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Amin v Amin (supplemental) [2010] EWHC 528 (Ch)

Judgment in quantum meruit claim concerning services provided by daughter to family company. The claimant was awarded £105,000.

This judgment is supplemental to Amin & Amin v Amin & Others [2009] EWHC 3356 (Ch). Having concluded in that judgment that Harshika Desai, one of the defendants, was entitled to make a quantum meruit claim against Cashco, Warren J is concerned in this judgment with the  issue of quantifying the value of services provided by her, as daughter, to a family business.  A summary of the wide-ranging nature of her duties can be found in the judgment. At paragraph 11 Warren J reiterates the factors – essentially family and cultural – that led him to conclude that Harshika was not entitled to a full commercial rate of compensation.  In particular, when looking at the historical profits of the family business, if Harshika had received a commercial salary it would have made a significant dent in the partnership profits enjoyed over time by the partners and the wider family. In consequence, Warren J awards Harshika £105,000 together with interest from the date of the quantum meruit claim, subject to possible adjustment following further argument concerning the tax consequences of the award.

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Neutral Citation Number: [2010] EWHC 528 (Ch)
Case No: HC05C00480

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL

16/03/2010

B e f o r e :
MR JUSTICE WARREN
____________________
Between:

(1) VATSAL BABUBHAI AMIN
(2) ANJU VATSAL AMIN 
(Claimants)

- and - 

(1) UDHYAM BABUBHAI AMIN
(2) RAHULKUMAR J DESAI
(3) PUSHPABHEN BABUBHAI AMIN
(4) CHAMPABEN KANTIBHAI PATEL
(5) MANJULABEN BHARATBHAI PATEL
(6) SANGITABEN VIPINBHAI PATEL
(7) BHARATBHAI J PATEL
(8) VIPINBHAI PATEL
(9) HASMUKBHAI J PATEL
(10) INDUBEN H PATEL
(11) BAKULKUMAR HARSHADRAY PATEL
(12) NAYANA BAKUL PATEL
(13) HARSHIKA RAHUL DESAI
(14) SWATIBEN B PATEL
(15) PRASHANTBHAI N PATEL
(16) BHAVINESHBHAI N PATEL
(17) BHAVINI UDHYAM AMIN
(18) BHAVINBHAI B PATEL 
(Defendants) 


And Between : 
4833 of 2005
(1) VATSAL BABUBHAI AMIN
(2) ANJU VATSAL AMIN 
(Claimants)

- and - 

(1) UDHYAM BABUBHAI AMIN
(2) BHAVINI UDHYAM AMIN
(3) PUSHPABEN BABUBHAI AMIN
(4) VU CHEM LIMITED 
(Respondents)
____________________
Mr T Sisley and Mr J O'Mahony (instructed by Messrs Magwells) for the Claimants
Mr P Talbot QC and Mr D McCourt Fritz (instructed by Messrs Stephenson Harwood ) for the First,Ninth,Tenth, and Seventeenth Defendants
Mr T Braithwaite (instructed by Messrs Cumberland Ellis) for the other Defendants (excepting the fourth and eighth defendants)
Hearing dates: 8th & 9th March 2010.
____________________
HTML VERSION OF JUDGMENT
____________________
Crown Copyright ©

Mr Justice Warren
:
1. This judgment follows on from my main judgment in these proceedings ([2009] EWHC 3356 (Ch)) with which it should be read.

Harshika's claim to a quantum meruit
2. I have now heard further argument about the quantum of Harshika's claim to a quantum meruit. I considered the relevant law and applied it to the facts as I found them in paragraphs 390 to 403 of my main judgment.

3. As a matter of decision, I held that Harshika's claim to a quantum meruit succeeded. I understood Mr Braithwaite as putting on her behalf a claim to remuneration equivalent to that which Cashco would have needed to pay, over the years, to a third party employed to carry out the work carried out by Harshika. Let me call that "full" restitution for short. I said that I did not think that that could possibly be the correct result in this family context. The considerations which I listed in paragraph 394 of my main judgment led me to say that this was not a family where it would have been expected that Harshika would take what might be regarded as an ordinary commercial salary. In paragraph 395, I stated that I had no doubt that, had the Father during his lifetime, ensured that provision was made for Harshika of some reward less than the full value of her services (ie less than "full" restitution), she would have accepted it. I added that she could not have expected to receive more than the business could afford. Accordingly, although deciding that Harshika's claim succeeded, I stated that it did not succeed to the extent to which Mr Braithwaite submitted.

4. Mr Braithwaite, in his skeleton argument for the present hearing, submits that my conclusions about the correct approach to quantification fail to give effect to the nature of the restitutionary remedy. That remedy, he correctly observes, is not concerned with the loss to Harshika but with valuing the benefit received by Cashco. He refers me to the way in which Hoffmann LJ put it in Ministry of Defence v Ashman (1993) 66 P&CR 195, "….all that matters is the value of the benefit which the defendant has received" a statement which, in context, must be read as referring the "value of the benefit to the defendant". I do not dissent from that for a moment as an accurate statement of general principle. Thus, whilst a benefit must be obtained at the expense of the Claimant there does not have to be a corresponding loss to the Claimant in order to measure what is recoverable.

5. Referring to Goff & Jones The Law of Restitution (7th ed) at 1-034, he submits that

a. Market value is the prima facie measure of recovery based on the provision of services freely accepted (as they were, I accept, in the present case).

b. The burden is on the partners in Cashco to persuade the court that the benefit it received was worth less than the market value of the service.

c. A defendant may be able to do this by proving that the subjective benefit received was worth less than the market value.

6. He submits that if Cashco can establish that the benefit received was in fact worth less than the market value, it would be proper for the Court to take that into account in assessing the value of the benefit. But the mere fact that the benefit was rendered in a family context, or may have been motivated by factors such as family obligation, does not devalue it. He submits that it not appropriate to have regard to the arrangements which Harshika and the Father might have implemented had he done what he said he would do. Having concluded that Cashco freely accepted Harshika's services knowing that she expected some reward, she is entitled to a restitutionary remedy which must be assessed having regard to the benefit received by Cashco. That was a commercial benefit, the value of which can and should be assessed by reference to the full market value of her services.

7. I expressed concern that these submissions amounted to an invitation to me to depart from things which I had said in my main judgment and which would be matters appropriate to an appeal. It is not for a judge to expand on his reasons, let alone change his mind, when it comes to further submissions consequential upon a judgment.

8. However, in his oral submissions, Mr Braithwaite submitted that I was entitled to depart from what I had said referring me to passages about issue estoppel in Spencer Bower, Turner and Handley The Doctrine of Res Judicata (3rd ed) at paragraph 201 in support of the proposition that a judge is only bound by a determination of an issue in another case where that determination was necessary to the decision and fundamental to it. I am only bound, he says, by what I said in relation to matters that were essential to my decision. In the present case, my decision, according to him, went no further than holding that Harshika had a right to a restitutionary remedy and that I expressed only tentative views about the approach to quantum. Harshika is now entitled to have the quantum of her claim ascertained according to the correct principles whatever I may have said provided it was not actually part of my decision. Nonetheless, in his oral submissions, Mr Braithwaite said that he did not dissent from my statement that the question of what was fair remuneration had to be judged in the context of the particular family relationship involved, in the context of this particular business and its profitability.

9. I do not think that it is open to me to depart from what I said in paragraphs 393 to 403 of my main judgment. Even accepting for the sake of argument that the same approach to issue estoppel should be adopted when it comes to working out, in the same action, the consequences of a judgment, as apply in a separate action, it was part of my decision that Harshika was not entitled to a quantum meruit equal to the full value which I have described. What I said by way of qualification to her claim for "full" restitution was part of my decision in that it formed the basis on which the court should thereafter approach the quantification exercise. Although I did not, in my main judgment, decide the weight which should be attached to the factors which I identified, let alone say anything about the figures, what I said about approach was part of my decision and was intended to indicate the principles on which the matter should subsequently proceed to quantification.

10. In point of fact, I doubt that there is very much difference in principle between the approach which I indicated and the approach which Mr Braithwaite says is correct. As the evidence has turned out, there is not, in fact, any difference in the result reached as will be seen later in this judgment. On either approach, it is relevant to ascertain the going rate of payment for the sort of work which Harshika carried out. But that is only one factor in the exercise since, as Mr Braithwaite points out, the real question is what the value of Harshika's services was to Cashco.

11. In answering that question, it seemed to me, and it still seems to me, that the factors which I identified in my main judgment are proper to take into account. It is not the mere fact that Harshika is a family member which might justify a significant departure from "full" restitution. Rather, it is the unique circumstances of this particular family in this particular business which is important. In that special context, the following factors are particularly relevant:

a. Harshika would have agreed to serve for whatever remuneration the Father determined. But, since he was universally respected as an honourable and honest man, she would, on the one hand, be confident that he would not, contrary to his word, leave her with nothing. However, she must accept, on the other hand, that he would not pay her more than the business could afford and would, in assessing that amount, take into account the family philosophy of ploughing profits back into the business. For the years now in question, it is not what the Father would have agreed since he was no longer alive. There is no reason to think, however, that his death changed the principles on which Harshika's quantum meruit should be assessed.

b. In my judgment, it is permissible (and correct) to take that factor into account. It is a factor which provides a strong steer to the value which Harshika's services had to Cashco. If, acting reasonably, the Father could have acquired Harshika's services for £X pa, that figure being one which she would accept without complaint, then the fact that "full" restitution would be a larger amount does not lead to the conclusion that that larger amount is the value of the services to Cashco rather than the amount (£X) which all concerned would have considered fair and reasonable. This is not, I consider, to introduce into the law of unjust enrichment the imposition of some sort of judicial yardstick of fairness. Rather, it is to recognise that the search is for the value of the services to Cashco. In an ordinary case, the market price at which an employer would need to pay an employee to perform services equivalent to those carried out by Harshika is an appropriate proxy for the value of the services to the employer. But if, in particular circumstances, a particular employer acting fairly and reasonably would be able to obtain the services of a particular person for less than that market rate, there is no reason, I consider, to grant a remedy of "full" restitution since "full" restitution would not reflect the underlying principle.

c. The accounts of the business show a steady, but not spectacular, increase in gross profit for trading over the period in question – 1999 to 2005. Starting at just over £280K for 1999, it rises to over £580K in 2004 with a similar rate of gross for the period ending in February 2005. But net profit is much lower, reflecting accounting policies introduced in 1998 when depreciation was shown for the first time. Net profit was just over £61.6K in 1995, decreasing to £11.6K in 1996, and then steadily rising to just over £231.4K in 2004. But net profit for the period to February 2005 was at a lower rate of less than £80K pa. Those are the figures in the accounts; but as will be apparent from my main judgment, there must be serious doubt about what the real profits were.

d. Some care must be taken in how these figures are used. It is obviously not right to judge the value of Harshika's service by conducting a minute analysis of the profits of Cashco year by year. These figures have to be taken as a whole to show the sort of profit which was being made and the sort of figures which the business could therefore afford to pay or, perhaps more importantly, could be seen as able to afford to pay at the time when the relevant services were being rendered. Account should therefore be taken not only of profitability in the years in question but in the years prior to 1999 as indicative of what the business would be able to afford. As to that, the accounts for 1992 to 1994 show gross profits of just over £244.7K rising to just over £280.3K with net profit figures being nearly £148K to just over £140K. But earlier years show markedly lower net profits; indeed for 1981 to 1984, there was a net loss and net profits did not rise above £50,000 until 1992.

e. Remuneration at the sort of level which Harshika is now claiming would have made a large dent in those profits and had a serious impact on the profits available to the partners for distribution or ploughing back into the business. It would produce, I consider, a disproportionate benefit for Harshika as compared with Udi and Vatsal. This is particularly so in the case of Udi who was himself heavily engaged in the strategic management of Cashco and spent a considerable amount of his time on its affairs. In any event, Cashco was the entity through which Udi derived the bulk of his income in running the family enterprises generally; and to some extent, it can be said that Vatsal derived some of his income from Cashco rather than VU Chem even though his actual working time was spent almost exclusively on VU Chem business.

f. The next factor, to which I do not attach much weight, but it is a factor, is that Harshika's husband was a partner – by his own account a sleeping partner who had not contributed to the business. Her own immediate family therefore already had some interest in the business.

12. At this stage, I wish to consider the evidence about the work which Harshika undertook and the amount which an employer in the open market would have had to pay for a person to carry out that work.

13. Harshika has described the nature of her work in her main witness statement prepared for the trial. She has enlarged on that in a short witness statement prepared shortly before the present hearing. In her main witness statement, she describes her duties in this way:

a. Managing staff on a daily basis, giving them instructions.

b. Organising the display of goods.

c. Attending customers.

d. Reviewing and ordering goods.

e. Attending supplier representatives.

f. Often dealing with banking for Cashco and the retail shops: I do not know what this involved but I think it relates to day to day matters such as banking cheques and not to discussions with the bank about overdraft facilities or matters of that sort.

g. Organising deliveries to VU Chem and conducting banking for the pharmacy chain.

h. She says she was the main person who did all the data entry for the Cashco business and dealt with checking of pricing on invoices to computer data.

i. She said her job description would not be easy one to put down but "in essence I have being doing everything needed to preserve and grow the Cashco business in the same way I would have done if I was the sole owner of the business".

14. The supplemental witness statement (on which Mr Sisley did not wish to cross-examine) puts a little flesh on the rather bare account previously given. It indicates rather more responsibility for example:

a. Supervising and managing employees (including human resources responsibility and disciplinary action).
b. Settling margins which involves checking the market place of the products and thereafter setting Cashco's selling prices.
c. Negotiating and placing orders with and maintaining good relations with suppliers.
d. Assessing, formalising and reviewing appropriate credit limits customer.

15. The evidence satisfies me that Harshika's role was more than the clerical and routine administrative roles which Mr Sisley really says her job was all about. I take account of all of the activities which she describes in her supplemental witness statement (not all of which I have set out). But I do not accept as an accurate summary the way in which she describes the essence of her job in her first witness statement. To describe her functions as subsuming all the function of the owner of a business is not, in my view, accurate. In particular, there is nothing to establish, whatever she may say in general terms, that she had a strategic role in the development of the business; and if her description of the essence of her job were correct, it would mean that Udi had a far less significant role in the management and strategic direction of Cashco than I am sure he had. The controlling financial mind of Cashco was clearly Udi and not Harshika. He was very much in charge in this family where, in accordance with convention, the men had the leading roles. The evidence which I heard at length at trial, and which I am not going to rehearse, is consistent only with the conclusion that it was Udi who was in charge of Cashco at Weir Road.

16. Harshika's evidence, which is not contradicted, is that she worked long hours, spending as much as 66 hours a week at Cashco. This, then, was clearly a "way-of-life" business for her. It is not sensible to try to compare the sort of commitment that a family member has to a family business to the attitude that an ordinary employee earning a wage would have to his employer's business. I take into account in my assessment of the value of Harshika's services to Cashco the fact that she worked long hours. But it is not appropriate, in my judgment, to ascertain the market value of an ordinary employee carrying out the sort of work carried out by Harshika during an ordinary working week of, say 40 hours, and then to say that the market value of her services must be proportionately increased.

17. As to market value, I have little evidence. Harshika has produced two letters from third parties. One is from the proprietor of HT & Co (Drinks) Ltd (which I think is a retailer), stating that he currently (ie March 2010) employs buyers in (a) wine (b) confectionery soft drinks and tobacco and (c) beers, spirits and cider with average pay of £32,000 pa. He says that he has been dealing with Harshika and that, were she working for him carrying out her current duties, she would earn about £53,000 pa. The other is from a Mr MM Patel, sales director of a cash-and-carry business, who says he has known and dealt with Harshika for over 20 years as a buyer for Cashco. He says that she "has specialised as a expert buyer and I would not hesitate to employ her with the salary of £55,000 per annum" and makes some flattering remarks about her skills. Those letters may be expressions of perfectly genuinely held opinion by the writers, but it is not evidence on which I can place any significant weight. I simply do not know what the individuals were told or what they were asked; I do not know, in the case of the proprietor of HT & Co (Drinks) Ltd how the work, which he says he would pay her that sort of salary to carry out, compares with the work which she in fact carries out.

18. I also have the result of some surveys carried out about remuneration levels throughout the UK. These are extracts from the Annual Survey of Hours and Earning of the Office for National Statistics. The extracts show separate tables for females and males and females taken together. Conveniently, it appears that the statistics are prepared to the end of February so that the page referring to 2005 is based on information as of the end of February 2005, and so on.

19. Mr Sisley has produced these and relies on them to show where the market value really lies. If an attempt is made to align Harshika's work with the categories set out in the survey, it is a mix, he says, of two categories:

a. First, under the heading "Administrative and secretarial occupations", he focuses on the categories "Numerical clerks and cashiers Accounts and wages clerks, bookkeepers and other financial clerks Counterclerks and cashiers".

b. Secondly, under the heading "Sales and customer service occupations" he focuses on the categories "Sales assistants and checkout operators Sales assistants Retail cash desk and check-out operators".

20. In his skeleton argument, Mr Sisley carried out an analysis as follows:

a. For his first categories, the mean for 1999 was £13,604 and for 2005 was £18,305. For his second categories, the corresponding figures were £9,170 and £12,001.

b. The average of these two sets of figures for 1999 was £11,387 for 1999 and £15,153 for 2005. Taking a straight line basis between those two figures give a mid-point of was £13,270.

c. The total for 6 years was £79,620.

21. Implicit in this analysis is that the mix of Harshika's work justifies a straight averaging of the two sets of categories relied for which Mr Sisley has not provided any justification.

22. Mr Braithwaite has not said that these extracts are inadmissible or that they do not show what they purport to show. They are, he does say, not of a great deal of help and are certainly not conclusive. Insofar as he accepts that the extracts are relevant at all, Mr Braithwaite submits that Harshika's work is most closely aligned with the entries, under the heading "Managers and senior officials" in the categories "Managers in Distribution, Storage and Retaining" and "retail and wholesale mangers". The mean figures for 2005 were £19,883 and £18,316, giving an average (adopting Mr Sisley' approach) of £19,099.5. The total for 6 years was £114,597. I do not have the corresponding figures for 1999: the categories changed in the intervening years and I cannot tell which 1999 category corresponds with the 2005 categories.

23. The figures used above are for the UK as a whole and do not reflect any London weighting. Mr Sisley accepts that London weighting must be recognised. I have been provided with a further extract from the ONS survey which shows for all jobs covered by the survey (for males and females) for 2005 a mean annual pay of £23,389 with a median figure of £18,949. It provides a breakdown of this, area by area. For Lambeth, where Cashco has its offices, the mean figure was £31,841 and the median figure was £26,470. The mean for Lambeth is therefore about 36% above UK and the median 40% above UK. That does, unfortunately, tell us a great deal about the London weighting appropriate to any particular category of job or, indeed, about the percentage weighting appropriate to Lambeth. This is because the profile of jobs in Lambeth as compared with the UK is not revealed. It may well be that the preponderance of jobs in Lambeth is to be found in higher paid categories than in the UK as a whole. I also note that the mean figure for females was £22,994 as compared with the figure for males and females of £23,389.

24. I consider that different elements of Harshika's work overall are aligned to some extent with both Mr Braithwaite's and Mr Sisley's selected categories, although I am not convinced that it is really close to any of these categories. The result is, as Mr Sisley's approach entails, a mix of categories.

25. There is no single right answer to the market value of Harshika's services. But I think that the ONS survey is the most reliable guide which I have. It is certainly more reliable than the two letters which I have referred to. On that basis, I have to decide how Harshika's work is properly to be seen as apportioned between the categories, taking an appropriately broad-brush approach to this unscientific exercise: as to which see paragraph 403 of my main judgment. Without further elaboration, I state my conclusion that, for 2005, the appropriate figure is £20,000, including London weighting for Lambeth.

26. Mr Braithwaite says that I should take the figure which I arrive at as the relevant figure for market value for 2005 and simply multiply it by 6 to arrive at the appropriate figure for the 6 year period for which Harshika's claim is not time-barred. The rationale for that is that, if a separate exercise were carried out for each year, interest would be payable. It is administratively simpler to carry out the exercise which he suggest; and to operate in this way is beneficial to Vatsal, he says, because the effect is to substitute the rate of inflation for the (variable) rate of interest from 1999 to 2002. That is not quite correct, since it would be to substitute wage inflation for interest. He also submits that on the figure thus calculated, interest should be paid from 2005 to date.

27. Mr Sisley urges a different approach. He submits that I should take a straight line between the open market values for 1999 and 2005, taking the average (that is to say, the half way point between the two figures) and multiply that by 6; no interest should be paid at all on the resulting figure.

28. As to interest, Mr Braithwaite's approach is a conventional one: Harshika has been kept out of her money and should be paid. His proposal for the adoption of a single figure for 2005 and multiplying it by 6 would be an elegant solution.

29. Mr Sisley submits that no interest should run. Accordingly, adopting a different simplifying factor, he takes the mid-point (the straight line as he puts it) between his figures for 1999 and 2005 and multiplies that figure by 6. That gives no interest up to 2005; interest should not, he says, be awarded thereafter. He relies, by analogy, on Birkett v Hayes [1982] 1 WLR 816 and in particular on what Watkins LJ said at page 825E about postponing the period of interest where there has been unjustifiable delay in bringing an action to trial. The judge was there referring to unjustifiable delay by a plaintiff in pursuing his claim after the date of the writ. Mr Sisley cannot, I think, complain against Harshika that she has been dilatory in her pursuit of the litigation. It would not have been reasonable to expect her to bring her counterclaim to court before the main action came to be heard.

30. Given the really significant delays on the part of Harshika in asserting any claim at all over many many years she has and given that her eventual claims came essentially as a riposte to Vatsal's actions against other members of the family, I consider that it would not be right to provide for the payment of interest prior to May 2005 when Harshika actually made her claims in her original Defence and Counterclaim.

31. Once the claim had been made, and there being no delay caused by Harshika after she made her claim, she should prima facie, be entitled to interest. Against that, it can be pointed out that it was not until the hearing, when Mr Braithwaite perhaps detecting which way the evidential wind might be blowing, that HarshikaHarshika abandoned what had, up until then, been her principal claim (namely, a claim to a share in Cashco) and concentrated on the claim which she had pleaded in the alternative (namely a claim for quantum meruit). In my judgment, Harshika is entitled to interest from the date of her counterclaim when she first raised the quantum meruit claim albeit as an alternative case.

32. However, to take the figure for the market value of Harshika's services in 2005 and to multiply it by 6 would be to give Harshika something akin to interest in respect of those parts of her claim for earlier years. I would therefore consider it more appropriate to adopt Mr Sisley's approach. Unfortunately, not having the appropriate comparable survey figure for 1999 by reference to Mr Braithwaite's categories, a further approximation is required. I therefore propose to apply to the 2005 figure of £20,000 a reduction to arrive at a figure corresponding to the mid-point which I have mentioned and to so by assuming that the percentage increase from 1999 to 2005 in the wages of those in Mr Braithwaite's categories were the same as in relation to Mr Sisley's categories. The result is the figure £X where X = 20,000 x (13,270/ 15,153) = £17,515. Multiplying by 6 gives a figure of £105,088. I propose to round that to £105K.

33. The figure of £105K represents the amount of Harshika's claim in February 2005 on the basis of "full" restitution. The next question is what, if any adjustment needs to be made to the amount of that "full" restitution to reflect the value to Cashco of the services of Harshika concerned. The amount of "full" restitution is considerably less than the amount which Mr Braithwaite had in mind at trial. My statement about what could not possibly be correct in this family context was made in the context of the submission that "full" restitution would result in payment at a rate of £60-75,000 pa. With the "full" value now being shown to be of a modest amount in comparison with that claim, the scope for an argument that the value to Cashco was in fact less than that amount is significantly reduced.

34. In my judgment, applying the criteria identified in my main judgment and discussed further above, it is not appropriate to make any adjustment. The result is that Harshika is entitled to receive from Cashco the sum of £105K plus interests from the date in May 2005 when she first pleaded her quantum meruit claim. This is subject to the following point.

35. This is a discrete point which concerns the tax consequences of any payment to Harshika. It is said to be unclear whether the partners in Cashco will be allowed any deduction from profits for the amounts paid to Harshika and unclear how Harshika herself will be subjected to tax on it. Will the partners be able re-open closed years of assessment? If not, will they be allowed a deduction in the year of payment? Or will they obtain no deduction at all, except for the current year? Will Harshika be taxed (either to income tax or capital gains tax) on the whole amount of the payment received by her? Or will she be taxed only on some of it? In either case, in which years will she be taxed? There may be similar questions in relation to National Insurance contributions.

36. It is, to my mind, slightly surprising that the parties have not presented me with any advice from their expert advisers about the tax position. I cannot believe that the questions are either particularly unusual or difficult, although they are not so straightforward that I can give an answer without any assistance. I comment that the provisions of section 36 Income Tax (Trading and Other Income) Act 2005 will need to be considered: this section provides that no deduction is allowed to an employer in a given period of account for employee's remuneration for that period unless paid within 9 months of the end of that period; if later, the deduction is in the year of payment although there are exceptions for significant errors.

37. It seems to me, therefore, that I should, in the first instance, make a determination of the amount which Harshika ought to receive without making any allowance for the possibility that the tax position is in fact different in economic terms from that which it would have been if payment had been made in the tax years in question. I would be surprised if Harshika were not to be taxed in one way or another on the whole amount she receives; and it seems to me more than probable that the partners in Cashco will obtain deductions in one tax year or another for the whole of the amount paid. If the position in fact turns out differently, that will be the appropriate time at which to debate and decide what, if any, effect the tax position has an impact on the proper quantum of the claim. I decline to make a decision at this stage not least because it may turn out both that Harshika will be taxed on everything she receives and that the partners in Cashco will obtain a full deduction. I consider that either side should be allowed to return to court to have the figures adjusted to reflect the final tax position.

38. I will make an appropriate order to reflect the contents of this judgment after hearing Counsel on the form of such an order.