QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
| GREGORY MORGAN PLUMBLY
|- and -
MR C. AYLWIN (instructed by DAVIES ARNOLD COOPER) for the DEFENDANT
Hearing dates: 14 - 17, 20 - 22 October 2008
Crown Copyright ©
Mr Justice Beatson:
Part 1: Introduction
Part 2: The Evidence
(a) Factual Evidence
(b) Expert Evidence
(c) Documentary Evidence and disclosure
(d) Assessment of the witnesses of fact
Part 3: Findings of fact
(a) The operation of comparison websites
(b) The Claimant's background and meeting Mr Paleomylites
(c) The AABTL website and Leadbay
"Looking for UK mortgage advice? With over 7500 mortgage deals to choose from getting the right deal is not easy. By completing our simple enquiry form we can put you in touch with a UK professional mortgage adviser who will contact you by telephone to discuss your requirements."
There is a hyperlink to the enquiry form, which it was common ground was Leadbay's form.
"If you would like to speak with a whole of market mortgage broker that can give you a free, no obligation quote, please fill in the form below.
This could be either for a buy-to-let mortgage or re-mortgage or you might be interested in re-mortgaging your current property to fund your next investment property."
The boxes to be completed reflect this, asking whether the form filler wants to "buy a property", "re-mortgage a property", or "buy a property to let".
"First of all, thank you for sending your mortgage leads to Leadbay.
Since its launch in January Leadbay's growth has been quicker than we anticipated. We have over 400 brokers registered with Leadbay and of these about 180 have credited their accounts and are actively bidding for leads.
This is leading to increased bid prices and ultimately more revenue for you. Our top affiliate last month earned over £20,000. We have recently launched an advertising campaign in the industry press and expect to built the brand and register more brokers over the coming weeks.
Today we have made some improvements to the form that you use to generate leads. One of these changes may require a minor change to your technical integration to ensure it appears correctly on your webpage…"
"Very interesting. We should speak with them in a week or so and see if we can use our forms. If we can't, and we want to use them, how easy is it to replace our forms with theirs?"
The final email in this chain is Mr Plumbly's response to Mr Paleomylites later that evening. With regard to the question asked, Mr Plumbly said "stroll in the park".
(d) The contracts
"Your salary will comprise a basic salary of GBP 40,000 per annum.
You will also receive a monthly Commission Bonus. The Commission Bonus will be calculated according to the prevailing rules of the FLO Commission Bonus. For the calendar year 2005, the Commission Bonus is calculated as 5% of gross profit (revenue less all marketing costs and external consulting costs). The Commission Bonus will be payable monthly in arrears cleared payment. The Commission Bonus will be revised at the start of year calendar year. If your employment is terminated for any reason before your Commission Bonus is paid, you will not be entitled to any Commission Bonus.
You will be entitled to receive share options in FLO issued pursuant to FLO's share options scheme. Details of FLO's share options scheme are attached to this document."
"Your duties include: the promotion of new business selling FLO's products and services through FLO's associated websites, liaising with clients, managing FLO's associated websites including site development, adding further features, search engine optimisation, pay-per-click campaigns, affiliate programmes; developing proposals for the establishment of FLO introducer websites; working with other FLO staff and contractors to develop plans and processes for the remote marketing of financial products and such other duties as may be reasonably be assigned to you and which are in keeping with the nature of your role."
"You must at all times observe the highest standards of professional conduct in your dealings with clients, professional colleagues, fellow members of staff and others with whom your work will bring you into contact. All affairs of FLO and of its clients are confidential and you must keep them secret and confidential both during and after the termination of your employment."
"You will not without the prior written consent of FLO directly or indirectly at any time within the relevant period engage or be concerned or interested in any business which competes or will at any time during the relevant period compete with the business."
"to remain away from the office during your notice period (whether you or FLO gave notice) in which case you will be required to comply with any conditions laid down by us and, whilst on full pay during such time, you will not be permitted to work for any other person, firm or client or on your own behalf without our prior written consent".
"acting either alone or jointly with or on behalf of any other person, firm or company, whether as principal, partner, manager, employee, contractor, director, consultant, investor or otherwise".
"With reference to your employment agreement dated 2 March 2005, please accept this letter as agreement by Finance Leads Online Ltd ("the Company") that you may continue to operate the Internet website, "www.allaboutbuytolet.com".
This agreement is conditional upon your website not directly competing with the business of the company and the company reserves the right to request that you remove or terminate the site subject to the company giving you two weeks notice.
This letter does not alter in any way the provision of your employment agreement except as stated above."
1.1 In consideration of the sum of £1 by the Option Holder to the Company (the receipt whereof the Company hereby acknowledges) the Company hereby grants to the Option Holder, with immediate effect (the "Effective Date") an option ("the Option") to subscribe for 100 ordinary shares of £0.01 each in the capital of the Company ("Ordinary Shares") at the price of £0.01 per Ordinary Share ("the Subscription Price"). Such Option to represent 10% of the Ordinary Shares of the Company.
2.1 Conditional upon the Option Holder remaining in the full time employment of the Company the Option shall be exercised by the Option Holder by giving notice in writing to the Company ("the Option Notice") at any time during the period commencing on the first anniversary of the Effective Date and ending on the third anniversary of the Effective Date ("Option Period"). The Option shall be exercised upon receipt of the Option Notice and not before.
2.2 The Company shall allot and issue to the Option Holder the Ordinary Shares, the subject of the Option specified in the Option Notice, upon it receiving from the Option Holder payment of the Subscription Price and shall register the Option Holder's name in the register of members of the Company and issue a share certificate in respect thereof as soon as reasonably practicable thereafter.
3. OBLIGATIONS OF THE COMPANY
3.1 During the period from the date of this Agreement to the expiration of the Option Period or exercise by the Option Holder of the Option in full, whichever shall first occur, the Company will:
3.1.1 ensure that there will at all time be sufficient authorised but unissued share capital and all requisite or other authorities necessary to enable the Company to discharge its obligations under this Agreement;
3.1.2 despatch to the Option Holder copies of all notices, accounts, statements and circulars dispatched to members or debenture holders of the Company at the same time as they are so despatched.
4. OPTION SHARES
4.1 The Ordinary Shares issued as a result of the exercise of the Option will rank in full for all dividends declared and payable on Ordinary Shares from the date of receipt of payment of the Subscription Price (unless a prior record date has been set before receipt of the Subscription Price) and will rank in all other respects pari passu with all other Ordinary Shares for the time being in issue from the date of receipt.
5. DEALINGS IN OPTIONS
The Option Holder may exercise the Option in whole or in part and may during the Option Period exercise the Option on any number of occasions provided that no exercise of the Option shall require the Company to issue more Ordinary Shares than those subject to the Option hereby granted.
6. ALTERATION OF SHARE CAPITAL
6.1 If, at any time between the date of this Agreement and exercise of the Option in full, the Company shall make an issue by way of rights in existing holders of Ordinary Shares then the Option Holder shall, so far as legally possible, be given the opportunity to participate in such rights issue at the rights issue price as if he or it had exercised the Option hereby granted in full in respect of the Option Shares then remaining under Option and was the registered holder of all Option Shares then the subject of this Option. If this is not legally possible, any discount element on the rights issue shall be treated as if it were a variation of share capital and Clause 6.2 shall apply. If such rights issue shall be declared between the date of the Option Holder giving an Option Notice on exercise of the Option and the allotment of Ordinary Shares in respect of such Option Notice, then the Option Notice shall be deemed not to have been given, solely for the purpose of extending such rights issue to the Option Holder in respect of the Option Shares then the subject of the Option Notice.
6.2 If the Company shall sub-divide or consolidate the whole or any part of its issued share capital into denominations of other than £1 or capitalise any of its reserves of profits by the issue of new shares or vary its share capital in any other way the number of shares the subject of this Option shall be adjusted accordingly to ensure that the Option Shares are of the same value after as well as before such variation.
6.3 In the event of the alteration of the number of Preference Shares the subject of this Option pursuant to any of the provisions in Clause 6, the Subscription Price shall be adjusted as appropriate."
(e) What Mr Paleomylites knew about AABTL's use of Leadbay:
(f) May 2005: BTQ's website becomes operational:
(g) Was AABTL competing with BTQ?
(h) Deterioration of Mr Plumbly's relationship with Mr Paleomylites:
(i) Developments regarding AABTL:
(j) Thomas Adalbert's involvement with BTQ:
(k) Mr Plumbly's performance at BTQ:
(l) AABTL's emails using the AWeber service:
"speak to an IFA about mortgage requirements. Fill in the online form below for free advice from a UK professional mortgage advisor. As well as buy-to-let mortgages, you may also wish to discuss the option of re-mortgaging your current property so you can fund your next buy-to-let investment."
(m) Discussions about share options:
(n) The "directorship" issue:
"The MD here tells me new shares can be issued diluting my equity so long as they are sold at market value. Previously he wanted to issue these with a nominal strike price thus reducing the value of my shareholding as I understand it. After much discussion he now proposing the new employees get share options based on to be newly issued shares (when exercised) and we do set a strike price based on current market valuation.
It does seem he thinks I should agree to what this valuation is, and I don't really understand the implications of this. …
He has also said he will require me to sign a disclaimer saying I wouldn't take legal action against the company and probably a bunch of other stuff."
"On return from the accountant the MD has come up with the following suggestion.
[(1)(2) & (3) deal with what Mr Paleomylites considers to be a fair value for the company and with compensation for the dilution of Mr Plumbly's equity and the equity split proposed.]
(4) He is proposing I am made a Director. I can't help being suspicious about this, I have never expressed an interest and I am currently living in a world of paranoia as I have many doubts about his integrity as discussed."
(o) Mr Plumbly's resignation and subsequent developments
(o) Misuse of confidential information
Part 4: Discussion
Part 5: The Remedy
(a) Specific Relief or damages
Part 6: Conclusion