Neutral Citation Number: [2007] EWCA Civ 688
Case No: 2006/2151
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
COMMERCIAL COURT
MRS JUSTICE GLOSTER 
[2006] EWHC 1931 (Comm) 
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 11 July 2007
Before:

LORD JUSTICE TUCKEY
LORD JUSTICE LONGMORE
and
LORD JUSTICE LLOYD
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Between:

	MUNIB MASRI	Claimant  Appellant	
	- and -		
	(1) CONSOLIDATED CONTRACTORS INTERNATIONAL COMPANY SAL
(2) CONSOLIDATED CONTRACTORS 
(OIL AND GAS) COMPANY SAL	

Defendants Respondents	

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- - - - - - - - - - - - - - - - - - - - -

Jonathan Hirst Q.C. and Simon Salzedo (instructed by Simmons & Simmons) for the Claimant Appellant
Mark Hoyle (instructed by LeBoeuf Lamb Greene MacRae) for the Defendant Respondents

Hearing date: 3 July 2007
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Judgment

Lord Justice Lloyd: 
1.	This appeal is against paragraph 1.3 of an order made by Mrs Justice Gloster dated 28 July 2006 after a 12 day trial.  The appellant is Mr Masri, the Claimant in the proceedings.  The Respondents are the Fourth and Fifth Defendants to the proceedings as originally constituted.  Both are Lebanese companies, part of the Consolidated Contractors group of companies, which I will call the CCC group.  The proceedings arise from an agreement made on 6 November 1992 between Mr Masri and (as the judge found) the two Respondents, under which Mr Masri is entitled to participate in profits from the Masila oil field in Yemen under a concession held by the Fourth Defendant (the First Respondent) and later transferred to the Fifth Defendant (the Second Respondent).  I will refer to the Respondents collectively as CCC, and separately as CCIC and CCOG respectively.
2.	The judge had to consider and resolve many questions arising from the dispute between the parties over the 1992 agreement.  Most of them were decided in favour of Mr Masri.  The Respondents appealed but, in circumstances which it is unnecessary to describe, their appeal has been struck out.  Mr Masri applied for permission to cross-appeal.  That application was directed to be heard with the main appeal, and for the cross-appeal to be heard at once if permission were granted.  In the events which have happened the cross-appeal is all that remains for decision.
3.	The judge’s admirably clear judgment, [2006] EWHC 1931 (Comm), describes fully the issues she had to decide, and the facts relevant to the various transactions.  I can be relatively brief in my summary for the purposes of the appeal.
4.	The Masila block or concession in South Yemen was and still is the subject of an agreement dated 15 September 1986, called Agreement for Petroleum Exploration and Production, and referred to as the PSA.  The parties were the Ministry of Energy and Minerals of the People’s Democratic Republic of Yemen, Canadian Oxy Offshore International Ltd (CanadianOxy for short) and CCIC.  It became binding on ratification by the Parliament of South Yemen on 15 March 1987.  CanadianOxy was a subsidiary of Canadian Occidental Petroleum Ltd, itself a Canadian subsidiary of the US corporation Occidental Petroleum Corporation.  CanadianOxy and CCIC were referred to together in the PSA as “the Contractor”.
5.	The PSA gave the Contractor the exclusive right to conduct petroleum operations in the defined contract area during the term of the agreement.  All such operations were at the Contractor’s sole cost and risk, so that it could only look to its share of any eventual production to recoup costs and make a profit.  It had six years for the initial exploration process.  If it was able to declare Commercial Discovery within that time, the PSA would continue for a further 20 years.  Otherwise it would terminate at the end of the six years.
6.	Article 9 of the PSA dealt with the allocation of oil production, providing first that operating expenses, exploration expenditure and development expenditure should be recouped out of 40% of all Crude Oil produced in each year (and 50% of any Gas), referred to as Cost Recovery Petroleum.  The principle and priority of such recovery was as follows.  Operational expenses were recoverable in the financial year in which the expenses were incurred.  Exploration expenditure was to be recovered at the rate of 25% per annum.  Development expenditure was to be spread over 6 years.  If in any year the total of these three exceeded the value of the Cost Recovery Petroleum for that year, the excess was to be carried forward to later years in turn.  Oil produced in excess of that allocated for cost recovery in each year was governed by section 9.3, under which it was to be shared between the Contractor and the Ministry in graduated proportions.  Up to 25,000 barrels per day of production was to be divided 2:1 between the Ministry and the Contractor.  Higher levels of production were to be divided differently, with the Ministry’s share increasing until, at more than 250,000 bpd, the ratio was 4:1.
7.	As between them, CanadianOxy’s and CCIC’s rights and obligations were governed by a Joint Operating Agreement (JOA) which gave a 60% share to CanadianOxy and 40% to CCIC.
8.	CCIC wished to avoid having to bear exploration costs, which could be very substantial, and would be incurred at a time when it was altogether uncertain whether there would ever be a commercial return on the expenditure.  It achieved this by stages.  The JOA made CanadianOxy responsible for the first $22.5 million of such expenditure, with CCC liable to reimburse $4.375 million of that amount, once the whole had been spent.  Thereafter CanadianOxy was to bear 65% of exploration expenditure until commercial discovery was declared.  Thus the burden of 5%, or one eighth of CCC’s 40%, was borne by CanadianOxy from the start, but once the latter had spent $22.5 million CCIC would be liable to pay $4.375 million for the past and a continuing 35%.
9.	In July 1990 CCIC entered into an agreement referred to as the Pecten farmout.  Pecten (a US oil company controlled by Shell) agreed to take half of CCIC’s 40% interest, and with it responsibility on a continuing basis for 20% of the exploration expenditure, in return for paying CCIC $16 million towards past and future exploration costs.  That payment enabled CCIC to meet its liability to CanadianOxy as regards the $4.375 million.  Then in July 1991 CCIC agreed a further farmout, with Occidental Yemen Inc (Oxy Yemen), another affiliate of the Occidental group.  Under this agreement Oxy Yemen took half of CCIC’s remaining 20% share under the PSA and the JOA.  Oxy Yemen agreed to pay its own share of the exploration costs (10%), and to pay CCIC $4 million, plus 50% of CCIC’s 10% share of the exploration costs up to commercial discovery, and all of its share of the exploration costs thereafter (except for those associated with development wells).  Because, up to the declaration of commercial discovery, CanadianOxy was carrying 5% out of CCIC’s (originally) 40%, by this second farmout CCIC had transferred to others the whole of its liability for exploration expenditure.  
10.	Mr Hirst showed us some figures produced by the CCC group in 1993 in connection with the syndicated loan agreement, to which I will refer later, which showed an anticipated payment to CCC in respect of exploration expenditure recovery, from which he submitted that, even though CCIC had shifted to others the liability for exploration expenditure, it had retained the right to keep part of the exploration expenditure recovery.  So far as appears this entry was not the subject of attention at trial, and it would be dangerous to place reliance on it for any particular inference.  In any event it is clear that, by July 1991, CCIC had been able to shift its liability for exploration expenditure, at a cost of limiting its participation to 10% of the concession.  It remained exposed to development expenditure and operational expenses, but the latter would only arise once the concession was believed, and declared, to be commercially viable.
11.	Mr Masri’s participation in CCIC’s interest in the concession arose from personal connections and from his involvement in Arab Bank plc (the Bank), a major international banking group.  The Chairman of the Bank used to be Abdul Majid Shoman, who died in 2005.  Hasib Sabbagh was a non-executive director of the Bank from 1979 to 2003, and he was replaced by Said Tawfic Khoury.  Mr Masri has been a non-executive director and Deputy Chairman of the Bank.  Mr Sabbagh and Mr Khoury were among the founders of the CCC group.  That group was a customer of the Bank, and an important one.  The judge explained at paragraph 22 of her judgment that Mr Masri’s interest in the Concession reflected the fact that the CCC group regarded the support of the Bank and of Mr Shoman for the project as valuable, and as something which they wished to reward, and that Mr Shoman would not take any such benefit for himself but wished it to be passed to Mr Masri (see also paragraph 24 on the same point).
12.	Detailed discussion of Mr Masri’s participation in the concession started in 1991.  After a meeting between Mr Sabbagh and Mr Masri in July 1991, a note was prepared which set out two choices of which one, as typed, was expressed as:
“1% of concession:-
(a)	In this case C.C.C. would bear all the expenses of exploration.  If oil is found commercially Munib Masri would share in 1% of the development cost.”
13.	As the judge explained at paragraphs 43 and 44, two different versions of this document exist.  In both of them a manuscript amendment has been made, altering the second 1% figure to 1.5%.  In one of them the first 1% has also been changed to 1.5%.  The judge held that the first of these two reflected the agreement reached on that occasion, and that Mr Masri had altered the first 1% later, but she said that he had not necessarily acted “with nefarious intent”.  Since this document was in any event superseded later, it does not seem to me that anything turns on the agreement represented by this document for the purposes of the appeal.
14.	In December 1991 the Contractor declared commercial discovery under the PSA, and thereby changed the status of the concession in accordance with the terms of the PSA.  CCIC obtained the construction contract for the operation in May 1992.   Extensive discussion was necessary to procure financing for the project, which led to an offer by the Bank in September 1992 to participate in a $50 million syndicated loan to CCOG, a company set up to become the operator for the concession.  The loan agreement was eventually executed in April 1993.
15.	In the meantime, Mr Masri and Mr Khoury met in August 1992 for a further discussion about Mr Masri’s participation in the concession.  The outcome of their meeting was recorded by Mr Nakhleh, of the CCC group, in a note as follows:
“Masila Oil Concession
On Wednesday August 19, 1992, the following was agreed between Said Khoury and Munib Al Masri concerning CCC’s 10% share of the concession.
1.		Munib will receive the benefit of 1% of the concession from CCC and 9% will remain for CCC.
2.		Munib will participate in 1% of the development costs and he will recover the amount from the sale of oil as per the agreement with the Government.  
3.		CCC will pay 10% of all other expenses and are entitled to all recoveries receivable from exploration expenses.”
I have omitted certain words which the judge held were added in manuscript at a later date, and which do not affect the agreement as reached at the time.  This represented a change from the position as at July 1991, but it was still not the final position.  While the agreement, such as it was, can legitimately be considered as part of the history, I doubt whether either this, or the July 1991 agreement, is admissible on the question of the true construction of the eventual agreement.  Even if they were admissible, they would not assist. 
16.	The eventual agreement came about in circumstances which the judge described at paragraph 67 of her judgment, as follows:
“Mr. Khoury and Mr. Masri were both in London at the beginning of November 1992, so they agreed to meet at the office of CCUK, being a convenient location in London.  They discussed the matter at the meeting in CCUK’s offices.  They agreed that a document should be signed incorporating their understanding reached at the meeting and that they would meet again that evening at Mr. Khoury’s home in London, where a document would be signed.  After the meeting, Mr. Khoury asked Mr. Brawley to draw up an agreement, as Mr. Brawley had a better knowledge of how the Concession arrangements worked.  Mr. Brawley did so and provided a draft to Mr. Khoury, who had the agreement typed up for signature.  It was typed on CCUK headed paper.  Mr. Khoury and Mr. Masri met again in the evening of the same day at Mr. Khoury’s home in London.  An amendment was made to the agreement in manuscript, deleting the obligation on Mr. Masri to pay a 10% share of CCC’s internal costs and administration, which, by this time, were already substantial.  The 1992 Agreement was then signed by both Mr. Khoury and Mr. Masri.  It was common ground that the Memorandum once signed constituted and/or evidenced an agreement binding on Mr. Masri on the one side and on at least one of the Defendants – ‘CCC’ in the document – on the other;  that Mr. Masri would be liable to CCC for 10% of the development and operating costs for which CCC was liable;  that Mr. Masri would be entitled to 10% of the actual net receipts by CCC, after payment of marketing and other costs, in respect of CCC’s share of ‘Contractor oil entitlements’ and development cost recovery;  and that the nature of Mr. Masri’s share was that he was to be a “hidden partner”, in that he was to step into CCC’s shoes in respect of his share without becoming an actual party to the various agreements relating to the Concession.”
17.	The agreement as signed (and omitting the passage which was deleted, as mentioned by the judge) is in the following terms:
“This is to define the principles of participation of Munib Masri (MASRI) in CCC’s interest in the Masila Block in Yemen.
Basic principle is for Masri to receive 10% of CCC’s 10% interest or a 1% overall interest in the Block for Masri subject to the following conditions, payments and adjustments:
1.	Masri is to pay 10% of Masila Block Development costs which are paid by CCC.
2.	Masri is to pay 10% of Masila Operating costs assessed to CCC.
…
4.	Masri shall pay 10% of CCC’s share of Bonus and Training payments required under the Production Sharing Agreement (PSA).
In consideration for the payments and participation of Masri as described above, Masri shall be entitled to the following when and if received by CCC.  (Based on actual net receipts by CCC, i.e. after payment of marketing and other costs).
A.	10% of CCC’s share of Contractor oil entitlements under the PSA.
B.	10% of Development Cost Recovery received by CCC.  
For the purpose of this agreement, the following priority shall be assigned to funds available for cost recovery:-
1.	Operating Expenses.
2.	Exploration Expenses.
3.	Development Expenses.”
18.	The one issue that remains live between the parties on appeal is whether the effect of the agreement is that Mr Masri is or is not entitled to share in operating cost recoveries made by CCC, it being agreed that he is liable to pay or bear his share of operating expenses.  The argument in favour of such entitlement is essentially that entitlement to cost recovery is otherwise symmetrical with liability to contribute to costs, and that if Mr Masri were to have to pay or bear operating costs but not to share in recoveries in respect of such costs, this would be a major distortion, and a substantial departure from the “basic principle” of his having a 1% interest in the Concession as a whole, a departure which one would not expect to find made without express provision.  The argument against entitlement is that there is no specific provision for it, whereas there is for development cost recovery, there are references to operating costs, and there is nothing which can properly be interpreted as providing for him to have a share of operating cost recoveries.
19.	The judge dealt with this, the ninth and last point argued before her, at paragraphs 128 to 131 of her judgment.  She accepted the main argument for CCC to which I have referred, and said that to read Contractor Oil entitlements as including cost recovery petroleum could not assist Mr Masri because it proved too much, giving him a share of development cost recovery, which is separately dealt with.
20.	On behalf of Mr Masri, Mr Hirst Q.C. submitted that there were two express provisions in the agreement which supported his client’s entitlement to share in operating cost recoveries.  One is the statement of the basic principle, because if he has to bear operating costs but cannot recover them, his share is significantly less than 10% of CCC’s 10%.  This is a substantial point, because there is no doubt that the operating costs are, and were always likely to be, significant, and if Mr Masri has to bear his share of them but cannot get a corresponding share of the recoveries, CCC gains twice over: by receiving a contribution to the cost, and by receiving the corresponding cost recovery without having had to incur the cost.  
21.	The other provision on which he relied is the reference to “Contractor Oil entitlements under the PSA”, which he submitted included Cost Recovery Petroleum as well as the Contractor’s share of excess oil under article 9.3 of the PSA.  He pointed out these words in article 9.1: 
“Such Crude Oil and/or Gas to which Contractor is entitled for the purpose of recovering its costs and expenses is hereinafter referred to as “Cost Recovery Petroleum”.”
He could also have relied on article 9.2 which speaks of 
“the Cost Recovery Petroleum to which [Contractor] is entitled pursuant to section 9.1 plus its share of the balance of Petroleum as stipulated in section 9.3”
22.	Mr Hoyle, for CCC, submitted that Contractor Oil entitlements can only be understood as referring to entitlement under section 9.3, which he called “profit oil”, as distinct from “cost oil” governed by section 9.1.  He relied on section 9.10, as follows:
“Contractor and Ministry shall have the right and the obligation to separately take and currently dispose of all of the Crude Oil to which they are entitled under this Article IX.”
23.	I do not understand his submission in this regard.  It seems to me obvious that this clause deals with all Crude Oil to which either of Ministry and Contractor is entitled, and that in the case of Contractor this means both Cost Recovery Oil under section 9.1 and its share of the excess under section 9.3.
24.	Mr Hoyle did submit, correctly, that as used in the 1992 agreement, the phrase “Contractor Oil entitlements under the PSA” has to be understood not only by reference to the PSA but also in the context of the 1992 agreement.  In this respect some other arguments are available to him.  One is based on the phrase in brackets: “based on actual net receipts by CCC”.  That suggests that before Mr Masri gets his 10% various outgoings will have been deducted.  Mr Hoyle submitted that one of these deductions, and the main one, would be the operating expenses.  The words in parenthesis go on to say “after payment of marketing and other costs”.  This shows that operating expenses were not the main item envisaged by the draftsman in this passage, whereas if they are deductible in this respect they would be financially the main item.  I cannot accept that these words in brackets achieve the result for which Mr Hoyle contends.  Nor did the judge rely on them.
25.	Mr Hoyle’s better point seems to me to be that the agreement does refer, twice, to operating expenses, as outgoings, in one case specifically to show that Mr Masri must bear them, whereas it refers three times to development costs, once to show that Mr Masri must contribute his share, and next to show that he is entitled to his share of the corresponding recoveries.  Plainly, the draftsman had operating expenses in mind, and he had in mind both obligations to contribute to expenses and entitlements to share in recoveries in respect of expenses.  It is striking, viewed in that way, that, if Mr Masri was to be entitled to share in operating cost recoveries, the agreement did not say so in terms.
26.	Related to this argument is the point that, if Contractor Oil entitlements under the PSA has the meaning for which Mr Hirst argues, then not only was it not necessary to include the specific provision about sharing in recoveries in respect of development cost, but it might also be argued that Mr Masri would be entitled to share in any recoveries made by CCC as regards exploration cost, which it is common ground that he was not entitled to.  Mr Hoyle argued that Mr Hirst’s submission required Contractor Oil entitlements to be understood, in context, as giving Mr Masri a share not only of what CCC was entitled to under section 9.3, but also of part, but not all, of what CCC was entitled to under section 9.1, and that this far from straightforward reading of the apparently simple phrase was impossible.
27.	Mr Hirst accepted that on his reading there would be duplication between the effect of the phrase Contractor Oil entitlements and the express inclusion of provision as regards sharing development cost recoveries.  He accepted that, if his reading of Contractor Oil entitlements might otherwise give Mr Masri an apparent claim to share in exploration cost recoveries, that could not prevail, because on no basis was Mr Masri liable to contribute to such costs, and he could not therefore claim a share in any recoveries.  The position as regards exploration costs is not clear because, as I have explained, CCC did not, in the end, have to bear any exploration costs, and it would not, on that basis, be expected to be entitled to a share of exploration cost recoveries.  Mr Hirst also submitted, rightly in my view, that if his reading of Contractor Oil entitlement would otherwise produce a duplication with the express provision about development cost recoveries, it would be impossible to contend that this gave Mr Masri the same entitlement twice over.  The express provision would be rejected as surplusage.  He referred to the familiar statement by Staughton LJ in The Eurus [1998] 1 Lloyd’s Rep 351 at 357:
“It is well-established law that the presumption against surplusage is of little value in the interpretation of commercial contracts.”
28.	He also showed us passages from a judgment of Sir Ernest Pollock MR, in Gregg v Richards [1926] Ch 521, warning against giving excessive weight to the principle which might, in English, be stated as “the expression of one thing is the exclusion of another”.  Mr Hirst submitted that Gloster J fell into that trap in the present case.  Pollock MR said at page 528:
“it would be far safer to regard this so-called rule not as a rule of law but a canon of construction to be applied in appropriate cases.”
29.	Gloster J did not refer to this principle, but it is a fair comment to say that she followed it in accepting some of the submissions made by Mr Aldous Q.C., then appearing for CCC.  In so doing it does not seem to me that she treated the principle as other than a guide to construction.
30.	Mr Hirst sought to meet the judge’s point about the futility of mentioning the order of priority, if he is right, by pointing out that Mr Masri had not seen the PSA, and that it would be relevant to make it clear, for the protection of CCC, that entitlement to recover development costs, in which Mr Masri did share, came after recovery of exploration costs, in which he did not share.  Even if CCC itself did not share in those (which is not clear, as mentioned above) it could be relevant to make this point because other parties did share these recoveries, which might postpone recovery of development expenditure.
31.	He also argued that the judge was wrong to place reliance on the passage deleted in manuscript from the agreement as typed.  This would have required a contribution by Mr Masri to internal expenditure incurred by CCC, which was not part of any expenditure covered by the PSA.  I agree that this is neutral on the main point, and cannot provide an indication that Mr Masri was getting a benefit from this deletion which was a counterweight to his not sharing in recoveries of operating expenses.
32.	For his part Mr Hoyle submitted that the “commercial drivers” to which the judge referred, without identifying them, included the proposition that this whole transaction was a gift by CCC to Mr Masri, not something which he had, in any sense, earned.  While he did not say, in terms, that Mr Masri should not look a gift horse in the mouth, he did contend that there was no particular reason why CCC should have been more generous to Mr Masri than it was inclined to be, that he should be grateful for whatever he has got, and that the disparity of position was the price for getting the gift.  That seems to me a bad point.  The agreement itself states what its basic principle is.  Why Mr Masri became a party to it, and why these terms were agreed, rather than any others, is neither here nor there.  What matters is what, in the context of relevant surrounding circumstances, they mean.  
33.	Mr Hoyle submitted that Mr Masri took benefits without risk, but that does not seem to me a fair analysis of the position.  Mr Masri was under a contractual obligation to contribute to development costs up front.  He broke that obligation and, as the judge held, CCC could have accepted that as a repudiation, but it decided not to do so.  He was liable for that contribution regardless of whether the concession proved profitable.  He was therefore at risk and, but for CCC’s decision not to treat the contract as discharged by his breach, he could have lost irrevocably the chance of the significant return to which the judge’s later judgments have shown him to be entitled in the end, while remaining liable in damages for his prior breach.
34.	I would also reject Mr Hoyle’s attempt to rely on much of the evidence given in the course of the trial, and positions expressed during it, as relevant material.  Witnesses on both sides said things which do not fit with what they now contend.  Mr Hoyle queried whether symmetry was relevant, given that CCC was actively involved whereas Mr Masri was not.  That seems to me to be an inadequate explanation for the position which the judge has found, and which at first sight is very odd, that Mr Masri has to contribute to operating expenses, but cannot share with CCC in the recoveries in respect of such expenses, so that CCC is entitled to retain for itself the recovery on account of costs which it has not paid or borne, but which were paid or borne by its hidden quasi-partner, Mr Masri.  Mr Hoyle pointed out, rightly, that this was not a true partnership, but the judge referred to Mr Masri’s status in these terms in paragraph 67 of her judgment (quoted above) and it seems to me that this was a fully appropriate use of language, so long as it is understood that there was no question of a legal partnership as such.
35.	The question of construction is short but not straightforward.  It seems to me that Mr Hirst is justified in saying that the starting point is set by the opening words of the agreement, which express the “basic principle”, and which do so in terms such that one would expect that, apart from express modifications, Mr Masri’s position would match that of CCC, at a proportion of 10% of the whole.  That would lead to an expectation that, since CCC has to bear operating expenses but is entitled to share in recoveries in order to recoup that expenditure, so Mr Masri will be both liable and entitled in the same way.  In my judgment he is also entitled to submit that the departure from this basic principle which is represented by the conclusion to which the judge has come is very striking and surprising, and that one would expect that it would have been achieved by an express provision, rather than by inference from the inclusion of other provisions in themselves uncontroversial.
36.	I see the force of arguments on the other side, particularly those mentioned in paragraph [25] above, based on the express reference to development cost expenses being both incurred and recovered, and by contrast the express reference to operating costs being incurred but not to their recovery.  In the end I have come to the conclusion that these do not suffice to achieve the position, as between the two parties, that one party can retain for itself the recoveries in respect of the other’s expenditure on operating expenses, which would amount to a very significant departure from the basic principle stated at the outset of the agreement.  I accept Mr Hirst’s submission that this distortion would have to have been spelled out explicitly, and that it cannot be inferred from the inclusion of the express provision, in itself uncontroversial, about development cost recoveries.  
37.	In my judgment, the provision for Mr Masri to receive 10% of CCC’s share of Contractor Oil entitlements under the PSA did entitle him to share in the recoveries, under section 9.1, in respect of operating expenses.  It did not give him an entitlement to share twice over in development expenditure recoveries.  If (which is not clear) CCC had any entitlement to receive anything in respect of exploration expenses, it did not give him an entitlement to share in those, because he had not incurred any such expenses.  I accept Mr Hirst’s proposition that it is easier to imply a provision disentitling Mr Masri from sharing in recoveries on account of something that he has not borne or contributed to, than it is to conclude that the agreement has the effect of disentitling him from sharing in recoveries on account of expenditure which he has incurred or borne.  In my judgment the agreement did not have the latter effect.  I respectfully disagree with the judge on this point, and I would grant permission to appeal and allow the appeal.
Lord Justice Longmore
38.	My mind has wavered in the course of the submissions made on what my Lord has called this short but not straightforward question of construction.  But, after reflection, I have no doubt that my Lord’s construction is the right one and the judge’s decision cannot, therefore, be correct.  I agree therefore that we should grant permission to appeal and allow the appeal.
Lord Justice Tuckey
39.	I agree.
The court's order requires an interim payment on account of costs of £85,000, and refuses permission to appeal to the House of Lords and also refuses a stay pending a petition to the House of Lords for leave to appeal. Otherwise the order will be in the agreed form.