Collidge (Sean Mervyn) v Freeport Plc

JurisdictionEngland & Wales
JudgeMR JUSTICE JACK,Mr Justice Jack
Judgment Date25 May 2007
Neutral Citation[2007] EWHC 1216 (QB)
Docket NumberCase No: HQ06X01451
CourtQueen's Bench Division
Date25 May 2007

[2007] EWHC 1216 (QB)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

Before

Mr Justice Jack

Case No: HQ06X01451

Between
Sean Mervyn Collidge
Claimant
and
Freeport Plc
Defendant

David Reade QC (instructed by Mayer Brown Rowe & Maw) for the Claimant

Paul Nicholls (instructed by Dechert) for the Defendant

Hearing dates: 1–4 May, 8–10 May & 15 May 2007

Approved Judgment

MR JUSTICE JACK Mr Justice Jack

A. Introduction

1

By a letter dated 31 March 2006 from the defendants, signed in acceptance by the claimant, terms were agreed for the termination of the employment of the claimant, Mr Sean Collidge, by the defendant, Freeport plc. Mr Collidge was the chief executive of Freeport, and until 6 December 2005 had also been its chairman. He had founded the company in 1993. Its business is the creation and management of what are called 'retailer outlet villages', which are in effect shopping precincts containing designer outlets where clothing and other products may be purchased at discount prices. These were initially in England and Scotland, but the six sites have since been sold or closed down. The company now has four European sites, in France, Sweden, the Czech Republic and Portugal. In December 2005 it relocated its offices from London to Monaco.

2

The termination agreement of 31 March 2006 followed a board meeting of Freeport on 29 March at which allegations made against Mr Collidge were considered by the board. The agreement provided for Mr Collidge to resign on 31 March 2006. In this action Mr Collidge claims payments which the agreement provided that Freeport should make to him. Freeport alleges that it is not obliged to make any payments under the terms of the agreement because there existed at its date breaches of his contract of employment entitling Freeport to dismiss Mr Collidge summarily. There are two broad issues. The first is a discrete issue as to the construction of the term of the agreement relied on by Freeport, namely clause 7(b). The second is whether there existed at the date of the agreement circumstances entitling Freeport to dismiss Mr Collidge summarily. The matters there relied on by Freeport are the following:

(a) the alleged use by Mr Collidge of Mr Bradshaw, a driver employed by Freeport, who mainly drove Mr Collidge, to do private work for Mr Collidge in company time;

(b) the alleged misuse by Mr Collidge of his company credit card;

(c) the alleged claiming by Mr Collidge of personal expenses as company expenses;

(d) the allegedly wrongful claiming by Mr Collidge of both mileage allowance and petrol costs;

(e) the alleged wrongful removal of equipment from Freeport's West Calder site in Scotland to the Castle Hotel owned by Mr Collidge.

B. The construction of the termination agreement

3

I will set out the whole of the termination agreement of 31 March 2006 with some of its provisions summarised in square brackets, so that the form and nature of all the obligations it contained can be seen. It stated at its start that:

'Subject to and conditional upon the terms set out below, the company will:—

(a) pay to you the sum of £445,680 gross as compensation in respect of the termination of your employment; and

(b) pay the maximum sum of £4,500 …. in respect of reasonable legal costs …… ;

(c) allow you to exercise the share options … under the company's Executive Share Option Scheme ….; and

(d) continue to meet the rental costs of the Monaco flat which you currently occupy until 30 September 2006 …..; and

(e) continue to provide you, …., with the benefit of private health insurance ….. [for a period] …..'

The agreement continued:

'The terms on which this offer is made are that you irrevocably agree as follows:—

1. Your employment with the Company shall terminate on the Termination Date [31 March 2006] by way of your resignation. ……

2. You accept the terms of this agreement in full and final settlement of any claim ………

3. You shall within 2 working days following the Termination Date return to the Company all ….. [Company property] …….

4. (a) [no public statements to be made by Mr Collidge regarding the termination save as authorised by the Company or required by law]

(b) [no disparaging statements to be made by Mr Collidge concerning the Company]

(c) [certain provisions of Mr Collidge's service agreement to remain in effect]

(d) [Mr Collidge to assist the Company with litigation]

[The company also undertook an obligation as to statements concerning the termination.]

5. The Company does not give any warranty as to the taxable status of the payments to be made to you pursuant to this agreement. ……

6. [Mr Collidge to resign from his directorships within the Freeport group]

7. You warrant as a strict condition of this agreement that as at the date hereof:—

(a) you have not failed to disclose any personal injuries of which you are aware (or of which you ought reasonably to be aware) in relation to which you reasonably believe you could claim against the Company or any company in the Group; and

(b) there are no circumstances of which you are aware or of which you ought to be aware which would constitute a repudiatory breach on your part of your contract of employment which would entitle or have entitled the company to terminate your employment without notice; and

(c) [no proceedings issued by Mr Collidge]

(d) You have not at the date of this agreement obtained employment …..

8. You and the Company agree that this agreement constitutes a compromise agreement pursuant to the provisions of … [a number of Acts and Regulations] …..

9. The Payment shall be made within 14 days of whichever shall be the later of ……

10. This Payment shall be made to you in Monaco ……

11. [The Contracts (Rights of Third Parties) Act 1999]

12. [Entire agreement clause]

13. [English law, non-exclusive English jurisdiction]'

The terms 'subject to and upon' which the obligations at the agreement's start are undertaken by Freeport include terms which place obligations on Freeport. Further the provisions relating to Mr Collidge may not all be of the same nature.

4

In accordance with clause 9 payment of £445,680 was due, if it was due at all, on 27 April 2006. On 26 April Freeport's solicitors, Dechert, wrote to Mr Collidge's solicitors, Mayer, Brown, Rowe & Maw ('MBR&M'), saying that Freeport had conducted an investigation into a number of matters. The letter stated that there were matters which, in the absence of explanation, showed that Mr Collidge was in breach of the warranty given in clause 7(b). The matters which I have listed were referred to. It was stated that the investigations were continuing, and that the board was in no position to authorise payment. Mr Collidge was given an opportunity to explain his position before further action was taken. On 27 April MBR&M wrote saying that payment was due and that they and their client were unaware of any investigation. Proceedings were begun by Mr Collidge on 19 May.

5

In Freeport's defence served on 22 June 2006 it was alleged that the obligation to make payment was 'subject to and conditional upon the Claimant's warranty given by clause 7 of the Compromise Agreement being accurate.' – paragraph 3, and that 'The Defendant was not obliged to [pay] because the warranty which the Claimant had given pursuant to clause 7 was untrue. Accordingly a condition precedent to payment was not satisfied and the Defendant was under no obligation to make payment' – paragraph 5. Paragraph 49 stated that by reason of Mr Collidge's repudiatory breaches of his contract of employment Freeport was not obliged to make payment. Freeport's case is thus that the agreement is to be construed as providing that Freeport was not obliged to pay if there were circumstances of which Mr Collidge was aware or should have been aware, which would have amounted to a repudiatory breach of his contract of employment entitling Freeport to dismiss him summarily.

6

The submissions made by Mr David Reade QC on behalf of Mr Collidge were to this effect. Clause 7(b) was not a contingent condition in the sense that its performance was a pre-condition to the enforceability of the agreement or to the enforceability of its payment provisions. But if it was any sort of pre-condition, the condition had been met by the giving of the warranty. He submitted that clause 7 provided conditions in the sense that they were terms whose breach would entitle Freeport to accept the breach as a repudiation of the agreement and to bringing it to an end. If repudiation was not accepted, the agreement remained in being for the benefit of both parties and Freeport would have a claim for damages for the breach of the clause.

7

The main dispute is thus as to the nature of clause 7 as a 'condition' of the agreement. There are two subsidiary matters. If the clause has effect as a clause the breach of which is a repudiation, has any repudiation been accepted by Freeport? If it has not, can Freeport nonetheless reclaim any sum which it may have to pay Mr Collidge, as damages for breach of the clause? Mr Paul Nicholls accepted on behalf of Freeport that such a claim was not pleaded, and he sought permission to amend if Freeport needed to rely on it.

8

-In my judgment, the effect of the introductory words to Freeport's obligation to pay, 'Subject to and conditional upon the terms set out below' and of the introductory words to clause 7, 'You warrant as a strict condition of this agreement', is that if the facts are not as set out in sub-clauses (a) to (d) of clause 7, Freeport is under no obligation to pay. In short, it is a condition, a sine qua non, of the obligation to pay that the facts shall be as warranted. That is plainly the sense of 'conditional' in the introductory words to the obligation to pay. I consider that 'strict condition' in the introductory words to clause 7 is to be construed in the...

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2 cases
  • Manoudakis v Easygroup Holdings Ltd
    • United Kingdom
    • Queen's Bench Division
    • 20 October 2011
    ...was of such gravity that it would have entitled EGUK to terminate the claimant's employment without notice. (3) in paragraph 89 of Collidge v Freeport plc [2007] EWHC 1216 QB Jack J says in relation to an expenses case: "Where expenses are obtained by an employee from a company which are no......
  • Collidge (Sean Mervyn) v Freeport Plc
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 5 March 2008
1 books & journal articles
  • The Employment Relationship and Fiduciary Obligations
    • United Kingdom
    • Edinburgh Law Review No. , May 2012
    • 1 May 2012
    ...of fidelity, for instance, may demand more by way of propriety where a senior employee is concerned.1515Collidge v Freeport [2007] EWHC 1216 (QB). More fundamentally, but perhaps questionably, some jurisdictions now hold that senior managers are fiduciaries.1616This is the case in Canada, f......

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