Case No: HC10C03968
Neutral Citation Number: [2012] EWHC 3099 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 07/11/2012

Before :

MRS JUSTICE ASPLIN
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Between :

	ARNE VIGELAND	Claimant	
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	(1)	ENNISMORE FUND MANAGEMENT LIMITED
(2)	VISTRA CORPORATE SERVICES LIMITED	Defendants	

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Adam Solomon and Marc Delehanty (instructed by DWFM Beckman) for the Claimant
Mathew Hardwick   (instructed by Simmons and Simmons LLP) for the First Defendant
Daniel Hochberg QC (instructed by Travers Smith) for the Second Defendant

Hearing dates: 9 – 12, 15 – 17 October 2012
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Judgment
Mrs Justice Asplin : 
1.	This is a claim by Mr Arne Vigeland against the First Defendant, his former employer Ennismore Fund Management Limited (EFM). His claims relate to bonus payments for the years 2002, 2003 and 2004 made to him by EFM whilst he was a fund manager. Mr Vigeland’s claims against EFM are in breach of contract or alternatively, in misrepresentation.
2.	Mr Vigeland also brings a claim in breach of trust against Vistra Corporate Services Limited, (Vistra) the Second Defendant. Vistra was formerly known as Charwell Trustees Limited. It is the sole trustee of an employee benefit trust into which part of Mr Vigeland’s bonuses were paid (the EBT). He contends that Vistra is in breach of clause 4(2) of the Deed of Settlement by which the EBT was established and is in breach of fiduciary duty in failing to take into consideration all relevant and no irrelevant factors when determining whether to exercise a discretion to distribute in his favour. He seeks a direction that a distribution be made to him or alternatively a declaration setting out the relevant and irrelevant factors to be taken into account when exercising the discretion. 
3.	Mr Vigeland no longer proceeds with a claim for a declaration that he is entitled under the terms of the Deed of Settlement by which the EBT was established and the Bonus Agreement which he says was reached with EFM to have the investments representing his bonus payments paid into the EBT, transferred to him forthwith or require that they be sold and the proceeds of sale transferred to him forthwith. A claim for equitable compensation is also no longer pursued. 
4.	Mr Vigeland claims that in about June 2002 he agreed a bonus related remuneration package with Mr Geoffrey Oldfield on behalf of EFM orally, (the Bonus Agreement). Under the Bonus Agreement Mr Vigeland contends that he was entitled to an annual bonus calculated as a percentage of the absolute return less benchmark costs on the investments under his management in each calendar year, (the Annual Performance Bonus). He says that it was agreed that 50% of the Annual Performance Bonus was a cash element to which he was absolutely and unconditionally entitled and which was payable within two months of the calendar year end of each year. He says that it was agreed that the remaining 50% of the Annual Performance Bonus would be paid into the EBT and would be invested in one of the investment funds operated by EFM. 
5.	This EBT element of the Annual Performance Bonus was subject to a three year clawback mechanism. This enabled EFM to reclaim some or all of the EBT element of the Annual Performance Bonus if the investments made by Mr Vigeland produced a negative investment return which resulted in a reduction in the performance fee earned by EFM in any of the three calendar years subsequent to the calendar year to which the EBT contribution related. It is Mr Vigeland’s case that upon the expiry of the three year period and assuming that no legitimate clawback in respect of negative investment returns applied, he was entitled absolutely and unconditionally to the EBT bonus element of the Annual Performance Bonus and he asserts that Mr Oldfield told him this. 
6.	He also contends that he was told that if he chose to invest the cash element of his bonus in the EBT, it too would be available to him were he to call for it, or rather the investments representing it, at any time.
7.	Mr Vigeland claims therefore, that he is entitled to the value of the investments representing a sum of £40,000 which he says was the EBT element of his bonus for 2002 which he was told had been invested in the EBT. In the same way he claims in respect of the EBT element of his bonus for 2003 which was £300,000 and is now free of any clawback. In respect of 2004 he claims both the cash element of his bonus being originally £393,007 which he reinvested in the EBT and the EBT element the value of which was also originally £393,007.  
8.	Mr Vigeland’s primary case is that these matters were orally agreed. In the alternative he contends that terms should be implied into the Bonus Agreement. They are that EFM would deposit the EBT contribution or deferred element of the bonus in a structure which would confer on Mr Vigeland absolute and unconditional rights to the EBT element after the expiry of the clawback period, insofar as clawback was not applied, that in the event that Mr Vigeland chose to invest the cash element of his bonus in the same structure, the structure would entitle to him absolute and unconditional rights to the investments purchased with the cash sum, that EFM would provide him with reasonable assistance in asserting his rights to the investments representing the contributions to the structure and would not impede his claims to them. 
9.	In the further alternative, Mr Vigeland claims that Mr Blair on behalf of EFM misrepresented to him that he would be entitled and have access absolutely and unconditionally to the investments representing the EBT contributions to the extent that they were not subject to clawback. It is pleaded that in reliance upon the representations, Mr Vigeland agreed to enter the Bonus Agreement on the terms that the EBT contributions were paid into the EBT and did not seek to transfer investments from the EBT immediately upon the expiry of the clawback period and also elected to invest certain cash elements of his bonus in the EBT. 
10.	In summary EFM contends that there was no Bonus Agreement of the kind alleged by Mr Vigeland and accordingly, there was no entitlement to bonuses, per se. EFM contends however that as stated in his offer of employment, Mr Vigeland’s bonuses were discretionary. It accepts that in accordance with the decision of the Court of Appeal in Horkulak v Cantor Fitzgerald International [2004] IRLR 942 the discretion provided for in Mr Vigeland’s contract of employment was subject to an implied term that it be exercised genuinely and rationally.
11.	It is also accepted that bonuses were paid in the years 2002, 2003 and 2004 and that each annual award consisted of a cash and an EBT element. The parties are agreed that the cash element of the 2002 bonus being £15,241.59 was paid to Mr Vigeland and there is no claim in that regard. It is EFM’s position that the cash elements for each of 2003 and 2004 were also paid and nothing remains outstanding in relation to them either. It contends that Mr Vigeland has no “entitlement” to the three EBT contributions, distributions from the EBT being at the absolute discretion of the trustee, Vistra, and that in any event, the entirety of the 2004 EBT contribution and part of the 2003 contribution were clawed back against 2007 investment losses as agreed between Mr Blair on behalf of EFM and Mr Vigeland in 2008. The alleged agreement in 2008 took place during a telephone conversation on 30 January that year and is disputed. 
12.	With regard to the 2002 EBT contribution, EFM contends that it was £34,080.17 and not £40,000 at all and, that it was not physically contributed to the EBT because there were sufficient assets in the EBT for a notional allocation of shares to Mr Vigeland.  Nevertheless it is EFM’s position that any distribution in relation to the 2002 EBT contribution is at the absolute discretion of Vistra as trustee of the EBT. 
13.	Mr Hardwick for EFM says that the claim in relation to implied terms is misconceived because there was no Bonus Agreement in which to imply them. In any event, he says that the alleged implied terms are inconsistent with the express terms and cannot co-exist, are incapable of clear expression, and are neither obvious nor necessary to give business efficacy. 
14.	With regard to the alternative cause of action in misrepresentation, Mr Hardwick for EFM says that there are fundamental problems. He says that there is no statement of fact as to the absolute nature of the alleged unconditional entitlement. He says that the document upon which Mr Vigeland relies is merely to the effect that certain shares will cease to be under clawback on certain dates. He says that that is a statement about the cessation of clawback and not a statement that Mr Vigeland would gain an absolute right to specific investments in a discretionary EBT.  He also points out that the statement was made in the context of a contribution to a discretionary trust and that in those circumstances, no reasonable representee in the position and with the characteristics of Mr Vigeland could have understood it to mean that an absolute and unconditional right to the shares was to spring into being. 
15.	He also says that there are serious problems with reliance and causation. The representations pleaded were allegedly made at meetings in the period from 2003 to 2008 and the email representation relied upon was dated 15 December 2005. But Mr Vigeland contends that in reliance on those representations he entered into the Bonus Agreement on terms that the EBT contributions would be paid into the trust. The Bonus Agreement, however was entered into in June 2002.  
16.	Vistra’s position is quite straightforward. It maintains that the EBT is a valid, properly established and constituted discretionary trust which it administers in accordance with Jersey law and its obligations as a trustee. It holds the trust fund on trust for the beneficiaries in accordance with the provisions of the Deed of Settlement of the EBT. Its powers are wide and in addition to providing sums equivalent to remuneration or bonuses, also include for example, power to make provision for maintenance, education or advancement of any beneficiary and death benefits.  
17.	Under a discretionary trust no beneficiary has a right to all or any part of the trust fund and since the discretion is vested in the trustee it is the trustee which decides whether or not to make a beneficial distribution and if so, the extent of that distribution and the assets to which it relates. Such a decision is made by a trustee in a fiduciary capacity and it is obliged to act in good faith only in the interests of the beneficiaries. It must take account of relevant and disregard irrelevant factors. It follows that a beneficiary cannot compel a trustee to make a particular distribution to him. 
18.	Vistra goes on to point out that it was not a party to and had no knowledge of the alleged Bonus Agreement and did not authorise EFM to act as its agent nor did it hold out EFM as authorised to act on its behalf. Such a case is not advanced by Mr Vigeland. Accordingly, Vistra says that it cannot be bound by any representation which may have been made about the way in which it would or might exercise its powers. Furthermore, there is no evidence of any sums transferred from EFM to the trust having been earmarked for any particular employee or former employee. Contributions were received in un-segregated form and there was no evidence of segregation or earmarking of any kind. 
19.	Vistra says therefore, it has acted properly at all times, has taken account of clause 4 (2) of the Deed of Settlement and having taken account of relevant factors and no irrelevant ones has properly decided to postpone its decision with regard to a distribution to Mr Vigeland until after the outcome of the appeal in the Cayman proceedings (to which I shall refer) is known. 
Witnesses 
20.	Mr Vigeland gave evidence by way of two witness statements and was cross examined extensively. He was quite clearly a sophisticated and well educated person with a detailed knowledge of financial matters and fluent in English. During cross examination there was only one occasion when he did not immediately understand the phraseology used. I found him to be an extremely evasive witness who was unwilling to make any concessions at all and often sought to dispute matters without any cause. He omitted reference to those parts of the documentary evidence which did not suit him and I found his explanations of those matters at times, to be incredible. Overall, therefore, I did not find him to be a reliable witness and in general, unless his evidence is consistent with contemporaneous documentation, I prefer the oral evidence of others where it differs from his. 
21.	Mr Schoningh was a founding member of EFM together with Mr  Oldfield and owned fifty per cent of the business at the relevant time in 2002- 2004. He was also responsible for internal records relating to bonuses and the operation of clawback. He sold his interests to Mr Oldfield and has not been involved with EFM since 2006.  His evidence in cross examination was quite vague and he appeared to recall little of the detail of the relevant period. However to the extent of his recollection I found Mr Schoningh to be a reliable witness and I give more weight to his evidence because he is no longer involved with EFM personally and ceased to be involved before the major dispute arose between EFM, Fenris and Mr Vigeland.    
22.	Mr Oldfield was Mr Schoningh’s co-owner of EFM. He became the sole owner when he bought Mr Schoningh out in 2006. At present he is the owner of 90% of the shares in EFM. He is the present Chief Executive Officer and a director. Mr Blair is the Chief Operating Officer of EFM and a director. He has been employed as such since May 2004. He is responsible for EFM’s internal records in relation to bonuses and the operation of clawback and according to Mr Oldfield took over the responsibilities in this regard from Mr Schoningh. 
23.	Both Mr Blair and Mr Oldfield adopted a very argumentative and belligerent stance in cross examination. This was true in particular of Mr Oldfield who sought to make lengthy declarations rather than answer questions put to him. At times I found him evasive, in particular, as to his attitude towards Vistra, the trustee of the EBT. Nevertheless, in general, I found Mr Oldfield to be a reliable witness. Mr Blair was a frank and forthright witness. But for his evidence in relation to the date on which his schedule of January 2008 was last modified, to which I refer at paragraph 151, which was clearly wrong, I found him to be reliable.   
24.	Ms Breusch is a director of Vistra Fund Services Limited and its affiliate, Vistra. She gave careful, precise and detailed evidence as to the workings of the EBT. She was unable to explain how a loan made to Mr Oldfield for almost £3 million had been advanced interest free and was willing to accept that it had been a mistake. She also proffered the evidence that most clients with EBTs administered by Vistra consider themselves able to instruct the trustee, something which rang true. I found her therefore, to be a truthful and reliable witness.  
25.	I should add that I have come to my own conclusions with regard to the credibility and reliability of the oral evidence based upon the evidence given and the rigorous cross examination to which the witnesses were subjected. I have not relied in this regard upon the conclusions reached by the judge in the Cayman proceedings as to the credibility and reliability of the evidence of Mr Oldfield, Mr Blair and Mr Vigeland given in those proceedings.
Background to EFM and the EBT
26.	EFM was formed by Mr Oldfield and Mr Schoningh in 1998. It provides investment management services to investment funds on the basis of advice and decisions of individual portfolio or fund managers. In 2006 Mr Oldfield purchased Mr Schoningh’s shares in the company and as I have already mentioned at present he owns 90% of the issued shareholding. 
27.	At the material time, EFM managed two funds being the Ennismore European Smaller Companies Fund (the ESC) and the Ennismore European Smaller Companies Hedge Fund (the EHF). In November 2006 a new fund, the Ennismore Vigeland Fund was incorporated in the Cayman Islands and was managed by EFM and provided with investment advice by Mr Vigeland through an offshore company Fenris Consulting Limited, (Fenris) which acted as the sole portfolio manager. 
28.	EFM having been formed in 1998, the EBT was established by a Deed of Settlement dated 21 December 1999 and made between EFM and Charwell Trustees Limited (the Deed of Settlement) which as I have already mentioned, has since changed its name to Vistra. As Mr Schoningh explained in his witness statement, he and Mr Oldfield on professional advice decided to set up the EBT as a tax efficient way for contributions made by EFM to be received and invested and for the profits to be distributed for the benefit of EFM employees, their spouses and children. It was a fundamental part of the structure that the trustee of the EBT have absolute discretion.   This evidence is not disputed.
29.	For the purposes of the EBT “Employee” is defined in clause 1(b) of the Deed of Settlement as “a director or any person for the time being employed by the Company or a subsidiary or a former Subsidiary under a full or part time contract of service.”  “Beneficiary” is defined in clause 1(c) as “any Employee any former Employee any spouse of any Employee or former Employee any child or grandchild (including any adopted child) of an employee or former Employee and any person who is in the opinion of the Trustees a dependant of an Employee and the personal representatives of a deceased Employee in their capacity as personal representative.”
30.	Clause 2 provides that the trustees upon receipt of any cash contributions from the Company will invest the same in any property of whatever nature and wherever situate and whether producing income or not. In fact, the EBT was heavily albeit not entirely invested in the ESC and EHF.
31.	I will set out clauses 3 and 4(1), (2) and (3) in their entirety. 
“3(1) The Trustees shall subject to the provisions of sub-clause (2) of this clause hold the income of the Trust Fund upon trust to distribute the same to or for the benefit of the Beneficiaries or any one or more of them exclusive of the other or others in such shares and proportions as the Trustees shall think fit.
(2) Notwithstanding sub-clause (1) above the Trustees may accumulate and capitalise all or any part or parts of the income of the Trust Fund. 
4(1) The Trustees may at any time or times pay transfer or apply all or any part or parts of the capital of the Trust Fund to or for the benefit of the Beneficiaries or any one or more of them exclusive of the other or others in such shares or proportions upon such trusts and with such powers and in such manner generally as the Trustees may in their absolute discretion think fit. Without limiting the scope of the above power the Trustees may in exercise of the power: 
(a)	appoint any capital upon or subject to discretionary trusts or powers exercisable by any person or persons whether or not such person or persons are Trustees hereof;
(b)	make provision for the maintenance education or advancement of any Beneficiary out of income or capital;
(c)	make provision for the accumulation of income.
Subject thereto the Trustees shall hold the Trust Fund on the Vesting Day upon trust for the Beneficiaries then in existence in such shares as the Trustees may determine and subject to and in default of any determination in equal shares absolutely. 
(2) In exercising the Trusts in sub-clause (1) of this clause the Trustees shall have regard principally to the contribution to the success of the Company . . . . made by the Employees.
(3) Subject to and in default of the foregoing provisions of this Settlement the Trustees shall hold the capital and income of the Trust Fund upon trust for the Beneficiaries in existence at the date hereof in equal shares absolutely.”

32.	As I have already maintained, the EBT is stated to be governed by the law of Jersey.  No point is taken on this and it is not suggested that the law of Jersey is different from that of England and Wales in any relevant material way. I should also mention that Vistra has submitted to the jurisdiction and has been represented before me.
33.	At the time the EBT was established, a letter of wishes signed by Mr Oldfield and Mr Schoningh on behalf of EFM was sent to the Trustees of the EBT. The relevant parts are as follows: 

“Memorandum of Wishes of the Directors relating to the Ennismore Fund Management Employee Benefit Trust 
We recognise that these, our wishes, are not binding on the trustees nor do we wish to fetter their discretion in any way but the following notes are intended to explain the aims which we had in mind in setting up the settlement. 
Overall Aims
To provide a trust fund for the benefit of all the present and future employees of the company and their dependants. 
Income and Distribution
We express the hope that:
THAT the trustees shall consider retaining and investing all income arising and for distribution of such to be made in consultation with the directors of the company to recognise the contribution individual employees have made towards the success of the company.
THAT the trustees shall consider distributing such sums of capital to employees as we may from time to time request.
THAT should the trustees wish to consult generally with someone close to the company with regard to any decisions affecting the beneficiaries the following directors should be approached: Gerhard Schoningh and Geoff Oldfield.”

34.	There was an email exchange in August 2000 not long after the EBT was established. The first email on 23 August 2000 makes reference to a conversation with Mr Oldfield in which Sandy Wood of WJB Chiltern, the parent of the Trustee explained the issues of de facto control over trust assets which would prejudice the CT, {by which it is assumed is meant Corporation Tax} position of EFM, and warned that the trust might contradict an award which he, Mr Oldfield might make to an employee. The email makes specific reference to the fact that the trustee might wish to award a lower sum. In the final email in the 23 August 2000 chain, Sandy Wood makes clear only the entirely correct procedures may be followed. 
“The company should make payments of the contribution to you, by means of a cheque or similar means, they should then make recommendations to you as to how to the contribution should be invested; you will consider their recommendations before investing the funds. I recognise there is inevitably a short delay whilst this process is put into effect but he will have to live with it. It would be better if some of the trust assets could be invested elsewhere than in Ennismore’s own funds, and if some could be retained in a bank account to demonstrate that the trustees can, if they wish exercise their discretion and make distributions from funds which are not tied up.” 

35.	In a letter of 24 August 2000, the Trustee set out its terms for the administration of the EBT. It included an obligation on the part of EFM to keep the EBT properly funded and details of the trust bank account to which contributions should be paid. 
36.	A letter of 17 October 2000 to the Inland Revenue from the Trustee stated that employees of EFM were aware of the trust and had been advised that benefits would be provided at the discretion of the trustees. The Inland Revenue responded on 29 January 2001 setting out the manner and occasions upon which the Trustee would be liable to tax, in the light of the discretion over income and power of accumulation set out in the Deed of Settlement. Of course, this is before Mr Vigeland was employed and it was accepted by Mr Oldfield that it was unlikely that Mr Vigeland had received a copy of the internal EFM letter explaining the workings of the EBT which was sent for example, to Mr Gurner who was a fund manager employed by EFM at the time although Mr Schoningh thought it more likely that it would have been. Nevertheless, in my judgment it is indicative of the nature and purpose of the EBT, as a tax efficient mechanism and the understanding which Mr Oldfield and Mr Schoningh had at the outset.

2001 – Mr Vigeland’s employment 
37.	In 2001 Mr Vigeland was employed by EFM as an investment analyst and from June 2002 until June 2004 he took on the role of a portfolio manager. Mr Vigeland received a written offer of employment from EFM dated 20 September 2001. It was signed by both Mr Oldfield and Mr Schoningh. The relevant parts of that letter are as follows: 
“We are pleased to offer you a position as an Analyst at a basic salary of £50,000 pa.  . . . 
You will be eligible for a discretionary bonus payable annually in February, starting 2003. If you perform excellently with your pre analytical work we would hope to pay you a one off interim bonus in the summer. As a Fund manager the level of your bonus depends on your investment return and can amount to a multiple of your salary if you achieve excellent results.  We will also make an annual contribution to a Self Invested Personal Pension Plan, which we will set up for you. We will make the maximum contribution of 17.5% of your earnings in each tax year at your current wage . . . . 
Could you please confirm your acceptance of this offer by returning a signed copy of this letter     . . . . .”
		(the Offer Letter) 

38.	Mr Vigeland duly signed the Offer Letter on 2 October 2001 under the heading “Offer Accepted” and this formed his contract of employment.  Mr Solomon on behalf of Mr Vigeland drew attention to the fact that the letter makes no reference whatever to the EBT or that any part of bonuses were in any way subject to a trust or were payable only at the discretion of trustees. 
39.	After he had commenced work in 2002, Mr Vigeland also received a copy of a memorandum produced in or about January 2002 by Mr Gurner at Mr Oldfield’s request and with his input which was headed “The Principles, Practise and Methodology of Performance Attribution” (the PPM) and related to the award of bonuses to fund managers of EFM. The parts to which I have been referred in particular are first the opening statement that the system should be “meritocratic and transparent with a deferred element which is subject to clawback.” Secondly, under the heading “Practise” it recorded inter alia, as follows:
“ . . . 
The principle of clawback will operate on any underperformance of the benchmark by a Fund manager, at a rate of 30% . . .. Clawback will apply to the last 3 years’ EBT contributions and any amount clawed back will be taken pro-rata from each of the 3 (or less) years contributions.  In a situation where there is insufficient EBT to clawback, the Fund Manager will have an underwater carry forward that must be covered before any future bonus can be earned. Any underwater carry forward at the start of a year will also compound at the rate of the hurdle for that year. 
….
The result of clawback is that each Fund manager starts the new year with a clean slate provided that their under performance did not exceed their accumulated EBT pot, ie. Clawback was less than Fund manager’s existing EBT assets. 
On a three year rolling basis the money in the EBT can be withdrawn as cash, left in the EBT or transferred into an individual EBT sub-fund.
The EBT is liable for employers national insurance on any distributed cash amounts, this is funded from each individual’s gross distributions. Any EBT distribution will be paid net by Charwell Trustee and the employee will still be liable for his or her’s income tax and employee’s National Insurance.” 
Mr Vigeland places particular emphasis upon the reference to the ability to withdraw money in cash on a three year rolling basis, a matter to which I will return. 

40.	I should mention that the PPM had been foreshadowed by lengthy discussions in relation to clawback and notes prepared by Mr Schoningh and by Mr Oldfield in January 2002. In fact, Mr Vigeland responded to Mr Schoningh’s note and concluded that the purpose of clawback was to create “symmetric incentives for the fund owners and its managers.” Mr Oldfield’s note of 14 January 2002 in particular contained the following:
“Need 1 document outlining the principles practise and methodology for arriving at FM’s remuneration. 
Principles   
•	Equitable meritocratic, transparent, longevity, clawback.
•	 . . . . 
•	The methodology and calculation should be Fund Manger independent. 
Practise
•	Methodology practise and principles available to all
•	Longevity – accounted for by rolling 3 years
•	On a 3 year rolling basis money transferred into own EBT sub-Fund or chased in (own sub-Fund incurs no tax. Cashed in option incurs income tax and national insurance).
•	Even if a FM has a negative year company may still decided to pay a bonus if other factors merit it e.g. prior years performance, assessment or bad luck (?)”

41.	Mr Vigeland accepted in cross examination that the bonus system at EFM had not been created for him and that it had been discussed and applied before he was employed. It was Mr Oldfield’s evidence which I accept that it was part of a remuneration system based on individual performance with accountability for underperformance. Both he and Mr Schoningh also emphasised that it was important to have a single structure for the remuneration of fund managers and I accept their evidence in this regard. 
42.	It is also not disputed that bonuses were arrived at by a four step mathematical process. Firstly, the value added to stock under a fund manager’s management was determined for a particular calendar year. Secondly, a performance fee of 20% was applied and thirdly, the fund manager’s percentage was applied to the performance fee figure. The uncontroverted evidence was that that percentage differed between fund managers and also might differ for an individual fund manager from year to year. The last stage was to divide the bonus between the cash element and the EBT contribution. The EBT element remained subject to clawback for three years, the clawback calculation being the mirror image of the bonus mechanism. It was the evidence of Mr Schoningh, Mr Oldfield and Mr Blair that EFM retained a discretion to award a bonus even if the fund manager did not achieve a positive return. However, Mr Oldfield in particular, was at pains to emphasise that there was no guarantee with regard to bonuses. 
43.	It is also not disputed that EFM, first through Mr Schoningh and after mid 2004 through Mr Blair, kept internal records of the EBT contribution elements of the fund managers’ bonuses and the notional stock attributed at least by EFM to those contributions and the value of those notional holdings. Such records were necessary in order to operate the clawback mechanism and to determine whether it was necessary for EFM to make further contributions to the EBT. It was Ms Breusch’s undisputed evidence on behalf of Vistra, which I accept, that Vistra had no knowledge of EFM’s notional attribution. I should add that it was also not disputed that EFM had no access to and could not control either the EBT bank account or the brokerage account in relation to investments operated by Vistra on the EBT’s behalf. 
44.	It was also accepted by all that the reference to EBT in the PPM was understood by everyone at the time including Mr Vigeland to be a reference to the employment benefit trust established under the Deed of Settlement of which Vistra was the trustee.
2002 Bonus
45.	As I have already mentioned Mr Vigeland received a bonus in 2003 in respect of the 2002 calendar year. He was informed by way of a letter dated 21 March 2003 signed by Mr Oldfield and Mr Schoningh. The relevant part of the letter provided: 
“I.	Your discretionary Cash Bonus will be £15241.59. This payment includes a cash element which you have chosen instead of a company contribution into a Self Invested Pension Plan.
II.	In addition we have made a contribution to the company’s Employee Benefit Trust from which you may benefit in future years depending on your performance.”

46.	In this regard, Mr Hardwick on behalf of EFM submits that the contents are quite clear as to the discretionary nature of the bonus and do not hold out any absolute right to the contributions made to the EBT whether immediately or in the future. Mr Solomon on the other hand points out that there is no reference to there being any strings attached to the receipt of contributions made to the EBT but for future performance. 
47.	Mr Vigeland says that he was informed that the EBT contribution element of his bonus for 2002 was £40,000. This was disputed by EFM at the hearing. Mr Blair on behalf of EFM corrected his witness statement before being cross examined and stated that the EBT contribution in respect of Mr Vigeland for 2002 was in fact £34,089.17 and not the figure of £40,000 after all. Mr Oldfield took the same step. 
48.	This assertion is based on mathematical calculations carried out recently on behalf of EFM by Mr Blair. He took the known figure of £15,000 odd for the cash bonus and the fact that notes to which I refer below reveal that a one third/ two thirds split between cash and EBT contribution was adopted for 2002. There is no documentary evidence to the contrary. As I have mentioned, Messrs Blair and Oldfield corrected their witness statements in this regard. It was only Mr Schoningh who did not correct his written evidence to refer to the lesser sum. I gave permission for the Defence to be re-amended to reflect the lesser figure and to reflect a one third/two thirds split between cash and EBT contributions for 2002 instead of a 50/50 split between the cash and EBT elements of the bonus. 
49.	It is not suggested however, that Mr Blair told Mr Vigeland that the EBT element of his 2002 bonus was £34,000 odd at the time. In fact, Mr Blair was not employed by EFM until 2004 and his employment only coincided with that of Mr Vigeland for a matter of two months. In fact, it is not suggested that there is any evidence that Mr Vigeland was informed of this figure by anyone at the time. 
50.	In my judgment, based on the evidence that a one third/two thirds split was applied in relation to the 2002 bonus which Mr Vigeland does not dispute and in the absence of any other evidence, it is entirely logical and more likely than not that in fact, £34,089.71 was the extent of the EBT contribution for 2002. 
51.	However, in the light of the fact that there was no evidence to suggest that Mr Vigeland was ever informed of the lower figure and prior to Mr Blair’s recent calculations all the written evidence was to the effect that the contribution had been £40,000, Mr Blair was not employed at the time, in cross examination Mr Oldfield could not recall what was said and it was Mr Schoningh’s evidence that the figure mentioned was £40,000, in my judgment it is more likely than not that that is what Mr Vigeland was told at the time.   
52.	Mr Oldfield also confirmed in cross examination that an award of bonus occurred when the fund manager in question was informed. He also confirmed that once the announcement had been made there was no power in EFM to reduce the bonus other than as a result of the clawback mechanism. Mr Blair on the other hand asserted in cross examination that subsequent reduction by EFM was possible. There was no documentary evidence of any kind to support such a contention and I reject his evidence in this regard. In my judgment, but for the recent change in evidence based upon Mr Blair’s calculations, it was accepted by all that Mr Vigeland had been informed that the EBT element of his 2002 bonus was £40,000 and accordingly, the award which was announced to Mr Vigeland and became binding was in that amount.
53.	In November 2002, an appraisal meeting took place between Mr Oldfield and Mr Vigeland. Mr Oldfield took a contemporaneous note in which he recorded amongst other things which are not directly relevant, “Remuneration structure give him a strong personal incentive to avoid mistakes.” 
54.	In any event, Mr Vigeland complained to Mr Oldfield about his 2002 bonus on 25 March 2003 and a manuscript note of the discussion made by Mr Oldfield was in evidence.  The note sets out various matters which Mr Vigeland states he had not been told about in advance. Mr Oldfield noted that Mr Vigeland stated that the bonus system should be “quantifiable, predictable and low risk” and that Mr Oldfield said that it was. The note also records:
“Remuneration
Arne came to me concerning his ’02 review. He was/is concerned that he wasn’t told before about: 
(a)	his pension element being part of his cash (ie included in the 1/3 of the 30%)
(b)	that employers national insurance is included in the 30% minimum calculation
He argued strongly that the % return once received should be directly linked to the ROCE that person generated. He argued that if you calculate it correctly his return last year was 100%.
He said he had received 27% and that in light of his excellent ROCE he would have expected to receive 35-40%.
I stressed that the system hasn’t changed since inception  . . .no matter what he thought.
He clearly felt it v unfair that someone (Rob) who received more than 30% had generated a lower ROCE. 
. . . . . 
With regards to the EBT portion he [Mr Vigeland] said it was really down to trust, adding there are 2 issues:
(a)	Is the money there?
(b)	Is there a willingness to distribute it?
(c)	(GET FROM GERHARD DETAILS OF NO’S SHARES IN OEIC [ESC] AND HF {EHF] THAT HIS CONTRIBUTION HAS BOUGHT . .)
. . . . .
He said he would like remuneration to be more objective and quantifiable rather than being based on table football skills. I said I thought the objective/subjective mix was correct for the business.” 

55.	Mr Hardwick relies on this part of the note in support of his submission that it was quite clear in 2003 that Mr Vigeland was fully aware of the limitations which applied to those contributions made to the EBT including the discretionary nature of the trust.  He also says that the reference as late as March 2003 to a desire for a “quantifiable, predictable and low risk” mechanism which was objective rather than subjective is entirely inconsistent with the existence of the Bonus Agreement.  He also draws attention to Mr Vigeland’s complaint about remuneration being based on table football skills and points out that it is incompatible with a contractual entitlement to bonus under the alleged Bonus Agreement.
56.	Mr Vigeland also produced a note of the discussions which he had with Mr Oldfield in relation to bonuses on 25 March 2003 which he sent to Mr Oldfield at his request at around that time. The note records that Mr Oldfield had stated that Mr Vigeland “had received the amount to which he was entitled under the bonus rules.”   Mr Solomon points to the reference to rules in support of the Bonus Agreement. The note also contains a reference “GO [Mr Oldfield] had previously stated (Spring 2002) that the 30% of the performance fee that is payable to FMs should be regarded as a minimum and that additional remuneration could be achieved by a) extraordinarily good investment performance  . . . and b) collaborative work  . . .”.  
2003 Bonus
57.	Mr Vigeland also received a bonus in relation to the calendar year 2003. The relevant amounts were determined in early 2004. £300,000 was awarded by way of cash bonus and a corresponding sum by way of EBT contribution. 
58.	In fact, Mr Vigeland chose to invest the cash element in the EBT and he says that he was told by Mr Oldfield that it remained free from “clawback” and could be paid to him on his request at any time. He elected to receive the cash element in February 2005 and have it paid to Fenris. Although this was put in issue in the Amended Particulars of Claim, it is not now disputed that Mr Vigeland caused Fenris to render an invoice to EFM for £430,124.30 on 25 February 2005 being the then value of the cash element of Mr Vigeland’s 2003 bonus. The relevant amount was duly paid out by EFM to the Fenris bank account.  There was no reference to Vistra with regard to this payment and none is alleged whether by EFM or Mr Vigeland. 
59.	Mr Vigeland contends that the other half of his 2003 bonus, being the £300,000 EBT contribution or its present value, is no longer subject to clawback and should have been paid to him. It is EFM’s case that part of it was subject to clawback agreed with Mr Blair on the 2008 call, something to which I will return. 
2004 Bonus
60.	On 24 June 2004 Mr Vigeland at his own request ceased to be an employee of EFM and relocated to his native Norway. He set up a consulting company Fenris, which was incorporated in Belize and owned through a trust company. Mr Vigeland was not a beneficiary of the trust. However, he was the sole director and provided portfolio management services to EFM much as he had previously albeit through Fenris.  The consultancy services agreement was contained in a letter from Mr Blair on behalf of EFM to Fenris dated 24 June 2004. It provided that fees would be agreed between the parties from time to time and paid on a monthly basis following receipt of an invoice. The terms of the arrangement between Fenris and EFM and specifically the operation of clawback as it applied to Fenris were disputed in proceedings in the Grand Court of the Cayman Islands, Financial Services Division between EFM and Fenris Consulting Limited (the Cayman proceedings). 
61.	Bonus payments for 2004 were considered and awarded to Mr Vigeland January 2005. They amounted to £393,007 by way of cash bonus and £393,007 by way of EBT element. The sum of £786,015 being the total amount of the 2004 award was shown on a schedule headed “Proposed Bonus and Salaries 31 Dec 04”. It also shows that a fund manager percentage of 40% was applied in Mr Vigeland’s case in respect of 2004. Lastly, at the bottom it records as follows: 
“Notes re EBT Contributions
(1)	Allocations subject to clawback become free of clawback after 3 years
(2)	Any distributions from the EBT will be made after deducting Employer’s National Insurance from the distributions
(3) 	Where cash bonus entitlements are taken as additional EBT interest the amount of the cash bonus paid into the EBT will be increased by the amount of Employer’s NI that would have been paid on the cash bonus (12.8%)
(4) 	Distributions are ultimately at the discretion of the Trustees.” 

62.	It is Mr Vigeland’s case that these two sums totalling  £786,015 related to the first six months of the year during which he was employed by EFM and that a further bonus was awarded to Fenris in respect of the second half of the year also of £393,007 which was paid to it. Mr Vigeland claims therefore, that both the £393,007 cash element of his personal bonus was invested in the EBT and remains due to him together with the corresponding EBT element which is free from clawback. EFM on the other hand maintains that there was no additional Fenris bonus in 2004, that the cash element of Mr Vigeland’s bonus was paid to Fenris and that the EBT element was subject to clawback agreed on 30 January 2008.  It is not disputed before me that further bonuses were received by Fenris in subsequent years and that they were subject at least to the principle of clawback which Mr Vigeland contends operated in a different way from the clawback in respect of him personally, something which was not explored before me.
Areas of Dispute
63.	The five primary issues in dispute are therefore as follows: 
(i)	Was there a June 2002 oral Bonus Agreement reached between Mr Oldfield and Mr Vigeland in the terms alleged? 
(ii)	Did Mr Blair represent that Mr Vigeland was entitled “absolutely and unconditionally” to the EBT contribution following the expiry of the Clawback period? 
(iii)	Did Mr Vigeland through Fenris receive full payment from EFM in respect of the cash elements of the 2003 and 2004 bonuses and if not, is he entitled to receive them forthwith? 
(iv)	Was part of the 2003 EBT contributions and all of the 2004 EBT contribution subject to clawback against investment losses in 2007 as purportedly agreed in a telephone conversation on 30 January 2008 and in any event is Mr Vigeland estopped from denying that such a clawback was agreed?
(v)	Has Vistra breached an express term of the EBT Deed of Settlement and is it in breach of its fiduciary duty to consider all relevant and disregard all irrelevant factors with regard to its decision not to make a distribution to Mr Vigeland? 
I have already dealt with the issue of the extent of the EBT contribution element of Mr Vigeland’s 2002 bonus. 
(i) Was there an oral Bonus Agreement reached in June of 2002 between Mr Vigeland and Mr Oldfield on behalf of EFM and if so what were its express or implied terms? 
(a) Express agreement? 

64.	Mr Solomon’s primary case on behalf of Mr Vigeland is that there was an express oral agreement reached between Mr Oldfield and Mr Vigeland some time in June 2002 to the effect that Mr Vigeland would be contractually entitled to an annual bonus. As I have already mentioned it is alleged that the annual bonus would be calculated as a percentage of the absolute return less benchmark costs on the assets under his management in each calendar year. He says that it was agreed that he would be entitled to 50% of that sum absolutely and unconditionally and that the sum would be paid to him in cash within two months of the calendar end of each year. The remaining 50% would be paid into the EBT and would be invested in one of the investment funds operated by EFM. The EBT element of the bonus was subject to clawback during a three year period in respect of negative investment returns on Mr Vigeland’s portfolio. He also says that it was agreed that at the expiration of the three year period and to the extent that the EBT contribution or the investments representing it were not subject to clawback, he would be entitled to and have access absolutely and unconditionally to the investments purchased using the EBT contribution and could require the investments to be transferred to him or to be sold and the proceeds of sale transferred to him.  
65.	As I have already mentioned it was not alleged and in any event, the evidence (to which I shall refer) would not have supported a contention that Vistra as trustee of the EBT was party to the alleged Bonus Agreement or had held out EFM as its agent for the purposes of making any agreement or representation to Mr Vigeland or any employee of EFM. 
66.	In the alternative, Mr Solomon says that terms must be implied into the Bonus Agreement in the form to which I referred at paragraph 8.
67.	However, in closing, Mr Solomon accepted that EFM retained a discretion as to whether to award a bonus but that that did not mean that it was not a contractual discretion nor that it was unenforceable. He submitted that once the amount was awarded, there was no further discretion, that the cash sum was payable and an equivalent amount had to be contributed to the EBT of which Mr Vigeland was a beneficiary, the clawback was the only mechanism by which EFM could recoup any part of a bonus once awarded and once the three year period had elapsed, Mr Vigeland had an enforceable contractual right to the EBT contribution as against EFM. In respect of any cash bonus which Mr Vigeland had elected not to take immediately, Mr Solomon said that Mr Vigeland had an immediate right to payment from EFM on request. 
68.	As I have already mentioned, EFM contends that bonuses were discretionary but accepts that Mr Vigeland’s contract of employment was subject to an implied term that the discretion be exercised genuinely and rationally. It is also accepted in the Re-Amended Defence that once the cash element of a bonus was announced Mr Vigeland had an enforceable contractual entitlement to it. However, EFM contends that there was no enforceable contractual right to EBT contributions after the three year clawback period had elapsed because by their very nature, they were subject to the terms of the EBT which is a discretionary trust and accordingly, distributions were subject to the sole discretion of Vistra as trustee.  
69.	Until pressed in cross examination Mr Vigeland was unable to give any precise details as to the date on which the alleged conversations during which the alleged Bonus Agreement was concluded took place in June 2002 nor could he be precise as to where the relevant conversations took place. However, in response to Mr Hardwick’s questions he stated for the first time that the agreement was reached in his office the week before he went on holiday to Norway in June 2002. There is nothing to support these assertions and I reject them as inherently unlikely given that they had never been mentioned before and did not appear in any of the pleadings. 
70.	In fact, Mr Oldfield was equally vague about the discussions but did agree that he would have discussed with Mr Vigeland the way in which he saw his relationship with EFM developing. In the Re-Amended Defence at paragraph 7.5 it is accepted that in the course of 2002 the issue of the bonus, albeit of a discretionary nature was discussed further by Mr Schoningh, Mr Oldfield and Mr Vigeland. This is consistent with notes prepared by Mr Schoningh and Mr Oldfield in early 2002 to which I referred at paragraph 40 and the production and circulation to fund managers of the PPM document in early 2002.
71.	In cross examination Mr Oldfield accepted that the payment of bonuses is a key element in the remuneration of fund managers but emphasised that there was no guarantee that a bonus would be awarded. However, he had to accept that EFM had never failed to award a bonus to a fund manager who had achieved a positive return on his investments in the relevant year and who did not have a negative “under water” carry over. 
72.	He also stated that in fact EFM had paid a minimum of 30% by way of bonus but that everything was discretionary. In fact, this is reflected in notes made by Mr Schoningh in late 2001 or early 2002 and by Mr Oldfield on 14 January 2002 in which he referred to a 30% performance fee. There is also reference to a 30% minimum calculation in the note of 25 March 2003 referred to at paragraph 56 above. I accept that a minimum of 30% was the practice. 
73.	Mr Oldfield went on to clarify that once it was decided to pay a bonus, the cash element became definite and was not subject to further discretion exercisable by EFM. He says that he would have definitely have told Mr Vigeland this in 2002 and that it would have been discussed more than once. I accept his evidence in this regard. 
74.	In relation to a cash element which a fund manager chose to invest in the EBT, Mr Oldfield accepted that he would have told Mr Vigeland that it could be withdrawn at any time subject to a recommendation being made by EFM to the Trustee. He also accepted that the issue of whether such investments of cash were subject to a discretion in EFM to recommend payment and a discretion of the Trustee whether to distribute was never raised but nevertheless asserted that Mr Vigeland knew that to be the case. He said that Mr Vigeland knew full well how the EBT worked and so there was no reason to tell him. 
75.	In relation to the EBT element of a bonus, Mr Oldfield’s evidence in cross examination was that a discretion remained because even after the three year clawback period it was up to EFM whether it chose to make a recommendation to the trustees of the EBT to make a distribution and thereafter the actual distribution was subject to the discretion of the trustee. This was also Mr Blair’s evidence in cross examination although he went further and stated that the element which was paid into the EBT was subject not only to clawback for a three year period but was also subject to a discretion in EFM not only as to whether it would be received but also whether it would be reduced. He could not point to any evidence of such a discretion in EFM further to reduce the EBT element but stated that such reduction other than as a result of clawback had happened in the past. He also stated that if a fund manager chose to invest what had been described as the cash element of his bonus into the EBT he forfeited it as cash and it took on all the attributes of an EBT contribution.
76.	Neither Mr Oldfield nor Mr Blair made reference to this additional discretion in EFM outside the clawback mechanism to reduce an EBT contribution once announced in their witness statements nor was it mentioned in the way in which EFM’s Amended Defence and re-amended pleading was put in this regard. There is nothing to corroborate this evidence which was proffered for the first time in cross examination and in my judgment it is inherently unlikely and I reject it.
77.	There is neither a contemporaneous note nor any other record of the alleged Bonus Agreement.  The only documents in relation to the alleged Bonus Agreement are Mr Vigeland’s Offer Letter which states that bonuses depended on investment returns only and the PPM which was drawn up by Mr Gurner, one of EFM’s fund managers at the time, at Mr Oldfield’s request and with his input and made available to fund managers including Mr Vigeland.  Mr Vigeland placed central importance on the PPM which he said was the basis of the Bonus Agreement. However, it had been produced in January 2002 and it was not suggested that it was tailored specifically to Mr Vigeland, something which he accepted. 
78.	Mr Oldfield stated in cross examination that the PPM was an internal document produced for discussion purposes only. He drew attention, for example, to the reference to sub-trusts which were in fact never established. The accepted evidence in this regard was that to Mr Vigeland’s knowledge after the PPM had been circulated, the establishment of sub-trusts was determined to be too expensive and was abandoned. In my judgment therefore, although the PPM contained details in relation to how the clawback was expected to work, it was as Mr Oldfield described, essentially an outline document on which there was discussion. 
79.	Mr Solomon on behalf of Mr Vigeland drew particular attention to the statement in the PPM that “on a three year rolling basis the money in the EBT can be withdrawn as cash, left in the EBT or transferred into an individual EBT subfund”. He says that this is relevant background as to whether the Bonus Agreement contained a term that after the clawback period elapsed there was an unconditional and absolute right to the EBT contribution. He also submitted that this was in complete accord with Mr Oldfield’s thinking revealed in his own manuscript notes made prior to the production of the PPM. He also says that Mr Oldfield’s thinking on EBT clawback can be seen clearly from his own manuscript notes made three years later on 2 September 2005 during a telephone conversation with Mr Vigeland who by that stage was rendering his services to EFM through Fenris. They read: 
“Arne’s Priorities
1.	Equality lien 2. Withheld EBT monies. Fact he’d prefer a lien arrangement. 3. P& L 4. Analyst.” 
Mr Oldfield also made a note on the page which read:
“I think after a certain no. of years, it makes sense to put clawback monies in to a lien a/c – ie. They would be returned to someone if they left.” 
Mr Solomon submitted that this was evidence that EFM treated the EBT like a bank account, something which Mr Oldfield denied. Mr Oldfield certainly agreed in cross examination that the money “should be returned because it was the fund manager’s money that they had earned and they would be getting it back.”

80.	In cross examination Mr Vigeland accepted that the reference to the three year rolling basis in the PPM does not expressly state that after the expiry of the three year period a fund manager had an absolute and unconditional right to the monies or their value at the time. In response to this he stated that he was told that the trustees did exactly what they were told. 
81.	Mr Solomon says that the only reference to the discretion vested in Vistra in respect of EBT contributions was in footnote (4) to the schedule for 2004 bonuses produced in January 2005 after Mr Vigeland’s employment had ceased, to which I referred at paragraph 61.
82.	On the other hand Mr Hardwick on behalf of EFM drew attention to the large number of references to EBT and EBT contributions in the PPM. In this regard, in cross examination Mr Vigeland accepted that he knew that half or at the beginning, two thirds of his bonus award was paid into the EBT, that the EBT was a trust with trustees the identity of which was known to him and he knew that the trustees had a discretion as to whether to make distributions from the EBT. He also accepted that he knew that there were tax advantages to the use of the EBT and that in particular, income tax was only payable at the date of distribution. 
83.	In cross examination Mr Oldfield accepted that the letter explaining the nature and operation of the EBT which had been sent to Mr Gurner in 2000 and which expressly stated that the EBT was managed by a trustee which was independent of EFM and that payments and benefits would be paid out of the EBT entirely at the discretion of the Trustee was very unlikely to have been sent to Mr Vigeland although this was contradicted by Mr Schoningh.  Mr Oldfield asserted however that the EBT was discussed “non-stop” and that Mr Vigeland would have understood precisely how it worked. In re-examination Mr Oldfield said that Mr Vigeland of all the fund managers was the most concerned about the EBT and the most knowledgeable. He said that Mr Vigeland was so aware of the discretion and added that this was the reason that he wanted a lien account at some stage. This is consistent with the uncontroverted evidence that a fellow fund manager Mr Gurner had left in 2003 without receiving anything from the EBT and with the notes of Mr Oldfield’s discussion with Mr Vigeland in September 2005 to which I referred at paragraph 79 which records “withheld EBT monies.  Fact he’d prefer a lien arrangement.”  Accordingly, I accept Mr Oldfield’s evidence in this regard.
84.	Mr Schoningh who was a joint owner of EFM at the time the Bonus Agreement was allegedly agreed denied any knowledge of it. He also said that in all the period before he left EFM in 2006, Mr Vigeland never said to him that he had an entitlement in the form of the Bonus Agreement. It was not disputed that EFM’s office was small and that there were relatively few employees. In cross examination he was clear that on such a crucial matter as the alleged Bonus Agreement Mr Oldfield would have kept him informed. He was also adamant that the existence of the EBT would have been explained to Mr Vigeland and that there were trustees and that the payments were discretionary. He also pointed out that had the full discretion of the trustees been in any doubt, it would have had tax consequences for Mr Vigeland, the other Employees and Beneficiaries and EFM.  I accept Mr Schoningh’s evidence in this regard. I find it inherently unlikely that he would not have been informed had the Bonus Agreement been entered into and equally that an agreement which compromised the tax efficiency of the EBT would have been agreed with a single fund manager. I place more weight on Mr Schoningh’s evidence with regard to his lack of knowledge of the alleged Bonus Agreement as a result of the fact that he has long since left EFM.
85.	Lastly, when pressed in cross examination as to whether the Bonus Agreement had been concluded, Mr Vigeland’s evidence was that there was such an agreement but went on to say: “There was a promise that fairness would be applied to awarding bonuses.” 
86.	In my judgment the Bonus Agreement in the form of an express oral agreement reached in June 2002 in the form of Mr Vigeland’s pleaded case or in the form it was put in closing did not exist. I reject Mr Vigeland’s evidence such as it was in this regard. In my judgment, his response in cross examination that there would be fairness in awarding bonuses is in fact the truth.  Equally the existence of the Bonus Agreement in my judgment is inconsistent with Mr Vigeland’s acceptance in cross examination that the trustee had a discretion whether to make distributions.   In my judgment had such an agreement been reached it is highly likely that it would have been confirmed in writing, or referred to in correspondence or other documentation at the time or relatively shortly thereafter. There is no such reference or documentation.
87.	Furthermore, such an agreement would have dealt with the fund manager percentage to be applied in Mr Vigeland’s case. Mr Vigeland accepted in cross examination that this was a critical part of the bargain. He also accepted that it had not been agreed and that he was still seeking to bargain for a greater percentage in respect of his 2002 bonus in early 2003, long after the Bonus Agreement was allegedly concluded. 
88.	EFM accepts that in accordance with the terms of the Offer Letter, it had a common law duty to consider the question of whether to award a discretionary bonus as a rational and bona fide exercise and that having done so Mr Vigeland became contractually entitled to the cash element of any award made. In closing this also seemed to be Mr Vigeland’s case. 
89.	The most telling part of the evidence against the existence of the Bonus Agreement is in my judgment, the note of the meeting in March 2003 which Mr Vigeland had with Mr Oldfield in order to complain about his 2002 bonus to which I refer at paragraph 54 above. In my judgment, if the Bonus Agreement had been reached, the form of any criticism would have taken a radically different form and would have referred to the Bonus Agreement itself. Instead, Mr Oldfield’s note of the conversation is predicated on the basis that the award of bonus is a matter of discretion might turn on factors such as table football skills and was unpredictable.  Furthermore, the content as a whole is entirely inconsistent with a contractual obligation to pay a bonus and to divide it equally between cash and EBT contribution. 
90.	The record of Mr Vigeland’s comments with regard to the EBT contribution element of the bonus also reveal Mr Vigeland’s appreciation at that stage of the fact that there was no certainty as to whether sums paid into the EBT would be received. He is not only recorded as referring to it being a matter of trust but also refers to whether there will be a willingness to distribute. This is consistent with Mr Vigeland’s subsequent desire to move from EBT to lien arrangement evidenced by Mr Oldfield’s notes of the 2 September 2005 discussion.  Mr Vigeland also accepted in cross examination that at the meeting in March 2003 he was exploring how the EBT worked. Such an exploration would have been unnecessary if in fact he had the benefit of a concluded agreement in the form of the Bonus Agreement.  Equally, in my judgment, had the Bonus Agreement been concluded, it is more likely than not that reference would have been made to it in Mr Oldfield’s notes for Mr Vigeland’s appraisal in November 2002 to which I referred at paragraph 53 above. 
91.	In my judgment, these complaints and Mr Vigeland’s explanation are completely incompatible with the Bonus Agreement having been reached. They are also incompatible with any suggestion that Mr Vigeland was not aware of the nature of the EBT and the effect of contributions to the EBT. In this latter regard, I also take account of the fact that Mr Oldfield’s notes of the 2 September 2005 discussion reveal a desire to transfer to a lien and his acceptance in cross examination that the terms “unconditional” and “absolute right” were never used in relation to EBT contributions. Mr Vigeland was only able to state that he had been told that the trustee would do as it was told which is wholly inconsistent with an absolute and unconditional right against EFM. First, Mr Vigeland accepted that that was the terminology used and that thereafter, the phrase “free” was used in relation to clawback. This gives no support to the alleged express terms of the Bonus Agreement. 
92.	In addition, Mr Vigeland accepted in cross examination that he went into the meeting in March 2003 seeking to bargain for a higher fund manager percentage to be applied to him for 2002.  It is also clear that at that meeting Mr  Vigeland would have been aware that the 2002 bonus had been split one third/two thirds between cash and EBT contribution. Had the Bonus Agreement existed in the form alleged, namely that the split would always be 50% it seems an inescapable conclusion that one of Mr Vigeland’s serious complaints would have been the failure to apply the 50/50 split. There is no reference to this in the note nor does this appear to be his case. 
As I have also mentioned, it was Mr Oldfield and Mr Schoningh’s evidence that it was important to them that all fund managers enjoyed the same remuneration package which I accept. This also tells against the Bonus Agreement having been reached in favour of Mr Vigeland alone.
93.	Lastly, I do not consider that the contents of Mr Vigeland’s note of the 2003 meeting to which I referred at paragraph 56 assists him either.  In my judgment the reference to “amount to which he was entitled under the bonus rules” is ambiguous.  It is entirely consistent with a discretionary structure described in the PPM and the acceptance by EFM that the cash element of a bonus was payable immediately and is insufficient to support the details of the alleged Bonus Agreement.
94.	Mr Vigeland also relied upon the first footnote to the “proposed salaries and bonus 13 Dec 04" document to which I referred at paragraph 61 above, in support of his contention that there was an express term agreed in the Bonus Agreement that he would have an absolute and unconditional right to the investments representing his EBT contributions after three years. He omitted to refer to the fourth footnote which makes clear that distributions are at the discretion of the trustee. In cross examination in an attempt to explain his understanding of the effect of the fourth footnote, for the first time, Mr Vigeland said that he understood that the trustee supervised clawback. There is no evidence to support this whatever and I reject Mr Vigeland’s evidence in this regard. 
 (b) Implied terms? 
95.	It is Mr Vigeland’s alternative case that terms should be implied into the Bonus Agreement rather than the Offer Letter. This is the way it is put in the Re-Amended Particulars of Claim at sub-paragraphs 9(1) – (4). As I have already found that there was no Bonus Agreement the alternative claim must also fail. However, for the sake of completeness I will set out my reasoning in relation to the alleged implied terms. 
96.	Before turning to this issue, I remind myself of the legal principles concerning the implication of terms to which I was referred by Mr Hardwick on behalf of EFM. He referred me to Lord Hoffmann’s consideration of the circumstances in which terms will be implied in some detail in AG of Belize v Belize Telecom Ltd [2009] 1 WLR 1988. Lord Hoffmann referred to and approved the statement of Lord Simon in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 282 to the effect that in order to imply a term the following conditions must be satisfied: 
It must be reasonable and equitable
It must be necessary to give business efficacy to the contract so that no term will be implied if the contract is effective without it
It must be so obvious that it goes without saying 
It must be capable of clear expression 
It must not contradict any express term of the contract. 

97.	I was reminded by Mr Hardwick on behalf of EFM that the reason why the law imposes such strict constraints on the power of implication was explained by Lord Bingham in Philips Electronique v B Sky B [1995] in a passage quoted in full by Clark MR in Mediterranean Salvage & Towage Limited v Seasmar Trading & Commerce Inc [2009] EWCA Civ 531: 
“The court’s usual role in contractual interpretation is, by resolving ambiguities and reconciling apparent inconsistencies, to attribute the true meaning to the language in which the parties have expressed their contract. The implication of contract terms involves a different and altogether more ambitious undertaking: the interpolation of terms for which, ex hypothesi, the parties themselves have made no provision. It is because the implication of terms is potentially so intrusive that the law imposes strict constraints on this extraordinary power.”

98.	In this regard, I accept Mr Hardwick’s submission that an implied term to the effect that EFM would deposit the EBT contribution in a structure that conferred on Mr Vigeland (effectively) absolute and unconditional rights to the investments purchased with it after the expiry of the clawback period to the extent that they were not clawed back and the same in relation to cash elements invested would be contrary to the alleged express term of the Bonus Agreement pleaded at paragraph 7 of the Amended Particulars of Claim. At that paragraph it is pleaded that the EBT contributions would be placed “in a discretionary trust.” In the Reply this was also accepted and the tax advantages of doing so were acknowledged. The alleged implied term would therefore, contradict an express term of the alleged Bonus Agreement. 
99.	The same is true of the alleged implied terms set out at paragraphs 9(3) and (4) of the Amended Particulars of Claim. They are that EFM would provide reasonable assistance in asserting absolute and unconditional rights to the EBT contributions not subject to clawback and to cash elements which had been invested and not to impede attempts to assert such absolute and unconditional rights. In my judgment such implied terms cannot co-exist with an express term in the alleged Bonus Agreement that sums were being placed in a discretionary trust. In the circumstances, implied terms in the form alleged become nonsensical. If this were not enough the convoluted nature of the alleged implied terms also tells against them. What is the structure into which it is suggested the contributions should have been placed in order to ensure the rights claimed by Mr Vigeland whilst preserving the advantageous tax treatment? Furthermore there is nothing obvious about the alleged implied terms to render them suitable for implication. 
100.	In this regard, Mr Solomon made reference in passing to the case of Patti Marlowe v East Thames Housing Group Ltd [2002] IRLR 798. In that case terms similar terms to those in paragraphs 9(3) and (4) of the Amended Particulars of Claim were implied. The case concerned an employee’s rights under a permanent health insurance policy to which she was not a party. As a result, she could not sue the insurers directly, nor could she sue her employers because they were only contractually bound to pay over whatever they received from the insurer. An implied term to take all reasonable steps to secure the payment of the insurance benefit and to pay the same to the employee was therefore necessary to give efficacy to the employment contract. I agree with Mr Hardwick that that is not the case (by way of analogy) here. The arrangement by which EBT contributions were subject to the discretionary trust with the consequent tax advantages was not unworkable in any sense.
101.	In this regard Mr Solomon says that the fact that the cash element of the 2003 bonus was paid by EFM to Fenris at Mr Vigeland’s request is indicative of such a term as pleaded at paragraph 9(2) of the Amended Particulars of Claim.  However, in my judgment, such a payment by EFM is not consistent with payment into a structure at all.
102.	Finally, in my judgment such implied terms are not necessary for business efficacy. The fact that EBT contributions were paid into a discretionary trust and accordingly were subject to the discretion of the trustee in order to gain tax advantages both for the employer and the employee does not undermine the efficacy of the remuneration package or the contract of employment as a whole. In fact, it seems to me that it is likely to have enhanced it. 
103.	Accordingly, had it been necessary, I would have rejected the claim in relation to implied terms. 
(ii) Did Mr Blair represent that Mr Vigeland was entitled absolutely and unconditionally to EBT contributions following the expiration of the three year clawback period? 

104.	 In the further alternative, Mr Vigeland claims that EFM through Mr Blair misrepresented that he would be entitled and have access absolutely and unconditionally to the EBT contributions to the extent that clawback did not apply which was false and that in reliance on those representations Mr Vigeland agreed to enter into the Bonus Agreement on the terms that the EBT contributions would be paid into the trust and did not seek the transfer of the EBT contributions to him. 
105.	In this regard, Mr Vigeland relies upon several meetings with Mr Blair and Mr Oldfield and on one occasion with Mr Perry between 2003 and 2008 at EFM’s offices and that on at least one occasion Mr Blair and Mr Oldfield told him that the trustee, Vistra, would do exactly as it was instructed by EFM in relation to distributions from the trust fund. 
106.	These alleged misrepresentations were not particularised and there was no reference in Mr Vigeland’s first witness statement to the alleged representation about the behaviour of Vistra. When Mr Hardwick put the omission in his witness statement to Mr Vigeland in cross examination he agreed that he had been vague but had not appreciated that it was important. He had to accept there was no reference to the alleged representation in his witness evidence at all.  I find his suggestion that he did not appreciate the importance of the point barely credible and I reject it. 
107.	It is not in dispute that Vistra followed all of the recommendations given to it by EFM.  The only example of it failing to do so promptly being the payment of National Insurance in relation to which it initially refused and later having taken legal advice, acceded to EFM’s request. Ms Breusch’s evidence about the administration of the EBT is set out in more detail at paragraphs 178 – 183.  In this regard, Mr Blair was cross examined about the manner in which a loan of almost £3million from the EBT was obtained on Mr Oldfield’s behalf.  The note taken by a member of Vistra’s staff suggested that it had been “required.” Mr Blair was adamant that requests were always made and the remainder of the documentation is phrased in that way. 
108.	Ms Breusch on behalf of Vistra however, accepted in cross examination that generally her EBT clients gave instructions. With regard to EFM she gave an example of the instruction it had given as to how the EBT should vote in relation to the winding up of the Ennismore Vigeland Fund. In the circumstances, Mr Solomon says that it is overwhelming likely that Mr Blair and Mr Oldfield made representations to Mr Vigeland that Vistra did.   
109.	However, it was Mr Blair’s evidence that he had not told Mr Vigeland that Vistra did as EFM instructed it. In cross examination he remained adamant that EFM made recommendations to the trustee. The point was not put to Mr Oldfield at all.
110.	In my judgment, given Ms Breusch’s candid evidence as to instructions and the lack of any example of Vistra ultimately having refused a recommendation from EFM, it is more likely than not that EFM expected Vistra to accede to its requests which no doubt on occasion were phrased more like instructions. However, there is no evidence to suggest that the EBT was not properly administered and discretions considered properly by Vistra and I accept Mr Blair’s evidence that he did not represent that Vistra did as instructed. 
111.	The only other material upon which Mr Vigeland bases his misrepresentation claim is the email exchange on 15 December 2005 between Mr Blair and Mr Vigeland in which Mr Blair identified ESC and EHF shares which “will cease to be under clawback . .”  It is said that this shows real control over the trust fund. In my judgment given that it was accepted that EFM first through Mr Schoningh and thereafter by Mr Blair kept internal records and that there was no earmarking in the trust, it would have been wrong for Mr Vigeland to infer anything from this. In cross examination he accepted that he did not challenge the independence of EFM’s record keeping from Vistra but had been told that the investments were under EFM’s control. His assertion was entirely unparticularlised and there was no evidence to support this and in the light of Mr Vigeland’s acceptance that he understood that the EBT was a discretionary trust with trustees, I reject his evidence in this regard. 
112.	Lastly, in paragraph 13(2)(iii) of the Amended Particulars of Claim it is said that in asserting that the shares would be free from clawback, Mr Blair was representing that Vistra would exercise its discretion in a manner consistent with Mr Vigeland’s rights under the Bonus Agreement because it did as it was told and EFM would direct it to honour the agreement. In cross examination Mr Vigeland reiterated that this was consistent with the contents of PPM. However, he went on to state that in fact, the words were not used at all. In the light of this admission, in my judgment the allegations in relation to a representation that Vistra did as it was told cannot survive. 
113.	Equally, Mr Vigeland’s assertion in cross examination that he had been told that Vistra supervised clawback came to nothing.  He first suggested that that had been implied and then admitted that in fact, that had not been said.
114.	In my judgment such a conclusion is also supported by footnote (4) of the “Proposed Bonuses and Salaries 31 Dec 04” document referred to at paragraph 61.  This was received by Mr Vigeland in early 2005, some months before the email exchange relied upon. Footnote (4) makes quite clear that the distribution of EBT contributions was at the discretion of Vistra. Accordingly, Mr Vigeland cannot have understood the assertion that certain shares would be free from clawback to amount to a representation that he would be absolutely and unconditionally entitled to them. 
115.	Even if the representations had been made out, I accept Mr Hardwick’s submissions as to reliance and causation. Mr Vigeland was only able to say that the representations were made during several meetings in the period 2003 to 2008. However, his pleaded case was that first in reliance upon them he had entered the Bonus Agreement. Even if I had found that the Bonus Agreement existed, it predated the alleged representations and therefore, could not have been entered into in reliance upon them.  At paragraph 32(2) and (3) of the Amended Particulars of Claim it is also pleaded that in reliance on the alleged misrepresentations Mr Vigeland also did not seek to transfer the investments representing his EBT contributions free from clawback or the elements of cash bonus invested in the EBT before the Cayman proceedings commenced.  Even if the representations had been made out given my findings in relation to cash bonus invested in the EBT set out below neither reliance nor loss could be established in this regard.
(iii) Did Mr Vigeland through Fenris receive full payment from EFM in respect of the cash elements of the 2003 and 2004 bonuses?  
(a)	2003 cash bonus 
116.	This element of Mr Vigeland’s claim was introduced by way of amendment of the Particulars of Claim in May 2012. By the amendment, Mr Vigeland’s claim was increased by the present value of the investments representing £338,400 contributed in 2004. In this regard, it is to be noted that Mr Vigeland’s original letter of claim of 30 January 2009 did not refer to this sum. 
117.	In fact, in his second witness statement dated and served shortly before the beginning of the trial, Mr Vigeland accepted that he had agreed with Mr Blair on 25 February 2005 that the present value of the cash element of his 2003 bonus which had amounted to £300,000 would be paid to Fenris and Fenris rendered an invoice for £430,124.30 in this regard which was duly paid by EFM into the Fenris bank account.  
(b) 2004 cash bonus
118.	In this regard, it was common ground that the 2004 cash bonus was calculated at the end of 2004 and that a discussion took place about it in January 2005. 
119.	Mr Blair was cross examined about a schedule headed “Proposed Bonuses and Salaries 31 Dec 04” in which reference was made to a single salary of £80,000 for the entire year. There is no separate reference to consultancy fees earned by Fenris for the second half of 2004 despite the fact that Mr Vigeland had ceased to be an employee in June. In this regard, Mr Blair and Mr Oldfield’s evidence is that Mr Vigeland was treated as a quasi employee even after he provided his services through Fenris and that was purely for his own convenience. They both say that there would have been no reason to pay an additional bonus to Fenris for 2004. It was Mr Oldfield’s evidence which I accept, that it was not the practice to award bonuses part way through the year. 
120.	The schedule contained further reference to FM Bonus 50% £393,007 and EBT Contribution 50% of FM bonus in the same amount. There was also a heading “Total bonus plus EBT contribution” with the figure of £786,015 beside it. There were also headings for EBT contributions subject to claw back and entries showing the values of shares in ESC and HF attributable to the contributions and figures for those shares which were free and those which were still subject to clawback. 
121.	As I have already mentioned at paragraph 61 at the bottom of the schedule there are four footnotes which read as follows: 
“(1) 	Allocations subject to clawback become free of clawback after 3 years
(2)	Any distributions from the EBT will be made after deducting Employer’s National Insurance from the distributions
(3) 	Where cash bonus entitlements are taken as additional EBT interest the amount of the cash bonus paid into the EBT will be increased by the amount of Employer’s NI that would have been paid on the cash bonus (12.8%)
(4) 	Distributions are ultimately at the discretion of the Trustees.” 
The manuscript notes in relation to a discussion of the schedule states “wants as usual, full reinvestment of his EBT – ideally all in the HF”. 

122.	The next relevant document is an email from Mr Vigeland to Mr Blair dated 15 February 2005 and headed “Re-invested bonus”. Of course, this is at a time at which Mr Vigeland was no longer an employee of EFM and was providing his services through Fenris. It states:
“I would like to know how the issues regarded my re-invested bonus are progressing. 
Should I invoice the entire amount of “free” holdings and subsequently buy into the HF?
Should we switch my EBT holding into escrow holdings?
Could I switch my EBT/escrow holding all into the HF?
Could you remind me of the dates/prices at which I reinvested my	2004 bonus (I assume the date of the bonus meeting)?” 

123.	It appears that Mr Blair wrote a computer file note on 16 February 2005 in the following form: 
“AP – Need to give his exact Fenris amount to invoice
(1)	Send money re 04 cash bonus to Fenris – him to reinvest
(2)	?escrow for clawback rather than EBT
(3)	Can we switch his Free EBT for what we would want in the HF rather than going thru the distribution from EBT route – Fenris again to reinvest” 
It is followed by an email from Mr Blair of 17 February 2005 stating:
“The amount to be invoiced by and remitted to Fenris for the 2004 bonus is £463,712. This is calculated as: 
Cash bonus £393,007
NI gross up £50,305
Pension contribution £20,400”

124.	In re-examination Mr Blair confirmed that the reference in his note to “re 04 cash bonus” was a reference to the recently calculated 2004 cash bonus of £393,007. He also stated that he had informed Mr Vigeland that the amount had not yet been invested in the EBT. Given that it was only some six weeks since it had been calculated, in my judgment this is more likely than not to be the case. 
125.	Mr Blair’s 17 February 2005 email is followed by a response from Mr Vigeland the following day attaching an invoice from Fenris for the items referred to by Mr Blair. It is said therefore on behalf of EFM that Mr Vigeland’s 2004 cash element of his personal bonus was invoiced for by Fenris and paid to him pursuant to that invoice. The invoice itself records that it relates to “fees agreed on 17.02.05” and requires payment to be made to a bank account in the name of Fenris “c/o Mr Vigeland”.  Mr Vigeland on the other hand says that this sum represented a separate bonus for Fenris and did not relate to anything due to him in his personal capacity in relation to the first six months of 2004 during which he remained an employee of EFM. 
126.	There is a further relevant email in the chain of correspondence which is dated 25 February 2005 and is headed “Free” Investments in EBT. It is from Mr Blair to Mr Vigeland and is in response to the final enquiry made by Mr Vigeland in his email of 15 February to which I referred at paragraph 123. The response is as follows: 
“Your current “free” holdings in the EBT are 8771.53 units in the OEIC and 817.06 in the hedge fund. 
 . . .  this gives current values of EUR 160,307.17 and GBP 319,108.26.
At an exchange rate of 1.444 this gives a total GBP value of £430,124 30. Assuming that you still wish to switch the investments out of the EBT please send me an invoice and I get this amount transferred to Fenris. 
If you have changed your mind about moving this out of the EBT please let me know since it effects the level of investment that we need to make at this month end dealing day.”

127.	Fenris then issued an invoice for “consulting charges – fees agreed on 25.02.05” in the sum of £430,124.30. The invoice also stated “Please pay the above total amount to our bank account in Barclays Bank” and provided Fenris banking details “c/o Arne Vigeland Paulsen.” 
128.	As I have already mentioned there is now no dispute that the figure of £430,000 odd related to sums due to Mr Vigeland personally in respect of his 2003 cash bonus. They were described as values of free holdings in the EBT and it is accepted by all that Fenris was not entitled and could not have had any interest under an employment benefit trust. 
129.	On 18 July 2005, in a letter signed by Mr Oldfield and Mr Schoningh, EFM wrote to shareholders proposing a change in fee structure. In that letter the remuneration of fund managers was described as transparent and reference was made to 50% of bonuses being paid in cash the rest being re-invested in the funds and subject to clawback for a period of three years. It was also stated that “to date all our Investment managers have chosen to re-invest the vast majority of their cash bonuses into the Funds.” In cross examination Mr Oldfield accepted that Mr Vigeland had been repaid his cash bonus and that the statement was not entirely accurate. 
130.	Equally, in my judgment the sum of £463,000 odd for which Fenris invoiced and which was paid into its bank account, relates to Mr Vigeland’s personal cash bonus for 2004 of £393,000 odd.  The figure described by Mr Blair in his email of 17 February 2005 included a pension contribution and employer’s NI, neither of which would be relevant in relation to services rendered by Fenris. There is also an express reference to the 2004 bonus in the corresponding email from Mr Blair of 17 February 2005. What is more, the figure of £393,007 represents 50% of the figure of £786,015. It is also clear from the chain of correspondence that there had been no notional allocation of shares in relation to this sum. 
131.	Furthermore, there is no documentary evidence whatever to support Mr Vigeland’s claim that a yet further sum of £393,000 was due to Fenris in respect of the second half of 2004 and that it was this which was paid to Fenris leaving the equivalent sum due to him in his personal capacity. In this regard, I accept the evidence of Mr Oldfield and Mr Blair that a single schedule detailed all bonus sums due to Mr Vigeland and Fenris for 2004 and that a separate bonus was not awarded halfway through the year. The schedule itself makes actual reference to the £20,400 pension contribution which could only have been made in respect of Mr Vigeland’s employment. I accept that the schedule refers solely to salary as if it had been due for the entire calendar year and does not refer to consultancy fees payable to Fenris. However, in the absence of any documentary evidence to support Mr Vigeland’s claim and in the light of the evidence that Mr Vigeland was treated as a quasi employee even after he rendered his services through Fenris for his own convenience, I reject his evidence in this regard.
132.	Further, I place reliance upon the fact in cross examination it was Mr Vigeland’s evidence that this sum of £393,000 odd was the only element of a Fenris bonus for the second half of 2004 and that there was no mirroring EBT element which was subject to clawback.  In this regard, Mr Hardwick also referred me to the relevant performance summary documents which show the total stock returns under the management of each fund manager for the twelve months of 2004. There was no change whatever in Mr Vigeland’s column to mark a change of status in July 2004 and a summary containing the figure of £786,000 which was split into the two £393,007 components. Given all these matters to which I have referred and I find it inherently unlikely that there was a second Fenris bonus and that it did not have a mirroring clawback element. Accordingly, I reject Mr Vigeland’s claim in respect of the cash element of his 2003 and 2004 bonuses both of which in my judgment he has already received albeit that he required the payments to be made to Fenris. 
(iv) Was part of the 2003 EBT contribution and all of the 2004 EBT contribution subject to clawback against investment losses in 2007 as purportedly agreed in a telephone conversation on 30 Jan 2008?
(a) the alleged agreement
133.	To complete the picture, I shall return to the chronology of events. A further enquiry was made by Mr Vigeland of Mr Blair by way of an email dated 15 December 2005. He stated that he would like to know how many shares of the OEIC and HF “I currently have (both EBT and “free”)”.  Mr Blair responded that day stating:
“HF 2315.75 (of which 205.95 will cease to be under claw back on 1 Jan 2006)
OEIC: 13847.54 (of which 713.56 will cease to be under claw back on 1 Jan 2006).”

134.	On 23 January 2006 Mr Vigeland emailed Mr Blair attaching his bonus invoice in respect of Fenris for 2005 “as per our agreement on 20.01.06.” The Fenris invoice referred to consulting charges agreed on 20.01.06 of £1,526,891 plus an additional 12.8% totalling £1,722,333. 
135.	On 6 April 2006 Mr Vigeland, Fenris and EFM signed an agreement relating to clawback against discretionary fees payable to Fenris. Under a heading “Amounts subject to Clawback in respect of 2005” it recorded:
“In respect of the year ended 31 December 2005 Ennismore has agreed to pay consultancy fees subject to clawback of £1,526, 891 to Fenris which Fenris undertakes to invest in shares of Ennismore European Smaller Companies Hedge Fund (“the Shares”). The Shares will be registered in the name of Fenris. The value of the Shares will be subject to clawback at a rate of 55% of the reduction in the performance fee earned by the Company attributable to any net investment losses.
After 31 January 2009, or 3 months after the Date of cessation if earlier, the Company must give consent to the sale, transfer or assignment of the shares unless any amounts are due to it from either Fenris or AVP [Mr Vigeland] after offsetting any amounts payable by the Company to either Fenris or AVP.” 

136.	Furthermore, there is no dispute that there was a telephone conversation between Mr Blair and Mr Vigeland on 13 December 2007. The note of the conversation records:
“AV - very different idea about EVF remuneration. OK clawback-should be at 40% first tranche c393k at cost
-	hold on EVF mgt fee is a deferral till he recovers
-	no clawback on non existent performance fee from EVF.”
Mr Vigeland relied on the note as corroborating the conversation, albeit that he drew attention to the reference to his very different idea about EVF remuneration which is a reference to the Ennismore Vigeland Fund established in the Cayman Islands and in relation to which Fenris provided EFM with advice. The note also records “OK – clawback” and makes reference both to the 40% applied for Mr Vigeland by way of bonus in 2004 and also to the figure of £393,000 which was his 2004 EBT contribution figure. However, in cross examination Mr Vigeland denied the significance of the “OK clawback” reference and stated that he and Mr Blair had disagreed on clawback not only to the extent of the EVF remuneration but the very principle. He went on even to dispute that the 40% figure had been his fund manager percentage in 2004, something which is well documented. His evidence in this regard and in relation to the discussion on clawback was extremely evasive and unsatisfactory and I reject it. In my judgment, on the balance of probabilities, an agreement in principle on clawback was reached during the December conversation. At the same time, I do accept that the discussion occurred before the end of the calendar year in which investment returns or losses were calculated and that the discussion can only have been preliminary and in principle at that stage. 

137.	There was a further email exchange on 7 January 2008 between Mr Vigeland and Mr Oldfield in which Mr Oldfield refers to the fact that he had just spoken to “Andy re yr [sic] end stuff  . . . Give him a call at some stage to check it makes sense.” In his second witness statement Mr Vigeland referred to the email as referring to the discussions he was having with regard to the proposed clawback agreement and the fact that they were still ongoing at this stage which I accept.   
138.	On 29 January 2008 when the finalised figures for 2007 were available Mr Blair emailed Mr Vigeland a schedule relating to 2007 prior to a telephone discussion between them the following day. In the body of the email Mr Blair referred to the schedule as a spread sheet “summarising your 2007 performance which we can use as a basis when we talk tomorrow morning. I hope that it makes sense.” 
139.	It is common ground that ESC and EHF funds had suffered losses in 2007 as a result of investment advice from Fenris, albeit that in cross examination Mr Vigeland stated that the numbers were disputed. But for Mr Vigeland’s refusal to accept the figures in respect of the 2007 losses there was no other evidence and no documentary evidence at all which undermined the accuracy of Mr Blair’s calculations of the losses for 2007 which I accept. Further, in my judgment, given that it is accepted that there were losses and that the conversation in December 2007 took place, it was obvious that the conversation in January 2008 would relate to clawback.
140.	In Mr Blair’s spreadsheet having set out the overall loss, the 20% EFM performance fee is applied and then Mr Vigeland’s percentage of 50% is applied to that in order to reach the figure of £1,257,980. I found Mr Vigeland’s rejection of those figures in the schedule to be unconvincing and artificial. He refused to engage with the document and stated that it was not obvious to him. However, he put forward no competing figures and I accept Mr Blair’s evidence as to the loss/clawback figure. 
141.	In this regard, I also take account of Mr Vigeland’s refusal in cross examination to accept that the figure of £519,000 which appears as the Fenris management fee share for 2007. Contrary to the terms of the memorandum of understanding between Fenris and EFM as to the management fee, Mr Vigeland refused to accept that any management fee would be due at all. This evidence was typical of Mr Vigeland’s approach to the contents of the schedule. In my judgment it is inherently unlikely that there was no Fenris management fee for this period and I reject Mr Vigeland’s evidence in this regard.    
142.	To return to the schedule, under the heading “assets to claw back” the first reference is to 2004 EBT contribution. This was the year in which Mr Vigeland had worked for six months for EFM and rendered his services through Fenris in the second half of the year. Furthermore, any contributions to the EBT in 2004 can only have been in respect of Mr Vigeland alone, as it is not disputed that the very nature of an EBT means that contributions can only be made to it in relation to employees. There is no doubt but that 2004 was within the three year period during which clawback could operate. 
143.	The figure for clawback for 2004 in the schedule is £697,500. This figure was explained by Mr Blair as an uplift on £558,000 in order to turn that figure into 50% rather than a 40% bonus. He says that this was necessary as a matter of fairness because the clawback was applicable at the higher rate. It was accepted by Mr Vigeland in cross examination that the same percentage was applied to bonus and clawback. Mr Blair also stated that the £558,000 figure represented the present value of the £393,000 odd invested in the EBT in 2004 in respect of Mr Vigeland. All of the figures were consistent with Mr Blair’s underlying spreadsheets. In this regard, I accept Mr Blair’s evidence. 
144.	There is no dispute but that the next day, 30 January 2008, Mr Vigeland and Mr Blair had a telephone discussion which was based upon the contents of the schedule. In cross examination, Mr Blair stated that the conversation lasted about thirty minutes and was not contentious in any way. There was no evidence to the contrary and I accept his evidence in this regard. 
145.	There is a typed file note of the conversation on 30 January 2008 compiled by Mr Blair which Mr Blair says records the gist of the conversation. It records the following: 
“(1)	EVF fee share for 2007 – agreed that the management fee share, rather than being deferred and payable in subsequent years, be used to set off the part of the clawback liability in priority to use of the EBT.
(2) Consequently the clawback liability is to be settled in full by
a.	clawing back 100% of assets subject to Clawback from 2004;
b.	cancellation of the company’s liability to pay the deferred fee share (£519k); and
c.	reduction in EBT interest not subject to clawback of £41.5K.
(3) EFML’s entitlement to clawback against the shares held by Fenris in respect of 2005 is reduced by the £41.5k claimed from free EBT assets.
(4) AV confirmed that he had now signed the Fenris Clawback letter to Citco re the 2006 bonus invested in EVF. 
(5) AV wishes to switch the balance of his free investment within EBT into EVF shares (£590k).” 
146.	It is not disputed that despite the importance of the alleged agreement, the file note was not sent to Mr Vigeland nor to Mr Oldfield. It is also to be noted that there is no competing note of the conversation put forward by Mr Vigeland. Nevertheless, Mr Vigeland disputes the entirety of the alleged agreement but for the matter mentioned at (3) of the file note.  He says that he did offer to agree to clawback in relation to the 2007 Fenris losses against £41,500 of his free EBT assets but that was in full and final settlement. 
147.	Mr Solomon submits that given the importance of the alleged agreement it is quite incredible to suggest that Mr Blair did not send the note to Mr Vigeland or anyone else, or seek confirmation of the terms of the agreement in any other way. In the same way, Mr Solomon draws attention to the fact that the updated version of the schedule sent with Mr Blair’s email of 29 January 2008 was not sent to Mr Vigeland. At the bottom of the revised version there is a heading “Actual Agreed Clawback Applied:” and the remainder records:
“Permanent offset vs EVF Mgt fee Share 	519
Clawback vs 2004 EBT				697.50
Clawback vs other EBT assets			  41.48  (205.88 shares)
-------------
						1258.0”
148.	The figure of £519,000 refers back to the EVF Management fee share. The £697,500 is clearly the figure for the 2004 EBT contribution uplifted to which reference was made in the 13 December 2007 conversation and the balancing figure of £41,480 makes up the £1,258,000 clawback figure in full. The other free EBT assets at that stage were represented by the 2003 EBT contributions. Mr Vigeland refused to accept any of this in cross examination. He went as far as to insist that any clawback had to be subtracted from 2005 vintage despite until then it having been undisputed that he had recalled agreeing (or offering to agree) to clawback against the £41,500 which related to him personally in relation to 2003. Mr Blair strongly refuted the idea that £41,500 was the entire commercial offer in relation to clawback. I accept his evidence in this regard. In my judgment such a suggestion is incredible. 
149.	Mr Solomon submitted that Mr Blair did not dispute that amounts could have been clawed back from positive returns made by Fenris in 2005 and 2006 and that there was no need to clawback against Mr Vigeland’s personal EBT balance. He also points out that Mr Vigeland disputes that EFM were entitled to clawback against Fenris and that that was the subject matter of the Cayman proceedings. He says therefore, that it was all the more unlikely that Mr Vigeland would have agreed to Mr Blair’s proposal. Lastly, he says that Mr Vigeland’s EBT contributions the last relating to 2004, were free from clawback by 2008. 
150.	It was Mr Blair’s evidence that the schedule was made and last modified on 30 January 2008. However, the metadata records that the document was modified on 29 July 2009. Save that Mr Blair was wrong in this regard, the matter was taken no further. 
151.	Lastly, in this regard, there is a note in the following form: 
“30 January 2008
Arne Vigeland  004721697758
-	main questions – costs
-	would like to invest his free EBT into EVF
-	(1) provide him with updated spreadsheet
-	agreed we leave his free EBT intact but 
-	take off the liability for the deferred fee share
At the side: 
1.	letter re lock ups for Fenris
2.	Better for Co to remove b/s liab and leave AV with no clawback investment 
3.	Costs? (primarily)” 
This note appeared during the trial. It is unclear whether this was a contemporaneous note of Mr Blair’s conversation written by him. It was not referred to in his witness evidence nor was it in EFM’s disclosure. In this regard Mr Solomon submits that whatever else it says, Mr Blair accepts that it does not record any agreement reached. He also makes reference to the fact that EFM’s first response to Mr Vigeland’s letter of claim in January 2009, made no reference to an agreement having been reached in 2008. 

152.	In my judgment, on the balance of probabilities, an agreement was reached on 30 January 2008 in the form alleged by Mr Blair. In coming to this conclusion I take account of Mr Vigeland’s unsatisfactory evidence about the conversation in which he back tracked from his witness evidence that he had agreed the clawback in relation to £41,500 odd and suggested that he had agreed to move in principle on the £41,500 in full settlement. As I have already mentioned, I find this explanation extremely unlikely. I also take account of the fact that Mr Blair’s account is consistent with the tenor of the note of the conversation on 13 December 2007, the contemporaneous file note and the addendum to the schedule. 
153.	It is also consistent with Mr Blair’s spreadsheets which were put to Mr Vigeland and were not realistically challenged. The figures in them and the references to “AV Clawback re 2007 vs 2004” with the number – 1,385.45 which was the amount of the EHF shares originally allocated in respect of the 2004 EBT contribution and “AV claw back re 2007 vs 2005 taken against free as agreed” together with the relevant figures correlate directly with Mr Blair’s evidence as to the agreement in relation to 2003 and 2004 clawback.   
(b) Issue Estoppel
154.	Mr Hardwick also prays in aid issue estoppel. In fact, in the light of the fact that I have found that there was an agreement in relation to clawback in 2008, it is not essential to decide this point which I allowed by way of amendment on the fourth day of the trial. In any event, I will set out the core issues in brief. 
155.	Mr Hardwick says that the requisite factors are present as a result of the decision of the Honourable Mr Justice Angus Foster in the Grand Court of the Cayman Islands, Financial Services Division on 7 February 2012 in which the learned judge preferred the evidence of Mr Blair to that of Mr Vigeland in relation to the agreement made during the 30 January 2008 telephone call. The parties to that action were EFM and Fenris and it concerned clawback against Fenris under what was referred to as the Clawback Agreement.
156.	In his judgment at paragraph 11, the judge identified two principal issues concerning the Clawback Agreement one of which was characterised as the construction issue. He broke the second main issue into two parts. First was the meaning of “attributable to” in the Clawback Agreement and the second was “whether in light of that meaning, the losses sustained in Mr Vigeland’s portfolios in the years 2007 and 2008  . . . are attributable to Mr Vigeland/Fenris.” 
157.	At paragraph 15 of his judgment, the judge dealt with the year 2007 and the contentions in relation to clawback. He referred expressly to the figures in Mr Blair’s schedule and the rubric “actual agreed clawback applied” at its foot. He went on at the end of the paragraph to note: 
“Mr Blair strongly contended that he had agreed the clawback details for the year 2007 with Mr Vigeland in a telephone conversation on 30th January 2008, subsequent to which he produced the schedule to which I have referred.”
At paragraph 16, the learned judge went on to state that Mr Blair and Mr Vigeland had been extensively cross examined on whether the agreement was reached and that there was a clear conflict of evidence. 

158.	At paragraph 41 of the judgment, the judge found that agreement had been reached between Mr Blair and Mr Vigeland on the telephone on 30 January 2008 in relation to the 2007 clawback and that he preferred the evidence of Mr Blair in this regard. Mr Solomon made reference to the fact that as part of his reasoning, the judge referred to a contemporaneous hand written note of the meeting whereas the only note before the Cayman court was the typed file note to which I referred at paragraph 146 above.  
159.	At para 42 the learned judge stated:
“The significance of the agreement, as I have found it, of the 2007 clawback is, in my opinion, considerable, not as an aid to the interpretation of the Clawback Agreement, which it is not, but as evidence of there being a supplemental agreement filling the lacuna in the Clawback Agreement. It is also entirely consistent with the agreed application in respect of the previous years 2005 and 2006 of the 20% x 50% (or net 10%) multipliers and with what Ennismore subsequently relied upon pursuant to such supplemental agreement in respect of the year 2008.” 
Finally, at paragraph 54 the learned judge identified the issue of whether there was an agreement about the 2007 clawback as one of the two important issues in relation to which the evidence of Mr Blair and Mr Oldfield on the one hand and Mr Vigeland on the other was entirely contradictory. He went on at paragraph 55 to state that he found Mr Blair to have been a frank and reliable witness of integrity whom he found convincing and persuasive. 

160.	The applicable principles for issue estoppel were not in dispute and in this regard I was referred to Res Iudicata, Spencer Bower & Handley (4th edition, 2009) Chapter 8 and particular to paragraphs 8.01, 8.04, 8.05, 8.16 and 8.28.  There was also no dispute that the three key principles which emerge are:
(i)	the subject matter must be the same thing – it must be a fundamental issue;
(ii)	the parties must be the same or privies to the original parties;
and
(iii)	there must be a final adjudication on the merits. 
161.	The first point is variously described at paragraphs 8.01 and 8.02 of Spencer Bower as “an essential step in its reasoning” and as “legally indispensable to the conclusion” and “fundamental to the decision”. On the other hand, “matters of law or fact which are subsidiary or collateral are not covered by the estoppel. Findings however deliberate and formal, which concern only evidentiary facts and not ultimate facts forming the very title to rights give rise to no preclusion.” Lastly, Mr Solomon referred me in particular to paragraph 8.23 at which it is stated, “The question is whether the determination was so fundamental that the decision cannot stand without it.” 
162.	Mr Hardwick says that the 2008 Agreement was a fundamental issue of fact in the Cayman proceedings and prays in aid the pleadings, witness statement of Mr Vigeland and affidavit of Mr Blair, and the transcript of the cross examination by Mark Cunningham QC.
163.	Mr Solomon submits on the other hand that none of the pleadings or Mr Blair’s affidavit makes specific reference to the 2008 Agreement and any amount of cross examination cannot elevate the issue to a fundamental one. He says that the judge set out the principal issues at paragraph 11 of his judgment and that it was accepted by Mr Hardwick that they were questions of construction of the Clawback Agreement between Fenris and EFM. He says that it is impermissible to take account of post contractual matters such as the 2008 agreement in such a construction and this is one of the grounds of appeal. Accordingly, the 2008 agreement cannot be central to the judge’s decision. 
164.	He also says that the judge made findings as regards the 2008 Agreement only in respect of percentages to be applied in determining the retention and the multipliers that the parties agreed and that he made findings on the 2008 agreement as evidence of an agreement filling the lacuna in the Clawback Agreement. He says that the judge wrongly conflates Mr Vigeland and Fenris at times and made an error in relation to whether there was a contemporaneous note of the 2008 Agreement but that in any event, it was not fundamental to the construction question with which he was concerned. 
165.	Mr Hardwick also says that Mr Vigeland and Fenris were privies. Fenris was owned by a Belizean company established by Mr Vigeland in 2004, Mr Vigeland had control of Fenris at all material times, Fenris was the offshore vehicle through which Mr Vigeland provided his services to EFM, he was the only human actor who gave evidence on behalf of Fenris in the Cayman proceedings and Mr Vigeland and Fenris have an identity of interest. Furthermore, Mr Hardwick drew attention to the financial information before the Court and submitted that it demonstrates the way in which Mr Vigeland and Fenris were treated seamlessly. He also referred to a contemporaneous note of 13 January 2009 which records that Mr Vigeland explained to Mr Oldfield that as he owned more than 66% of Fenris the Norwegian tax authorities were attributing to him personal liability for monies paid to Fenris. 
166.	Mr Solomon on the other hand submits that Mr Vigeland was not privy to the Cayman proceedings. He was not a party to them nor was he represented before the Cayman court. Furthermore, he refers to the unchallenged evidence that Mr Vigeland was not the owner of Fenris but that it was owned by an offshore trust of which he was not a beneficiary.  
167.	Lastly, Mr Hardwick says that the issue has been the subject of final adjudication by a court of competent jurisdiction which was handed down on 7 February 2012. Mr Solomon on the other hand points out that if the appeal, which has already been heard and in which judgment is awaited, is successful and a finding of issue estoppel were made in this case, it would be necessary to make a further application here to set that decision aside. 
168.	Had it been necessary to decide these issues, I would have found that the issue of the 30 January 2008 agreement was not sufficiently fundamental to the decision in Cayman. In this regard, I accept Mr Solomon’s submissions that none of the pleadings in the Cayman proceedings, the affidavit of Mr Blair nor the witness statement of Mr Vigeland make express reference to the 2008 agreement at all and that cross examination cannot elevate an issue to one of fundamental importance to the decision. The judge himself analysed the issues with which he was concerned and the 2008 agreement was not central to his analysis. His findings at paragraphs 41 and 42 of the judgment with regard to the 2008 agreement related to the application of multipliers and determination of the retention. He found that the conversation was evidence of a supplemental agreement filling a lacuna in relation to the Clawback Agreement with which he was concerned. In my judgment this is insufficiently fundamental to satisfy the first requirement of issue estoppel. In my judgment, the determination in relation to the 2008 agreement was not so fundamental that the decision in the Cayman proceedings could not stand without it. 
169.	Even if that had not been the case, there was uncontroverted evidence before me that Fenris was not owned by Mr Vigeland and that he was not a beneficiary of the trust by which it is owned. The only contrary indicator was the 13 January 2009 note to which I have referred.  In the circumstances, in my judgment Fenris and Mr Vigeland cannot be privies despite their very close association. Furthermore in this regard, it was not clear to me at all that Fenris and Mr Vigeland had an identity of interest, the financial interest of one being contrary to that of the other.
170.	Lastly, however, had the other matters been satisfied, I would have found that there had been a final adjudication by a court of competent jurisdiction. Although I accept that a first instance decision is superseded if there is a successful appeal, judgment in the appeal has not yet been handed down. The difficult situation in which the parties find themselves could have been avoided had the stay which was in place at one stage, been continued until the decision in the Cayman appeal was known. 
(v) Has Vistra breached an express term of the EBT Deed of Settlement and is it in breach of its fiduciary duty to consider all relevant and disregard all irrelevant factors with regard to its decision not to make a distribution to Mr Vigeland? 

171.	Mr Solomon on behalf of Mr Vigeland no longer pursues a claim that Vistra holds specific investments absolutely for Mr Vigeland. This was an inevitable consequence of making clear in closing submissions that Mr Vigeland accepts that the EBT is a discretionary trust and does not claim either that the EBT is a sham or that there is a sub-trust or earmarked funds within its structure of which Mr Vigeland is the beneficiary. It is trite law that a beneficiary under a discretionary trust has no right to any defined part of the income or capital of the trust fund. The beneficiary’s only right is to be considered for the exercise of the trustees’ discretion and to compel due administration of the trustees’ duties. 
172.	It is the exercise of Vistra’s discretion upon which Mr Vigeland now focuses. He says that on the basis of the evidence there is only one way in which Vistra can properly exercise its discretion in response to the request made by Mr Vigeland’s then solicitors Judge Sykes Frixou by letter dated 6 April 2010.  By that letter Vistra was required to confirm that it would release to Mr Vigeland the entirety of his EBT holding recorded as being £865,384 as at 31 December 2004. 
173.	Mr Vigeland now seeks an order directing Vistra to distribute EBT assets to him in the amount which has been notionally allocated to him by EFM or alternatively a declaration is sought setting out the true construction of clause 4(2) of the EBT Deed of Settlement and listing the factors which are relevant and those which are irrelevant to the exercise of Vistra’s discretion together with an order that it reconsiders the exercise of its discretion promptly. 
174.	I should set out the relevant events. As I have already mentioned, by a letter from Mr Vigeland’s solicitors of 6 April 2010, Mr Vigeland requested the payment to him of the value of his EBT contributions.   The “Proposed bonuses and Salaries 31 December 04” was enclosed.  Vistra replied by a letter of 14 April 2010 in which it drew attention to its absolute discretion in relation to distributions, the fact that no beneficiary had a direct entitlement to or vested interest in any trust assets and that accordingly Mr Vigeland had no entitlement to specific assets of the EBT.  This was the first indication to the trustee of a lack of harmony between EFM and Mr Vigeland. Vistra’s solicitors responded again on 28 September 2010 stating that as a former employee, Mr Vigeland was a beneficiary of the EBT and pointing out that the EBT was “fully discretionary.” The solicitors also stated that the Cayman proceedings were a “material factor” for Vistra to take into consideration.   
175.	In fact the relevant passage in the letter was as follows.
“The legal proceedings in the Cayman Islands are a material factor for our client company to consider.  The pleadings which have been filed, and which we have seen contain an admission that Fenris Consulting Limited (“Fenris”) was at material times under the control of your client.  Furthermore, it has been alleged by the plaintiff, Ennismore Fund Management Limited (“EFML”) that it has suffered significant investment losses due to the investment advice of Fenris and/or  client.  Therefore we cannot accept your assertion that those legal proceedings are entirely discrete from your client’s request as our client company is obliged to take into account the performance of your client (as the principal of Fenris) during the totality of his time as a employee of EFML.”
176.	Vistra also took detailed legal advice in relation to its position as to which privilege has not been waived. 

177.	Mr Blair wrote to Vistra on behalf of EFM on 31 May 2012, reminding the trustee of the judgment in the Grand Court of Cayman on 7 February 2012. In particular he stated: 
“It was held inter alia that the evidence of Mr Vigeland was unreliable unconvincing and unpersuasive. The judgement makes findings concerning the investment losses attributable to Mr Vigeland and his conduct which are factors that EFM considers form an important part of any recommendation it would make to the Trustee for distributions from the Fund to Mr Vigeland. As you also know, Mr Vigeland has appealed against the judgment of the Hon Mr Justice Angus Foster. The appeal hearing is listed for 23 and 24 July 2012. EFM has incurred legal costs of approximately $700,000 in relation to the Cayman action. 
In these circumstances, EFM does not currently recommend that a distribution should be made to Mr Vigeland but will review the position after the decision of the Court of Appeal of the Cayman Islands.” 

178.	By a written resolution of 13 June 2012, having reviewed the letter and all material considerations, Vistra resolved to defer its consideration of Mr Vigeland’s request for a distribution until after the outcome of the appeal and an update has been received from EFM. The matters noted in the written resolution were these proceedings against both EFM and Vistra, the contents of Mr Blair’s letter of 31 May 2012 and in particular, the judgment in the Grand Court of Cayman, the fact that an appeal was pending, the fact that EFM did not recommend a distribution and the fact that EFM intended to review the situation after the outcome of the appeal.
179.	Ms Breusch gave evidence that Vistra administered the trust in accordance with the Deed of Settlement and that although recommendations and requests were received from EFM, the Trustee considered each exercise of its power, exercised its own discretion and documented the decision of the Trustee. I was taken to various examples of written minutes of the Trustee. She emphasised that everything Vistra does has to be in the best interests of the beneficiaries. 
180.	However, Ms Breusch as I have already mentioned was also happy to admit the reality which is that companies which set up employee benefit trusts often behave as if they are in a position to give directions to the trustee and seek to instruct it in various ways. She also accepted that but for the case of reimbursement of national insurance contributions in relation to which Vistra as a result of a misunderstanding of its powers had initially refused EFM’s recommendation, Vistra had always acceded to the company’s recommendations in relation to distributions from the EBT. This included a request for a £3million loan to Mr Oldfield which in the event was made interest free despite the reference in the trustee minute to terms as to interest.   Ms Breusch stated that if the loan had been made without interest it was a mistake.
181.	I was also referred to the telephone note of 25 January 2006 which recorded the conversation by which the trustee became aware of Mr Oldfield’s need for the loan in which there is reference to it being “required”. The loan was to enable Mr Oldfield to purchase Mr Schoningh’s interest in EFM. The note goes on to record that Mr Oldfield agreed to arrange for the directors of Ennismore [EFM] to send the trustees a letter asking them to consider making a loan. Mr Oldfield explains this as a need and stated that he did not consider that it was certain that the loan would be received which I accept. 
182.	It is also clear from a redacted Trustee file note of 2 November 2006 that the Trustee approved distributions of specific sums relating to investments in the ESC and EHF. The statement of assets for the EBT as at 30 November 2006 showed that EBT held shares in funds other than those in which EFM was directly involved.
183.	It was Ms Breusch’s evidence that Vistra had no knowledge of any bonus or clawback agreement between EFM and Mr Vigeland and that Vistra had not appointed EFM to act on its behalf in any way. There was no evidence to suggest that this may have been the case.   Furthermore, there was no evidence that EFM had control over the investments made by the trustee or the Trustee’s bank account in respect of the EBT. 
184.	Ms Breusch’s evidence with regard to the exercise of discretion was that Vistra’s primary obligation was to abide by the law, look after the assets and act in the best interests of the beneficiaries.  She was well aware of the requirement in clause 4(2) of the Deed of Settlement to have regard principally to the contribution to the success of the company made by the Employees.  She added that other elements could be taken into account and that Vistra would normally do so.  She also stated that having received a request, a member of Vistra’s staff would often ring Mr Blair for more information.  She also stated that Vistra would and has considered requests from beneficiaries and Mr Vigeland.  With regard to Mr Vigeland she stated that Vistra had yet to make a decision in relation to distribution.  However in cross examination she referred to the contribution of the Beneficiary rather than Employee.  When pressed by Mr Solomon as to her reference to Beneficiary rather than Employee she said Vistra had regard to someone’s contribution as an Employee ‘a lot’ but could not ignore if they had destroyed it in another phase of life and that was why Vistra was waiting for the outcome of the Cayman appeal.
185.	Mr Solomon points out that there is no reference to Mr Vigeland’s contribution as an employee in the resolution of 13 June 2012. He also drew attention to the definition of “Employee” in clause 1 (b) of the Deed of Settlement which refers to current employees and not former employees and that accordingly, Vistra must have regard principally to Mr Vigeland’s contribution to EFM from 2001 until June 2004 whilst he was an employee. He says that Vistra may not have principal regard to his contribution whilst a consultant or any post employment conduct or activity. In fact, he goes as far as to submit that Mr Vigeland’s post employment interaction with EFM is not a relevant factor for Vistra to take into consideration at all. 
186.	He goes on to say that a decision maker can only have principal regard to a single factor and that it is clear that in this case the single or principal factor of which Vistra has taken account is the proceedings between Fenris and EFM in the Grand Court of Cayman. In doing so he says that Vistra has contravened clause 4(2) and taken irrelevant factors into account when exercising its discretion.   
187.	He also contends that Vistra has conflated the period during which Mr Vigeland was an employee with the subsequent period and prays in aid erroneous references to Mr Vigeland being a party to the Cayman proceedings which appeared in Vistra’s Amended Defence, correspondence and the evidence of Ms Breusch on Vistra’s behalf. He drew attention to Ms Breusch’s reference in cross examination to a “Beneficiary’s contribution” rather than that of an Employee. He says that this is indicative of the error into which Vistra has fallen. He says that it has lost sight of the temporal distinction between Employee and Beneficiary and that therefore its justification for its exercise of discretion on the basis that “it is important to await the court’s decision in the Cayman Proceedings in order to understand the contribution made by Mr Vigeland to the success (or otherwise) of Ennismore” is unsustainable. He says that it is not enough to rely upon the epithet “quasi-employee”, a term which has no legal meaning. Vistra he says has principally had regard to post employment factors and therefore, is in breach of clause 4(2) and its fiduciary duty. 
188.	With regard to the exercise of the fiduciary duty, Mr Solomon adds that there is a significant distinction between an EBT and a family trust because the capital contributed to the trust pot can properly be said to have been earned by EFM’s employees, something which Mr Oldfield accepted in cross examination. Mr Solomon went on to submit that the bonus and clawback mechanism was a good indicator of contribution to success of the business and was a highly relevant factor for Vistra in the exercise of its discretion and should not have been dismissed as such by Ms Breusch in cross examination. 
189.	Mr Solomon also contends that Vistra has been overly deferential to EFM and has never made a distribution on its own initiative but has relied exclusively upon EFM. He says it was incumbent upon Vistra to make its own enquiries especially where the relationship between EFM and Mr Vigeland was no longer harmonious. He also says that there is no analogy which can be drawn with a family trust with an onshore settlor and offshore trustees because in this case the Employees or for that matter the Beneficiaries have earned the contributions made on their behalf. Lastly he says that although Vistra contends that a decision has not been made, the resolution of 13 June 2012 is effectively a decision.
190.	Vistra’s position in this regard is in accordance with Ms Breusch’s evidence.  It states that all distributions are subject to the discretion of the trustee and in this case it has taken account of the wishes of EFM and in particular, the Cayman proceedings in which judgment was obtained against Fenris. Vistra states that it considers the outcome of the appeal to be a relevant factor in its exercise of discretion and accordingly it awaits the outcome of the appeal before making any decision. It is denied that a decision has been made.
191.	Mr Hochberg on behalf of Vistra submits that “principally” in clause 4(2) means just that and does not mean “exclusively” and that former employees can have contributed to the success of the company and adversely affect it for example if they are bad leavers. He drew the analogy of a disgruntled former employee who intentionally damaged his company car or set fire to premises. He pointed out that after June 2004 Mr Vigeland was both a former employee and had accepted that he was treated as a quasi employee. 
192.	Mr Hochberg accepted that when exercising its discretion the trustee is acting in a fiduciary capacity and is required to act in good faith in the interests of the beneficiaries of the trust and that it must take account only of relevant factors. He also emphasised that it is the duty of the trustee to exercise its discretion and it is only in exceptional circumstances where there can be no doubt as to the proper basis for a distribution that the court may direct a distribution: Re Baden’s Deed Trust [1971] AC 424 at 456-7. 
193.	He also referred me to Re Esteem Settlement [2004] WTLR 1 at paragraphs 165-7 in which it is made clear that in a well run trust it would be expected that there would be a harmonious relationship between settlor, trustee and beneficiary and in those circumstances, where the settlor makes a reasonable request as to how the trustee should exercise its discretion, it would be exceptional for the request to be refused. Likewise it would be proper for the trustees to take into account a non-binding letter of wishes such as that to which I referred at paragraph 33.  Mr Hochberg submitted that this logic should also apply to employment benefit trusts. He says that in this case Vistra did not act robotically and in the case of the payment of national insurance took its own advice and that its independence arises from the very trust structure itself. 
194.	For the correct analysis of the way in which an employee benefit trust operates he referred me to the decision of the Special Commissioners in Dextra v Ronald McDonald [2002] UKSC SPC00331 at 7-10. At p 9 the Special Commissioners observed:
“The highest the case can be put is that the trustee is likely to comply with any reasonable request that is for the benefit of the beneficiaries, which is hardly surprising in the context of a trust established for the benefit of employees.  This falls far short of saying that the trustee is a cipher who will do what it is told by the six.  Mr Dart, who described himself as a trust law specialist (as was Mr Richardson, the other director who took part in meetings) seemed to us someone who well understood his duties as director of a trust company.”

195.	He also pointed out that as Vistra was independent of EFM and offshore, there was no means by which to obtain relevant information other than through EFM itself and/or the Employees or Beneficiaries and that nothing untoward can be extrapolated from the manner in which Vistra has conducted itself. In this regard he referred me to R (Rawlinson & Hunter Trustees) & Ors v Central Criminal Court [2012] EWHC 2254 (Admin) at paragraphs 5 – 8 in support for the contention that such conduct is perfectly consistent with common practice when an onshore settlor establishes an offshore trust. He also reminded me of the exchange of emails between Sandy Wood of WJB Chiltern, Mr Le Claire and Mr Oldfield in 2000 (to which I referred at paragraphs 34 and 35 above) as to the manner in which the EBT was to be properly managed and administered.  

196.	He concludes by saying that after lengthy correspondence and the fact that Mr Vigeland himself stated that he was treated as a quasi employee it is a perfectly reasonable and rational approach for Vistra to want to await the outcome of the Cayman appeal before making its decision. He says that it cannot be said that no reasonable trustee could have done so. He reiterates that the conduct of a former employee is something which can be taken into account particular in the circumstances in which the relationship with Mr Vigeland and EFM was seamless and the change to the use of a consultancy company was not of EFM’s choosing. 
197.	In my judgment, there is no evidence to suggest that the EBT has been administered in a way which is other than proper. Furthermore, it was clear from her evidence that Ms Breusch, a professional trustee involved in the administration of a number of employee benefit trusts is fully aware of her fiduciary duties. Furthermore, I accept that it is common practice when an onshore settlor establishes an offshore trust that the trustee obtains relevant information from the settlor and once it is aware of any hostility should also obtain and receive information from the beneficiary him or herself. I consider that the comments of the Special Commissioners in the Dextra case which I have set out apply equally in this case. There is no basis upon which to argue that Vistra has acted merely as a cipher for EFM and in fact, Mr Vigeland does not contend that that is the case. In the context of an employment benefit trust it is hardly surprising that it has acceded to reasonable requests by EFM in the past.  
198.	Furthermore, with regard to clause 4(2) I accept Mr Hochberg’s submissions. Whilst it is quite clear that clause 4(2) requires Vistra to take account principally of the contribution of an Employee to the company, a principal consideration does not prevent other relevant matters from being considered. It is entirely correct to point out that the definition of “Employee” does not include “former employee” nor for that matter ‘quasi employee’. However, in my judgment that cannot prevent a trustee with an absolute discretion from taking account of relevant matters post employment when considering the exercise of its discretion. 
199.	I also accept Mr Hochberg’s submission that if this were a case in which irrelevant factors had been taken into consideration in an exercise of discretion by Vistra, it would remain under a duty to reconsider the exercise of the discretion in the light of all relevant factors. This is not a case in which the position is so clear that a direction should be made to Vistra to make a distribution. Nor in my judgment would it be appropriate in this case, to set out the factors which are relevant and those which are irrelevant for the exercise of the discretion. 
200.	I should add that I note that the 13 June 2012 resolution recording Vistra’s decision to postpone the issue and reconsider a distribution to Mr Vigeland after the outcome of the Cayman appeal is known makes no mention whatever of Mr Vigeland’s contribution to EFM whilst an employee. This is something to which Vistra is required to have principal regard when exercising its discretion to make a distribution. In my judgment, given that the nature of the resolution was to defer a decision until the outcome of the Cayman appeal is known, rather than a decision in relation to distribution itself, in my judgment I do not consider that anything turns upon the lack of reference to Mr Vigeland’s contribution to EFM as an employee. 
201.	Lastly, I should make clear that I consider such a postponement to be a step which a reasonable trustee would be entitled to take in the circumstances.