COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
(MR JUSTICE JACK)
REF NO: HQ09X01241
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE HOOPER
LORD JUSTICE TOMLINSON
| TULLETT PREBON PLC & ORS
|- and -
|BGC BROKERS LP & ORS
Mr Daniel Oudkerk QC, Miss Jane McCafferty and Miss Amy Rogers (instructed by Rosenblatt Solicitors) for the Respondents
Hearing dates : 13, 14, 15 December 2010
Crown Copyright ©
Lord Justice Maurice Kay :
An overview of the issues and findings at trial
Further salient facts
1. Constructive dismissal
"80 the defendant brokers can rely on any conduct by Tullett which, objectively considered, constituted a breach of Tullett's duty not seriously to damage the degree of trust and confidence which each was entitled to have in Tullett
104. Looked at objectively the second purpose of the meetings [held between Tullett and brokers who had entered into forward contracts with BGC] was to persuade the brokers to renege on their contracts with BGC and remain at Tullett, the first purpose being to persuade them not to walk out early
105. The next question is whether this conduct, considered objectively, was conduct likely to destroy or seriously damage the relationship of trust and confidence between Tullett and the brokers in question. Here Tullett was requiring the brokers to comply with their contracts with Tullett and threatening them with legal action and huge claims if they did not. At the same time Tullett was trying to persuade the brokers not to honour their contracts with BGC. That is the high point of the brokers' case.
106. Tullett's conduct was not intended to attack the relationship between Tullett and the brokers, but was intended to strengthen it. The context in which it happened was that the brokers were expecting a call from BGC to leave Tullett, and were prepared to do so in reliance on BGC's indemnity
107. I conclude that in the particular circumstances Tullett's conduct at the meetings was not such as to seriously damage its relationship of trust and confidence with the brokers
108. As the conduct is to be considered objectively it may in a sense be irrelevant how the brokers reacted. But I think that the contemporaneous reaction of people to a party's conduct may be of assistance in judging its seriousness."
(1) The factual challenge
"The circumstances are so infinitely various that there can be, and is, no rule of law saying what circumstances justify and what do not" (ibid).
" the legal test is whether, looking at all the circumstances objectively, that is from the perspective of a reasonable person in the position of the innocent party, the contract breaker has clearly shown an intention to abandon and altogether refuse to perform the contract."
That, it seems to me, was essentially the approach of the Judge in paragraphs 105 and 106 of his judgment.
(2) The legal challenge
"Tullett's conduct was not intended to attack the relationship between Tullett and the brokers, but was intended to strengthen it."
" all the circumstances must be taken into account insofar as they have been on an objective assessment of the intention of the contract breaker. This means that motive, while irrelevant if relied upon solely to show the subjective intention of the contract breaker, may be relevant if it reflects something of which the innocent party was, or a reasonable person in his or her position would have been, aware and throws light on the way the alleged repudiatory act would be viewed as such by a reasonable person."
"The motives of the employer cannot be determinative, or even relevant, in judging the employees' claims for breach of the implied condition."
"A party can still have an intention which may be relevant, but the intention is to be judged objectively I had it very much in mind that [I] had to have my objective spectacles on."
(3) Constructive dismissal: paragraph 106 of the judgment
"The context in which it happened was that the brokers were expecting a call from BGC to leave Tullett and were prepared to do so in reliance on BGC's indemnity."
(4) Interplay between constructive dismissal and conspiracy
2. The Part 20 claim
"[It is a] claim for damages for inducing the Tullett Three to renege on their forward contracts and to decide to remain at Tullett when their existing contracts came to an end Tullett deny that they did induce the Tullett Three to renege on their BGC contracts and assert that in each case the brokers decided for themselves not to go to BGC without inducement from Tullett. Tullett advanced a number of other defences. The defence which Tullett put first is that on any view BGC cannot establish any loss. Although it was put on behalf of Tullett as a separate defence, one aspect of whether BGC can show any loss is whether the brokers in question were entitled to terminate their contracts with BGC as they purported to do by their solicitors' letters of 1 May 2009."
" the conduct of Mr Verrier was such that the Tullett Three could have no trust and confidence in him and BGC as their future employer BGC's conduct showed a cynical disregard for the law and for employees' duties A person can have no trust or confidence in an employer who has recruited him in such a manner and should not be obliged to serve him. The Tullett Three were entitled to treat their obligation to join BGC when free to do so as ended.
I therefore conclude that while Tullett induced the Tullett Three to end their contracts with BGC, the Tullett Three were entitled to do so; that is, Tullett induced them to do something which they were entitled to do."
(1) The legal analysis
"I accept that [the obligation of trust and confidence] applied as between the brokers and BGC even though the brokers were not yet in BGC's employment. It applied as appropriate taking account of that circumstance." (Emphasis added)
"The contractual relationship continues but the employment relationship is destroyed, as it seems to me, by the garden leave notice. I do not think that thereafter there can subsist any implied obligation of good faith and fidelity between the parties."
Mr Hochhauser seeks to apply to the pre-employment, forward contract period in the present case, that analysis of the post-employment period of garden leave.
"Counsel for Mr Christiansen confessed to some difficulty in seeking to justify that part of the Vice-Chancellor's judgment But, as we heard no argument on the point from counsel for Symbian and it is not necessary to deal with it, I say no more about it."
"The mere fact that the duties would only be performed on a date subsequent to this contract having been entered into cannot take it outside the concept of a contract of employment. If it were otherwise, a very large number of contracts would not be contracts of employment, even though they were entered into perhaps only one day before the individual began actually performing his or her duties for the employer."
"Your employment under this Agreement will commence as soon as you are free and able to do so Your employment is for an initial period of five years."
There followed detailed provisions about remuneration, hours of work and other matters.
"The basis of the doctrine is that where a party to a contract before the date for performance has arrived evinces an intention not to perform his part of the contract, he has committed no breach until the date for performance arrives. Nevertheless the innocent party will be relieved of his obligations under the contract, if he so chooses, so as to render him free to arrange his affairs unhampered by the continued existence of those obligations. It is for the innocent party to elect whether he wishes to be so relieved, which he does by accepting the repudiatory act of the guilty party as a repudiation of his, the guilty party's obligations under the contract."
(2) The factual matrix
"In looking at BGC's conduct for this purpose [viz the issue of repudiatory breach of the forward contracts by BGC] I should concentrate mainly on illegal and dishonest conduct. I summarise the relevant matters for this purpose as follows:
(1) The use of Mr Hall by Mr Verrier to bring over his desk.
(2) The attempt by Mr Verrier through Mr Hall to get the brokers to write letters complaining about their white board meetings, which contained matters which the brokers thought untrue and which were untrue, I refer in particular to the spicing up of the letters by BGC.
(3) The intention of Mr Verrier to 'blow the whistle' and have all the brokers leave Tullett regardless of whether they had honest claims for constructive dismissal.
(4) The use by Mr Verrier of Mr Marshall as the adviser to the brokers, when Mr Marshall's loyalties were divided and in some respects he was assisting Mr Verrier rather than representing the interests of his clients.
I should enlarge on the third of these, which may be the most important."
"Mr Hall said to him: 'I know exactly how you feel about this but I saw Tony [Verrier] yesterday and we are all thinking of leaving together This is only going to work if we all start together at BGC."
The Judge accepted this evidence.
"The Judge was not bound to find that Tullett's conduct in asking its own employers not to walk out [but] to stay in the face of a conspiracy was the same as BGC's 'illegal and dishonest' conduct which was intended to 'cripple Tullett'."
Although the Judge was also critical of the Tullett hierarchy in the way it defended itself, the turpitude and the obloquy were of a very different order and justified a different conclusion in respect of repudiatory breach.
3. Renewed application for permission to appeal on other grounds
Lord Justice Hooper:
i) A requirement to "take all such lawful action (including resigning from your current employment) as shall be necessary to comply with your obligations under this agreement and commence your duties with [BGC] at the earliest possible time."
ii) The provision of an indemnity should the current employer take action against its employee for resigning in breach of the contract of employment between them.
iii) The provision of substantial salary and commission payments together with substantial signing-on payments, as to which see paragraph 6 of the judgment of Maurice Kay LJ.
iv) The obligation on the part of the person entering into a forward contract with BGC to pay a very substantial sum in liquidated damages should he not resign from his current employment when he was legally entitled to do so. (In the case of Mr Sully the agreed sum should he not resign from Tullett when entitled to do so appears to have been one year's salary, a bonus payable to him and other benefits multiplied by 0.4, a minimum of over £325,000)
"But indemnities carry two dangers. A recruit who has an indemnity is more likely to break, or run the risk of breaking, his existing contract if he is covered by an indemnity. Second, the indemnity is likely to have a provision as here: 'It is a condition precedent that the company has given prior approval to all and any steps taken in connection with this indemnity', or to similar effect. While this does not enable the recruiting company to tell the employee what to do, it comes close to it. In cross-examination Mr Lynn accepted that BGC used an indemnity as a means of controlling the conduct of the employee with his current employer Day 22.101. In his evidence Mr Smith said that he saw indemnities almost as a licence for wrongdoing by individuals Day 11.108. In paragraph 64(8) above I have referred to the discussion which had taken place between Mr Verrier and Mr Marshall about the operation of the indemnity if BGC called on the brokers to leave Tullett."
In paragraph 64(8) Jack J wrote:
"This confirms that Mr Marshall and Mr Verrier had discussed the operation of the indemnity in the context that BGC asked the brokers to walk out of Tullett. It appears that there was then to be an extension of the indemnity to cover the situation."
"Further, where as here, the recruit's contract with his employer requires him to report an approach, encouraging the employee not to do so in knowledge of the term, will be inducing a breach of contract and tortious. Mr Verrier was familiar with the terms of Tullett contracts."
Lord Justice Tomlinson: