Tullett Prebon Plc and Others v BGC Brokers LP and Others
| Jurisdiction | England & Wales |
| Judgment Date | 22 February 2011 |
| Neutral Citation | [2011] EWCA Civ 131 |
| Docket Number | Case No: A2/2010/1223(B), 1223, 1222 |
| Court | Court of Appeal (Civil Division) |
| Date | 22 February 2011 |
[2011] EWCA Civ 131
(Mr Justice Jack)
Before: Lord Justice Maurice Kay Vice President of the Court of Appeal, Civil Division
Lord Justice Hooper
and
Lord Justice Tomlinson
Case No: A2/2010/1223(B), 1223, 1222
REF NO: HQ09X01241
IN THE HIGH COURT OF JUSTICE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Andrew Hochhauser QC and Mr Jonathan Cohen (instructed by McDermott Will & Emery UK LLP) for the Appellants
Mr Daniel Oudkerk QC, Miss Jane McCafferty and Miss Amy Rogers (instructed by Rosenblatt Solicitors) for the Respondents
Hearing dates: 13, 14, 15 December 2010
Lord Justice Maurice Kay:
1. Tullett Prebon PLC and its associated companies (Tullett) are active in the field of inter-dealer brokerage, acting as intermediaries for banks and other financial institutions. BGC Brokers LP and its associated company (BGC) compete with Tullett in the same high-value, sophisticated financial markets. The financial products with which they concern themselves include cash, foreign exchange, derivatives, commodities and equities. A successful brokerage business depends on the skills, abilities and contacts of the brokers in its employment. They are highly remunerated. They work in specialist teams or desks. This case is concerned with the efforts of BGC to recruit desks of brokers from Tullett. Those efforts took the form of a coordinated plan in which the central character was Mr Tony Verrier. He was formerly Chief Operating Officer at Tullett's London office before he left and joined BGC as Executive Managing Director and General Manager on 5 January 2009. As soon as he joined BGC, he put into action a plan to recruit Tullett brokers. He succeeded in persuading 13 to sign “forward contracts” with BGC, although three later changed their minds and stayed with Tullett. They were referred to at first instance as “the Tullett Three”. In total, Tullett employs about 650 brokers in London, as compared with about 600 employed by BGC.
2. The factual background to the case is set out in great detail in the judgment of Jack J (the Judge) which was handed down on 18 March 2010. The trial had begun on 14 October 2009 and it ran until 5 February 2010, when judgment was reserved. I pay tribute to the Judge who produced a meticulous judgment in a relatively short space of time. Its neutral citation is [2010] EWHC 484 (QB). It is about 130 pages long. The findings of fact are extensive. I do not intend to repeat them here. There is no need. This appeal is limited in its scope.
An overview of the issues and findings at trial
3. Before the events which gave rise to these proceedings the Fifth to Fourteenth Defendants were each brokers who were contracted to Tullett for fixed terms of different lengths and subject to post-termination restrictions. An employer such as Tullett would have much to lose if its brokers were free to move to a competitor without such fixed terms and restrictions. When Mr Verrier and others (including Mr Shaun Lynn, BGC's President) decided to recruit groups of Tullett brokers, they did so by the use of forward contracts by which individual brokers agreed to join BGC at future dates when free to do so. BGC provided them with indemnities in anticipation of litigation at the suit of Tullett. This is a very litigious industry. BGC also agreed to make substantial signing-on payments to the brokers, usually on the basis of half payable on signing with the balance to follow on the commencement of employment with BGC. Although Tullett sought at trial to establish that the forward contracts were unlawful, the Judge found them to be lawful.
4. Towards the end of March 2009, the broker defendants resigned from Tullett and claimed that they had been constructively dismissed. On 2 April Tullett obtained interim relief, preventing the broker defendants from taking up employment with BGC and preventing BGC from employing them before trial or further order.
5. At trial, the Judge rejected the claim of the defendant brokers that they had been constructively dismissed. He found that BGC, Mr Verrier and Mr Lynn had participated in an unlawful means conspiracy, the unlawful means including the inducement of the broker defendants to breach their contracts of employment with Tullett by leaving early without lawful justification. BGC had made a Part 20 claim against Tullett in relation to the Tullett Three, alleging that Tullett had induced each of them to breach his forward contract with BGC by terminating it without lawful justification and remaining with Tullett. The Judge rejected this claim, holding that the Tullett Three were entitled to terminate their forward contracts as a result of BGC's conduct, that being essentially the conduct which had proved the conspiracy. The Judge granted Tullett some final injunctive relief which BGC initially sought to challenge on this appeal but ultimately it did not pursue that challenge. Finally, he adjourned Tullett's claim for damages which remains listed in 2011.
Further salient facts
6. For the purposes of this appeal, much of the focus has been on Tullett's Forward Cable Desk, the Head of which was Mr James Hall. His contract with Tullett tied him until June 2012 at the earliest, with post-termination restrictions thereafter. On 30 January 2009 he signed a forward contract with BGC, providing that he would commence employment as soon as he was free to do so but no later than 31 January 2013, which would have been four weeks after the expiry of his post-termination restrictions. The forward contract provided for substantial salary and commission payments once employed, together with a signing-on payment of £413,000, of which half was payable immediately and the balance on commencement of employment. The signing-on arrangements were actually set out in a separate document entitled “Loan Agreement and Promissory Note”. Although it contained provisions for repayment, in the words of the Judge: “provided all went well, it [viz the £413,000] was his to keep”. He was also provided with an indemnity. On 25 March 2009 Tullett suspended Mr Hall. Shortly before that Tullett had issued and served the present proceedings. Although Mr Hall was later to claim that he had been constructively dismissed, the Judge set that in the context that “he was a disaffected employee of Tullett, was assisting Mr Verrier in the recruitment of his desk to BGC and was working with Mr Verrier to provoke conduct which might be relied on in support of a claim for constructive dismissal”, in relation to which “he relied on manufactured grounds”.
7. Mr Hall's desk at Tullett included Mr Steven Harkins, Mr Robert Sully and Mr Paul Bishop. They were successfully recruited to BGC as part of the raid. It also included Mr Tom Stevenson, Mr Mark Comer and Mr Nigel di Palma. They too were initially tempted and signed forward contracts but they later changed their minds. They are the Tullett Three. Prior to these events, Mr Hall and these six brokers had been a close unit, working successfully together for several years.
8. Three other desk Heads were successfully recruited by BGC: Mr James Bowditch of the Sterling OBS (Short) Desk, Mr James Wilkes of the Sterling Cash Desk and Mr Mark Yexley of the Dollar Cash Desk. Mr Bowditch took two brokers with him and Mr Wilkes took one. Having described some of Mr Hall's contractual arrangements with BGC in some detail, it is unnecessary to do the same with the others'. They were not all precisely the same but, for present purposes, there were no material differences.
9. The conspiracy and the ruthless implementation of it were the subject of a vast quantity of evidence. It referred to a large number of conversations and meetings. I should refer briefly to some of them. On 26 January 2009, Mr Verrier hosted a dinner in a private room at the Bleeding Heart Restaurant for Mr Hall's Forward Cable Desk. One of those present was Mr Marshall, formerly an in-house solicitor at Tullett, but by this time a partner in the firm of Russell, Jones & Walker. He had represented Mr Verrier when Tullett had brought proceedings against him in 2008. Between January and March 2009 he advised the Tullett brokers who were being recruited for BGC by Mr Verrier. From the end of March he acted only for Mr Verrier and remained his solicitor at trial. He played an important part in the events of January – March 2009. Although not named as a defendant, the case for Tullett was that he was one of the conspirators. He did not give evidence. On any view he was an important, if somewhat penumbral, figure in what transpired. The Judge wisely concluded that he should be “careful to make no more findings concerning him than are necessary to my decision”. Nevertheless, he found that Mr Marshall “became involved in a plan to get the … brokers to leave Tullett together and within a short period without regard to whether there were valid grounds for alleging constructive dismissals”. One of the brokers who received advice from Mr Marshall was Mr Cohen. On the basis of one of Mr Marshall's attendance notes, the Judge found that Mr Verrier had given Mr Cohen an assurance that “one way or another, he would be out in six weeks”. That is precisely what came to pass.
10. On 11 March, Mr Verrier gave a dinner at Rules Restaurant for all the brokers who had signed forward contracts. Mr Lynn and Mr Marshall were also present. Mr di Palma was not present but two or three days later he had a conversation with...
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