Petrodel Resources Ltd v Le Breton

Where an employee continues working for the original employer after a proposed transfer to a new company fails, the court may find that the original employer assumed liability for revised remuneration. An agreement that payment is to be deferred may mean that the increased remuneration accrues as a debt but is payable only when funds become available. That is distinct from an agreement making entitlement conditional on future financing. Appellate courts should respect trial judges’ factual findings based on witness assessment where the findings were open to the judge. An award of interest is discretionary and will not be altered unless the decision was plainly wrong or outside the range of reasonable disagreement.

Timothy Showdon Le Breton brought three monetary claims after Petrodel Resources Ltd terminated his employment: a bonus, a resource-pool incentive payment and unpaid salary. The High Court, presided over by HHJ Havelock-Allen QC as a deputy High Court judge, found for him on the bonus and salary claims and entered judgment for an alternative sum on the incentive claim by consent.

The appeal concerned only the alleged increase in annual salary from $150,000 to $250,000 from 1 January 2007 and, alternatively, the date from which interest should run. The proposed new employer, Petrodel Upstream Ltd, was not capitalised, and Le Breton remained employed by Petrodel. The central issues were whether Petrodel had assumed liability for the increase, whether payment was conditional on financing, and whether the interest award should be disturbed.

1. Appeal dismissed. The High Court was entitled to find that, after the proposed financing of Petrodel Upstream Ltd failed, Le Breton remained employed by Petrodel and that Petrodel was liable for the increased salary accruing from 1 January 2007. The reference to a “PUL salary” did not determine liability because “PUL” was used both for the company and for the exploration and production business carried on by Petrodel (para [21]).
2. Before 8 February 2007 the parties had assumed that Petrodel Upstream Ltd would employ Le Breton at the increased salary. The judge found that there had been no discussion making the increase conditional upon finance being raised. After the financing failed, the March 2007 discussions implicitly recognised Petrodel as the employer. The agreement to defer payment meant that the increase accrued but payment was postponed until money became available. That finding was inconsistent with a condition that no increase would be payable unless finance was raised (paras [22], [27]).
3. The judge was entitled to accept Le Breton’s explanation for not pressing the salary claim earlier. The conclusion was open on the evidence and was supported by the commercial context and the fact that he had assumed substantial additional responsibilities while the incentive scheme had been withdrawn (paras [24]-[25]).
4. The award of interest from July 2008 was also upheld. Interest was a matter of judicial discretion. The appellant had to show that the judge was plainly wrong or had acted outside the ambit of reasonable disagreement. That threshold was not met (para [30]).

Lord Justice Lewison and Lord Justice Mummery agreed with Sir Mark Waller.

1. Court of Appeal (Civil Division) — [2011] EWCA Civ 1605: appeal dismissed.
2. High Court, Queen’s Bench Division — HHJ Havelock-Allen QC sitting as a deputy High Court judge: judgment dated 1 April 2011 for Le Breton on the bonus and salary claims, with judgment by consent for an alternative incentive sum. The appeal challenged the salary award and the date for interest.