Deir v Athel & Ors

A contractual promise to pay directorship fees is construed objectively, having regard to its commercial purpose. The promise covered appointments involving more than nominal duties, but not a salaried managing-director appointment where the fee would duplicate the salary. Entitlement depended on active management, meaning readiness to perform a role beyond that of a nominal director in a company with a potential trading future. Periodic fees accrued on a daily pro rata basis. A course of dealing may establish an implied contractual term or acquiescence, so a payer who permits an established practice to continue may be unable to reclaim payments later. The court may resolve proportionate consequential calculations broadly where detailed assessment would be disproportionate.

The claimant, Zaher Nicola Jeries Deir, claimed directorship fees from Sheikh Fahad and companies associated with him, relying on an alleged oral commitment to pay £20,000 per year for each relevant directorship. The defendants denied the agreement and advanced counterclaims concerning company expenditure, aircraft, computer files, and alleged unauthorised business activities.

The litigation followed an earlier dispute between the parties before Cranston J, reported as [2010] EWHC 1276 (QB). The central issues were whether the alleged promise was contractually binding, the scope and duration of any entitlement, and whether the counterclaims were established.

1. Directorship-fee agreement. The court found that Sheikh Fahad had made a personal contractual commitment to pay Mr Deir £20,000 per year for companies to which he was appointed after moving to the United Kingdom. The commitment formed part of the consideration for Mr Deir undertaking important work in the United Kingdom.
2. Objective construction and scope. The agreement was construed objectively, having regard to its commercial purpose. It did not extend to London Ashford Airport Ltd, where Mr Deir was appointed managing director and paid a salary. Nor did it extend to a merely nominal statutory directorship. It did apply where Mr Deir performed more than nominal duties and actively managed the relevant company.
3. Active management. The relevant inquiry was whether Mr Deir was ready to act in a role beyond that of a nominal director in a company which retained a potential trading future. The court applied that approach to FAL Aviation UK Ltd, Phoenix Aero Engineering Ltd, the Lydd Golf companies, Basil Property Company SA Ltd, Barton House (No 41) Ltd and Lydd Airshow Ltd, allowing the claim for specified periods.
4. Accrual. The fees were payable pro rata on a daily basis rather than only for completed years. The court considered that result obvious from the agreement and, alternatively, supported by section 2 of the Apportionment Act 1870, under which periodic payments in the nature of income accrue from day to day.
5. Counterclaims. Some counterclaims succeeded, including the claims concerning family travel, part of the credit-card expenditure, and agreed credits. Other claims failed, including the alleged secret profits through Jet Connections, conversion of the Piper aircraft, the BMW valuation, and the alleged deletion of electronic files. An £18,000 allowance was set off for use of London Ashford Airport facilities by Jet Connections.
6. Disposition. The claim succeeded in part. The counterclaims succeeded in part. The sums due were to be recalculated consistently with the judgment, with consequential orders to follow if agreement could not be reached.