Fahim Imam-sadeque v Bluebay Asset Management (services) Ltd
| Jurisdiction | England & Wales |
| Judge | The Hon. Mr Justice Popplewell |
| Judgment Date | 10 December 2012 |
| Neutral Citation | [2012] EWHC 3511 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Case No: HQ12X00380 |
| Date | 10 December 2012 |
[2012] EWHC 3511 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
The Hon. Mr Justice Popplewell
Case No: HQ12X00380
Daniel Oudkerk QC and Amy Rogers (instructed by Doyle Clayton) for the Claimant
Paul Goulding QC and Diya Sen Gupta (instructed by Allen & Overy) for the Defendant
Hearing dates: 9–12, 15, 16, & 19 October 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, Mr Imam-Sadeque, is 4Since leaving university and qualifying as a fellow of the Institute of Actuaries he has spent all his professional career in investment management. He was employed by the Defendant ("BlueBay") on 1 July 2004.
BlueBay was founded in 2001 by Hugh Willis and Mark Poole. As part of a reorganisation in April 2012, it transferred its business to a limited liability partnership, BlueBay Asset Management LLP, but for the purposes of this action it is not necessary to distinguish between the Defendant and the LLP, and I shall refer to both as BlueBay. BlueBay manages investments for institutions and high net worth individuals, focusing primarily on credit and fixed income products and alternative investment products. It is based in London and also has offices in the USA, Luxembourg, Hong Kong and Japan, with a total of 310 members of staff. It was purchased by Royal Bank of Canada in December 2010 in a deal which valued it at £963 million.
Mr Imam-Sadeque was employed by BlueBay from 1 July 2004 until 31 December 2011. By 2011 he was a senior employee and highly remunerated. He wanted to leave BlueBay following a meeting on 6 July 2011 at which management raised complaints made by other employees about his conduct at work, and informed him about the promotion of a colleague, Mattias Hojmark-Jensen. If he had resigned, however, this would have had adverse financial consequences. His remuneration over the years included being granted shares under the terms of Bonus Plans operated by BlueBay, which would vest at future dates. The shares were invested in fund units pursuant to Mr Imam-Sadeque's directions. Mr Imam-Sadeque had fund units which were due to vest in January and March 2012, which it was estimated would be worth approximately £1,700,000 ("the 2012 Fund Units"). If his employment were terminated before the vesting date, his entitlement to all unvested shares or fund units would depend upon whether he was a "Good Leaver" or a "Bad Leaver" as defined in the Plans. If he left voluntarily he would be a Bad Leaver and forfeit the right to his unvested fund units and shares.
Unknown to BlueBay, soon after this meeting Mr Imam-Sadeque agreed to join a new start up asset management company, Goldbridge Capital Partners LLP ("Goldbridge") whose business was to be the management of similar investments. Mr Imam-Sadeque was to become a partner of Goldbridge, and to be entitled to a profit share, as well as a guaranteed bonus and sign on payment.
BlueBay appreciated that Mr Imam-Sadeque wanted to leave and was prepared for him to do so on the terms of a compromise agreement, which was swiftly concluded. The compromise agreement, concluded on 22 July 2011, provided for Mr Imam-Sadeque to conduct a handover, and then be on garden leave until 31 December 2011; and for Mr Imam-Sadeque to be treated as a Good Leaver for the purpose of the vesting of the 2012 Fund Units, provided that he complied with the terms of the compromise agreement and his employment contract. Mr Imam-Sadeque was on garden leave from 22 August 2011 until the termination of his employment on 31 December 2011, during which he was paid his full salary by BlueBay. He then started working for Goldbridge.
BlueBay alleges that Mr Imam-Sadeque was in repudiatory breach of the terms of the compromise agreement and his employment contract between 6 July and 31 December 2011, as a result of which he is not entitled to be treated as a Good Leaver and is not entitled to the 2012 Fund Units. The principal complaints are (1) that Mr Imam-Sadeque assisted Goldbridge in setting up and launching its competitive business, and (2) that Mr Imam-Sadeque assisted Goldbridge in recruiting Damian Nixon, a BlueBay employee who had previously reported to Mr Imam-Sadeque, and is now part of his team at Goldbridge. Mr Imam-Sadeque denies the alleged breaches. He brings a claim for the 2012 Fund Units, denying that they have become forfeit by reason of any breach of the compromise agreement or his employment contract, and arguing in the alternative that any such forfeiture would be unenforceable as a penalty.
Approach to the evidence
Mr Imam-Sadeque gave oral evidence, and there was a written statement from his wife, whose evidence was not challenged. I heard oral evidence from Mr Hojmark-Jensen and Natalie Benitez-Castellano on behalf of BlueBay. Ms Benitez-Castellano was an impressive witness whose evidence I generally felt confident in accepting. Mr Hojmark-Jensen's evidence was of limited relevance to the issues which I have to decide. Mr Imam-Sadeque had the articulate fluency of a good salesman, but I felt unable to accept certain aspects of his evidence, as I explain more fully below.
Mr Goulding QC argued that I should draw adverse inferences against Mr Imam-Sadeque's case from his failure to call witnesses who were in a position to give important evidence. In particular, he submitted, Ms Germano, Mr Shewaram, Mr Midha, and Ms Sharpling, all of whom were part of the Goldbridge start up, where Mr Imam-Sadeque is now working, together with Mr Nixon, who was described by Mr Imam-Sadeque as a friend as well as a current work colleague at Goldbridge, could have been expected to have given evidence in support of Mr Imam-Sadeque's account of events if they were true.
The Court may draw adverse inferences from a party's failure to call a particular witness or witnesses: see Wisniewski v Central Manchester Health Authority [1998] PIQR 324, 340 and Karis v Lewis [2005] EWCA Civ 1637. Ms Germano and Mr Nixon were each party to critical conversations with Mr Imam-Sadeque, the content of which was at the heart of the dispute, and of which there was no written record. Mr Shewaram, Mr Midha and Ms Sharpling were also, in their different ways, parties to conversations and events which were disputed, and in respect of which I was left only with Mr Imam-Sadeque's word. The importance of these events and conversations will appear from the narrative of events set out in this judgment. I have no doubt that each of these individuals had important evidence to give, which would have assisted me in resolving the issues which arise in this case. There was no explanation in the evidence for their absence.
I do not, however, consider that their absence as witnesses should be held against Mr Imam-Sadeque. This point was taken on behalf of BlueBay for the first time in closing submissions. There was nothing in BlueBay's opening submissions to alert Mr Imam-Sadeque that such a point would be taken, and he was not cross examined about the current status, health or availability of these potential witnesses. Mr Goulding QC submitted that it was for Mr Imam-Sadeque to proffer an explanation for the absence of all these witnesses, irrespective of any warning that the point would be made. That would be to impose a burden which offends principles of fairness and would be contrary to the overriding objective in CPR Rule 1. It is incumbent upon a party who wishes to invite the Court to draw adverse inferences from the opposing party's failure to call witnesses, to give notice that he intends to do so, in a manner which affords the opposing party an opportunity of explaining the witnesses' absence. Unless otherwise agreed, such an explanation can only properly be received by the Court by evidence, not submission. Questions of waiver of privilege may arise, and associated waiver, upon which legal advice may well be required. It would be unfair to allow a party to rely upon there being no such explanation in evidence when the other party, who would have to adduce such evidence, has had no notice that the witnesses' absence is to be relied on against him. If he has no notice, he will not know, for example, the identity of any individual whose absence is to be relied on so as to call for an explanation.
Mr Goulding QC also submitted that I should draw adverse inferences from Mr Imam-Sadeque's failure to preserve evidence, particularly with respect to a new BlackBerry mobile phone he acquired on 14 July 2011 under a contract in his wife's name. This was the mobile phone used by Mr Imam-Sadeque to contact individuals connected with Goldbridge, and Mr Nixon, between 14 July and December 2011 It was taken to a Vodafone store by Mrs Imam-Sadeque on or about 27 March 2012, some two months after the commencement of these proceedings, where it was reset to factory settings. This had the result of rendering irretrievable all text messages on the device. In her witness statement produced during the course of the trial, which was not ultimately challenged, she explained that she had taken it to the store because she wanted to use it for family purposes, and to remove any of Mr Imam-Sadeque's contacts. She asked those at the store how to do so, and it was at their suggestion that this was achieved by resetting it to factory settings. Mr Imam-Sadeque said in evidence that in any event it was his practice to delete texts when the conversation string was finished, so that nothing had in fact been lost. It is fair to say...
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