Axel Threlfall v ECD Insight Ltd and Another
| Jurisdiction | England & Wales |
| Judge | The Honourable Mrs Justice Lang DBE,Mrs Justice Lang DBE |
| Judgment Date | 17 December 2012 |
| Neutral Citation | [2012] EWHC 3543 (QB) |
| Docket Number | Case No: HQ11X04305 |
| Court | Queen's Bench Division |
| Date | 17 December 2012 |
[2012] EWHC 3543 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mrs Justice Lang DBE
Case No: HQ11X04305
Mr Sam Neaman (instructed by Penningtons Solicitors LLP) for the Claimant
Mr Seb Oram (instructed by Blandy & Blandy LLP) for the Defendants
Hearing dates: 23 rd, 26 th, 27 th, 28 th November 2012
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
The Claimant brings this claim for breach of contract against his former employer, the First Defendant ("ECD"), and its managing director, Mr Glenn Whitney, who is the Second Defendant. The Claimant was employed by ECD as Head of Media from 3 February 2003 to 19 September 2008, when he left to take up a post as a television news presenter with Reuters Ltd.
The Claimant seeks declaratory relief, damages and specific performance of his employment contract with the First Defendant, claiming that he is entitled to:
i) an 8 percent share in the equity of the First Defendant, increasing to 20 percent from November 2005;
ii) share dividends;
iii) a termination payment;
iv) a bonus payment in respect of the final three months of his employment in 2008.
The Second Defendant was joined in a personal capacity as he owns 100 percent of the shares in the First Defendant, which is a private company. Therefore the relief sought in relation to the ownership of shares might have to be against him, not the company.
The Defendants dispute the claim, on the following grounds:
i) although the Claimant's employment contract made provision for an 8 percent equity stake, this was forfeited pursuant to paragraph (d) of schedule 2 to the contract, by reason of his breach of the restrictive covenants in clause 15 of his contract;
ii) the forfeiture provision in schedule 2 was reasonable and in any event, was not capable of being severed;
iii) there was no concluded agreement with the First Defendant to increase his equity stake to 20 percent;
iv) the First Defendant (acting through the Second Defendant) properly exercised its discretion to refuse the Claimant bonus payments in respect of the final three months of his employment in 2008,
v) the employment contract did not make provision for a termination payment.
The First Defendant also counterclaims for breach of contract, alleging breach of the restrictive covenants and a breach of fiduciary duty and/or good faith.
In response, the Claimant denies that he has acted in breach of contract and he denies that he owes a fiduciary duty. Alternatively, he submits that the provisions in schedule 2 to the contract, providing for forfeiture of the equity stake, are an unlawful restraint of trade and should be severed.
Evidence
I heard oral evidence from the Claimant, and the following witnesses who gave evidence on his behalf: Mr Steve Clarke, Ms Joanna Sheldon, Ms Susan Watson and Ms Jane Tomlin.
I heard oral evidence from the Second Defendant, and the following witnesses on behalf of both Defendants: Mr Julian Lewis, Mr Jeremy Adams and Ms Helen Lucas.
I received some 1500 pages of documentary evidence.
In the course of the hearing, I ruled on the admissibility of hearsay evidence. Under the Civil Evidence Act 1995 ("CEA 1995"), evidence is not to be excluded on the ground that it is hearsay evidence, but the circumstances in which the hearsay evidence is adduced will go to the weight to be attached to the evidence by the court.
Applying these principles, I ruled that the Claimant could rely upon hearsay evidence given by Mr Michael Gestrin, Ms Helen Fisher and Ms Brenda Killen, pursuant to the CEA 1995, section 1 and CPR rule 33.2(3). They are employees of the Organisation for Economic Co-operation and Development ('OECD') who approved draft witness statements but their statements were never finalised (only one was signed and none of them had made statements of truth) because the OECD stated in a letter dated 10 February 2012 that its officials should not give evidence as they were "immune from legal process in respect of things done by them in their official capacity", by virtue of the "OECD Protocols on the Privileges and Immunities of the Organisation". I did not consider that I was bound either by the letter or the immunity from legal process to exclude the draft statements from the evidence.
I concluded that CPR rule 33.2(3) was sufficiently wide in scope to include these draft statements. The Defendants were given notice of their evidence and the reason why they could not be called to give oral evidence. I accepted that it was impossible for the Claimant to call them to give oral evidence, and that these statements were genuine and approved by the three employees, Nonetheless I could only give the statements limited weight since, if they had attended court, there would have been supplementary questions to ask by way of cross-examination.
A witness statement was served by Mr Neil McNeil, and the Claimant notified the Defendants by letter that he was not available to give oral evidence at trial. Reasons were not given. Although this evidence was admissible under Civil Evidence Act 1995, section 1 and CPR 33.2(2), the fact that Mr McNeil was not available for cross-examination meant that I could only give his statement limited weight.
The Claimant also relied on emails submitted by two individuals, Ms Ehrenstrahle and Ms Baerveldt, in response to requests for information from the Claimant or his representatives. These were documents containing hearsay, and governed by the notice requirements of CPR rule 33.2(3). No notice was served, the reason given was that they were only received in the last few weeks. I did not accept the Claimant's argument that the late arrival of the emails, and thus the failure to serve a notice, was a result of late disclosure from the Defendants. However, under the CEA 1995, the failure to serve a notice did not prevent the emails from being admitted in evidence, although it was potentially relevant to the weight to be given to them.
The Defendants applied under CPR 33.4 to cross examine Ms Ehrenstrahle and I granted the application. The Claimant then decided not to call her as a witness, and gave as a reason that Mr Adams had accepted that she had not attended the conference in Stockholm, on the basis of her email. This was somewhat disingenuous as Mr Adams had also said that it was his understanding that she was due to attend the conference and she ought to be asked why she had not done so. However, ultimately the Claimant was at liberty to decide which witnesses to call, and since the Claimant had effectively decided not to rely upon her evidence, I ruled that the email from her should not be admitted in evidence.
The Defendants did not seek to cross-examine Ms Baerveldt, and her email was admitted in evidence. However, I could only give her evidence limited weight because it was contained in an informal email to the Claimant, not a signed witness statement with a statement of truth; there was no explanation for her failure to attend to give oral evidence; and there was no opportunity to test her evidence in cross-examination.
Findings of fact
ECD
ECD was incorporated on 21 May 2001. It is a small private company, with one Director, Mr Whitney. Mr Whitney is the managing director and actively controls the company.
Mr Whitney was the founder of the company. In a "Growth Plan", prepared by Mr Whitney in 2002, he stated that he founded the company in 1998. It appears from his personal tax returns that he was trading as a self employed "Communications Consultant" under the name ECD Insight prior to incorporation of the company.
The company accounts record that 100 Ordinary shares of £1 each have been allotted and paid and are held by Mr Whitney. Regular and substantial dividend payments have been made to Mr Whitney, totalling about £489,703 between April 2003 and June 2011.
ECD has offices in London, France and the USA, and has subsidiary companies registered in France and the USA.
Mr Whitney, who is a national of the USA, is resident in France and divides his working time between the various offices of ECD.
Recruitment of the Claimant
Before joining ECD, the Claimant was employed as a print journalist and as a business news broadcaster and presenter. In 2002, when he was working for CNBC, a business news channel, he was approached by Mr Whitney to join ECD. Mr Whitney had been searching for someone with media experience and had been impressed by the Claimant's broadcasting skills. They had discussions over several months and Mr Whitney promoted the company to him as a fast-growing international consultancy with predictions of a substantial increase in revenue over the next five years. Although the turnover in the year ending 31 June 2002 had been only £546,068, Mr Whitney's revenue projections, based on anticipated growth, were as follows:
| 2003: | £1.29 million |
| 2004: | £3.175 million |
| 2005: | £5.56 million |
| 2006: | £8.9 million |
| 2007: | £12.5 million |
Mr Whitney offered the Claimant an opportunity to share in the future success of the company, by offering him a share in the equity, as well as linking the level of his salary to turnover/profit, and basing his commission/bonus upon his success in attracting new business. Mr Whitney had to make the offer sufficiently attractive to the Claimant, in financial terms, to persuade him to join ECD, and the offer of a share in the equity was an...
To continue reading
Request your trial
-
Alesco Risk Management Services Ltd v Bishopsgate Insurance Brokers Ltd
...or general fiduciary duties to his employer: per HHJ Stephen Davies at [62], [65]. Similarly, in Threlfall v ECD Insight Limited [2013] IRLR 185, the Head of Media, a “senior employee” contractually obliged to keep the Board informed of his conduct of the business, was held to owe no fiduci......
-
Axel Threlfall v ECD Insight Ltd and Another
...Whitney's sole shareholding. 2 The trial took place before Lang J, who handed down judgment on 17 December 2012. Her judgment is at [2012] EWHC 3543 (QB) and is reported at [2013] IRLR 185. Her main conclusions can be summarised as follows: (1) the contract of employment was varied, as Mr T......