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	England and Wales High Court (Queen's Bench Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Ball v Druces & Attlee (a firm) [2004] EWHC 1402 (QB) (17 June 2004) URL: http://www.bailii.org/ew/cases/EWHC/QB/2004/1402.html Cite as: [2004] EWHC 1402 (QB)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		17/06/2004

Mr Justice Nelson :

Introduction

1. The first seeds of the Eden project were sown at the beginning of October 1994 when Jonathan Ball and Tim Smit met at Heligan, Cornwall. The idea of building a massive dome sub divided into a number of separate environments each with its own climate containing representative areas of flora from throughout the world was conceived by Mr Smit, who had already discovered and restored the Heligan Estate, now known as The Lost Gardens of Heligan. The new idea was to create a grand project in Cornwall for the Millennium, aided by funds from the Millennium Commission.
2. Mr Smit had been a successful composer and record producer before creating The Lost Gardens of Heligan. He was not only a successful entrepreneur but knew a substantial number of influential people in Cornwall and elsewhere. Jonathan Ball was an architect in Bude who, like Mr Smit, is a man of considerable energy and a very substantial number of contacts. Through his membership of the Athenaeum, as well as his architect's practice Mr Ball's web of important contacts spread far and wide. Each man depended on the other's skills and contacts in order to drive the project forward and obtain the necessary funding. Whilst therefore Mr Smit told Mr Ball at their very first meeting on 1.10.94 that he regarded himself as a conductor in the middle of an orchestra, both he and Mr Ball each regarded themselves as co-founders of the project throughout. Both men, with considerable assistance from other sources, worked very hard to achieve the Eden Project. They succeeded, and provided not only an internationally known site, but as had been hoped from the beginning, very substantial economic benefit to Cornwall. Some 4 million visitors have ensured this, with £160M benefits in the last year.
3. Mr Smit is the Chief Executive Officer of the Eden Project. The Claimant, Jonathan Ball however plays no further part in the Eden Project and, in essence, apart from his expenses, has obtained no financial benefit from it in spite of the fact that the Trustees had at all relevant times wished both co-founders to be rewarded for their contribution to making the project possible.

The Claim

4. The solicitors who had acted for Mr Smit in his successful Lost Gardens of Heligan project, Druces & Attlee, were brought on board by Mr Smit in a matter of days after he had started having meetings seeking to set up the Eden Project. It is Mr Ball's contention that his failure to profit from the success of the Eden Project is due to the breach of contract and / or negligence of Druces & Attlee when acting as his solicitors, jointly instructed by Mr Smit. The essence of the Claimant's case is simple: he and Mr Smit accepted the Defendants advice that a charitable trust should be formed as the vehicle for carrying forward their project and applying for Millennium Commission and other funding, but made it clear before the Trust was established that they also expected to share financially in the success of the project. In spite of the fact that they arranged for the Defendants to see proposals prepared by Ove Arup and Ernst & Young which clearly showed their desire to retain a personal stake and the possible structures which might enable them to do so, the Defendant solicitors simply continued with the setting up of the charitable trust, taking no steps to advise either Mr Smit or Mr Ball that this would or might defeat their expectations for personal benefit. They did nothing to advise him that the establishment of the Trust might damage his expectations and encouraged him to understand that there was no urgency about establishing or securing his interests. They failed to advise him of the need to enter into a bidding agreement with the Trustees. As a consequence the Claimant contends that he lost his rights and interest, and any leverage whereby he might have obtained recognition of them, save for the payment of historic costs and expenses.
5. He also claims breach of fiduciary duty by the Defendants in giving advice to the Trustees of the Eden Trust and Eden Project Limited in connection with the Claimant's attempts to receive recognition of his asserted rights, and for their acting for those parties, until restrained by an interim injunction, in litigation in the Chancery Division brought by the Claimant. He seeks an account of profits, and damages.
6. The Defendants initially denied that they had acted for the Claimant in any capacity but now admit in the pleadings that they were retained by him, jointly with Mr Smit, from 27 January 1995. They deny that they were ever retained to advise the Claimant in relation to his personal position and contend that they were only ever instructed on behalf of the proposed project and for Mr Smit and Mr Ball in their capacities as promoters of the project. That retainer was never amended or varied. In any event the Defendants deny breach unless there was an express retainer to advise the Claimant as to his personal position, and further contend that even if there was a duty and a breach the Claimant is unable to establish causation as he cannot show that he would have accepted and followed the advice that he contends he would have been given, or had he done so it would not have been of any benefit to him as Mr Smit would not have joined him in seeking such benefits and the Millennium Commission would have refused to make the grant had he insisted upon personal benefit of the kind for which he now contends. Any breach of fiduciary duty is denied.
7. Unusually, there are many contemporaneous documents in this case as the two solicitors dealing with the matter on behalf of Druces & Attlee, Mr Stroh and Mr Monkcom, both made attendance notes, and Mr Ball compiled 'aides memoire'. I acknowledge the point made by Mr Bernard Livesey QC on behalf of the Defendants that where such a body of documents exists the Court must exercise caution before accepting evidence which purports to be recollection, but which is not supported by the contemporaneous documentary evidence. Furthermore the absence of a mention of an important matter in contemporary documents may be of significance.
8. I have also borne in mind Mr Livesey's contention that Mr Ball's statement is no more than a reconstruction of events made with the benefit of hindsight and from a biased perspective. The evidence therefore requires careful appraisal with these points firmly in mind.
9. The contemporaneous documents and sequence of events are so important to the resolution of the issues in this case that I propose to analyse the key documents and chronology before turning to the issues. This is a lengthy but essential process for a full understanding of the case.

Review of key documents and chronology.

1994.

10. Mr Smit met Mr Ball on Saturday 1^st October and discussed his proposed project. By that stage he had already approached Sir Richard Carew Pole, Michael Galsworthy, the High Sheriff and David Brown, the Chief Executive Officer of Restormel Borough Council. During the course of the discussions between Mr Ball and Mr Smit the name Timco – Terrific Ideas for the Millennium Company – was conceived. Mr Ball's case is that this company was the vehicle through which his financial aspirations would be realised. In the aide memoire referring to further conversations with Mr Smit on 5.10.94 Mr Ball records:-

"We then went on to how the company would be set up, TS and JB would be at the top, under TS would be TS's partners, under JB would be some, VB + one other perhaps and then landowner we would assume to get about 25% of the action." (I 44,45)

11. Mr Ball drew a diagram on 1.10.94 showing both the Trust which he and Mr Smit anticipated in their discussions would be set up, and Timco. As no mention of Timco reappears in the documents until July 1996 save in the Mission Statement in January 1995 when it is the name for the project as a whole, the Defendants contend that it cannot be regarded as synonymous with financial aspirations.
12. Mr Smit contacted Mr Stroh of Druces & Attlee on 4^th October 1994. Mr Ball's aide memoire for 5.10.94 records that Mr Smit had been talking with his London lawyer about setting up a company and a Trust. That discussion had taken place on 4.10.94 when Mr Smit had informed Mr Stroh of his proposal for the building of the massive dome and the funding of that project by the Millennium Commission. Mr Stroh's attendance note (I 27) notes Mr Smit's concern about the amount of control that he would wish to exercise and the desire to avoid persistent committee type interference. Mr Stroh said he would give consideration to the type of structure which could be adopted and confirmed that he would be delighted for the firm to be appointed the Project's solicitors. His manuscript notes (X2, 3,) state "Have to be a Trust – must be Commercial venture." In relation to Mr Smit the notes record:-

"T Smit = orchestrator/conductor Not necy financial gain as long as paid for job"

13. This note indicates that Mr Smit might want financial gain from the project but might not do so if he was paid for a job. What is clear about this manuscript note is that Mr Smit was expressing a possible desire for financial gain from the outset. Whether this possible desire waxed or waned, or was expressly or impliedly withdrawn, is a matter for analysis of the later evidence, in particular the documentary evidence. Mr Smit was not called as a witness.
14. On 11.10.94 Mr Smit again telephoned Mr Stroh to discuss his further thoughts upon the project. They discussed the legal structure of the company and Mr Stroh said that his:-

"initial view was that property could be held by a trust and that the commercial development undertaken by a company with Tim as Managing Director/ Chief Executive. In order to free his hands as much as possible of interference, I suggested that a modular approach with each stage of the transaction being approved in advance and him receiving authority to progress it. This is clearly a difficult area which requires further deeper consideration."

In his manuscript note of the same meeting (X 4) Mr Stroh notes EU funding in the form of derelict land grant, if not Millennium funding, and states "Millennium fund or not get structure in place, which would apply whether MF or not."

15. This note clearly acknowledges the possibility that Millennium funding might not be available but that if it is not it is intended the project would go ahead anyway. This is confirmed the following year by a letter to the Charity Commissioners from Druces & Attlee of 15 June 1995 (K 308) which states in terms that if the application to the Millennium Fund is not successful it is proposed that the endeavour will proceed but on a far smaller scale with the limited funds that have already been promised. "It would be the intention to attract further investors as the project progressed."
16. The contact for Druces & Attlee was with Mr Smit, their former client. It is Mr Ball's case that Mr Smit would take the lead on behalf of both of them, and that he took charge and led negotiations on legal aspects. Mr Ball did however meet Mr Stroh at the Athenaeum on 9.11.94. Mr Stroh's attendance note (I 77) shows that they spent a couple of hours discussing how the project should proceed and that he asked the co-founders to lock themselves away for a weekend and prepare an outline project proposal / business plan. Mr Smit said that he perceived himself as being in charge of the plant entity whereas Jonathan Ball as being in charge of the project and that they would probably need to recruit someone from outside in respect of the commercial exploitation. Mr Stroh told them that once they had prepared their project proposal / business plan he should be able to work from it and give them some idea of the type of structure that would be involved. Until then it was not possible. Mr Stroh's manuscript note, on Athenaeum notepaper, reads as follows:-

"Charitable Co/ entity to be responsible for the Project. Who holds the shares in the Co? Are there any returns to shareholders – no – Charitable – therefore profits retained on project & Commercial exploitation profits (covenanted) to charitable vehicle.

Benefits of franchising / ppties / sales of products / - tickets etc ? Ch vehicle..or straight T or company limited by guarantee."

17. Mr Stroh told me in evidence that the proposals for the project at this meeting were made by Mr Smit and the Claimant. There was no mention by either of them of Timco, and there was no mention as far as he could recall of any personal interests of either Mr Ball or Mr Smit. He would have mentioned it in his note if there had been.
18. The Defendants submit that the retainer was determined by this discussion at the Athenaeum and in subsequent discussions with Mr Smit. The Athenaeum discussions and the documents, they submit, demonstrate that not only was there no express retainer as to personal financial aspirations, there were in fact no such aspirations.

1995

19. The preliminary Mission Statement for publication in January 1995 described the project, which was named the Timco project, as "..bequeathing a gift of incalculable value to those who will follow us..our hope for and belief in the future." Such a statement, the Defendants contend, is more consistent with an entirely charitable project than one from which personal profit is to be made, and also shows that Timco was initially a name for the project not merely a vehicle for the co-founders' financial aspirations. The claim on 19.12.1994 by the two principals for expenses only at £2,500 a month confirms that this is what they required out of it the Defendants submit. At that stage the project might have been called "Kew West" with 50% Trustees to be Kew Trustees and the other 50% to be movers and shakers and environmentalists. The initial intention was for the Trust to own the entire site and for there to be another company which would exploit the commercial possibilities 'with the profits to be covenanted up to the trust.' This would essentially comprise a management company which would look after the site. (I 153 and X 7)
20. On 6.1.95 Mr Smit saw Mr Stroh and expressed the concern that the charity which was to own the freehold or head lease of the land should be formed as soon as possible. The charity was to lease or sub-lease to a management company, limited by guarantee, and the management company would then grant underleases to commercial ventures such as a hotel company. Mr Stroh said it was important for all parties that no liability should attach to Mr Smit personally and that he should therefore speak to Restormel. As soon as this had been sorted out and funds received Druces & Attlee could then take steps to contact the Charity Commissioners and Mr Monkcom and Mr Smit would meet with the Commissioners to discuss the formation of a Trust. (J 10) In his manuscript note of the meeting Mr Stroh indicated that 'Clients = Trust'. (Y11) The Trust did not come into existence until 15.1.96.
21. On 27.1.95 Mr Smit suggested to Mr Stroh that he should write a letter to Restormel Borough Council saying that Druces & Attlee had been instructed by Mr Smit and Mr Ball to set up a trust for a Millennium project, and asking for the sum of £2,500 to be paid on account in order to enable them to proceed. Mr Stroh did so on 31.1.95 estimating his likely costs to be in the region of £5,000. On 20.2.95 he wrote again to Restormel suggesting that as it may be difficult for public monies to be paid on account "..an alternative would be for the Borough of Restormel to be my firm's client for the initial purposes of the Millennium Project so that following the setting up of the charitable trust, the client would revert to being the Trust a sequence of events which would I believe better reflect the reality of the decision".
22. On 1.3.95 Mr Monkcom advised Mr Smit, 'although it was not strictly within his brief at this stage' to be careful in how the project was managed and developed. The potential problem for VAT and the inability of the charity to recover this, amongst other things, caused him to advise Mr Smit to get on board an accountant as swiftly as possible. He recommended a firm with a very large charitable section. The same day Mr Monkcom telephoned Ernst & Young and told Dawn Nicholson at their London office that the main area of concern was VAT loss. Miss Nicholson said that Ernst & Young would be pleased to help and on 7.3.95 Mr Monkcom reiterated his strong recommendation to Mr Smit to discuss the matter in detail with accountants and enclosed the letter from Dawn Nicholson. Mr Monkcom also asked Mr Smit to confirm that he would pay Druces & Attlee's fees if Restormel did not.
23. Mr Ball had been attending meetings with Davis Langdon Everest, the eventual quantity surveyors for the project, together with Land Architects, who were engaged initially in developing the project. Ronnie Murning was a principal of Land Architects and Mr Ball a sleeping partner of that firm. Jonathan Johns of Ernst & Young, Exeter was also in contact with him; a presentation to the Natural History Museum was being prepared as were images of the project. On 8^th March 1995 Mr Ball spoke with Mr John about Land Architects being "a better vehicle of JB interest and the need for us to sort out our own business agreement heads of terms..". "Meeting with Toby Stroh in London would be helpful". Mr Johns had agreed to act as financial consultant for three months.
24. Mr Ball told me that, throughout, Mr Smit and he had agreed that they were 50 – 50 partners in the project, that he had always intended to obtain financial benefit from the project, as had Mr Smit, and that was the reason why both of them had not put themselves forward as Trustees. (B11 para 34, D2.116, D3.3, 24, 50 D4.47) The diagram of 19.12.94 (I 137) showed JB and TS having a 50% interest which may well have been discussed even at the Kew West stage as there had to be rigorous commercial propositions in the project as well as public money in order to deliver it. (Day 3 84).
25. As Mr Smit took the lead in dealing with Druces & Attlee, Mr Ball spoke to them only very rarely. There is a substantial conflict as to the first occasion when he says that he did speak to Mr Stroh after the meeting at the Athenaeum on 9.11.94. Mr Ball says in his witness statement, which he confirmed in evidence, that he telephoned Mr Stroh early in March 1995 to enquire specifically whether Mr Stroh had any difficulty in acting for him, given that he continued to act for Mr Smit personally. Mr Stroh said "absolutely not" and it was agreed that from that conversation onwards he would copy him in on all Druces & Attlee's correspondence with Mr Smit. There is no attendance note from Druces & Attlee nor an aide memoire from Mr Ball but he said in evidence, when it was put to him that the conversation did not take place, that he vividly recalled it and in particular the assertive terms in which Mr Stroh reassured him that he had no difficulty in continuing to act for him and Mr Smit personally. There is a letter of 10^th March 1995 from Mr Monkcom to Mr Ball referring to a telephone conversation that day between his secretary and Mr Ball as a consequence of which he enclosed letters and documents.
26. In the draft Registration of Charities Questionnaire it is noted under paragraph 27 that it is "possible that in order to fulfil its objects a trading company will be formed, the shares of which will be owned by the Charity."
27. In April 1995 Mr Smit had been discussing the project with Sir John Banham who had suggested to him a three tier structure with a Trust, a new company of the great and good which would channel the money for the project and then dissolve at completion underneath which would be a management company run by Tim Smit, Jonathan Ball and other dedicated members which would run the project. Tarmac would get a charge over the freehold for their involvement.
28. The first application to the Millennium Commission was made on the 24^th April 1995. The structure proposed in the application stated (K 224) that:-

"The ultimate ownership of the project assets would be vested in the Charitable Trust, in perpetuity. After implementation, the Trust will be managed on a day-to-day basis by its Management Company. This company will covenant the majority of its profits to the Trust."

This first application was not accepted but it was not its proposals in relation to the structure which caused its rejection. The reference to the majority of its profits being covenanted to the Trust left open the possibility that others, such as contractors or co-founders, could take some of the profits of the management company.

29. Mr Smit raised the question of a large consultant receiving an equity stake in the company with Mr Stroh on 3.5.95.
30. The second time Mr Ball told me he spoke to Mr Stroh after the meeting at the Athenaeum was on 31.7.95. On that occasion he said he had a long conversation with Mr Stroh in which he gave him details of the meetings which had taken place the previous week and then went on to discuss management structuring and his and Tim Smit's positions. Mr Ball's aide memoire continues:-

"Camelot directors got a lump sum on the day they delivered everything on time - 500k - and this combined with a contract renewable every 3 years or whatever would probably be the best way – we would need to talk that through with the Trustees who would see something as being fair and reasonable."

31. Mr Ball told me in evidence that Mr Stroh had advised him that he and Mr Smit would need to talk this through with the Trustees. No request was made to Mr Stroh to do it for them. Nor was reference made to any other personal benefit than a success fee and a job.
32. Mr Stroh had no recollection of the conversation but did not challenge that it took place. Although he had no independent recollection of it he accepts that it is likely that he would have said that Mr Ball and Mr Smit would need to talk the proposal through with the Trustees to decide what would be fair and reasonable.
33. It is correct, as Mr Livesey submits, that this conversation made no reference to securing equity or intellectual property rights but what it did demonstrate was Mr Ball's desire to obtain personal financial benefit from the project and that a success fee and a job "would probably be the best way forward". Such a desire does not on its face seem consistent with an intention to obtain no more than kudos and control from a wholly charitable project. It is to be noted that Mr Stroh accepted in evidence that the possibility of Mr Smit and Mr Ball becoming Trustees was mentioned but discounted because they would not be able to receive remuneration from a Trust or otherwise in connection with professional services that were rendered. He also accepted that they were not simply seeking expenses but something out of the continued project. (Day 8 99-107)
34. Mr Monkcom reiterated the need for accountants to be retained, in particular before any monies were received from the Millennium Fund because of the potential problem of recoverability of VAT and the need to ensure that the funds were paid to the correct vehicle at the correct time. (L 68). Mr Smit and Mr Ball did not however accept this advice as on 14.8.95 Mr Smit informed Mr Monkcom that they had in fact got Ove Arup to deal with the business plan and were not for the time being instructing accountants. Mr Smit had been put off by two large firms of accountants who he had felt had lied to him. Mr Monkcom was concerned as to whether Ove Arup would supply tax and accountancy services and said it was extremely important to get the right structure at the outset which would include correct taxation advice. Druces & Attlee could advise on a limited basis but for a large development would expect an accountancy input. The risks in relation to VAT were emphasised by Mr Monkcom.
35. On 30.8.95 Mr Smit informed Mr Stroh that Sir Ralph Riley had agreed to become a Trustee and that Mark Bostock of Ove Arup was doing the business plan. This was due for presentation to banks and to the European Commission. The possibility of the English China Clay Company becoming equity stakeholders in the management company in exchange for land was discussed. On 12.9.95 Mr Smit confirmed to Mr Stroh that if the Millennium Commission remained uninterested in the proposal then he confirmed someone within the Disney Empire might be interested. Druces & Attlee were therefore once again reminded that Mr Smit intended the project to go ahead with commercial funding if Millennium Commission funding was not available.
36. On 3.10.95 Mr Smit reported to Mr Stroh that Mr Bostock had persuaded them that they should go for only part of the funds available to them from the Millennium Commission or from Europe in order to build the main dome and second dome with the following two domes to be built out of cash flow at a later date. Mr Stroh records in his attendance note that:-

"Mr Bostock has pointed out that the Millennium Commission applications that are successful at the moment appear to be based very much on charitable premises and that there is a charitable trust with a company limited by guarantee involved. This clearly fits in well with our structure and satisfies my problem with Tim's previous suggestion of equity participation by third parties. I confirm that our company limited by guarantee would need to be looked at again in order to check that it could do what it would be required to do under the new route."

37. Mr Bostock's draft business plan followed on 11.10.95. It was stated that:-

"The basic concept for the Eden Project is that it will be a 'not for profit' enterprise. It will be owned by a Trust and operated through a management company. The surpluses generated by the management company will be used to:

meet the debt servicing costs;

provide for future investment."

The funding, based on pure assumptions at that stage, was to be ERDF, Millennium Commission, other public funding, private funding and bank loans, the latter being the amount of debt to be raised on the market. Mr Stroh noted that this business plan was consistent with Druces & Attlee's approach to the structure and concern about the equity participation by third parties. (L 133) It was not however to remain for long as the proposed business plan as, after a period of intensive activity and written proposals from Mr Smit, a revised business case was sent by Mr Bostock on 2.11.95.

38. The revised business case envisaged Tim Smit and Jonathan Ball being 'properly rewarded for their upfront costs and sweat equity/risk'. It included a 32% equity stake for Smit/Ball stated on the Arup plan as £9M. (M 23-28) When Mr Bostock sent the revised business plan to Mr Stroh on 2.11.1995 he suggested that he should talk to Tim Smit and agree with him on the appropriate structure for the Eden Project to get off the ground, which was workable from an operational point of view and was winnable from the perspective of the Millennium Commission. He added that they had to move quite fast now to get all their 'ducks in place' for a 30 November submission. (M24)
39. The events leading to this revised business plan are important and need to be considered in some detail. On 16.10.1995 Jonathan Ball had met an American book collector at the Athenaeum. He was fascinated by the Eden Project which he thought would make 'JB and TS millionaires! One of the angles is..2000 years of Cornwall..'. He told Mr Ball that they must think 'big screens,' which he said was the biggest trend from America. In his aide memoire for 16.10.95 Mr Ball also refers to Mr Smit having spoken to his friend, an international entrepreneur called Rolf Munding, who said that funding should be sought from the banks on the basis of the money from the Lottery and ERDF, that the company structure was for a Trust which acquired the assets and then leased the site to the development company 'possibly 51% Trust, 32% JB/TS, 17% Tarmac or whoever, who execute bond by lease agreement, minimum performance standards established and surpluses from that development company then go back to the Trust. Sounds all right.' The Defendants submit that it was these meetings which prompted the co-founders into seeking personal reward, effectively for the first time, but that that desire was shortly afterwards abandoned.
40. The Charity Trust Deed was sent by Mr Monkcom on 27.10.95 to Mr Smit for the Trustees to sign. On 29.10.95 Mr Smit prepared a document entitled 'Management Structure for the Eden Project' which he sent to Mr Bostock who in turn sent it together with a copy of the revised Ove Arup business plan on 2.11.95. It appears from Mr Stroh's manuscript note (X39) that he had discussed the matter with Mr Smit 2 days before Mr Smit prepared his management structure. The management structure put forward by Mr Smit (L 204/ M25) appears to be based at least in part upon his discussions with Mr Munding on 16.10.95. The proposals which Mr Smit sent to Mr Bostock on 29.10.95 are:-

"MANAGEMENT STRUCTURE FOR THE EDEN PROJECT.

What follows is a suggested management structure for the Eden Project. There are certain assumptions within this structure which are for illustrative purposes only;

1 – That Eden raises £62M from the Millennium Commission and Europe.

2 – That another party (Tarmac?) may enter into a debt for equity arrangement as a loan to the project to the sum of £10M

For the sake of argument there are three players at the start A –The Trust, B – Tim & Jon, and C – Tarmac.

The Eden Trust will own the freehold to the property and have £62M towards the construction, Tim & Jon have a large amount of sweat equity which for arguments sake is responsible for raising the Trusts stake so a notional share value has to be attributed to that role. Tarmac will put in notionally £10M and the rest of the money needed is raised from the banks.

The Trust will lease the site to a development company on very strict conditions (these conditions will incorporate the most demanding conditions for the development and subsequent management of the site.)

The Development Company (Eden Devpt) will be owned 51% by The Eden Trust, 32% by Tim & Jon and 17% by Tarmac on a debt for equity arrangement. This company will build the project. On completion the site is leased through to …….

The Management Company. This company is responsible for the management and staffing of the site and all areas of commercial exploitation. The lease arrangement between it and the development company will enshrine all the tight controls of the original contract. The rental will comprise a de minimis rent at the same level as that agreed between the development company and the Trust, as well as a royalty based on turnover (say 5%). This 5% goes into the development company and is apportioned as dividend according to the shareholding. A proportion of this money will go to paying off Tarmac's loan, at the end of which their shareholding will revert to the Trust. At the moment the intention is for the management company to be controlled by Tim & Jon with a board of directors. To guarantee integrity in these arrangements it is proposed that there should be annual rent reviews to enable profits of the management company to be contained within agreeable parameters. It is however, in my opinion essential that the company should be able to exercise a certain amount of commercial freedom in order that it operate successfully. The exact nuts and bolts of the management company need to be ironed out but in principle this is what I want. The issue of whether profits (all or a proportion) should be covenanted to the Trust is an interesting one.

I want to control the development of the project. Money is not the driving force, but control is.

The fact that the Millennium Commission may want to see the Trust side as dominant is fine by me-however a device enabling me to control the operation is essential.

One more aspect needs to be developed and that is the need for a company limited by guarantee to operate as the secretariat and development arm of the Trust. This company will disburse and manage the monies on Trust projects around the world. This company will either be separate totally or have staff seconded to it, or a mixture of both. It is for example obvious that the Curator in chief will have interests in all fields.

Do you think this appropriate?"

41. The potential personal benefit available to the co-founders on Mr Smit's proposals were:-

32% equity in the development company.

A royalty based on turnover of say 5% apportioned according to the shareholding in the development company.

There were to be annual rent reviews to enable the profits of the management company to be contained within 'agreeable' parameters but Mr Smit thought it essential that the company should be able to exercise some commercial freedom so that it could operate successfully. It is not clear whether the reference to "profits, (all or a proportion) be covenanted to the Trust" is a reference to the management company profits or wider but the question of whether profits should be covenanted to the Trust is declared to be 'an interesting one' and hence left open.

42. What is made clear in the document is that Mr Smit proposed a personal profit out of the project by way of equity of 16% and royalty based on turnover of c 5%. Equally clear is the strong desire to control the development of the project. 'Money is not the driving force, but control is. The fact that the Millennium Commission may want to see the Trust side as dominant is fine by me – however a device enabling me to control the operation is essential.' Whether his desire for control was so strong that it overcame his desire for profit and caused him to abandon it as the Defendants submit, has to be determined in the light of the evidence as a whole and particularly with regard to the documents from October 1995 through to January 1996.
43. It was after receipt of this document and consideration of it that Mr Bostock prepared his revised business case (M 23-28).
44. Mr Ball spoke to Mark Bostock on 2.11.95 (M30) and was told that he'd been discussing management structure with Mr Smit and had faxed back his reply. When Mr Ball said he wanted copies of Mr Bostock's reply Mr Bostock made the "curious remark that he was worried about not wanting to fall out with me". Mr Ball assumed that this was something to do with a controversial position Mr Smit was asserting which he felt might not meet with his approval. Mr Ball then had a long chat with Mr Stroh and complained about not getting all copies of communications on Eden. Mr Stroh said he would adjust that. On management structure Mr Stroh said faxes had gone between him and Mr Bostock and Mr Ball said "Could I have copies of his views and his recommendations in this regard? He said yes but he might not be able to get it through today."
45. Mr Stroh makes no reference to this conversation in his statement and there is no attendance note of it. Such a conversation would indicate a readiness on the part of Mr Stroh to give Mr Ball his views and recommendations on Mr Bostock's revised business plan. It would not be surprising in these circumstances if Mr Ball thought that Mr Stroh was acting on his behalf and advising him as to his personal position and how the proposed structure affected that.
46. It is to be noted that the attendance note relating to 1.11.95 and 2.11.95 also contains the active steps which Mr Ball was then taking to further the project and the progress that was being made. The 'wow' factor had arrived for the first time.
47. On 6.11.1995 Mr Ball and Mr Smit travelled to London on the train. It became apparent during their conversation that Mr Smit saw himself as Chief Executive with a wish to keep total control. Mr Ball reminded him that there was 16% each and he did not disagree. Mr Ball was however unhappy with Mr Smit wanting to be Chief Executive and suggested that they should be joint Chief Executives. This was the start of a dispute between the two men which Mr Ball said in evidence may have caused them to take their eye off the ball of securing their personal benefits.
48. When Mr Stroh spoke to Mr Smit about the revised business plan on 6.11.95 he said that it was fine to a certain extent but would not constitute a genuine feasibility study to enable financial institutions to commit funds to the project. There was not enough in the papers to submit to Touche Ross for advice. He appreciated the need to have property ownership, development and management as separate sectors within the management structure although the precise relationships needed to be considered. On 7.11.95 Mr Ball rang Mr Stroh and complained that he hadn't received the papers on the management structure yet. Mr Stroh was concerned about who his client was and Mr Ball told him that anything on Eden was JB/TS (M43).
49. Mr Stroh wrote to Mr Smit on 8.11.1995 suggesting a meeting with other partners in his firm to discuss the structure which, as Mr Smit had said to him, was one of the main elements which the Millennium Commission was looking at in determining the validity of an application. Mr Stroh said that it was becoming increasingly apparent, evidenced by the Wembley bid, "that the Commission is trying to ensure that private enterprise should not profit from the Millennium Commission directly and that it is looking very closely at the relationship between the parties and the extent to which they can profit from the transaction. The relationship between the parties will, therefore, need to be very clearly defined." (M47) Mr Stroh is here advising Mr Smit that there are difficulties in private enterprise obtaining profit from Millennium Commission directly. This advice is given against the background of the revised business plan and Mr Smit's stated intention in his proposed management structure for the Eden Project to obtain 32% equity between himself and Mr Ball and a royalty based on turnover of about 5%. When writing this letter Mr Stroh therefore knew that Mr Smit and Mr Ball had personal financial aspirations. He was not indicating to his client that they could not be achieved but the Millennium Commission's attitude meant that if they were to be achieved the relationship between the parties would have to be very clearly defined. Mr Ball and Mr Smit on receiving such a letter could reasonably have thought that Druces & Attlee had well in mind their desire for personal benefit from the project and were at that stage dealing with it.
50. On the following day, 9.11.1995, the day when Mr Ball may well have received the letter to Mr Smit of 8.11.95, a copy of which was sent to him, he met Tim Jones, a personal friend, and the representative of SWEL (South West Enterprise Limited) on European matters. Mr Jones gave evidence before me on his role in the obtaining of the ERDF grant and his knowledge of Mr Ball's and Mr Smit's desire for personal benefit from the project. In his aide memoire of 9.11.95 Mr Ball records on the subject of management that Mr Jones had said "The principle is that we get a cover for what you put in before it gets going and then positioned to grow with the growth. Obviously you have to give away bits as you go along so by the end you end up with a much smaller bit..of the total equity position." (M97) Mr Ball was asked in cross-examination by Mr Livesey why, on the receipt of this advice, which was very similar to that which he was now alleging should have been given Druces & Attlee, he did not raise it with Mr Stroh, especially as Mr Jones said that he could put together the whole scenario for him in hour. Mr Ball's reply was that Mr Bostock, Mr Smit and Mr Stroh were all active on the issue of structure which was clearly something at the front of their minds. He didn't consider it necessary to raise it with them as in his mind they were already dealing with it.
51. On 17.11.95 Mr Bostock sent Mr Smit and Mr Ball a redrafted company schedule showing Mr Smit and Mr Ball as joint managing directors of Eden Development Limited in a new structure above Eden Management Limited. On 20.11.95 Mr Stroh wrote to Mr Smit stating that any decisions on the structure would be premature until all documentation backing up the business plan was available.
52. In a letter to Touche Ross of 23.11.95 Mr Thomas of Druces & Attlee described Mr Smit as "our client" and stated that Tim Smit and Jonathan Ball 'are the driving force behind the project'. The aim was to give Touche Ross the opportunity to meet "the clients" so that Touche Ross could tell them why they should be involved.
53. In fact Mr Smit and Mr Ball did not go to Touche Ross but returned to Jonathan Johns of Ernst & Young Exeter. (M142) He thought that the biggest problem so far as sweat equity for Ball and Smit was concerned was potential tax liability.
54. On 27.11.95 Mr Stroh asked Mr Smit whether he and Mr Monkcom were required to attend the Trustees proposed meeting on 29.11.95, and whether the meeting with Touche Ross should go ahead. Both in this letter (M144 145) and Mr Thomas's letter of 28.11.95 (M134 135) Mr Smit and Mr Ball are described or treated as if they were clients.
55. Ernst & Young Exeter sent their thoughts as to structure to Mr Ball and Mr Smit on 28.11.95. (M158 – 161) This involved Mr Smit and Mr Ball having an equity investment by way of B ordinary shares giving 49% of the voting power. One of the key issues which required further consideration was 'the tax implications for the quantum of Messrs Smit and Ball's investment'. This further structure, albeit different, also included a financial benefit from the project for the co-founders.
56. The Trust Deed had not yet been signed but a meeting of the proposed Trustees took place on 29.11.95 when Mr Monkcom advised them about their potential liability as Trustees of the Eden Trust. In particular he pointed out that provided they acted prudently and lawfully in accordance with the Trust Deed any liabilities incurred could be met out of the Trust Fund, otherwise they might be personally liable. It was decided that the Deed would be executed by all parties and held in escrow by Druces & Attlee until such time as the first meeting had taken place. Detail of the proposed structure and the Millennium application would then be provided. The Ernst & Young letter gave only the basic skeleton of the structure and Mr Monkcom said that they had to be sure that the correct structure was in place and knew precisely what was going to take place beneath the Trust. Sir Alan Donald was concerned as the potential liabilities of Trustees had not been stated to him previously.
57. There then follows a series of documents upon which both parties rely. The second proposal which had been submitted to the Millennium Commission on 30.10.95 was accepted as eligible by the Millennium Commission on 8.11.95. (M45) On 30.11.95 Mr Smit spoke to Mr Monkcom. (M172, 173) He said that he wanted the Trust Deed signed as swiftly as possible by all the Trustees so that there could be a preamble to his application saying how the Trustees think the project is 'the best thing since sliced bread.' Mr Monkcom said that the Trustees wanted to be satisfied first about their liabilities and secondly wanted to know more about the structure underneath the Trust. When Mr Monkcom said that they had advised accountants be appointed at the outset so that the structure could be considered, Mr Smit said that he did not think that was the right way round, and that Ove Arup had produced a good structure.
58. "REM said his greatest concern was that he understood from the structure that there was some kind of profit sharing arrangement below the Trust. The Trust was drafted on the basis that there was a captive trading company and certainly this was the way REM in his experience had always dealt with matters. REM said that the fact that there was external funding from the Millennium application was something of which he was not immediately familiar nor was he aware how it was dealt with in other Millennium applications."
59. He advised that charity trustees did not want monies passed to a company which was in turn able to dissipate those funds how they wished. He suggested they could go to counsel who knew about charity matters.
60. "REM also said that to be fair we have been instructed simply to form a charitable trust. We had not been asked to deal with the structure. Tim acknowledged this and said that he was very happy with what we had done so far and was not criticising us in any way. He was merely looking for a commercial way that he could benefit from his Intellectual Property Rights. He said that in some respects he was a little bit disappointed that having appointed all these advisors there was no father figure who was really taking the project forward. REM said that clearly it would help if there was somebody who be seen as a project manager.
61. As solutions to Tim's problem REM said that he could either be a paid employee of the Trust or a paid employee of the company. REM did not however think that the Charity Commissioners would be particularly happy about the profit sharing arrangements currently being suggested."
62. As the Defendants submit, this appears to be the first occasion when intellectual property rights were mentioned. (M173) It is however clear, as Mr Monkcom himself pointed out, that some kind of profit sharing arrangement below the Trust was being sought. Even if Mr Monkcom was correct in saying that up to that point Druces & Attlee had been instructed simply to form a charitable trust and Mr Smit acknowledged this, he was then informed that Mr Smit was in fact looking for personal benefit. That Mr Monkcom understood this is clear from the fact that he advised Mr Smit as to the solution to his problem, stating that he could either be a paid employee of the Trust or of the company, but didn't think that the Charity Commissioners would be happy about the profit sharing arrangements being suggested. It is at this point that Mr Monkcom in effect advised Mr Smit that his profit sharing aspirations, save for paid employment, were unlikely to be realised. When he was giving that advice he was addressing 'solutions to Tim's problems'. He was not however, he said in evidence, dealing with structure or with the Millennium side of the application. (Day 10 74.) He was saying to Mr Smit that if his advice about the Charity Commissioners' likely view did not fit in with his plans then he should go and get other advice from accountants. (Day 10 70)
63. The Trust Deed was sent to the Trustees for signature on 30.11.95 and a copy of the proposed Trust document sent to Mr Johns of Ernst & Young on the same day. Mr Monkcom expressed his concern that 'It is now being mooted that the charity will invest in a company to carry on trading which is not a captive of the charity. The charitable trust was clearly drafted on this basis.' (M178) When he spoke on the same day to Mr Williamson of Ernst & Young he was told that they had been asked by Mr Smit and Mr Ball to produce a structure 'whereby there could be equity participation by those two individuals. REM said that he realised this. It was however beyond the original brief that REM had been given in relation to the preparation of the Trust Deeds. REM says he was pleased that Ernst & Young were now on board..' He again said that a possible way forward would be to go either to the Charity Commissioners or to counsel. Mr Stroh added a concern about what impact the arrangements would have on the Millennium funding.
64. The second application to the Millennium Commission was due in January 1996 and on 6.12.95 Mr Stroh told Mr Smit (M331) that it was clearly impossible for the structure to be set out in any sort of detail in the application and what "we therefore were looking for was the best possible 'fudge' which would satisfy the Commission." Mr Smit said that the Commission was being backward about coming forward as to what its requirements were about the involvement and benefiting of and by private investment in projects funded by the Commission and pointed out that the Commission only provided funding up to 50% of the project and therefore there would have to be some benefiting by private enterprise otherwise "what was in it for them". The purpose of the advice as to "the best possible fudge" appears to have been to enable the possibility of personal financial reward to be left open.
65. Once again Mr Stroh reiterated the need for the structure to be commented on by Ernst & Young which had been their advice eight months ago because the structure was of major importance.
66. The following day 7.12.95 Mr Smit had a lengthy conversation with Mr Monkcom. Mr Smit said that he had had a lengthy conversation with Mr Baird at the Millennium Commission. "It appeared that they had no set structures in mind but they did appear to be rejecting applications if a proper structure was not in place. Further, Mr Baird did not seem to be particularly forthcoming about external investors in projects." The Trust had been drafted showing the Trust owning 100% of the development company. Mr Monkcom was reluctant to have any other method unless they went back to the Charity Commissioners. When discussing various possible structures all of them "seem to indicate that Tim Smit wanted to extract some of the profit from the project. REM said that strictly the Trust should benefit from the arrangements." Any employment would have to be at arms length with the most appropriate people. "REM could not immediately see that there was a specific place for Tim Smit being able to extract profit." He again suggested that Mr Smit went to Ernst & Young London or other firms or counsel. They didn't want to spoil the ship for a hapeth of tar.
67. Mr Monkcom was certainly expressing his doubts in this letter and noted, as if it were the first time it had been mentioned, that Mr Smit wanted to extract some of the profit from the project. This, Mr Monkcom advised, was not in his view possible as it was the Trust which should benefit from the arrangements. Advice should be sought from other sources.
68. After that discussion Mr Smit faxed a letter the same day to Mr Monkcom upon which the Defendants rely as indicating that the co-founders had abandoned any proposal to obtain personal profit of any kind save a job for a salary within industry norms. (Closing submissions paragraphs 49-50) The letter (M335) reads as follows:-

"Dear Richard,

At long last the fog is clearing. I have just spoken with Mark Bostock and we require answers to two specific questions. We believe that there are two forms of management structure that answer our needs and the needs of transparency for Europe and The Millennium Commission.

The Trust owns the freehold and sets up a wholly owned development company – Eden Development Ltd.

Eden Development will be responsible for the delivery of the finished project (ie construction phase and up until it opens to the public) and the employment of all academic / horticultural / horticultural maintenance / educational staff and will be responsible for all internal and external research projects (ie all those sort of jobs associated with the running of a scientific institution).

Eden Development will employ Tim Smit and Jonathan Ball as respectively Chief Executive and Managing Director of Eden Development Ltd under license from the Eden Management Company (Smit/Ball shareholders) for salaries that are within the range of industry norms with an incentive based, turnover royalty agreement, with Eden management for their services.

Please could you comment as to whether this would, in your opinion meet Trust rules."

69. Mr Smit's proposal involved the Trust wholly owning Eden Development Limited. That company would employ Mr Smit and Mr Ball as Chief Executive and Managing Director under license from the Eden Management Company of which Mr Smit and Mr Ball were shareholders. From this arrangement the co-founders would obtain a) salaries within the range of industry norms and b) an incentive based turnover royalty agreement for their services. The reference to royalty agreement is similar to that set out in Mr Smit's management structure to Mr Bostock on 2.11.95. (L204)
70. This letter appears to be an attempt by Mr Smit to put forward a structure which was consistent with the advice which he had received from Mr Monkcom earlier that day. His specific request was whether his proposal met with Trust rules, a matter upon which Mr Monkcom had been advising. ("Strictly the Trust should benefit from the arrangements.") In addition however to a salary within the range of industry norm Mr Smit sought an incentive based turnover royalty agreement, which had earlier been expressed in his proposed management structure at about 5%. The precise manner in which such an incentive based turnover royalty agreement would operate, and precisely what it was supposed to cover, was not spelt out in the letter. Nor indeed was the role of Eden Management Company of which Mr Smit and Mr Ball were shareholders and how that might be involved in the activities of the site, including commercial exploitation. What was clear however was that the royalty agreement had potential for very substantial personal profit for Mr Smit and Mr Ball depending upon how it operated and the size of the turnover. I cannot accept Mr Livesey's submission that all that was sought was a job which was to be within industry norms. The royalty turnover element clearly showed a desire for personal profit at a level which might be very substantial.
71. Mr Monkcom's response was to write to Mr Smit the following day, 8.12.95, (M339) stating that it was not clear to him how the structure suggested solved the problem of investment by third parties. The Trust owning a wholly owned trading subsidiary would not however be enough as the Trustees would have to be satisfied that any investment or provision of services was proper expenditure on behalf of the Trust. The services of Messrs Smit and Ball via a company wholly owned by those persons (Eden Management Company) could be obtained by the development company wholly owned by the Trust but "The question again arises as to why the Trustees would wish to pay more than a salary for your services in overseeing the project." Again he recommended Ernst & Young London "Who may be able to suggest further alternatives which would meet your investment criteria as well as the charitable objectives."
72. Mr Monkcom said in evidence that as a result of not hearing anything further from Mr Smit in response to his letter he considered that he had accepted the position. He had been giving him advice in connection with the options he put forward "From the Trust's perspective". (Day 10 91) He said that the absence of a reply meant that Mr Smit was content that matters should proceed and that if he could get anything from the Trustees that was a matter for negotiation in the future. Mr Monkcom denied however that he was advising Mr Smit. He said he was advising in connection with the Trust and that Mr Smit was not seeking advice in his personal capacity. "As he never came back and said 'I want you to stop the structure, I want things held up until my personal position is resolved' I proceeded with the meeting on 15^th January of which both Mr Smit and Mr Ball were aware." (Day 10 91)
73. The Claimant points out that the proposition that advice was given (albeit "in connection with the Trust") and was accepted by Mr Smit by his silence to the letter of 8^th December 1995 is not expressly pleaded. Nor, it was submitted, did it appear to be consistent with Mr Monkcom's evidence that if he thought that what Mr Smit was proposing would have been defeated by the formation of the Trust he thought he would have told him. (Day 10 94) In re-examination Mr Monkcom said that he possibly would not have pointed out instructions which might present a difficulty with the Trust, if he thought that the difficulty could be overcome.
74. The Defendants' case as to abandonment of personal gain is based upon the "fog is clearing" letter, Mr Smit's silence in the face of Mr Monkcom's letter of 8.12.95 and the fact that the second application to the Millennium Commission prepared by Mr Smit in December 1995 and sent to the Millennium Commission on 9.1.96, stated that the development company would be entirely owned by the Trust, that Mr Smit and Mr Ball would be Chief Executive Officers of the development company and that proposed surpluses would used by Eden Trust on research, education and further development of the Eden Project. (N49, 50) It should be noted that the formal structure was yet to be finalised and Mr Smit and Mr Ball were referred to as the instigators of the whole concept of the Eden Project. The proposal was stated to be the copyright of the Eden Trust (N35). It should also be noted that when volume six of the application was sent to the Millennium Commission on 16.1.97 it included CIBC's executive memorandum (Q210) and Ernst & Young's outline business case dated November 1996 (Q226). The executive memorandum stated:-

"The Intellectual Property Rights attaching to the Eden Centre will be retained by a separate company owned by the founder project principals. This will include the brand exploitation rights and rights attaching to the scientific developments generated from within the biomes and the associated areas."(N223)

The Ernst & Young outline business plan included at paragraph 2.8 the following:-

"There will be an arrangement whereby the project principals will receive rewards via license / royalty on terms yet to be finalised and incentives will be offered to attract donations. Both of these will be subject to approval by the Trustees." (N233)

The first Trustees meeting took place on Monday 15^th January 1996. On that date the Trust Deed was signed by all the Trustees, Sir Richard Carew Pole, Sir Ralph Riley, Sir Alan Donald and Sir Alcon Copisarow. Each of these Trustees was either known or related to Mr Ball and either members of or connected to the Athenaeum. A report was to be prepared by Tim Smit and Jonathan Ball with a review of proposals for, amongst other things, management objectives and organisational structure.

Post January 1996

75. The application to register the Eden Trust as a charity was made on 16.1.96. The London press launch of the project followed on 25.1.96. It was well received being described as 'The West Country's biggest and most exciting plan to celebrate the Millennium', 'A brilliant concept', 'The most imaginative inspiration', 'A brilliant tourist attraction', '..a turning point in Cornwall's history..' (N151).
76. On 9.2.96 Ian Hay Davison agreed to become a Trustee. He was asked because of his specialist knowledge on finance and business structures.
77. Mr Ball's aide memoire of 2.2.96 shows the wave of enthusiasm for the project and its potential success that he was riding at the time. There was clearly great excitement generated by the project with international coverage and a post bag getting bigger and bigger. Sir Alcon Copisarow expressed the view that Smit and Ball needed to be properly rewarded and he referred to 'the two of us as both necessary neither sufficient'. (N161). The option contract for the purchase of the site, Bodelva Pit, by the Trust was exchanged on 7.3.96.
78. The Millennium Commission selected the project for further examination on 24.4.96 with a detailed appraisal review (DAR) to be undertaken. On 29.5.96 the Millennium Commission visited the site. The visit was a great success. The project was to receive strong support from the Commissioners, two in particular Mr Michael Montague (O223) and Patricia Scotland (O259), both of whom showed real enthusiasm. There is no doubt that with the plans from the architect Nicholas Grimshaw and the art work and models of the site the project had by this time fired the imagination of both the public and the media.
79. The Trustees were anxious to ensure that Mr Smit and Mr Ball should be 'rewarded for their risk, sweat equity and time in bringing the whole project together separating out and back dating expenses etc.' (N70). Sir Alcon Copisarow had been discussing the matter with Hay Consultants.
80. On 10^th May 1996 Mr Stroh made it clear to Mr Smit that with regard to Druces & Attlee's fees they were working on a 'no foal no fee' basis and that if funding were to be received but they were not instructed then they would be able to recover outstanding time. In his evidence Mr Stroh confirmed that Druces & Attlee were prepared to do a lot of work beyond simply setting up a trust, registering with the Charity Commissioners and obtaining an option on the land because they would be able to bill for all the effort they had put in including work on legal structure and any advice as to the position of the project principals were the project to come into being. (Day 8 at 94, 95) He wrote to Mr Ball and Mr Smit on 20 May 1996 wishing to discuss 'the project's expected legal requirements for the future and how we can continue to assist.' (N101)
81. Mr Ian Hay Davison was at this time having meetings with Guiness Mahon and Clifford Chance. When Mr Ian Hay Davison was chairman of Sadler's Wells Theatre Clifford Chance had acted as the solicitors to facilitate the financial structuring of Sadler's Wells with the aim of obtaining a lottery grant. In addition to their knowledge and experience Mr Ian Hay Davison told me in evidence that he was also concerned that Druces & Attlee had a conflict of interest. He did not raise that at the Trustees meeting but one of his concerns was that the founders were being advised by the same firm that was advising the Trustees and the financing. He was told that the founders were being advised by Druces & Attlee. The fact that neither Mr Smit nor Mr Ball were Trustees highlighted the fact that they had separate interests from those of the Trustees. (Day 5 23, 24) In fact Clifford Chance never acted for any party in the Eden Project. Druces & Attlee sought clarification of the matter on 23.7.96 setting out the main areas of legal input where they would be pleased to advise the Trustees including corporate structure, ownership of the projects and assets, the relationship of the Eden trust and the Eden Development Company, the means of repayment of commercial loans, and intellectual property. (P98) At the Trustees meeting of 25.7.96 Druces & Attlee were invited to act on behalf of the Trustees and Clifford Chance were to be invited to advise in respect of corporate structure and finance. Druces & Attlee were not however appointed until 23.4.97.
82. Some weeks before this Trustees meeting Mr Ball had been discussing his and Mr Smit's interests after a project meeting which had taken place on 5.6.96. In his aide memoire of that date (O146) he records Mr Bostock as saying:-

"Feels there should be a small percentage equity for the team. The team must be highly incentive based fee idea with an end loaded uplift and not just a straight percentage as per Derek Johnson (of Davis Langdon Management). Talking about Intellectual Property Rights to the principals and their reward base should be appropriate with the design intellectual property. Thinks IHD should get..Clifford Chance allows 60 – 70% Trustees ownership and 30 – 40% TS + JB together with a small amount to the team."

83. This, as Mr Livesey submits, is the first occasion when Mr Ball himself has mentioned intellectual property. It is however clear that he is actively thinking about his own and Mr Smit's personal interests. On 17.6.96 Mr Ball phoned Mr Stroh. He said that he and Mr Smit would require assistance in protecting their own positions. Mr Stroh's attendance note continues:-

"I said that essentially we would not be able to advise JB and Smit individually and that the whole question of D&A's involvement needed to be resolved. He confirmed that his view was that D&A were the core legal advisers and that others may come and go but we would be part of the central team. I said this was fine but we could none the less not act for the project and also Ball and Smit. What we could however do would be to put together a package we could then present on behalf of the project and on which Ball and Smit could take separate advice at the relevant time. I felt this was further down the line. He agreed." (O221)

84. I see no reason to doubt that this is anything other than a perfectly genuine attendance note in which Mr Stroh sought to record his recollection of what he had said to Mr Ball. Mr Ball, however, whilst acknowledging the conversation, has no note of it and no recollection of being told that Druces & Attlee could not advise him and Mr Smit individually. This would indeed seem to be so from his aide memoire for 25.6.96 in which he has a brief chat with Mr Smit in which he states 'must have our position right although too hectic to get to Toby Stroh at the moment.' A gate receipt on a royalty basis was for discussion. This is not the attendance note of a man who knew he had just been informed that Mr Stroh could no longer act for him. The explanation for this may be that the suggestion that Mr Ball and Mr Smit could take separate advice at the relevant time on a package which Mr Stroh put together, was 'further down the line' i.e. not something he need concern himself with at present. Whatever the explanation I am satisfied that Mr Stroh did not successfully communicate to Mr Ball that he could not act for him, even if he thought he had.
85. A further document demonstrating the continuing relationship are Mr Stroh's attendance note of 24.7.96 when Mr Ball and he had a discussion about the rights which JB and Smit wanted to try to exploit. Mr Ball referred to forming a company called Timco Limited which would be owned 50/50 and would be the vehicle for licensing the logo and any other rights. Mr Stroh said he didn't see that there was anything other than the possibility of a trademark that they could licence and didn't believe that the concept of the project was capable of protection by copyright. Smit/Ball/Timco should bear the costs of preparation of any trademark not the Trustees or the Development Company.
86. Mr Ball records a conversation with Mr Stroh two days later on 26.7.96 when Timco was discussed as well as Mr Munding. During the course of this conversation Mr Ball records in his aide memoire, and said in evidence, that he asked Mr Stroh whether he was 'speaking privately to my lawyer to which Toby replied positively.' If such a conversation did take place, Mr Livesey submits, it was no more than Mr Ball asking whether he was speaking privately 'as if I was speaking to my lawyer'. The context of the remark does appear to be confidential comments about Mr Munding but I have no doubt on the evidence that Mr Ball still regarded Mr Stroh as acting for him. On the same day he wrote a letter setting out the concept of Timco independently protecting by registration 'the essential intellectual bits' to be licensed through to the Eden Development Company. 'Perhaps you could give us some thoughts to Timco and the way we might present this as our preferred way of going forward'. The document enclosed with this letter, namely a diagram for structure and setting out what he thought he had agreed with Mr Smit was the 'back of the envelope' summary which he had mentioned to Mr Stroh on 23.6.96. This diagram shows TS and JB 50/50 ownership of Timco owning intellectual property / name / logo copyright. 'Equal liability and opportunity'. In his letter of 26.7.96. Mr Ball recognised that the approach set out in this document would have to gain support from the Trustees and the Millennium Commission. (P126)
87. On 12.8.96 Mr Smit informed Mr Stroh of his discussions with the Millennium Commission. He told Mr Stroh that the Commission:-

"Had said that essentially they had needed checks and balances and that there should be no 'rape' of the Commission's investment otherwise one could do more or less what one wanted. He said that the Commissioners had confirmed that they would accept 25% return on investment and that equity participation by external bodies would be in order." (P149)

The phrase '.. otherwise one could do more or less what one wanted' on its face shows that Mr Smit was still considering his own personal interest. It is also clear that from about this time Mr Smit was becoming concerned about the issue of control. Mr Ball records him as baulking at having anyone in control other than him in his aide memoire of 23.7.96 and on 12.8.96 Mr Smit told Mr Ball that he was essential but that Mr Ball's future participation was bound to be of a more limited nature.

88. Some ten days later on 22.8.96 Mr Stroh discussed Timco with Mr Ball again. Mr Ball records in his aide memoire of that date (P171) that Mr Stroh was very sympathetic about the question of the need to move the Timco bit forward but said that they had something which was moral but not copyrightable as such in the terms of an intellectual idea. Mr Stroh is recorded as saying:-

"You have to establish what you are protecting and certainly we can reserve rights on the logo and the name in relation to our project. We also have to have that enshrined in the structure and he suggests we just put it at this time as a paragraph..there will be an arrangement whereby the project principals will receive rewards via licence / royalty on terms yet to be finalised and subject to approval by the Trustees..or similar."

Mr Ball faxed this suggestion of Mr Stroh's to Mark Williamson of Ernst & Young Exeter for possible inclusion in the business plan. This is what in fact happened. Mr Stroh's suggestion was incorporated in the Ernst & Young's outline business case dated November 1996 which was submitted to the Millennium Commission for their consideration on 16.1.97 (Q226). In the same fax to Mr Williamson of 30.8.96 (P194, 195) Mr Ball sets out the three bases for his and Mr Smit's business interests, firstly start up costs of the two last years, secondly director's drawings for the delivery of the project and thirdly birthright issue with rewards on some form of royalty / licence basis. He refers to securing his position long term and getting reward for the creativity and the risks taken. Mr Stroh's draft was intended to assist the co-founders in their attempt to secure personal reward from the project.

89. On 22.8.96 Mr Stroh also told Mr Ball that it was difficult to see what commercial merit there was in the logo with no track record and in any event what he was seeking to do was to obtain past consideration. Mr Ball discussed his concern about Mr Smit being Managing Director and Chief Executive Officer of the Development Company as he didn't see how he, JB, could contribute in the future. Tensions with the Board of Trustees are referred to in the aide memoire of 31.8.96 when Mr Ball records that Mr Smit sees the Trustees as 'in a cupboard that you unlock and wheel out when you want them'. On 3.9.96 Sir Alcon Copisarow was expressing to Mr Ball concerns about a conflict of interest re advices being given to Mr Smit and Mr Ball and how best to proceed to the Commission and in doing so come up with conditions which were acceptable to the Millennium Commission. Concern was also expressed about Clifford Chance's role. This was echoed by Mr Stroh when speaking to Mr Smit the following day. Mr Stroh said that Druces & Attlee were perfectly happy to have dealt with the question of structure but required instructions to do so.
90. Mr Stroh advised Sir Alcon Copisarow on 11.9.96 that he couldn't see why the Trust or the Eden Development Company should necessarily voluntarily enter into a licence agreement when they were perfectly able to draft their own logo and use it without paying any royalties. 'AC said that they would like as Trustees to recognise the origins of the scheme and this could be dealt with by way of licensing of the logo. I said that this was fine but this was essentially past consideration.' In a letter dated 23.9.96 Druces & Attlee advised Sir Alcon Copisarow that any payment to the co-founders by the Trustees by way of a licence fee in respect of the logo would have to be commercially justifiable. Mr Stroh expressed readiness to advise the project as a whole rather than solely the Trust. (P259 and 260)
91. The Trustees meeting of 3.10.96 records:-

"5.02 As to the registration of Eden name and logo this was for continuing discussion with lawyers. The Trustees were entirely sympathetic to the JB view that this was a birthright issue for the two Project Principals. A proposal to be prepared by TS/JB for consideration by Druces & Attlee and by the Trustees."

92. The intended employment of Clifford Chance was no longer to take place but Druces & Attlee were to take a more prominent role and Stephens & Scown would be confirmed as local legal services. (Q4) Mr Ball and Mr Smit continued to discuss their 'birthright' on return from the Trustees meeting and agreed that they must produce something for the Trustees to look at. Such a document was never in fact produced. Mr Ian Hay Davison resigned as a Trustee on 18.11.96. He told me in evidence that he had started to become uncomfortable with his position as a Trustee because he could see trouble ahead in properly defining the roles of the co-founders, the Trustees, Druces & Attlee and the chairman Sir Alcon Copisarow. As he did not have the time to help sort out these matters he resigned.
93. Future power and control was discussed in the context of the birthright issue between Mr Smit and Mr Ball with the need to get that in place before others got involved in the process between them and the Trustees.
94. Mr Ball and Mr Smit continued to have discussions about their financial interests in the project and a document entitled 'Structure of the Eden Project' at Q195 shows two models for the structure. On 20.12.96 Mr Ball wrote to Mr Smit setting out in detail the discussions they had had the previous day at a meeting at the Arundel Arms. (Q198-202) The confidential aide memoire records:-

"As agreed the first and most urgent need is to establish The Terrific Ideas For The Millennium Company. This will be owned 50/50 you and me and it is set up to provide inalienable protection of birthright. It is home of the intellectual property rights so far as they are able to be established and the two of us as project principals will negotiate an appropriate position with the Eden Trust to balance the securing of birthright with fulfilling of charitable intentions."

A golden vote in the hands of the two directors of Timco to ensure 'others cannot hijack matters' was raised.

95. The note continues:-

"Forgetting titles we discussed what you and I will do. You want to be Managing Director and simply do for Eden what you have done for Heligan..! You have never made any secret of the fact that your primary ambition is power and the status that goes with it. For you financial rewards are of secondary importance.

For my part I also want power and influence but I believe Eden will give us both and also the financial rewards. Like you I am not motivated by money."

96. Ernst & Young Exeter produced a structure on 8.1.97 which it is submitted on behalf of the Claimant represents a sensible solution. It suggests that Timco is formed, that the intellectual property is identified and transferred to Timco whilst the base cost is negligible, and that Timco are then to acquire Eden Project Limited before the project starts 'proper'. A letter of intent to transfer intellectual property from the principals to Timco is required and an acknowledgement from the Trust that it considers intellectual property resides with the principals not the Trust. The diagram suggests that Timco is owned by Tim Smit and Jonathan Ball, that it contains the intellectual property, and that Eden Project Limited, which is acquired by Timco, has a small shareholding for the co-founders. There is an annual charge for the intellectual property. Mr Ball is described as Vice Chairman and Mr Smit as Chief Executive.
97. On 9.1.97 Druces & Attlee advised the Trust against adopting Ernst & Young's proposals. Mr Monkcom said that it appeared that they were on course for having a project without a Trust which ran counter to their understanding that the Commission would only approve a project if there were to be a Trust. Profits if any would be paid up by way of dividend to the Trust if there was to be a shareholding in Eden Development Company. This view was given to Mr Ball on 20.1.97 when he sought advice from Druces & Attlee. (R58) Mr Ball assured them that their position was secure with the Trust when they expressed concern about their position. On 22.1.97 they expressed a concern over conflict of interest to Sir Alcon Copisarow; the Trust, the project, the principals, the newly formed Eden Project Limited, and possibly even the proposed Eden Foundation all had interests which might be divergent.
98. On 25.1.97 Mr Smit wrote to Sir Alcon Copisarow and raised the question of the Trustees recognising the intellectual copyright in the project as residing in the principals' chosen company. That was not however to be confused with a success fee that might become appropriate at a later stage. At a Trustees meeting on 27.1.97 Druces & Attlee sought to clarify their position. Sir Alcon Copisarow felt it was important that they should act for the Trust and advise on what could be properly delegated to Eden Project Limited. 'Druces & Attlee expressed the wish then to become lawyers for Eden Project Limited rather the Trust.' Sir Alcon Copisarow sought clarification on the ability of Druces & Attlee to act for both the Trust and Eden Project Limited until a conflict arose. Druces & Attlee said they would advise on the shareholding of Eden Project Limited between six parties including both the Trust and Tim Smit and Jonathan Ball re their birthright.
99. The attendance note of 10.2.97 shows that Mr Stroh was happy to be able to continue advising the Trustees until a conflict arose although 'on present thinking' it was not obvious how a conflict should arise. With regard to the position of Mr Ball and Mr Smit Sir Alcon Copisarow said that the financial benefit for the whole exercise should be rewarded on a 50/50 basis. Mr Stroh was not entirely clear whether this was to be a one off or a royalty basis. Sir Alcon Copisarow said that the Trustees were likely to agree a one off payment for all time/expenses to date. This demonstrates the Trustees' continued willingness to reward Mr Smit and Mr Ball for their birthright. Their preparedness to do so diminishes once Sir Alcon Copisarow notes that all intellectual property rights are the assets of the project on 4.5.97 and in October 1997 when Druces & Attlee advise the Trust that any intellectual property rights that existed have already passed to the Trust and that all shares in Eden Project Limited must be owned by the Trust. (24.10.97)
100. The divisions between Mr Smit and Mr Ball as to how precisely they saw the royalty working and what was sought became apparent (see attendance note 12.2.97 R178).
101. When Druces & Attlee advised the Trustees in writing on 13.2.97 they repeated that they did not envisage a conflict arising but if one did they would inform the Trustees suggesting they should seek independent legal advice whilst Druces & Attlee would continue to act for the Eden Project Limited. No separate advice was to be needed at that stage. Proposals were expected from Tim Smit and Jonathan Ball, with legal advice in this regard to be independent of Druces & Attlee, possibly from Stephens & Scown. (S3)
102. On 2.4.97, shortly before the final submission was made to the Millennium Commission on 9.4.97 (S148) Mr Williamson and Mr Johns from Ernst & Young told Mr Ball that he and Tim Smit were very exposed legally and 'If we are not legally secure we will be shafted!' (S99) Mr Ball expressed a preference for the concept of royalty linked to the business case with enhancement incentivised if they achieve more than that business case.
103. At a confidential meeting between Mr Smit and Mr Ball on 7.4.97 at the Crown Inn St Ewe Mr Smit said that power and profile was much more important than money, that legal agreements and the position must be secured before third party contracts, and that whilst financial rewards were not the motivating factor should they be substantial then the co-founders should benefit in a way that was commensurate with being the project founders who conceived the project and had taken by far the greatest portion of risk. The three elements were (a) recovering costs from inception, (b) success fee or similar and (c) inalienable protection of birthright. (S123, 124)
104. At the Trustees meeting of 23.4.97 the Trustees decided to appoint Druces & Attlee as lawyers to the Trust. Their readiness to reward the project principals continued (para 8 S238, 239).
105. The final submission had been made to the Millennium Commission on 9.4.97 and on 23.5.97 the Millennium Commission approved a grant of up to £37,150,000 subject to satisfactory conclusion of the terms and conditions of grant. No objection had been raised to the CIBC's executive memorandum or Ernst & Young's business case referring to intellectual property rights being retained by a separate company being owned by the founder project principals and rewards via license/royalty for the project principals on terms to be finalised. On 25.4.97 a Mr Gillespie on behalf of the Millennium Commission informed Mr Smit that the Commission were relatively relaxed about the formal structure. He confirmed that third party rewards were acceptable provided they were at arms length (S250).
106. On 5.5.97 Mr Smit set out his wishes and views in a letter in response to Mr Ball's memorandum of 7.4.97. He noted that the agreement to share any profit or benefit in the name of the architectural vision equally was written in stone. He said that they owned the name and concept of the Eden Project and 'The recognition of the claim by the Trustees will of itself imply that the claim justifiably exists..' The Eden Trust would grant Timco the right to exploit the name on its behalf and in return 'We would receive a management fee based for instance on turnover, or a retainer basis, which ever we/ the Trustees deem most appropriate. This seems much less sleazy to me'. The Trust and all good works associated with it will be able to use the logo and name for free. Timco as owners of the exploitation rights will be able to chose who and on what basis such exploitation can take place. This document together with Mr Ball's memorandum of 7.4.97 demonstrate that the co-founders still wanted both control and financial reward but were not agreed on the precise manner in which such reward was to be obtained.
107. In a fax dated 9.5.97 Sir Alcon Copisarow said:-

"As all intellectual property rights are assets of the project Tim and Jonathan should now submit alternative benefit proposals to the Trustees."

Such a view, which foreshadowed the formal advice Druces & Attlee give in October 1997, demonstrated the difficulty which the co-founders were to face in obtaining any licence or royalty rights. This was not however appreciated by Mr Ball who in his memorandum of 31.5.97 acknowledged that the Eden Trust/Institution should use the logo and name for free but that the co-founders should benefit from the financial rewards generated by Eden which may or may not be substantial. Thus financial / commercial opportunities from international branding, film or TV rights, merchandising, book rights etc should be substantial. Mr Ball considered that a management fee or turnover for royalty should be for discussion.

108. The Millennium Commission terms and agreement dated 1.7.97 noted that the allocation of profits was to be agreed with the Commission at a later date (T69q). Clause 14 of the agreement headed Intellectual Property Rights states as follows:-

"14.1 To ensure that the ownership in any items of intellectual property (including know-how, inventions, designs, processes, discoveries, works and ideas) which are discovered, created or come into existence in the course of the Project which become vested in the Recipient are at all times vested in the Recipient, and shall not be sold or otherwise disposed of, nor licensed to others, unless the Commission agrees otherwise. For the avoidance of doubt, all such intellectual property shall constitute "Project Assets".

14.2 To procure that the Contractor and the Consultants grant free of charge to the Commission an irrevocable licence to use and reproduce the plans drawings specifications and calculations relating to the Project and all amendments and additions to such plan drawings specifications and calculations and any work designs or inventions of the Contractor or the Consultants for all purposes relating to the Project including (without limitation) the construction completion reconstruction modification extension repair or use of the land building or property to which the Project relates.

15 No Dividends

Not to pay make or declare any dividend or other distribution or make any other payment to any of its shareholders or members, or to any person comprised in the Recipient (or any of its shareholders or members) except for goods or services supplied on an arm's length basis which constitute Proper Project Expenditure."

109. On 3.7.97 Mr Smit was appointed as temporary Chief Executive of Eden Project Limited. In September Evelyn Thurlby took over as Chief Executive Officer. Discussions as to the co-founders' rights continued and intellectual property rights were raised at the Trustees meeting of 25.7.97 when it was noted that the cost of registration and renewal fees for trademarks were very substantial. Tim Smit and Jonathan Ball were reported to be receiving the advice of both Jonathan Johns of Ernst & Young and James Kelleher of Stephens & Scown.
110. In August 1997 the Ernst & Young updated outline business plan was submitted. It referred to a small proportion of shares being made available to Mr Smit and Mr Ball (T89). On 10.8.97 Mr Smit expressed his concerns about the undermining of the authority chain by the insistence that the Trustees had final executive power and stated that Jonathan and he needed to have incorporated the vehicle holding the intellectual copyright prior to the final appointment of the new Chief Executive Officer. Concern was expressed by Jonathan Johns to Mr Ball on 23.8.97 that because of Tim's prevarication Jonathan Ball and Tim Smit were too late for intellectual property rights' retention. (T142)
111. Mr Ball and Mr Smit were concerned that they receive due recognition for their original idea before it was too late to make a claim (Fax from Sir Alcon Copisarow 17.9.97 T196). The two page proposal submitted to the Trustees meeting on 16.9.97 by Mr Ball and Mr Smit was considered by Sir Alcon Copisarow in his fax. He recognised the complexity of the problem so far as the Trustees "who may already have the goodwill and brand name" were concerned and that any new contract entered into must clearly be disclosed to the Commission and the ERDF. He raised the question of a royalty agreement which might provide for a sharing of benefits above a substantial threshold level. The document submitted by Mr Ball and Mr Smit states as follows:-

"To: T Smit Esq and J Ball Esq

From: The Trustees, The Eden Trust

Dear Tim and Jonathan

We The Trustees of the Eden Project on this day of 1997 acknowledge that the idea for an Institution dedicated to conservation based on giant greenhouses known as The Eden Project was developed by Jonathan Ball and Tim Smit. In recognition of this we confirm that Jonathan Ball and Tim Smit have the exclusive rights to the name and any logo that represents or is associated with this idea.

In return you have agreed for the sum of £1 to the irrevocable licensing of these rights to The Eden Trust insofar as necessary to satisfy the requirements of the public sector funders and our obligations to the Charities Commission in respect of the project at Bodelva, St Austell.

You will not prevent either the Trust or such company as it licences to manage its affairs on its behalf from exploiting the name or the concept as a description for "Destination Eden" or for, with your consent, the charitable activities on which The Trust/Foundation/EBI are engaged.

However, you as project sponsors will retain for yourselves and your assigns the right to the "brand's" development in the interests or yourselves and the Trust.

We acknowledge that the recognition of these rights must form the basis of any licensing agreement between The Trust and any such company that it licences to manage its affairs.

Yours sincerely,

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

duly authorised on behalf of the Eden Trust Trustees

We acknowledge and agree the above

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

T Smit J Ball

Dated 1997"

112. On 30.9.97 ERDF approved a grant of £10M to the project. (T203)
113. There was a meeting on 2.10.97 between Mr Smit, Evelyn Thurlby, Mr Ball and Steven Boxall and Jerry Michell from the Millennium Commission. Mr Smit raised the question of intellectual copyright. He said they wanted the Eden Trust to have all the rights and income from this but wished to protect the concept in some way. For example if Eden found itself in trouble and granted the use of the name to an unsuitable body they would wish to stop that. Mr Boxall said that he was getting the impression that this was about the protection of brand and image rather than making money. Was that the correct impression? The Commission's agreement said that intellectual property rights must be vested in the project. Mr Smit confirmed that that was the case. Mr Michell said that the best course of action was for them to go to the Trustees and then put their proposals to them. Mr Michell said that the value was generated by the project not the name. It was not compatible with this proposal. (T222)
114. No progress was being made by Mr Ball or Mr Smit in relation to their rights and Mr Ball, at the suggestion of Mr Ian Hay Davison, sought the advice of Field Fisher Waterhouse. He was advised by them to apply to register the trademark in his name on behalf of himself and Mr Smit on behalf of the Eden Project. He made that application on 15.10.97 and informed Sir Alcon Copisarow at the Athenaeum that he had done so.
115. The following day 16.10.97, having been asked for a meeting with Evelyn Thurlby for the purpose of establishing his historic and future position, he sent a memorandum setting that out. His proposal consisted of four elements:-

"(a) payment of all disbursements incurred since inception

(b) a formula for reimbursement of my time costs

(c) a formula for recognition of the intellectual inspiration as co-founder of the whole project, the talent and creative energy together with the substantial risks Tim and I have taken since September 1994

(d) a formula for sharing in future success

(e) a defined position in the organisation additional to my status as co-founder where my creative energy and ability to generate new ideas can prosper and I can maintain a central position in the evolving project contributing to the maintenance of the ethos."

116. In relation to rights in the name and logo of the project Mr Ball said:-

"That either Jonathan/Tim acknowledge that the Eden Trust owns the trademarks and in return the Eden Trust grants Jonathan/Tim a royalty on exploitation income; or Jonathan/Tim own the trademarks and grant the Eden Trust a royalty free licence for the purposes of running the project limited to the site, and a royalty based licence for all other uses. The suggested split would be 75/25 in favour of the Eden Trust. This would break down to 10% each for Jonathan and Tim and 5% shared amongst those closest colleagues who have been fundamental to Eden's realisation. It is also anticipated that the Eden Trust will wish to retain overall control over the use of the trademarks which can be achieved."

117. Mr Ball also proposed a 4% shareholding in Eden Project Limited to each co-founder. (T252-254)
118. On 20.10.97 Mr Ball submitted his claim for disbursements and sweat equity to Financial Close. The disbursement claim amounted to £101,066.17p and the sweat equity claim was said to be in the order of £450,000 based on a charge rate of £100 per hour. Mr Ball said that he expected the recovery of this amount to be in part cash, part founder shares in Eden Project Limited and part in establishment of certain rights in the name and logo of the project. (T260)
119. This claim, declared to be to Financial Close, did not on the face of it include (c) a formula for recognition of the intellectual inspiration, (d) a formula for sharing in future success. It was put to Mr Ball in cross-examination that as the Eden Trust appeared to take the view that the Millennium Commission prevented him from getting either founder shares or intellectual property rights he would have to make do with the balance of the claim set out in his letter of 20.10.97 i.e. a total of £550,000. Mr Ball said that he would not because it would have been totally unacceptable to him. He would have insisted on a fair and reasonable negotiation. (Day 7 55-57)
120. Mr Ball did accept that at the time he was making the proposals in his memorandum of 16.10.97, he had not been asking for a royalty on gate money. Had he and Mr Smit owned the trademark they would have granted the Eden Trust a royalty free licence for the purpose of running the project limited to the site. Nor had he registered the trademark on 15.10.97 to include gate money. In so acting and claiming 4% founders shares it is submitted on his behalf that he was merely recognising the difficult situation he was then in. Evelyn Thurlby came to Bude to visit him on 16.10.97 and was generally hostile to him. His application for a trademark the previous day was not likely to make him popular.
121. On 19.10.97 Evelyn Thurlby noted that advice was being sought from Druces & Attlee, Ernst & Young and CIBC on project structure, the Trust's golden share, the shareholding, co-founders rewards and intellectual property rights. A warning about the danger of benefiting excessively from public monies was given. On 24.10.97 Mr Ball recorded that Mr Stroh advised that intellectual property rights did not exist, and that any that did had already passed to the Trust. Mr Stroh also said that it was not necessary to register trademarks, that takes 18 months and would be likely to be challenged. In turn the Trust and Eden Project Limited would object to the Tim Smit/Jonathan Ball application. Mr Stroh also advised that under the Trust Deed the Trust owned 100% of the shares except by application to change to the Charity Commissioners. Sir Alcon Copisarow, whom Mr Ball was meeting at the Athenaeum, also said that Mr Ball could consider his rewards by a total sweat equity investment figure agreed and then have a 15% annual return based on that figure if he were to be denied a job. (T307, 308) The advice which Mr Stroh was giving was consistent with that which Sir Alcon Copisarow had expressed on 4.5.97.
122. A meeting took place on 30.10.97 with the Millennium Commission and Eden Project Limited. Mr Michell, Mr Rice and Mr Boxall represented the Millennium Commission and Evelyn Thurlby Eden Project Limited with Mr Stroh. There are three notes of the meeting: one from Mr Boxall, one from Evelyn Thurlby and one from Mr Stroh. The notes from Mr Boxall and Mr Stroh are more detailed and similar. They all note that equity is likely to be possible for third party investors such as McAlpines and Gardner Merchant though Mr Boxall expressed surprise that the Millennium Commissioners accepted any equity as a co-founding package. As far as Mr Smit and Mr Ball were concerned cash was the preferred option, equity would be difficult if not impossible and a loan stock with a coupon rate agreed the more preferable option. Generally, there was a strong preference for no external equity and encouragement for equity to be replaced with debt. The Millennium Commission would not allow 'at this stage' licensing rights to Smit and Ball. The general approach was, as Mr Michell said, to try to ensure that there was no leakage of public funds. Miss Thurlby's note stated "ie no equity for co-founders or any other party".
123. Mr Ball's note of 2.11.97 records Miss Thurlby as being dead against any royalty/licence rights for Tim Smit / Jonathan Ball and that she was aware that Toby Stroh had conflicts of interest but she had no money to go elsewhere at that time.
124. On 22.11.97 Mr Ball's note records Evelyn Thurlby as telling him that the Millennium Commission had approved the constructor operator and the bank having equity but not the co-founders as they were no longer fundamental to securing and achieving the business case. She urged him to concentrate on looking at the future licence opportunities as the way forward. On 4.2.98 Sir Alcon Copisarow told Mr Ball that Druces & Attlee had advised the Trustees that there was no obligation whatsoever to Tim Smit / Jonathan Ball. Mr Ball explained to him that the key point was in relation to Druces & Attlee's default at the moment the Trust was formed. The Trustees were still very keen to be assisted in coming to a generous solution and hence Sir Alcon Copisarow suggested that they would listen to any view that Field Fisher Waterhouse had on the matter.
125. On 9.2.98 Mr Ball met Eric Sorensen, the then Chief Executive of the Millennium Commission who told him that founder shares and equity were not easy but he was quite happy with a founders fee and royalty above the business plan was no problem in principle.
126. Meanwhile Evelyn Thurlby made a formal offer of £200,000 to Mr Ball in satisfaction of his claim for £550,000. She said in her letter (T340) that the Millennium Commission confirmed it could not accept individual project principals receiving equity stakes and ERDF had also confirmed this. I was told in evidence by Mr Jones who as the SWEL (South West Enterprise Limited) representative was responsible for ERDF grants, that this was incorrect as ERDF did in fact accept equity in project principals. (Day 5, pages 147 –149) Mr Ball was offered a part-time as, and when requested, consultant's appointment with the project. He rejected the offer as insulting.
127. The agenda for the Trustees meeting of 18.2.98, noting Mr Ball's without prejudice fax of 14.1.98, said that there was no agreement, formal or informal, setting out the terms on which the project principals were to be remunerated. The lack of agreement arose as there was no counter party available to make any commitments on behalf of third parties. At the Trustees meeting on 18.2.98 Mr Ball put his case to the Trustees and stated that there was a legal moment at which his rights in the project, and something of value, had been transferred to the Trust without adequate legal advice as to the consequences. Druces & Attlee informed the Trustees that they were not acting, had never acted, for either Smit or Ball in connection with the project and had told them to take independent legal advice particularly in relation to the question of intellectual property rights. This advice, given at the meeting, was confirmed on 3.3.98 when Mr Stroh wrote that "I have never acted for Jonathan Ball in his personal capacity or at all either in connection with this project or any other" (U143, 146A). The Defendants' case before me was different. They now accept that they acted for Mr Ball from January 1995, but solely in connection with the project. And not in any personal capacity.
128. On 23.11.98 Mr Smit wrote to Mr Ball declining to sign the copyright assignment document (T197). He stated that their intellectual property was inalienable but the rewards there from should used to further the best interests of the Eden Trust the key issue being, as far as he was concerned, how their original exciting vision was to be protected. On 25.11.98 Mr Ball had a meeting with his then solicitors Field Fisher Waterhouse and the Trustees. The Trustees indicated again that they wanted to be fair and generous to Mr Ball. Sir Alcon Copisarow indicated that the Trustees had been told that an hourly rate was £45 an hour which the Trustees considered was too low. He described the added value as being only £40 - £45 an hour. Sir Alcon Copisarow did not give evidence and there was a debate as to the precise meaning of this passage. It cannot mean that he was limiting the total hourly rate to £45 an hour as the Trustees had, he stated, considered this to be too low. The added value suggests to me that he thought the total hourly rate was £80 - £85 an hour ie £45 + £40 - £45 as opposed to the £100 an hour which Mr Ball sought. The Trustees remained sympathetic to Mr Ball's claim for birthright and intellectual property rights were discussed. No solution was reached.
129. Negotiations continued through 1998 and 1999 culminating in the Historic Costs Agreement which covered past disbursements and time spent but not birthright or intellectual property rights. (V64, 65) A somewhat wistful review of the dispute was made in February 2000 by Mr Ball ending with a quotation from Kipling.
130. On 5.6.00 Mr Ball was removed as a director of Eden Project Limited. On 4.10.00 he commenced proceedings against Eden Project Limited and the Trust in the Chancery Division with Druces & Attlee acting for the Defendants. The Trust and Eden Project Limited counterclaimed for an injunction to restrain Mr Ball from threatening any person having dealings with the Trust and Eden Project Limited with proceedings for infringement of a registered trademark. On 9.4.01 Mr Justice Laddie granted the Trust and Eden Project Limited's application for summary judgment on the counterclaim. On 12.12.01 an interim injunction restraining Druces & Attlee from acting for the Trust and Eden Project Limited in the Chancery action was granted by Mr Justice Burton. On 15.2.02 the Chancery action was settled. The only other important matter of chronology to note is that the Claimant's appeal from the order of Master Rose refusing permission to rely upon expert evidence by a solicitor was refused, upon the basis that no expert evidence was required as Mr Livesey had conceded that if the Claimant's version of the retainer was correct the Defendants would necessarily be in breach because it is accepted that Druces & Attlee took no steps to safeguard the position of Mr Ball. Mr Livesey 'candidly accepts that in that event, the Defendant would be open to criticism for failing to advise that the various ways of protecting the Claimant's financial position mentioned by Mr Clough in his report be pursued.'
131. Mr Smit remains the Chief Executive Officer of Eden Project Limited on a salary of £60,000 for a three day week. On 16.6.99 he wrote to Mr Ball expressing the view that there was no evidence to support the contention that the Trust owned the intellectual property rights and stating that the issue had only ever been concerned with the secondary commercial exploitation of those rights. He proposed that a royalty of 2.5% of profits from all licensing income accruing from the Eden Project or £60,000 per annum, which ever is the lesser should be offered to Mr Ball. This was rejected.
132. Against this detailed background I turn to the issues in the case. Firstly retainer.

Retainer

133. There is a substantial issue between the parties as to the content of the retainer, and on whose behalf the Defendants were acting. The Claimant contends that the Defendants were jointly instructed by him and Mr Smit to advise on the setting up of the project, taking into account their wishes to share financially in its success. These instructions were given between October 1994 and 15^th January 1996 orally and in the various documents referred to in paragraph 6 of the re-amended Particulars of Claim. The nature and extent of the instruction were therefore given over a period of time. The 15^th January 1996 is important because that is the day when the Trust was established after which Mr Stroh said in evidence that his firm was retained by the Trustees even though the formal appointment to act on behalf of the Trustees was not made until April 1997. The Claimant contends that the retainer to act on behalf of himself and Mr Smit in their personal capacities continued after January 1996 as, he submits, the documents show. The Defendants contend that there were three specific retainers, firstly to form a Trust, secondly to obtain an option of the land which was to form the site, and thirdly to form a company limited by guarantee. Even if the retainer was wider than this, it did not extend to advising the co-founders on securing an entrepreneurial profit. Indeed the Defendants submit that the evidence and the chronology do not support the existence of a serious desire for financial gain and in so far as they do, it was a weak desire easily abandoned when necessity seemed to dictate that. The Defendants did not write to either Mr Smit or Mr Ball defining their retainer.
134. The person from whom the instructions come, and the meaning and extent of those instructions, that is, the scope of the retainer, needs to be determined according to the facts of the particular case and the retainer may be express or implied.

"The retainer when given puts into operation the normal terms of a contractual relationship, including in particular the duty of the solicitor to protect the client's interest and carry out his instructions in the matters to which the retainer relates, by all proper means. It is an incident of that duty that the solicitor shall consult with his client on all questions of doubt which do not fall within the express or implied discretion left to him, and shall keep the client informed to such an extent as may be reasonably necessary according to the same criteria." (Groom v Crocker [1939] 1 KB 194 at 222).

The oral evidence.

135. Mr Ball was clear in his understanding that Druces & Attlee were acting as his solicitors and indeed Mr Smit's solicitors in a personal capacity in order to advise on setting up the project including their personal wishes to share in its financial success. It was Mr Smit who was taking the lead in these matters but he and Mr Smit had always wanted financial reward from the project and Mr Ball therefore believed that Mr Smit would have reflected their agreement when he spoke to Mr Stroh on their joint behalf. (Day 3 43, 44) Mr Ball did not have any independent recollection or note of the meeting at the Athenaeum on 9.11.1994 but had no doubt that he would not have agreed to something which did not give him 'a commercial going forward position'. (Day 3 49, 50)
136. A substantial challenge is made to the accuracy of Mr Ball's evidence by the Defendants. They contend that his evidence is unsatisfactory, obstructive and unreliable (closing submissions para 12). It is certainly right that Mr Ball was reluctant to give a simple answer to a question and clung to his witness statement as if it were a life raft. I am however entirely satisfied having had the opportunity to listen to Mr Ball over several days, that he, as indeed is the case of all the other witnesses, was seeking to tell me the truth as he saw it to the best of his recollection. His memory for events, some of which were 9 years ago, was less than perfect – hence his reliance on his witness statement. I am however satisfied that he still had a clear recollection of certain events, whether aided by his witness statement or not. His cautiousness about committing himself to answers and his reliance on his witness statement was not due to any desire to obstruct on his behalf but a desire to give accurate answers which properly reflected what he believed to be his case.
137. His evidence that he had at all times wanted financial reward from the project was clear and consistent. I am satisfied that from the outset he regarded himself as a 50 – 50 partner with Mr Smit and that each of them would share both the cost and the reward. The evidence of Mr Jones and Mr Ian Hay Davison on this issue assisted me. Mr Jones whose evidence I accept, had been a friend and business associate of Mr Ball's for some 25 years and knew his approach to matters well. He told me that he had met Mr Ball and Mr Smit in a cafe in Truro at about Christmas 1994 where they both talked about their long-term ambitions. He said that Mr Ball had told him that he wanted equity in the project and that the first time that that was raised was undoubtedly before November 1995, he thought about December 1994. When it was put to him that all they wanted was jobs he said "No he would have seen a much broader picture than that as there was absolutely no question of doubt that they were both looking for long term reward from Eden". (Day 5 113-119)
138. In November 1995 (M97) Mr Jones gave Mr Ball the advice which Mr Livesey relied upon in cross-examination as being the sort of advice which he was now saying Druces & Attlee should have given him, namely 'The principle is that we get cover for what you put in before it gets going and then get positioned to go with the growth. Obviously you have to give away bits as you go along so by the end you end up with a much smaller bit than what you thought of the total equity participation.' Mr Jones confirmed that this was the sort of advice that he would have given to Mr Ball and that such advice was consistent with commercial practice. He knew that Mr Ball intended to benefit from his involvement in the project if it succeeded (Day 5 114, 115). He also said that it was always understood that the principals would be involved in the deal in the broader sense and he included in that an equity stake (Day 5 147). This answer was given in refuting Evelyn Thurlby's comment in her letter that ERDF would not permit equity. On the contrary he would never have accepted the exclusion of equity on behalf of ERDF and he was the principal private sector representative at the time.
139. Mr Ian Hay Davison, whose evidence I found impressive, is also a friend of Mr Ball and a fellow member of the Athenaeum. He thought that Mr Ball's interests were 'not principally financial. He was more interested in making a success of it and perhaps that reflected well on his energy and initiative.' He thought that Mr Smit might have had more of a financial interest as well as clearly a power interest. His view on the matter was summarised by the following evidence:-

"I have said, and I believe to be the case, that both money and power, which are the two motives you have suggested, played a part in the hands of both the founders and I have not sought to judge the balance between those." (Day 5 30, 31)

Mr Ian Hay Davison formed the view that Mr Smit had been a successful entrepreneur on the Heligan Project, here was another venture in which he was engaged with Mr Ball, and that it 'behoved the Trustees to ensure that a proper financial structure was in place and proper agreements were settled, because one of the parties at least was pretty shrewd in that department.'

140. The Defendants submit that whatever Mr Ball's general intention as to profit might have been, his conduct, as demonstrated in the contemporaneous documents, shows that he either had no clear desire for financial reward or at some stage abandoned it. Mr Livesey relies upon the following factors in addition to the documents themselves. Firstly he submits that there were other benefits than financial rewards which Mr Ball was plainly interested in, such as being involved in public life and networking which he found very satisfying, benefits to his architectural practice, and the benefit of regular payment of expenses from the project. Secondly he submits that the idea of personal gain fits uncomfortably with the presentation of the project to third parties which always stressed the public ownership and public benefits. Thirdly others contributed to the project for little or no reward and personal gain for the co-founders would sit uncomfortably with that. Fourthly the co-founders never sorted out their own business agreement with heads of terms even though they were often encouraged to do so. This indicates that they had little interest in their personal position. Fifthly they ignored advice on the structure when they received it from accountants. Sixthly there is no suggestion any where in the papers of personal gain apart from a job until 31.7.95, 10 months into the project.
141. There were undoubtedly benefits to Mr Ball from the project other than money. There is no question but that he enjoyed public life and networking as his aide memoires amply demonstrate. It is also the case that Mr Ball saw the possibility of benefits to his practice in being engaged in the project when he received the first call at the end of September from Mr Smit. The project however, if it had any kind of success, was going to be very time consuming as it turned out to be. I accept Mr Ball's evidence that his work on the Eden Project had a substantial adverse impact on his practice by the end of 1997. There was a chance that his practice would benefit from the project and indeed may have done so in the early months but there was a clear and significant risk, with Mr Ball having spent a substantial time away from his practice, that it would ultimately and foreseeably suffer. It had already contracted from eight architects to four architects between the late 1980's and 1990's. It is however correct that the receipt of payments, particularly in 1995 of about £24,834, diminished the amount to which his own expenditure of time and money was at risk during that year. (Day 3 106)
142. None of these benefits however is inconsistent with a desire on Mr Ball's part to seek financial reward from the Eden Project. Given a general intention to seek financial reward from it, it would not be surprising if Mr Ball's view of what financial reward might be available would alter as the project gathered its powerful momentum, whilst recognising that the level of any reward would be or might be affected by the fact that substantial public funding was being sought.
143. The presentation of the project to third parties undoubtedly stressed the benefits to the public which were likely to be and indeed were realised. There is no reason in principle why, in projects where public and private finance are involved, profit should not be made. Indeed with the current desire to have matched funding it is, as Mr Jones told me, entirely common for private equity interests to be taken in such a project. For my part I see no inconsistency in the mission statement of 'bequeathing a gift of incalculable value to those who will follow as..our hope for and belief in the future' and there being personal profit available to some engaged in the project. If there were to be matched funding this would apply even when Kew and the Natural History Museum were involved. The claim for £2,500 per month plus expenses (I146, 147) is neither inconsistent with nor does it exclude other personal benefit by the co-founders. A project in which there is both private and public finance may well properly be described as being in the public interest and yet wholly consistent with reasonable financial reward for those who have put their time or money at risk. It follows that the fact that some may make personal gain does not sit uncomfortably with the fact that others who have made contributions will not. Trustees, for example, who remain unpaid, are in a different position to those who create and forge a successful project, as the Trustees themselves in this case consistently recognised.
144. I shall consider the Defendants' submissions as to the failure to sort out a business agreement and the ignoring of advice on structure from accountants when I deal with the documents as I now turn to do. The first document of importance on the issue of retainer, and the co-founders' desire for personal profit, is Mr Stroh's handwritten note of 4.10.94 recording his discussion with Mr Smit. This is the note which records 'have to be a Trust – must be commercial venture' and 'T Smit = orchestrator/conductor not necy financial gain as long as paid for job'. As I have indicated earlier in this judgment the effect of what Mr Smit told Mr Stroh on 4.10.94 was that he left it open as to whether he wanted a financial gain as well as a paid job. He might or might not. He was certainly telling Mr Stroh that he had a possible desire for financial gain from the outset. When dealing with the project thereafter Mr Stroh would have to bear in mind that the project might have to include provision for financial gain for Mr Smit, and Mr Ball.
145. It is against this background that the events which followed have to be considered, and it is in my judgment not possible for the Defendants to contend that the retainer has to be construed only from the meeting at the Athenaeum on 9.11.94 and subsequent documents.
146. The meeting of 9.11.94 at the Athenaeum which both Mr Smit and Mr Ball attended decided that it would be a charitable company/entity which would be responsible for the project. Mr Stroh noted that there were to be no returns to the shareholders, the project was to be charitable and therefore the profits retained. Commercial exploitation of the profits were to be covenanted to the charitable vehicle.
147. Mr Stroh told me in evidence that the main vehicle in the Trust could either be a charitable trust, or a company limited by guarantee, and his recollection is that this is what Mr Smit and Mr Ball's proposal was as to how they perceived the project to proceed. Mr Ball did not challenge Mr Stroh's account of this meeting and Mr Smit was called by neither party. I accept Mr Stroh's evidence that there was no mention by Mr Smit or Mr Ball of Timco nor, as far as he could recall, of any personal interests on their behalf at that meeting. He told me that he considered that it was clearly intended that his firm would be appointed to act for the entity that would become the Eden Trust or Eden Project Limited or what other entity was subsequently created. Acting for the project on the one hand and the corporate entity it became or the trust that it became was in distinction to acting for anybody in their personal capacity. (Day 8 3-6)
148. Mr Stroh recognised however that it was meaningless to talk about 'the project' (Day 8 24) as it could mean, in the context of conflict of interest, the Trust, the principals, Eden Project Limited or the Foundation (Day 8 26). 'The project' could not give instructions to accountants or indeed anyone else until such time as a legal entity was created which could have legal rights and duties and give instructions. It is clear that no such entity existed until the Trust came into being on 15.1.96. Until then Druces & Attlee could only receive instructions from Mr Smit or Mr Ball who were seeking to create the project. The extent to which the project would succeed, the sources of its funding and indeed whether it succeeded at all were all unknown until the Millennium Commission grant was obtained. Druces & Attlee could not have known whether they might have found themselves in a situation where, if public funding failed, private investors might be sought or Disney might be involved. In such circumstances it is clear that the instructions could not be written in stone from any early day but that the solicitors would have to be responsive to the changing circumstances and the co-founders' wishes.
149. Mr Stroh's confusion as to the source of his instruction was exemplified by his evidence that he was working for the Trust from October 1994, and the following passage in his evidence:-

"As has been correctly pointed out, and I entirely agree, there was no entity. There were, however, promoters of what I call the project. There were general discussions that I had and other people in my firm may have had with the co-promoters which were necessary in order to take the project forward as when it became the Eden Trust, so that there were general discussions held under the umbrella of the formation of the project." (Day 8 32)

150. I am quite satisfied that until, at the earliest, January 1996 Druces & Attlee were instructed by Mr Smit and Mr Ball as individuals who were seeking to create what later became known as the Eden Project. The instructions, express or implied, which came from either Mr Ball or Mr Smit were therefore the instructions which defined their retainer and their contractual duties to their clients.

The scope of the retainer.

151. What the co-founders wished to achieve personally, how they conveyed those wishes to Druces & Attlee, whether Druces & Attlee were advising on structure at all, and if so whether such structure included the co-founders aspirations are all matters which arise in conjunction on the contemporaneous documentation and the evidence.
152. That Druces & Attlee were advising on the legal structure necessary to put the project in place appears from the early documentation. In his attendance note of 11.10.94 Mr Stroh says:-

"We discussed the legal structure of the company and I said that I had spoken to a number of my partners and was setting up a working group. My initial view was that the property could be held by a trust and that the commercial development undertaken by a company with Tim as Managing Director/Chief Executive. In order to free his hands as much as possible of interference, I suggested a modular approach with each stage of the transaction being approved in advance and him receiving authority to progress it…" (I51)

153. This attendance note was written against the background that Mr Smit had made it clear that he might want financial gain but that the project must be a commercial venture and that he was concerned about the issue of control. (X1-3) Mr Monkcom's role was more concerned with the setting up of the charitable trust and was hence less involved in the question of structure.
154. On 20.12.94 Mr Smit repeated what had been said at the meeting on 9.11.94, that the profits were to be covenanted up to the Trust. (I153) Whilst Mr Ball believed that the co-founders' commercial aspirations must have been made clear to Druces & Attlee at this stage, I am not satisfied on the evidence that this is so save in the sense that the issue of financial gain was left open on 4.10.94. Mr Ball was himself rarely in communication with Mr Stroh and Mr Smit has not been called to give evidence. There is no evidence before me to suggest that in 1994 Mr Stroh was informed that Timco was to be a separate company which enshrined their rights and interests. The evidence suggests that at one stage Timco was thought to refer to the whole project, in view of the use of that name in the mission statement in January 1995.
155. I accept that it may well have appeared to Mr Stroh after the Kew West meeting on 20.12.94 that the type of structure that was likely to be involved was a structure which involved a charity, and a wholly owned operating company with profits going to the charity. I say likely, because clearly the instructions could change in accordance with the progress being made generally and in particular in negotiations with the various bodies as to funding. This was not a fixed and certain retainer to set up a charitable trust, but a general retainer to assist the co-founders in setting up the project in accordance with their wishes and instructions. That such instructions were liable to change in accordance with circumstances or changes of emphasis in the client's wishes was inherent in a substantial and complicated project of this nature.
156. In early 1995 Mr Stroh saw his client as the Trust (J11) and Mr Smit was concerned that the charity should be formed as soon as possible. The application for registration of the Trust was sent to the Charity Commission on 20.3.95 and if there was to be a trading company the shares of it 'will be owned by the Trust'. (J213) I am satisfied that in early 1995 matters were proceeding as if there were to be a charitable trust with profits covenanted to that Trust. It would be understandable, from the evidence before me, if this were Mr Stroh's and Mr Monkcom's understanding at the time. I am equally satisfied that Mr Ball had not in any way relinquished his desire for personal gain from the project. He himself had had no dealings with Mr Stroh after 9.11.94 but had left matters to Mr Smit. I accept that he did not consider that anything which was being done at the time was likely to exclude his personal aspirations.
157. Mr Monkcom advised that accountants were brought in to deal with the proposed structure in March 1995 (J123, 137) but Mr Stroh rightly accepted in evidence that such advice would not exclude legal advice about the structure (Day 8 82). In fact Mr Smit had an antipathy towards large accountants and brought in Ove Arup, only later instructing accountants.
158. When the first application was made to the Millennium Commission it included at para 9.08 the statement that the management company will covenant 'the majority of its profits to the Trust' (K224). This was clearly wide enough to include any aspirations the co-founders might have for personal gain as well as for private equity.
159. The first contact which Mr Ball had with Druces & Attlee in 1995 was in March 1995 when he spoke to Mr Stroh about being copied in on correspondence. I am satisfied that this conversation took place. Mr Stroh does not recall it but I do not doubt Mr Ball's recollection. He did in fact start to receive some documents after this albeit through Mr Monkcom's secretary. This conversation may have reaffirmed Mr Ball's status as a client but it contained no discussion as to the scope of the retainer.
160. On 31.7.95 however Mr Ball and Mr Stroh had a long conversation together in which management structuring and Mr Smit's and Mr Ball's respective positions were discussed. The fact that the Camelot directors got a lump sum of £500,000 for delivering the project on time together with a contract of employment renewable every three years was said in the course of the discussion between Mr Ball and Mr Stroh to be probably the best way forward. (L47) This in my judgment is an important conversation. It plainly indicated Mr Ball's desire for personal gain, and it should be noted that he was talking about both his and Mr Smit's particular positions in relation to management structuring. The conversation should have reminded Mr Stroh that Mr Smit had said at the outset that he might want financial gain from the project. He was after this discussion alerted to this renewed possibility and hence under an obligation to resolve any doubts that existed as to the extent to which the co-founders required personal gain from the project.
161. This conversation in my judgment is inconsistent with any belief that the instructions remained simply to form a charity with a wholly owned operating company with all the profits to go to the charity. Mr Stroh could not simply ignore the request and keep on the path upon which he and Mr Monkcom were already set without at least clarifying the co-founders' desires. If he did not do so the desire for a success fee and a job might be unobtainable.
162. It was not a sufficient discharge of his duty to tell Mr Ball to discuss the matter with the Trustees in order to establish what was fair and reasonable.
163. The instruction of accountants was essentially for taxation, in particular VAT advice as there could be huge losses 'if we did not adopt the correct development structure.' Mr Monkcom's attendance note 14.8.95 (L76) (See also L67). Other documents in 1995 also indicate that Druces & Attlee were considering whether the professional teams or the landowners might be given shares. (K238, L8, 97) Thus Mr Stroh was aware that any structure might involve private interest. And he accepted in evidence that he knew that such interests could participate in Millennium Commission projects. (Day 8 111)
164. When the first proposal from Ove Arup whom the co-founders had instructed to create a business plan emerged, it stated that the basic concept for the Eden Project was that it would be a 'not for profit' enterprise. (11.10.95 L145) Mr Livesey said that it was surprising that this document, consistent with Druces & Attlee's understanding of the nature of the structure, did not give rise to howls of protest. What was said is not recorded but what happened is clear from the documents. Some 18 days later on 29.10.95 Mr Smit faxed to Mr Bostock of Ove Arup his Management Structure For The Eden Project (L204, M25). It appears (X39) that there had been discussions about its contents on 27.10.95 with Mr Stroh. This discussion which included a development company owned 51% by the Trust, 32% by the co-founders and 17% by Tarmac foreshadowed Mr Smit's note of 29.10.95 on management structure. Mr Stroh's explanation for what appeared to be the giving of advice on structure to Mr Smit was that he was acting as a responsive sponge, taking in information which could be used later for the giving of advice to the Trust. Mr Smit was not seeking any advice from him at that stage. I do not accept this explanation. I am satisfied that Mr Stroh was continuing to give advice on structure which by this stage clearly included the personal position of the co-founders as he must have known.
165. Whether Mr Smit's 'Management Structure' was prompted by Mr Smit's discussion with his friend Rolf Munding suggesting a shareholding of 32% for JB/TS is not known but Mr Smit's proposal certainly included 32% equity for himself and Mr Ball in the development company and a royalty based on turnover of about 5% apportioned according to the shareholding in the development company. As Mr Bostock said when sending his new proposed structure on 2.11.95 to Druces & Attlee, one of the important issues was that both Tim Smit and Jonathan Ball were properly rewarded for their upfront costs and 'sweat' equity/risk.
166. Mr Smit was without doubt concerned about control throughout but Mr Bostock's reference to proper reward is clearly and on its face not limited to control. The question of whether profits, all or a portion, should be covenanted to the Trust was left open. Mr Bostock said in his fax of 2.11.95 that this revised business case was something on which Mr Stroh said that he and one of his colleagues 'would have views and could advise Tim'. (M23)
167. It was clear from the time that Druces & Attlee received this document that they were prepared to and would have expressed views upon it, including advising Mr Smit. The revised business plan was a plan, for the project, which included a financial reward for Mr Smit and Mr Ball, had to be workable from an operational point of view and winnable from the perspective of the Millennium Commission. There was a need for speed if they were to get all their ducks in place for a 30^th November submission to the Millennium Commission.
168. It is not therefore correct, as the Defendants submit, that the co-founders sought advice as to structure from Ove Arup and not Druces & Attlee. They sought advice from both as the fax from Mr Bostock reveals, as does Mr Ball's conversation with Mr Stroh on 2^nd November when Mr Stroh said that faxes had gone between him and Mr Bostock on management structure and he could have copies of his views and his recommendations in this regard. (L30)
169. This was not the first time that Mr Ball had raised his own personal aspirations as to financial reward. He had done so clearly on 31.7.95 in the discussion about the Camelot success fee and a job. Nor was it the first occasion that Mr Smit had raised the matter as he clearly had it in mind as a possibility in his very first conversation with Mr Stroh on 4.10.94. It is correct, as Mr Livesey submits, that there is no direct reference to intellectual property rights nor was there complete clarity as to precisely how the structure would work in delivering profits to the co-founders or the extent of such profit. What was clear was the fact that personal benefit was being sought.
170. The forwarding of the revised business plan and the seeking of advice upon it became part of the instructions from the co-founders as to how they wished the project to proceed. It therefore became part of Druces & Attlee's retainer to deal with that instruction.
171. Druces & Attlee sought to do so by suggesting that accountancy advice was required on the proposed structure (6.11.95 M38), that the Millennium Commission would look very closely at the relationship between the parties and the extent to which they could profit from the transaction (8.11.95 M47), and stating that any decision on the structure would be premature (20.11.95 M112).
172. When Ernst & Young Exeter did provide a report on 28.11.95 it also included financial reward for Mr Ball and Mr Smit albeit in a different form to that devised by Ove Arup. On 30.11.95 Mr Monkcom noted that he understood from the structure that there was some kind of profit sharing arrangement below the Trust which was not consistent with the way that the Trust had been drafted with a captive trading company. Mr Monkcom made it clear he was not immediately familiar with Millennium applications and suggested again that Ernst & Young should be involved. Mr Smit acknowledged that Druces & Attlee had been instructed simply to form a charitable trust and had not been asked to deal with the structure but said that he was 'looking for a commercial way that he could benefit from his intellectual property rights'.
173. Whatever doubts Mr Monkcom might have had earlier, he could no longer have harboured any doubts that Mr Smit wished to obtain a financial return from the project. Mr Monkcom's response was to indicate that the Charity Commissioners wouldn't be particularly happy about the profit sharing arrangements.
174. The fact that the co-founders were seeking financial reward was further confirmed the same day by Mr Monkcom's discussion with Mark Williamson of Ernst & Young who said he had been asked to produce a structure whereby there could be equity participation by Mr Smit and Mr Ball.
175. On 6.12.95 Mr Stroh advised that as it was clearly impossible for the structure to be set out in any sort of detail in the application, what they were looking for was the best possible 'fudge' which would satisfy the Commission. The proper interpretation of this advice in my judgment is that Mr Stroh was recognising that the client's position needed to be protected until the structure was resolved and was so advising. The fact that Mr Smit pointed out that the Commission only provided funding for up to 50% and that there would have to be some benefiting by private enterprise otherwise 'what was in it for them' could only have confirmed with the utmost clarity that Mr Smit was seeking to ensure that he obtained some financial benefit. Such a request was not restricted to control.
176. When Mr Smit sought further advice from Mr Monkcom on 7.12.95 Mr Monkcom said that although Mr Smit seemed to indicate that he wanted to extract some of the profit from the project it was the Trust that strictly should benefit from the arrangements. He could not immediately see that there was a specific place for Tim Smit being able to extract profits. He advised Mr Smit to see Ernst & Young London or counsel.
177. The effect of Mr Monkcom's advice, apart from suggesting yet further advice from other sources, was that he thought that Mr Smit would find it difficult to extract profits because strictly the Trust should benefit from the arrangement. On receiving that advice Mr Smit wrote the 'fog is clearing' letter the same day. His suggestion sought to accommodate Mr Monkcom's advice by making the development company wholly owned by the Trust. It was nevertheless clear that he still wished to extract profit from the project as he not only sought a salary but 'an incentive based turnover royalty agreement'. His question to Mr Monkcom as to whether his proposals met 'Trust rules' demonstrates that he was seeking to obtain profit, and, as I have indicated earlier in this judgment, profit which could be substantial, whilst at the same time complying with trust rules as Mr Monkcom had advised.
178. Mr Monkcom's reply on 8.12.95 (M339) expressed the view that the Trustees could do no more than pay a salary for Mr Smit and Mr Ball's services in overseeing the project. Again he advised that Ernst & Young London should be consulted no doubt in recognition of the fact that Mr Smit's 'investment criteria' still contained a personal profit for him and Mr Ball.
179. It was Mr Monkcom's evidence (Day 10 91) that in this letter of 8.12.95 he was advising in connection with the Trust and Mr Smit was not seeking advice from him in his personal capacity. The absence of a riposte meant that Mr Smit was no longer pursuing the matter:-

"As he never came back and said 'I want you to stop the structure, I want things held up until my personal position is revolved', I proceeded with the meeting on 15^th January, with which both Mr Smit and Mr Ball were aware."

180. Mr Livesey also argued that the absence of any reply to this letter together with the form in which the co-founders had put in their application to the Millennium Commission meant that they had abandoned any desire for profit in exchange for ensuring that they would obtain the public grant from the Millennium Commission. I reject this contention. The failure to respond could not in the face of Mr Smit's persistence in seeking a personal reward in spite of Mr Monkcom's advice be properly construed as an abandonment of any desire of personal reward. Nor do I consider that the form of the Millennium application indicates that Mr Ball and Mr Smit had accepted the inevitable and abandoned any hope of obtaining personal reward. I have no doubt that they considered that the door was still open. Indeed subsequent events demonstrate that Druces & Attlee appeared to think the same themselves otherwise Mr Stroh would not have advised Mr Ball, as he did on 22.8.96 (P171) that the business plan for submission to the Millennium Commission should include words to the effect of 'there will be an arrangement whereby the project principals will receive rewards via license/royalty on terms yet to be finalised and subject to the approval by the Trustees.'
181. Furthermore the Defendants' submission that the aim for personal reward was abandoned is inconsistent with the co-founders' continued attempts to obtain personal benefit after January 1996, unless this can be explained, as was suggested in argument, by Mr Ball and Mr Smit having abandoned their aim to obtain personal benefit, then renewing it again later. The Trustees' desire to ensure that Mr Smit and Mr Ball were properly rewarded is clear from the aide memoire of 2.2.96 and it is clear from the documents that discussions as to how to achieve this continued. Thus on 29.4.96 (O70) Sir Alcon Copisarow was anxious to sort out how Tim Smit and Jonathan Ball should be rewarded for their risk.
182. The application to the Millennium Commission did show that the development company would be wholly owned by the Trust without any shareholding for the co-founders. Mr Ball and Mr Smit had decided to proceed in that manner at that stage. (Day 4 76-77). The co-founders appeared to be following Mr Monkcom's advice about the difficulty of obtaining equity but not abandoning salaries and some form of royalty on turnover.
183. As to the Defendants' contention that the co-founders never sorted out their own business agreement with heads of terms even when encouraged to do so, the evidence shows that they did make such attempts. They went to Ove Arup and produced their report, and then to Ernst & Young Exeter. On each occasion they took those business plans or structures to Druces & Attlee for advice. No inference as to a lack of desire to benefit in the project can be drawn from such facts. Nor do I accept that they ignored the advice on the structure when they received it from accountants. They sought to discuss it and take advice upon it from Druces & Attlee. The fact that they failed to resolve through advice from accountants the precise structure which might be suitable does not in my judgment indicate any lack of desire for personal benefit but emphasises the need for their position to be protected until such time as agreement could be reached as to what they did require.
184. On the basis of findings as to retainer set out above I conclude that the Defendants were retained by Mr Smit and Mr Ball to act on their behalf in setting up the project, and that the project so set up should enable them to obtain personal reward from it. In such circumstances the Defendants were under a duty to protect the co-founders' personal interests and warn them of any risks which would or might defeat their expectations for personal benefit.

Summary of Findings as to Retainer.

185. 1. The Defendants were instructed by Mr Smit and Mr Ball to advise them as to the setting up of a project which was to permit them to obtain personal reward from it.
186. The possibility that personal financial gain would be sought from the project was first raised by Mr Smit on 4.10.94.
187. The instructions to obtain personal benefit on behalf of the co-founders were communicated to the Defendant by Mr Ball in his conversation with Mr Stroh on 31.7.95, and thereafter in Mr Smit's conversation with Mr Stroh on 27.10.95, Mr Smit's drafting of his document entitled Management Structure some two days later on 29.10.95, the revised business plan from Ove Arup of 2.11.95 and various conversations and letters between Mr Smit and Mr Stroh or Mr Monkcom concluding with the letter of 8.12.95.
188. There is no evidence before me that the co-founders used such words as "Please protect my personal interests, or ensure that the project permits me to obtain personal reward", but such a desire and request was clearly implied from the documents, letters and conversations set out in 3.
189. The desire for personal gain by the co-founders was clear and consistent and set out in the documents referred to above.
190. Mr Stroh from 31.7.95 and Mr Monkcom from 30.11.95 at the latest knew or ought to have known that the co-founders wished to obtain personal financial reward from the project.
191. Druces & Attlee were not acting on behalf of the Trust at any time before its formation, but for the joint principals in their desired aim to set up a project which included the ability for them to make personal reward from it.
192. The co-founders' desire for personal reward from the project was never abandoned, but varied in accordance with the advice which they received from time to time.
193. It was the duty of the Defendants under their retainer to take all proper steps to protect the co-founders' personal interests and advice them of any risks which they might meet in achieving them.
194. This duty continued after January 1996.

Breach of Duty.

195. It is admitted by the Defendants that if an express retainer to protect their desire for personal financial reward was agreed with the co-founders in 1994 or 1995 there would be a breach of duty. I have found there is no evidence that there was any express instruction to Druces & Attlee requesting them in terms to protect such interests but that such a retainer arose by the clearest possible implication from the documents and discussions in 1995. In such circumstances Mr Livesey submits that there was no breach of duty because Druces & Attlee constantly advised the co-founders to see accountants and counsel, correctly advised that the personal interests sought were inconsistent with the way that the charitable trust had been set up, that the bidding agreement faced so many problems that there was no negligence in failing to tell the co-founders about that possibility and in any event claims for personal benefit had been abandoned for part or all of the personal benefits sought and hence no advice was needed.
196. Mr Stroh accepted that it was arguable that merely by setting up the trust the positions of the project principals were adversely affected. (Day 9 57) He said that Druces & Attlee did anticipate that there were likely to be difficulties in all this, which is why they advised advice being sought from Touche Ross and Ernst & Young. (Day 9 55 and 57) Mr Stroh accepted that he did not advise Mr Smit or Mr Ball that it was arguable that the setting up of the trust might make the gaining of their expectations more difficult. There was no such record of any advice having been given and he did not recollect such advice having been given. (Day 9 57) Once the trust was set up as Druces & Attlee had advised, the Trustees would take the grant money and deliver the project which had previously been worked out by Mr Smit and Mr Ball. There was no legal obligation upon the Trust to provide an executive post, shares, royalties, success fee or whatever for Mr Ball or Mr Smit. There was no formal arrangement in place between the parties which protected the project principals' position in relation to those matters. (Day 9 69-71) Nor was a special purpose vehicle set up with the co-founders as shareholders for the running of the Project after it had been built.
197. It was not argued in front of me by Mr Livesey that the co-founders' expectations would not be adversely affected by the setting up of the Trust save in the sense as a matter of causation that it would have made no difference as the Trustees' desire to be generous to the co-founders continued. For my part I am satisfied that the creation of the Trust on 15.1.96 without any legal protection for the co-founders did adversely affect their position. Once the Trust was in place and had acquired the assets of the project without any legal protection in place for the co-founders, they became supplicants of the Trust rather than the possessors of a legal right.
198. The failure to warn the co-founders of this potential adverse affect was negligent, as was the failure to advise them to protect their position by seeking to enter into heads of agreement with the Trustees. Mr Stroh accepted (Day 9 76) that if the Trustees had entered into a contractual arrangement on the basis that the rights were reserved to Mr Smit and Mr Ball on the first day that the Trust was constituted that agreement would have been binding.
199. Mr Stroh did not at any time consider the drafting of a bidding agreement. It did not enter his head in November and December 1995 (Day 10 20).
200. The Claimant submits that it would have been a simple matter to devise a binding heads of terms which reserved the position by which the Trustees acknowledged that the co-founders would be entitled to shares in the company, employment by the company and a royalty at a reasonable rate. This is in essence what was set out at paragraph 27 of the re-amended Particulars of Claim. Mr Livesey submits that a bidding agreement, to be legally binding, would have to set out a share or provide a workable method of determining it. No Trustee could sign up to a vague agreement without such clarity. The bidding agreement could not leave room for negotiation if it were to be legally binding. He does however accept that it would have been possible to draft a bidding agreement if the co-founders were in agreement as to what it should include.
201. What prompted the submissions on the bidding agreement was the fact that I had requested that the Claimant's counsel provide a copy of an example of draft heads of terms which would be appropriate in the circumstances. They did so, whilst reminding me that there was no evidence before the Court as to such a bidding agreement because of the Defendants' objection to an expert witness being called upon the matter.
202. It would in my judgment be inappropriate to permit Mr Livesey to put forward his arguments on the bidding agreement when he conceded before Mr Justice Gray that if the Claimant's version of the retainer was correct (and that included the implied basis for the retainer as pleaded) the Defendants would necessarily be in breach because it was accepted that Druces & Attlee took no steps to safeguard the position of Mr Ball. (F260) In any event I accept the Claimant's submission that it would have been possible to devise a heads of terms to reserve the co-founders' position in respect of the matters set out in paragraph 27 of the re-amended Particulars of Claim. It is unnecessary for me to make any finding as to whether the example provided would have been suitable or not. Whether or not the Trustees would have accepted a properly drafted heads of agreement or whether the co-founders would ever have been able to agree terms are matters I consider under the heading of causation.
203. It is without doubt correct that on several occasions Mr Smit and hence Mr Ball were advised to go to Touche Ross or Ernst & Young London or counsel. Mr Smit chose to go to Ove Arup initially and then went to Ernst & Young but in Exeter rather than London. This was a perfectly appropriate choice for a client to make and Mr Smit's failure to go to Ernst & Young London did not in my judgment prevent Druces & Attlee's duty to provide advice themselves from continuing. As the Claimant submits, if Druces & Attlee saw or ought to have seen steps being taken as to structure which might damage their clients' interests they could not discharge that duty simply by advising that the client went to accountants or counsel. It was their obligation to advise the co-founders as to how the setting up of a trust might affect their expectation of financial reward from the project.
204. Mr Monkcom did advise Mr Smit that he did not think that the Charity Commissioners would be particularly happy about the profit sharing arrangements currently being suggested (M172) that he could not immediately see that there was a specific place for Mr Smit being able to extract profits (M337) that the charitable trust was drafted on the basis of a captive trading company not the one now being put forward (M178) and that the question arose as to why the Trustees would wish to pay more than a salary for the co-founders' services. (M340) This advice was given in spite of the fact that Mr Monkcom was not immediately familiar with external funding for a Millennium application and accepted in evidence that the Charity Commissioners may be prepared to allow a small element of equity to pass to a third party with the Trust as present constituted. This could be either by the setting up of another company or alternatively involve the transfer of some shares. The Charity Commissioners looked at the overall structure and determined what was fair and reasonable. The important thing was that there was no loss of charity funds. (Day 10 85, 112 and 117)
205. I am not satisfied that the advice given in November and December 1995 by Mr Monkcom was fully or properly considered. In so far as it is suggested that personal gain was probably not available, then it was not necessarily accurate and in so far as it prompted Mr Smit into abandoning any part of personal gain he had in mind, without suggesting the need for his position to be protected before the matter was further explored, the advice was negligent. Mr Monkcom's approach was inflexible. The charitable trust had been set up and anything which threatened it was in his view inadvisable. His approach should have been, now that you have raised the question of personal gain you must explore with the Charity Commissioners and the Millennium Commission the extent to which this is available to you and in the meantime seek to reserve your rights by way of a bidding agreement with the proposed Trustees. The failure to give such advice so as to enable the client to make any decision with the appropriate matters in mind, and with their rights secured, was negligent. It is clear from the continued attempts to obtain personal gain in 1996 that the co-founders did not appreciate their rights had been adversely affected, nor in view of the help and advice which Mr Stroh gave e.g. in drafting the entry for the Outline Business Case (P171) does it appear that he fully appreciated it either. Had he done so he surely would have advised the co-founders of the risk, or advised them to seek separate legal advice immediately.
206. I have already concluded that far from abandoning all desire for personal gain Mr Smit sought to bring his desire for personal gain within Mr Monkcom's advice. Hence the 'fog is clearing' letter. The evidence as a whole satisfies me that there was no intention on Mr Smit's part or Mr Ball's part in October 1995 to January 1996 to abandon the plan for personal gain.
207. I accept Mr Kent's submission the 'fog is clearing' letter cried out for clarification and advice, not the narrowly focused response from Mr Monkcom of 8.12.95. If there was any doubt in Mr Stroh's or Mr Monkcom's minds about the extent of the retainer or the meaning of instructions at any stage, clarification should have been sought before the Trust was formed. It was not.
208. I am satisfied for the above reasons that the Defendants were in breach of their retainer. I now turn to the question of causation.

Causation

209. The establishment of a causal link between a Defendant's negligent omission and a Claimant's loss depends on the answer to the hypothetical question of what the Claimant would have done if the Defendant had not been guilty of the omission. Thus, where, as here, there has been a failure to give proper advice, the Claimant must prove on the balance of probability that he would have taken action to obtain the benefit which he claims he has lost had the advice been given. If he does establish that, there is no discount because the balance has only just tipped in his favour. Where, in addition, the Claimant's loss depends on the hypothetical action of a third party the Claimant will succeed provided that he shows that there was a substantial chance rather than a speculative one, of the third party acting so as to enable him to obtain the benefit he says that he would have achieved had proper advice been given. Provided that a Claimant's chance is substantial rather than speculative, it may be less than 50%. Allied Maples Group v Simmons & Simmons [1995] 1 WLR 1602.
210. Here the Claimant must establish the following:-

i. That, on the balance of probabilities, had he been given proper advice, he would have taken it.

ii. That there was a substantial chance that Mr Smit would also have agreed to take it.

iii. That had the correct advice been given by the Defendants to the Claimant and Mr Smit, there was a substantial chance that the Claimant would have achieved the financially better result he now seeks.

211. If therefore the Claimant is able to establish on the balance of probabilities that he would have requested Druces & Attlee, if proper advice had been given to him, to draft a bidding agreement to protect his situation and that there was a substantial chance Mr Smit would have done so too, he must then establish that he would have achieved a better result financially by proving that there was a real and substantial chance that:-

The Trustees would have agreed the terms of such a bidding agreement and to serve as Trustees with such an agreement in place.

The Millennium Commission would have accepted the application with such a bidding agreement in place in January 1996.

Mr Smit would have joined in negotiations in 1997 with Mr Ball reaching an agreement which each of the co-founders would have found acceptable.

The Trustees would have agreed terms suitable to Mr Smit and Mr Ball in such negotiations in 1997.

The Millennium Commission would have approved the agreement between the Trustees and the co-founders in 1997.

I shall deal firstly with Mr Ball, and then with Mr Smit, then with the Trustees and lastly with the Millennium Commission.

Would Mr Ball have accepted proper advice had it been given.

212. I have found that the Claimant had always wished to obtain a financial reward from the project. That had been his aim from the beginning and was the reason why he and Mr Smit did not become Trustees. Mr Ball saw his future as involving a job with the Eden Project and financial reward from it. He expressed his desire for personal reward in varying different ways between October 1994 and January 1996. He and Mr Smit were to share 50 – 50 in both the burden and the reward from the project. He raised the question of a success fee in July 1995; equity and intellectual property rights were raised in 1995. Precisely how the Claimant was to achieve financial reward and the amount of such potential reward varied in accordance with the advice he received from discussions with Mr Smit, friends such as Mr Jones, and in particular Ove Arup and Ernst & Young Exeter.
213. The project was however always in reality going to be a Millennium project with other sources of public funding such as ERDF and some private funding. It is possible that the project might have gone ahead without such public funding, from for example Disney, but this was not likely. Mr Smit had clearly perceived the project as a Millennium project from the outset. It was therefore regarded as essential for the success of the project by both partners that a Millennium grant should be obtained. The Defendants submit that this fact presents an obstacle which the Claimant cannot overcome in establishing on the balance of probabilities that he would have acted on advice from Druces & Attlee to set up a bidding agreement if that advice had been given.
214. The Trust was vital to making a Millennium Commission application and anything which would have delayed the application being made or its prospects of success would have been abandoned by the co-founders. (See for example Mr Ball's note at W97 January 1996) There was a real concern about a negative attitude of the Millennium Commission to personal profit and neither of the co-founders would have allowed any attempt to gain personal profit to stand in the way of the application.
215. In paragraphs 8 – 15, 56 – 89 and 110 of their closing submissions the Defendants set out the hurdles which they contend the Claimant is unable to clear on this first issue of causation. It is submitted by the Defendants at the outset that Mr Ball at no stage desired more than a modest personal gain. This can be seen from the fact that the success fee in the context of the Camelot directors was £500,000 on completion and a job, and that the Ernst & Young proposal demonstrated that they only got a very small part of the equity namely £1.5M out of £63.5M and limited dividends. The co-founders were always prepared to permit the Trust to use Destination Eden free which limited their claim for intellectual property rights to a very substantial degree. That Mr Ball's ambitions were minor can be demonstrated by the claim that he made on 17.10.97 at T258. He was only claiming for time costs and projected sweat equity of £450,000 to be calculated in part cash, part founder shares in Eden Project Limited and part in the establishment of certain rights in the name and logo of the Project. These were the maximum returns which were realistic given the nature of the publicly funded project and consistent with what on the face of his claim Mr Ball recognised that he could obtain.
216. I do not accept the submission that Mr Ball limited his claim to some £450,000. I am satisfied that Mr Ball, as set out in his memorandum to Evelyn Thurlby of 16.10.97 was intending to claim not only all his disbursements and time costs, by whatever route those were to be paid, but also a formula for the recognition of the intellectual inspiration and for sharing in the future success of the project. Neither of these two latter points were included in his claim of 17.10.97 (T258 – 263). The fact that the method of recouping the historic cost elements set out in this document was through cash, part founder shares and rights in the name and logo of the project did not mean that Mr Ball was abandoning his claim for recognition of the intellectual aspiration or sharing in the future success of the project. It was merely the route by which he felt able to obtain his historic costs. Their payment had to be delayed. When he was paid in respect of this claim it was accepted that it was a claim for historic costs and without prejudice to his wider claim.
217. The fact that Mr Ball sought 4% equity on 16.10.97 (T254) and in the Chancery action (G11-12 paras 35, 36) and did not claim equity throughout is again not a recognition by him of the fact that he could have achieved no more than such a proportion, but a product of the fact that by 16.10.97 he faced a situation in which he had no bargaining power. There were no heads of agreement in place and the Trustees had been advised that equity was not available, intellectual property rights did not exist and that in effect Mr Ball had no more than a claim for past consideration.
218. I remain of the clear view on the evidence that Mr Ball hoped for substantial financial rewards from the project throughout and had his aspirations been properly protected he would have sought such reasonable sums as the Trustees would have accepted and would have enabled Millennium Commission approval.
219. Nor do I accept the Defendants' submission that as Mr Ball and Mr Smit declined to follow Druces & Attlee's advice as to instructing counsel they would also have failed to follow any advice to have a bidding agreement. The question was never raised and never proposed. It would clearly have been in the Claimant's interests to have his potential rights so protected and I consider it improbable that he would have rejected such advice.
220. When it was put to him in cross-examination that the effect of Ernst & Young's proposals on 28.11.95 (M158 159) would have meant that he would have had to have gone forward without a Trust which would have been ' a spanner in the works' Mr Ball said that they were not going to submit an application unless and until it had the endorsement of the co-founders, the Trustees and advice from Druces & Attlee. "Unless and until that took place we were not going to submit anything. If it went a month later so be it, that would have been – I am sure in my recollection that would have been the policy we would have adopted." (Day 7 79-81)
221. If Mr Ball had been given proper advice I am satisfied that he would have followed it subject to the attitude of the Millennium Commission and the Trustees which I deal with below.
222. I have already found that the co-founders did not abandon any plan to benefit from the project by the time of the Millennium Commission application on 9.1.96. In fact Mr Smit sought to bring himself within the advice, which had not been fully researched, that in effect all the co-founders could hope for was a job on an arms length basis. Had the proper advice been given a different response would probably have been made to it. I have no doubt that both co-founders were anxious to make their application to the Millennium Commission promptly. They wanted to maximise their chances of success with the Millennium Commission by showing that the Trustees were enthusiastic and that this was a charitable application with the charity already formed. That would reinforce the seriousness of their purpose and enable the body to receive the money right away. (See Day 3 135, Day 7 87, Day 4 48 Mr Smit's 'sliced bread' memo of 30.11.95).
223. The fact was however that the Trust did not have to be established for the application to be made nor indeed for the grant to be approved in principle, though it did have to be in place before the first payment of the grant could be made. (T69 and Day 11 23, 24).
224. It is also correct that the co-founders believed, from what Mr Stroh said, from what Mr Bostock and others had said, that the Millennium Commission was very concerned about private benefit from Millennium Commission funded projects. On the basis of the perceived need to make the application promptly through the Trust and of the concern of the Millennium Commission towards personal benefit, the Defendants submit that the co-founders would not have accepted any advice from Druces & Attlee to enter into a bidding agreement because they would not have tolerated any further delay in putting in their application and would have wished, as their December 1995 application did, to portray the project as not involving personal gain.
225. I do not however consider that these submissions are correct. I am satisfied that if the proper advice had been given Mr Ball would have accepted that the appropriate course was to have a heads of agreement prepared, and that if it proved acceptable to the Trustees and the Millennium Commission to have gone ahead with it. If however the Trustees were not prepared to accept any such agreement or the Millennium Commission would not accept the terms of any agreement made, or suitable alternative terms, then I do not consider that Mr Ball would have persisted in his demand for personal benefit. In other words if such benefit was demonstrated to be wholly unacceptable to either the Trustees or the Millennium Commission he would then have abandoned it rather than prevent a Millennium grant being awarded.
226. The Defendants further contend that Mr Ball would not have accepted advice to enter into a bidding agreement because profits from the Eden Project were likely to be small and because the Charity Commission would not have approved of the co-founders benefiting from trust money. There was however every reason to be cautiously confident about the success of the project. Profits could not of course be in any way accurately forecast at that stage but the optimism about the project in general was such that there was no reason why the co-founders should have considered that this was a reason for not entering into a bidding agreement.
227. As to the Charity Commission Mr Monkcom said that the Charity Commission would have had apoplexy had the co-founders sought to benefit from trust money (Day 10 30). But Mr Monkcom made it quite clear in evidence that the Charity Commissioners would look at the matter commercially, and that provided there was no loss of charity funds may have been prepared to allow a small amount of equity to pass to a third party. They would determine what was fair and reasonable. (Day 10 85, 112, 117) Mr Ian Hay Davison said that a bonus was given to Mr Albery at Sadler's Wells and the Charity Commissioners were prepared to agree that.
228. It is also submitted that the delay involved in going back to the Charity Commissioners would have been such as to have discouraged Mr Ball and Mr Smit from making the necessary request for approval because of the effect that could have had on their application to the Millennium Commission. It is further submitted that the bidding agreement would have caused delay because the Trustees would have had to have taken professional advice, the document would have taken time to draft, consent from the contributors to handing over their intellectual property rights would have been necessary and there would have been other time consuming matters.
229. There may have been some delay as a result of going back to the Charity Commissioners and in the drafting of the bidding agreement. There is no evidence that such delay would have threatened or would have been regarded by the co-founders so threatening to the Millennium Commission application that they would not have pursued what I have found to have been their clear desire for personal reward from the project. They would have had to have balanced the possible effects of delay upon the application to the Millennium Commission against the risk of losing their right to financial reward if they failed to enter into a bidding agreement with the Trustees. Had they been properly advised they would have been aware of the fact that a bidding agreement was necessary in order to secure reasonable financial benefit from the project. I do not believe that they would have wished to close that option down, given their clear desire to obtain financial reward, unless they perceived that leaving it open would seriously threaten the whole project. There is no evidence before me to indicate that they would have thought that. Neither Druces & Attlee nor the co-founders had properly researched the true effect which claiming personal benefits on behalf of the co-founders would have upon the Millennium Commission application and the question of a bidding agreement. Its possible effect had not been contemplated by Druces & Attlee at all and no advice given upon it.
230. Nor do I consider that the lack of money would have prevented a bidding agreement being drafted. There is simply no evidence that the co-founders would not have been prepared to pay, or able to pay for such advice had it been considered necessary to do so at that stage. Indeed I see no reason why such advice both to the co-founders and any necessary to the Trustees could not have been dealt with on the same basis as other legal expenses which were up to then being incurred on behalf of the project. The Defendants further submit that the loss of the co-founders' bargaining position was largely theoretical. The Trustees were from January 1996 entirely willing to reward the co-founders and there is no reason to think they would not have had exactly the same attitude in December 1995. If they were reluctant to enter into a deal with the co-founders after the Trust was set up they would probably have been unwilling to sign up as Trustees in any event.
231. It is undoubtedly correct that the Trustees remained anxious and willing to reward the co-founders properly throughout. It is an entirely different proposition however to submit that the co-founders' bargaining position remained the same, especially in view of Mr Stroh's evidence that it was arguable that their position was adversely effected by the absence of an agreement reserving their rights. The matter becomes even more difficult for the Defendants to argue when it is apparent that from September 1996 onwards it is they who advised the Trustees that the co-founders were asking for what was essentially past consideration. (P248 11.9.96) By 9.5.97 Sir Alcon Copisarow is noting that all intellectual property rights are assets of the project and by 24.10.97 Druces & Attlee are advising that intellectual property rights do not exist and that any that do have already passed to the Trust. (JB chronology T307-313)
232. These facts confirm that the co-founders' bargaining position worsened as the consequence of the fact that their rights had not been properly reserved before the Trust was created. The Trustees were advised, by the Defendants themselves, that their legal position was such that there were difficulties in the way of rewarding the co-founders. The point is particularly unmeritorious considering that it was the Defendants who failed to give proper advice to the co-founders and then advised the Trustees of the legal limitations arising out of their failure to give such advice. The Trustees remained anxious to help throughout, but they could not ignore the advice they were receiving.
233. I shall deal with whether the Trustees would have been prepared to become Trustees on the basis of a bidding agreement under the separate heading relating to Trustees below.

Would Mr Smit have accepted the advice?

234. This question relates to two different phases; firstly would he have joined Mr Ball in seeking a bidding agreement in or about January 1996 and secondly would he have joined Mr Ball in negotiations for acceptable terms with the Trustees in the autumn of 1997.
235. (i) January 1996 – the bidding agreement.

I have already found that Mr Smit was interested in personal gain. He made the possibility of this clear at the very outset in October 1994 and then sought it between October and December 1995. There is equally no doubt that Mr Smit was interested in control, and ultimately, may have been interested more in that than in anything else. I have not had the benefit of hearing Mr Smit but on the basis of the documents I am quite satisfied that Mr Ian Hay Davison was entirely correct in saying that both money and power played a part in the hands of both founders. My reading from the documents is that this is an entirely accurate reflection of the situation.

236. When Mr Smit was putting forward the various different options for obtaining personal benefit in October – December 1995 I consider it probable that he would have accepted advice that a bidding agreement should be put in place in order to reserve the position he was then striving to achieve. Like Mr Ball, it is only if he considered that the Trustees would simply not accept such a document or the Millennium Commission application would fail if he pursued it that he would not have joined in the bidding agreement. There is no evidential basis upon which it could properly be found that Mr Smit at that time could have perceived that the Trustees would refuse to enter into such an agreement or that the Millennium Commission application would fail if he pursued personal benefit. I deal below with whether there was a substantial chance that the Trustees and the Millennium Commission would have accepted a properly drafted bidding agreement.
237. (ii) Negotiations in 1997.

This, as the Defendants submit, is a higher hurdle for the Claimant. In spite of the fact that the Trustees sought a proposal from the co-founders as to their 'birthright issue' (Trustees meeting 3.10.96 (Q3)) the co-founders failed to produce any such proposal until September 1997. (T196-198) By this time Mr Livesey submits, Mr Smit had abandoned any desire for personal gain as can be seen from his comments during the meeting with the Millennium Commission on 2.10.97 (T222).

238. The co-founders were well aware that they had to put their proposals forward with 'an urgent need to have intellectual property identified invested with Timco whilst base cost is negligible'. (14.1.97 (R29)) The reason why they failed to do so was, it is submitted, because of a difference in the co-founders' views as to what should be sought. Mr Smit preferred a founder's share solution rather than any royalty / licence / copyright agreement whereas Mr Ball preferred the royalty approach. (Confidential meeting between the two co-founders at the Crown Inn 7.4.97 (S122)).
239. Their failure to put in a proposal was even in spite of the fact that Ernst & Young Exeter had advised them that they were very exposed legally and 'if we are not legally secure we will be shafted'. (2.4.97 (S99)). Even when other solicitors, Stephens & Scown, were consulted, matters still progressed slowly.
240. The real reason, Mr Livesey submits, why there was this divide between the co-founders, was that Mr Smit was increasingly concerned to ensure that he had power and control and Mr Ball accepted that a central part of the disagreement between them was Mr Smit's fight to be Chief Executive Officer. (Day 6 85, 86).
241. What the co-founders did agree, was that the Trust should have the free use of the name and logo at Destination Eden. This was accepted in their proposal in September 1997 (T197) and by Mr Ball in his proposal to Evelyn Thurlby on 16.10.97. (T253) As equity had already effectively been abandoned and intellectual property rights to the Trust at Destination Eden would be free, Mr Livesey submits that Druces & Attlee could not in any event have caused any loss. He submits that the difficulties of Mr Ball agreeing anything with Mr Smit were so overwhelming that this element of causation cannot be established.
242. These submissions do not however take into account the fact that Mr Smit's clearly desired rights were not reserved by a bidding agreement before the Trust was established. Had Druces & Attlee given proper advice as to the protection of the rights set out in paragraph 27 of the re-amended Particulars of Claim, scope for potential negotiation with the Trustees later would have been established and the likelihood of dispute between Mr Ball and Mr Smit much reduced. There may still have been argument over control but the proposal for their birthright would have already been set out and reserved. The issue of what job each should have had would have been more readily agreed between them. Things would have been likely to have been very different if proper advice had been given by Druces & Attlee at the appropriate time before the Trust was established.
243. Nor do Mr Livesey's submissions take sufficient account of the fact that the co-founders were not receiving any coherent advice as to how to advance their position in so far as birthright was concerned from Druces & Attlee in 1996 or 1997. The Defendants were advising both the Trust and, on occasions, the co-founders during this period. Thus Mr Stroh advised Mr Ball as to how the position might be reserved in relation to the Millennium application with an appropriate formula of words. By then however Mr Stroh was already of the opinion that Mr Smit and Mr Ball were seeking past consideration (P174). As it is the Defendants' case that from January 1996, although not appointed until April 1997, they were already acting on behalf of the Trust, it is probable that the Trustees were themselves given similar advice. It is therefore clear that Mr Smit and Mr Ball were getting no assistance from Druces & Attlee in 1996 even though I am satisfied on the evidence that Mr Ball remained convinced that they were still acting on his behalf.
244. I conclude on the basis of all the evidence before me and the submissions of the parties that there is a real and substantial chance that Mr Smit would have entered into negotiations in the autumn of 1997 with Mr Ball in order to seek a personal benefit from the project, if the position had been properly reserved before the formation of the Trust in January 1996. I am quite satisfied that the chances of Mr Smit having so joined Mr Ball in negotiations in the autumn of 1997 was considerably greater than a speculative chance, had the correct advice been given.

Would the Trustees have agreed to a bidding agreement?

245. The documents demonstrate that from the outset the Trustees wished to ensure that Mr Smit and Mr Ball were properly rewarded for their creation of the project. On 2.2.96 Mr Ball records Sir Alcon Copisarow as saying that '..Smit and Ball need to be properly rewarded' and he referred to the two of them as 'both necessary neither sufficient.' (N161). On 29.4.96 Sir Alcon Copisarow told Mr Ball that he was anxious to sort out how the two co-founders should be rewarded for their risk, sweat equity and time in bringing the whole project together, separating out and back dating expenses. (O70) On 11.9.96 Sir Alcon Copisarow and Mr Stroh discussed the Smit / Ball intellectual rights question. In spite of the fact that on this occasion Mr Stroh advised that he could see no reason why the Trust should enter into a licence agreement and pay royalties, Sir Alcon Copisarow said that the Trustees would like to recognise the origins of the scheme and this could be dealt with by way of licensing of the logo. Mr Stroh discouraged that by saying that that was fine but it was essentially past consideration, thereby underlining the consequences of Druces & Attlee's failure to reserve the co-founders' position.
246. The Trustees struck the same attitude at Trustees meetings. Thus for example at the meeting of 3.10.96 the Trustees were recorded as being entirely sympathetic to the Jonathan Ball view that the registration of the Eden name and logo was a birthright issue for the two project principals. This attitude continued. On 11.2.97 Mr Stroh records in his attendance note that 'Apparently JB, Smit and AC had agreed the concept of royalty payments on products sold at the site. There would also be an additional lump sum paid when funds were initially received by way of part recompense of work carried out by JB/Smit. The balance of the 'reward' would be royalty payments' (R173). The manuscript note taken by Mr Stroh at X137 notes that 'If economic performance exceeded forecast shares should be allocated.' At the trustees meeting of 17.2.97 it was agreed that:-

"The intellectual property rights / trademark / registration of names etc was an appropriate way forward and the Principals should come to the Trustees with a proposal at the earliest moment." (Para 11.01 R208)

247. The Defendants had advised on 13.2.97 (R192) that in so far as intellectual property rights and the project was concerned it was probably not possible for protection to be afforded to the concept of 'the project'. This was certainly true in the absence of a bidding agreement but the attitude of the Trustees at the meeting of 17.2.97 shows that they still wished to reward the co-founders if it were possible for a suitable proposal to be brought forward by them. By May 1997 however Sir Alcon Copisarow was expressing the view that as all intellectual property rights were assets of the project Tim and Jonathan would have to submit alternative benefit proposals to the Trustees. (9.5.97 (S335)) Mr Stroh had already advised that he thought that there was no reason why the Trustees should pay royalties and Sir Alcon Copisarow informed Mr Ball on 24.10.97 that Mr Stroh had said that 'intellectual property rights doesn't exist/any that does has already passed to the Trust' (T307).
248. I conclude from the documentary evidence that the Trustees remained anxious throughout to ensure that proper rewards were given to mark Mr Smit and Mr Ball's 'birthright' but that in the face of the advice they were receiving from the Defendants, and in the absence of any bidding agreement reserving the co-founders' rights, they were unable to do what they desired to do save in so far as they were able, and did pay historic costs. Such advice was not given on the evidence before me until about May 1997.
249. The only Trustee who gave evidence was Mr Ian Hay Davison. I have already indicated that I found him to be an impressive witness. He confirmed that which is clear from the documents namely that there was a great fund of goodwill on the part of the Trustees towards Mr Smit and Mr Ball. Mr Ian Hay Davison was asked to consider paragraph 27 of the re-amended Particulars of Claim in evidence. He confirmed that if such an agreement had already been in place when he was invited to join an existing Trust, not being a founding Trustee himself, it would have influenced him as to whether he would join:-

"A..had arrangements been in place it would not have been for me to disturb them, but nevertheless I might have considered whether I would have been willing to become a Trustee.

Q Why's that?

A Because the Trustees are exposed to substantial personal liabilities, and if the arrangements had been what I thought to be inappropriate, I would not have wished to have undertaken those liabilities."

250. He would therefore have looked at any such agreement and gave the following answer:-

"Q You have seen what is proposed here. Agreements along the lines in 27, paragraph c)(i)-(v), is there anything there which would have caused you concern?

A No. These are the matters that I would have thought should have been addressed and in place." (Day 5 5-8)

251. The Defendants submit that the Trustees would not have agreed to a bidding agreement of the nature sought by the Claimant. Sir Alan Donald had expressed concern about potential liabilities which had not been explained to him previously (29.11.95 (M170)) and the proposal that they would have been faced with was one which would have troubled them as it was not fair and reasonable. Any claim for 25% equity and 5% royalty could not have been acceptable to the Trustees. There would also have been the delays involved in the Trustees taking legal advice and the consent of the Charity Commissioners being sought. Mr Ian Hay Davison's view on what was fair and reasonable would have made it highly unlikely that the Trustees would have agreed to the bidding agreement as proposed by Mr Ball.
252. Mr Ian Hay Davison makes it clear in his second witness statement that he would have been content if Mr Ball and Mr Smit had taken an initial equity shareholding in the Project's special purpose vehicle. Indeed he based his views upon the hypothetical negotiation which would have taken place in autumn 1997 upon that basis. When it was put to him that having seen paragraphs 27 a),b) and c) in the re-amended Particulars of Claim he would have thought long and hard to determine whether the best interests of the Trust would be served by taking on board such a requirement, his answer was as follows:-

"I would have taken the view that the success of this project depended upon taking the idea that the founders had generated and the connections and work they had done, and developing it in the public interest. To have achieved that it would have been necessary to define the terms under which a) their ideas and b) their future involvement should be determined.

The labourer is worthy of his hire. It would follow that there would be an appropriate figure that would be arrived at between the Trustees on the one hand and the founders on the other, which fairly and equitably would reward them for what they had done and what they will be doing in the future.

To have reached those terms would not have breached my position as a Trustee. To have reached them in terms that were extravagant, or excessive, or inappropriate would have breached my duty. I would therefore have had to see that an negotiation took place between the founders on the one hand, properly advised, and the Trustees on the other, properly advised, at which a figure was struck which was fair and equitable in the circumstances." (Day 5 54-56.)

253. I am satisfied on the evidence that the Trustees would have accepted a bidding agreement containing the matters set out in paragraph 27 of the re-amended Particulars of Claim. I see no reason to consider that the Trustees would have taken any different approach to the matter than Mr Ian Hay Davison did. He was a man of considerable reputation and experience in financial matters. Had he accepted a bidding agreement based upon paragraph 27 of the re-amended Particulars of Claim as fair and reasonable, which in evidence he clearly did, (Day 5 8) there is no reason why the other Trustees should have differed. The concern which Sir Alan Donald expressed about potential liabilities was that they had not been stated to him previously. After Mr Monkcom's explanation at 29.11.95 there is no further concern expressed.
254. It may be that the Trustees would have sought legal advice though, as Mr Michael Kent QC points out in his submissions on behalf of the Claimant, they did not seek separate advice or valuation in respect of the likely costs of the project as conceived in January 1996. But if they had sought advice there is no evidence before me to suggest that proper legal advice would have prevented a bidding agreement on the lines of paragraph 27 of the re-amended Particulars of Claim being put before the Trustees and agreed by them. The evidence that is before me, namely that of Mr Ian Hay Davison, indicates that that which was being sought by the co-founders was appropriate and that which he would have expected to have found in place. The Trustees would have accepted and shared his opinion.

Would the Trustees in Autumn 1997 have agreed to the terms which the co-founders were putting forward?

255. The oral evidence on this issue is again from Mr Ian Hay Davison. He says in his second witness statement at paragraphs 26 and 27:-

"26. I am confident that a deal would have been struck between the Eden Trust and the co-founders to buy out any contractual or other rights of the co-founders, if the Millennium Commission had required it, as a condition of funding.

27. I say this because I know from contemporaneous conversations with the Trustees in 1996 (in particular Sir Alan Donald and Sir Ralph Riley) that the Trustees wished to be fair and equitable to the co-founders, and they wished to reward them for originating the scheme."

256. Mr Ian Hay Davison deals with the hypothetical negotiations in autumn 1997 in paragraphs 26-35 of his second witness statement. On the basis that Mr Ball's 12.5% equity stake and his share of the royalties under the licence agreement were worth a considerable amount and that he would have been pressing for £2M plus, he would have expected all his rights for equity debt, sweat equity and intellectual property rights to have been bought out at a maximum of £1.5M. That sum would be regarded as debt in the project on which interest would be payable until such time as the charity was able to repay the debt:-

"Let me be clear that this would be high risk debt. In other words this would be the deferred debt. It would only be payable when other obligations had been met. It would have been payable only when the Eden Project got into a significant positive cash flow, and as you rightly say interest would have been accumulated on it until that time." (Day 5 59)

257. The figure of £1.5M and accumulated interest paid out only when the project got into significant positive cash flow was in Mr Ian Hay Davison's view a fair and reasonable agreement for both sides.
258. Subject to the attitude of the Millennium Commission towards such an agreement, which I deal with below, I am quite satisfied on the evidence before me that the Trustees as a body would, on the one hand, have wished to reward the co-founders generously for originating the scheme and their past and future work to make it succeed, and on the other hand to ensure that the Trust paid them no more than was fair and reasonable in all the circumstances. There is no evidence to suggest that they would have taken any different approach to the matter than Mr Ian Hay Davison and I so find.

Would the Millennium Commission have allowed the application to proceed in 1996 with a bidding agreement such as Mr Ball sought in place, and would they have approved the negotiated agreement between the Trust and the co-founders in autumn 1997?

259. The Millennium Commission was concerned to ensure that private profit was not made out of public funds. There had however to be recognition that private funding was also sought in relation to their projects and some private profit could not therefore be excluded. Hence Mr Stroh's letter to Mr Smit of 8.11.95 in which he informed him that the Commission was trying to ensure that private enterprise should not profit from the Millennium Commission directly. (M47) Mr Bostock informed Mr Stroh on 3.10.95 that Millennium Commission applications seem to be successful at the moment when based on charitable premises, with a charitable trust and a company limited by guarantee involved. (L133) This would seek to ensure that there was, to use Mr Monkcom's phrase, no leakage of public funds. Mr Michell, an officer of the Millennium Commission, confirmed that the Commission did not take the rigid stance that because Millennium Commission funds had enabled a project to get off the ground no-one could have anything out of the income stream. What needed to be done was to protect the public purse tightly. (Day 10 157 158)
260. The general approach of the Millennium Commission is reported in various documents before the Court. Thus on 12.8.96 Mr Smit reported to Mr Stroh that :-

"With regard to the Commission negotiations, the Commission has said that essentially they had needed checks and balances and that there should be no 'rape' of the Commission's investment otherwise one could do more or less what one wanted. He said that the Commissioners had confirmed that they would accept 25% return on investment and that equity participation by external bodies would be in order." (Mr Stroh's attendance note P149).

261. In April 1997 Mr Gillespie of Berwin Leighton, the Commission's legal advisers, confirmed to Mr Stroh that the Commission was 'relatively relaxed about the formal structure.' "He confirmed that third party rewards were acceptable provided they were 'at arm's length'. If however employees were receiving inflated salaries this would be a matter for concern. Similarly with regard to commercial funding, provided this was at arm's length on commercial terms this would be acceptable." (25.4.97 (S250))
262. Mr Stroh confirmed in evidence that no clear guidance was available from the Millennium Commission at that time:-

"It was in the very early days of the Millennium Commission particularly so far as any landmark projects were concerned. So there was uncertainty as to what the Millennium Commission might or might not ultimately be prepared to accept." (Day 9 12 and also 11).

263. There is a substantial dispute between the parties as to whether or not the Millennium Commission would have accepted a bidding agreement which sought equity and intellectual property rights and the other matters set out in paragraph 27 of the re-amended Particulars of Claim. Mr Boxall, another officer of the Millennium Commission called by the Defendants said in re-examination that he thought it highly likely that if there was a bidding agreement under which the co-founders would earn 25% of the equity and the whole of the intellectual property rights that the Commission would not have taken the project any further. Mr Michell said that such a bidding agreement would have affected the progress of the project by making its prospects worse. (Re-examination Day 10 164). Mr Sorensen, however, the Chief Executive Officer of the Millennium Commission at the time who was called on behalf of the Claimant said that if the terms negotiated between the Trust and the co-founders were reasonable the Millennium Commission would not have interfered and considered that a deferred payment to the co-founders with interest, with repayment of capital deferred until cash flow permitted with rewards via licence/royalty on terms to be finalised, would not have been objectionable. (Paragraphs 8 & 10 of Mr Sorensen's statement and Day 5 page 94 95).
264. With this conflict of evidence it is therefore necessary to analyse the evidence of the Millennium Commission before the Court.
265. The general approach of the Millennium Commission in 1996 and 1997 was that equity was given to third party investors with considerable reluctance. Mr Michell and Mr Boxall both stated that this was so and KPMG (the Commissioners' advisers) at a meeting on 26.6.96 said that the Millennium Commission insisted on intellectual property rights being vested in the project. (O264) Mr Sorensen himself accepted that intellectual property had to be secure in favour of the project itself so that it was not diluted but that did not exclude a reasonable payment as a reward for the idea. (Day 5 88 89)
266. The attitude of the Millennium Commission towards equity was flexible and commercial so far as third party investors such as banks were concerned (see for example Mr Boxall Day 11 40) but less flexible towards equity for co-founders. At the meeting between the Millennium Commission and Eden Project Limited on 30.10.97 Mr Boxall was noted as saying that equity was difficult if not impossible for co-founders. There are in fact three notes of this meeting, one by Mr Boxall, one by Evelyn Thurlby and one by Mr Stroh. (T285A-T287F) The notes from Mr Boxall and Mr Stroh are considerably fuller and as a consequence I have found them more helpful. Mr Michell says in his witness statement that the equity shareholding by founders was unacceptable (paragraph 15) and that no Millennium project in fact had equity investors. (Day 10 129) Equity was unacceptable and converting it into debt was only acceptable if value could be demonstrated. (Day 10 159 – 160)
267. Mr Boxall accepted that profits would not be distributed to investors but reinvested in the project, only after interest, including interest for payment of debt, had been paid. (Day 11 37-42). But in relation to the co-founders he stated that the Millennium Commission would have been reluctant to permit equity. Had there been an operating company in existence with existing shareholders including the co-founders the options were not merely allowing them to keep their shares or buy them up, but a third option namely 'we do not want anything to do with this'. (Day 11 52-53). There would in such circumstances have been a discussion and the Trust and the third party shareholders would have been given an opportunity to negotiate a position that satisfied the Commission:-

"Q What the Commission would have done with your assistance would be to determine whether the results of any negotiation was fair and reasonable, balancing the needs of the public funds, the Lottery Fund, the recognition that the project required match funding, required other contributions, the value of the project at the country, to the region and its popularity with the public, with politicians. All those considerations would have gone into the melting pot of consideration and discussion.

A Yes, amongst other things, yes."

In re-examination Mr Boxall said that neither 25% equity nor £2M debt in lieu would have been acceptable. (Day 11 58 59.)

268. In his notes of the meeting of 30.10.97 Mr Boxall records himself as saying that they were surprised that 'MC accepted any equity as co-funding package.' He records Mr Michell as saying in respect of the co-founders 'cash is the preferred option. Equity will be difficult if not impossible. A loan stock with coupon rate agreed a more preferable option (and is also capped). Prefer to be debt only project across the board (as want to limit equity)'. He notes Mr Michell stating at the beginning of the meeting 'first project with shareholders and have to try and ensure no leakages (beyond a reasonable amount).' (C58-60)
269. Both Mr Michell and Mr Sorensen considered that the Commission's approach to intellectual property rights was bound by clause 14 of schedule 8 of the Principal Agreement. (T69y) This clause which is set out earlier in this judgment requires intellectual property which has become vested in the recipient to remain vested in the recipient and not to be sold or otherwise disposed of nor licensed to others 'unless the Commission agrees otherwise.' The rule is therefore not inflexible and in any event applies to intellectual property which has become vested in the recipient. Mr Boxall's notes state 'MC will not allow at this stage licensing rights to Smit and Ball.'
270. Mr Sorensen was the Chief Executive Officer of the Millennium Commission from March 1997 until March 1998. In that capacity he signed the letter informing the Eden Project that the Commission had approved in principle a grant of up to £37,150,000 subject to the satisfactory conclusion of terms and conditions of grant. (S340) Mr Sorensen had met Mr Ball in February 1998 at the re-launch of the Eden Project in London. In a discussion about the position of the co-founders Mr Sorensen told Mr Ball that, in addition to full reimbursement of their costs, he would be happy for reward via licence/royalty payments on terms to be finalised to be given to the co-founders in accordance with paragraph 2.8 of the Ernst & Young business plan. (Q233) Any arrangements made between the Trust and the co-founders would not be interfered with by the Millennium Commission provided that they were reasonable.
271. In cross-examination however Mr Sorensen accepted that the rules embodied in the agreement were fairly inflexible (Day 5 76-77), that intellectual property rights should vest in the project so that it could not be held to ransom and that the Commission were fairly hostile to the prospect that anyone should hold an equity shareholding in a project. The reason for this was because the Commission did not want Lottery grants to be used to provide a private benefit. (Day 5 78) The Commission were engaged in trying to make equitable and fair judgments but he would not accept co-founders as being paid in shares in equity, nor a royalty payment for intellectual property rights which might have originally vested in them. (Day 5 84)
272. In re-examination Mr Sorensen was referred to his statement at paragraph 10 and the reference to the Ernst & Young business plan "..whereby the project principals will receive rewards via licence/royalty on terms yet to be finalised..". He was asked what aspect of that agreement he would have considered had he been faced with such an arrangement being made in the autumn of 1997. He said:-

"We would have considered first that the intellectual property was secure in favour of the project itself so that that was not diluted in that sense. But also what this simply deals with is a reward system for the idea, which we would have regarded as a reasonable payment regarding on what size those payments were." (Day 5 89)

He said that what was set out in that business plan was in principle satisfactory to him as the Millennium Commission subject to negotiation about a reasonable amount. (Day 5 90) An agreement to replace a licence/royalty by a lump sum for the assignment of intellectual property out of cash flow would have been acceptable "so long as the project itself was secure and the grant was going for the purpose for which the grant was intended, then one could allow for the possibilities of other cash flow being used to pay for earlier work done or earlier ideas generated, yes." (Day 5 91) Mr Sorensen confirmed to me that the principle of a payment for licence/royalty as set out in paragraph 10 of his statement with capital deferred until cash flow permitted were both matters with which the Millennium Commission would have had no problem in principle. (Day 5 94 95)

273. Mr Sorensen as Chief Executive was responsible for dealing with the heads of each department in the Commission when it came to establishing policy. He dealt with the Department of Culture, Media and Sport and was accountable to Parliament. The officers such as Mr Boxall and Mr Michell would assess a project and make recommendations. The ultimate decision would be for the Commission itself and those recommendations would be a significant factor which the Commissioners would take into account. Before the matter reached the Commissioners it might be referred to Mr Sorensen from his officers if the project dug its heels in. (Day 5 73) In cases of difficulty therefore his opinion and recommendations would become relevant.
274. Mr Michell, with reference to equity participation by the constructor and the operator, said:-

"The true position was that this project was quite unusual in that Commissioners decided to award the grant and that was in May 1997 before the corporate structure, the details of the physical nature of the project, the co-funding and various other issues had all been clarified. So Commissioners, I suppose, bought into a concept of at that stage without really knowing the details."

275. In the same context and referring to a structure that was acceptable to the project but also acceptable to the Commission Mr Michell said:-

"Having said that, Commissioners, it is true, were very keen that this project should succeed. So I suppose the brief as far as the negotiations team was concerned was to get the best possible terms and to endeavour not to have to have an equity participation, but on the other hand to try and not let this project fail because it was always felt to be one that was likely to be highly successful, so it was a balancing act." (Day 10 132, 133)

276. It is to be noted that the Millennium Commission application included the CIBC executive memorandum stating:-

"The intellectual property rights attaching to the Eden Centre will be retained by a separate company owned by the founder project principals. This will include brand exploitation rights and rights attaching to the scientific development generated from within the biomes and the associated areas." (Q223)

The application also included the Ernst & Young business plan referring to rewards for the project principals via licence/royalty on terms to be finalised (Q233). The grant was made in May 1997 when the application contained those statements.

277. What is entirely clear from the evidence is the fact that the Eden Project had captured the imagination not merely of the media and the public but also the Commissioners themselves. Mr Sorensen said that by the time he joined the Millennium Commission the Eden Project was viewed 'as one of the twelve capital projects most likely to succeed and to capture the public's imagination.' (Paragraph 6 of his statement). A letter from Jennifer Page the former Chief Executive dated 22.10.96 indicated that the Commission viewed the Eden Project 'as innovative and exciting and hopes it will prove possible to provide Millennium funding support for the scheme'. (Q30)
278. Michael Montague and Patricia Scotland, two of the Commissioners, were both passionate about the scheme (Q24). Patricia Scotland QC loved the project and was glowing about the idea. She was very interested in the international focus that Eden would give Britain. Provided they could satisfy the DAR the project had 110% support from her.
279. Mr Boxall confirmed in evidence that the Commissioners liked the potential of the project. (Day 11 14) In his statement at paragraph 9 he said that the project had a special status:-

"It was always agreed and understood we would have to go back to the Commissioners to get approval for the final funding structure, particularly since it was being suggested that there should be an element of equity funding on the part of corporate institutional investors."

280. The Defendants submit that on the basis of this evidence the bidding agreement would not have been accepted in 1996 and no agreement would have been reached in 1997. The project would therefore not have continued at all. Mr Livesey invites me to find that Mr Sorensen's evidence is of limited value in view of the fact that he changed his mind in re-examination and given the fact that he was at the Commission for only a short time and was never involved in the negotiations as Mr Boxall and Mr Michell were.
281. The conclusions I reach upon the basis of this evidence are as follows:-

i. The Millennium Commission did not at the material time have a clear and certain policy as to how to deal with rewards for co-founders. It was as Mr Stroh said still early days for them, particularly in landmark projects.

ii. There was a reluctance amongst the officers to allow equity but that might in appropriate circumstances be permitted in so far as banks and professional teams were concerned.

iii. There was a strong reluctance on the part of the officers to allow either equity or intellectual property rights to co-founders. Mr Boxall's note and evidence was that equity was difficult if not impossible for the co-founders, and Mr Michell's view was the same.

iv. There was a tension between the view that the private individual should not receive a return on public money (Day 10 152) and the need to be commercial where there was private investment funding as well.

v. Equity and royalty/licensing rights to the co-founders were not unobtainable if there were no leakages from public funds 'beyond a reasonable amount.' (C58) Licensing rights to Smit and Ball were not allowed 'at this stage' (C59). Loan stock with coupon rate was a preferable option to equity. (C60) (Mr Boxall and Mr Michell at the 30.10.97 meeting.)

vi. Mr Sorensen was prepared in appropriate circumstances to contemplate rewards to the co-founders by way of licence/royalty and capital deferred until cash flow permitted. Mr Boxall's and Mr Michell's recommendations and Mr Sorensen's views as Chief Executive Officer would have been influential, but the decision rested with the Commissioners.

vii. Such rewards would be permitted by Mr Sorensen if they were considered after negotiation to be fair and reasonable, and necessary in order to enable the project to go ahead.

viii. There is a real and substantial chance that the Commissioners would have been prepared to agree rewards by way of equity and or royalty/licensing to the co-founders in view of the fact that this was a particularly unusual case. The grant was awarded before the corporate structure and other issues such as co-funding had been clarified. The Commissioners were so enthusiastic that they had bought into it without really knowing the details.

ix. The Commissioners found the project exciting and innovative. It had fired the imagination of the public and the media and hence was as likely to succeed as any similar large project.

x. The potential rewards to the local community were likely to be perceived as a substantial reason for progressing the project. It is to be noted that ERDF were equally enthusiastic and, I am satisfied on the basis of Mr Jones' evidence, would have been prepared to have given the co-founders a royalty or equity. There was a strong need to support employment and investment in Cornwall, whose economy had gone through a difficult time. (Mr Jones re EU funding Day 5 100).

xi. If the Trust had negotiated a bidding agreement with the co-founders which they regarded as appropriate and which enabled a negotiation for what was fair and reasonable to take place I consider that there was a real and substantial chance that the Millennium Commission would not have rejected the application because of the existence of such an agreement. They did in fact make the grant on an application which included in it intellectual property rights retained by a company owned by the co-founders and in its business plan provision for rewarding the co-founders by licence/royalty.

xii. There was a real and substantial chance that a fair and reasonable agreement would have been struck in autumn 1997 between the Trust and the co-founders which the Millennium Commission would have regarded as fair and reasonable with no leakage of public funds beyond a reasonable amount to enable the project to go forward and succeed.

282. I now turn to the quantification of the chance to obtain personal reward from the project which I have found that the Claimant has lost as a result of the Defendants' negligence or breach of duty.

Quantum.

283. If causation is established in a lost chance case the Court must embark upon the evaluation of the substantial chance of a better outcome which it has found in order to assess quantum. (Allied Maples Group Limited v Simmons & Simmons at 1610 and 1611.)
284. Where there are various possible outcomes to an assessment of quantum the right approach is to evaluate the chance of success of each of the possible outcomes, giving a percentage assessment for each category of lost chance. This is the approach used in personal injury litigation where a claimant might, had he not been injured, have achieved various different levels of success in a particular career. Langford v Hebran [2001] PIQR Q13 and Doyle v Wallace [1998] PIQR Q146. Double counting must be avoided and the chance of failure evaluated. In this case although I have found that there is a real and substantial chance of a bidding agreement being concluded with the Trust with the agreement of Mr Smit and the approval of the Millennium Commission in 1996 and negotiations with the Trust successfully concluded with the approval of the Millennium Commission in autumn of 1997, the chances of failure in any of those matters must be built into the award so that it properly reflects the true value of the chance which the Claimant has lost as a consequence of the Defendants' negligent omissions.
285. The hypothetical negotiations between the Trust and the co-founders take place in the autumn of 1997 after both the Millennium Commission and ERDF have agreed to award grants subject to the satisfactory conclusion of terms and conditions of grant. The negotiations are conducted on the basis that the Defendants advised that a bidding agreement should be entered into with the Trust securing and reserving the co-founders rights, and that that advice was taken and a bidding agreement is accordingly in place. The co-founders therefore have rights in relation to both equity and royalties which they have the power to dispose of as they wish.
286. The purpose of the negotiations is to agree terms on which the Trust buys out the co-founders' rights at a fair and reasonable level, and at a level which the Millennium Commission finds acceptable. If the Millennium Commission had found the terms presented to them unacceptable they could insist on a renegotiation before making the grant, and if the co-founders found the Millennium Commission's demands unacceptable they could withdraw from negotiations. Ultimately the Millennium Commission could refuse to make any grant and the co-founders could refuse to let the project proceed. The project was not however held to ransom as their demands were limited to what was fair and reasonable, which would if necessary have been objectively judged.
287. It is conceded by the Defendants that it is possible to draft an appropriate binding heads of terms. It is assumed that such an agreement is in place for the purpose of these negotiations and that the rights that it reserves are equity, and intellectual property rights such as would enable the Claimant to contend for an interest in equity at 12.5% and royalties at 5% as put forward by his expert valuer, Mr Kelvin King of Valuation Consulting, in his reports and evidence before me.
288. I accept the Claimant's submission that the intellectual property rights in this case consist not merely of the name and logo, but copyright in drawings for which Mr Ball would have obtained an exclusive licence to use for the purpose for which they were intended, and more particularly, the intangible property and material gathered over the 15 months in which they were embarked upon the project. Their creative ideas and work embodied, as Mr Kent submits, in the Arup business plan and in the knowledge of the design team and others including Ove Arup and Ernst & Young, was and was intended to be confidential. The outlines of the idea were released for public consumption to gain support but the details were not revealed. This very substantial amount of work and energy by the co-founders amounts to confidential material such as that described by Lord Greene M.R. in Saltman Engineering Company v Campbell Engineering Company [1948] 65 RPC 203. What makes material which may be available to every one confidential is the manner in which its use and assembly has been perceived and created by its maker. Such a person has "used his brain and thus produced a result which can only be produced by somebody who goes through that same process." Saltman at 215.
289. At the hypothetical negotiations each side would have taken advice. That advice would have been taken, not against a background of litigation, but against the background of a strong desire on all sides to drive the project forward on reasonable terms which would satisfy the co-founders, the creators of the project, and ensure that the Trustees were carrying out their duties to the Trust properly and responsibly.
290. At the hypothetical negotiations the Claimant would have contended for a job, a 12.5% equity stake and a 5% royalty on each line of business, that is tickets, merchandising and refreshments. Mr King was instructed that he was to take the equity at at least 25% for both co-founders, hence his figure of 12.5%. The royalty rate was reached by Mr King on the basis of his very substantial expertise in valuation. He used as his comparator Disney, which he accepted was not ideal as it was a well established brand with proven success. Nevertheless he considered that it could be foreseen that the Eden Project was itself likely to be, as it indeed has been, extremely successful. He adjusted the royalty figure used at Disney of 10% to 5% but expressed the view in his report that a higher figure, such as 8%, could probably have been justified in 1997 as a proper rate for the Eden Project. He regarded a figure of 5% as conservative and reasonable.
291. Mr King valued the Claimant's share of the equity and royalty payments on the basis that they had been converted into debt funding, in accordance with the bidding agreement, at £1M each.
292. This information was provided to Mr Ian Hay Davison who was the financial Trustee, and would have been advising the Trustees on the negotiations and the appropriate outcome to them. He said in his statement and in evidence that on the basis that Mr Ball was putting forward a claim for £2m + his opening bid on behalf of the Trustees would have been £1M to each co-founder. Given that if the co-founders' interests were not bought out, the project could not proceed, he considered that the negotiations would have come out at £1.5M for each co-founder. This was his maximum figure; it would have been a fair and reasonable agreement, beyond which he would not have gone.
293. Mr King, or Mr Ian Brewer, his assistant, made calculations of the various deals which could have been reached between the parties. The calculations varied according to the amount of buy out, £2M maximum on Mr King's view, £1.5M on Mr Ian Hay Davison's evidence. Whilst however equity might be converted into debt funding to comply with Millennium Commission views, rewards for royalties might, it was submitted, remain open and not be converted to debt funding. Calculations were made upon this basis too.
294. Whether the loan was repayable over a 5 year period, as chosen in relation to the Ian Hay Davison scenario or at the end of a 10 year period was another variable. Interest rates, whether compound or simple, and whether the interest was rolled up and payable at the end of the period or payable annually were other variables. 10% or 15% compound interest or 10.5% interest based on Mr Ian Hay Davison's views, compound or simple were other variables.
295. The Claimant's advisers produced a schedule based upon these possible outcomes to the negotiations setting out some fourteen scenarios ranging between £2,192,685 and £10,741,494. (Quantum: the figures tab C Claimant's closing submissions.) These calculations apply a discount of 6.75% for accelerated receipt of sums falling after 31^st December 2003.
296. Whilst accepting the methodology and approach of much of Mr King's report the Defendants' expert, Mr Andrew Mainz, a forensic accountant, challenged a number of Mr King's premises and conclusions. After a joint meeting between the experts the main issues between them were reduced to the following issues. Firstly, Mr Mainz contended that if normal accounting principles were applied payment of even the lowest levels of claim would create losses for the project; they would have been unaffordable compared with the projected modest profits in the Ernst & Young business plan (August 1997 D135). There was therefore a rejection of normal accounting standards of profit and loss by Mr King who ignored the need to take a true and fair view of profit and loss. Secondly, and related to the first point, is Mr King's treatment of capex. By omitting any allowance for this Mr Mainz contends he seriously distorted the value of the royalties. Thirdly the discount rate chosen by Mr King of 9% was inappropriate. If the proper discount rate of about 20% was taken the shares would be worth very little. Fourthly the shareholding should have been valued on the basis of a minority interest which would have reduced it very substantially. Fifthly 5% was an inappropriate rate to be taken for royalties. It should have been 0.5%. Mr Mainz also challenged Mr King's figure of 6.75% to allow for accelerated receipt of payment, his figure of 15% interest, and in some instances the calculation of compound rather than simple interest.
297. Mr Mainz concluded that the 12.5% minority shareholding in October 1997 had little or no value. The royalty, limited to trademark and logo was worth a lump sum of no more than £50,000 and if a running royalty was justified on all turnover it was no more than 0.5% which produced about £500,000. A licence fee of 0.5% might result in about £120,000 p.a.
298. It must be remembered that the putative negotiations in autumn 1997 would not have been dealt with in the combative adversarial manner in which these issues were put before me. Mr Mainz's report was in essence a critique of Mr King's whereas any report to the Trustees in 1997 would have been written upon the basis that the Trustees would have been absolutely mindful of their duties to the Trust, but at the same time anxious to ensure that the co-founders were properly rewarded for their ideas, work and energy. Both sides were working towards the same goal of reaching a fair and reasonable settlement so as to enable the project to proceed; they were not in conflict.
299. It is not necessary for me to determine each and every one of the issues between the experts. My task is to consider the effect of the arguments which would have been put forward in the putative negotiations upon those taking part in the negotiations. The parties would be presented with the arguments of the experts advising them, not a list of findings. Nevertheless it is necessary to investigate the apparent weight and influence that such arguments as are now deployed might have had upon the participants in the negotiations.
300. The relationship between Mr Ball and Mr Smit and Mr Ball's state of mind would, in my judgment have been very different in October 1997 to that which was the case had a bidding agreement been concluded in about January 1996 with the Trust. Each co-founder would have been secure in the knowledge that each had a senior job secured with the development company and that their rights to equity and royalties were also secured. The knowledge that these rights had been reserved for them render it probable, though not certain, that the conflict between the co-founders as to control would have been diminished and Mr Ball's mounting anxiety as to his own rights and entitlement would simply not have been present. Issues as to control would, I am satisfied, still have arisen, but would have been more readily resolved given the fact that the future of each of the co-founders and their continuing role in the project had been secured. In the absence of hearing the evidence of Mr Smit, and with the inherent difficulty of judging a purely hypothetical question, some doubts must remain as to how the relationship would have evolved but on the extremely detailed and complete contemporaneous documentation I am satisfied on the balance of probabilities that the underlying situation would be as I have found had a bidding agreement been in place.
301. The Trustees would have approached the negotiations with some caution. There was very strong confidence in the project but of course no certainty as to the extent to which it would be successful. The Trustees would have made themselves fully aware of the Millennium Commission's attitude before entering into negotiations. They would therefore have known of the Millennium Commission's reluctance to allow equity and the strong reluctance on the part of the officers to allow any equity to co-founders. They would have known that the Chief Executive of the Millennium Commission had a more open view to the possibility of equity provided it was converted into debt. They would certainly have known that the Commissioners were enthusiastic about the project. They would also have known that the Millennium Commission required intellectual property rights which became vested in the recipient of the grant to remain vested in the recipient but that rewards for royalties to the co-founders, again by way of conversion to debt were possible. Any reward could not be seen to be open-ended, could not result in leakage of public funds, and had to be fair and reasonable. What was certainly known to the Trustees was the existence of the enforceable bidding agreement giving the co-founders rights to a job, equity and royalties and that there was a strong desire on the part of everyone, including the Millennium Commission, that the project should succeed. In order to succeed however a Millennium Commission grant had to be obtained.
302. I shall deal with the issues set out above firstly under the heading of equity and royalties and then a job.

Equity and Royalties

303. Firstly, the Trustees would have sought to reduce the level of 12.5% equity being sought. They would have been aware of the fact that through Ove Arup in November 1995 the co-founders had sought a total of 32% equity between them, but that Ernst & Young in January 1997 appear to have been putting forward, on their pie chart, equity of about 10%, and Ernst & Young in August 1997 referred to a 'small shareholding' for the co-founders. The Trustees would not have known, because the circumstances which gave rise to it would not have occurred, that Mr Ball had sought 4% equity in his negotiations with Evelyn Thurlby on 16.10.97 and also, on advice, in the Chancery action. The fact that Mr Ball was prepared to advance this level (although this would have been unknown to the Trustees during the hypothetical negotiations) may indicate what he would have been prepared to accept. But without the bidding agreement, and without the support of his co-founder, Mr Ball's position was not as strong as it would have been in the hypothetical negotiations.
304. Mr Smit had told Mr Stroh on 12.8.96 (P149) that the Commission had told him that there should be no 'rape' of the Commission's investment 'otherwise one could do more or less what one wanted. He said that the Commissioners had confirmed that they would accept 25% return on investment and that equity participation by external bodies would be in order.' Such a view demonstrates what Mr Smit thought he might be able to persuade the Commission and it is clear from the note of the meeting of 7.4.97 (S122), that at that stage Mr Smit preferred founder shares as a solution rather than royalties, though each co-founder's view as to what he wanted varied. Nevertheless taking into account all the evidence I consider it unlikely that the Trust would have simply accepted, or that the Commission would, an equity stake as high as 12.5%. The Trustees would in my judgment have had in mind that a stake of about half to three quarters of that percentage would have been more appropriate.
305. The Trustees would certainly have been concerned by the absence of profits sufficient to make payments to the co-founders. They would not have been content to make payments solely out of cash flow as Mr King would have submitted. They would have been concerned by the fact that Mr King acknowledged, as he did before me in evidence, that a payment out of £300,000 per year would wipe out the projected profit on the basis of Ernst & Young's estimation though not on Mr King's and Mr Mainz's estimated profit. It is probable therefore that the Trustees would have insisted that both equity and royalties were converted into debt and that that debt should not be repaid for some 10 years to allow the project time to make profits. It follows that only the scenarios which allow for conversion to debt and repayable at the end of 10 years are viable and can therefore be considered as reasonable outcomes.
306. The Trustees would have taken into account Mr Mainz's point on capex but not in the manner he puts forward. It is correct that the intention to pay for the third and fourth biomes from cash flow was expressed on various different occasions in the documents. Mr King gave evidence before me that, had he been advising Mr Ball in 1997, he would have viewed those capital expenditure amounts as likely to be provided by way of grant or donation. It is reasonable to assume that the Trustees would have taken account of this view. There was, in fact, a later application made to the ERDF for funding which could have been used for the fourth biome, but this was rejected because Eden had not delivered a part of its first phase development programme, namely an education centre. Mr Jones told me that until the question of transport had been sorted Eden might have to wait for the fourth biome but there was an application for funding. (Day 5 108, 109). Bearing in mind the possibility of further public funding in the future, the Trustees would have made some allowance for Mr Mainz's point about capital expenditure but not such as would have seriously diminished any potential royalty payment.
307. As to discount rate I do not consider that the Trustees would have regarded the Eden Project as being fraught with risk. Even if it was correct that the Ernst & Young discount factor of 9% did not include a discount for both risk and accelerated receipt, I consider it likely that they would have found Mr Mainz's figure of 20% as excessively cautious. Mr King's discount factor of 9% or one very close to it would have in my judgment been borne in mind by them.
308. The minority interest point, still made by the Defendants but virtually conceded by Mr Mainz in cross-examination, is of no value. Mr King's opinion, expressed in his supplementary report, that there would have been a method for valuing the minority shareholding prescribed in either the articles of association or a shareholders agreement in the manner he suggests, would have persuaded the Trustees that this was so. Furthermore the Trustees would have borne in mind that Mr Ball was in the project for the long term and not likely to seek to find a market for his shares. A valuation of a theoretical sale of a minority interest was inappropriate.
309. I consider that the Trustees would have found, as I did, that Mr King's views on royalty rates were persuasive. He is well aware of all the potential comparators as set out in his report and although the Disney comparator was not ideal it was of some help in determining the difficult question of what a royalty would be in relation to a start up project such as the Eden Project. Mr King had discounted the 10% permitted under Disney (one of his clients) to 5% for the Eden Project but expressed the view that 8% might well have been justifiable. Even though Destination Eden was free to the Trust I consider that the Trustees would have been persuaded by Mr King's view that 5% was a reasonable assessment. I see no basis for Mr Mainz's figure of 0.5%, save that he appears to have asked what a proper figure to be taken out of the project is and then ascertain what that percentage is. The fact that in October 1997, when he had no negotiating position, Mr Ball may have claimed, apart from Destination Eden, 0.5% could not have been known to the Trustees in the putative negotiation. Nor indeed would it have been likely to have happened had a proper bidding agreement been in place.
310. The Trustees would have been concerned about an interest rate (or coupon rate) as high as 15%.
311. On taking these various facts and arguments into account and in reaching their conclusion as to what was fair and reasonable in the circumstances and likely to satisfy the Millennium Commission, I consider that the Trustees would have been significantly influenced by Mr Ian Hay Davison. If his view as the financial Trustee was that the maximum lump sum to buy out both equity and royalties was £1.5M I think it unlikely that they would have exceeded this. It may be however that the arguments for the £2M figure put forward by Mr King particularly on royalties, would have been of some influence as the £2M figure represented what Mr King thought was likely to have been agreed rather than figures which he would have put forward in argument. The Trustees however in my judgment would have regarded £1.5M as about the maximum buy out figure before the calculation of interest.

Employment

312. I do not consider that the Trustees enthusiasm for the project, nor their belief in its likely success, nor their strong desire to reward the co-founders would have prevented them from exercising their duties as Trustees properly and responsibly. They would therefore have been cautious. It follows that what they had determined as fair and reasonable would have been a powerful influence on the Millennium Commission's views. The figures which I set out below are those which represent the conclusion of the negotiation between the Trustees and the co-founders and after any renegotiation had taken place with the Millennium Commission.
313. I turn now to the question of employment. I am satisfied that if there had been a bidding agreement in place providing that Mr Ball was to be employed by the project that agreement would have been honoured. Evelyn Thurlby confirmed this in her evidence (Day 11 80). If he already had an executive position in Eden Project Limited when Evelyn Thurlby arrived, with a contract, she would have determined with the Trustees what value he was giving against what compensation might have to be paid to him to terminate that agreement if it was thought that it had to be terminated. (Day 11 76).
314. When Mr Ball requested the role of corporate affairs director after Evelyn Thurlby had commenced as Chief Executive Officer on 1.10.97 neither the Trustees nor Evelyn Thurlby thought that was an appropriate role for him at that time. (Day 11 76). At that stage however there was already conflict and disagreement, with Mr Ball anxiously seeking to protect his own position. Miss Thurlby said that she worked very closely with Tim Smit and was told that Mr Ball was 'being manoeuvred out of the project'. (Day 11 93).
315. This is to be contrasted with the time when a bidding agreement would have been put in place, when Sir Alcon Copisarow described Mr Smit and Mr Ball as 'both necessary neither sufficient'. (2.2.96 N161). Mr Ian Hay Davison said in evidence that he considered the positions of the founders should have been properly reserved as that of Mr Albery was at Sadler's Wells. It would have been perceived necessary at that time to ensure that the co-founders' services could be maintained for 5 years. Mr Ball's contribution with his excellent connections in the country as a whole and with other bodies and with bodies in Cornwall made his continued involvement important. (Day 5 53, 63).
316. Mr Ian Hay Davison confirmed that if a person was not thought to be critical to the success or continuing success of the project then he wouldn't be employed. (Day 5 53, 54). Before relations soured, Mr Ball's employment was thought to be necessary for the success of the project. If the time had come when his services were no longer required he would have been entitled to compensation.
317. I am satisfied on the evidence that a bidding agreement in January 1996 would have reserved employment for Mr Ball with the project for 5 years at a salary of about £60,000 per year. This is the figure at which Mr Smit was engaged for a three-day week. It is therefore appropriate for Mr Ball. I am satisfied that that agreement would have been honoured.
318. The outcomes which would have been reasonably attainable in negotiation in the autumn of 1997 leading to a fair and reasonable result acceptable to both the Trust and the Millennium Commission are in my judgment as follows:-

i. Employment by Eden Project Limited under a service agreement at £60,000 per annum for 5 years. I am entirely satisfied on the evidence that in January 1996 when Mr Ball was regarded as necessary for the project a service agreement would have been offered to him in the bidding agreement on such terms. It is therefore a constant feature in the scenarios which I consider to be reasonably attainable. Together with simple interest this produces a sum of £367,784.

ii. Buy out of equity and royalties at £1M for both, repayable at the end of 10 years at 10% compound interest, plus the salary of £60,000 per annum. This is scenario 2 in the Claimant's quantum schedule and is made up as follows:-

Buy out £2,185,394

Salary £367,784

Agreed credit (£280,684)

£2,272,494

I assess that the Claimant would have had a 50% chance of obtaining this outcome in the negotiations.

iii. Buy out at £1.5M for both equity and royalties, repayable at the end of 10 years at 10% compound interest plus salary of £60,000 per annum. This is scenario 4 in the Claimant's figures and is made up as follows:-

Buy out £3,278,091

Salary £367,784

Agreed credit (£280,684)

£3,365,191

I assess that the Claimant had a 20% chance of achieving this scenario.

319. I do not consider that any of the other scenarios were reasonably attainable outcomes. The buy out figure would have been at the lower end in view of the arguments rehearsed above and the Trustees' need for caution. None of those involving any payout until the end of 10 years, save in respect of employment, would have been regarded as justified. As the Claimant would not be receiving any money during the 10-year period the interest should be compound and 10% is the appropriate rate. I have noted the challenge to the figure of 6.75% for accelerated receipt, but accept that Mr King's research of the matter is correct.
320. The possibility of failure should, as Mr Livesey submits, be built into the calculations. Whilst I have found that there was a real and substantial chance of success, at least, on each of the issues of causation, there remains the possibility of failure in my judgment on three of the issues. It is possible that the Claimant may not have persuaded Mr Smit to join with him to the conclusion of successful negotiations in autumn 1997. I am satisfied that Mr Smit would have joined the Claimant in a bidding agreement acceptable to the Trustees, and with that in place the likelihood of him joining Mr Ball in successful negotiations in autumn 1997 are in my judgment high. The risk of discord and disagreement resulting in failure is small and I would assess it at 10%. The other areas of potential failure are a refusal by the Millennium Commission to accept the bidding agreement in 1996 or the terms which, I am satisfied, would have been agreed by the Trustees in 1997 as set out above. There is in my judgment a higher risk of failure on Millennium Commission approvals which I would assess at 20%. The overall risk of failure I would therefore assess at 30%.
321. Contributory negligence was pleaded but not argued before me. No deduction falls to be made.
322. The calculation of the Claimant's main claims as at 31^st December 2003 is therefore as follows:-

Scenario	Amount	%	Award	Award
£1M for equity and royalties repayable at the end of 10 years @ 10% compound interest + salary of £60,000 p.a.	Buy out Salary Agreed credit	£2,185,394 £367,784 (£280,684) £2,272,494	50	£1,136,247
£1.5M for both equity and royalties repayable at the end of 10 years @ 10% compound interest + salary of £60,000 p.a.	Buy out Salary Agreed credit	£3,278,091 £367,784 (£280,684) £3,365,191	20	£673,038
Failure to establish causation	Risk of failure of T Smit to join in successful negotiations in autumn 1997 and refusal of Millennium Commission to approve the bidding agreement or successful negotiations with Trustees	30	Nil	Nil
Total			100	£1,809,285

323. The award to the Claimant on his main claim is therefore £1,809,285.

The Equitable Claims.

Breach of fiduciary duty and conflict.

324. The Claimant contends that the Defendants, having acted on behalf of the co-founders and whilst continuing to do so, acted on behalf of the Trust and in so doing were in conflict of interest and breach of fiduciary duty. Firstly, it is alleged that the Defendants acted against the interests of the co-founders by advising the Trust and representing them in negotiations in respect of the Claimant's claims on the Trustees after 15 January 1996, and secondly by acting for the Trustees and Eden Project Limited in the Chancery litigation brought by the Claimant.
325. The Claimant seeks an order for an account and enquiry in respect of the alleged breach from 15.1.96 onwards, and profit costs of £66,942.44p in respect of the Defendants appearing on behalf of the Trust and Eden Project Limited in the Chancery action.
326. Conflict of interest is defined in the Guide to Professional Conduct of Solicitors 1993. Chapter 15.01 states that a solicitor should not accept instructions to act for two or more clients where there is a conflict or a significant risk of conflict between the interests of those clients. 15.02 states that a solicitor who has acquired relevant knowledge concerning a former client during the course of acting for that client, must not accept instructions to act against the client. Nor under 15.03 can a solicitor continue to act for two or more clients where a conflict of interest arises between them.
327. The Defendants submit that as there was no retainer no conflict of interest arises and in any event it was made perfectly clear to Mr Ball during 1996 that Druces & Attlee could not act for him personally, in particular during the telephone calls of 17.6.96 (O221) and 23.7.96 (P105). There is in any event no loss as the alleged failure to instruct Mr Ball to seek independent advice because of the conflict would not have been followed.
328. As to breach of fiduciary duty the Claimant must first show that he retained Druces & Attlee to protect his personal interests, secondly that in the course of that retainer Druces & Attlee had acquired confidential information, thirdly that in the course of acting for the Trust against their former clients, the co-founders, Druces & Attlee used that confidential information against their clients' or former clients' interests. Mr Livesey submits that even if the Defendants were retained, no confidential information was acquired by them.
329. Mr Livesey reminds me that there is no breach of fiduciary duty in a solicitor merely changing sides and advising the other side against the interests of a former client, save for the issue of breach of confidential information. Bolkiah v KPMG [1999] 2AC 222 at 235 C-D.
330. The case of Bolkiah concerns an application to restrain a solicitor from acting for a client rather than an action for breach of fiduciary duty against a solicitor seeking either damages or an account. Nevertheless the basic principles are the same. It is helpful to quote from Lord Millett's judgment at 235:-

"Where the court's intervention is sought by a former client, however, the position is entirely different. The court's jurisdiction cannot be based on any conflict of interests, real or perceived, for there is none. The fiduciary relationship which subsists between solicitor and client comes to an end with the termination of the retainer. Thereafter the solicitor has no obligation to defend and advance the interests of his former client. The only duty to the former client which survives the termination of the client relationship is a continuing duty to preserve the confidentiality of information imparted during its subsistence.

Accordingly, it is incumbent on a plaintiff who seeks to restrain his former solicitor from acting in a matter for another client to establish (i) that the solicitor is in possession of information which is confidential to him and to the disclosure of which he has not consented, and (ii) that the information is or maybe relevant to the new matter in which the interests of the other client is or may be adverse to his own. Although the burden of proof is on the plaintiff, it is not a heavy one. The former may readily be inferred; the latter will often be obvious. I do not think that it is necessary to introduce any presumptions rebuttable or otherwise in relation to these two matters."

331. The difference between the case where an injunction is being sought and where final relief is being sought is that in the former it is sufficient if there is a risk of confidential information being disclosed or misused whereas in the latter the existence of such information must be established, as must the fact that it has been disclosed or misused.
332. I have found that the Defendants were retained by the Claimant to advise him on his personal position prior to 15.1.96. I am equally satisfied that they continued to advise him and Mr Smit in their personal capacities after the Trust had been formed on 15.1.96. When Mr Stroh informed Mr Ball that Druces & Attlee could put together a package on behalf of the project and Mr Ball and Mr Smit could take separate advice on it at the relevant time he said that this was 'further down the line'. There was, in other words, no need for independent advice to be taken by Mr Ball at that stage. When Mr Ball sent his back of the envelope summary to Mr Stroh on 22.7.96 he was clearly requesting assistance on his own personal position. When Mr Stroh spoke to him on 24.7.96 he informed him that they could only licence the trademark not the concept of the project. He was clearly there advising Mr Ball as to the weaknesses, as he perceived it, of Mr Ball's case for obtaining a personal reward from the project.
333. It is important to note at this stage that Druces & Attlee's position was uncertain. They had not been formally appointed as solicitors to the Trustees and Clifford Chance had been invited to participate. Mr Stroh had indicated on 23.7.96 that Druces & Attlee would be delighted to advise on the overall structure but the following month on 29.8.96 they were reluctant to advise because of the position of Clifford Chance.
334. On 26.7.96 Mr Ball talked to Mr Stroh about Timco for some 20 minutes and Mr Stroh said that he would give it thought. I am satisfied that during this conversation Mr Ball did ask whether he was speaking privately to his lawyer and Mr Stroh replied positively. Once again Mr Stroh gave the impression to Mr Ball that he was still acting for him. This could only have been confirmed when he was sent Mr Ball's back of envelope structure and on 22.8.96 (P171) was sufficiently sympathetic to suggest a paragraph be inserted in the description of the structure in order to protect the co-founders interests in respect of rewards via licence/royalty. This is advice to Mr Ball as to how to keep open his options for obtaining a financial reward from the project in negotiation with the Trustees, and to be approved by the Millennium Commission..
335. During this period there are two important documents relevant to the issue of confidentiality. On 12.8.96 (P149) Mr Smit told Mr Stroh that he thought that Mr Ball's participation from now on would be bound to be of a more limited nature but the project couldn't however go on without Mr Smit. This is, on its face, confidential information from a co-founder which would indicate to Mr Stroh a potential weakness in Mr Ball's position for negotiating with the Trust. On 22.8.96 (P174) Mr Ball himself said that he did not see how he could contribute. This was confidential information given to Mr Stroh which again would demonstrate a potential weakness in Mr Ball's negotiating position in so far as the Trust was concerned.
336. By September 1996 the question of conflict of interest was arising (P208). Sir Alcon Copisarow raised the question of conflict of interest for the Trustees in putting forward the condition which might be unacceptable to the Millennium Commission. In the same aide memoire of 3.9.96 Mr Stroh is recorded as expressing anxiety about the role of Clifford Chance.
337. On 3.10.96 Clifford Chance were no longer to be instructed and Druces & Attlee were to take a more prominent role. On 22.1.97 Mr Stroh was concerned about conflict of interest and at the Trustees meeting on 27.1.97 (Q106) said that he wanted Druces & Attlee's position clarified. When told by Sir Alcon Copisarow that they should act for the Trust and advise on what could properly be delegated to Eden Project Limited Druces & Attlee expressed the wish to become lawyers to Eden Project Limited rather than the Trust. They then stated on 10.2.97 that they could continue to act for the Trust as there was no conflict yet. The Trustees formally resolved to appoint Druces & Attlee as lawyers to the Trust on 23.4.97.
338. Up to that time Druces & Attlee were concerned about their position. They were clearly conscious of their own interests and prepared to act for either the trust or Eden Project Limited. The impression is given that, as with the co-founders and the Trust, they were keeping their options open during a period of uncertainty.
339. By October 1997 however they were clearly acting on behalf of the Trust against Mr Ball when he submitted his claim. They drafted the letter which Miss Thurlby sent on behalf of the Eden Project making the offer of settlement of his claim for historic costs. They told Sir Alcon Copisarow that the Trustees already had the goodwill and brand name and on 24.10.97 advised that intellectual property rights didn't exist any more and that any that did were already passed to the Trust. Such advice was clearly against the interests of their former clients, the co-founders.
340. Mr Stroh's evidence on the issue of conflict and breach of fiduciary duty was somewhat confusing. Although it was contended by him that the Defendants were retained by the Trust from 15.1.96 his evidence was that Mr Ball and Mr Smit were only informed in relation to a possible conflict on 17.6.96 in the telephone conversation to Mr Ball. Yet as indicated above he had further discussions with Mr Ball about his aspirations and back of envelope calculation and also spoke to Mr Smit on 12.8.96 (P149) who informed him as to the stance which the Commission were taking about return on investment and equity participation. Mr Stroh said in evidence that when giving that advice he was responding to third party requests, the third party being Mr Smit. (Day 9 92) The consequence, as was put to Mr Stroh in cross-examination, is that in 1995 Mr Smit was asking him for advice to which he responded and then in 1996 he becomes a third party.
341. I am satisfied on the evidence that there was a clear conflict of interest between Mr Smit and Mr Ball on the one hand and the Trust on the other.
342. Mr Stroh's evidence as to breach of fiduciary duty was based upon the premise that there was no barrier of secrecy between Mr Ball and Mr Smit and the Trustees. That transparency of information meant that no information was confidential because it was all available to the Trustees as it was to Mr Stroh. He could not however say that this was the case, merely that it was 'entirely possible that everything that was said by them was also said to the Trustees.' (Day 9 94)
343. Mr Stroh also asserted in his evidence that there was no relevant confidential information which he had acquired from his former clients. Mr Livesey submitted that the onus remains upon a Claimant who must therefore demonstrate what information there is which is confidential, but no particulars of such information had ever been delivered in spite of requests by the Defendants. This is not a situation where inferences can be drawn, as that only applies where interlocutory injunctions are being sought rather than final relief.
344. I do not accept that submission. From 31.7.95 and thereafter Mr Ball spoke on numerous occasions, both before and after 15.1.96 to Mr Stroh. He spoke in his capacity as a client who had retained Druces & Attlee's services. The advice that he received before 15.1.96 continued thereafter. The inference that during the course of such discussions Mr Stroh had learned what Mr Ball thought were his strengths and weaknesses seems irresistible but I have set out two instances where this is explicitly so on the documents. The conversation with Mr Smit on 12.8.96 and with Mr Ball himself on 22.8.96 plainly involved discussions about Mr Ball's participation on the project and his concerns about that. Any information which indicated where Mr Ball perceived his weaknesses to be and how, as an individual, that might affect his negotiating stance and what he might be prepared to accept was plainly confidential information.
345. When therefore Druces & Attlee advised the Trust on Mr Ball's claim and drafted Evelyn Thurlby's response to his claim letter, they were acting against the interests of a former client and doing so whilst possessing confidential information.
346. It follows that when they gathered the documentation relating to Mr Ball for the purpose of defending the Chancery action brought by him on behalf of the Trust and Eden Project Limited they were also acting against the interests of a former client and using confidential information when doing so. I see no reason why the inference should not be drawn that the solicitor has confidential information in his possession in circumstances such as these but in any event the documents reveal the existence of such information in the form of Mr Ball's stated apprehension about the weakness of his position in relation to his future participation in the project.
347. I do not accept that all the information which Druces & Attlee had from their private discussions with Mr Ball and Mr Smit must have been within the knowledge of the Trustees. There was no evidence upon this issue and Mr Ball's evidence at Day 7 98, 99 does not confirm this.
348. I find that:-

i. Mr Smit and Mr Ball were either former clients or clients of Druces & Attlee in relation to their personal interests both before 15.1.96 and after.

ii. There was a clear conflict of interest between the Trust and the co-founders. The Trust was advised by Druces & Attlee that the claim being made by Mr Smit and Mr Ball for personal reward from the project was in some respects weak and in others impermissible.

iii. In the course of advising the Trust, Druces & Attlee were acting against the interests of the co-founders, their former clients.

iv. In giving such advice and in acting for the Trust in the negotiations by Mr Ball for his claim, Druces & Attlee were in possession of confidential information relevant to Mr Ball's strength in negotiation and by continuing to act in such circumstances were in breach of fiduciary duty. (See Davies v Clough 8 Sim 262 (1837))

v. By acting on behalf of the Trust and or Eden Project Limited in the Chancery action brought against them by Mr Ball, Druces & Attlee were also in breach of fiduciary duty.

vi. In view of the conflict of interest found above Druces & Attlee should not have accepted instructions to act against their former client. As Mr Michael Kent QC submits there is no unfairness in this as had the Defendants given proper advice as to a bidding agreement which had been acted upon they could then quite properly have acted on behalf of the Trustees.

vii. No clear advice as to the immediate need to seek independent advice was given by the Defendants to Mr Ball.

349. I am satisfied in the circumstances that there was a breach of fiduciary duty both in relation to the negotiations and in relation to the Chancery action. The Defendants acted for clients, the Trust, they should not have continued to act for in the circumstances. In so far as the defence of the Trust and Eden Project Limited in the Chancery action is concerned the Defendants acted for the Trust or Eden Project Limited when they should not have done. In neither case however do I consider it appropriate to make an award of damages. An account, or damages in respect of breach of fiduciary duty are equitable remedies. The Claimant however has already been fully compensated for the loss he has suffered at the hands of the Defendants and cannot establish any further loss attributable to the Defendants acting for the Trust and Eden Project Limited. I make no order for an account or damages in the equitable claims.

Conclusions.

350. 1. I find for the Claimant in the main action and award him £1,809,285 damages.
2. I also find for the Claimant in the equitable claims but make no order as to an account, or award of damages for breach of fiduciary duties as the Claimant has already been fully compensated in the main action.