Gamatronic (UK) Ltd and Another v Hamilton and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Andrew Smith |
| Judgment Date | 30 October 2013 |
| Neutral Citation | [2013] EWHC 3287 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Case Nos: HQ13X00943 |
| Date | 30 October 2013 |
[2013] EWHC 3287 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Andrew Smith
Case Nos: HQ13X00943
Rachel Oakeshott (instructed by Asserson Law Offices) for the Claimant
Emily Gillett (instructed by RadcliffesLeBrasseur) for the First and Second Defendants
Gabriel Buttimore (instructed by Healys LLP) for the Third Defendant
Approved Judgment
Hearing dates: 22 and 23 October 2013
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.
The defendants seek (i) orders striking out the claimants' statement of case and consequential orders under CPR 3.4, and (ii) summary judgment under CPR 24.2. The main issues are (i) whether the claimants have made a binding and applicable agreement to release the first and second defendants from liability for claims now made; (ii) whether the statement of case should be struck out in whole or in part because the claims are inadequately or defectively pleaded or because claims asserted, in particular causes of action for money had and received and for which damages is a necessary ingredient, have no proper factual or juridical basis; and (iii) if the statement of case is struck out, whether the proceedings should be dismissed (in part or in whole) or whether the claimants should be permitted to serve a new or amended pleading. There are other applications before the court: the claimants seek permission to amend the claim form, and there are applications for security for costs. I have deferred argument about them until after delivering this judgment, but I record that the security for costs applications have been resolved except as to the costs of and relating to them.
I heard submissions about the proper approach to determining applications of this kind, but (unsurprisingly) there was no dispute about them. I need say only that I seek to apply the principles formulated by Lewison J in Easyair Ltd v Opal Telecom Ltd, [2009] EWHC 339 (Ch) and by Hamblen J in Credit Suisse International v Ramit Plana OOD, [2010] EWHC 2759 (Comm).
From 2001 to 2012 Mr Robert Hamilton, the first defendant, and Ms Jayne Mansfield, the second defendant, were directors and joint Chief Executive Officers of the first claimant (whom I shall call "Gamatronic UK"), and they together owned 49% of the shares. The litigation arises from an acrimonious breakdown in their relationship with Gamatronic UK's majority shareholder, the second claimant, an Israeli company whom I shall call "Gamatronic Israel", and the other two directors of Gamatronic UK, Mr Joseph Goren and his daughter Ms Sharon Bar Zvi, who together largely own Gamatronic Israel. Mr Hamilton and Ms Mansfield now work for the third defendant, whom I shall call "Vox", and the claimants say that they started to do so while still directors of and employees of Gamatronic UK, and in that regard misused confidential information and otherwise behaved dishonestly and improperly. The businesses of Gamatronic UK and Vox are both to do with uninterruptible power supplies (UPSs), which ensure power to computers and other equipment is not interrupted by power failures, but there is some question (upon which I need not and do not enter) about how closely they compete.
In 2001 Gamatronic UK, Gamatronic Israel, Mr Hamilton and Ms Mansfield entered into a Founders Agreement dated 21 December 2001, which set out the terms on which the shareholders in Gamatronic UK should work together, including the shareholdings to which they should subscribe and the terms of Directors Service Agreements into which Mr Hamilton and Ms Mansfield should enter. The shareholders, including Mr Hamilton and Ms Mansfield, agreed to use their best endeavours to promote the interests of Gamatronic UK. The Founders Agreement included provisions which (in essence and by way of incomplete summary) precluded Mr Hamilton and Ms Mansfield from being involved in any competing business and from disclosing or misusing "Confidential Information" (as specified in the Founders Agreement). It also provided that the shareholders in Gamatronic UK should offer their shares to the remaining shareholders before selling them to a third party. Further, if a shareholder committed a breach of the Founders Agreement which "in the case of a rectifiable breach is not rectified within 7 days of written notice", then the Founders Agreement was to terminate as regards the defaulting shareholder and the others were entitled to buy his or her shares.
Gamatronic UK entered into new contracts of employment with Mr Hamilton and Ms Mansfield dated 25 January 2007, which were still in force when their employments ended. They provided (again, by way of incomplete summary) that the employees would devote their "best efforts, entire productive time, ability and attention to the business" of Gamatronic UK; that they would not disclose or misuse Gamatronic UK's Confidential Information (as defined in the contracts of employment); and that while employed and for 12 months thereafter they would not (i) be involved with any business competing with Gamatronic UK or Gamatronic Israel in areas where they transacted business; or (ii) seek to solicit or divert away from Gamatronic UK or Gamatronic Israel any employees, suppliers or actual or prospective customers. The contracts of employment specified that any breach of the obligations about Confidential Information could result in summary dismissal for gross misconduct.
Apparently until 2011 Gamatronic UK made profits, but in 2011 it had losses in three of the four quarters of the year. The reasons are controversial: the defendants, or at least Mr Hamilton and Ms Mansfield, attribute the downturn, at least in significant measure, to defective products and customer dissatisfaction with them. The claimants contend that an effective cause of the reversal in Gamatronic UK's fortunes was wrongdoing on the part of Mr Hamilton and Ms Mansfield. Whatever the reason, Mr Hamilton's and Ms Mansfield's relationships with Gamatronic Israel, Mr Goren and Ms Bar Zvi deteriorated. On 11 May 2011 they gave notice to Gamatronic Israel that they intended to sell their shares in Gamatronic UK, stipulating a price of some £5,102 per share (or some £500,000 for their combined 49% shareholdings). Exchanges about them leaving Gamatronic UK dragged on and became increasingly hostile. By the end of January 2012 Mr Goren was questioning their bona fides: on 29 January 2012 he wrote to them, "Your current behaviour is making me more and more suspicious regarding your true motivation and wonder whether you in fact want to harm [Gamatronic UK] while wasting our time on fruitlessness negotiations [sic]", and "My feelings regarding your good faith are not so well and in some sense I feel cheated by you". On 14 February 2012 he wrote "due to your continuing frustrating delays I cannot avoid from attributing you untrue intentions [sic]" and "There is a limit for your tricks and we have reached that limit!!!".
By a sale and purchase agreement ("SPA") entered into, apparently, on 29 February 2012 by Gamatronic UK, Gamatronic Israel, Mr Hamilton and Ms Mansfield it was agreed that Gamatronic Israel should buy and Mr Hamilton and Ms Mansfield should sell their shares on Gamatronic UK for £115,000. (The actual sum to change hands was apparently £112,000 because of addition of a "bonus" payment and deduction of directors' loans, but I ignore that for present purposes.) Clause 6 was headed "Founders Agreement", and I shall set it out.
"6.1 The parties agree, subject to Clause 6.2, that the Founders Agreement shall terminate upon Completion.
6.2 Each party hereby irrevocably and unconditionally releases each other party from performance of the Founders Agreement and from all liabilities and claims whatsoever and howsoever arising under or in connection with the Founders Agreement including (for the avoidance of doubt) for any liabilities or claims arising (or relating to the period) before such release.
6.3 RH and JM each severally covenant with Gamatronic Israel that they shall not:
a) at any time during the period of six (6) months beginning with [29 February 2012], deal with any person who is at [29 February 2012], or who has been at any time during the period of six (6) months immediately preceding that date, a client or customer of the Company; and
b) at any time during the period of six (6) months beginning with [29 February 2012]:
i) offer employment to, enter into a contract for the services of, or attempt to entice away from the Company, any individual who is at the time of the offer or attempt, and was at [29 February 2012], employed by or directly engaged with the Company; or
ii) procure or facilitate the making of any such offer or attempt by any other person, and for the avoidance of doubt, the above provisions of this Clause 6.3 shall apply in substitution for [specified] provisions … of the Founders Agreement, released by Clause 6.2."
At the same time Mr Hamilton and Ms Mansfield each entered into an agreement (a "Compromise Agreement") with Gamatronic UK to determine his or her employment and directorship, and pursuant to them Mr Hamilton ended his employment on 23 March 2012 and Ms Mansfield ended her employment on 15 May 2012. The recitals to each agreement referred to the SPA and stated:
"(A) Without any admission of liability, the Company has agreed to settle all claims and potential claims that the Employee has or may have arising out of the Employee's employment and/or the Employee's directorships and/or other offices and/or its/their termination. "
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