malik told me that MKC had incurred expenditure in time and costs of the order of 60,000 US dollars which had to be written off when none of the hoped for mandates materialised.)

It is difficult to understand why Mr Raja and Mr Malik would have agreed to EPL having a one third share in the event of success for having shared the risk with them, but at the same time as committing themselves to paying Dr Muth over 60,000 dollars in the event of failure. I am quite satisfied that such a one-sided arrangement would have been so contrary to their instincts and inclinations that I cannot believe it happened. Likewise with Dr Wagenmann. As he put it, was he supposed to be very kind or very stupid?

I must now deal with the third note, which is of the meeting held between 12.00 and 1.00 p.m. on 15 December 1997. What it records is as follows:

For Dr Wagenmann to say that he stood by his promise that he would be paid for "his work in the context of the Pakistan proposals" can hardly be said to add anything to what had been agreed on 23 October. He was clearly not adding any greater commitment to that already undertaken, which I am quite satisfied was to the effect that Dr Muth would have had first call on any funds that came in following the grant of a mandate.

It is interesting to note that Dr Wagenmann specifically told Dr Muth that he had not yet secured a "budget for the active promotion of TPG's marketing activities". I simply cannot read into that guarded comment any implication, let alone a binding assurance, that he had secured from UBK a budget to cover a large sum, of the order of 60,000 dollars, in respect of work already completed by the date the assurance was supposed to be given.

I must now consider the other evidence called on behalf of the Claimant. A curious feature of three of the witnesses' evidence was that each was asked his impression of Mr Raja's role, and each responded by seeking to belittle him as some kind of stooge who did as Dr Wagenmann bade him. Those witnesses were Mr Patrick Doyle, Mr Peter Wilcox and Mr Keith Norman. I am not sure it matters what "impression" they had. I am quite satisfied from having seen Mr Raja and Mr Malik that each was his own man and fully capable of standing up for himself. I have already described the role played by Mr Raja at IBJI and the fact that TPG was his conception (which had originally depended very much on his own personal contacts in Pakistan and his acquaintance with Mr Malik). That is indeed consistent with paragraph 7 of Mr Doyle's witness statement where he said "Saad Raja on behalf of IBJI and I on behalf of [MKC] agreed to form a joint venture vehicle (which subsequently became The Privatisation Group)". I reject any notion that he was a mere cypher.

As to the main dispute before me, I did not find Mr Doyle's evidence particularly helpful, since, as he put it, "... I was not involved in all of the discussions between Dr Wagenmann and Peter Muth whether on the joint venture generally or on the issue of payment specifically. I picked things up second hand". It is necessary to remember that much of his time in November and December of that year was spent away in Pakistan. Since one of his primary sources of information, for developments when he was not present, would have been his junior colleague Saleem Malik, I find it difficult to imagine that he was given a different account from that which Mr Malik gave the court. Mr Doyle added, "I do recall being told by both Keith Norman and Peter Wilcox that Peter Muth was to receive for his work what were in effect up front payments together with a participation in the success fee although I do not recall now where or when they told me this". I suppose the phrase "in effect up front payments" would be apt to cover the arrangement described by Mr Raja and Mr Malik, namely that Dr Muth was to go to the front of the queue and receive payment first following any mandate granted. At all events, Mr Raja's evidence about that was first hand, and I see no reason to disbelieve it. Nor do I believe Mr Malik would have told Mr Doyle anything different. I naturally prefer that evidence to what Mr Doyle "picked up second hand".

I need now to introduce Mr Wilcox and Mr Norman, who have not hitherto featured in the narrative. Mr Wilcox was the chief executive of Acorn Power Developments, of which Mr Norman was also a director. They were involved specifically as experts in power generation in connection with one of the four possible privatisation projects in respect of which TPG proposals were submitted. That was the proposed privatisation of the Sui Southern Gas Company.

On the main point, Mr Wilcox's evidence was that he was "left with the firm impression" that Dr Wagenmann of behalf of UBK Asset Management Plc had agreed to enter into a commitment to EPL and Dr Muth to pay fees and expenses in respect of the work which was to be performed by Dr Muth and his colleagues for TPG. He added "I was not surprised that details of the exact arrangement were not revealed to the other members of TPG, since it was very clear to us that UBK Asset Management Plc and Dr Wagenmann alone were responsible for the fees and expenses in question to the exclusion of the other members of TPG".

That takes the matter no further since it in no way undermines the first hand evidence given by Messrs Raja and Malik. It is to be noted, moreover, that Mr Wilcox has introduced an element into the supposed arrangement which even Dr Muth does not contend for – namely the payment of expenses.

Mr Wilcox also said that it was not unusual for deals to be done orally, but he gave no examples. It seems clear from the evidence of Dr Wagenmann and from the statement I was invited to read from Kevin Hunter of UBK that, in the world of banking (in which Dr Wagenmann has spent his working life), an oral commitment to pay fees of the order now claimed by Dr Muth would indeed be most unusual. There are established procedures to be gone through.

Whereas Mr Wilcox said in his statement that he was informed that TPG had retained Dr Muth, it seems that Mr Norman had formed the impression that it was IBJI who had hired him. This tends to confirm that both are simply giving their general impression or understanding of an arrangement which, in the nature of things, did not directly concern them.

At paragraph 6.1 of his statement Mr Wilcox went so far as to say that he recalled one meeting (he could not say when) at which Dr Muth requested payment from "the Group", since he could not work without payment. He went on, "Dr Wagenmann said that this was all right in principle but that he would need to consult his 'masters' at UBK". Mr Wilcox said he heard this as there was "a general babble going on around the table".

This does not tie in with Dr Muth's own evidence in two important respects. First, Dr Muth says that the relevant conversations were conducted one-to-one with Mr Raja, in the first instance, and later with Dr Wagenmann. He does not suggest that any such conversation took place in earshot of Mr Wilcox. Secondly, Dr Muth says that Dr Wagenmann was warranting his authority on behalf of UBK and agreeing – without any need to refer back to his "masters". Moreover, Mr Wilcox said in court that Mr Raja was not at the meeting. If so, he cannot be describing the meeting of 23 October.

Mr Norman came over especially for the hearing from South Caralina, despite the fact that he is now 76, because he regards it as being a matter of business integrity. He thought it was his duty to come. One can only respect that, and I fully accept that he, like the other witnesses in this case, is doing his best to give a frank account according to the best of his recollection.

What Mr Norman actually said was, "It was my understanding from casual discussions with Mr Saad Raja that Dr Muth was being paid by IBJI for the work he was undertaking for TPG and that, in addition, Dr Muth would share in any profits earned by TPG...".

That cannot possibly be accepted in preference to what Mr Raja actually told the court – unless, of course, the account he was giving the court was a false one. That is out of the question and was not even put to him.

Mr Norman described how on one occasion he shared a taxi in the rain from Bucklersbury House, where the MKC offices were, with Dr Wagenmann and headed towards Marble Arch. Dr Wagenmann has a vague recollection of such a taxi ride also but he did not recall that it was with Mr Norman. Mr Norman told me that he sometimes had the responsibility for hiring specialist advisers at that time, such as Dr Muth, "and quite frankly I was interested in the going rate". He said that he asked Dr Wagenmann what Dr Muth was being paid for his work on the proposals and Dr Wagenmann replied "2,000 per day" – and confirmed that this was dollars rather than pounds. It is a matter of record, of course, that Dr Muth was not actually "being paid" 2,000 dollars a day or anything. He did not render an invoice until the following April.

Dr Wagenmann says that he could have given a figure if asked for "the going rate". Although he normally thought in pounds rather than dollars, he could have given a dollar figure in the context of a general question about going rates. He would know roughly what Dr Muth's "going rate" was, because he had told him on 6 October that "he would charge £1500 or the dollar equivalent, which was cheap if compared to rates charged by London-based merchant banks". The fact that he had this knowledge, therefore, in no way gives the lie to his evidence or that of Mr Raja.

I am driven to the conclusion in the light of the evidence, and the inherent probabilities of the situation, that no contractual commitment was entered into of the kind for which Dr Muth now contends, whether on behalf of IBJI, UBK or Dr Wagenmann personally. It follows also that there was no breach of warranty of authority. The claim must accordingly be dismissed.

I should add that after this judgment was complete I received a letter from Dr Wagenmann dated 14 July enclosing a copy of his closing speech and supplementing it in minor respects. This made no difference to the judgment (save for the addition of this final paragraph).