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
		05 December 2007

Bernard Livesey QC:

1. The first claimant ("RDF") is a company which engages in the acquisition and distribution of television content, mainly in the factual entertainment, comedy, drama and children's programming genres. The second claimant ("RML") is a wholly owned subsidiary. RDF floated on the alternative investment market ("AIM") in May 2005 and following listing it decided to go for growth by acquisition of smaller companies engaged in the same business.
2. On 1^st December 2005 RDF entered into a Sale and Purchase Agreement ("SPA") for the purchase of IWC Media Limited ("IWC") for a consideration of approximately £10-14 million. The defendant ("Mr Clements) was one of the shareholders of IWC and entered into a service agreement with RML to work as Director of Content of IWC for an indeterminate period terminable on 6 months' notice.
3. In exchange for almost £2 million pounds in cash and shares, Mr Clements entered into a number of restrictive covenants with RDF including one in the following terms

11.1 He shall not, directly or indirectly, alone or jointly with any other person, and whether as shareholder, partner, director, principal, consultant or agent or in any other capacity:

11.1.1 For a period of three years starting on the Completion Date, carry on or be engaged, interested or concerned in, or assist any business which within Scotland or England or Wales competes with any business carried on by any Group Company at Completion. "

4. By clause 11.2, the three year restriction was reduced to two years in cases where the employer unlawfully dismissed the employee:

"The restrictions set out in clause 11.1 shall be restricted to a period of two years starting on the Completion Date in respect of [the Defendant] should that individual cease to be an employee of [RML] other than as a result of (i) voluntary unilateral resignation or (ii) by virtue of a summary dismissal permitted in accordance with the terms of that individual's employment".

5. On 30^th March 2007, just 16 months into the three year agreement, Mr Clements gave notice of termination of his employment with RML and indicated that he intended to take up employment with the Scottish Media Group plc ("SMG") as Director of Content to the Group and sought a reduction in his period of contractual notice to enable him to commence the role within weeks.
6. Mr David Frank, the Chief Executive of RDF responded that RDF intended to hold Mr Clements to his covenants for the full period and that RML intended to put him on gardening leave during his notice period.
7. In the media briefing which followed, it is alleged that Ms Oriel (the Managing Director of IWC) briefed the Press about Mr Clements in terms which were 'poisonous', untrue and highly damaging to his reputation; some of the remarks were published. He claims that RML was in breach of the implied condition of trust and confidence both in relation to those remarks which were published and those which were not. On 13^th April 2007 Mr Clements emailed a letter to RDF claiming that he had been constructively dismissed. By letter dated 16^th April RML denied constructive dismissal and alleged that the Service Agreement remained in existence. By letter dated 27^th April Mr Clements reasserted that he was constructively dismissed and refused to accept remuneration. On 3^rd May RML accepted Mr Clements' letter of 27^th April as a repudiatory breach of contract.
8. If it is established that Mr Clements was constructively dismissed then, it is argued by Mr Clements but disputed by RDF, that upon a proper interpretation of the SPA, the duration of his non-competition, and indeed all other, covenants is reduced from three years to two.
9. Proceedings were issued by RDF and RML claiming a declaration that the defendant ceased to be an employee of RML as a result of his voluntary unilateral resignation and seeking an injunction requiring him to abide by the non-competition obligations in the covenant. The defendant counterclaims for a declaration that he was constructively dismissed on 13^th April 2007, that he therefore ceased to be an employee other than by voluntary unilateral resignation and that the restrictions on him will terminate by effluxion of time on 2^nd December 2007.
10. The issues for determination in this trial include the proper interpretation of clauses 11.1 and 11.2, and whether the representations to the journalist and in the newspaper constituted a breach of the implied obligation of trust and confidence having regard to all the circumstances including in particular the contention that the defendant was on gardening leave at the material time.
11. The trial took place over the course of five days in London. The claimant called the following witnesses to give oral evidence, Mr David Frank, Chief Executive of RDF, Ms Susan Oriel, the Managing Director of IWC, and Mr Hamish Barbour, a fellow Director of Content at IWC; expert evidence from Dr Audrey Giles was read. The defendant gave evidence and called as witnesses Mr Kenneth Symon and Mr Hamish Mykura. It is to be noted here, that Mr Clements did not seek to call evidence from anyone at SMG.
12. Two other evidential problems arose for consideration. First, Mr Clements when called upon for disclosure of his private diaries disclosed diaries which had originally been completed in pencil but where the pencil had been completely erased - a practice which he stated was his norm. Secondly, at some point between the date when he gave notice and the 23^rd May 2007 Mr Clements procured his (and Mr Barbour's) former Personal Assistant, a lady called Janice McKnight, who had left IWC in January 2007 and then begun to work as a personal assistant for his wife, to enter the private internet mailbox of Mr Barbour in order to snoop on emails passing between the directors of RDF and IWC which, it was hoped, would provide evidence against RDF. On this basis, RDF now contends that Mr Clements' Defence and Counterclaim should be struck out.
13. The outcome of this case depends to some extent on matters of law but to a large extent on the findings I make on disputed issues of fact. I therefore propose here to set out the facts I have found in some detail.

The Facts in Detail:

14. Many years ago Mr & Mrs Clements (otherwise known by her professional name as Kirsty Wark) created an independent television production company^[1] called Wark Clements & Co Ltd. Mr Clements is an important and influential person on the production side of television in the UK, and in particular in Scotland, who has very significant knowledge, contacts, experience and reputation within that industry. He is an active member of BATA and PACT. He sits on the Executive of the Edinburgh International Television Festival and on the Board of Scottish Enterprise Glasgow. He is an Honorary Professor of the Faculty of Law, Business and Social Sciences at Glasgow University.
15. Ideal World Productions Ltd was also an independent production company but owned by the television presenter Miss Muriel Gray and her husband Mr Hamish Barbour. It appears to be the case that the creative geniuses in each company were not talented in business and financial affairs. Ideal World recognised this and employed Ms Sue Oriel from 2001 to assist in the management of the business; she later became its managing director. Wark Clements were late in discovering the deficiency in their management practices and it is accepted that they had got into a financial muddle.
16. At the instigation of Ideal World, the two companies merged to form IWC Media Ltd ["IWC"]. Ms Oriel became Managing Director of the merged company and Messrs Clements and Barbour became its Creative Directors and, in order to capitalise on his high profile in the media, Mr Clements became Chairman. It was when due diligence was being carried out that the deficiencies in the Wark Clements' financial management became apparent; the deficiencies were significant and potentially deal breaking, but the merger went ahead and over time the difficulties were overcome and the new company began to work well.
17. IWC came to the attention of RDF shortly after the latter had floated on AIM. Negotiations between Ms Oriel and Mr Frank resulted in the Sale & Purchase Agreement ["SPA"] dated 1^st November 2005. The consideration was payable in instalments, the final tranche of shares becoming due on the results for the year ended 31^st January 2007, and in the case of Mr Clements alone it amounted to just short of £2million.
18. It is apparent that the value of the acquired companies (including IWC) to RDF lay not merely in the productions on which those companies were working at the time of the take over but in the talents of the highly skilled personnel of the acquired companies and that is why, when IWC was being purchased, RDF were keen to secure the continued employment of the key personnel by means of restrictive covenants including, inter alia, those set out in paragraphs 3 & 4 above. None of the extensive covenants in the SPA has been impugned in any way.
19. As part of the sale negotiations, Ms Oriel and Messrs Clements and Barbour entered into service agreements with RML of indeterminate duration but terminable on 6 months' notice; these also included covenants including one "not, without the prior written consent of the RDF Board, [to] carry on or be concerned or engaged or interested in any Competing Business ..." for a period of six months after ceasing to be an employee of the Company.
20. Remodelling of the business of IWC commenced; the London office contracted and the Glasgow office expanded. At a strategy meeting in June 2006 Mr Clements was recorded as declaring to his fellows that no matter how things went he was not going to leave before 2008 (when the period of the restriction was in fact over). An interview and "photo shoot" took place with a journalist from the Scottish Sunday Herald which produced an article published on 18^th March 2007 under the headline "Hamish Barbour and Alan Clements are committed to IWC for the foreseeable future". The purpose of the article was to celebrate the achievements of IWC and its two creative directors. In it Mr Clements was unequivocal that he would be staying with IWC: he and Mr Hamish contradicted the reported speculation of unnamed persons that they would "take the money and run" as soon as they were able to do so.
21. According to Mr Clements it was indeed his intention at the time of the article to stay with IWC to the end of 2008 but on the 19^th March, the day after the article appeared, he met up with a colleague from the past called Rob Woodward, whom he had known when the latter was Commercial Director of Channel 4 and who was now Chief Executive of SMG. SMG was both a television broadcaster and a producer of programmes. The SMG share price had been in the doldrums for some time but following a shareholder revolt in early 2007 there had been a new Board, new management and an injection of substantial fresh investment and, it was believed, that SMG was keen to recruit new talent.
22. Mr Clements visited Mr Woodward at about 5.00pm the same evening at SMG's new premises in Glasgow and towards the end of a "catch up" meeting, during which there were extensive discussions about the industry in general and the work on which Mr Clements was engaged, Mr Woodward allegedly "out of the blue" enquired whether Mr Clements would consider going to work for SMG as Head of Content for the Group. RDF challenges this account and I will return to it later.
23. Two days later, on 21^st March, Mr Clements attended a preview of the Hogarth Exhibition at Tate Britain at the invitation of Channel 4 television. While there he took the opportunity of a few moments with his host, Hamish Mykura, the Head of Specialist Factual programmes at Channel 4, who gave evidence before me which I accept as accurate and truthful. Mr Clements asked Mr Mykura what he thought of SMG, and said that he had been approached by them for a job and that he was considering joining them. Mr Mykura told him that he did not know SMG but assured him that no matter where Mr Clements decided to work he would continue to commission work from him. He asked Mr Clements what would happen to the projects already commissioned which were in the pipeline. Mr Clements said that he would make sure that those would be "properly looked after", there being sufficient personnel at RDF to do this. Mr Mykura passed on this information to Mr Kevin Lygo, the Director of Programmes at Channel 4.
24. With encouragement from his family, on the same evening and at his own home Mr Clements again met with Mr Woodward who was accompanied this time by Mr Anmar Kawash, who was SMG's Strategy and Planning Director. It is apparent that they discussed together the elements of his 'package'; discussions included the fact that he thought (wrongly as they later told him) that the final tranche of RDF shares (worth £525,000) might be lost if he left IWC before June; and the existing productions on which he was then working including one with Stephen Hawking, Richard Dawkins and My Life as a Teen. RDF queried whether the discussion included an agreement that Mr Clements would attempt to bring some of the productions on which he was working with him. Despite Mr Clements' denial I am of the view on a balance of probabilities, having regard to the contents of his aide memoire for the meeting and what later transpired, that there was an understanding reached between them that if he were to accept the position he would try and bring with him some of the projects on which he was then engaged for RDF.
25. Following this, on 22^nd March he sent his Curriculum Vitae by email to Mr Woodward and copied it to Mr Richard Findlay, Chairman of SMG. On 26^th March he met Mr Findlay briefly at a coffee bar locally during working hours. On the evening of Thursday 29^th March he met Mr Woodward at a hotel at Glasgow airport and was given a written offer of employment in the following terms:

"I am delighted to confirm your appointment to the position of Director of Content for SMG Television, effective at a date to be agreed... I've set out below the main elements of the offer.

[................]

On your confirmation of your acceptance of these terms, I'll arrange for a full Service Agreement to be drawn up. I look forward to working with you on generating new, exciting and creative content for SMG Television. "

26. Mr Clements says that he spoke to his family about the offer and decided to accept it. There is no record of a written confirmation of acceptance but I am confident that he did confirm acceptance of the offer, subject only to the fact that he would be unable to take up his appointment until he had negotiated, as he hoped, a date for leaving earlier than his contract with RML allowed.
27. Mr Clements asserts that he knew all along that he was bound by a three year noncompetition covenant in the SPA and that he would have to negotiate an earlier exit. It was his intention and hope that he would be able to do so.
28. RDF argues that the evidence points to the opposite conclusion. In my judgment, despite his evidence to the contrary, at the time when Mr Clements agreed to accept the post with SMG it had slipped his mind that he was bound by the restrictions in clause 11 of the SPA. He thought it was only a question of his notice period and that, rather naively, he would easily reach a negotiated compromise of that period with RDF. I will return to this at a later point.

The Resignation:

29. On 30^th March Mr Clements let his colleagues know that he wished to leave the company to join SMG.
30. It is clear that they were all devastated. Mr Clements says, but RDF disputes, that Mi-Frank was very reasonable when he first spoke to him and, using a foot balling analogy, said that there was no point in trying to keep an unhappy player - rather it was better to arrange a transfer. Mr Frank does not accept this; he says that although he used the footballing analogy he made it clear that he needed to take advice and establish the contractual position before responding. The difference of recollection does not seem to me to be of importance and merely reflects the different points of view of the participants.
31. At the request of Mr Frank, Mr Clements sent an email confirming his intention to resign in the following terms:

"I am writing to confirm that I am giving notice of my resignation. As you know, my notice will expire on the 30^th September, though I would like to discuss the possibility of my leaving earlier. I look forward to speaking to you next week. "

32. He also spoke by telephone twice to Ms Oriel: on the first occasion he told her that he had been offered a job as Director of Content, running all SMG's content for television; it was a "huge job", a "great opportunity", a "top table position" and that "they were making it very hard for him to refuse". She says (but he denies) that she asked him about his restrictive covenants and he replied that he had checked these and they lasted for six months. She said that she was surprised by this and would check. After checking she telephoned back to tell him that the non-compete Service Agreement ran until December 2008 and that the restrictions in his service agreement ran for six months from termination of his employment, not from his resignation. She says he replied "Oh" and after a long pause added that he thought he should get some legal advice. Mr Clements disputes this; but I accept Ms Oriel's account.
33. On the same day he obtained a copy of both the SPA and his Service Agreement and went to obtain legal advice from solicitors.

The attitude within RDF/IWC:

34. It is clear that all of Mr Clements' colleagues were very shocked by his decision to leave, especially after the repeated assertions that he would not go before the end of 2008; it was generally felt that he was being thoroughly disloyal to his colleagues and that it was "not nice" that he had told Mr Mykura that he was leaving about 10 days ago - so that Kevin Lygo [Head of Channel 4 - their biggest 'customer'] knew before his colleagues did.
35. But the decision had more serious implications. SMG was known to be an important competitor with recently increased funding; it was in a phase of expansion in an attempt to turn around its business; a contemporary email recorded that "we should assume that [Alan Clements] is going to try to hire all our best staff (including the ones who have not arrived yet) with the lure of huge salaries and new titles".
36. In addition, there were a number of projects (including the Darwin and Dawkins^[2] projects), at various stages of realisation, on which Mr Clements had been working and, upon his departure, their viability might be in the balance for a number of reasons. Although it is undoubtedly the case that the intellectual property in all projects remained in IWC, a project might fail to proceed because (for example) the chosen presenter might have a very close personal relationship with Mr Clements and might not wish to work with his replacement.
37. It was also the case that an event such as the move of Mr Clements from RDF to SMG was going to give rise to press interest and speculation. It was inevitable that the news would leak out and RDF was concerned that it should not be portrayed in an adverse light when it did.
38. Above all, from Mr Frank's point of view, there were about two dozen skilled senior employees of subsidiary companies within the RDF Group who were employed under virtually identical restrictive covenants and it would be wholly destructive of shareholder value if they were to get the idea that the Group company would be content to let them ignore their restrictions by renegotiating them on their voluntary earlier departure.
39. Initially, at any rate, the shock which his colleagues felt was mixed with disappointment rather than anger; and it was the case that the regard in which his colleagues held him caused all personnel to wish to keep relationships with him civilised and friendly: as Ms Oriel said on the afternoon of 30^th March "I personally want to keep [it] civilised and friendly and I am pretty sure you [sc. Hamish Barbour] feel the same way".
40. However, within 20 minutes or so of the above email, further information swept in via an email from Mr Barbour that Mr Clements had already told Jaqui Hayden [Head of Development] that "he was going to take Dawkins with him " which prompted Miss Oriel to reply "I think we need to do something quite fast here as he is obviously going to start behaving like the c**t (sic) we now know him to be".

The Period from 1^st to 4^th April 2007:

41. There are three strands to the events on which there is a need to keep an eye. The first is what went on between Mr Clements and RDF; the second is what went on internally within RDF - I shall tell these as a single narrative. The third is what went on between Mr Clements and SMG.
42. On Sunday 1^st April Mr Frank sent a text message asking Mr Clements not to return to the office for work on Monday until they had spoken again and on Monday 2^nd April he made it clear that although Mr Clements was entitled to resign, if he wished to do so, he was not entitled to join SMG or any other competitor until December 2008.
43. That day, 2^nd April Mr Clements asked if he might put a proposal for a negotiated settlement to IWC and at 6.39 pm the same day sent by email to Mr Frank a letter (drafted by his solicitors) containing his proposals, which were that "We agree a reduced notice period (say 4 to 6 weeks) " after which Mr Clements would be free to join SMG and in return he would (a) use his best endeavours to secure current projects for IWC such as Hawking, My Life as a Teen, (b) "carry those projects which require my ongoing input in the longer term such as The Second World War, Darwin etc. with me to SMG with RDF Rights retaining distribution and RDF sharing in the backend",... (c) return one quarter of the last tranche of RDF shares (roughly £125,000) and (d) "sign up to a jointly agreed (between you, SMG and myself) positive public statement on my departure".

The last paragraph of the letter stated

"I think this would be the basis of a positive deal which would allow both companies to work together to foster production in Scotland. The alternative would be an unseemly public parting of the ways which would be damaging to both and lead to the potential loss of valuable projects. "

44. Before me, the claimants have attached great significance to the above paragraph in order to justify what subsequently occurred. Mr Frank says that he regarded the sentence as delivering a threat, although there is no sign in any of the contemporaneous documents that he so regarded it at the time. What in my judgment caught the major part of his attention was the bare-faced cheek of it all. By 7.00pm the same day he had circulated on a confidential basis amongst the directors of IWC, an email encouraging them

"not to boil over" but observing that "the guy is living in 'cloud cuckoo land'... the cheeky f***** is actually suggesting he takes projects with him and that RDF Rights get distribution (which we've got anyway) and he'll cut us in on the back end. It's quite staggering. ....I am truly lost for words ...... Let's talk tomorrow but right now I'm thinking we go back to him and say no more discussion - he's resigned and he can't join SMG. Full stop. And we say whatever we like to the press."

45. He rejected Mr Clements' proposal by email at about midday on the 3^rd April, stating that the proposal was "wholly unacceptable", and adding

I confirm that you should remain on garden leave (in accordance with clause 8.8 of your Service Agreement) and should not attend the Company's offices or contact any employees, customers or suppliers of the RDF Media Group without my prior consent.

I may need you to manage some of your existing projects during your garden leave and/or effect a smooth handover of those projects. I may also need you to do some development work in the specialist factual area for which you have been responsible. I will contact you about this in due course -you may need to attend some meetings from time to time but I would have thought that most of the work that you will need to do can be carried out from home. If necessary, I will ensure that appropriate email access is set up for you.

I remind you that during your garden leave, you remain employed by RDF and I would expect you to act accordingly.

46. At about 12.54 on 3^rd April Mr Frank notified a number of non executive Directors on the RDF Board of the resignation of Mr Clements. During the course of the email he remarked that "What Alan didn't do though (because the truth is Alan's a bit dim) was read the Share Purchase Agreement which he signed when we acquired IWC... " , a remark which Mr Clements argues constitutes an employer's breach of the implied obligation. Mr Frank also reported that Ms Oriel and Mr Barber were "besides themselves with anger at Alan's act, as they see it, of betrayal".

47. At about 7.00 pm that night Mr Jonathan Slow, a Development Director, wrote to Mr Andrew Craig of Investec, the company's Broker, to inform him of Mr Clements departure. After setting out the facts he stated "As you can imagine we feel strongly that his conduct is pretty dishonourable .... I guess there might be a deal to do but - but (sic) we either want our money back or him out of the market for the full term plus his reputation in pieces. His immediate colleagues, as you can imagine, feel even more strongly than that". Mr Clements relies upon this remark also as an employer's breach. Jumping forward a little, Mr Slow in another email on 12^th April to Erik Anderson of Investec described Mr Clements as "a little weasel" - to which Mr Clements also takes exception. Mr Clements knew of neither of the remarks prior to his claim of constructive dismissal but only when disclosure took place in these proceedings.

47. The news of Mr Clements' departure first broke in the Scotsman which appeared at about 1.51 BST on 4^th April 2007 under the headline "SMG lures Clements to key post of content director". The story was probably placed on a non-attributable basis by SMG and the article was positive about SMG and just mildly condescending to RDF. It reported the fact that SMG had "poached" Alan Clements and that "an industry source" [that is to say, SMG itself] stated "This will be regarded as a coup for SMG". It contained factual errors (probably as a result of sloppy journalism) including the assertion that IWC was Mr Clements' company and that it was the name behind certain named popular shows, which in fact had not been made by Mr Clements' side of the business but by Ideal World.
48. RDF for its part had already decided it was important to speak to the press - which it did on the afternoon of 3^rd April via a director called Mr Stephen Lambert being reported online on the 4^th April and in hard copy on the 5^th April under the headline "RDF blocks exit of IWC chief Clements". It stated that "according to industry sources, RDF is blocking the move claiming that Clements has reneged on his contract. Clements is thought to be still subject to a non-compete clause that would prevent him taking the job until December 2008". It reported "one source" saying that "Alan has recently realised his last set of shares ...He has made around £2 m now and thought that it would be an ideal time to leave "; and "another indie source" that "RDF feels surprised and let down that Alan should want to break his contract..." Mr Clements contends that each of these remarks also amount to an employer's breach.
49. Also on the 4^th April RDF issued a Press Release which was reported at 2.00pm in the Media Guardian online report. The matter in the Press Release and articles published under it of which Mr Clements complains is the statement "It is unfortunate that he has chosen to leave the company at a time when RDF is making a major investment in its Scottish production businesses and so soon after he very publicly proclaimed his commitment to IWC and its staff", and reference to the fact that "a key component of (the acquisition of IWC) was that he agreed not to work for a competitor for 3 years " so that "he cannot work for another company in television production until December 2008". Again Mr Clements relies upon the quoted remarks as employer's breaches. Media Guardian also stated that "Mr Clements had sold IWC - which started life as Wark Clements, the production company he founded with his wife Kirsty Wark - to RDF in December 2005".

Matters between Mr Clements and SMG:

50. It is fairly clear that from the date when he gave notice onwards, Mr Clements and SMG made contact with each other and to some extent co-ordinated with each other their response and actions. Mr Clements accepts that he supplied a copy of the SPA and his Service Agreement to SMG for them also to consider, with or without their own lawyers.
51. On 3^rd April he received an email from Mr Kawash (see paragraph 24 above) who was in Glasgow and wrote that he

"would love to catch up ... Like Rob, I am very excited about having you on board and we will work through the issues at hand and make it happen ASAP ... This unfortunate hurdle does not take away from the exciting prospect that lays (sic) ahead for all of us. "

52. From this email it is clear and I find that Mr Clements had already accepted the offer of employment, that both parties expected and wished it to happen and would collaborate to try and make it happen at the earliest opportunity; that "the unfortunate hurdle" was the non-competition covenant and that SMG was going to help in any way it could to secure the objective of an early release from RDF.
53. In an email in reply, Mr Clements confirmed that "The whole process has just made me even more determined to be a success at SMG".
54. Also on the same day Mr Clements had a discussion with Mr Callum Spreng, Head of Corporate Affairs at SMG, in order to discuss what their joint attitude should be to the inevitable press interest which was likely to be sparked off. It is likely that Mr Spreng took the lead in advising what should be said to the press but it is undoubtedly the case that Mr Clements agreed with and gave his support to the tactics being discussed. In that regard it was agreed between them that SMG should continue to brief the Press on a non-attributable basis.
55. At 8.21 am on 4^th April Mr Spreng emailed Mr Clements with a draft of the announcement which SMG proposed to make to its staff and to the Press of Mr Clements' appointment as Director of Content. The announcement claimed inter alia that it was a 'real coup' for SMG and that Mr Clements would be "pivotal in the revitalisation of SMG ".
56. Later on that afternoon Mr Spreng sent by email to Mr Clements a copy of an article in the Media Guardian and stated "Here you go Alan. As I hope Rob told you, I'm sticking to briefing off the record in a reactive fashion. Good to see the web-sites are moving onto saying that you 're going, its about negotiation now ". The claimants draw particular attention to this last sentence which, it says, in conjunction with the email from Mr Kawash (see para 52 above) suggests that Mr Clements was combining with SMG to engineer a situation in the media in which RDF would see Mr Clements' departure as an irrevocable fact and that it was in its best interests to negotiate an early release from the covenants.

The Period from 4^th to 8^th April:

57. At 6.07 pm on 4^th April Ms Oriel sent to Mr Frank a copy of the article in the Media Guardian with the comment "Just read that and weep ...we HAVE to do something to counter this because is makes Hamish and I sick and it's so unfair. "
58. When Hamish Barbour saw the article he sent it to Mr Frank with the comment

"... how does he do it. This is just factually incorrect, apart from deeply irritating. I'd love to rewrite this part of history once and for all, I'm sorry if I sound petty but this sort of thing has been going on for years..."

59. Mr Frank replied that he would be

"... happy for one/both of you to put the record straight on the background history to IW (meaning Ideal World) and WC (meaning Wark Clements) -I reckon a full briefing to a journalist on an 'off the record basis' would be best - that way we can't be accused of sour grapes.

But listen Hamish I fully understand your feelings and am right behind you in going after Alan. I think he's let every down in a major major way. I'd love to get even. But we need to be clever how we do it. .... I'm sorry you 're being put through all this. But we'11 win in the end..."

60. Mr Barbour replied to this that he was of course keen to remain totally grown up about all this; he merely wondered if there was a way that IWC could place an interview where the record was put straight, whereby there would be a positive/going forward message and not just a raking over the coals.
61. In the result it was decided to give an interview to the Sunday Herald, not least because it was they who had published the original piece on 18^th March in which they had reported Mr Clements' commitment to work out his time with IWC. The plan was that Ms Oriel would speak mainly on an off the record basis in order to provide the background and Mr Barbour would speak on the record. It was arranged that interviews would be conducted by Mr Ken Symon, the business editor, who would make contact with both Ms Oriel and Mr Barbour separately by telephone.
62. Mr Frank authorised the meeting. Although he was criticised, in my view justly, for being disingenuous bordering on the untruthful both in remarks made during inter solicitor correspondence as well as in a Defence filed in the Scottish Employment Tribunal, I have come to the conclusion on balance that at the time he gave authorisation he contemplated no more than the correction of past factual errors, the disclosure of factual information relating to the SPA (which was required by the SPA to be kept confidential and the disclosure of which would embarrass Mr Clements), and expressions of disappointment and surprise at the decision to resign which were designed to achieve the same effect.

The Article in the Sunday Herald:

63. There can be no doubt about what was printed in the article but there is a dispute as to what was said by Ms Oriel to Mr Symon. Since Mr Clements contends that he is entitled to claim constructive dismissal both on the grounds of what was said (irrespective of whether it was printed or not) as well as what appeared, it is necessary to resolve the conflict between the evidence of Ms Oriel and Mr Simons.
64. As regards the finished article: it appeared on Sunday 8^th April 2007 under the headline "Clements leaves IWC for SMG... but will his contract allow it?" The article included a number of factual observations about the background to the story. Within the article there were a number of assertions attributed or unattributed to which Mr Clements objects. They include the report that under the Employment Contract "it is thought" that the defendant has to give 6 months notice; that 'sources' said that, under the deal by which RDF acquired IWC, the defendant had earned £2m and in return had signed a three-year non-compete clause; that Ms Oriel had said "it is extremely disappointing that he has reneged on his deal"; that, after referring to anger amongst some of the defendant's former colleagues, 'one source' said "if you take the money then you do the bloody job. It's just very dishonourable "; and that what had caused consternation to "some people" "is the fact that Clements has recently been hiring people, some of whom have moved home and family to work at IWC assuming that they would be working with him ".
65. As regards the briefing. There is no complaint against Mr Barbour. His briefing was entirely 'on the record'; and I am clear that Mr Barbour took particular care to be precise, accurate and fair in his observations to Mr Symon, even to the extent that he made a call to Mr Symon after the interview to correct the wording of what he had said because on reflection he was worried that it might not be entirely correct; he even made a second call to ensure that he felt happy with the quotes which were attributed to him in the article. As Mr Barbour put it "I felt a responsibility to IWC and to RDF to convey the right tone and I really did not want there to be any sense of pettiness about it". I have seen Mr Barbour give evidence. He impressed me as a person who was scrupulous about telling the truth and being accurate. I accept his evidence on this aspect and indeed in its entirety.
66. The complaint is against Ms Oriel, whom Mr Clements argues was poisonous to him.
67. Mr Symon in his statement says that this is the first time in his journalistic career that he decided to reveal a source: he did so because he decided that the denials in the Defence (he means the claimants' Reply) were a slight on his professional reputation in that they allege that he had misreported what he was told by Ms Oriel; secondly because in his twenty nine years as a journalist he had never in his career heard a more vitriolic briefing than that given to him by Ms Oriel about Alan Clements. He had 'toned down' her comments when he wrote the article.
68. He also added that "The other part of the reason that I have chosen to speak out is because she threatened a member of my family". This, he said, was because at the commencement of the interview Ms Oriel had said "this is all 'off the record' and I will come up and 'have' your first born if it comes out that this came from me" - a comment which he said in evidence he did not take particularly seriously. If this was truly part of the reason he disclosed his source, it was silly of him because the terminology was clearly nothing more than a colourful and assertive way of emphasising that the briefing was off the record.
69. He told me that he telephoned Ms Oriel when he was in his own office; he did own a recording machine but it was not working and he did not use it. He kept a record in shorthand of the conversation, writing down only Ms Oriel's answers as best he could, not the questions and sometimes only the gist, since this was "off the record". The shorthand record was, he acknowledged incomplete and some of it he was unable even now to decipher. He regarded a shorthand note as an effective aide memoire for writing up an article within days of a conversation, rather than for long term reference. The shorthand note was exhibited, as was a transcript which he had made of it, and during his cross-examination we looked at both with some care and a little enlightenment on my part.
70. Ms Oriel did not keep any note of her conversation. She was at home ill at the time. Her plan before the interview was to explain the business history and mainly to correct the impression that Mr Clements was the architect of IWC's success, the engineer of the merger and business brain behind the success of IWC's operations when, in her view, this was not true. Her recollection after it had taken place was that she had been fairly forceful during the conversation because it really mattered to her to set the record straight regarding mis-attributions to Mr Clements' expertise in business; she had been, she thought, quite calm as she was on top of the facts and "not one thing I said to the journalist was not true however unpalatable Alan might have found it to read in the newspaper".
71. In my judgment, there are some slightly unsatisfactory aspects about the evidence of Mr Symon. The interview took place from his own telephone in his own office and by arrangement. If it is the truth that his own tape recorder was not working, it is a pity that he did not think, or was not able, to borrow another. Again, his shorthand record of the interview is plainly incomplete and in some places rather poor; there are obvious signs in the note that he has been unable to keep up with Ms Oriel who speaks precisely and, I would think, not unduly fast. The slightly casual attitude was probably because the interview was "off the record" and therefore was not required to be absolutely word perfect. He did not impress me as having a memory which could reliably take him much further than the transcript of his shorthand note.
72. Ms Oriel struck me as a strong-minded, highly articulate and intelligent and with a "sharp" mind. She claimed to remember precisely the conversation with Mr Clements on 30^th March, to which I referred in paragraph 32 above, and I am confident that she did remember. Her conversation with Mr Symon might have been a different matter since it was an unusual situation for her. She does however claim to have a good recollection of the interview which she can express in narrative terms but when the detailed remarks at issue were put to her in cross-examination she claimed not to remember having said this or that bit of the conversation and thinks she would not have said this thing or that or said them in that way. The reality in my judgment is that she is reluctant to admit to herself that she got carried away and went too far. She got carried away mainly because of what she perceived as the injustice of the position into which Mr Clements had put IWC by what she perceived was dishonourable conduct on his part in relation to "the deal" and in part because of irritation that Mr Clements was, she felt rightly or wrongly, 'overrated' and yet able to secure professional advancement on the basis of an image which gave him credit for achievements which was in substantial part due to others rather than himself.
73. My conclusion on this issue is as follows: I accept that the shorthand note produced to this court is a genuine document and accept that what is recorded in it is an accurate account of what Ms Oriel said to Mr Simons - so far as it goes. I do not find Mr Symon's assertion that never in his career had he heard a more vitriolic briefing is helpful or to be taken literally. In the result, I do accept, contrary to the evidence of Ms Oriel that the matters which are supported by the shorthand note were indeed said by her. I am not satisfied that any assertion of Mr Symon which goes beyond his note is correct.
74. The matters therefore which I find were said by her (including those not recorded in the article) are set out virtually verbatim in the following narrative (I emphasise that I have strung together individual remarks from a four page text in order to reflect in a few lines the matters to which Mr Clements takes exception). What I find she told Mr Symon is inter alia that Mr Clements had a reputation as the architect of the success of IWC as a business and the absolute reverse was true; when the merger took place Wark Clements was a shambles and didn't have a set of accounts it could rely on; the business lost just short of £1 million in trading losses in the year prior to the merger; one of Mr Clements' productions "the Gathering Place " was probably the worst documentary ever produced; although Mr Clements had great ideas and was a fantastic salesman he [failed] on execution ... needed to get other people to finish them off and then he "gets in at the end and signs the production off. The valuable contributor in the merger between Wark Clements and Ideal World was Ideal World; Wark Clements did not get any repeat business which was a problem for them; Mr Clements himself was a phenomenal egomaniac and his personal standing was the most important thing to him; the most important thing for him was that he had a ticket to the top table - that was more important than anything else and that was where he wanted to be. She explained about Mr Clements receiving £2 million and the effect of the non-competition clause and went on:

"The phenomena] ego (unclear) - he actually thought I would just let him off.....If you take the money you do the bloody job. [then, some 10 lines later] Its just very dishonourable ... promise to stay the three years - (quit) within 16 months.

Reaction to the Sunday Herald Article:

75. Mr Clements told me that he was upset by the article and explained in detail why. I remind myself that whether the conduct of the defendant was calculated to destroy or seriously damage the relationship of trust and confidence is a matter to be determined objectively and that the subjective effect on the defendant is not of relevance. He also told me that shortly afterwards he learned from Mr Symon that he had 'toned down' the article.
76. He saw his solicitors and after taking advice from them sent to RDF a letter claiming to have been constructively dismissed. The letter included the following

"I am writing in response to the recent Press coverage surrounding my resignation. In circumstances where I have simply resigned with notice in accordance with my contractual terms and have not yet entered any binding agreement in breach of any of my contractual arrangements with RDF Media, I consider this to be not only defamatory, but a breach of trust and confidence by the company.

.....The latest article which appeared in last week's Sunday Herald can only be described as utterly poisonous. Not only has this called me "very dishonourable ", it also goes into more detail concerning the contractual terms between us, as well as quoting Sue Oriel, saying that I have "reneged on [my] deal". This is not only factually inaccurate, but I consider that it is also defamatory.

I would remind you that during this very public attempt to destroy my reputation, I have honoured my contractual duty of trust and confidence and have not said anything that could be construed as being negative about RDF. Given the content of the Sunday Herald article, it seems that you are not doing the same. That being the case, the relationship between us has been destroyed I am resigning in response with effect from today's date. I consider I have been constructively dismissed."

77. By letter dated 16^th April RML denied constructive dismissal and alleged that the Service Agreement remained in existence. By letter dated 27^th April Mr Clements reasserted that he was constructively dismissed and refused to accept remuneration. On 3^rd May RML accepted Mr Clements' letter of 27^th April as a repudiatory breach of contract.

The Defendant's Case

78. Mr Aidan Casey for Mr Clements submitted that a number of representations in the articles in the newspapers and/or to journalists and/or in emails to various persons were representations which ought not to have been made about him and that the making of them constituted a breach by the claimants of the term of trust and confidence implied in the Employment Contract and/or acting in a manner that was likely to and did destroy or seriously damage the relationship of trust and confidence between him and RML, his employer. He was therefore entitled to accept RML's breach as a repudiation of the contract. It followed that the determination of his employment was not as a result of his voluntary resignation within the meaning of clause 11.2 of the SPA.
79. The representations which, it is claimed, constitute a breach of the term are found in the following documents (listed in order of increasing seriousness):

a. First, the email sent by Mr Frank to RDF's non-executive directors, in which he referred to Mr Clements as "a bit dim" and saying that "what [Mr Clements] didn't do was read the Share Purchase Agreement" see at paragraph 46 above;

b. Secondly, the emails sent on 3^rd April 2007 and 12^th April 2007 by Jonathon Slow (RDF's Development Director) to Andrew Craig of Investec, the Company's Brokers (see at paragraph 47 above);

c. Thirdly, the matters reported in the articles in Broadcast, the Media Guardian and the Sunday Herald - the representations emanated from the claimants; some of the matters were by the terms of the SPA confidential as between himself and the claimants and others were untrue and potentially highly damaging to his reputation within the industry;

d. Fourthly, the content and nature of what Ms Oriel said to Mr Simon was such that by saying those things to him (even though some of them were not published and he did not learn about the detail of it until later, during the litigation when Mr Symon agreed to give evidence) RML committed breaches of the term of trust and confidence implied into the Service Contract and thereby repudiated it; in this regard it is averred that it matters not whether Ms Oriel held the views represented, the very fact that she chose to express such matters to a third party, and in particular a journalist, was completely inimical to any trust and confidence surviving between the defendant and his employer.

The Claimants' Case:

80. The claimants contend that on a true interpretation of clause 11.1 and 11.2 of the SPA the defendant ceased to be an employee by voluntary unilateral resignation, whether or not his allegation of constructive dismissal is successful, because it was his resignation by email on 30^th March 2007 which led to his ceasing to be an employee at the end of September and started the train of events which led to him ceasing to be an employee earlier.
81. That the representations stated to be confidential were already in the public domain and true in fact; that all other representations were substantially true in fact.
82. That in any event there is a high threshold for proving breach of the implied obligation, especially where, as here, Mr Clements had been put on garden leave following his own letter of resignation.
83. In any event, the occasions on which the representations were made provided reasonable and proper cause for making the representations.
84. By his own actions Mr Clements was in any event in breach of his own express or implied obligations under the Service Agreement and in that case, if RML is found to have been guilty of repudiatory conduct, being himself in repudiatory breach of contract, was not able to accept the claimant's breach as a termination of the agreement.
85. Apart from which, the defendant has, by deleting his diary entries and by unlawfully entering the IWC website of Mr Barbour, been in breach of the law and contempt of court and this court should strike out his defence and counterclaim.
86. These being the broad allegations, I propose to deal first with the question of construction.

The Issue of Construction:

87. The issue of construction arises in relation to clause 11.1 and 11.2 of the SPA which are set out at paragraph 3 and 4 of this judgment and I will not repeat them.
88. Mr Aidan Casey, counsel for Mr Clements argues that, applying the ordinary meaning of words, if Mr Clements ceased to be an employee by reason of constructive dismissal of the employer then he so ceased "other than as a result of (i) voluntary unilateral resignation or (ii) by virtue of a summary dismissal permitted in accordance with the terms of that individual's employment".
89. Mr Thomas Croxford for RDF reminded me of the fourth principle enunciated by Lord Hoffman in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 All ER 98 at 115a that meaning "was not a matter for dictionaries and grammars" but was "what the parties using those words against the relevant background would reasonably have been understood to mean". While acknowledging that a literal construction would appear to favour the construction for which Mr Clements argues, Mr Croxford contends that the reality is that the email dated 30^th March was the reason why Mr Clements ceased being an employee; having sent the email Mr Clements set the seal on his own departure by what was a voluntary unilateral notice of resignation; that was also the start of the chain of events which led to him claiming constructive dismissal on 13^th April 2007; had there been no email, it is unlikely that those events would have happened. Mr Croxford might have added that it was the email which caused the employment to come to an end by voluntary unilateral resignation; the constructive dismissal did not cause the cessation of employment, it only advanced the date on which the cessation took place; the words "other than" should be regarded as sufficiently wide to exclude not merely a cessation caused by voluntary unilateral resignation but also one where that resignation made even a small but material contribution to that cessation.
90. It seems to me that while there is some attraction in these arguments, at the end of the day they must fail. Prima facie the words should be construed in their natural and ordinary meaning and in this there is no ambiguity. The notice of resignation may have started a chain of events which resulted in a constructive dismissal (if that is what it was) but it did not cause and the chain was not bound to end the way it did; in particular, if the employer's conduct was repudiatory it was the employer which caused it to be that way. The period of notice was six months and Mr Clements was entitled to the benefit of continuity of employment during that period. There might have been other outcomes, including a reduction of the period of notice by negotiation during the notice period. I am not persuaded that the interpretation for which RDF argues can be said to have been in accordance with the presumed joint intention of the parties.

Some issues of credibility:

91. Before turning the question of constructive dismissal I need to consider certain issues which went to the credibility of Mr Clements. I consider first the evidence about the erased entries in his diaries. The matter arose before me in this way. Upon disclosure it was discovered that the claimant had two personal diaries, one kept by his personal assistant and one kept by himself. It became evident that the one he kept personally had been written in pencil (save for birthday and other anniversaries) but the entries had been rubbed out so effectively as to be virtually invisible, but certainly illegible, to the naked eye. The well known forensic handwriting expert, Dr Audrey Giles spent some time examining and attempting to reconstruct the entries for part of the period and has been only partially successful. What she has reconstructed has not been inconsistent with Mr Clements' evidence as to material events.
92. Mr Clements says that the erasure of entries is entirely innocent. He used the diary as an aide memoire for those things to which he had to attend on the following day; once the day was finished, or maybe after a couple of days if he'd been on the road, he erased the entries for that day - apart from a note on a kind of fitness regime he runs on a Monday night. He adopted the practice some years ago when a new personal assistant (Ms Janice McKnight) commented that his then habit of making entries in pen and deleting them made him look like a psychopath. He produced a diary for the year 2001 showing entries in ink deleted; and two for the years between then and now showing pencil entries erased. It puzzled me what was the sense of keeping at his home diaries whose entries were completely erased and he was not able to explain that to me. He did not call any other witness as to fact to support his evidence and confirm this practice.
93. However, both Mr Barbour and Ms Oriel, who shared an office with Mr Clements for some time contradict this account and assert that in their time with him they did not see him routinely erase entries in his diary except where, for example, the date of a meeting was changed from one date or time to another. As I have indicated above, I regard Mr Barbour as a witness of truth. He is supported in his evidence by Ms Oriel. I accept their evidence. It follows that I do not accept that Mr Clements was telling the truth when he said that the erasure was innocent.
94. While dealing with the credibility of Mr Clements there is another matter which I should mention. This relates to his vehement assertion that he had well in mind when accepting the new post with SMG and resigning that he was bound by the three year anti-competition restrictions imposed by the SPA. I do not accept that this is accurate or true. The reason I do not accept his evidence on this is partly because it is so extraordinary that he should have so easily assumed that it was safe for him to accept employment with a competitor in the above circumstances, only sixteen months into a three year restriction; partly because Mr Barbour told me of a conversation in a taxi which, if true, strongly suggests that he had forgotten about the three year restriction (and I accept the truth of Mr Barbour's evidence); partly because I accept the evidence of Ms Oriel as to the discussion which took place on 30^th March (see paragraph 32 above); and partly because it is quite evident that Mr Clements did not raise the matter on his agenda for discussion with SMG so that later on, when the three year restriction was raised, Mr Kawash of SMG referred to it as "this unfortunate hurdle" (see paragraph 52 above). I think it probable that he does not accept that he had forgotten the three year restriction simply for reasons of pride. The non-admission is otherwise of little significance.
95. A third matter relating to credibility is the fact that Mr Clements accepts that he procured his former personal assistant Ms Janice McKnight (who is now working for his wife) to use Mr Barbour's password to make unauthorised entry to Mr Barbour's private email inbox on RDF's website in order to monitor what his former colleagues at RDF and IWC were saying between themselves about him and, he says, to discover evidence that the report in the Sunday Herald could be laid at their door, which they were not then accepting. I do accept his evidence that he had arranged for this to occur only on or about 23^rd May 2007 and for the reason he gave. However, he must have known it was neither fair play nor honourable. I find it more than a little surprising that he should have snooped into the private correspondence of a close colleague and friend, having regard to the strong objection he has shown in this case to the reports in the newspaper which alleged that he had behaved in a dishonourable manner.
96. The question remains why he should have concealed his diary entries by erasure. In my judgment the reason is probably because they contained reference to an earlier contact with Mr Rob Woodward than he has disclosed at which the first intimation of an offer from SMG was raised and interest shown in accepting it. It seems to me that this makes better sense of the fact that the meeting between the two men took place at 5.00pm at SMG's office premises rather than outside working hours, at leisure over a drink of some sort. He would want to conceal this because it would challenge his good faith in pledging to the Sunday Herald on 18^th March that he was committed to IWC for the foreseeable future.
97. The entries may well also have contained further detail of contacts between Mr Clements and SMG or their advisers between the 30^th March and 12^th April than those Mr Clements has disclosed so far.
98. I turn now to consider the question of constructive dismissal. I will consider first the principles of law which can be deduced from the authorities which have been cited to me.

THE LAW RELATING TO THE DISMISSAL ISSUES:

99. The implied obligation of mutual trust and confidence in employment contracts requires that the employer shall not, "without reasonable and proper cause, conduct itself in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee": see Malik v BCCI [1998] AC 20 per Lord Steyn at 45, adopting the formulation in Woods v WM Car Services (Peterborough) Ltd [ ICR 666 (EAT) and Lewis v Motorworld Garages Ltd [1986] ICR 157; and Imperial Group Pension Trust v Imperial Tobacco Ltd [1991] ICR 524.
100. The implied obligation as formulated is apt to cover a great diversity of situations in which a balance has to be struck between an employer's interests in managing his business as he sees fit and the employee's interest in not being unfairly and improperly exploited. It is a mutual obligation, though it seems that the implied term adds little to the employee's implied obligations to serve his employer loyally and not to act contrary to his employer's interests.
101. In assessing whether there has been a breach, it seems clear that what is significant is the impact of the employer's behaviour on the employee rather than what the employer intended. Moreover the impact will be assessed objectively: per Lord Steyn (ibid. at 47B).^[3] The motives of the employer cannot be determinative, or even relevant, in judging the employee's claims for damages for breach of the implied obligation.
102. The burden lies on the employee to prove the breach on a balance of probabilities. This means, where the employer claims that he had reasonable and proper cause for his conduct, that the employee must prove the absence of reasonable and proper cause. Although the matter does not seem to have been decided expressly, I would hold on the basis of first principles that whether there is reasonable and proper cause must also be determined objectively; and the subjective intentions of the employer, though admissible in evidence, are not determinative of the issue.
103. Whether there is "reasonable and proper cause" in relation to a representation of the sort that this case is concerned about may depend on whether the occasion on which the representation was made occurs is one on which it is reasonable for the employer to make representations about the employee. It would however be wrong, I think, to substitute 'occasion' for reasonable and proper cause; that is because there may be occasions where it is appropriate for the employer to make some representation but the representation which he in fact made went beyond what was reasonable and proper in the circumstances.
104. The test whether there is a breach or not is said to be a 'severe' one.^[4] In this regard it should be remembered that for an employee to become entitled to claim that he has been constructively dismissed on this ground, it is not enough to prove that the employer has done something which was in breach of contract or 'out of order' or that it has caused some damage to the relationship; there is a need to prove that the conduct of the employer is sufficiently serious and calculated or likely to cause such damage that it can fairly be regarded as repudiatory of the contract of employment, that is to say, so serious that the employee is entitled to regard himself as entitled to leave immediately without notice.
105. RDF argues that the effect of placing an employee on garden leave is to alter the nature and content of the implied obligation of trust and confidence. In my judgment that must be correct because whether there has or has not been a breach is a question of fact which must depend on the balance which is struck between the interests of the employer and those of the employee; where the balance is to be struck in any given case will depend on all the circumstances subsisting at the time in question and whether an employee is on gardening leave must be a relevant circumstance.
106. RDF further argues that during a period of garden leave, the relationship of mutual co-operation between employer and employee is effectively at an end (notwithstanding that the contractual relationship continues) and that any obligations of trust, confidence and good faith are therefore either brought to an end or attenuated - even to the point of nonexistence; in either event, it follows that the threshold at which conduct amounts to a breach of those obligations must be higher. He relies on the observations of Scott VC in Symbian v Christensen Ltd (8^th May 2000) Ch.D unrep., BAILII: [2000] EWHC 458 (Ch) who stated

"[A period of garden leave] fundamentally and irretrievably undermines the employment relationship between the parties. The contractual relationship continues but the employment relationship is destroyed ... 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. What there is a contractual obligation, and that must be analysed and if necessary, enforced. But that there are implied obligations of good faith and fidelity which can survive the service of a garden leave notice...I would not accept."

107. I note that a question arises as to whether Mr Clements was in truth on gardening leave or not and I will return to that later. It seems, however, that a distinction may need to be drawn between implied obligations of loyalty and good faith (as in Symbian), on the one hand, and obligations of trust and confidence on the other: see Employee Competition 2007 OUP at paragraph 4.111.
108. Finally, the House of Lords in Malik^[5] has accepted that an employee may rely on a breach of the implied obligation even though he was not aware of it at the time when he was employed and even where his employment came to an end for reasons other than the discovery of the breach. As Lord Steyn observed:

"... there is nothing heterodox about allowing a claim for damages for a breach occurring during the contractual relationship where damage resulting from the breach only becomes manifest after the termination of the relationship. In truth the ignorance of an employee of a breach of the implied obligation is only relevant to the choice of remedies: obviously the employee cannot decide to terminate on a ground of which he is unaware. "

To like effect Lord Nicholls of Birkenhead stated [at page 35 H]

"In the nature of things, the remedy of treating the conduct as a repudiatory breach, entitling the employee to leave, can only avail an employee who learns of the fact while still employed. If he does not discover the facts while his employment is still continuing, perforce this remedy is not open to him, "

109. As a matter of practicality these observations are of course absolutely correct. However, it seems also to be the case that, as a matter of principle, an employee who claims constructive dismissal on the grounds of breach of the implied obligation may, if he fails to establish the breach on which he purported to claim that his employment ended, rely on any matters constituting a breach which he has discovered only since he resigned. This seems to follow from the application of general contractual principles laid down in the case of Boston Deep Sea Fishing and Ice Co v Ansell (1888) 39 ChD 339. The employer in that case was not able to establish at trial the grounds on which it had dismissed Mr Ansell but was entitled to rely on a separate breach which it had discovered only thereafter.

APPLYING THE LAW:

110. Applying these principles, it seems to me that the following considerations will be relevant and appropriate in relation to the specific issues arising in the instant case.
111. First, the content of allegations and representations which are expressed orally and/or in writing by an employer to others about an employee can in appropriate circumstances constitute a basis for an employee to contend that there has been a breach of the trust and confidence obligation, provided that the matters raised or the circumstances of their publication are "calculated to destroy or seriously damage the employment relationship" -that is to say, of sufficient seriousness to constitute a repudiatory breach of the employment contract.
112. Secondly, where such allegations and representations are expressed between members of the Board of Directors of a Company which is the employer, it is difficult to conceive of circumstances which can give the employee the right to complain of a breach of the obligation. That is because the Board of Directors is the controlling mind of the Company and representations between individuals on the Board is merely equivalent to the Company thinking aloud to itself. It is not yet the law that an employer is prohibited from thinking even negative and unworthy thoughts about an employee on his payroll.
113. Thirdly, where representations are made between the executive members of a Company (or between managers and personnel officers) about an employment issue affecting an employee, it will usually be the case that the occasion is one where there is "reasonable and proper cause" for the representation to be made; in such a case the employee, on whom lies the burden of proving the absence of reasonable and proper cause, may well fail to prove this essential element in his case, unless the representations in fact made went well beyond what was reasonable and proper for the occasion.
114. Fourthly, where representations are made between an employee of a quoted Company and an external adviser, such as the Company's Broker, in order to inform him about matters of which he may need to be aware in relation to his own area of responsibility, the occasion is likely to be one where reasonable and proper cause may exist, subject to the same qualification.
115. Fifthly, it is important to take account of the status of the person who made the representations of which complaint is made. There are two points to consider here. One is whether the representation was made by someone for whom the employer has vicarious liability. The other is whether the representation was made in the context of the employment relationship. Where the person who made the representation is the line manager of the employee in question it is obvious that no problem arises in either respect.
116. Here it may also not be irrelevant to note that until 16 months prior to these events, IWC, though a limited company, was run like a partnership of three partners who were more or less equal in standing and owned much of the business. Although after the take-over by RDF Ms Oriel was nominally the line manager of Mr Clements, I sense that between the three persons in question in IWC the sense of partnership between equals remained, notwithstanding that all of them were formally answerable to Mr Frank.
117. Sixthly, representations made to the press fall into a different order of significance from other representations. Cases where this sort of complaint is made against an employer are likely to be concerned with representations which the employee regards as either untrue and damaging to his reputation or true but of a personal and private nature, not in the public domain and either formally or informally confidential between himself and his employer. In such cases, the averment that the representation is true may be a good defence to an allegation of defamation; but, although the truth or otherwise of the representation may be one of the relevant circumstances to take into account, it does not follow that it will be a good defence to a complaint by an employee that the representation was true. There may be many things which are true about each one of us which would hurt us greatly if the information were published in the media. Even though the material may be true, if the employer's conduct in publishing the information has caused damage to the employment relationship of the necessary degree, the employee will be entitled to claim that the implied obligation has been breached by causing it to be published.
118. In such a case, the employee does of course still have to prove the absence of reasonable and proper cause; it will be relevant to enquire into the reason for the provision of information to the Press and whether it was provided for a good reason or none at all. As I have indicated, the employer's subjective reason for making the statement has to be judged objectively.
119. Finally, when evaluating whether the employer has breached the implied obligation, it is not unimportant to consider the state of the relationship, which is of course a relationship which both parties have a mutual obligation to foster, at the time when the breach is alleged to have taken place. If, by way of example, an employee has no relationship or is himself in repudiatory breach of his relationship, this may have to be put into the scales as it may affect the balance which has to be struck.
120. Applying these propositions to the allegations in the present case, my conclusion about them is as follows.
121. As regards the first allegation set out at paragraph 80 (a) above - the email from Mr Frank to members of the Board saying inter alia that Mr Clements was "a bit dim" : in my judgment the communication was amongst those individuals who were the controlling mind of the company and amounted to the company thinking aloud to itself. This cannot constitute a relevant breach.
122. As regards the second allegation set out in paragraph 80 (b) above (from Mr Slow to Investec): in my judgment the representation was made by a fairly junior employee (despite his grand title of Development Director) to the company's brokers on what can fairly be regarded as a 'need to know' basis, though the remarks went further than was reasonable and were more than a little peevish and personally insulting of Mr Clements. The most important aspect however is that Mr Slow had nothing at all to do with the employment relationship and the remarks were made entirely outside that context. In any event they did not achieve the degree of seriousness to constitute repudiatory conduct by the company either on their own or in conjunction with any other representations.

The remarks to the Press:

123. These are of a different order of importance and need to be considered with some care. In order to come to a conclusion whether the representations made to the Press were or were not a breach involves a consideration of a number of distinct strands of the relevant circumstances which go into the mix.
124. It is a relevant circumstance that Mr Clements was a public figure in the media industry who had a reputation which he was entitled not to have damaged. It is relevant that he was not a lowly employee but a person who worked at a senior level in a quasi-partnership with those who were his line managers. It is relevant that he was being "poached" by one quoted company from another, both with reputations and stock market prices to protect. It was inevitable, and RDF and Mr Clements both appreciated, that the departure would become a news item within the media industry very quickly. I would have thought that an employee would find it difficult to negative the "reasonable and proper cause" defence where his employer makes a briefing to the Press which is designed solely to correct a material misrepresentation already in the Press, irrespective of whether the misstatement came from the employee, someone briefing on his behalf or sloppy journalism.
125. It is to be noted that the news was first reported in the Scotsman online on the basis of what seems to have been an unattributable briefing from SMG. It reported their "coup" in "poaching" Mr Clements; it contained statements which were favourable to SMG reporting its success at the expense of RDF. But it also contained mis-statements (probably because of sloppy journalism) that IWC was the name behind "Location Location Location" and that IWC was Mr Clements' Company - comments which led to the cries of grief from Ms Oriel and Mr Barbour on 4^th April (see paragraphs 58 and 59 above).
126. The first briefing by RDF was in fact made in anticipation, one might say, of the news breaking out. It was made the preceding afternoon on a non-attributable basis by Mr Lambert and was reported first in Broadcast on 4^th April - see at paragraph 49 above. The complaint by Mr Clements is first of all that the article referred to matters which were confidential, such as his receiving £2 million and thought to be subject to a non-compete clause; and secondly because of the words "RDF feels surprised and let down that Alan should want to break his contract". In my judgment, the response by RDF to the first point, that the information was already in the public domain, is only technically true; a person who researched past press releases at the time of the takeover and married them up with information in the share register of IWC and the profitability of RDF in its accounts, could in all probability recreate the information for himself - though no one was likely to do this. However, although confidential, the information was not damaging to Mr Clements and its disclosure might make RDF 'out of order' but not in breach of the implied obligation.
127. As regards the reference to the non-compete clause, though disclosure of this was prohibited by the SPA, this was in my judgment a piece of factual information which RDF was entitled to disclose to inform the public debate which was about to occur why it was that RDF was in a position and entitled to block Mr Clements' move. Moreover, it was no more damaging to Mr Clements than he was bound to anticipate in the circumstances which he chose to bring about. It was entirely appropriate that at the time when the public learned that Mr Clements had resigned from RDF to take up a post at SMG, it should also learn that Mr Clements could not do it because of a three year restriction. I do not regard either statement as a breach of the implied obligation.
128. As regards the allegation that"... Alan should want to break his contract", Mr Clements points out that he wanted to re-negotiate his contract not break it; he adds that the allegation that he wanted to break it is damaging. Though as a matter of technicality it is correct that he did not by resigning break his contract and did wish to renegotiate it, as a matter of substance he did want to work with a competitor after only sixteen months of a three year restriction in breach of that contractual restriction and could broadly have been described as wanting to break that contract. All other things being equal, at the point in time at which this part of the information (even if broadly true) was 'briefed' I regard it as being on the borderline of acceptable, potentially damaging but not to the degree that it might seriously damage the relationship.
129. The RDF Media Group Press Statement was released in the morning of 4^th April; in so far as it was factual, it was appropriate that RDF should make its own statement and it had reasonable and proper cause for so doing; the factual information was accurate and presented in a fairly dispassionate manner. The remark of Mr Frank, of which complaint is made, that "it was unfortunate that [Mr Clements] had chosen to leave the company at a time when RDF was making a major investment in its Scottish production business and so soon after he very publicly proclaimed his commitment to IWC and its staff was factual, low key and entirely fair. I do not accept that any imputation was intended or that the remark was calculated or likely to convey the implication alleged. The observation that "Alan was paid cash and RDF shares for his stake" and "a key component of the [SPA] was that [Mr Clements] agreed not to work for a competitor for three years" was entirely accurate and anyone in the industry might have guessed it, had they put half a mind to it. In so far as it was "confidential" according to the terms of the SPA, RDF can be said to have been in breach of the terms of the SPA, though not the express terms of the Service Agreement. But a breach of a term of the SPA is not to be equated as equivalent to the breach of the implied obligation of trust and confidence in the service contract and, even if it were, I observe that the obligation of confidentiality imposed by the SPA was mutual and Mr Clements could scarcely complain of a breach by RDF in circumstances where he had himself supplied a copy of the SPA to SMG in breach of the self-same term and caused or permitted speculation in the media about his imminent departure implying an entitlement which was factually untrue.
130. As regards the RDF briefing to the Sunday Herald: the aim of Mr Barbour, expressed in his email of 5^th April 2007 (see at paragraph 61 above) was entirely laudable and his performance of his task was impeccable. In a situation, such as the present, where there was likely to be intrusive press interest and where press comment might seek to use the departure of Mr Clements to disparage RDF in an unfair manner, it seems to me that RDF had reasonable and proper cause to make a factual statement together with an expression of aspiration for the future of the sort which Mr Barbour had in mind.
131. As regards the contents of the article in the Sunday Herald (see paragraph 63 above) for the reasons already given I do not think it objectionable that RDF repeated the fact that Mr Clements was subject to the three year restriction in the SPA and a six month restriction in his Service Agreement; the fact that he received £2 million was confidential, an unnecessary piece of information designed to hurt Mr Clements but on its own not damaging. The reference to Mr Clements 'reneging on the deal' was broadly accurate (in the sense described above) and could be inferred from the terms of the restriction but of borderline acceptability. The comment that "if you take the money you do the bloody job. It's just so dishonourable" I accept was two separate statements joined together for effect by sloppy journalism. In one sense the phrase is a statement of the obvious deducible from facts which had already been dispassionately presented but both statements are seriously judgmental and made more powerful by the addition of the word "bloody" and by joining the two sentences. Taking all the statements in the Sunday Herald together, I have come to the conclusion that they constituted a serious attack on Mr Clements character and, whether they were true or not, constituted conduct, beyond what was reasonable or proper, by RDF which was calculated or likely to destroy or seriously damage the relationship of trust and confidence between it and Mr Clements.
132. As regards those matters which I have concluded were stated by Ms Oriel in the briefing (as set out in paragraph 75 above): in my judgment, the occasion might have given rise to reasonable and proper cause had the statements been reasonable. Most of those I quoted obviously went far beyond the line of what was acceptable, and that is so whether they were true or not. All other things being equal, I have no doubt that these also amounted to conduct to the requisite degree of seriousness to constitute a breach of the implied obligation and a repudiatory breach of the Service Agreement.
133. But RDF argues that all other things are not equal. As I indicated above, it is in my judgment a relevant circumstance that Mr Clements had been put on gardening leave. He argues that the terms of the letter dated 3^nd April putting him on leave (see paragraph 45 above) suggest that RDF intended that he was liable to return and therefore that his gardening leave was only partial - a different picture from that in Symbian. Although I think that the chances of Mr Frank exercising the right he reserved were very slight, and would have been non-existent had RDF realised what had taken place during the meetings and communications between Mr Clements and SMG, I do not think that the gardening leave issue impacts on the question. In my judgment, the fact of gardening leave does not entitle the employer to require the employee to be bound by a contract of employment with him while he subjects the employee to what became at its climax a campaign of vilification in the Press.
134. RDF contends that even if it was guilty of breach of the implied obligation, Mr Clements' own behaviour disqualifies him from being able to rely on the above breach of obligation, in so far as he was in repudiatory breach of his own obligations.
135. In his witness statement Mr Frank had stated that when he learned about Mr Clements' conversation with Mr Mykura he was appalled, considered Mr Clements to be in serious breach of his obligations and considered dismissing him on the spot but decided not to do so. In my judgment had he decided to dismiss it would have been a mistake because in my judgment the conversation with Mr Mykura did not amount to a breach by Mr Clement of his obligation to RDF. Even if it had done, by choosing not to dismiss Mr Frank affirmed the contract.
136. What took place with the executives and other employees of SMG is however another matter. I have found that as a matter of probability at the meeting with Mr Woodward and Mr Kawash on 21^st March 2007 Mr Clements disclosed to them confidential information as to the projects on which he was working with RDF and informally agreed that, were he to take up a post with SMG, he would try and take with him some of the projects on which he was working at that time; and further, on or around the 3^rd and 4^th April he informally agreed with Messrs Woodward, Kawash and Spreng of SMG that he would approve and/or co-operate with briefing by them of the media so that the public perception of the dispute would put RDF under pressure in the media to negotiate an early release of Mr Clements from his obligations. The evidence of the contacts between SMG and Mr Clements indicate to my mind that a transfer of loyalties had taken place from RDF to SMG. Working contrary to the interests of RDF in this way constituted acts of disloyalty on Mr Clements' part which amounted to a breach by him of the mutual obligation and/or the duty of loyalty and fidelity. Had Mr Frank known about it I am sure that he would have reacted by dismissing him on the spot.
137. In these circumstances the question arises whether Mr Clements can rely on the breach of the implied obligation which I have prima facie accepted in paragraph 132 above.
138. The question is not easy to resolve. I have been referred to some authority and ordinary contractual principles do not seem to provide a clear answer. The breach by Mr Clements preceded the breach by RDF; RDF was not at the time aware of the breach and so the contract continued in force, although RDF clearly did not affirm it. Had RDF known of Mr Clements' breach prior to its briefing of the Sunday Herald it would have accepted it as a repudiation of the contract and the representations to Mr Ken Symon would not have been a breach of its implied obligation. Mr Casey argues that the proper analysis is that the contract did indeed continue, it was terminated by Mr Clements accepting RDF's repudiatory breach; the anterior breach by Mr Clements is not forgiven and forgotten, it remains but sounds only in damages. Where, as here, damages is not the essence of either party's claim for relief, I do not accept that such a result is either a satisfactory or equitable solution.
139. In these circumstances I am inclined to accept the formulation of Mr Croxford who argues, on the basis of the authority of Bremer Vulcan Schiffbau Und Maschinenfabrik v South India Shipping Cory [1981] AC 909 at 986B-D, 987G, Paal Wilson v Partenreederei Hannah Blumenthal [1983] 1 AC 854 at 909C-D, that where as here the defendant is himself in repudiatory breach of a mutual obligation he is not entitled to accept any repudiation by RDF by reason of his own breaches.
140. The alternative way of looking at it is by application of the consideration set out in paragraph 120 above. The point is that if one looks objectively at the relationship between RDF and Mr Clements, that relationship had already been seriously damaged or destroyed by misconduct on his part which went to the root of the relationship. The point is one of causation as well as equity. As a matter of causation I would hold that the relationship was destroyed not by RDF but by Mr Clements as a result of his anterior breach of the mutual obligation. It would also be inequitable for Mr Clements if he were able to claim that RDF caused serious damage to the relationship where the relationship in question was already seriously damaged or destroyed by his own conduct.
141. On the basis that Mr Clements was not in the circumstances entitled to accept RDF's conduct as a breach on which he was entitled to terminate the contract, it follows that the contract was terminated by the claimants' letter to him dated 3^rd May 2007, both on the grounds set out in the letter but also, on the principle of Boston Deep Sea Fishing, on the grounds that they are entitled to rely upon his anterior breach as justifying their termination of his contract by that letter.
142. Finally, RDF contends that the court has power to order Mr Clements's Defence and Counterclaim to be struck out as an abuse of process if it comes to the conclusion that he has been guilty of misconduct which jeopardises the fairness of the trial or has attempted to pervert the course of justice by a flagrant campaign of deception: see per Bean J in Madarassy v Nomura International plc [2006] EWHC 748 (QB). Striking out is of course a Draconian remedy: it must be a proportionate response to the misconduct involved, and there must be a compelling reason for the court or tribunal to take such a step.
143. RDF submits that such an order would be appropriate in the present case where Mr Clements, as he admits, caused Miss McKnight to enter covertly into Mr Barbour's email inbox; and where he has erased the pencil entries in his diary.
144. As regards the 'snooping' and as I have indicated already, I have come to the conclusion that Mr Clements did cause Miss McKnight to enter RDF's system only around 23^rd May, as he told me and for the reason he gave. That does mean that he behaved dishonourably and in breach of process but I do not believe he secured any material benefit from so doing. I do not feel that my ability to do justice to the case has been affected by what he did.
145. As regards the erasure of the pencil entries in the diaries: I have drawn certain inferences against Mr Clements as set out in paragraphs 96 & 97 above. Again, I have not found my ability to deal justly with the case has been materially affected. In my judgment it would be disproportionate in these circumstances to strike out the Defence and Counterclaim.
146. In conclusion, it follows that in my judgment Mr Clements' employment with RML ceased as a result of a notice of dismissal in the letter of 3^rd May 2007, that RML was entitled to dismiss him without notice, and in the circumstances the restrictions imposed by clause 11.1 of the SPA remain valid for a period of three years not two.

Bernard Livesey QC

Deputy Judge of the High Court

Note 1   Popularly known within the industry as an "indie".    [Back]

Note 2   Richard Dawkins, who had agreed to be the presenter of a programme or series.    [Back]

Note 3   Quoting from an article by Douglas Brodie at (1996) 25 ILJ 121.    [Back]

Note 4   Gogay v Hertfordshire CC [2000] IRLR 703 at para 56 per Hale LJ.    [Back]

Note 5   See per Lord Steyn ibid. at p. 48 G.    [Back]