“Precisely how [the Business] was structured historically … remains obscure despite extensive cross-examination on the topic. This reflects a theme running through Mr Davies’ case, which is that his various business operations were run with a high degree of informality – indeed, one might say, with a complete disregard for any necessary formality – all of which makes it difficult to identify with any real clarity what the state of the Business was at any given point in time.”
“reflected his intention to entrust Mr Ford and Mr Monks with the growth and development of the waste management business at the Ashford Site, while he stepped back from any day-to-day involvement because of various personal difficulties which had affected him during 2010, and moved abroad.”
“As to Mr Monks, his position (broadly) is that the decision to incorporate GBRK in early 2011 was a response to the state GBR was in at the time. He says that the waste management business formerly carried on at the Ashford Site was never in fact transferred to it, and so it never had ownership of the Business; he says that although he became a director, he never became bound by any contract of employment with GBR; he says that by early 2011 GBR was insolvent (or close to insolvency) and for various reasons was not able to trade lawfully; and he says that in the circumstances he and Mr Ford were concerned about potential personal liabilities to which they might be exposed because of the physical state of the Ashford Site. Mr Monks also says that GBR had effectively been abandoned by Mr Davies, who had misled him (Mr Monks) in various ways, including by saying he was terminally ill and by failing to disclose that he (Mr Davies) was the subject of proceedings under the Directors Disqualification Act, which resulted in him being disqualified as a director for a period of 11 years with effect from8 October 2010 . In short, Mr Monks says that he and Mr Ford were justified in doing what they did in early 2011, and in reality had no choice about it given the situation they were left in by Mr Davies.”
“7. After GBRK had been operating for several months, GBR was struck off the register and dissolved on18 October 2011 . It is common ground that, at the time, neither Mr Ford nor Mr Monks had taken steps to resign as directors of GBR. In the period since then, GBRK has grown to be a successful business (its accounts for 2018 show that for the six months between 1 July and31 December 2018 , it had turnover of£3,592,689 and made profits before tax of£364,329 ). Mr Monks’ position is that this is the result of the hard work he and others have put in, and of the capital they have invested. 8. In the meantime, Mr Davies says that although he continued to feel aggrieved about the way he had been treated, he was not in a position to do anything about it because he lacked the necessary funds to do so. Much later, in 2016, he says that position was remedied, and he then petitioned for the restoration of GBR to the register under ss 1029 and 1032Companies Act 2006 …, and for its winding-up on the just and equitable ground unders 122(1)(g) Insolvency Act 1986 …. On23 January 2017 , Ms Deputy Registrar Jones made the Orders sought, restoring GBR to the register but immediately placing it in compulsory liquidation. Joint Liquidators were appointed on15 March 2017 , and on22 May 2017 , the Liquidators initiated the present proceedings. On25 July 2017 , the Liquidators assigned GBR’s claims against Mr Ford, Mr Monks and GBRK to Mr Davies, and Mr Davies was later substituted as Claimant.”
“For the avoidance of doubt, the quantum of any equitable or proprietary interest in the Business (as defined in the Particulars of Claim) to which the Claimant may be entitled if he elects for equitable relief shall be the subject of the trial of quantum, not liability.”
“I also think that Mr Davies was entirely genuine in expressing a sense of grievance at the way in which Mr Monks had acted in relation to the events described below. In other words, whatever his own shortcomings, Mr Davies really did feel that Mr Monks had acted wrongly and unfairly. 15. Overall, I feel I must treat Mr Davies’ evidence with caution, and test it carefully against the (somewhat limited) documentary record, but I do not discount it entirely.”
“Overall, I have determined that I must treat Mr Monks’ evidence generally with a high degree of caution, and on a number of points I specifically reject the evidence he gave.”
“It is … not a business characterised by customer loyalty. There are few long-term contract arrangements. Certainly, SIK did not have any long-term customer contracts, but instead relied on ad hoc work, although according to Mr Davies some customers used SIK’s services on a repeat basis. Mr Monks’ evidence, which was not challenged and which I accept on this point, was that a good customer base is only achievable if a company has a good reputation, including for regulatory compliance and good customer service. Or as he put it more graphically, “You’re only as good as your last skip.””
“(i) What was the scope of the contractual and fiduciary duties owed by Mr Monks in late 2010 and early 2011, in light of the position of GBR at the time, and was he in breach of those duties in taking the steps he took in relation to GBRK? (ii) Given that the Claim Form was issued only on22 May 2017 , more than six years after the incorporation of GBRK on7 January 2011 , are any or all claims against Mr Monks in any event time-barred? …. …. (iv) Is GBRK fixed with relevant knowledge to ground a claim against it in knowing receipt, and in any event are claims against GBRK time-barred? …. (vii) If it is correct that Mr Monks owes continuing fiduciary duties to GBR even today, with the effect that all unauthorised benefits flowing from any breach of such duties are held on trust for GBR, is Mr Davies entitled to assert a proprietary remedy in respect of such benefits – and therefore to say that, since the benefits in question are effectively the business and assets presently in the name of GBRK, such business and assets are held on constructive trust for him, such that no further trial in the proceedings is needed? (viii) If Mr Davies is in principle entitled to claim an account of profit, should Mr Monks in principle be entitled to claim an equitable allowance?”
“1. Mr Monks shall … pay to Mr Davies the sum of£170,685 in respect of funds belonging to [GBR] that Mr Monks converted to his own use … 2. Judgment be entered for Mr Davies (i) against Mr Ford and Mr Monks for equitable compensation; and (ii) against GBRK for knowing receipt. 3. The nature, extent and quantum of (i) equitable compensation payable by Mr Ford and Mr Monks; (ii) any equitable allowance granted to Mr Monks; and (iii) the proprietary and/or personal remedy to be granted to Mr Davies in respect of the business conducted by GBRK be determined at a further trial (the “Quantum Trial”).”
“As to section 175(4)(a), and the question whether the situation is one which can reasonably be regarded as likely to give rise to a conflict of interest, it seems to me that obviously it can. The conflict arises because of the tension between (1) Mr Monks’ directorship of, and ownership interest in, GBRK, on the one hand, and (2) on the other, his status as a director of GBR, which gave rise to duties owed to GBR, and which required him to avoid any situation in which he had a countervailing interest – whether or not GBR was itself capable of taking advantage of any relevant property, information or opportunity which might present itself. Thus, it seems to me that Mr Monks was tied in, and in the circumstances unable to take advantage for his own benefit of the situation at the Ashford Site which emerged in late 2010 and early 2011. He might think that unfair, but it is an entirely conventional analysis, and a consequence of the fiduciary obligations he undertook, and which exist for well-established policy reasons, essentially as a deterrent: see, e.g, Murad & Anor. v Al-Sara & Anor.[2005] EWCA Civ. 959 , per Arden LJ at [74].”
“What of the present case? I express no final conclusion about it since it is more properly an issue for the further trial in these proceedings, but there is undoubtedly evidence supporting the view that the efforts and capital investments made by Mr Monks since early 2011 have contributed to the growth and success of GBRK. In those circumstances, I take the view that Mr Monks should in principle be entitled to claim an equitable allowance… I say nothing more about the scope and extent of that allowance which, given the division of issues in the case, I was not addressed on. It seems to me that the sort of allowance I have in mind does not fall foul of the limitation identified by Lord Goff in Guinness v Saunders: it does not have the effect of relaxing the scope of the duties owed by a fiduciary or of encouraging a breach of such duties to say that, in the case of a breach, unauthorised benefits should be disgorged but subject to some allowance for the efforts made by the fiduciary in contributing to the development or growth of those benefits.”
“(i) a declaration that GBRK holds the freehold of the Ashford Site on constructive trust for Mr Davies (as assignee of GBR); and (ii) an account of profits extending to the present day and/or equitable compensation (amounting to the current value of GBRK less the value of the Ashford Site).”
“My impression of Mr Monks is that, for all his energy, drive and entrepreneurial flair, he is someone who is quite prepared to tell direct lies or to give vague answers to questions when he wants to obscure the truth. I am therefore not prepared to accept his evidence unless it is otherwise corroborated.”
“For the avoidance of doubt, this sum is in addition to any sums which (as set out above) Mr Monks might actually have received from GBRK in the relevant period.”
“Overall, the picture is a messy one. The state of the operations at the Ashford Site was shambolic. The question of the discharge by Mr Monks of his duties as a director must be looked at in light of that overall assessment.”
“271. In light of these comments, in my judgment the proper approach to assessing whether Mr Monks was in breach of duty …involves one asking not only whether pre-existing corporate assets of GBR were misapplied, but also, more pertinently, whether his actions were wrongful. 272. As will be readily apparent from the narrative above, the factual background is somewhat confused, and despite my best efforts to decode the evidence, a number of gaps and omissions remain. Notwithstanding that, a number of points are clear, and in terms of what Mr Monks did, they include the following: … 273. In my judgment, and leaving aside for the moment any modification to the orthodox position which might be said to arise from GBR being insolvent or of doubtful solvency, each of these steps on the face of it involved Mr Monks in a breach of the duties he owed as a director and fiduciary.”
“I think it’s clear enough actually. I don’t think we need to modify the language, the order obviously has to be [read] in light of the judgment, so I would suggest that we leave the language as is.”
“I think that, when read in the context of the judgment as a whole, it is quite clear that the [Liability] Judge was limiting his findings as to Mr Monks’ breaches of duty to the matters specifically listed in paragraph 272. In my view the judgment cannot be read any other way…”
“247. Thus, property acquired directly by GBRK, or contracts entered into directly by GBRK cannot be assets capable of being described as property or assets received by GBRK on trust for GBR. Further, the mere fact that GBRK entered into contracts and subsequently did business with third parties which contracts could have been entered into by GBR, does not make the prospect or expectation that GBR had of entering into those contracts an asset of GBR which can be knowingly received by GBRK. 248. Further, I agree with Mr Cook when he submits that the disposition of the relevant property must, itself, be a breach of trust or breach of fiduciary duty. I do not accept Mr Shaw’s submission there is no need for the breach of duty to be the direct cause; that a “reasonable relationship” is all that is required… 249. Thus one cannot, in my judgment, simply assert, as Mr Shaw does, that everything that GBRK had acquired by18 October 2011 was acquired in dishonest breach of Mr Monks’ duties as a director of GBR. In order to make good a claim in knowing receipt, the claimant has to point to specific assets or property acquired as a result of a specific breach or breaches of duty.”
“first, a disposal of his assets in breach of fiduciary duty; secondly, the beneficial receipt by the defendant of assets which are traceable as representing the assets of the plaintiff; and thirdly, knowledge on the part of the defendant that the assets he received are traceable to a breach of fiduciary duty.”
“Liability in knowing receipt thus derives from the combination of “the beneficial receipt … of assets which are traceable as representing the assets of the plaintiff” and “the recipient’s state of knowledge” having been “such as to make it unconscionable for him to retain the benefit of the receipt”
“A defendant must have received trust assets, not just benefited from them.”
“In short, a continuing proprietary interest in the relevant property is required for a knowing receipt claim to be possible. A defendant cannot be liable for knowing receipt if he took the property free of any interest of the claimant. It follows that, as the Judge held, “absent a continuing proprietary interest in the Disputed Securities at the time of registration, the claim in knowing receipt as pleaded will fail”.”
“However, the centrally relevant point for present purposes is that, at least in some cases where an agent acquires a benefit which came to his notice as a result of his fiduciary position, or pursuant to an opportunity which results from his fiduciary position,the equitable rule (“the rule”) is that he is to be treated as having acquired the benefit on behalf of his principal, so that it is beneficially owned by the principal. In such cases, the principal has a proprietary remedy in addition to his personal remedy against the agent, and the principal can elect between the two remedies.”
“a number of 19th century cases not involving bribes or secret commissions, where an agent or other fiduciary makes an unauthorised profit by taking advantage of an opportunity which came to his attention as a result of his agency and judges have reached the conclusion that the rule applied.”
“In … Cook v Deeks …, a company formed by the directors of a construction company was held to have entered into a contract on behalf of the construction company as the directors only knew of the contractual opportunity by virtue of their directorships. In Phipps v Boardman[1964] 1 WLR 993 (affirmed[1965] Ch 1992 , and[1967] 2 AC 46 ), where agents of certain trustees purchased shares, in circumstances where they only had that opportunity because they were agents, Wilberforce J held that the shares were held beneficially for the trust. More recently, In Bhullar v Bhullar[2003] 2 BCLC 241 , the Court of Appeal reached the same conclusion on similar facts to those in Cook (save that the asset acquired was a property rather than a contract).”
“where a fiduciary has exploited a commercial opportunity for his own benefit, the relevant question, in my judgment, is not whether the party to whom the duty is owed (the company in the instant case) had some kind of beneficial interest in the opportunity: in my judgement that would be too formalistic and restrictive an approach. Rather, the question is simply whether the fiduciary’s exploitation of the opportunity is such as to attract the application of the rule.”
“The Toronto Construction Company Ltd was a building contractor. Deeks was one of its directors. The company had been the successful tenderer for a number of construction projects for the Canadian Pacific Railway. Deeks negotiated with the Canadian Pacific Railway for a contract for a new construction project, but on his own account rather than on account of the company. Deeks then formed a new company, the Dominion Construction Company, for the purpose of entering into the new contract, which it did.”
“44. The upshot was that Deeks was regarded as holding the contract on behalf of the company. Lord Buckmaster LC [giving the advice of the Privy Council] continued, at p.564: “If, as their Lordships find on the facts, the contract in question was entered into under such circumstances that the directors could not retain the benefit of it for themselves, then it belonged in equity to the company and ought to have been dealt with as an asset of the company.” 45. Again this is not a case in which the principal had a pre-existing interest in the chose in action (i.e. the new contract) which case into existence as a consequence of the breach of duty. Nor did the Privy Council say that the opportunity itself “belonged” to the company. What “belonged” to the company in equity was the contract. On the other hand the Privy Council did not make any declaration of trust but ordered the taking of an account. On the face of it this would appear to be a personal remedy. But the account was ordered not only against Deeks and his co-directors but also against the Dominion Construction Co. Since the Dominion Construction Co. was not itself a fiduciary, the order against it could only be justified on the basis that it was in knowing receipt of trust property. Thus the principal must have had a proprietary interest in the contract.”
“Bhullar Bros Ltd owned property in Huddersfield. Two of the directors of the company discovered that the next door property was on the market. They put in a bid for it which was accepted; and the property was transferred to a newly incorporated company called Silvercrest Ltd. At the conclusion of the trial of an unfair prejudice petition Judge Behrens declared that Silvercrest Ltd held the property on trust for Bhullar Bros Ltd and ordered the directors to procure its transfer to Bhullar Bros Ltd at the price that Silvercrest Ltd had paid. His decision was affirmed by this court.”
“Thus the supposed benefit to GBRK derived not from the grant of the Second Lease, but rather from the prior transfer of the freehold to Benchmark. Further, and in any event, I do not think that the supposed benefit or advantage of gaining greater security can possibly constitute an asset or property the receipt of which can found a claim for knowing receipt.”
“If a tenant surrenders his tenancy to his immediate landlord, who accepts the surrender, the tenancy is absorbed by the landlord’s reversion and is extinguished by operation of law.”
“The ordering of an account is an equitable remedy. It is not discretionary in the true sense. It is granted or withheld on the basis of equitable principles. But one of those principles is that of proportionality…… one of the grounds on which an account may be withheld is that the taking of an account would be a disproportionate response to the gain that appears to have been made, or to the nature of that which has been misused…..”
“Where a claim based on equitable wrongdoing is made against one who is not a fiduciary, we consider that …… there is no reason why the common law rules of causation, remoteness and measure of damages should not be applied by analogy.”
“We consider that where a claim for an account of profits is made against one who is not a fiduciary, and does not owe fiduciary duties then, as Lord Nicholls said in the Blake case[2001] 1 AC 268 , the court has a discretion to grant or withhold the remedy. We therefore agree … that the ordering of an account in a non-fiduciary case is not automatic. One ground on which the court may withhold the remedy is that an account of profits would be disproportionate in relation to the particular form and extent of wrongdoing …”
“Further, and in any event, I have already held that Mr Davies is entitled to receive equitable compensation from Mr Monks in the sum representing the value of GBRK as at mid-October 2011, the date beyond which I have held that, in the counterfactual world, GBR would not have been able to trade. In my judgment, to order an account of profits against GBRK in addition to the equitable compensation would, in the circumstances, be to grant Mr Davies double recovery or to enrich him unjustly. The value of GBRK as at mid-October 2011 gives him all that to which, in my judgment, he is entitled as a result of Mr Monks’ breaches of duty. The value of GBRK as at that date takes into account the profits which that company had made in the relevant period. Thus I would, in any event, decline to grant him the discretionary remedy of an account against GBRK.”
“Equity recognises two types of compensation claim against trustees, which will be termed substitutive performance claims and reparation claims. Substitutive performance claims are claims for a money payment as a substitute for performance of the trustees’ obligation to produce trust assets in specie when called upon to do so. Claims of this sort are apposite when trust property has been misapplied in an unauthorised transaction, and the amount claimed is the objective value of the property which the trustees should be able to produce. Reparation claims are claims for a money payment to make good the damage caused by a breach of trust, and the amount claimed is measured by reference to the actual loss sustained by the beneficiaries. Claims of this sort are often brought where trustees have carelessly mismanaged trust property, but they lie more generally wherever a trustee has harmed his beneficiaries by committing a breach of duty. … Each type of claim is sometimes described as a ‘restitutionary’ claim, but this usage is best avoided, both to avoid confusing the two types of claim with one another, and to avoid confusing the trustee’s liability in either case with a liability in unjust enrichment: loss-based liability for equitable wrongdoing differs from gain-based liability for unjust enrichment, and it is clear that in this context the word ‘restitution’ is used to mean ‘compensation’. In modern times, it has also become common to describe each type of claim as a claim for ‘equitable compensation’, and this, too, can lead to confusion because it may be unclear from the context of particular cases which type of claim a court has in mind when using this expression.”
“In the context of substitutive performance claims it is often said that the trustee must effect ‘restitution’ or ‘restoration’ of the trust assets for which he has failed to account.”
“Reparation claims are claims that trustees should make good the harm which the beneficiaries have suffered as a consequence of the trustees’ breach of duty. Unlike substitutive performance claims they depend on the assertion that the trustees have committed a wrong, and the award made is calculated by reference to the loss suffered by the beneficiaries as a result of the trustee’s wrongdoing, including the loss of a chance to avoid a detriment or make a gain.”
“64. All agree that the basic right of a beneficiary is to have the trust duly administered in accordance with the provisions of the trust instrument, if any, and the general law. Where there has been a breach of that duty, the basic purpose of any remedy will be either to put the beneficiary in the same position as if the breach had not occurred or to vest in the beneficiary any profit which the trustee may have made by reason of the breach (and which ought therefore properly to be held on behalf of the beneficiary). Placing the beneficiary in the same position as he would have been in but for the breach may involve restoring the value of something lost by the breach or making good financial damage caused by the breach. But a monetary award which reflected neither loss caused nor profit gained by the wrongdoer would be penal. 65. The purpose of a restitutionary order is to replace a loss to the trust fund which the trustee has brought about. To say that there has been a loss to the trust fund in the present case of£2.5m by reason of the solicitors’ conduct, when most of that sum would have been lost if the solicitors had applied the trust fund in the way that the bank had instructed them to do, is to adopt an artificial and unrealistic view of the facts. 66. I would reiterate Lord Browne-Wilkinson’s statement [in Target Holdings Ltd v Redferns[1996] AC 421 at 436] … about the object of an equitable monetary remedy for breach of trust, whether it be sub-classified as substitutive or reparative. As the beneficiary is entitled to have the trust properly administered, so he is entitled to have made good any loss suffered by reason of a breach of duty.”
“Monetary compensation, whether classified as restitutive or reparative, is intended to make good a loss. The basic equitable principle applicable to breach of trust, as Lord Browne-Wilkinson stated, is that the beneficiary is entitled to be compensated for any loss he would not have suffered but for the breach.”
“the exercise of the jurisdiction is restricted to those cases where it cannot have the effect of encouraging trustees in any way to put themselves in a position where their interests conflict with their duties as trustees.”
“It seems to me that the sort of allowance I have in mind does not fall foul of the limitation identified by Lord Goff in Guinness vSaunders: it does not have the effect of relaxing the scope of the duties owed by a fiduciary or of encouraging a breach of such duties to say that, in the case of a breach, unauthorised benefits should be disgorged but subject to some allowance for the efforts made by the fiduciary in contributing to the development or growth of those benefits.”
“Whilst this, of course, does not necessarily directly affect the question of whether and to what extent Mr Monks is entitled to an allowance in respect of equitable compensation which he is ordered to pay GBR, it does at least show that he was in fact remunerated for his efforts in the real world. Further, the receipt by him of such sums would, in my view, have to have been taken into account in the valuation of GBRK as at October 2011 as it would have been a factor contributing to the financial state of GBRK as at that date. So, to an extent, an award of equitable compensation based on the value of GBRK has already taken into account certain payments made by that company to Mr Monks.”
“182. On the facts here, I am prepared to grant Mr Monks an allowance to recognise the skill and effort which he displayed in building up the business of GBRK. However, in my judgment it would be wrong to allow Mr Monks anything more than the£3,000 per month which I find was contemplated by the agreement described in the Handover Note. Whilst he had not seen the Handover Note itself, he has not proved that he was unaware of those parts of the arrangement that related to him. I would be very surprised indeed if he was unaware of the fact that his remuneration was, at least initially, intended to be£3,000 per month. Further, and in any event, he was being brought into GBR by Mr Davies specifically to use his skill and experience to grow the business. It is reasonable to anticipate that he would initially receive less than the market rate for the job he was doing in the expectation that his salary and the value of his shareholding would grow in time. 183. That is all I intend to allow him:£3,000 per month for 10 months, that is£30,000 . For the avoidance of doubt this sum is in addition to any sums which (as set out above) Mr Monks might actually have received from GBRK in the relevant period.”
“The learned Judge erred in finding, as a matter of fact, that the value of GBRK as of October 2011 was£800,000 when: (i) the opinion of both valuation experts was that GBRK was worth substantially less than this, and (ii) the Judge found that GBRK was insolvent at the time and so, as opined by both valuation experts, it should be valued on a net asset basis.”
“Thus I would have preferred Mr Hall’s view as to the value of GBRK as at18 October 2011 had I not thought that there was a better and more reliable valuation available on the evidence.”
“164. However, it seems to me that there is contemporaneous evidence as to what someone considered was the actual value of GBRK as at early to mid-October 2011: that is what Mr Simmons actually invested for what he was told and considered was a 20% (in fact a 25%) stake in the company. 165. Both experts agreed that the investment made by Mr and Mrs Monks Senior [i.e., the parents of Mr Monks] was not an arm’s-length transaction and could not therefore be relied upon for valuation purposes. In accounting terms (IVS 104) Mr and Mrs Monks were parties who had a “particular or special relationship” with GBRK and Mr Monks. 166. However, the experts agreed that Mr Simmons was not technically such a party.”
“Despite what Mr Simmons states, in my opinion the fact that he acquired his shares in what appears to have been an arm’s-length transaction implies the market value of all of GBRK’s shares at the date they were acquired in October 2011 was£800,000 .”
“Q. Yes. I think the point I am trying to make is that the very best evidence of what something is worth is what somebody in the market actually pays for it. So, the only way that you can – the only accurate way of doing it is to market something and find out how much somebody is in fact prepared to pay. Without that, all that you can do is try and anticipate what that person would be willing to pay; do you accept that? A. Yes.”
“170. A number of things are clear from his evidence. Firstly, although in 2011 he was a friend and business acquaintance of Mr Monks (he described himself as a “good friend”), this friendship appears to have arisen out of their prior business dealings. The relationship was nothing like as close as that between Mr Monks and his parents. Mr Simmons was looking to invest money in the long term: he wanted income and capital growth. He was interested in the share of GBRK which he was getting for his money. He was getting shares and he told me that he would not have invested his£200,000 if he had only been offered 1% of the company. Tellingly, his evidence was that the 20% figure was suggested by Mr Monks himself. He said “that was what we agreed upon”
“173. In those circumstances, and noting in particular the comments of Mr Hall in his evidence, I agree with the submission made by Mr Shaw in his written Closing that the best evidence shows that the value of GBRK as at October 2011 was£800,000 .”
“GBRK was, if not insolvent, then in a sufficiently serious financial situation to require an urgent injection of cash (which is what the investors provided).”
“There is no rule that an expert’s report which is uncontroverted and which complies withCPR PD 35 cannot be impugned in submissions and ultimately rejected by the judge. It all depends upon all of the circumstances of the case, the nature of the report itself and the purpose for which it is being used in the claim.”
“It is a question of fact whether the investments made in GBRK in October 2011 and later were arm’s-length transactions. … Mr Haywood Crouch does not consider in his view that the investment by Mr Simmons was arm’s-length and has proceeded on that basis.”