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	England and Wales High Court (Commercial Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Taylor Aston Ltd. v AON Ltd [2005] EWHC 1684 (Comm) (26 July 2005) URL: http://www.bailii.org/ew/cases/EWHC/Comm/2005/1684.html Cite as: [2005] EWHC 1684 (Comm)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		26/07/05

1. Taylor Aston Limited, the Claimant in this action, was originally an unincorporated insurance consultancy business known as Harding & Taylor Associates. Its principals were Mr Binks Harding and Mr Alec Taylor, both of whom already had considerable experience in the insurance industry. The unincorporated business was duly incorporated in about March 1992 in anticipation of the business which is the subject matter of this action. Its name became Harding & Taylor Associates Limited ("H&T"). The change of company name to Taylor Aston Limited took place on 5 May 1998 after a new shareholder, Aston Finance Limited, injected capital into the company. I have been informed that the company is and has for some time been insolvent. It appears that its only real asset is the claim made in this action.
2. The Defendant, Aon Limited, is one of the largest insurance broking companies in the world. It includes a number of hitherto independent businesses, including Alexander Howden Group Limited ("Howdens"). In 1992 Howdens was an established insurance and reinsurance broker with significant overseas business. The Defendant acquired Alexander & Alexander Limited (of which Howdens was then a subsidiary) on 15 January 1997. Prior to that, in August 1996, the Aon Group had acquired Nicholson Leslie Group Limited, another insurance brokerage company. Nicholson Leslie Group Limited was at no time a subsidiary of Howdens.
3. This action concerns an initiative to promote insurance and reinsurance business emanating from Kazakhstan. After the break up of the former Soviet Union the idea took hold that there were opportunities to establish national insurance industries along European lines and practices both in Kazakhstan and also in adjoining CIS states. The prospect of significant oil and gas reserves made it foreseeable that multi-national energy companies working in Kazakhstan would require insurance, which could be placed in Kazakhstan and reinsured elsewhere, in particular in London. It seems that this idea was the brainchild of, in particular, Dr Jack Murphy, who was then senior business studies lecturer at the Dundee Institute of Technology. It seems that the introduction to Dr Murphy of Mr Alec Taylor (to whom I refer in this judgment as Mr Taylor) came from Mr Mel Pulford. Mr Taylor, who had considerable experience in working abroad, including in Tanzania and in Russia itself, had no direct experience of Kazakhstan itself, but believed that he had the experience and ability to promote and co-ordinate the proposed Kazakh insurance business. Building on Dr Murphy's ideas and the contacts necessary with influential people in Kazakhstan he set about co-ordinating the project.
4. He realised that he would need at least one leading reinsurance broker to back him in the initiative described, and ultimately decided that Howdens was the most appropriate. One particular reason for this was his close working relationship with Mr Christopher Laurie, one of Howdens' reinsurance directors, with whom he had worked in particular on a project in Tanzania in 1990. Mr Taylor was also acquainted with Mr David Salt of Clyde & Co, the well-known solicitors, whose help was sought with several aspects of the project. Mr Salt was a fluent Russian-speaker.
5. Negotiations took place in early 1992 between Mr Taylor and Howdens through Mr Laurie and his superior at Howdens, Mr Brian Burnside. Mr Burnside himself reported to Mr Ron Iles, who was Howdens' chairman. The commission agreement which resulted from these negotiations was drafted by Howdens' in-house lawyers at the request of Mr Burnside and Mr Laurie, but the draft was reviewed, at Mr Taylor's request, by Mr Salt of Clyde & Co. This resulted in the Commission Agreement dated 23 July 1992 which is at the heart of the dispute between the parties. It is on the headed paper of H&T and is addressed to Howdens. It is signed by both Mr Harding and Mr Taylor and, on behalf of Howdens, by Mr Iles and Mr Dennis Mahoney, these being the two most senior executives of Howdens. It is common ground that Mr Laurie did not have the authority to enter into an agreement of this sort nor indeed to discuss or settle financial matters at all.
6. The Claimant is at pains to categorise this agreement as a consultancy agreement, for the purposes of several of the issues which arise in the action. The Defendant, for its part, treats it as a brokerage or sub-brokerage agreement, again for obvious reasons. The truth is, as Mr Iles said in his evidence to the Court, that it is a hybrid. It is not a typical brokerage or subbrokerage agreement, nor is it a typical consultancy. The obligations on H&T set out on the first page are not those of a typical broker, but the payment obligations set out on the second page are characteristic of the remuneration of an insurance broker or sub-broker. I have not ultimately found it helpful to try to fit the agreement into one or other of the categories advocated by the parties. It seems to me to be safer to recognise it as the hybrid which it is. It is however clear that the method of remuneration in respect of H&T is not that which one would typically find in a consultancy arrangement. There is no mechanism for payment of fees nor is payment related to the amount of work done. Payment is to be by commission, and to that extent the arrangement is closer to that one would expect for a broker or sub-broker.
7. I set out some of the terms of the Commission Agreement.

"We write to confirm the arrangements between us. This agreement is for Kazakhstan but can be expanded to include Georgia, Uzbekistan and other CIS states (added in manuscript in February 1993).

We will form and lead a small working party of experienced people from the London Insurance Market to advise on the formation of a pool of insurance companies consisting of Demyeooshilik and other Kazakh insurance companies ("KIP"), its requirements its insurance and reinsurance facilities, recruitment and training, reinsurance protection and insurance broking. You will be part of such working party.

We will use reasonable endeavours (1) to procure your introduction to those people in Kazakhstan who are in the initial stages of forming KIP or are necessary to meet in connection with the formation and early operation of KIP and in particular to the Minister of Finance and Insurance ("Persons") and (2) to assist in the negotiations……

Upon [Howdens] or any other company within the same group as [Howdens] executing an agreement in relation to KIP or any insurance corporation incorporated for the provision by [Howdens] of insurance-related services to KIP or the laws of the Republic of Kazakhstan or any successor or subsidiary or associated company of such companies ("Newcos")….or the appointment (whether formal or de facto) of [Howdens] as insurance broker of record to KIP or Newcos resulting from the introductions and endeavours undertaken by us on [Howdens]'s behalf as above, [Howdens] will pay to us a commission equal to:-

(a) 33% (or as otherwise mutually agreed) of the commission received, net of taxes, by [Howdens] (net of any part thereof paid by [Howdens] to a third party insurance broker) in respect of each and every insurance or reinsurance contract placed with on behalf of KIP or Newcos directly or indirectly through [Howdens] less any deduction resulting from return premiums;

(b) 33% (unless otherwise mutually agreed) of all other remuneration, net of taxes deducted therefrom, which is received by [Howdens] and which is payable directly or indirectly in respect of or in relation to the advice on the formation, operation, recruitment and/or training for, broking of and for requirements, facilities and reinsurance protection of KIP or Newcos….

Any commission payable under (a) and (b) above shall be reduced by 50% in the case of any remuneration paid to [Howdens] as a result of competitive tendering.

The Commission payable under (a) above shall not be payable in relation to insurances and reinsurance directed by existing clients of [Howdens] to whom they are a broker of record, provided such insurances and reinsurance:

(a) are not controlled by KIP or Newcos; and

(b) are not required by the law of Kazakhstan to be placed with or arranged through KIP or Newcos….

….Such commission will be paid to us each quarter in arrears based on sums received by [Howdens] during the quarter in question.

The commission payable under (a) and (b) above will cease to accrue five years after the date of receipt by [Howdens] of the commission payable in respect of the first insurance contract placed through [Howdens] with KIP or Newcos or on behalf of KIP or Newcos…..

.…The terms of this agreement shall be governed and construed in accordance with the laws of England and each party agrees to submit to the exclusive jurisdiction of the English Courts as regards any claim or matter arising under this agreement….."

8. Although the Commission Agreement with Howdens provided that H&T should receive 33% of all commissions and/or remuneration generated from insurance business placed by Howdens from Kazakhstan over the five year period of the Agreement, H&T was content to receive something like one third of that, being close to what a normal producing broker would earn. To that end H&T entered into two sub-agency agreements. The first of these was with Dr Jack Murphy and others, referred to loosely as "the Kazakh parties"; the second was with Mr Mel Pulford. These are dated 30 September 1992 and 15 February 1993. Mr Pulford was to get a small share of H&T's commission, although the true construction of the Pulford Agreement is in issue between the parties. A much greater share was to go to the Kazakh parties, including Dr Murphy. Under the agreement of 30 September 1992 Dr Murphy was to receive two thirds of H&T's share under its Commission Agreement with Howdens. Thus H&T would ultimately receive only 11% of Howdens' total commissions, out of which it would have to make payments due to Mr Pulford under the Pulford Agreement.
9. There is a major issue between the parties as to the extent to which H&T were entitled to be paid their expenses in relation to the Kazakh project, and I will leave that matter for later consideration. H&T say that, in their role as consultant, they were entitled to expenses, as a consultant normally would be. This is denied by the Defendant. There is also a major issue as the extent to which sums paid by Howdens to H&T (other than in respect of accrued commission entitlement) were or were not repayable by H&T to Howdens, and again I defer that matter until later in this judgment. What is common ground, however, is that in 1992 all parties were optimistic about the prospects of substantial Kazakh commission-earning business, either resulting from the placing of direct insurance with Kazakh insuring entities (the KIPs) or from reinsurance relating thereto. There were changes in the identity of the designated Kazakh insurance companies, passing from the company named in the consultancy agreement to Kazinstrakh and then to Kazakinstrakh, at a time when it was becoming compulsory in Kazakhstan to ensure through state owned or state controlled entities. Nothing turns on these distinctions.
10. From about July 1992 Mr Taylor made regular visits to Kazakhstan, sometimes with Mr Laurie and sometimes without him. Efforts were made to set up an office for Howdens in Almaty, the principal city in Kazakhstan, and Mr Jerry O'Keefe was chosen to head that office. At a later date Dr Murphy himself became based in Kazakhstan and became an employee of Howdens. I have no doubt that Mr Taylor put in considerable effort to set up the Kazakh operation of Howdens and to facilitate the insurance and reinsurance business, together with getting the necessary work done on understanding and implementing the requirements of Kazakh law, whether through Clyde & Co or otherwise. There was also no doubt that in August 1993 Howdens were appointed the broker of choice to the Kazakhstan Insurance Pool ("KIP") and I accept that once that occurred Taylor and Harding had performed what it needed to undertake in order to be entitled to its commission share. Thereafter, all depended on how much business came in, but no further work was required by H&T from that time onwards in order to earn its commission.
11. The Claimant relies on this fact, no doubt in order to explain the carrying out of later work as having been pursuant to a separate "retainer". But the point is double-edged. The fact that H&T had done all that was needed in order to earn its commission underlines the element of the consultancy agreement which has the nature of a brokerage arrangement, rather than a consultancy. At all events it is clear that Mr Taylor continued to be involved in promoting the Kazakh business, and indeed Howdens' business in Kazakhstan, after August 1993 until early 1996. During this time either the whole or at least most of his time was expended on these ventures. As Mr Taylor said in evidence it was to the parties' mutual benefit that he should continue to facilitate business, whether or not he had a legal obligation to do so in order to earn commission. The more business that was facilitated, the more commission would flow through to Howdens and on to H&T.
12. From 1993 onwards two almost separate stories unfold. The first is that relating to the receipt of commission by Howdens and their communications with H&T as to H&T's entitlement thereto. The second relates to sums paid or advanced by Howdens to H&T, the nature of which is controversial, over much the same period. Although it became clear in evidence that no form of running account was ever operated by Howdens in respect of these two elements, at the end of the day it has been the Defendant's case that, although substantial commissions have accrued and become prima facie payable, those sums are exceeded by the amounts of the payments or advances made by Howdens, which Howdens claims to be repayable by H&T and to overtop the commission entitlement.
13. As for the accounting for commissions due, the Defendant contends that it is not an accounting party under the Commission Agreement and had no contractual obligation to render accounts, but only to pay the 33% as and when it accrued due. It is accepted that information passed to H&T up until the middle of 1995 was patchy, to put it at its lowest. The Defendant alleges that the first payment of commission was made in October 1993, whilst (I think) the Claimant alleges that the first payment was in March 1994. At all events, little or no information was given until the middle of 1995. From 31 August 1995 it seems that H&T were sent every month a "Business List", created from the information that was contained in the monthly bordereau which Howdens in London received from their office in Kazakhstan. Mr Andrew Browne, who worked in or alongside Howdens' accounts department, became involved in H&T's affairs at about this stage and explained the status of these Business Lists in his evidence.
14. Although criticised by the Claimant for lack of information, these are in fact highly detailed documents containing a great deal of information. Again, whilst there has been criticism of the way some of the material is set out, including the split between commissions payable to Howdens in London or Howdens in Kazakhstan (or the absence thereof), Mr Browne explained that the format of these documents was agreed with Mr Taylor's son, Mr Mark Taylor, and that there was never any complaint about the Business Lists. Mr Browne accepts that there was some consciousness at the Kazakh end as to the rather low level of commissions recorded as generated from Kazakh business, and indeed it is and has always been the Defendant's case that the level of business actually emerging from Kazakhstan has been disappointingly low. This has been at the heart of the dispute between the parties, since the Claimant for its part has blamed the low level of commissions on inadequate accounting or reporting by Howdens as to the true levels of business done. By 1996 there were consistent complaints from H&T in this connection, although little was done about it until 2000.
15. The second element in the story concerns the advances made by Howdens. As I said above, Mr Taylor continued to work in relation to the project from 1993 to 1996. This involved a good deal of expenditure, some of which is illustrated in Mr Taylor's witness statement. This included the sponsorship of a tennis tournament and the encouragement of the activities of a Kazakhstan trading company, Meyir International Limited. Shortly after the tennis tournament in about August-September 1994 Mr Taylor and his son Mark began to realise that H & T was facing serious financial difficulties. By this time some lump sums had already been advanced by Howdens (according to the Claimant in order to meet ongoing costs and expenses) but this had been spent and H&T was out of pocket. Since 1993 the chief financial officer of Howdens, Mr Francis Marjoribanks, had been involved in the financial aspects relating to the consultancy agreement.
16. Some of the early events involving Mr. Marjoribanks are in dispute. According to Mr Taylor, there had been a meeting in March 1994, with which I deal below. There had also, according to Mr Taylor, been a private dinner in Dunmow, Essex, at which Mr Marjoribanks had picked Mr Taylor's brains about the future of Howdens' insurance business in Kazakhstan. At all events, by December 1994 it is common ground that to Howdens' knowledge H&T's financial problems had become acute, and that their bankers required comfort. The circumstances of this meeting are hotly disputed and I will return to this dispute later. However, by this time at least £87,000 had been advanced by Howdens, and that sum increased thereafter. From some time in 1995, lists of the totals of these advances were submitted by Howdens to H&T, and Mr Taylor admits that by at least November 1995 he was aware of these. By a document dated 23 November 1995 Howdens produced a list, totalling £416,159.93, of sums purportedly owed by Harding and Taylor to Howdens under a number of heads, which it will be necessary to consider below. It does not seem that these sums were disputed, nor that the increase in those sums thereafter was disputed, and indeed similar sums were recognised in the accounts of Harding and Taylor, again as appears below, as being due to "Creditors".
17. Mr Taylor relies upon a meeting with Mr Marjoribanks on 11 March 1996. He accepts that Mr Marjoribanks asserted that H & T was obliged to reimburse the sum of £416.159.95. Mr Taylor says that he informed Mr Marjoribanks that he understood that the Kazakh parties might be prepared to contribute £250,000 towards this. However, Mr Taylor was under considerable pressure from the Kazakh parties to obtain payment of their share of the commissions. No commitment to contribute the £250,000 ever seems to have been forthcoming from the Kazakh parties. On the contrary, Mr Taylor was compelled to relinquish control over the payment of the commissions due to the Kazakh parties under the sub-agency arrangements by signing a letter dated 11 March 1996 authorising Howdens to deduct and transfer the share of the Kazakh parties from Howdens' own commission and to remit that directly to the Kazakh parties. Mr Taylor was clearly very reluctant to have to do this, as Mr Marjoribanks himself accepts, but he did so, (albeit an attempt was made to subsequently revoke the necessary authority in a letter dated 5 December 1996).
18. Thereafter relations between the parties deteriorated significantly. At a meeting in June 1996 mention of having to take the matter to Court was made, and it seems clear that there was some sort of reference by Mr Marjoribanks to H&T becoming bankrupt before the matter could be brought to Court. I am not satisfied that this amounted to a threat by Mr Marjoribanks to bankrupt H&T or anything of the sort. Both parties were, by this time, exasperated with each other, and somewhat intemperate things might well have been said, but I am not assisted in resolving any of the issues in this case by considering precisely what words were used. Mr Marjoribanks was adhering to his understanding of the legal and financial position, as was the Claimant. Matters seem to have come to a head, although it was four years before any action was taken by the Claimants.
19. In 2000 and 2001 the Claimant obtained orders for pre-action disclosure from Master Trench. These were disputed by the Defendant, but orders were made. I am not satisfied that Master Trench particularly disapproved of the Defendant, but he thought that the disclosure was appropriate, particularly in the light of the fact that all the facts were in the knowledge of the Defendant and not of the Claimant. Extensive disclosure was in fact made and the Claimant was able to inspect the considerable quantity of documentation, including placing files etc. I am satisfied that this material was effectively what the Defendant actually had, and seen no basis for any suggestion that any relevant documentation was withheld. This led to the production of the "Final Bordereau", which has itself been subsequently revised and re-revised. As appears below, that is now an agreed document, in relation to the entitlement of H&T to commissions under the Commission Agreement, subject to certain specific sub-issues and claims to commissions resulting from business other than direct insurance or reinsurance of the KIPs. I will return to that below.
20. The Final Bordereau as re-revised, produces a total figure for commissions due of US$551,990. This is less than the total claimed by Howdens against the Claimant, which the Defendant alleges to amount to a total sum of £614,112, which it is sought to set off against the commission entitlement. It seems to me, although I am not entirely sure of this, that the Defendant should have deducted from this sum, but has not done so, the sum of $60,000 which its expert, Mr Lovell, believes should not have been claimed and which I understand the Defendant to accept. Even with this adjustment, the amount of the sums claimed by the Defendant, in excess of £600,000, greatly exceeds the amount of the agreed commissions as per the Final Bordereau, as is reflected in a schedule served at the back of the supplemental witness statement of Mr Browne (which does I believe take account of the $60,000).

The Issues

21. Helpfully, the parties had agreed the issues which arise, and I set these out for convenience under the following headings:-

Issue 1. When did the five year term of entitlement under the Commission Agreement begin and end?

Issue 2. What commissions were earned by Howdens on relevant business over that period? Sub-issues on this point are:-

(a) Does brokerage earned by Howdens on the Ispat Karmet account constitute relevant business?

(b) Does any brokerage earned by Howdens on "Ispat Karmet Retrocessions" constitute relevant business?

(c) Did Howdens earn any relevant brokerage in respect of the following accounts that has not been credited to the Claimant:

(i) Philip Morris?

(ii) British Gas?

(iii) Coca Cola?

(d) Did Howdens receive "up to £750,000" from the Association of British Insurers or the "Know How Fund"?

(e) Do ceding commissions retained by KIP (by deduction from premium) constitute part of Howdens' commission to which H&T was entitled to a share?

Issue 3. What payments were made by Howdens to on behalf of H&T?

Issue 4. What was the status of such payments? Were they advances on commission or were they outright payments which were not liable to be set off against commissions owed?

Issue 5. Was or is the Defendant prevented from seeking to recoup advance commissions because of lack of certainty/want of consideration?

Issue 6. Was the Claimant's commission entitlement reduced from 33% to 25% as a result of the 1 December 2004 meeting?

Issue 7. On the true construction of the assignments, did the Defendant acquire the right to be paid 86.66% of all commissions due to H&T, or only 73.33%?

Issue 8. As a matter of construction of the 16 December 1997 assignment between the Kazakh parties and the Defendant, was its effect somehow to finally settle any sums due from H&T to those parties or their assignees?

Issue 9. In some or all of the Claimant's claim is some or all of the Claimant's claim statute barred for limitation? In particular:

a. did a fresh cause of action accrue by reason of any acknowledgement on the part the Defendant within section 29 of the Limitation Act 1980?

b. can the Claimant establish that the Defendant deliberately concealed facts relevant to the Claimant's cause of action within section 32 of the Limitation Act 1980?

Issue 10. Is some or all of Aon of the Defendant's counterclaim statute-barred for limitation?

Witnesses

22. Before considering the issues listed above, I think I should say a little of the oral evidence in this case. I am satisfied that all witnesses were doing their best to assist the Court and were essentially honest. I think that Mr Taylor and his son Mark exhibited that they have a genuine grievance of some depth against the Defendant and the way in which they have behaved over the years. I was able to accept much of their evidence. However, there were times when, particularly when under pressure of more difficult questions, they were less convincing. Mr Taylor, who was impressive and highly experienced, tended when under pressure to say that a particular matter, usually anything to do with the finances of his business, was not known or understood by him but was a matter entirely for his son Mark. I do not accept that he was as uninvolved as he claims in the financial aspects of his company's business or that these matters were entirely a matter for his son Mark. I found this to be an unattractive passing of the buck, as well as being unconvincing.
23. Both Mr Taylor and his son had the gravest difficulty in explaining the accounts which they had signed over many years, the only possible construction of which can be that they were reporting the sums advanced by Howdens to H&T as being sums repayable to Howdens and known by both of them to be so repayable. Attempts to blame matters on an accountant were wholly unconvincing. I do not say that Mr Taylor or his son were being dishonest in the evidence they gave to me. Their problem was simply that there was no answer to the particular point, which was an especially strong piece of evidence, destructive of their case that most if not all of the sums advanced was not repayable to Howdens. Mr. Laurie's evidence was adduced under the Civil Evidence Act 1995. Where it conflicts with other evidence I cannot accept it since it has not been tested. But in fact he does not say very much of significance, dealing largely with the intentions behind the Commission Agreement. He provides some support for the Claimant, but not much on the key issues.
24. As for the Howdens witnesses, I was impressed by all of them. Mr Iles is a highly experienced and senior insurance broker who helped to put the Consultancy Agreement in context, he having been a signatory to it. Mr Nicholson's evidence was barely challenged and his credibility not at stake. Mr Andrew Browne struck me as a witness who exhibited a determination to be fair to H&T at all times, and indeed documents were produced which showed that he was particularly scrupulous, even if there were others at Howdens who were less keen to ensure that H&T got its just deserts. As part of his case on limitation, it was incumbent on Mr Dorman, representing H&T, to put to Mr Browne that he in fact behaved dishonestly in concealing information from H&T. I found it quite impossible to accept that there was anything approaching dishonesty on the part of Mr Browne, who impressed me as a witness. Last but not least, Mr Francis Marjoribanks came across to me as a measured and careful individual, who despite the criticisms made of him, actually went some way towards helping H&T in its financial difficulties in 1994 and 1995. I find him reliable and on all issues where his recollection or account of meetings differed from those of Mr Taylor and his son Mark, I preferred the account of Mr Marjoribanks.

Issue 1

25. This concerns the date of commencement of the five-year period under the Consultancy Agreement. The issue was a short one. On 21 May 1996 Mr Marjoribanks wrote an internal memorandum in which he noted that from his records the five-year period commenced with effect from 1 January 1994. The Claimant does not rely upon this as being correct, but points out that it is inconsistent with the Defendant's pleaded case, namely that the first commission payment was received by Howdens in respect of Kazakh business on 13 October 1993. The Claimant's case is that the period commenced on 9 March 1994, that being the date of a meeting at which it was allegedly agreed that the five-year period should commence on that very day. Thus, the rival candidates for the commencement date are 13 October 1993 and 9 March 1994.
26. The evidence in favour of 9 March 1994 is slight. Mr Taylor remembers a meeting, but there is no documentary evidence at all of any meeting on that date. Mr Marjoribanks does not remember any such meeting, although he said that he could not rule out a meeting having occurred. Mr Taylor's recollection seems to depend entirely upon his son's alleged diary, but no such diary ever appeared. Nor was it clear that Mr Taylor had actually seen any entry in that diary. Mr Mark Taylor made no mention of the meeting in his witness statement, but elaborated on it in oral evidence in a manner which I did not find convincing. There may well have been some sort of meeting on that day, and it seems that certain Kazakh parties were in England at about that time. But whether or not there was some sort of meeting, I find it impossible to conclude that there was an agreement that the period of five years should start to run at that date. Had that been agreed, it plainly would have been recorded somewhere by somebody. These would had to have been a very clear and express agreement to override the terms of the Commission Agreement which stipulated that the period should commence when the first commission was received. I have no doubt that the date of the first receipt of commission was indeed 13 October 1993, and I see no basis for taking any other date as the commencement of the five-year period. I was variously told that it might make little or a substantial difference which of the two dates I might choose. Be that as it may, I find that the Agreement commenced on 13 October 1993.

Issue 2.

27. It is a remarkable feature of this case that, despite all the complaints and criticism made by the Claimant of the information provided to it from 1994 onwards in respect of commissions, the Final Bordereau has been agreed, as representing a full and accurate statement of the commissions received by Howdens in respect of the relevant Kazakh business, and H&T's own entitlement. This is, of course, subject to the various points which I now turn to consider, the most important of which is that relating to ceding commissions. As I will find, all the other sub-issues fall away very quickly, so that the Claimant's position ultimately seems to be that they accept the Final Bordereau, but not in respect of ceding commissions. I consider the merit of that position below. However I should record at this stage that the adjusted commission figure in the re-revised Final Bordereau is US$551,990. Whether or not the Defendant was slow in providing information, and whether not it was necessary to go to Court to obtain the pre-action disclosure orders in 2000 and 2001, the fact remains that in answer to those applications full documentation does seem to me to have been provided (including what limited information Howdens had in respect of gross premiums) and that has made it possible to agree the Final Bordereau. I now consider the various sub-issues under this head.

Issue 2a

28. The circumstances of the Ispat Karmet account are set out in a witness statement served at or about the beginning of trial by Mr James Nicholson. The main thrust of his evidence was not challenged in cross-examination, and I have no hesitation in accepting it. There is certainly a Kazakh connection with this business, in so far as it concerns insurance of a Kazakh steel company, but it seems clear that it was simply miscoded as Kazakh business relevant to the Commission Agreement. There seems never to have been any doubt that this was not business placed with any KIP, but was insurance placed directly in London. On that basis, it is hard to see how it comes within the wording of the Commission Agreement.
29. Initially, the Claimant took a point that there had been a breach of Kazakh law in structuring the business in the way it was structured, but this was abandoned before trial, as recorded at the time of the hearing before Cresswell J on 13 May 2005, and as reaffirmed in a hearing before me on 14 June 2005. At that time it was suggested that this business might come within category (b) of the two categories under which commission might become payable, that Mr Dorman at trial realistically conceded that (b) was not designed to catch this sort of business. Rather, that concerns payments received in respect of advice given of various types; it is relevant to one of the matters considered below, but, as Mr Dorman recognises, it does not assist him in relation to Ispat Karmet.
30. The Claimant's case therefore depends upon category (a). Mr Dorman contends that, read sensibly, (a) is wide enough to cover this business, but it seems to me that that is untenable. (a) can only bite in respect of insurance or re-insurance "placed with or on behalf of KIP or Newcos directly or indirectly through [Howdens]….". On no basis, particularly where any breach of Kazakh law is no longer pursued, can those words cover the facts of the Ispat Karmet account, as described by Mr Nicholson.
31. There is a further problem with the Claimant's case here. The business was not placed directly or indirectly through Howdens, but through Nicholson Leslie, which had no corporate connection with Howdens in 23 July 1992. The definition of Howdens in the Commission Agreement only extends to companies in the same group as Howdens, and I do not think that that could be extended to include a company which only came into the same group as Howdens when Howdens became part of the Aon Group on 15 January 1997 (Nicholson Leslie already being part of that Group). This seems to me to be a further reason why this business does not qualify for commission under or in respect of the Commission Agreement.

Issue 2b

32. This concerns Ispat Karmet retrocessions. The Claimant says that retrocession is much the same as reinsurance, and indeed in many contexts it is, being simply reinsurance of reinsurance. But the problem is not whether the word reinsurance in the Commission Agreement is wide enough to include retrocession. In principle it would be. The problem is that the relevant business has to be "placed with or on behalf of KIP or Newcos". The relevant business is between a non-Kazakh reinsurer and a retrocessionnaire, and that will not qualify, because the relevant business will not be with or on behalf of KIP or Newcos. Thus, the retrocession business fails and falls outside the Commission Agreement, and would do so even if the business earlier considered (made issue 2(a)) did not.

Issue 2c

33. As far as Philip Morris, British Gas and Coca Cola are concerned, the Claimant succeeded in widening the search to be conducted by the Defendant to see whether there was any further relevant brokerage in respect of any of those accounts. Further work was done, in particular by Mr Lovell of KPMG, the Defendant's expert, and no challenge was made to that evidence. It revealed no additional relevant commissions. Of course there had been business which had been placed through KIP and which had attracted commissions, but no further evidence has emerged, as Mr Lovell's second report makes clear. In respect of Philip Morris, the only accounts identified by a comprehensive search either have no connection with Kazakhstan at all or have a loose connection which would not be sufficient to bring them within the wording of the Commission Agreement. The same is true of Coca Cola. As for British Gas evidence was found of a joint venture involving British Gas, called Karachaganak, which revealed certain small retrocession accounts. Again, this was retrocession and did not involve any contract placed with on or on behalf of KIP or Newcos, and therefore does not qualify. It is therefore clear that there is nothing due to the Claimant in respect of any of these accounts.

Issue 2d

34. This claim does concern category (b) of the Commission Agreement, and I accept that in principle that clause would apply here. The Claimant says that applications were made by the Defendant to the "Know How" fund for financial support and that the British Government, through the Association of British Insurers ("ABI") advance £750,000, or perhaps some lesser sum, to the Defendant for the purpose of training staff and supporting the Defendant in the creation of the insurance industry in Kazakhstan. That would come within clause (b), but the difficulty here is that there is no evidence whatsoever that £750,000, or indeed any other sum, was received by the Defendant. I am satisfied that the Defendant has made all proper enquiries to ensure that it is certain that no sum has been received, and late in the trial I was shown a letter of 24 June 2005 from the UK Department for International Development and a letter of 5 July 2005 from Travers Smith, solicitors acting for the ABI, both of which support the Defendant's contention that no relevant sum has been, nor indeed will ever be received in this respect. There is absolutely no reason to doubt this. The Claimant contends that the Defendant's evidence is unsatisfactory, but there is a limit to how much one can do to prove a negative. There is no overwhelming probability that this sum must have been received; quite the contrary. I am satisfied that there is no maintainable claim in this connection.

Issue 2e Ceding Commissions

35. This is a much more substantial argument, and requires more extensive treatment. The evidence as to precisely what was received is not satisfactory here, and I have had considerable sympathy with the Claimant in trying to get to the bottom of this aspect of the case and to work out its entitlement. At the end of the day, as will be explained, I am satisfied that certain ceding commissions have been deducted by the Defendant in a way which has diminished the commission payable to H&T, and that that should not have occurred. I am, however satisfied that in so far as is reasonably practicable at this point in time, a decade or so after the relevant payments were made, the Defendant has made adequate disclosure and that there is no utility in ordering any further account, as the Claimant invites me to do. The extent of the adjustments which I find are necessary to the Claimant's entitlement are not such as ultimately to affect the balance of sums due between the parties, but that is for a later part of this judgment. I proceed first to consider an important question of construction, and then the evidence as it stands.
36. Mr Dorman takes the point on the Commission Agreement that it does not permit Howdens to deduct from its own commission (in order to arrive at H&T's one third share) ceding commissions paid by Howdens back to the Kazakh insurer/ceding company, and that insofar as Howdens have done that, they were not entitled so to do. It seems to me that that submission is wellfounded. Mr Dorman makes the point that it is not open the Defendant at one time to rely upon the straight wording of the Commission Agreement, for example in respect of the difference between Nicholson Leslie and Howdens, and at the next to argue for a very loose approach to the wording here. But whether loose or tight, it seems to me that the Agreement is quite clear. In it, the parties have agreed that H&T should be entitled to 33% "of the commission received, net of taxes by [Howdens], net of any part thereof paid by [Howdens] to a third party insurance broker….".
37. Mr Head, on behalf of the Defendant, argues that this includes commission not only net of taxes and not only net of payments to third party insurance brokers, but also net of ceding commissions. He does not pretend that ceding commissions constitute payments to a third party insurance broker, but says, by some process of construction which I have been unable to understand, that this further netting is somehow permitted. He says it would be commercially absurd to do anything else, but that seems to me to be questionable. I think it very likely that the parties to the agreement expected that ceding commissions would be retained by the ceding company in Kazakhstan, and only the net premium remitted to the reinsurer in London. But if, for some reason, the ceding company paid the premium gross, and the ceding commission had to be remitted back from London to Kazakhstan, I see no basis on which it can be said that the parties allowed Howdens to deduct that ceding commission from H&T's entitlement. It seems to me very clear, therefore, that insofar as premium was paid gross, H&T was entitled to one third of Howdens commission on the full amount, and that Howden was not entitled to deduct any ceding commission it had to repay to Kazakhstan before accounting to H&T.
38. Howdens rely on a note of Mr Taylor's dated 28 July 1992, which shows that it was envisaged that KIP would benefit from premiums by retaining a commission of 20%, being the "acquisition cost" of the pool. I do not think that this document can be relied upon to construe the Commission Agreement, being subsequent to it. It does show, if it were necessary, that ceding commissions were envisaged as being likely, and indeed the assumption in the note is that such commissions would be retained by the ceding companies. Whilst this might assist Howdens in showing that they only had to account to H&T for one third of commissions received, ceding commissions having already being deducted (considered below), it does nothing to support the Defendant's argument that even where such commissions were not retained out of the premium in Kazakhstan they can still be deduced by Howdens before H&T's one third share is computed.
39. The other point which Mr Head makes, which seems to me to be wellfounded, is that where ceding commission is retained by the ceding company in Kazakhstan, and only net premium is ever paid to the reinsurer, than the position is otherwise. This is because H&T's entitlement is one third of whatever is "received" by Howdens. Although Mr Dorman made an attempt to do so, I do not see how it can be said in any realistic sense that Howdens have received the ceding commission. Where this is what occurred, therefore, it seems to me that the way in which Howdens have conducted themselves and made payments to H&T is correct. The question, therefore, is how much was retained by the ceding company, and how much was not but was subsequently remitted to Kazakhstan by Howdens.
40. For a long time in this action the Claimant has complained about ceding commissions, but its complaint was not originally in the form in which it was argued at trial. It was said that the ceding commissions paid by Howdens or through them were excessive, but that argument was abandoned at or as a result of the hearing on 14 June 2005 before me. It was, in any event, a hopeless contention, since, as became clear during the trial, there is no such thing as a normal level of ceding commission; everything depends on the individual circumstances, although Mr Iles, who was an impressive witness, was prepared to accept that certain levels might be more normal than others. It would have been quite impossible to prove that ceding commissions were "excessive" either without the use of expert evidence or, I am sure, even with it. Nor is the concept of what is or is not excessive of any relevance. Insofar as excessive ceding commissions were paid, this would diminish Howdens commission just as much as it would diminish H&T's commission. It was not in the interest of Howdens to permit excessive commissions, whatever that might mean, and it seems to me that that line of enquiry was always irrelevant.
41. Nonetheless, the Claimant has, ever since the full disclosure was given to it as a result of the hearings before Master Trench in 2000 and 2001, had the opportunity to make full enquiry into all aspects of Howdens' records relating to ceding commissions, the payment of gross premium and the remission of funds to Kazakhstan. Indeed it is clear that to some extent they did so, since their expert, Mr Niemiec, was able to consider the matter in his expert report and indeed produced an Appendix 6, revealing some strange looking aspects of the payment of ceding commissions, which he described as "kickbacks". The matter is further bedevilled by the fact that there emerged from Kazakhstan (but not from Howdens in London) bordereau other than the Final Bordereau, or indeed the Business Lists, which has been referred to before me as the Cumulative Bordereau. The Defendant has always contended that this information is very unreliable, but the Claimant has persisted in using it to support its case as to discrepancies and inconsistencies in reporting. The Cumulative Bordereau did set out gross premiums, accurate or not, whereas the Final Bordereau was not based on gross premiums, and Howdens in London have always had a limited amount of information, or at least reliable information, to put forward in relation to the issue as to whether or not premiums were paid net gross by Kazakh ceding companies.
42. The Claimant has, in its own computations and in its pleadings, continued to rely upon the information in the Cumulative Bordereau, despite its obvious inaccuracy and unreliability, but other than being able to point out discrepancies and oddities, has not been able to produce evidence (with one exception with which I will deal below) to the effect that ceding commissions remitted back to Kazakhstan by Howdens have been deducted from Howdens' own commissions so as to reduce H&T's entitlement. Otherwise, the Claimant has produced no evidence to support the figures in Schedule 3 of the Scott Schedule, which is based on the Cumulative Bordereau. Neither Mr Niemiec himself nor any of the Claimant's factual evidence addresses the Schedule, so that I am left with the Defendant's evidence, together with such unreliable material as exists in the Cumulative Bordereau and the fact that the Claimants have had access to all the relevant papers, insofar as they are retained by Howdens in London, for some time.
43. At or about the commencement of the trial is that Mr Browne made a second witness statement, the principal point of which is further to review, so far as possible, the sums alleged in Schedule 3 of the Scott Schedule. In that supplemental statement he records that at paragraph 50 and 51 of his first statement he had said, in dealing with ceding commissions, that it was his belief that all premiums had been received by Howdens net of such commissions. This was based on his experience of dealing with the Kazakh business, which had begun in about August 1995. As he clarified in his oral evidence, from that time onwards, all premiums were indeed received net of ceding commissions, but before that time the position was much more uncertain. He records that he has since carried out a review of the accounts where the Claimant claimed a sum in respect of ceding commissions. In doing so he has started from the Cumulative Bordereau, as a result of which the Claimant's Schedule 3 suggested that ceding commissions totalled US$1,142,609.28. Of this sum some 49 items totalling US$499,297.77 were "NTUs", ie simply not taken up by the relevant original insured, which is demonstrated by the fact that none of those items appears on the Final Bordereau. Mr Browne identified errors in the remaining figures; of those accounts where errors have been identified the original total of US$63,206.38 is reduced to US$22,065.08 (a reduction of US$41,141.30). A number of smaller items totalling US$119,358.52 have not been reviewed due to their high number and small size. Items totalling US$460,746.61 of the commissions in the Cumulative Bordereau Mr Browne was able to agree. Adding that sum to the US$22,065.08 makes a total of US$482,811.69.
44. The next question is how much of this represented commissions deducted by the Kazakhs and how much was remitted after receipt in London. Mr Browne established that premiums reflecting ceding commission to a value of US$458,421.15 were received net of such commissions, and that premiums reflecting ceding commissions to a value of US$24,390.54 were received gross of such commissions. Thus, the overwhelming majority of ceding commissions were deducted before premiums were remitted to London. This, I find, is what had been envisaged as likely to occur in respect of ceding commissions at the time that the Commission Agreement was entered into, and this is why category (a) was drafted as it was. Nonetheless, US$24,390.54, on my view as explained above, does not fall to be deducted from Howdens commissions prior to computation of H&T's one third share.
45. In addition to this US$24,390.54 the Claimant produced, during the course of the trial and probably as a result of the diligence of Mr Niemiec evidence of a further sum of US$80,119, which showed that this sum had been paid to London and then returned to Kazakhinstrakh. Some of the documents surrounding this payment indicate that a more general practice of sending premiums gross from Kazakhstan, with the return of the ceding commission, might well have been envisaged in the early days of the Kazakh venture. As I have found, that happened to some extent up to the middle of 1995 but not thereafter. However the case of the US$80,119 is clear. The Defendant is right to say that the Claimant makes no specific claim in respect of this sum, and I invited Mr Dorman at the conclusion of the trial to decide whether or not he wished to include this sum. He was disinclined to do so, for understandable reasons. He realised that the effect of the addition of this sum, and indeed of the US$24,390.54, would not much avail the Claimant, in particular if the Defendant's counterclaim is good and can be set off against any entitlement to commission. What the Claimant really wanted was to open up the whole question of ceding commissions and/or seek an account, in the hope that there might be substantial further payments unaccounted for which could alter the balance between claim and counterclaim. Despite the skill until which the Dorman developed this argument, I see no basis for opening up these matters in the light of the full disclosure made by the Defendant in 2000-2001, the Claimant's ability to investigate this material, the further work done by Mr Browne and referred to in his supplemental witness statement and the yet further investigations carried out by on behalf of the Claimant shortly before and during the trial which brought to light the US$80,119.
46. However, this seems no basis for failing to credit to the Claimant's account the ceding commissions which have been wrongly debited. If the US$24,390.54 had not been deducted from Howdens commissions, one third of that would have accrued to the benefit of H&T, namely US$8,130. A similar exercise falls to be carried out in respect of the US$80,119. Again, H&T should have seen the benefit of one third of that, namely US$26,706. This increases H&T's entitlement to US $586,826.

Issue 3

47. The quantum of payments made by Howdens to the Claimant and claimed now by the Defendant in its counterclaim is set out in Bundle I, known either as the Schedule of Payments or the Master Ledger. This has been effectively audited by Mr Lovell of KPMG. The Schedule of Payments records £627,161 as having been paid. This has been verified by Mr Lovell, subject to a limited number of particular points. The Defendant now accepts that certain sums in the final category of the Master Schedule headed "Additional Sums" cannot properly be reclaimed by the Defendant, namely (i) sums totalling £3,749 paid to Arboretum after the revocation of authority on 5 December 1996 (ii) the sum of £1,800 paid at a very early stage in the project and (iii) the sum of £7,500 paid to H&T as rent due after the termination of their occupation of the premises at Mitre Street. This reduces the Defendant's claim to £614,112.
48. There also falls to be deducted, as suggested by Mr Lovell, the sum of US$60,000 which was payment made by the Defendant pursuant to an assignment of 16 December 1997 as consideration for the assignment of certain rights to the Defendant. Clearly this sum should not have been debited to the Schedule of Payments and has been withdrawn by the Defendant. The Claimant goes further and complains that this sum was taken from a "fiduciary" or "technical" account, and that this might have involved some impropriety. I do not think there is anything in this. The so-called fiduciary account, not I think an entirely accurate description, denotes sums collected essentially for underwriters, but out of which commission payments can be made and are made. There was certainly no fiduciary relationship between Howdens and H&T and no sums in the fiduciary account could possibly be alleged to be in any real sense the Claimant's money. Further, I am satisfied that Howdens were entitled to transfer moneys between the fiduciary account and the private ledger account. The private ledger account recorded debit balances against H&T in respect of advances made. I do not think the fiduciary description of the account renders it in anyway inappropriate for Howdens, as against H&T, to deal with the US$60,000 in the way in which they did. Of course to debit it against H&T in the Schedule of Payments is another matter; that is quite inappropriate. I shall leave the parties to calculate the appropriate conversion rate of the US$60,000 into sterling, then to be set against the figure of £614,112 referred to above.

Issue 4

49. The conclusion of this exercise is, however, that subject to the all-important issue of principle as to whether and to what extent these payments are repayable by H&T to the Defendant. The quantum of the payments made and (on the Defendant's case) now due under the counterclaim exceeds by a considerable margin the total of commissions due to H&T, even as increased by the ceding commissions with which I have dealt above. The Defendant seeks to set off its counterclaim against the claim, and if (i) the counterclaim is well-founded and (ii) the defence of set off is available, that will extinguish the Claimant's entitlement, even on the revised figures set out above.
50. The Claimant says that the payments fall broadly into three categories. Some payments represent the meeting of specific expenses of the Claimant in the precise sum required to meet the expense. Secondly, there were lump sum payments made generally in respect of costs and expenses. Thirdly there were "retainers". Essentially, the Claimant says that none of these are repayable, although realistically it is accepted that there are some situations in which sums advanced by Howdens can be reclaimed.
51. Mr Dorman on behalf of the Claimant started with an attack on the way in which this counterclaim has been pleaded, and indeed there is some force in the point that the Defendant's case has changed from its original formulation. Even now I am not entirely clear whether the Defendant claims that some sort of arrangement was made at the time of and in the context of the Commission Agreement or later and if so in precisely what terms and circumstances. Ultimately, I think that the Defendant's case is simply that monies were advanced from time to time for various purposes on the clear understanding that they were recoverable, even if it is difficult to spell out the express terms of any request for reimbursement or of any contract to reimburse.
52. Mr Dorman then says, again with force, that there is very little, especially in the early years, evidence of any demands for repayment by Howdens from H&T. Mr Marjoribanks accepted this and was not easily able to explain it. However, this is of limited value in assessing whether or not the sums paid by Howdens were repayable. Howdens might not have wanted to harry H&T unnecessarily with repayment requests, and in any event in respect of most of the payments the intention was that they should be set off against commission payable to H&T, rather than being the subject of specific demand for repayment. Nonetheless, Mr Dorman's point is a good one, and if the overall evidence were less unequivocal than I find it to be, this argument would have some weight.
53. Next, the Claimant underlines its role as a consultant, rather than a broker, making the generally valid point that a consultant would normally be paid a fee and reimbursed his expenses, and would not have to spell out a detailed agreement to the effect that his expenses were to be covered. But I do not think this really goes anywhere. Whether or not it is right to describe H&T as a consultant or a broker, the fact of the matter is that a Claimant was being remunerated on the basis of a commission, the Commission Agreement making no reference to expenses. It would clearly be unusual to be entitled both to commission and also to have one's expenses paid as a matter of course, although all forms of hybrid agreement are of course entirely possible. I find that there is no particular presumption one way or the other about Mr Taylor's entitlement to be paid expenses.
54. Emphasis was placed by the Defendant upon internal Howdens' documentation to the effect that the payments, or many of them, were refundable and/or were to be set against commission entitlement. An early note from Mr Burnside clearly evidences this, as does Howdens' documentation in support of the two £25,000 payments made in March and April 1993. It is quite right that this documentation did not cross the line to H&T, but it does evidence how the matter was seen by the Defendant at the time. This does not carry the Defendant home, but it is a relevant feature in the landscape. As later events clearly showed, H&T themselves were of the same mind.
55. The most arresting evidence is that of H&T's own accounts. Consistently throughout the relevant period from 1993 to 1999 both the lump sum payments and the £7,500 monthly payments made as from December 1994 were treated in H&T's accounts under the heading "Creditors". The total amounts listed under Creditors seem to me essentially to include all of the matters in respect of the counterclaim, increasing as the years went by, and on the face of it this is the clearest possible recognition by H&T that the large scale advances made by the Defendant to it were indeed repayable to Howdens. How else could they possibly be classified under "Creditors"?
56. Both Mr Taylor and his son Mark were clearly involved in the production of these accounts. Mr Taylor himself signed the balance sheet with the reference to "Creditors" and his son Mark accepts that he was the director or senior employee responsible. Both witnesses were closely questioned about these accounts in the cross-examinations. Mr Taylor, as he so often did, passed responsibility to his son, despite his signature on the balance sheet. Mark Taylor sought to explain the accounts on the basis that the treatment was what had been recommended by H&T's accountant, and that he, Mark Taylor, had simply followed the accountant's advice. I did not find this explanation either coherent or credible. How the accountant, who did not give evidence, can possibly have advised that the sum should be included under "Creditors" when they were not payable to any creditor defies belief. It also defies belief that Mark Taylor, although not a qualified accountant, can have thought that this was a proper treatment of sums which were not repayable to any creditor. It also defies belief that Mr Taylor himself, even though he left financial matters largely to his son, can have had any misunderstanding or doubt about the significance of this very important entry on the balance sheet, together with the absence of any reference to the receipt of income in the profit & loss account.
57. I have no doubt that both Mr Taylors, senior and junior, must have been well aware throughout the relevant period that the sums advanced by Howdens under all the three categories outlined above, (save for certain specific expenses which Howdens have never sought to recover) were indeed repayable to Howdens. Mr Dorman sought to suggest in his closing address that the accounts were in some way unsatisfactory or incoherent, but it seems to me that the opposite is the truth. They are clear and compelling evidence of the true nature and status of the payments made by Howdens to H&T.
58. Mr Marjoribanks made the valid point in evidence that if the payments made by Howdens had been made or intended to be made outright, rather than being repayable, they would have been treated quite differently by Howdens and would have been expensed in Howdens' accounts. Nothing like this happened. The picture in relation to the Defendant's attitude to the payments is quite consistent throughout; so, until the very late date, is the position of the Claimant. It is, I think, important to stress that when complaints did start to be made in particular in 1996, the complaint was not about the sums which by then the Claimant knew that Howdens were seeking to have repaid, but rather about the level of commissions received by Howdens and/or accounted for to H&T under the Commission Agreement. In other words, the Defendant was not saying it did not owe the money to Howdens; it was saying that there should be much more commission than they had been told about. This was understandable, both as a result of the imperfect accounting, particularly in the early years, by Howdens, and on the basis of the optimistic assessments which all parties, including the Claimant, had made of the Kazakh business at its outset. In fact, I am satisfied that those optimistic assessments were not in the event borne out by the reality.
59. I must now deal with the important meeting of 1 December 1994. Mr Marjoribanks has produced what he claims to be an attendance note of that meeting made essentially during the meeting. This is challenged by the Claimant, which says that most of the note was made before the meeting and consisted of a wish list of what Mr Marjoribanks hoped to achieve, but did not necessarily succeed in achieving. I have no doubt at all that Mr Marjoribanks' evidence is to be preferred, and that (with the possible, but unlikely, exception of a few lines in the document) the note was made at the meeting, and indeed Mr Taylor was forced to accept under cross-examination that some significant parts of it must have been made at or after the meeting because it recorded things said at the meeting. If that is so, then the notes represent important corroboration of the Defendant's case. There was considerable discussion as to the financial difficulties which H&T were by now facing. Those difficulties are common ground. Mr Marjoribanks's evidence, as supported by his note of the meeting, indicates that the Claimant acknowledged a debt to Howdens of some £87,000 and that what was discussed was a number of ways in which Howdens might assist the Claimant in its predicament.
60. Five points are summarised at the end of the note. Firstly Howdens were to pay £25,000 to get H&T's creditors of their back. A second point relating to shareholders is of less importance. Thirdly there was a negotiation with Clyde & Co to eliminate the debt due to them. Howdens were to pay a sum stated as £10,500 per month (but possibly that was a mistake for £7,500 per month) to H&T as "advance of commissions" for a period of 12 months subject to review. This point is a vital significance. The Defendant's case is that this monthly support was an advance of commissions, a proposition strongly challenged by the Claimant. I am satisfied that it was discussed between the parties as being an advance of commissions. This was how all parties understood it at the time. The fifth and final point recorded that as a quid pro the H&T commission entitlement would be reduced to 25% from 33%.
61. I do not accept that H&T were in a strong position as at December 1994 because of the possibility of them going to another broker. On the contrary, the position of H&T was very weak by virtue of its parlous financial position. The Commission Agreement did not permit the introduction of any new broker. Much was made in evidence of the fact that Mr. Taylor was continuing to work, and was prepared to continue to work on the project despite having already set up the mechanisms necessary to earn H&T its commission. Why, he postulated, should he carry out such work unless he was being remunerated for it or, put another way, retained by Howdens?. But it is clear, in my view, that it was in H&T's interests for Mr Taylor to continue to work in facilitating as much Kazakh business as possible. The more he did this, the more business would be written, the more commissions would flow to Howdens and the more commissions would flow to H&T. It is not necessary to postulate a further agreement for further services or a retainer in the true sense. The monthly sum was to help H&T in its financial difficulty, and it was to be deducted from commissions.
62. No letter was sent recording what had been agreed at the December 1994 meeting, at least not immediately. However, H&T chased Mr Marjoribanks to produce something which could be shown to their bankers. Eventually a letter was produced on 13 March 1995, which was (as he admitted in evidence) the only letter which Mr Marjoribanks ever wrote personally to H&T in relation to this matter. H&T deny receiving this letter, but I am quite satisfied that it was sent. It also seems to me to be a probable inference that it was received, since no further attempt was made to secure anything to satisfy H&T's bankers. It evidenced the help which Howdens were giving to H&T, the only negative point being the fifth point about the reduction in commission share from 33% to 25%. However, Mr Marjoribanks never put this reduction into operation, nor does the Defendant seek to put it into effect in connection with the computation of the claim in the present action. This was not pursuant to any further agreement, but was a concession on the Defendant's behalf. I regard it as probable that both Mr Taylor and his son were happy with what Howdens was prepared to do to assist them, and there was certainly no complaint whatsoever about it.
63. Some time in 1995 statements began to be sent to H&T setting out the various advances which had been made. Mr Taylor was emphatic that he did not see any version of these statements until November 1995. Mr Mark Taylor accepted that he had seen at least one earlier version. The November document totalled items calculated at £416,159.93. It does not seem that either Mr. Taylor or his son complained about this, although it must have shown them that Howdens were expecting payment of this sum from the company. Mr Taylor was unable to explain, and indeed Mr Mark Taylor was also unable to explain, how, if their present case is correct, they did not object vehemently to an attempt to foist an unjustified demand of almost half a million pounds upon them.
64. The Claimant suggested that there might have been an agreement that the Kazakh parties should contribute to the Claimant's debt, but the evidence shows that no such agreement was ever made, whatever hopes there might have been that it would be. In relation to a garnishee order, H & T's then solicitors wrote to Mr Marjoribanks in terms which could only be interpreted as an admission of the existence of the debt and, in December 1996, the Claimant's solicitors wrote in terms which again are consistent only with the acceptance that the sums of money being demanded by Howdens were indeed due, the amount then being £419,000. There is an issue as to whether the Kazakh parties would or should make any contribution, but it is clear that this did not detract and was not intended to detract from H&T's obligation to pay the sum if the Kazakhs did not contribute.
65. The evidence is overwhelming that the Claimants at all times recognised that the status and nature of these payments was that they were, with very few exceptions, repayable to Howdens. Howdens certainly treated the money as repayable and on H & T's contemperaneous evidence I find that at all times they were of the same opinion. The evidence of the meeting on 1 December 1994 is consistent only with that version of events. I therefore have no hesitation in concluding that sum of £614,112 less $60,000 referred to in paragraph 48 above is, subject to what follows, repayable to Howdens.
66. A number of further points are taken. The Claimant points to the fact that, as referred to above, the H&T percentage share was not reduced from 33% to 25%, but this does not seem to me to assist them. It was simply that Mr Marjoribanks did not activate what had been agreed at the 1 December 1994 meeting as part of the price of the support which Howdens were giving. However, the Claimant points to the fact that after that meeting, the regular payments of £7,500 a month were referred to in documents emanating from the Defendant as the "monthly retainer". I agree that this is a peculiarity of the evidence. The phrase "monthly retainer" does not connote the making of advances which were payable out of commissions. I agree with the Claimant that on the face of it, this language is consistent with their case, and not with that of the Defendant.
67. However, it seems that this terminology was not used by Mr Marjoribanks himself, but by Mr Harry Seddon in the accounts department. On 2 November 1994 Mr Seddon had written a memorandum, which a copy to Mr Marjoribanks referring to the fact that "…. Francis has indicated that we need to revisit our agreement with Alex (sic) Taylor and move to regularise payments to him as a consultant with an agreed contract and cancel the previously agreed brokerage sharing arrangements with him". I do not know whether Mr Seddon thereafter believed that this did in fact occur, but I am quite satisfied that it did not. Whatever Mr Marjoribanks may or may not have had in mind in November 1994 he certainly did not cancel the previously agreed brokerage sharing arrangements and, by the same token did not regularise payments to Mr Taylor "as a consultant with an agreed contract". "Retainer" was a misnomer and, in my judgement, does not accurately reflect the arrangement made in December 1994 or put into effect thereafter. Again, it is significant that H&T's accounts treated these monthly payments of £7,500 under the "Creditor" heading to which I have referred. If they really had represented a retainer for services rendered by Mr Taylor, it is inconceivable that they could have been treated in this way, or that either Mr Taylor or his son could have allowed them to be.
68. The Particulars of Claim in the action seems to me, so far as I can see, to be the first time that complaint was made about the Defendant's contention that the advances were repayable. Again, I stress that all the emphasis in the contemporaneous communications from the Claimant concerned the commission levels, whether commissions were being adequately disclosed etc. Any attempt now to argue otherwise lacks all conviction.

Issue 5

69. The Claimant says that the arrangement that the advances should be repaid fails for lack of certainty or lack of consideration. There is no particular requirement for certainty, provided only that at the time when the monies were advanced, it was the common understanding that they were indeed repayable and were advanced against commission. As for consideration, Howdens plainly suffered a detriment in parting with its money at all, and there can be no force in the objection of lack of consideration whatsoever.

Issue 6

70. I have already concluded that there was an agreement to reduce the Commission level to 25%, but that the Defendant never put this into effect.
71. For dealing with limitation, I must say something about the sub-agency agreements referred to in paragraph 6 above, originally made with Mr Pulford and Mr Murphy. Pulford assigned his agreement to a company called Arboretum Limited on 1 February 1994. Arboretum itself assigned the right on to the Defendant on 13 January 1998. Mr Murphy assigned the rights under his sub-agency agreement to Tal-zhan, a Kazakhstan company representing certain Kazakh parties, on 18 December 1994. Tal-zhan assigned its rights to the Defendant on 16 December 1997. A number of points arise in respect of these sub-agency agreements and their assignments.

Issue 7

72. The first point concerns the Pulford agreement. That agreement records that Mr Pulford was to be entitled to "20% of nett retained commission received by us [H&T] from [Howdens]". The Defendant says that this means 20% of all commissions received by H&T, whereas H&T says that the 20% is only of H&T's commission after paying Mr Murphy his share. I accept that the agreement is ambiguous, but prefer the case of the Claimant. It seems likely that the reference to "nett" refers primarily to matters such as tax, but it could also encompass commissions paid to other brokers. The Claimant seeks to pray in aid an earlier draft of this agreement, but I do not think that the simple production of a draft is admissible as to the true construction of the words used, nor does this amount to admissible evidence of the matrix or genesis of the agreement. However, the Claimant does not need this point.
73. The Defendant pointed out that a difficulty with the Claimant's contention is that not only would it reduce Mr Pulford's share considerably, but would mean that he could be virtually squeezed out altogether if the Claimant were to make a significant number of other sub-commission payments to other sub-brokers. But such a squeezing out would squeeze out H & T themselves and I do not find this point compelling. I do not see how the Claimant can limit the deduction only to Mr Murphy's share, but I do not think that is Mr. Dorman's argument. If the Claimant is entitled to deduct Mr Murphy's share, they could also deduct any other payments which they chose to make to any other subbroker they might choose to use. Mr. Taylor told me that Mr. Pulford's role had been a slight one, I accept that. It is said that Mr Taylor's own evidence at day 2/59/21 and day 2/60/19 support the Defendant's case on construction of the Pulford agreement, but I think this was just an example of Mr. Taylor's fair-mindedness. On balance I prefer the Claimant's case of this issue.

Issue 8

74. A more important argument concerns the Murphy agreement. Mr Dorman argues the effect of the assignment to the Defendant in December 1997 was not only to assign to the Defendant the Murphy/Tal-zhan rights but to extinguish, fully and finally, any liability from H&T to the Kazakh parties or their assignees. On this basis the Defendant acquired nothing, and might as well simply have paid the US$60,000 in final settlement of the Kazakh claims.
75. It seems to me that what the assignment means is that the US$60,000 was supposed to represent "outstanding monies due to the assignor", viz Tal-zhan. It does indeed seem to have been an approximation of sums then due. The words in quotes are a description of the consideration. They are not in any way a statement that all claims which Tal-zhan might have or thereafter have were extinguished by the assignment. What was assigned was the "full benefit" of the Murphy agreement and all money payable or to become payable under it by Mr Murphy". H & T was not a party to the assignment and I am far from sure that an agreement between Tal-zhan and the Defendant could wholly and finally settle all rights as between the Claimant and Talzhan. Tal-zhan was accepting the $60,000 and could not claim that sum again. The other benefits under the Murphy agreement would inure to the Defendant thereafter, as the Defendant argues. The Claimant's contention amounts to saying that somehow or other the Defendant, at the moment that it became entitled to the benefit of the Murphy agreement, agreed to its complete discharge. This is both pointless and absurd.
76. If I am right in this, and in my conclusion under Issue 7, then it follows that the Defendant is correct that it acquired the right to be paid a percentage of all commissions due to H&T, but that the percentage was 73.33%, not 86.66%. There is nothing peculiar in my conclusion on the Murphy assignment. At the time the assignment was made it was no doubt expected that very little further commissions would flow and very little would inure under the Murphy agreement, assigned or not. The Defendant was to get this benefit, but it was also paying US$60,000 to Tal-zhan as consideration for the assignment. This was commercially comprehensible and in no way improper.

Issue 9 Limitation and the claim

77. On the findings I have made to date, and in the light of my further conclusion that the Defendant's counterclaim can be set off against the Claimant's entitlement to commission, this issue does not arise. Mr Dorman contests that no set off is permissible, but I have no doubt that the claim and counterclaim are sufficiently closely intertwined for equitable set off to be available. Even if it were not, this seems to me to be a case of mutual debts, which can be set off even if not inter-related in this way. If I am wrong in this, the claim would be prima facie time-barred, and I would have to go on to consider firstly (i) whether the Defendant had acknowledged liability under section 29 of the Limitation Act 1980 and/or (ii) whether the Claimant was entitled to rely on section 32 of the Limitation Act 1980. I deal with these points briefly for completeness.
78. I was initially attracted by the acknowledgement argument, since the stance taken by the Defendant has consistently been to accept the Claimant's claim, subject to its counterclaim. The Claimant relied in particular on an Affidavit from Mr Foley of the Defendant which Mr. Dorman said constituted an acknowledgement. However, it has been pointed out by Mr Head that it is a matter of law this line of argument is not available. The case of Swann v. Sowell (1819) 2 B and Ald 759 makes it abundantly clear that where a party effectively admits a claim but only subject to his counterclaim which he seeks to set off against the claim, he does not acknowledge the debt for the purposes of section 29 of the Limitation Act 1980. Therefore, it seems to me clear that the argument based on acknowledgement is not open to the Claimant.
79. The second point concerns deliberate concealment. Deliberate concealment means what it says, as was stressed in Williams v. Fanshaw Porter & Hazlehurst [2004] 1 WLR 3185. It is already clear from what I have said above that I do not see any basis for a case of deliberate concealment here. I do not think that the Claimant had a contractual right to the degree of information sought or an account as alleged by it. In any case, despite not inconsiderable failures, a good faith attempt was made at all times by the Defendant to provide answers to the Claimant's requests. In the middle of 1995 the Business Lists were sent, and as I have found Mr Mark Taylor had an input into how these were to be presented. He was happy with the way Mr Browne presented them. It is true that the Claimant had to go to Master Trench to obtain two orders for pre-action disclosure, which the Defendant did resist unsuccessfully, and that this produced a good deal of further documentation which had hitherto not being provided. True though this is, it does not begin to evidence deliberate concealment. Mr Dorman did put to Mr Browne that he had dishonestly withheld information, but this was clearly without any substance. As I have said, I have on the contrary found Mr Browne to have been determined to be as helpful as possible to the Claimant; certainly, if anybody was dishonest it was not him, and it was only to him that the allegation was put.
80. I am in any event quite sure that although in some parts of the Defendant's organisation there may have been a reluctance to assist H&T, no evidence comes anywhere near establishing a case of deliberate concealment. Even if there was a concealment, it seems to me that it was revealed. In August 1996 a letter of complaint was sent from the Claimant's then solicitors. Similar letters during that year are to the same effect. This action was not commenced until November 2003. Further, even if the concealment was not actually discovered earlier it was discoverable earlier within the meaning of the judgment of the Court of Appeal in Paragon Finance v Thakerar [1999] 1 AER 400. It could have been discovered in March 1997 at the latest when disclosure was offered to the Claimant albeit on a more limited basis than was subsequently provided. Advantage was not taken thereof. Thus, the Claimant could with reasonable diligence have discovered any concealment that there might have been well before November 1997, six years before the present action was begun.

Issue 10

81. The final issue concerns limitation and the counterclaim. So far as the Defendant relies upon a set off, this does not arise, so that it only needs to be considered insofar as the Defendant seeks to recover the balance of its counterclaim left after extinguishing the Claimant's claim. At the hearing, however, Mr Head on behalf of the Defendant confirmed that no claim is maintained in respect of this and that the Defendant is content to extinguish the Claimant's case and leave it at that. In those circumstances this issue does not arise.

MICHAEL BRINDLE QC