In a judgment handed down on 3 December 2025, Mr Justice Thompsell dismissed claims of unjust enrichment and common mistake brought by the Claimants, Maritime Transport Limited and Maritime Group Limited (together, “MTL“) against the Defendant, Mr David Boomer arising out of a Settlement Agreement.
David and Mia represented the successful Defendant, instructed by Charlie Thompson of Stewarts.
The case concerned the Claimants claim to Capital Gains Tax (“CGT”) refunded to the Defendant from HMRC (the “CGT Refund”), which the Defendant had paid to HMRC in respect of payments made to him by MTL pursuant to a Growth Securities Ownership Plan (“GSOP”), which the First Tier Tribunal Tax Chamber (“FTT”) determined was subject to Income Tax (“IT”) and National Insurance (“NI”).
Background
MTL provide integrated road and rail freight logistics. Mr Boomer was employed by MTL from 1994 until 2021. He was the Chief Executive of Distribution from around 2018 until 31 May 2021 when MTL terminated his employment. He had then worked for MTL for some 27 years.
Between 2009 and 2015, MTL entered into a GSOP, which purported to offer an alternative means of renumerating key staff, whereby any payments made under it would only be subject to CGT, and not IT and NI. The scheme operated by employees entering Contracts for Differences (“CFDs”). Mr Boomer was one of the employees involved in MTL’s GSOP.
HMRC issued Notices of Determination under Regulation 80 of the Income Tax (Pay as You Earn) Regulations 2003, that MTL owed IT and NI under PAYE. In light of HMRC’s decision, around 2016, MTL agreed to pay IT and NI on account for the tax years 2016/17 and 2018/19, to avoid penalties and interest being incurred. In respect of the earlier years, HMRC already held CGT payments made by the individual employees.
Around 2017, a legal challenge against HMRC was commenced on behalf of a group of c.80 companies, including MTL (“the HMRC Challenge“).
In 2021, relations between Mr Boomer and MTL deteriorated, for reasons entirely unrelated to the GSOP/HMRC Challenge. MTL terminated Mr Boomer’s employment, and his wife’s employment, and informed him that a non-negotiable tripartite package would be prepared for him.
On 5 May 2021, a letter was sent to Mr Boomer, setting out the details of that package (“the Settlement Offer“). The second element of which was stated to be as follows [emphasis added]:
“Secondly, a payment of £1million if there is a favourable conclusion for Maritime to the current Contract for Difference case that has recently been heard by the First Tier Tax Tribunal. […] As you are aware, if HMRC’s challenge is ultimately successful, then there will be a further IT and NIC charge on you. I am prepared to agree that in this event Maritime will bear any further additional payment to HMRC.“
Mr Boomer accepted the Settlement Offer and a Settlement Agreement was drawn up and signed. In addition to an entire agreement clause, and other relevant terms, Clause 4.5 of that Settlement Agreement stated [emphasis added]:
“The Company and Maritime each agree, on a joint and several basis, to indemnify the Employee and hold him harmless in respect of any liability (and any related interest, penalties, costs and expenses) that the Employee may incur in respect of IT and/or NI contributions arising from the HMRC challenge to the GSOP/Contracts for Difference.”
The FTT handed down its decision in the HMRC Challenge on 20 January 2022, in Jones Bros Ruthin (Civil Engineering) Co Ltd, Britannia Hotels Ltd v The Commissioners for Her Majesty’s Revenue & Customs [2022] UKFTT 00026 (TC) (the “FTT Decision”). Dean J held that “the relevant payments are properly characterised as “earnings from an employment” and the Appellants are required to account for IT and are liable for NICs in respect of those earnings” [436]. MTL did not appeal.
Following the FTT Decision, MTL engaged in correspondence with HMRC, expressing that it had anticipated that HMRC would now keep the payments of CGT it already had, and only require MTL to pay the difference between that and the amount of IT and NI owed.
However, HMRC did not take this approach. It said that the CGT payments belonged to the individual employees, and that therefore, these would be refunded to those individuals, and the full amount of the IT and NI would be sought from MTL (the “Separate Payments Approach”). Individuals could choose to mandate their CGT refunds to MTL if they so chose, but there would be no off-setting from HMRC’s side. The only exception concerned select cases where employees had failed to keep their Self-Assessment tax years open or to make a claim for overpayment of CGT, in which case HMRC did allow an off-setting, since the CGT could no longer be refunded. That approach was taken in respect of one of Mr Boomer’s tax years. Otherwise, HMRC adopted the Separate Payments Approach. MTL accordingly paid the IT and NI due.
MTL subsequently wrote to Mr Boomer asking him to mandate his CGT refund to them, in exchange for it paying the IT and NI owed, and if Mr Boomer did so, MTL purported to withdraw the indemnity under Clause 4.5 of the CFDs. The letter made no reference to the terms or effect of the Settlement Agreement. Mr Boomer did not do so.
Legal Claims
MTL claimed that, on a true construction of the Settlement Agreement, they were entitled to be paid the amount of the CGT Refund received by Mr Boomer, by way of restitution, on the grounds that it discharged his liability for IT and NI under compulsion of law, and Mr Boomer, in retaining the CGT refund, had been unjustly enriched.
Alternatively, MTL claimed that the Settlement Agreement failed to give effect to the parties’ common intention (as reflected by the Settlement Offer), namely that MTL would only bear the additional further IT and NI, over-and-above the CGT already paid, for which the Defendant would become liable (i.e., the difference between the two amounts only).
Mr Boomer denied the claims in their entirety. He suggested that on a true construction, the Settlement Agreement did not entitle MTL to any payment from him. Alternatively, there was no basis to rectify the Settlement Agreement, because the parties did not have the common intention or agreement alleged.
Issues
Issue 1: Whether, on a true interpretation of the Settlement Agreement, the Claimants were only to indemnify the Defendant in respect of liability for any additional IT and NIC (in excess of the CGT which he had already paid).
Issue 2: Whether, as a matter of law, the Claimants were entitled to restitution of the amount of the CGT refund received by the Defendant.
Issue 3: Whether, at the time of the Settlement Agreement, the parties had a common intention that the Claimants would only bear the additional further IT and NIC (over and above the CGT which the Defendant had already paid), which the Settlement Agreement mistakenly failed accurately to record and whether, as a result, the Settlement Agreement should be rectified to give effect to that common intention.
Issue 4: What was the total amount of the CGT refund received by the Defendant.
High Court Decision
Mr Justice Thompsell found for the Defendant on all four issues.
In respect of Clause 4.5 of the Settlement Agreement, the Claimants’ interpretation was “impossible, to square with the plain words” and as a result, “it is difficult to see any ambiguity that needs to be clarified by reference to the surrounding facts”. The exercise the Claimants proposed the court should take ran contrary to the warnings of Lord Neuberger in Arnold v Britton not to use the surrounding circumstances to undermine the importance of the language actually used, and the court noted that it should be slow to reject the natural meaning of clause 4.5 on that basis. The existence of the entire agreement clause compounded that view. The purported lack of commercial sense was also not as pronounced as the Claimants suggested, given that Clause 4.5 was just one part of the Settlement Agreement, which arose from Mr Boomer’s dismissal after 27 years’ service, and was designed to achieve a consensual exit, on admittedly generous terms. Further, the suggestion that everyone at MTL (including Mr Boomer) was only concerned to deal with the net position between the CGT payments and IT/NI payments was considered weak. As a result, Thompsell J rejected the Claimants’ argument that Clause 4.5 needed to be interpreted not in accordance with its plain words. [31]-[45]
In respect of common mistake rectification, there was no outward expression of accord, which demonstrated a common intention of the parties to indemnify Mr Boomer only to the extent of the amount of IT and NI over-and-above the CGT already paid. Thompsell J did not accept that the Settlement Offer demonstrated an outward expression of accord, finding that its wording was ambiguous. Having considered the background, there was insufficient evidence of a common understanding between the parties. There was no real evidence that Mr Boomer would have understood the wording of the Settlement Offer in the way the Claimants suggested. The Claimants failed to provide convincing proof that the proposed rectified version of the Settlement Agreement was in accordance with the parties’ true intentions, per the tests in Joscelyne v Nissen and Fowler v Fowler. The Claimants did not even discharge the bare burden of proof and the rectification claim failed [124]-[130].
In conclusion, Thompsell J held as follows [132]:
“i) Question 1: On a true interpretation of the Settlement Agreement, the Claimants were to indemnify the Defendant in respect of liability for any additional income tax and NIC and not only for the excess above the CGT which he had already paid.
ii) Question 2: As both their interpretation argument and their rectification argument have failed, there is no basis, as a matter of law, for the Claimants to be entitled to restitution of the amount of the CGT refund received by the Defendant.
iii) Question 3: The Claimants have failed to show that, at the time of the Settlement Agreement, the parties had a common intention that the Claimants would indemnify only the additional further IT and NIC (over and above the CGT which the Defendant had already paid), and therefore have failed to establish that the Settlement Agreement mistakenly failed to record accurately such an intention. As a result, the Settlement Agreement should not be rectified to give effect to that common intention; and
