England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		15th November 2007

HHJ PETER COULSON QC:

INTRODUCTION

1. In these proceedings the Claimant, (whom I shall call "Tullett"), seeks damages, declarations and an injunction restraining their employee, the First Defendant, Mr. Davis, from taking up a new job with the Second Defendant (whom I shall call "GFI") until 20^th May, 2008, the date on which his notice period expires. The claims are rendered more complicated by the fact that a number of GFI's former employees have recently left GFI and signed new contracts of employment with Tullett.
2. This litigation culminates in a trial on Monday, 26^th November. It is perhaps not for the faint-hearted. Although the application before me is in respect of specific disclosure and inspection of a handful of documents, the underlying animosities between the parties – although, happily, not between counsel - were never far from the surface. This is in many ways an old-fashioned turf war between two City broking firms. Although I do not need to explore the history of that war in great detail, it is necessary for me to set out a thumbnail sketch of the background to the disputes and the issues that arise in the litigation.

BACKGROUND

3. Mr. Davis worked for Tullett on its Euro Corporate Bond cashdesk. In January 2007 that was merged with its Credit Default Swap ("CDS") desk. Mr. Davis was appointed to head the merged desk. It appears to be common ground that GFI were the market leader in CDS and that it was an area of trading in which Tullett were keen to increase their own share of the market.
4. For reasons which will doubtless be explored at the trial, Mr. Davis resigned from Tullett on 21^st May, 2007 giving the twelve months' required by his contract. The chief operating officer of Tullett, Mr. Tony Verrier, described him in an e-mail of that date as "a disloyal twat" who, in his words, should be "made to suffer". That was perhaps an odd reaction, given that only a month later, in an internal e-mail of 26^th June, 2007, Mr. Verrier admitted that Tullett had been involved in "raiding" GFI for their staff. It appears that, in total, eleven former employees of GFI left GFI between June and early October to go and work for Tullett.
5. Prominent amongst these GFI employees were Max Leverett, Jeremy (or Jel) Bussey and Ivor O'Toole. Mr. Verrier, and others at Tullett, called them 'the Three Amigos'. In an internal e-mail sent on 19^th June, 2007 Mr. Verrier noted that Mr. Davis had signed up for GFI and saw how that could be turned to Tullett's advantage:

"Jevin Davis (Cash CDS) has informed us that he has signed for GFI. Although we wanted to keep JD it was unlikely even on the announcement of the 3 amigos, as he is very loyal to Roffey and therefore would want to go anyway. The upside is that we have further leverage on a hostage exchange".

6. The reference to Mr. Davis as a hostage was plainly intended to mean that Tullett could negotiate for the release of Leverett, Bussey and O'Toole from their contracts with GFI, whilst agreeing with GFI to release Mr. Davis from his contract with Tullett. Indeed, there were direct negotiations to that effect. On 23^rd July, 2007 Mr. Verrier e-mailed Mr. Heffron of GFI to say:

"I will contact Julian here in London, but just wanted to let you know that we appreciate your offer of David and Mike for Jevin, but that we don't see this as an appropriate exchange. Our position remains the same as when I spoke to Ron. This is what we feel an appropriate exchange is: Max [Leverett] or Jel [Bussey] for Jevin. We feel that their contracts and roles are comparative and therefore a more fair and reasonable exchange".

7. On 20^th September, 2007, in circumstances that, again, will doubtless be explored at the trial, GFI summarily dismissed Leverett, Bussey and O'Toole and released them to work for Tullett immediately. It is GFI's case that they did so because the three were soliciting other GFI employees to leave GFI and join Tullett. It is also GFI's case that, following that event, it was agreed that Mr. Davis was free to join them, and/or that Tullett are now estopped from denying that Mr. Davis was free to work for GFI. That is disputed, and is a major issue at the trial. Mr. Davis started working for GFI on 21^st September, 2007. A week later Tullett sought, and obtained, an interim injunction from Flaux J. Whether or not that injunction should be made final is another critical issue to be determined at the forthcoming trial.

THE ISSUES AT TRIAL

8. On behalf of Tullett, Mr. Lewis submitted, and I accept, that the principal issues between the parties at the forthcoming trial were whether or not there was an agreement that Mr. Davis could work for GFI, or, if not, whether Tullett were estopped from denying that he was free so to do. I also see from the papers that there is a potential dispute about repudiation, although that may be the subject of arguments in relation to the pleadings. However, I also accept the point made by both Mr. Davies QC and Mr. Goulding QC, on behalf of the respective Defendants, that if they are unsuccessful in relation to those issues, the court will still have to decide whether, in the exercise of its discretion, an injunction should be granted to stop Mr. Davis from working for GFI until May 2008. The determination of that issue will require a consideration of a variety of matters, including (a) whether Tullett have a legitimate business interest to require such an injunction; (b) whether damages would be an adequate remedy; (c) whether such an injunction would be just in all the circumstances.
9. Thus, it seems to me inevitable that, at the forthcoming trial, the court is going to need to explore what harm, if any, Tullett might suffer if the injunction was not continued. That, in turn, will involve consideration of what Mr. Davis did for Tullett and what he will now do for GFI; what steps Tullett have taken to make up for Mr. Davis' absence; and whether, given Tullett's recruitment of GFI staff, there is any significant harm to Tullett if Mr. Davis does go to work for GFI now, rather than in May 2008.
10. I also note that Tullett contend that they want Mr. Davis to come back and work for them, and that accordingly they were, and are, prepared to offer him his old job back. It will therefore be relevant at the trial to test whether or not that offer is genuine or real.
11. It is with those probable issues for the trial in mind that I turn to consider the Defendants' applications for specific disclosure. I do so by first reminding myself of the general principles to be applied.

THE RELEVANT PRINCIPLES

12. In accordance with CPR31.6(b) a party in litigation of this sort must disclose the documents which: "(i) adversely affect his own case; (ii) adversely affect another party's case, or (iii) support another party's case". Both Defendants seek orders for specific disclosure and inspection of certain documents pursuant to CPR 31.12.
13. An argument that loomed large in Mr. Lewis' submissions was that of confidentiality. I remind myself that:

(a) The first question for me is whether the document in question is relevant pursuant to CPR 31.6(b);

(b) Confidentiality is not of itself a justification for refusing production of relevant documents: see Science Research Council -v- Nasse [1980] AC 1028;

(c) However, the decision in Nasse also makes plain that confidentiality is a relevant matter in the exercise of my discretion. There is a balancing act to be performed between the degree of relevance of the document in question and the nature and extent of its confidentiality;

(d) If a document is both relevant and confidential, disclosure should be ordered if its disclosure is in accordance with the overriding objective and, in particular, if disclosure is proportionate and necessary to ensure that the case is dealt with fairly.

14. I now turn to deal with the documents which are sought. I deal with them in a slightly different order from the way in which they were set out in the draft orders for reasons which I hope will become apparent.

THE CONTRACTS WITH LEVERETT, BUSSEY AND O'TOOLE: GFI'S APPLICATION AND PARA. 1(d) OF MR. DAVIS' DRAFT ORDER

15. GFI's application for specific disclosure and inspection is limited to the unredacted versions of the three employment contracts. Although Mr. Davis seeks other document as well, it is plain that the provision of the three contracts of employment also lies at the heart of his application.
16. The Claimants' solicitor's attitude to these three contracts has been something of a moveable feast. Originally they were not disclosed at all. Subsequently, copies of the three contracts were provided, but with all the remuneration details (including starting payments, six month bonuses, and the like) redacted. More recently still, it has been said that the Defendants (and presumably the court) should operate on the express concession that Messrs. Leverett, Bussey and O'Toole are being paid 'significantly in excess' of that which Tullett paid to Mr. Davis.
17. Since the three contracts have now been provided by Tullett, I have assumed that their solicitors accept that, at least in their redacted form, the contracts are relevant. If the point remains in issue, I consider that they are relevant for the reasons noted in paras. 18 to 20 below. That leaves the question of whether the remuneration details which have thus far been redacted are also relevant. I am in no doubt that they are. There are three reasons for that.
18. First, it seems to me that the remuneration of the three employees will be relevant to the issue of what loss, if any, Tullett might suffer if the injunction is not maintained. Was Mr. Verrier right to describe Mr. Leverett and Mr. Bussey as "fair and reasonable exchange" for Mr. Davis? Will Tullett's new employees be employed to do the job that Mr. Davis once did? If so, does the amount of their remuneration matter, and does it relate to issues such as the value Tullett put on their new employees, the revenue they might engender, and whether in such circumstances Tullett would suffer any sort of loss if Mr. Davis goes to work for GFI? It seems to me that those questions are all matters which could, or might, arise at the trial, and are therefore matters to which the level of remuneration is relevant.
19. Secondly, and this is an entirely separate point, I note that a central plank in Tullett's claim for an injunction is that Mr. Davis was an extremely important person within their broking department. He is described at one point in the statement of Mr. Duckworth as 'a talisman' for the Tullett team. In the litigation it is plainly to Tullett's advantage to emphasise Mr. Davis' former role and status. Therefore it must be legitimate for the Defendants to counter that suggestion, if they consider that Mr. Davis' status is being over-stated. If Leverett, Bussey and O'Toole were being paid, say, ten or twenty times what Tullett paid Mr. Davis for doing the same job, then that might call into question Tullett's case that Mr. Davis was indeed such a talisman that they could not afford to lose him. It seems to me that that is a second reason why the levels of remuneration are discloseable.
20. Thirdly, I accept the submission that what Messrs. Leverett, Bussey and O'Toole were being paid is relevant to whether Mr. Davis could ever return to work for Tullett, a situation which Tullett maintain they want to achieve. The Defendants maintain that it is fanciful to think, given all that has happened, that Mr. Davis could go back to work for Tullett. A consideration of this issue would involve understanding whether Messrs. Leverett, Bussey and O'Toole were earning, say, ten or twenty times what Mr. Davis was paid. If they were, it is again difficult to say that the offer was genuine or made with any reasonable belief that it might be accepted. Again, therefore, the level of remuneration is relevant to that issue.
21. Mr. Lewis' principal argument in support of Tullett's position was to say that, even if the unredacted contracts were relevant, they were confidential and so should not be disclosed. I am not, however, persuaded that the unredacted contracts can properly be described as confidential, at least not in the sense of being documents which, but for this application, would never be made public or known to the Defendants. Two factors are relevant to that conclusion.
22. First, Messrs. Leverett, Bussey and O'Toole have commenced Employment Tribunal proceedings against GFI, possibly because they appear to be required to do so under the terms of their new contracts with Tullett. The Employment Tribunal claim forms reveal that each man has been asked, in terms, what sums he is now earning, or will earn, in his new job. When making his submissions to me yesterday Mr. Goulding QC said that the Defendants were surprised at the low level of the figures quoted by the three men. However, he made plain that, as a result of this question and these answers, it was inevitable that the terms of the contracts between Leverett, Bussey and O'Toole, including the levels of remuneration, would enter the public domain. It seems to me that that submission is right.
23. Mr. Lewis submitted that the question of the Employment Tribunal proceedings was a red herring and he said, for example, that the proceedings could be settled without the documents ever being disclosed. Of course, what might happen to those Employment Tribunal proceedings is a matter of pure speculation. However, it seems to me that, if Messrs. Leverett, Bussey and O'Toole had provided full answers to the questionnaire, the redacted details in their contracts would already have been provided to GFI by way of those completed forms. It seems to me that it must be relevant for a court, when considering a confidentiality argument, to note that it is inevitable that the information being sought should have been, or will be, made available to GFI in one forum or another. That is the first reason why I doubt that these documents can properly be described as confidential.
24. Secondly, I note that there is a good deal of evidence in the Defendants' witness statements about what Messrs. Leverett, Bussey and O'Toole themselves were saying about their new levels of remuneration. I refer in particular to the evidence of Mr. Scudder at para. 17 of his statement where he says:

"It was common knowledge across the dealing floor at GFI, as a direct result of Max, Jeremy and Ivor having been open about the packages they had accepted from Tullett, that they were on guaranteed packages which meant that, in their words, they could 'retire on them' after three years. Specifically they made it known that they were each offered signing-on bonuses of £2 million and guaranteed bonuses for three years of £2 million a year".

That evidence is not apparently challenged. Again, therefore it seems to me that it is ultimately self-defeating for Tullett to argue that the levels of remuneration are confidential when, on the evidence, Messrs. Leverett, Bussey and O'Toole have themselves been talking about what those levels of remuneration might be.

25. If, which I do not accept, the levels of remuneration are somehow confidential, then I consider that, on balance, their probative value outweighs the alleged confidentiality and that the contracts should be disclosed in their unredacted form in any event.
26. The final point made by Mr. Lewis is the concession to the effect that Messrs. Leverett, Bussey and O'Toole are being paid significantly more than Mr. Davis. He says that this concession should mean that the unredacted figures remain undisclosed. I do not accept that suggestion. I can only decide if a document is relevant within CPR 31.6; if it is confidential; and, even if it is confidential, whether it should be disclosed. I have decided each of those points in relation to these contract documents against Tullett. I think therefore that it would be wrong in principle for me then to refuse the orders sought on the ground of the alleged concession. I do not know what parts of the evidence at trial will be important and what will not. It may be that the precise levels of remuneration will matter very much. It may be that they will matter not at all. That is not something I can decide now. What I can say is that I do not believe that a party to litigation can 'control' the evidence in the way suggested by Tullett's lawyers. It does not make for openness. Indeed, on the contrary, it gives the impression - which I am sure is not the impression intended - that potentially relevant details can be hidden behind a bland formula of words. Accordingly, it seems to me that it is not an approach which I should adopt. This question of controlling the evidence is something to which I refer again below.
27. Accordingly, for all those reasons I order that the contracts of employment of Messrs. Leverett, Bussey and O'Toole be disclosed by Tullett and offered up for inspection in an unredacted form. That deals with the entirety of the application made by GFI, the Second Defendants. That leaves the other documents sought by Mr. Davis, the First Defendant.

THE PRIMARY DOCUMENTS BEHIND DOCUMENTS 63 TO 64 IN TULLETT'S LIST: PARA. 1(a) OF MR DAVIS' DRAFT ORDER

28. The first additional category of documents sought by Mr. Davis is the documents from which Documents 63 to 65 in Tullett's list have been compiled. Documents 63 to 65, which I have seen, are documents which Tullett have prepared for the purposes of this litigation in order to demonstrate, amongst other things, the proportion of work performed by Mr. Davis on behalf of Tullett and the percentage of revenue that he generated for Tullett. They are therefore secondary documents prepared for this litigation by Tullett. On their own case, therefore, they are plainly relevant to the issues before the court. They are explained in detail by Mr. Duckworth in his third witness statement. Mr. Davis wants to see the primary documents from which these secondary documents have been created. It is those primary documents which Tullett refused to disclose.
29. In his statement opposing the disclosure application, Tullett's solicitor, Mr. Frost, deals with this category of documents at paras. 25 to 30. He says of them,

"I am instructed by Mr. Simon Clark, the head of Legal of the Tullett Prebon Group, that the documents at Tabs 63 to 65 have been produced by way of careful analysis of the underlying information in a form which is relevant to the issues in the case. The raw financial data underlying the documents at Tab 63 to 65 is irrelevant to the issues in dispute".

Mr. Frost goes on to say that the documents are irrelevant. He does not say that they are confidential. In any event, it seems to me that a party cannot rely on a set of primary documents to produce a secondary document, which is said to be important to his case in the litigation, but then say that the primary documents on which it is based are somehow confidential.

30. On the basis of Mr. Frost's statement, Tullett's attitude to these primary documents could be summarised in this way: "We have prepared an analysis from documents that we do not want you to have. We have checked that analysis and are happy with it. We will therefore rely on that analysis at trial. But we will not disclose the documents on which the analysis is based, and we will not allow you to check to see whether or not that secondary document has indeed been accurately compiled". It seems to me that such an attitude only has to be spelt out for its central fallacy to be exposed. If, as Tullett say, the secondary document is relevant because they rely on it, then so, too, must be the primary documents on which that secondary document is based. Basic fairness and common-sense therefore dictates that Mr. Davis should be allowed to see the primary documents on which the analysis at Documents 63 to 65 have been created. Indeed, it may even be suggested that the matter could not be dealt with fairly without those documents being provided.
31. Mr. Lewis picked up the principal point made in Mr. Frost's statement, which was that the "production of the underlying figures will plainly not go to the issue of whether or not Tullett and GFI are in competition with one another". This argument went to the question of the relevance of the underlying documents. It seems to me, however, that it misses the point that at least one of the many reasons why Mr. Davis wants to look at these documents is because the secondary document has been created to show what his alleged role was within Tullett and how important he was to their earning capacity. Accordingly, all the points that I have made above at paras. 18 to 20 are relevant again. It seems to me, therefore, that even on that basis, the underlying documents are relevant, or potentially relevant.
32. For those reasons it seems to me that the primary documents underlying Documents 63 to 65 of Tullett's list must be disclosed. Again, it does seem to me that the refusal to disclose those documents is a further example of the controlling approach to the evidence to which I have previously referred. Again, for the reasons that I have given, I reject that approach as a matter of principle.

NEGOTIATIONS WITH CREDITEX: PARA. 1(c) OF MR DAVIS' DRAFT ORDER

33. Mr. Davis sought all documents containing or evidencing negotiations between Tullett and a third party called Creditex for the exchange or release of employees. I am bound to say that I was not persuaded that such documents, involving a third party, were relevant within the test set out in CPR 31.6. However, the point is now academic anyway because Mr. Frost's statement makes clear that there are no documents in this category. Although Mr. Davies QC asked for a further statement verifying that position from Mr. Clark, Tullett's Head of Legal Services, I consider that in the circumstances, Mr. Frost's statement is sufficient. I therefore make no order in relation to this item of the application.

UNREDACTED DOCUMENTS: PARA. 2 OF MR DAVIS' DRAFT ORDER

34. Originally, Mr. Davis sought unredacted copies of six documents provided by Tullett being nos. 26, 27, 45, 50, 60 and 61 in their list. However, in respect of the last three of those - namely, 50, 60, and 61 - Mr. Frost's statement confirms that each redaction related to matters unconnected to Mr. Davis or this litigation. Entirely properly, Mr. Davies QC accepted that assurance and I do not believe that it is appropriate to require Tullett to provide any further confirmation of the position by way of a further statement from Mr. Clark. No order will therefore be made in respect of those three documents.
35. The other three documents have some relevance to this litigation and they have been disclosed by Tullett on that basis. The question is whether the redactions should be allowed because of the irrelevance of the redacted parts and/or confidentiality. There is a certain amount of difficulty with a court reaching a final view on such matters in circumstances where the court does not have the unredacted copy. However, as we shall see, that is not a difficulty that I have in relation to these three particular documents. It does, however, arise later in this Judgment in respect of the final category of documents sought.
36. As to Document 45, it is extremely difficult to understand in its redacted form. What appears to be missing is largely a list of dates, although that does not seem to be the entirety of the material that has been redacted. Mr. Frost says that the dates are irrelevant. He does not allege confidentiality. I consider that, given this document as a whole has been disclosed and is relevant, it seems to me that it should be disclosed unredacted. There is no justification for the redactions. With the redactions the document is potentially misleading and it should therefore be disclosed in full.
37. The other two documents each contain one redacted figure. One figure is described as a 'target number'; the other as a 'potential revenue' figure. It seems to me from the information that I have that these target figures may have some relevance to the issues at the trial, although it also appears that such relevance would be marginal.
38. At para. 49(a) of his statement Mr. Frost deals with the confidentiality in relation to these figures. He says,

"It is information which, if revealed to GFI, would give it a competitive advantage in the market in relation to its own development, recruitment and revenue plans in relation to Cash and CDS markets which would eradicate the natural forces of competition".

As I discussed with Mr. Lewis during his submissions, I am a little troubled at the assumption that in some way, merely because confidential information was provided to GFI, they would use it in breach of their obligations to the court for matters which were unconnected with this litigation. However, I accept the underlying assumption in Mr. Frost's evidence that this material is confidential.

39. Thus I am faced, on the information that I have, with two documents, each of which contains one redacted figure, in circumstances where I consider the figure may have some relevance, but where that relevance may be peripheral, and where the figure is plainly confidential. It seems to me, doing the balancing act to which I referred earlier, that I should rule that these two documents do not need to be disclosed in their unredacted form. In other words, this does seem to me to be an area where the legitimate concerns of confidentiality just about outweigh the peripheral relevance of the two figures.

TEXT MESSAGES AND RESPONSE TO E-MAIL OF 20^TH JULY, 2007: PARA. 3 OF MR DAVIS' DRAFT ORDER

40. Mr. Frost has now confirmed that there are no text messages and no response to the e-mail of 20^th July. It would not be appropriate to require further or separate confirmation of that from Mr. Clark. Accordingly, I make no order under para. 3 of the draft order sought by Mr. Davis.

THE BUSINESS PLANS/SPREADSHEETS: PARA. 1(B) OF MR DAVIS' DRAFT ORDER

41. I have deliberately kept this category of documents until last because, on the basis of the information that I presently have, it has definitely caused me the most difficulty. The documents in question are:

(a) the business plan referred to in Mr. Verrier's e-mail of 16^th August and the reply from Mr. Duckworth of the same date;

(b) the spreadsheets referred to in the e-mails of 13^th July, 2007 and 21^st August, 2007.

The e-mails are all concerned with the plans to recruit Leverett, Bussey and O'Toole, and, I assume, the likely increase in income and market share that these men might generate for Tullett.

42. It was said that these documents were relevant because they went to whether Tullett had any genuine desire to retain Mr. Davis' services; whether Tullett now had others who could carry out the work that Mr. Davis used to do for them; and whether damages were an adequate remedy. On the face of the original documents I could see that, again, these documents may be of some relevance on these issues, although it was difficult to say, certainly without sight of them, that they were of great relevance.
43. However, the position as to relevance was, in a sense, complicated by Mr. Frost's statement. Mr. Frost has had the advantage of looking at the documents: an advantage which has not been vouchsafed to me thus far. He maintains that the documents were both irrelevant and confidential. He suggested that their purpose was to work out revenue based on a 'thirteen man desk'. Thus, if the projections excluded Mr. Davis, and demonstrated that Tullett were going to operate their business without Mr. Davis and make money far in excess of the profit which they made when Mr. Davis was there, that might be relevant to the issues before the court at the trial the week after next.
44. Furthermore, as to confidentiality, I certainly accept Mr. Lewis' submission that these documents are, at least potentially, in a different league to some of the other documents with which I have been concerned in this application. I could see that these documents may be highly confidential and that their confidentiality might outweigh any relevance that the documents would otherwise have. Again, however, I am in difficulties because I have not seen the documents and it is very difficult for me to perform the necessary balancing act. This was a matter which I raised with Mr. Lewis late on on the afternoon of 14^th November. In answer to it, this morning his instructing solicitors sent my clerk and the solicitors acting for the other parties an e-mail in which an offer was made to show me unredacted copies of these specific documents. Regrettably, due to my other commitments, I have simply not had time to take up this offer. I have not therefore looked at the documents.
45. Accordingly, I have decided that, in relation to this category of documents only, it would be unfair to all parties for me to decide this question without having looked at the relevant documents. It seems to me that the right way to deal with this particular point is this: if the parties want me to consider those documents so that I can then give a ruling on them, I could look at them and give that ruling in the early part of next week. However, the parties might consider that it makes more sense to ask the trial Judge to look at those documents. He or she, I imagine, will be identified at some point during the next few days. He or she can then look at those documents and give a ruling, hopefully before the trial starts. I will do whatever the parties want me to do.

CONCLUSION

46. I have concluded, for the reasons set out above, that:

(a) The contracts of Leverett, Bussey and O'Toole should be disclosed and made available for inspection in an unredacted form;

(b) The primary documents, on which Tullett's secondary documents at 63 to 65 of their list are based, should be disclosed to Mr. Davis and made available for his inspection;

(c) The document at no. 45 of Tullett's list (dealt with at para. 36 above) should be disclosed in an unredacted form.

47. I consider that such an order is proportionate, since the documents identified at para. 46(a) and 46(c) simply involve removing the tippex, and the documents identified at para. 46(b) must be easy to assemble, given their recent use by Tullett themselves in compiling the secondary documentation to which I have referred.
48. I make no other order for disclosure or inspection. I indicate again that I am happy to consider the documents referred to at para. 1(b) of the draft order sought by the First Defendant, Mr. Davis, if that is what the parties would like. Alternatively, those documents could be considered by the trial Judge.
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