Pugh v Cantor Fitzgerald International
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE WARD,MR JUSTICE EVANS LOMBE |
| Judgment Date | 07 March 2001 |
| Neutral Citation | [2001] EWCA Civ 307 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A2/2000/2374 |
| Date | 07 March 2001 |
[2001] EWCA Civ 307
Lord Justice Ward and
Mr Justice Evans Lombe
Case No: A2/2000/2374
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN'S BENCH DIVISION
(Mrs Justice Smith)
Royal Courts of Justice
Strand,
London,
WC2A 2LL
Mr Andrew Stafford Q.C. (instructed by Messrs Hobson Audley for the Appellant)
Mr Damian Brown (instructed by Messrs Olswang for the Respondent)
This is an appeal by the claimant, Mr Andrew Pugh, against the order of Smith J. made on 30th March 2000 when she allowed in part an appeal against the order of Master Leslie made on 16th February 2000 striking out parts of the defendant's counter-schedule of loss in an action brought by Mr Pugh for damages for wrongful dismissal from his employment.
Mr Pugh was employed by the respondent, Cantor Fitzgerald International, as a broker in the Euro Bond Department under a written contract of employment dated 22nd February 1994. He had a further agreement with the American parent company of the respondent, the "partnership agreement", to which I will refer later. Under his contract of employment he was to be paid £200,000 per annum by way of salary and guaranteed bonus with the prospect of an additional bonus being paid at the company's discretion. The contract was for a three year term automatically extended year by year unless a month's notice had been given that no such extension was required. After that three year period, the contract could be terminated on six month's notice. Such notice was in fact given by the company and it is common ground that under the provisions of the contract that notice would have taken effect so as to terminate the employment on 21st February 2000. However, as it was alleged in paragraph 4 of the particulars of claim: -
"On 7th October 1998 the defendant unlawfully terminated the contract with effect from 15th October 1998 in that the defendant terminated the contract before the expiry of the notice period."
In a schedule of loss the claimant set out the calculations of salary, the value of his benefits, the guaranteed and discretionary bonuses totalling nearly £229,000. He gave a discount for accelerated payment reducing the claim to about £208,000. That needed to be grossed up to allow for income tax. The amount claimed on that basis was some £326,500.
The acknowledgement of service was filed late but no defence was put in and as a result judgment in default was entered on 21st September 1999. The defendant then applied to set that judgment aside on grounds that: -
i) "The defendant had a real prospect of successfully defending the claim in accordance with Rule 13.3(1)(a) of the Civil Procedure Rules; and
ii) The claimant's judgment under Part 12 of the C.P.R. was wrongly entered because the conditions in Rule 12.3(1) of the C.P.R. were not satisfied (pursuant to Rule 13.2(a) of the C.P.R.)."
The defendant relied on the evidence of its solicitor Mr Aherne (which is not in the bundle before us) and of Mr Falkner, its General Counsel to which I shall refer later, and, in respect of which for present purposes, it is sufficient to state that it went almost entirely to the second ground relating to alleged improper service of the proceedings with which we have not been troubled.
It is necessary to analyse the defence in a little detail. Paragraph 4 of the Particulars of Claim, which had alleged unlawful dismissal, was admitted. Nevertheless three implied terms were then pleaded, namely that the claimant as head of a team (the Dutch Government Bond Desk): -
"3.1 Would disclose any approaches from competition to his departmental manager;
3.2 Would not seek to solicit, procure or otherwise persuade other members of his team to work for a competitor;
3.3 Would not seek to induce a breach of contract, or collateral agreements, of other members of his team."
Paragraph 4 pleaded an express term contained in paragraph 11 of the contract that the claimant would "well and faithfully" serve the defendant. Paragraph 16 of the contract contained another express term that the claimant would not divulge any "secret, confidential or other similar information".
What constituted the breaches must also be carefully examined. The allegations were: -
"6.1 In or around October 1996 the claimant was approached by a competitor of the defendant Liberty Eurasia Ltd. ("Liberty") to commence employment with Liberty and to persuade members of his Dutch Government Bond Desk and members of the German Government Bond Desk to join Liberty.
6.2 The claimant informed Liberty of the senior brokers employed by the defendant to speak to regarding recruitment by Liberty of the members of the German Government Bond Desk and proceeded to arrange for members of his Dutch Government Bond Desk to meet with the managing director of Liberty in or about November 1996. The claimant together with members of his Desk, Mr R. Alder, Mr N. Dyte, Mr D. Griffiths and Mr E. Vanderdonk met with Mr Taylor who discussed their employment with Liberty.
6.3 Further the claimant also persuaded an employee of the defendant, Mr P. Norton, a member of the defendant's Italian Government Bond Desk (but who had previously worked on the Dutch Government Bond Desk) to contact Mr Taylor of Liberty about his being employed by Liberty.
6.4 Further the claimant gained knowledge from Mr Taylor of Liberty that Liberty intended to recruit all the members of the defendant's German Government Bond Desk and Belgian Government Bond Desk (all of whom left the defendant in January 1997 without notice to work for Liberty). The claimant did not disclose his knowledge of any of the approaches by Liberty to employees of the defendant to his department manager or any other manager of the defendant.
6.5 The defendant first learnt of the claimant's involvement in these activities in November 1998."
It was then alleged that "by reason of all of those matters the claimant was guilty of gross misconduct disentitling him to any damages." For convenience I shall call this "the liability issue". No admission was made as to the loss and damage pleaded.
The claimant's solicitor, Mr Mahal, responded to those matters in his witness statement placed before the Master and us. He disputed the allegations of improper service and as to the defence he said it was a sham and that the case then being advanced was inconsistent with the defendant's previous stance in the dispute. His view was that: -
"Clearly the defendant is attempting to construct a further reason for its defence which should not be allowed."
He concluded that: -
" in the absence of any meritorious defence the judgment in default should be allowed to stand. The defendant will of course have the opportunity of defending the issue of quantum in this matter."
Mr Aherne put in a second witness statement, and, unlike the first, this is with our papers. He deals at length with the failure to return the acknowledgement of service in time but when he dealt with the substantive defence he said little more than this: -
"9.
I believe the defendant has discovered matters which constitute a valid defence
11. With respect, Mr Mahal's contention that this defence is a sham is wholly incorrect. The matters set out in the draft defence demonstrate a valid and sustainable defence to the claimant's case."
I will not quote more from this statement. It was practically useless for the purpose it was designed to serve. It may have been long in argument and comment but it was woefully short on facts, especially any which went to the basis of the defence sought to be advanced.
That application was heard by Master Leslie on 6th December 199He ordered that the defendant's application to set aside the judgment entered on 21st September 1999 be dismissed and he gave directions for the defendant to serve a counter schedule to the claimant's schedule of loss. He fixed a case management conference for 16th February 2000. There is no note of his judgment. There is no satisfactory explanation of why there is no note of his judgment. All that was apparently before Smith J. and all that is before us is as she set out in her judgment: -
"Unfortunately, there is no note of his judgment and counsel have been unable to tell me how the Master expressed himself save that he said that the defence had no reasonable prospect of success."
It is indeed unfortunate because the outcome of this appeal may well depend upon what the Master found and what the effect of his findings are.
The defendant duly filed its counter schedule. It suggested that the claimant had suffered no loss, paragraph A.1 asserting that the claimant was "not entitled to any damages as a matter of causation", which I shall refer to as the "causation issue", either because:
"1.1.1 The defendant was entitled to terminate the claimant's contract of employment ; or
1.1.2 The losses do not flow from the defendant's breach because of the claimant's repudiatory breach of the terms of the contract."
The defendant's case was then stated. This pleaded the same terms of the contract well and faithfully to serve under paragraph 11 and not to divulge secret or confidential information under paragraph 16. It added a further express term namely: -
"During the course of your employment you will not solicit for your own benefit or the benefit of any person or organisation other than the (defendant) the employment or other services of any individual personally known to you who was employed by the (defendant)."
Then the schedule pleaded implied terms to disclose any approaches from competitors and not to seek to induce a...
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