Cook v Ministry of Sound Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Rimer,Lord Justice Wilson,Lady Justice Smith |
| Judgment Date | 09 July 2009 |
| Neutral Citation | [2009] EWCA Civ 624 |
| Docket Number | Case No: 2008/1954 |
| Court | Court of Appeal (Civil Division) |
| Date | 09 July 2009 |
[2009] EWCA Civ 624
[2008] EWHC 1949 (QB)
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Mr Justice Burton
Before: Lady Justice Smith
Lord Justice Wilson
and
Lord Justice Rimer
Case No: 2008/1954
Mr Andrew Hochhauser QC and Mr David Craig (instructed by Jones Day) for the Appellant
Mr Ian Croxford QC and Mr Thomas Croxford (instructed by Lewis Silkin LLP) for the Respondents
Hearing dates: 5 February, 3 July 2009
Lord Justice Rimer:
Introduction
The claimants are MSHK Limited (formerly Ministry of Sound Holdings Limited) ('Ministry') and Ministry of Sound Recordings Limited ('Recordings'). Ministry owns businesses operating in the dance music field. Recordings, a wholly-owned subsidiary, is Ministry's record label and operates in the production and sale of recorded dance music. For practical purposes, the claimants operate as a single entity. The defendant, Ben Cook, was employed by Ministry from 1998 until 3 August 2007, when he was summarily dismissed. He had been employed as a member of Recordings' artist and repertoire ('A&R') team.
By a claim form issued on 1 February 2008 the claimants sought a declaration of the lawfulness of Mr Cook's summary dismissal, damages and equitable compensation. Their Particulars of Claim were answered by a (once amended) Defence and Counterclaim. On 13 May 2008 Mr Cook issued an application under CPR Part 24 seeking summary judgment. Extensive evidence was exchanged and the application came before Burton J.
The application was dealt with on the basis that, whilst Mr Cook disputes many of the factual allegations in the Particulars of Claim, he conceded them for the purposes of his application, as also for this appeal. His case was that the claim could not succeed even if the facts asserted were true. He was successful to the extent that the judge held that the four breaches pleaded in paragraphs 32.2 to 32.5 of the Particulars of Claim provided no lawful basis for his summary dismissal. But the judge dismissed Mr Cook's application in respect of the balance of the pleaded issues, leaving them to go to trial. That left it open to the claimants to prove at trial that their other pleaded grounds justified the dismissal and to make good, if they could, their claim for damages and compensation.
This is Mr Cook's appeal against part of Burton J's order dated 21 July 2008 that was adverse to him; and he seeks permission to appeal against a further such part. He says the judge was wrong merely to find that the claimants had so affirmed the employment contract as to preclude them from dismissing him in reliance on the four breaches just referred to; and that he should have held that his employment contract had been affirmed in respect of all the breaches alleged in paragraph 32. As for the claim for damages, the periods in respect of which loss is asserted are (i) 23 May to 4 July 2007, when Mr Cook was away on sick leave and it is said no loss was suffered; and (ii) the period following the dismissal on 3 August 2007, in respect of which it is said the losses were caused by the claimants' wrongful act in dismissing him.
Also before the court is the claimants' renewed application to appeal against that part of Burton J's order that was adverse to them.
In addition to the full written arguments that preceded the hearing, and the oral argument presented at the hearing, we have also had the benefit of further, very full, written submissions directed to a particular point on which the court requested further argument. Following the provision of our draft judgment to counsel, but before the formal hand down, we also had a short further hearing in relation to the claimants' application to amend their particulars of claim and costs, upon which we ruled at that hearing.
The facts
The facts have not been the subject of investigation at trial and many are in dispute. When hereafter I refer to Mr Cook 'admitting' a fact or allegation, I make clear that he has done no more than admit them for the purposes of the application before Burton J and of this appeal. I will not repeat this mantra when referring to each such admission.
Mr Cook's employment contract with Ministry, signed in November 2001 and subsequently amended (most recently in January 2005), entitled him to an annual salary of £90,000, participation in a bonus scheme and eligibility for royalties in respect of records he signed. It imposed post-termination restrictions on the soliciting of the claimants' key employees, artists, suppliers and customers. It did not prevent him from competing with the claimants or dealing with any artist, supplier or customer whom he had not enticed away. The contract was terminable by six months' notice by either side: Mr Cook could, therefore, give such notice and join a competitor. Although he was not a member of the board of either claimant, the claimants assert (and he admits) that on 23 April 2007 he was designated Recordings' 'managing director' in its A&R team. It is agreed that, in the claimants' hierarchy, he was second in importance only to Lohan Presencer, Ministry's managing director, to whom he reported. Mr Palumbo was Ministry's chairman and James Bacchus its head of operations. The critical events occurred between the summer of 2006 and August 2007.
A. Events from summer 2006 to 22 May 2007
In the summer of 2006 Mr Palumbo, in Mr Presencer's presence, told Mr Cook that if he secured a number one hit, he would be given a cheque for £100,000. Ministry admits this but asserts that it was 'light-hearted banter rather than a promise intended to have contractual effect'. In October 2006 Mr Cook did achieve such a hit. He claims to have reminded Mr Palumbo and Mr Presencer of the promise at a meeting which the claimants deny. But in their Reply the claimants admit that in early 2007 Mr Presencer told Mr Cook that he:
'… would be paid the £100,000 in a tax-efficient manner by way of an incentive to future commitment and recognition of past commitment. It is averred, that Mr Presencer informed [Mr Cook] that the £100,000 would only be paid on condition that were [Mr Cook] to leave the employment of [Ministry] within three years, he would have to repay part of that sum. The payment was to be made in the expectation that [Mr Cook] would remain a loyal employee of [Ministry]….'
On 22 January 2007 Mr Holman of Ministry wrote to Mr Cook confirming the terms of a bridging loan that Ministry would (and did) make him in connection with his forthcoming house purchase, due to be completed on 10 February. The amount was £150,000, repayable on completion of the sale of Mr Cook's flat and anyway no later than 31 July 2007. This was unrelated to the promised £100,000, but it is Mr Cook's case (not disputed) that Mr Presencer also told him that, instead of repaying the full £150,000, he would be able to set the £100,000 off against it and need only repay £50,000 of the bridging loan. Ministry's position is, however, that Mr Presencer told him this before Mr Cook's resignation from Ministry, the event that led to his dismissal during the currency of his notice period.
On 23 March Mr Cook was offered the role of managing director of a new label with Warner Music UK Limited ('Warner'). Warner provided him with a draft contract.
On 15 May Mr Presencer sent a text message to Mr Cook saying 'your money is sorted!' This was a reference to his £100,000 promise made earlier in the year. At some uncertain date after receiving that message, Mr Cook received a letter dated 10 May 2007 from Ms Ford of Nimbus Holdings Limited (Ministry's Jersey holding company) offering a loan from Nimbus. The letter recorded that Mr Cook had various shares in Nimbus via an option granted by Ogier Employee Benefit Trustee Limited and that 'as a key manager in [Ministry's] business we wish to ensure your continued employment and we have agreed to do this by assisting you with the purchase of your new property'. Nimbus offered Mr Cook an interest free loan of £100,000, to be made on completion of the purchase of his new property. Repayment was to be only out of the proceeds of his Nimbus shares (estimated to be worth about £400,000)
'… unless you cease to be an employee of [Ministry] (or any member of its group) … in circumstances constituting you a Bad Leaver, in which event Nimbus may (in its absolute discretion) require you to pay all or part of the Loan forthwith. …
Please note that you will be a “Bad Leaver” if you cease to be an employee of [the Ministry group] in circumstances in which you could be summarily dismissed by your employing company for “gross misconduct”….'
If Mr Cook agreed, he was invited to sign and return a copy of the letter. Ministry admits the loan was offered in part in relation to Mr Cook's past commitment.
On Wednesday 16 May Mr Cook accepted an offer of employment with Warner to become the managing director of a new pop music record label for Warner known as 'Asylum'. On 18 May he told Mr Presencer he was resigning to take up employment with Warner. In accordance with his employment contract, he gave six months' notice to Mr Presencer, expiring on 18 November 2007, and confirmed it by email on Monday 21 May. Mr Bacchus accepted the notice on the same day and told Mr Cook his leaving date would be 16 November 2007.
In paragraph 20 of the Particulars of Claim, the claimants...
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