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Cite as: [2017] EWHC 2478 (Comm)

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Neutral Citation Number: [2017] EWHC 2478 (Comm)
Case No: CL-2015-000488


Rolls Building
7 Rolls Building
Fetter Lane
London EC4A 1NL

B e f o r e :

(Sitting as a High Court Judge)


Michael Wright
- and -

David Rowland
Jonathan Rowland


Mr Philip Marshall QC and Mr Paul Casey (instructed by Charles Fussell & Co. LLP) for the Claimant
Mr Ali Malek QC and Mr James Evans (instructed by Forsters LLP) for the Defendants
Hearing dates: 3 – 6 July & 10 – 13 July 2017



Crown Copyright ©

    Mr Christopher Butcher QC:

  1. In the present action, the Claimant claims that the Defendants contractually agreed that he should have an option to purchase up to 5% of the shares of Banque Havilland S.A. ("BH") for an option exercise price of €2.5 million. He claims that that agreement has been repudiated, and claims damages accordingly. Alternatively he claims a quantum meruit for services which he contends that he rendered to the Defendants, including the introduction to the Defendants of the opportunity to acquire Kaupthing Bank Luxembourg S.A. ("Kaupthing Luxembourg").
  2. The parties

  3. The Claimant ("Mr Wright") qualified as a solicitor in 1997, and worked at several firms in London, before seeking to establish a career as an entrepreneur and businessman. His last practising certificate was issued in May 2010.
  4. The First Defendant ("David Rowland") is a successful and very wealthy businessman and investor. As he described it, his investment experience began with the founding of Fordham Investment Group, which he set up in 1965 and successfully sold in 1970 for £10 million, of which his share was £2.5 million. After that, he was involved in commodities industries, and investing in a wider range of businesses. In the late 1990s he began introducing his children into certain businesses. The Rowland family businesses' financial and investment management activities are now extensive.
  5. The Second Defendant ("Jonathan Rowland") is David Rowland's eldest son. He left school at 16, and came to be involved in a number of Rowland family businesses, by which is here meant businesses in effect funded by David Rowland and in which one or more of his children are involved in some way. In 2013 he had a serious stroke, which curtailed his involvement in business activities.
  6. The nature of the claim

  7. Mr Wright's case is that he was selected as "lieutenant" for Jonathan Rowland, with whom he was or became friendly, and started working for the Rowlands in 2008 to help them locate and acquire investments. He contends that this was pursuant to an oral agreement which he initially dated to 2 April 2008, or alternatively to an agreement concluded by conduct, whereby he would have a monthly retainer, expenses, and a profit share of either 10% or 33% depending on whether the Rowlands' money was at risk. This arrangement has been described by Mr Wright and those representing him as "the 2008 Agreement".
  8. Mr Wright contends that he became a fully integrated member of the Rowlands' management and investment team. He was initially given office space at Blackfish Capital Management Ltd ("Blackfish Capital"), which is a financial services business in Savile Row, and which to some extent functioned as a Rowland family office. Later he moved to Monaco to work there with Jonathan Rowland, and was given an office in the Monaco subsidiary of BH.
  9. Mr Wright's essential claim in the present action is that, in late 2008, he was introduced by a mutual friend to Sigurdur "Siggi" Einarsson, the former Chairman of Kaupthing Luxembourg, the distressed Luxembourg arm of the collapsed Icelandic banking group, Kaupthing Bank hf. He contends that, through Mr Einarsson, he sourced and introduced to the Rowlands the opportunity to acquire Kaupthing Luxembourg, and then worked as a senior member of the Rowlands' deal team to negotiate, structure and close the acquisition ("the BH Transaction").
  10. The BH Transaction involved the demerger of Kaupthing Luxembourg into a new private "good bank", BH, which was named after David Rowland's Guernsey home, and an SPV (which has been described as a "bad bank") called Pillar Securitisation Sarl ("Pillar"). BH was incorporated in Luxembourg as a public company limited by shares. All the issued shares of BH were held by Luton Investments SA ("Luton"), a Luxembourg shelf company acquired as the purchase vehicle. Luton acquired 100% of the shares of BH for a consideration of €50 million contributed by the Rowlands, and a slightly larger contribution by the Luxembourg government. Luton became solely owned by a Guernsey company, controlled by David Rowland, called Braseton Ltd ("Braseton").
  11. Mr Wright contends that after the successful conclusion of the BH Transaction, David Rowland had a small party on board motor yacht "101", and that, on that occasion, and more specifically while the yacht was at Villefranche on 20 July 2009, it was agreed as follows:
  12. i) That the Rowlands (i.e. David Rowland and Jonathan Rowland) granted him an option to purchase up to 5% of the shares in BH for the same proportionate price that the Rowlands had paid to acquire the entire issued share capital of BH, i.e. €50 million ("the BH Option");

    ii) That he would receive an annual fee of €50,000 for three years;

    iii) That a loan would be advanced to assist him with the purchase of the freehold interest in a house at 25 Flood Street in Chelsea;

    iv) That he would receive 10% or 33% (depending on whether the Rowlands had had to commit funds) of the profits made by the Rowlands from deals made by or through BH.

  13. Mr Wright's case is that the agreement which he contends was made on 20 July 2009 was a variation of the "2008 Agreement", alternatively was a free-standing agreement under which he was granted the BH Option.
  14. Mr Wright contends in the present action that the agreement made on 20 July 2009 was substantially performed, save in relation to the BH Option. In that respect, he contends, the agreement has been repudiated. What happened was that, after Jonathan Rowland's stroke in 2013, his relationship with the Rowlands deteriorated, and he was asked by David Rowland in June 2013 to clear out his offices at the premises of BH's Monaco subsidiary. There was then a meeting between him and David Rowland on 25 June 2013, at the offices of Blackfish Capital, which he partially recorded on his phone. At that point, Mr Wright contends, David Rowland repudiated the agreement reached on 20 July 2009, and the "2008 Agreement", in the following terms:
  15. "David Rowland: No, I'm not giving you anything on the bank. I'm not giving you anything – you've had it all on the f-----g bank. 'Cause this is why you got the bloody cut on the things in Denmark, this is why you're getting a cut on Hamleys …. You know, I'm not … I don't … you're not having a carried position on the f-----g bank forever…"
  16. The Claim Form was issued on 26 June 2015. The Particulars of Claim were served on Jonathan Rowland on 6 August 2015 and on David Rowland on 10 November 2015. They set out the claim the essence of which I have summarised in paragraphs 5 to 11 above.
  17. The nature of the defence

  18. The Defences of each of David and Jonathan Rowland were served on 22 December and 30 September 2015 respectively. In Jonathan Rowland's Defence, amongst other things:
  19. i) It was denied that there was any oral agreement in 2008 as to the basis on which Mr Wright would be remunerated, whether on or about 2 April 2008 or at all. It is also denied that there was any agreement by conduct of the terms said by Mr Wright to constitute the "2008 Agreement".

    ii) It was pleaded that there were discussions between Jonathan Rowland and Mr Wright in that period, but they were intended, on both sides, to be friendly and informal, and not to create legal relations. Had it been intended that there was to be a legally binding agreement, it would have been embodied in a written contract. Furthermore, Jonathan Rowland had not had any authority to enter into any agreement on behalf of David Rowland.

    iii) It was admitted that Mr Wright was included on the payroll listing of Blackfish Services Ltd ("Blackfish Services") from 6 April 2009 until 31 August 2010, and for this period was paid £100,000 per annum. Further it was admitted that, given Mr Wright's relocation to Monaco in about August 2010, from September 2010 until May 2013 he received monthly payments of €25,000 from HC1 Ltd, equivalent to €300,000 per annum.

    iv) While it was admitted that Mr Wright was involved in "some discussion" in early 2009 with Mr Einarsson and representatives of Kaupthing Bank hf or its subsidiaries in relation to "a proposed transaction concerning bonds" which did not proceed, it was pleaded that the contact which led to the opportunity to acquire Kaupthing Luxembourg came "subsequently".

    v) It was pleaded that there was no legally binding oral agreement, or indeed any "arrangements", entered into on 20 July 2009 on yacht 101. Further or alternatively it was said that any discussions were friendly and informal, not intended to create legal relations, and too uncertain and incomplete to be a binding agreement. Further, insofar as it was said that this was a free-standing agreement, there was no good consideration for it.

    vi) There was no "part performance" of any such agreement, because no agreement had been made.

    vii) It was not admitted that, even if Mr Wright had been granted the BH Option, he could have exercised it.

    viii) It was denied that Mr Wright is entitled to claim any sum by way of a quantum meruit.

  20. David Rowland's Defence took essentially the same points. It may be noted that it was specifically pleaded:
  21. i) That Jonathan Rowland neither had nor was held out as having David Rowland's authority at any material time.

    ii) There was no "2008 Agreement", and in any event Jonathan Rowland had no authority from David Rowland to engage Mr Wright.

    iii) That it was denied that Mr Wright introduced to the Rowlands the opportunity to acquire Kaupthing Luxembourg.

    iv) There was no discussion as to Mr Wright's remuneration, or any such matters, involving David Rowland on 20 July 2009.

    Key areas of dispute

  22. In light of the above, Mr Wright's counsel identified what were said to be four key areas of factual dispute, as follows:
  23. i) Did Mr Wright provide his services to the Rowlands pursuant to a contract formed orally in 2008 or by conduct under which he would be paid a monthly retainer, expenses, plus profit share of 10 or 33% depending on whether the Rowlands' money was at risk?

    ii) Did Mr Wright source the opportunity to acquire BH for the Rowlands?

    iii) What was Mr Wright's role in the BH Transaction?

    iv) What, if anything, was agreed between the parties on board motor yacht 101 on 20 July 2009?

  24. I agree that this is a useful summary of the main areas of dispute. They are not all of equal importance, however. Issue (1) is relevant principally by way of background, and to the question of whether the alleged 20 July 2009 agreement was a variation or a free-standing contract. No claim is made for damages for breach of, or amounts due under, the unamended "2008 Agreement" if it is found that there was no agreement on 20 July 2009. Issue (2) is relevant principally to the question of what might be due by way of a quantum meruit. It is not part of Mr Wright's case that, if there was an agreement on 20 July 2009 as he contends, the grant of the BH Option was dependent on his showing that he introduced the opportunity to acquire BH to the Rowlands. Issue (3), likewise, is relevant principally to the claim for a quantum meruit. Issue (4) is the critical issue in relation to the claim for breach of contract.
  25. Below I will review and make findings in relation to each of these issues. Before I do so, however, I will record my general impressions as to the factual witnesses and state my approach to the evidence.
  26. The Witnesses and my Approach to the Evidence

  27. I heard evidence from three factual witnesses, namely the parties. I regret to say that this is a case in which I did not consider that the evidence of any of these witnesses was satisfactory.
  28. In the case of Mr Wright, I considered that he displayed a tendency to tailor his evidence to try to fit in with developments in the case and with documentation which had not been previously seen or whose significance had not been appreciated. A clear example of this was his change in paragraph 74 of his witness statement, just before he gave evidence. As appears below, I consider that there were similar examples in relation to the date and timing of the alleged making of the "2008 agreement", and as to whether there was one or more than one discussion of the BH Option on the yacht on 20 July 2009. I considered that there were also concerns as to his scrupulousness. An example of this was that in August 2010 he applied to the Luxembourg authorities for a business visa as a translator for BH for someone who was employed by him as a nanny in the UK and he wanted her to move to Monaco with him and his family. He sought to have BH corroborate the false basis of the application, which it refused to do.
  29. As to Jonathan Rowland, I considered that he had a tendency to give misleading or evasive evidence when he considered that the truth would potentially damage the Defendants' case. This was the position, for example, in relation to his denials that the BH Transaction was one of the best transactions that the Rowland family had done, and that, prior to the BH Transaction, the Rowland family had been considering the acquisition of a bank for some time. I also came to the conclusion that he had invented certain matters which he considered assisted the Defendants' case. In my judgment this applied, at least, to his suggestion that, before the meeting on the boat at Villefranche, he had explicitly told Mr Wright that there would be no question of any options being granted, a matter which had not featured in his witness statement; and similarly his suggestion that at some point after receiving Mr Wright's email of 10.56 on 13 August 2010 he had explicitly told Mr Wright to "stop sending me these emails about things that don't exist", which again had not appeared in his witness statement.
  30. In relation to David Rowland, he was at times aggressive and argumentative, and at others resorted, in my judgment, to saying that he did not know or did not remember matters without making a serious attempt to assist the Court as to the full extent of his knowledge or recollection. I considered that he was less than frank as to the extent of his knowledge of the acquisition of BH or its subsequent fortunes, on which subjects his evidence was at odds with a considerable amount of other evidence as to the degree of control and oversight which he exercised over all Rowland family businesses; and also as to the circumstances of the departure of Mr Konig, and the role in that of the short sale of Kirkland Lake Gold shares.
  31. In almost every commercial case, the best approach for a judge to adopt in making factual findings is to be guided principally by the contemporary documents and the inferences which can be drawn from them and from known or probable facts, rather than oral evidence of witnesses (see UBS AG (London Branch) v Kommunale Wasserwerke Leipzig GmbH [2014] EWHC 3615 (Comm) at [70], and Gestmin SGPS S.A. v Credit Suisse (UK) Limited [2013] EWHC 3560 (Comm) at [15-23]). Given my reservations as to the factual witnesses, set out above, this is particularly appropriate in the present case, and is how I have approached the evidence.
  32. Legal Principles as to Contract Formation

  33. It is also convenient to set out here the legal principles as to contract formation, as these inform my approach to the fourth of the main issues which I have already identified. As to these, I was referred to the recent decision of Coulson J in MacInnes v Gross [2017] EWHC 46 (QB). It contains a helpful summary at paragraphs 76-78, as follows:
  34. "76. The general principles relating to contract formation are set out in the judgment of Lord Clarke in RTS Ltd v Milkerei Alois Muller GmbH and Co KG [2010] UKSC 14; [2010] 1 WLR 753:

    "45. The general principles are not in doubt. Whether there is a binding contract between the parties and, if so, upon what terms depends on what they have agreed. It depends not upon their subjective state of mind, but upon a consideration of what was communicated between them by words or conduct, and whether that leads objectively to a conclusion that they intended to create legal relations and had agreed upon all the terms which they regarded or the law requires as essential for the formation of legally binding relations. Even if certain terms of economic or other significance to the parties have not been finalised, an objective appraisal of their words and conduct may lead to the conclusion that they did not intend agreement of such terms to be a pre-condition to a concluded and legally binding agreement."

    As Lord Clarke made plain at paragraph 50 of his judgment in the same case, the governing criteria is the reasonable expectations of honest and sensible businessmen.

    77. There are a number of important principles relating to the intention of the parties to create legal relations. In particular:

    (a) Where there is express agreement, in an ordinary commercial context, the burden of disproving an intention to create legal relations is a heavy one: see Chitty on Contracts, 32nd Edition, 2-168;

    (b) Where there is no express agreement, the onus is on the party claiming that a binding agreement had been made to prove that there was an intention to create legal relations: see Assuranceforeningen Gard v IOPC Fund [2014] EWHC 3369 (Comm);

    (c) One factor which may be relevant to the issue of contractual intention is the degree of precision (or otherwise) with which the alleged agreement is expressed. Vagueness/uncertainty may be a ground for concluding that the parties did not reach any agreement at all: see Chitty on Contracts, 2-147 and 2-194.

    78. The court may conclude that there is no binding agreement because no definite meaning can be given to what was said: see Mamidoil-Jetoil Greek Petroleum Co SA v Okta Crude Oil Refinery AD [2011] 2 Lloyds Rep 76. In this context I also note that:

    (a) The more complicated the subject matter, the more likely the parties are to want to enshrine their contract in a written document, thereby enabling them to review all the terms before being committed to any of them: see Cheverney Consulting Ltd v Whitehead Mann Ltd [2006] EWCA Civ 1303 and Benourad v Compass Group PLC [2010] EWHC 1882 (QB) at paragraph 106(a);

    (b) The express identification of a "trigger" event (upon which it is said, for instance, commission becomes payable) is something which the law regards as essential for the formation of a legally binding contract: see Luxor (Eastbourne) Ltd v Cooper [2941] AC 108 and Wells v Devani [2016] EWCA Civ 1106."

    The Main Areas of Dispute

    Was there a "2008 Agreement" and if so what were its terms?

  35. I have already set out the nature of Mr Wright's case as to the making of a "2008 Agreement". His letter before action stated that discussions with Jonathan Rowland had culminated in a lunch meeting on 2 April 2008 in London, at which Jonathan Rowland proposed and Mr Wright accepted specific terms which gave rise to a binding legal contract. Subsequently in Further Information, it was pleaded on Mr Wright's behalf that "the meeting took place on or around 2 April 2008 at Cecconi's (the Italian restaurant in Mayfair, London)".
  36. Mr Wright's case as to when any meeting had taken place was subsequently modified. It emerged that Jonathan Rowland was abroad from 27 March to 4 April 2008. Mr Wright accepted in his witness statement that the meeting had probably not occurred on 2 April, but said that it had probably occurred later in the month, on 22 April 2008. There was, however, evidence that Jonathan Rowland had had lunch with representatives of Coutts bank on that day. Faced with this, Mr Wright said in evidence that the "lunch" meeting had taken place later, in the afternoon, and had involved light food.
  37. These developments of Mr Wright's case on the meeting raised doubts as to the reliability of Mr Wright's evidence in this area. This made it all the more important to consider the extent to which his account was or was not supported by the contemporary documentation. As to this, there is no document recording terms agreed between Mr Wright and Jonathan Rowland in or about April 2008. Nor did Mr Wright make his own note or memorandum recording an agreement. There is no email or other communication, from any date in 2008, which refers to there having been an agreement of the terms of Mr Wright's engagement at a meeting with Jonathan Rowland. An email which was sent by Mr Wright on the evening of 22 April 2008, i.e. the date which came to be Mr Wright's preferred candidate for the meeting at Cecconi's, contained no reference to there having been any agreement, or to any terms on which Mr Wright was being engaged.
  38. By contrast with Mr Wright's account, Jonathan Rowland denied that there had ever been an agreement in 2008, at Cecconi's or elsewhere, which involved all the features Mr Wright contends were then agreed. Jonathan Rowland's evidence was that the relationship with Mr Wright was loose, and casual, and evolved over time. It had involved, or come to involve, the payment of a certain sum, which Jonathan Rowland had thought was £100,000 per annum, as a retainer, as well as the reimbursement of expenses. Jonathan Rowland also said that, in relation to a profit share, this had not been agreed at the outset, but there had come to be a "framework", under which Mr Wright might be paid either 10%, in the case of deals where the Rowlands had put up capital, or 33% where they had not. Whether such payments would be due would, however, always depend on whether David Rowland agreed to do so on a case by case basis.
  39. I accept that during the course of their discussions during 2008, Jonathan Rowland must have given sufficient indications to Mr Wright as to how he would be remunerated for Mr Wright to have been willing to work for the Rowlands, and in particular to be, or seek to be, Jonathan Rowland's "right hand man". In my judgment, however, Jonathan Rowland's account of what happened in this regard is the more plausible and the more consistent with the surviving documentation, or lack of documentation. Specifically, I consider it to be unlikely that, if there had been any concluded agreement at any meeting in or about April 2008 which was intended to involve binding commitments of the sort alleged by Mr Wright, it would not have been reduced to writing or at least recorded in some way.
  40. Furthermore, if there was to have been any binding agreement, it would have had to have been sanctioned by David Rowland. David and Jonathan Rowland both denied that the former had given the latter any authority to enter into an arrangement of the sort Mr Wright contends for as the "2008 Agreement". Having seen him give evidence and heard of his approach to his businesses, I regard it as highly unlikely that David Rowland would have given Jonathan Rowland authority to enter into an open-ended commitment, involving profit shares in unidentified deals, with someone that David Rowland did not, at that stage, know very well. I regard it as significant that, as Mr Wright accepted, he had never asked David Rowland for a written contract embodying the alleged "2008 Agreement". I consider that the reason for this is that he did not consider that there was any binding agreement with David Rowland, and that to have asked for a written contract would have produced, at the least, a denial that the Rowlands had any contractual obligations to him.
  41. Mr Wright made an alternative case to the effect that the agreement was entered into by Jonathan Rowland on or about 2 April 2008, and was then subsequently ratified by David Rowland. As I have already said, I find that Jonathan Rowland did not enter into any oral agreement of the kind alleged. In any event, I do not consider that, even if he had, it was established that David Rowland had ratified it. What is relied upon, in this respect, is that David Rowland accepted services rendered by Mr Wright, and permitted payments to be made in return for such services. However, it was not established that David Rowland had had the necessary knowledge of the conclusion of any agreement between Jonathan Rowland and Mr Wright; and his involvement in authorising certain payments to Mr Wright did not amount to a manifestation that he treated such an agreement as authorised or binding on himself. They are consistent with ad hoc agreements to the payments of particular sums in circumstances where Mr Wright was assisting Jonathan Rowland.
  42. A further alternative case was made by Mr Wright, to the effect that the "2008 Agreement" was made by conduct, and in particular by (a) Mr Wright's commencing work as a "deal finder" for the Defendants, shortly after 2 April 2008, and (b) the payment to Mr Wright of retainer fees, expenses and profit share payments.
  43. It is apparent that from about the middle to the end of 2008 Mr Wright was involved with Jonathan Rowland in working on a number of potential projects or ideas, as to which there is limited information. There is no documentary evidence suggesting that his involvement in these matters was pursuant to any arrangement which meant that he had to work exclusively for the Rowlands during this period.
  44. It is also clear that Mr Wright submitted and was paid in respect of certain invoices relating to the latter part of 2008. Specifically, there were three invoices, RW01, RW02 and RW03. The first, RW01, was dated 17 November 2008, and claimed £37,500 for "consultancy services provided in Abu Dhabi, Bahrain and Montenegro", for July, August and September 2008. No VAT was included, and payment was requested to be made to Mr Wright's wife's account at Nordea in Luxembourg. RW02 was dated 28 November 2008, was headed "E Wright", and was for an amount of £12,500 "in respect of consultancy services provided on Scandinavian and Abu Dhabi deals". RW03 was dated 16 December 2008, was for £12,500, and was "in respect of consultancy services provided on Scandinavian deals".
  45. Mr Wright's oral evidence was that these payments had been part of a contractual arrangement whereby he was to be paid £12,500 per month. I was unable to accept this, given that the invoices were sporadic, and that, even if it were granted that RW01 related to July, August and September, RW02 to October and RW03 to November, there was no invoice and no payment relating to December 2008. Equally, Mr Wright neither invoiced for, nor received, any monthly payments in the early part of 2009.
  46. What subsequently happened was that, in April 2009, steps were taken to put Mr Wright on the payroll of Blackfish Services at an annual salary of £100,000. This was ultimately effected and he was placed on the payroll from 1 June 2009, and a balancing payment was, it appears, made to cover the period from January 2009. In his oral evidence, Mr Wright accepted that he was an employee of Blackfish Services, though he did not have, and was content not to have, a written contract of employment with the company. It thus appears that the parties conducted themselves on the basis that Mr Wright was an employee of a company, and that his monthly payments and expenses, after the beginning of 2009, were paid pursuant to his arrangements with the company.
  47. None of these arrangements appears to me to justify an inference of a binding legal contract between Mr Wright and the Defendants personally on the terms of the alleged "2008 Agreement". They appear to me to be consistent with a looser but evolving arrangement, under which Mr Wright initially made intermittent requests for payment, and this was then replaced, albeit after an interval in which matters were not on any sort of clear basis, by payments as an employee of Blackfish Services.
  48. In relation to the profit share element of the alleged "2008 Agreement", it suffices to say that there were no payments of any profit shares to Mr Wright in 2008 or 2009. There were therefore no payments which could constitute conduct from which an agreement can be inferred for either of those two years.
  49. The introduction of the opportunity to acquire BH

  50. Most of the basic facts in this area were not seriously in dispute. To the extent that they were, I incorporate my findings below.
  51. The Rowlands did not know any of the management of Kaupthing Bank before late 2008/early 2009. Mr Wright, for his part, was able to establish a connexion to Mr Sigurdur Einarsson, the former Chairman of Kaupthing Luxembourg, through Mr Troels Askerud, a lawyer at the Danish offices of Eversheds. In late 2008, Mr Wright introduced Jonathan Rowland to Mr Askerud, and that led to a meeting with Mr Einarsson. At that point, there was an initial discussion of the possibility of the Rowlands' acquiring the loan book of the London arm of the Kaupthing Group (Kaupthing Singer & Friedlander). Those discussions continued in early 2009.
  52. Kaupthing Luxembourg was, at the time of these initial discussions, for sale, but the administrators had not approached the Rowlands, and were in negotiations with a Libyan investment group. I find, however, that at the point of these initial meetings between Mr Wright, Jonathan Rowland and Mr Einarsson there was some discussion of the state of play in relation to the sale of Kaupthing Luxembourg. This seems to me to be indicated by the speed with which matters developed after the opportunity became available in March 2009, and, in any event, it would have been surprising if, in the circumstances of the initial meetings, the matter had not come up.
  53. A restructuring plan was presented to the inter-bank creditors of Kaupthing Luxembourg, but was rejected by a vote on 16 March 2009. This put an end to the Libyan bid. On the same day as the vote, Mr Gudmundsson, Kaupthing Luxembourg's then CEO, sent to Mr Wright what he described as "a short memo on the restructuring of the bank", which he said that he was sending following a discussion with Mr Einarsson. This document mentioned that the plan was that the investor would contribute €100 million, although the amount could be lower. Mr Gudmundsson also offered to meet Mr Wright in short order to discuss the plan. This was then followed by Mr Einarsson's sending a Non Disclosure Agreement to Mr Wright and to Jonathan Rowland on 21 March, and by Mr Wright's sending a signed Letter of Intent to Mr Einarsson on 23 March 2009. That Letter of Intent was addressed to the management of Kaupthing Luxembourg and the administrators, signed by Jonathan Rowland, and referred to the fact that "after having been introduced to the Bank's senior management, we recently had the possibility to hold discussions with Kaupthing Bank Luxembourg's senior management and to review the restructuring proposal dated March 05, 2009".
  54. On the following day, 24 March 2009, Mr Gudmundsson emailed Mr Wright, with a copy to, amongst others, Jonathan Rowland, inviting them to a meeting in Luxembourg, at their earliest convenience, "to understand better your intentions regarding Kaupthing Bank Luxembourg and to explain to you where we stand in the restructuring process". On 27 March 2009, Mr Einarsson visited the Blackfish offices to discuss "steps to progress the deal".
  55. Given this sequence of events, I find that the introduction by Mr Wright of Jonathan Rowland to Mr Askerud, and in turn the introduction to Mr Einarsson in late 2008 was causally significant in the Rowlands' ultimate acquisition of Kaupthing Luxembourg. Specifically, I consider it unlikely that, without that introduction, the acquisition of Kaupthing Luxembourg by a Rowland entity would have taken place. What appears to have happened is that Mr Einarsson, aware of the Rowlands as potential investors as a result of the initial introduction and meetings in late 2008/early 2009, as soon as the Libyan bid fell away used his influence over Kaupthing Luxembourg and its management to ensure that the Rowlands were approached immediately. This then led, eventually, to the BH acquisition being concluded.
  56. I consider, therefore, that it was a fair description of what had occurred when Jonathan Rowland in a 40th birthday greeting to Mr Wright wrote that Mr Wright had "sourced" the BH acquisition.
  57. Mr Wright's role in the BH Transaction

  58. After the approach from Mr Gudmundsson on 16 March 2009 to the closing of the BH Transaction on 10 July 2009 there was, of course, a considerable amount of work to be done to ensure the successful conclusion of the deal.
  59. The evidence is that Mr Wright played an active part in this process. It seems likely that he had input into the formal offer letters to the administrators. He was involved in giving instructions to the Rowlands' English and Luxembourg lawyers. He was a point of liaison with the Bank's management concerning due diligence, the timetable for the transaction and the involvement of the Central Bank of Luxembourg. He negotiated a £100,000 contribution to the costs of the due diligence exercise from the Gudmundsson brothers, who were at one time possible minority investors with the Rowlands. He also played a role in persuading the majority of the Inter-Bank Creditors to accept the Rowlands' offer rather than a rival bid by private investment firm JC Flowers, including by preparing or overseeing the preparation of an asset realisation paper. He was also involved in the organisation of Pillar.
  60. Whether Mr Wright was accurately described in the public offering documents for Jellybook Ltd in 2011 as having "co-led" the acquisition of the bank is debatable. The phrase is imprecise. I accept Jonathan Rowland's evidence that Martyn Konig, an experienced banker who had from 2001 been CEO and CIO of Blackfish Capital, had the preeminent leadership role. Jonathan Rowland nevertheless accepted that Mr Wright had, as part of the team, worked "incredibly hard" on the transaction, and that I consider to be correct.
  61. Was there an agreement made on board yacht 101 on 20 July 2009?

  62. It is common ground that David Rowland hosted a small party on board yacht 101 in the south of France on 19-21 July 2009. The Defendants, Mr Wright, and a partner of PwC, with their respective partners, were present. On 20 July 2009 the yacht was in the bay of Villefranche.
  63. As to what occurred on 20 July 2009, insofar as relevant to the question of Mr Wright's remuneration, the parties' positions are strikingly different. Mr Wright's evidence was that, at some point, "relatively early", when "the sun was there", David Rowland called him and Jonathan Rowland and said words to the effect of "Right, let's go and talk about things now". They went to the rear of the boat. David Rowland then did most if not all of the speaking. He said, in effect "Right, we've done a great deal and this is what we're going to agree with you." Thereupon David Rowland said that he would give Mr Wright an option to purchase an amount, agreed at 5%, of the shares in BH at the same price as that at which the Rowlands had purchased them; to make three payments of €50,000; to make a loan to assist in the purchase of the freehold of Flood Street; and to make payments of a profit share, of 10% or 33%, in relation to transactions which arose out of the acquisition of BH. He also said that he would look after Mr Wright's family. Jonathan Rowland confirmed what he had previously been discussing with Mr Wright, and David Rowland elaborated on this and confirmed it. In this way a binding oral contract was concluded between Mr Wright and each of the Defendants personally.
  64. The Rowlands' evidence was that there had been no discussion at all relating to Mr Wright's remuneration on the boat at any time. Their case was that Mr Wright had invented the whole discussion.
  65. Any agreement was not reduced to writing. Neither was any contemporaneous note made of the discussion, if it occurred. These facts are themselves prayed in aid by the Defendants to support their case that no agreement was made. I will consider that further below. What is clear, however, is that in the absence of any such written agreement or note, and given the sharp conflict of evidence, it is necessary to consider any other documentation, either before or after 20 July, which may shed light on what occurred then, as well as the other surrounding circumstances and the plausibility in that context of each side's account. I will consider four aspects of this further material.
  66. The email of 2 June 2009

  67. Mr Wright relies on an email dated 2 June 2009 from him to Jonathan Rowland. No copy of the original of this email has been disclosed by either side. It is, however, set out in an email from Mr Wright to Jonathan Rowland of 13 August 2010. At one point it appeared that the Defendants would contend that the 2 June 2009 email was a forgery, but Mr Malek QC stated in opening that that was not a case that would be made. The terms of the email were as follows:
  68. "Many thanks for the conversation this afternoon. I thought it would be useful to reflect in writing the principal terms of what we agreed with my participation in the entity Luton investments Sarl ("Luton") and the New Bank as a result of my introduction of the Kaupthing Luxembourg SA deal.
    1) An option over 5% is to be granted to me or a nominee on the same subscription price of euro 50m as you and your father invest your funds – this option is to vest immediately and as such is not related to performance or subject to any bad lever;
    2) I will be given an opportunity to subscribe on terms compatible to those that are offered to the other board members;
    3) I will also receive fees as a board director of the bank and in any committee(s) within the Bank, such as the SPV steering committee. Such fees have yet to be agreed; and
    4) It is agreed that I will receive 10% of any profit made by the Rowland family and their various trusts or connected parties on any side deals or arrangements entered into with the New Bank, Luton or Luton group companies.
    I am really excited at working with you and all members of the Rowland family on this new banking venture and to making it into a very successful investment. The first of many profitable and fun transactions together.
    Please can you confirm your agreement to the above.
    Many thanks
  69. Mr Wright's evidence was that he had drafted this email with the assistance of William Charnley, a partner of Mayer Brown. He said that he was not able to remember where and when the meeting with Jonathan Rowland had taken place. He accepted that Jonathan Rowland had not confirmed his agreement to the terms of the email, as had been requested. He said that he believed that this was because Jonathan Rowland needed to clear it with David Rowland. As he put it: "Jonathan needed to clear every major decision with David that's how they worked. … David was all controlling so David would have to approve". On that basis it was not part of Mr Wright's case that any concluded agreement had been entered into on 2 June 2009, nor that the 2 June 2009 email evidenced a contract.
  70. For his part, Jonathan Rowland's evidence was that, while there were various discussions between himself, Mr Wright and Mr Konig as to remuneration, nothing had been discussed with Mr Wright on 2 June 2009. Specifically, his evidence was that the terms said to have been agreed were not discussed. He also said that he had never received the email.
  71. Mr Konig's attempts to secure an equity share

  72. A further aspect of the surrounding documentation and circumstances is the attempts by Mr Konig to agree some form of equity share for himself and possibly also for Mr Wright. The documentation shows that at the end of May 2009, Mr Konig and Mr Wright discussed how they might participate as shareholders in Luton. Mr Wright sent an email to Mr Konig on 29 May 2009, setting out an overview of an equity position by way of origination fee and management equity, which involved A and B shares in Luton, with associated rights. Mr Wright then spoke to Mr Marc Meyers of Loyens & Loeff, a Luxembourg lawyer who had been acting in relation to the BH Transaction, and then forwarded to him "our preliminary ideas on the economic shares we discussed", with a copy to Mr Konig. Mr Meyers discussed these ideas with the CSSF, at least in general terms, on the same day. Mr Wright accepted in his oral evidence that, at this stage, he was planning to get the same terms as Mr Konig. He said that "on the basis of how the Rowlands were navigating us in trying to avoid obligations, I was prepared to get – to try to piggyback where Martyn would be".
  73. On 2 July 2009, Mr Konig wrote to Jonathan Rowland, copy to David Rowland, attaching a draft three-year employment contract for himself as an employee of BH. He also made a proposal in relation to "the issue of profit share", as follows:
  74. "BH/Luton have a separate agreement with me, on the following lines.
    MK is entitled in 3 years time (or immediately payable if employment terminated earlier), to a cash payment or at MKs option only, shares to the value of the same in Luton SA or BH to be calculated as:
    5% of (equity of the Bank at that time less the value of Rowland family equity investment plus any other new shareholder equity investment) This would effectively give me as we agreed a cash settled option on 5% of the growth of the equity in New bank over that 3 year period, over and above the Rowland family and any new investors equity investment.
    Again, if in principle you are happy with this I suggest we get Loyens to draft something appropriate, maybe do something similar for MW [ie Mr Wright] also?".
  75. On 7 July 2009, Mr Konig sent Mr Wright an email which quoted his suggestion as to "profit share", and Mr Wright said, in response: "Martyn - I have Loyens drafting something now." Mr Wright said in evidence that he could not remember when or how he had instructed Loyens to "draft something". On 10 July 2009, the BH transaction completed. Mr Konig was later to state, in an email of 29 July 2009, that he had, on that day, spoken to David Rowland about his proposed employment contract and profit share. Mr Konig said that David Rowland had said that he only wanted to give Mr Konig an employment contract for a year, and that the proposed option was not acceptable "for a variety of reasons". On 11 July Mr Konig sent an email to Jonathan and David Rowland, which appears principally to have been addressed to David Rowland. It attached a draft employment contract. It also stated: "You said that Graham [Robeson] [David Rowland's long-standing right hand man] will draft the option agreement terms and handle this, so I would ask you to forward this mail on to him and then he contact me direct". David Rowland replied on 12 July 2009, saying that he hoped that "we can work out an arrangement for you that are satisfactory for us both". He also copied this to Mr Robeson, saying that they would need to talk about it the next day.
  76. On 17 July 2009 Mr Konig emailed Mr Robeson, in relation to his employment contract. He also asked for his views as to "how you think the option structure should work if you don't think the suggested structure I have put forward is acceptable". They continued to exchange messages over the weekend and into Monday 20 July 2009.
  77. On 20 July 2009 occurred an incident which affected Mr Konig's relations with the Rowlands. This concerned some shares in Kirkland Lake Gold. At 10.57 on 20 July, Mr Wright emailed Eggert Hilmarsson of BH, with a copy to David and Jonathan Rowland and Martyn Konig, referring to instructions which had been given to Mr Hilmarsson "to seek a consent request for an affiliate to deal and/or Banque Havilland in 1m Kirkland Gold shares at cd$6.50." Mr Wright recorded that Mr Hilmarsson had "raised the issue of procedures that should be adopted by the bank in dealing in these securities", and went on "I agreed to send this email acknowledging that you had acted on my instructions and that this concern will be addressed going forward". Mr Konig responded promptly and in concerned terms, as follows:
  78. "Michael, what position do you have to request anyone to act on your authority ???? Maybe a call to me first might have been a good idea?? And you are not going to short cut any procedures, I assume you are not aware that PWC acting on behalf of the CSSF are monitoring every single transaction, so all procedures must be followed, as I do not intend to take the flak for the consequences …. can you pls wake up and realise this is nt a f…… (sic) sweet shop but a bank."
  79. Jonathan Rowland replied to this, saying that Mr Wright had been acting under instruction from David Rowland. There appear to have been further telephone communications between Mr Konig and Jonathan Rowland in the afternoon of 20 July 2009. I have no doubt that this incident exacerbated an already tense relationship between Mr Konig and the Rowlands. Mr Robeson continued to work on the draft of Mr Konig's employment contract and option agreement. A draft of an option agreement between Braseton and Mr Konig was prepared for Mr Robeson. On 22 July 2009, Mr Robeson also provided Mr Konig with comments on the draft for his employment contract. By that stage, however, Mr Konig and David Rowland had had a conversation which represented the parting of their ways. David Rowland told me that Mr Konig had rung him while David Rowland was waiting in an anteroom to see the Prime Minister of Latvia, and had said "I'm leaving". On David Rowland's account, he had asked Mr Konig to wait until he got back, but Mr Konig had said "No, I've got too many problems. My house has been burgled, my wife doesn't want to move to Luxembourg". Mr Rowland said Mr Konig was in a very emotional state, was crying on the telephone, and they had not spoken since. By contrast, Mr Konig's email of 29 July 2009 suggests that Mr Konig had not resigned, but had been dismissed, and indeed, that he had been told by the PA in the Blackfish office to "clear his desk".
  80. I do not accept that David Rowland gave a full and accurate account of the conversation between himself and Mr Konig. I consider that it is likely that there was, at least, also an exchange which related to the Kirkland Lake Gold shares. What undoubtedly happened is that, in the evening of 22 July 2009, Mr Konig replied to Mr Robeson's email commenting on his employment contract, to say that "things have rather moved on, I will talk to DR/JR but for the time being suggest you don't do any further work on this". Mr Robeson forwarded that to David Rowland, saying "Presumably a show down at dawn". David Rowland replied the same evening: "He's a complete C--T. Read up on your banking law." I observe that that reaction would have been inappropriate if Mr Konig had merely said that he had too many problems, his house had been burgled and his wife did not wish to live in Luxembourg.
  81. Communications with Richard Page

  82. A third strand of contemporary documentation is Mr Wright's communications with Richard Page of Mayer Brown. On 13 July 2009, Mr Wright sent an email to Mr Page asking whether, when he was back from his fishing trip, he could help Mr Wright document his "deal terms with the Banque". In the morning of 20 July 2009, Mr Page emailed Mr Wright, saying that "We'd be delighted to help", but raising the point that, as Mayer Brown had represented Rowland/Blackfish on the acquisition, they would only be able to act for Mr Wright if Jonathan Rowland confirmed that that was acceptable. To that Mr Wright replied, in the morning of 21 July 2009, as follows:
  83. "Hi Richard
    I do hope your fishing trip was a success?
    I appreciate the potential conflict of interest raised but the commercial terms are sufficiently clear. I am back in London when perhaps we can talk about the agreement. David wants to grant the option from Braeston that holds Luton.
    Will discuss terms with you at the end of the week
    V best
  84. Mr Page responded to say that they would discuss the terms at the end of the week, and mentioned that he wished to present a bill that month. This chain of emails (including Mr Wright's of the morning of 21 July 2009) was then forwarded to Su Simargool, who is David Rowland's daughter-in-law, and she subsequently forwarded them to, amongst others, David Rowland. There was, however, no discussion between Mr Wright and Mr Page at the end of the week as envisaged by Mr Page. In his oral evidence, Mr Wright said that this was because: "I think it got to the situation where basically the Rowlands said, 'You won't get it documented. You have to believe we have an agreement. It will be implemented. It will be done.'" He also said that he thought that he had told Mr Page that he could not progress it further. There was no documentary evidence of these discussions.
  85. Emails of August 2010

  86. Mr Wright also relied on certain communications which took place some time after the alleged agreement on 20 July 2009. In particular he relied on emails exchanged between himself and Jonathan Rowland in August 2010. Jonathan Rowland had, on 10 August 2010 stated in an email "We have to put in place an arms length commercial loan for your property", and then had suggested certain terms. He had also said that "In terms of Monaco we also need to discuss when we start paying and how it is going to work." To this Mr Wright had replied on 11 August 2010. His email contained the following:
  87. "To date we have been very relaxed on terms as I feel we have a 100% trust – I personally like that way of doing business and really enjoy our day to day activities. We seem to have the same aims and mindset. These financial terms are in addition to our existing historic arrangements of 10% on deals where money is put up; 33% on deals where no money invested or minimal investment, agreed 5% equity position with BH and fee of e50k annually. As we did last year, we will look at the deals completed at the end of each year and then agree the share of proceeds."
  88. To this, Jonathan Rowland replied on 13 August 2010:
  89. "Lets make the annual salry Euro 300k all in and then I will adjust the loan on the property to 2 over and no arrangement fee. In terms of paying down the loan it may have to be a bit more…
    On other subjects. We agreed 4% on BH and 50k per annum for 3 years…"

    Mr Wright responded:

    "Are you free for a call now? This is all probably best talked through by phone so nothing is lost in wrongly nuanced emails.
    The % in BH was definitely 5% that I agreed with both you and your dad on 101 boat on 20 July – I remember the conversation clearly, where we ended up and what we shook hands on. That's the danger of not documenting it at the time so it's good we clarified now. I dug up an email where I had set out the original % that was the basis of our discussion and that's below". [There was then set out the text of the email of 2 June 2009, which I have quoted above.]
  90. On 20 August 2010 Mr Wright emailed Jonathan Rowland as follows:
  91. "To summarise our discussion, its agreed as follows:
    Loan for 25 Flood Street freehold:
    2% over 3mnts euribor (poss to fix, tbc) 20k per quarter repayment
    5 years
    Loan funds to be paid to solicitor account by end of the month.
    E300k pa from 1 September
    Equity in BH:
    5%in bank at original subscription/purchase price
    E50k for 3 years (1 year remaining)
    10% on deals with investment; 33% on deals with no risk."

    Later on the same day he resent this message to Jonathan Rowland, asking "Can you confirm below all agreed pls." There is no email response to this request for confirmation.

    Other aspects of the evidence

  92. Finally I should mention three further aspects of the evidence. The first is that Jonathan Rowland, in the course of his oral evidence, stated that it had been resolved, prior to the meeting on the yacht, that there was no question of Mr Wright's being granted an option. His evidence was that, at the point that Mr Konig was told that he would not be granted an option, Mr Wright would have been told the same thing, and "That's when all options fell away." I do not accept this evidence. It was not pre-figured in Jonathan Rowland's witness statement, and appears to me to be inconsistent with the fact that on 13 August 2010 Jonathan Rowland wrote "We agreed 4% on BH". If Mr Wright had been definitively told that there was no question of an option that would have been a most unlikely email for Jonathan Rowland to have written.
  93. The second is the reliance placed by Mr Wright on that part of the recorded meeting between himself and David Rowland of 25 June 2013, at which the following exchange took place:
  94. "MW: And David, remember when we bought the bank, then we were sitting on the boat 101 – in the harbour on July 20th …
    DR: Well yeah but look … Jonathan says that … Jonathan says that … Look, you've had all that Michael.
    MW: No, but, can I ..."

    This was then followed by the passage which I have already quoted in paragraph 11 above.

  95. What was suggested on behalf of Mr Wright was that David Rowland did not deny that there had been a discussion on the boat, and also that it was significant that he knew, without its being specifically mentioned, that what Mr Wright was alleging was the grant of a "carried position". I was unable to accept the latter part of this contention. The recording which there is of the conversation is unsatisfactory. I consider it obvious that it did not commence at the outset of the meeting, and it undoubtedly broke off shortly after the passage now under consideration. I consider it possible, indeed likely, that, before the recorded part of the conversation, Mr Wright had mentioned certain matters which he considered outstanding, and David Rowland was responding to them, and that this may well explain why he referred to the idea that Mr Wright should have a "carried position" on BH.
  96. Thirdly, Mr Wright relied on what he contended was the performance of the other parts of what he said had been agreed on the yacht, namely (1) the making of 3 payments of Euros 50,000; (2) the making of a loan of £900,000 to purchase the freehold of the house in Flood Street; and (3) the making of payments of certain amounts by way of profit shares in 2011 in respect of deals which came to the Rowlands through Pillar. Again, I considered that this was not persuasive. That these arrangements came subsequently to be made appeared to me to be equally consistent with an informal and developing relationship as with a specific contractual undertaking made on 20 July 2009 as alleged by Mr Wright.
  97. Findings and conclusion

  98. That being the evidence, I can state my findings and conclusions relatively briefly. I consider that it is probable that there was at least some discussion of Mr Wright's remuneration on the yacht. It is a matter which Mr Wright was undoubtedly keen to raise; and such discussion would explain why, in the conversation of 25 June 2013, David Rowland did not deny the existence of any relevant discussion on the boat. I also consider that this discussion may have included David Rowland's countenancing the possibility of an option being granted by Braseton. This would account for the reference to Braseton in Mr Wright's email to Mr Page of 21 July 2009, and also for the fact that, although this email was ultimately forwarded to David Rowland, it elicited no denial.
  99. I am, however, entirely unpersuaded that there was any commitment given by David, or Jonathan, Rowland, on the yacht, to the four matters which Mr Wright says that David Rowland then agreed to. Specifically, I reject the suggestion that David and Jonathan Rowland agreed at that point personally to grant an option, which would have immediate effect, in respect of BH shares.
  100. In reaching this conclusion, I consider that the following matters are of importance:
  101. i) Had David Rowland said what Mr Wright alleges or something approximating to it, with a firm commitment on a series of points, I consider that it would have been documented. Had such words been spoken, I consider that it is likely that Mr Wright would have put them in an email, or at least to have made a contemporaneous note. Furthermore, what he did write on the next day, in his email to Mr Page, appears to me to be inconsistent with the suggestion that there had been any such firm commitment. If there had been, I consider that the email would have said that the terms of the agreement had been specifically and clearly stated by David Rowland the previous day. By contrast, the actual terms of the email, with a reference to "commercial terms" being "sufficiently clear" to proceed to the drawing up of a written contract appears to me more consistent with there having been no firm and binding oral commitment on the previous day.

    ii) The issues of an option and a loan were ones which both sides would have expected to be the subject of written agreements, and, for there to be a binding commitment, to have involved more detailed terms than Mr Wright alleges were discussed. In particular, any binding agreement on an option would have been expected at least to include specific provision as to the company which was granting it, and as to its duration. In this regard, I consider that the contemporaneous attempts of Mr Konig to agree an option arrangement are significant. Both he, and indeed Mr Wright in the period up to at least 7 July 2009 while he was attempting to "piggyback" on Mr Konig's efforts, as well as the Rowlands and those representing them, envisaged that any agreement for an option had to be embodied in a formal agreement. I consider it unlikely that at almost exactly the same time as there were discussions as to whether the Rowlands would agree a formal written option agreement between the relevant company and Mr Konig, they would have entered into an undocumented personal option agreement, on more generous terms, with Mr Wright. Nor do I consider, especially in light of what he knew was happening in relation to Mr Konig's proposal, that Mr Wright or any honest and sensible businessman in his position, would have believed that there was a binding commitment to an option unless a written agreement was drawn up.

    iii) The fact that Mr Wright gave the account which he did as to what David Rowland said is not of itself enough to persuade me that it occurred as he said. I have already given general reasons for why I treated Mr Wright's evidence with caution. In relation to the visit to the yacht specifically, I considered that he had in one clear instance sought to change and tailor his evidence to meet objections to it. Thus, as I have already said, his account in his oral evidence was initially that there had been a single conversation with David Rowland, which had occurred relatively early in the day. When reminded that in his witness statement he had referred to what David Rowland had told him "the night before", he said that there "could have been" a second discussion involving Braseton later. Furthermore his accounts of what exactly was said were imprecise and in some respects changed over time. Thus in his witness statement he had said that David Rowland had stated that he "would be" granted an option. In his oral evidence, however, he said that "it is from that very moment that I had an option", but did not clarify what words had been used to have this effect.

    iv) The communications of 2 June 2009, and those dating from August 2010, to which I have referred above, do not persuade me that Mr Wright's account is correct. In relation to the email of 2 June 2009, there is a real doubt as to whether it was ever received by Jonathan Rowland. There is no evidence that it was shown to or known to David Rowland. It therefore provides only very limited support for Mr Wright's account of what David Rowland said on the boat on 20 July 2009. As to the emails of August 2010, these appear to me to indicate attempts by Mr Wright to obtain from Jonathan Rowland a written acknowledgement of terms which had not been formally or clearly agreed, but to do so without offending him or inviting a clear rejection by presenting the draft of a written contract. They were unsuccessful in the sense that Jonathan Rowland gave no such acknowledgement in response to the request made on 20 August 2010. Furthermore, it is to my mind significant that none of these emails was copied to David Rowland, notwithstanding that, even on Mr Wright's case, it was David Rowland who had agreed all the terms on 20 July 2009 and that no binding arrangement could have been made without his approval.

    Determination of Mr Wright's contractual claim

  102. The issue of whether there was a binding contract concluded on 20 July 2009 is determined by my findings in paragraphs 72 and 73 above. There was no agreement on the terms which Mr Wright contends for. Furthermore, insofar as there was a discussion of the terms of Mr Wright's remuneration, and specifically of the grant of an option, I find that it was apparent to those concerned, and objectively, that for there to be any legally binding relations there would need to have been a written document enshrining the agreement. For these reasons the claim in contract fails.
  103. In the light of this conclusion, it is not strictly necessary for me to deal with two further points which arose in relation to the claim in contract and in particular as to whether, if there was a binding contract, Mr Wright could, in any event, establish that he had suffered loss as a result of a breach thereof. The first of these was that the Defendants contended that it had not been shown that Mr Wright could have raised and would have paid the €2.5 million to Luton for a 5% shareholding in BH in or about June 2013 (it being his pleaded case that he would have done this at the end of June 2013). The second was as to whether the market value of a 5% interest in BH as at the end of June 2013 was greater than the putative purchase price of €2.5 million. This issue was the subject of expert evidence. Given my decision that there was no binding contract as to the grant of the BH Option, I will express my conclusions in relation to these two points briefly.
  104. As to the first, while the evidence was thin, I was, on balance, persuaded that Mr Wright could, if he had sought to do so, have raised the €2.5 million. He said that he could have borrowed the money, including from Brian Cytrynbaum. I accept that this is probably so.
  105. As to the second, there was a divergence between the experts. Mr Steve Taylor, called by Mr Wright, estimated the value of a 5% stake in BH as at 30 June 2013 as between €5.4-€6.4 million (ie a net value of €2.9-€3.9 million after the strike price of €2.5 million). By contrast, Mr Nicholas Andrews, called by the Defendants, estimated the value of such a 5% stake as at 30 June 2013 as between €1.562-€2.762 million (ie a net value of nil to €0.3 million). Mr Andrews' preferred net valuation was what he called a "middle valuation", which was nil.
  106. The reasons for this divergence were essentially two-fold. First, there was a difference as to the value of 100% of the equity in BH. Mr Taylor estimated this as between €154.5-€209 million. Mr Andrews estimated it as between €104-€138 million. An important aspect of this difference was the use of different multiples of price to book value.[1] Mr Taylor used a range of 1.0-1.3; Mr Andrews considered a range of 0.8-1.0 to be appropriate. Secondly, there was a difference as to the discount to be applied for lack of marketability. Mr Taylor considered that this should be between 30-40%. Mr Andrews considered that it should be between 60-70%.
  107. Where they differed, and in particular on both of the issues which I have identified, I preferred the evidence of Mr Taylor. He had more experience of valuing banks than Mr Andrews. Furthermore, as to the first significant issue, I found Mr Taylor's approach of identifying a limited number of closely comparable banks more likely to produce a better estimate of the appropriate multiple than Mr Andrews' approach of taking an average of a larger number of less closely comparable banks. As to the second, Mr Taylor's approach of taking a starting point from restricted stock and pre-IPO studies of 20-30%, and uplifting that by not more than 10% in the case of BH, given in particular its high capitalisation and lack of volatility, was, to my mind, persuasive.
  108. The claim for a Quantum Meruit

  109. Mr Wright's alternative claim is in quantum meruit, for "such sum or sums as shall seem to the Court just and reasonable as a quantum meruit for the Services as pleaded at paragraphs 9 and 10 [of the Particulars of Claim]". The Services pleaded at paragraphs 9 and 10 were (a) Mr Wright's identification and introduction of Kaupthing Luxembourg as an investment opportunity and (b) his work "to negotiate, structure and close the BH Transaction".
  110. The relevant legal principles were, once again, helpfully summarised in MacInnes v Gross at paragraphs 162-166, as follows:
  111. "162. The leading case is Benedetti v Sawiris [2013] UKSC 50. That makes plain that, in order to establish a claim for unjust enrichment, the claimant must prove that:
    (a) The defendant has been enriched;
    (b) The enrichment was at the claimant's expense;
    (c) The enrichment was unjust; and
    (d) There are no defences available to the defendant.
    163. A claim for unjust enrichment is not a claim for compensation for loss, but for recovery of a benefit unjustly gained by a defendant at the expense of the claimant, which is sometimes referred to as a 'transfer of value': see Boake Allen Limited v MRC [2006] STC 606, CA. The enrichment is valued at the time that it was received by the defendant. The starting point for identifying any benefit to the defendant is the objective market value, or market price, of the services provided by the claimant: see Cobbe v Yeoman's Row Management Limited [2008] 1 WLR 1753, HL. The defendant is entitled to prove that he did not subjectively value the benefit at all or that he valued it as less than the market price in order to reduce the quantum of the claim: see Sempra Metals Limited v IRC [2008] 1 AC 561, HL.
    164. It has long been the case that, in certain situations, when considering a quantum meruit claim, the court can take into account any bargain or agreement reached between the parties which seeks to put a value on the services: see Way v Latilla [1937] 3 All ER 759, and Vedatech v Crystal Decisions [2002] EWHC 818.
    165. There was a dispute between the parties as to whether a remuneration agreement of the sort alleged by the claimant would, without more, represent the objective market value of the services provided, or whether it was only a factor for the court to take into account and that other material relating to the objective assessment of value would also be required.
    166. For the reasons noted below, this is not a decision which, on my primary findings, I need to make in this case. But my conclusion on the principle, for what it is worth, is that, depending on the evidence, there may be cases in which an agreement between the parties as to remuneration may, without any further consideration, be taken as the best evidence of the objective market value of the services: see Lord Neuberger in Benedetti. However, such circumstances would be fairly unusual and/or limited, and it will usually be the case that the court will require other evidence relating to market value over and above the agreement reached between the parties."
  112. To this summary I would add the specific point made by Lord Clarke JSC in paragraph [14] of Benedetti v Sawiris as to the valuation of the enrichment that "the question is what is the value of the services themselves, not of any end-product or subsequent profit made by the defendant."
  113. I have set out above my factual findings as to what Mr Wright actually did as regards (a) identifying and introducing the Kaupthing Luxembourg investment opportunity and (b) negotiating, structuring and closing the BH Transaction. The position of the Defendants is, however, that even on the basis of such findings the claim for a quantum meruit fails for a number of reasons. I am persuaded that the Defendants are correct that this claim fails, for the two reasons discussed below.
  114. The first point is that the Defendants contend that it has not been shown that either Defendant has been personally enriched. Any enrichment would have been of Luton or perhaps Braseton. These entities were ultimately owned, via other entities, by the Rowland Purpose Trust 2001, of which, I was told, David Rowland was a Protector but in which he had no beneficial interest, and of which his 8 children were discretionary beneficiaries. However, there was no allegation by Mr Wright that the corporate and trust structure was a sham, and no other showing that the Defendants, personally, had been enriched.
  115. In my view the Defendants are correct on this point, to which Mr Wright had no persuasive answer. It was not shown that there had been an enrichment of the Defendants, or either of them, personally, and neither Luton nor Braseton was joined as a defendant.
  116. The second point is that the Defendants say that there was no evidence on which the Court could value any enrichment arising from Mr Wright's performance of the "Services". In accordance with the principles already set out, what would have to be shown as a starting point would be the objective market value of the benefit at the time it was received, and not any subsequent profit accruing. Here, Mr Wright had simply claimed that the value of the benefit was the same as the amount which he claimed as his contractual measure of damages, on the basis that the best evidence of the objective value of the services provided was the discussions held between the parties on yacht 101, even if those discussions did not give rise to a legally enforceable contract. That, however, contended the Defendants, did not establish a market value, and Mr Wright had adduced no evidence, and in particular no expert evidence, supporting any market value of Mr Wright's services.
  117. I consider that this objection is also well-founded. I am not able to reach any conclusion as to the market value of the services which Mr Wright performed. I do not consider that the discussions on board the boat on 20 July 2009, even if they involved a discussion of the possibility of an option to purchase BH shares, were intended to represent a market value of the services performed as opposed to one which was conditioned by the friendship between Jonathan Rowland and Mr Wright. In any event, as I have found, there was no firm agreement on the grant of any option and this also counts against relying on those discussions as evidence of a market value. I accept that the services performed by Mr Wright had some value, but he was not without compensation even without the BH Option: he was in receipt of a salary of £100,000 per annum during 2009, and received €300,000 a year from September 2010. I have no basis on which to conclude that the market value of his services was greater than the benefits he himself received.
  118. The Defendants contended that the claim for a quantum meruit failed for two further reasons. The first was that this was a case in which there was no unjust enrichment, in that Mr Wright either performed the services as part of his employment with Blackfish Services, and that the employment contract governed his remuneration, or if that was not correct, he performed the services in circumstances where the parties did not intend to create contractual relations and, in such a case, a claim for unjust enrichment would not arise. The second was that the claim at least in respect of the introduction of Kaupthing Luxembourg as an investment opportunity was time barred, in that the work was done before 26 June 2009. To this Mr Wright responded, inter alia, that no incontrovertible benefit had been conferred on the Rowlands until BH had been acquired as a result of the introduction.
  119. In light of my conclusion on the two points discussed in paragraphs 84 to 87 above, it is not necessary for me to decide these issues, and I prefer not to express a view on them, given that neither is a straightforward point.
  120. Overall Conclusion

  121. In the result, Mr Wright's claims fail.

Note 1   In fact Mr Taylor preferred to use a ratio of price to tangible book value, while Mr Andrews used price to book value. This made little difference.    [Back]

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