Kieran Looney v Trafigura Beheer Bv
| Jurisdiction | England & Wales |
| Judge | Mr Justice Newey |
| Judgment Date | 01 February 2011 |
| Neutral Citation | [2011] EWHC 125 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC09C04778 |
| Date | 01 February 2011 |
[2011] EWHC 125 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Before : Mr Justice Newey
Case No: HC09C04778
Mr Matthew Collings QC and Mr Philip Roberts (instructed by Olswang LLP) for the Claimant
Mr Guy Morpuss QC and Mr Andrew Lykiardopoulos (instructed by Macfarlanes LLP) for the Defendant
Hearing dates: 7–10, 13–15, 17 and 20 December 2010
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.
Mr Justice Newey:
Introduction
In January 2009, the claimant, Mr Kieran Looney ("Mr Looney"), entered into a contract to provide the defendant, Trafigura Beheer BV ("Trafigura"), with a performance management programme. Late in the same year, Trafigura purported to bring the contract to an end pursuant to a provision for early termination which the contract contained. It is Mr Looney's case that Trafigura was not in fact entitled to invoke the early termination clause and that it repudiated the contract. In these proceedings, Mr Looney claims damages for breach of contract.
Factual history
Mr Looney and the KLA Program
After spending half a dozen years with Lehman Brothers, the investment bank, Mr Looney switched careers in 1995 to leadership development and executive coaching. He worked with management development consultancies for some five years before setting up his own business in 2000. His clients have included BP and Citigroup.
One of the programmes which Mr Looney offers is the "Kieran Looney & Associates Performance Management System Program" (or, more shortly, the "KLA Program"). This makes use of a range of materials designed by Mr Looney. They include "performance contracts" (which provide criteria against which an executive's performance can be evaluated), "90-day delivery plans" (which focus, as their name suggests, on things to be achieved over 90-day periods) and "engagement plans" (which identify key individuals who need to be enrolled and partnered to achieve particular results). Among other things, the Program provides for the use of precise and focused language, for clear objectives to be set, for review of whether such objectives are being met, and for taking responsibility and not giving (or accepting) excuses for failure to achieve objectives.
Mr Looney prefers to disseminate his training by a "Train the Trainer" approach. This involves Mr Looney sharing the KLA Program's concepts with an organisation's senior leaders and those leaders in turn, having achieved an appropriate level of expertise (known as "accreditation"), passing the concepts on through the organisation (a process known as "cascading").
Mr Looney distinguishes between "cascading" and "embedding". As Mr Looney uses the term, "embedding" involves a formal implementation (or "roll out") of the KLA Program to the organisation's employees. This requires detailed implementation and engagement plans, and oversight, from Mr Looney.
The Trafigura group
Trafigura is a substantial commodities trading company. It has offices around the world, but its principal offices are in London and Switzerland. The group has some 1,700 employees in total.
The president of Trafigura is one of its co-founders, Mr Claude Dauphin. Trafigura's management board also includes Mr Mike Wainwright ("Mr Wainwright"), the chief operational officer, Mr Pierre Lorinet ("Mr Lorinet"), the chief financial officer, Mr Frank Runge ("Mr Runge") and Mr Jose Larocca ("Mr Larocca"), the co-heads of oil trading, Mr Christopher Cox, the global head of concentrates and coal trading, and Mr Jeremy Weir, the head of derivatives and chief executive officer of Trafigura's asset management subsidiary.
Mr Looney's involvement with Trafigura
On 8 September 2008, Mr Wainwright and Mr Lorinet gave a presentation to London-based senior managers of Trafigura about problems they perceived to exist with the group's management. Among the concerns Mr Wainwright and Mr Lorinet expressed were that there was a "silo mentality", that there was a "lack of accountability and discipline", that too much emphasis was being placed on "doing rather than managing" and that too little energy was being devoted to longer-term planning. In the discussions that ensued, it was agreed that there should be a follow-up meeting led by an outside facilitator. Mr Ralph Torrance ("Mr Torrance"), global head of operations (oil), suggested that Trafigura should approach Mr Looney, whom he had encountered when working at BP. In due course, it was agreed between Trafigura and Mr Looney that the latter would facilitate at a management meeting on 8 November and, in advance of that meeting, would assist with a "360° feedback process". Such a process involves analysis of feedback from employees at different levels of an organisation (including management, direct reports and peers) on perceptions of individuals' behaviour.
Shortly after the 8 November meeting, Mr Runge entered into a contract for Mr Looney to provide him with personal coaching at a fee of £100,000 for 12 months. Mr Runge had not been involved in the "360° feedback process" or the 8 November meeting, but he had met Mr Looney on a couple of occasions and been impressed by him.
On 12 November 2008, Mr Wainwright emailed Mr Looney about a "general proposal for Trafigura", to include "Development of leadership team" and "Key leader development". Mr Looney responded by putting forward a proposal for a three-year KLA Program focused on Trafigura's back and mid office. As Mr Looney explained in his evidence, this was to have four key elements:
i) A performance management system involving, in particular, the use and implementation of 90-day delivery plans. There were to be group meetings every 90 days to review progress;
ii) A leadership curriculum with key competencies such as accountability and coaching;
iii) A "Train the Trainer" programme in which leaders would demonstrate their ability to transfer knowledge to others in the back/mid office; and
iv) Individual coaching focused on identified areas of development.
Mr Looney supplied Mr Wainwright and Mr Lorinet with a draft agreement for the provision of the KLA Program. This envisaged that Mr Looney would be employed for three years at an annual fee of £3 million. The draft also, however, included (as clause 1.10) a provision for early termination. This was in these terms:
"Early termination may only occur on written notice on the basis set out in the Financials. On Trafigura serving written termination notice and paying the early termination fee the Program will be discontinued and Trafigura and KLA will have no further obligations to the other in relation to payment or delivery of the Program respectively except that the confidentiality, Materials terms and other provisions of this agreement intended to apply after termination will continue to apply with full force and effect. If no written notice is served under and in accordance with the timescale set out in clause 2.5 Trafigura will pay the license fee for 2010 by 15 th December 2009, and the license fee for 2011 by 15 th December 2010."
The reference to the "Financials" related to "pricing terms and conditions" set out in an attachment. Section 5 of this attachment stated the following as regards early termination:
"Written notice must be received by KLA on or before 1st November 2009
Non refundable deposit + £1,000,000 early termination fee to be paid to KLA within fourteen days of notification"
Mr Looney's employment was discussed at a Trafigura board meeting on 21 November 2008. Although members of the board queried the cost of the KLA Program and the benefits it would bring, the board endorsed proposals for the adoption of a leadership programme for senior managers. Mr Wainwright and Mr Lorinet were asked to "go through a tender process in order to evaluate service providers available and costs". Thereafter, inquiries were made as to alternatives to Mr Looney. In the end, however, Mr Wainwright and Mr Lorinet preferred Mr Looney's KLA Program to what was available elsewhere.
Mr Wainwright and Mr Lorinet were aware that Mr Looney had a strong personality and a forthright style. That, however, was what they wanted. They were keen that managers should be challenged and taken outside their comfort zones. They thought that things should be shaken up a bit.
A written contract between Mr Looney (as "Kieran Looney & Associates") and Trafigura was eventually signed on 14 January 2009. For the most part, this was in the terms Mr Looney had drafted. It includes, in particular, the early termination provision (clause 1.10). It also incorporates, however, a small number of manuscript amendments which Mr Wainwright and Mr Lorinet had asked for. One of these was inserted at the end of clause 1.10. The amendment was in the following terms:
"It is intended that the program is dynamic in nature and will evolve subject to the specific requests (within reason) of Trafigura BV."
Another change concerned the next provision in the agreement, which related to the terms on which materials were to be made available by Mr Looney. In its amended form, the provision was in these terms:
"The terms of the Materials Agreements will be regarded as internal terms of this agreement, and will continue to apply after early termination of this agreement for any reason. KLA is entitled to refuse to start the Program if this is not done and may refuse to continue the Program if there is evidence of breach of the terms or conditions of the Materials, whilst acting reasonably in all cases."
The last six words came from Mr Wainwright and Mr Lorinet....
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