Tullett Prebon Plc and Others v BGC Brokers LP and Others
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE JACK,Mr Justice Jack |
| Judgment Date | 18 March 2010 |
| Neutral Citation | [2010] EWHC 484 (QB),[2009] EWHC 819 (QB) |
| Docket Number | Case No: HQ09X01231 |
| Court | Queen's Bench Division |
| Date | 18 March 2010 |
[2010] EWHC 484 (QB)
Before: Mr Justice Jack
Case No: HQ09X01231
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Mr Jeffery Onions QC, Mr Daniel Oudkerk and Ms Amy Rogers (instructed by Rosenblatt) for the Claimants
Mr Andrew Hochhauser QC and Mr Jonathan Cohen (instructed by McDermott Will & Emery) for 1st, 2nd & 4th Defendant
Mr Stuart Ritchie and Mr Christopher Newman (instructed by Russell Jones & Walker) for the 3 rd Defendant
Mr Selwyn Bloch QC and Mr Jeremy Lewis (instructed by Berwin Leighton Paisner) for the 5 th to 14 th Defendants
Hearing dates: 14 October 2009—5 February 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 Jack :
INDEX
| Part A – Preliminaries | Paragraph |
| Introduction | 1 |
| Mr Verrier | 4 |
| Mr Marshall | 10 |
| Brokers, their contracts and the recruitment of brokers | 11 |
| The course of the litigation | 21 |
| The defendant employees’ contracts and those of the Tullett Three | 28 |
| Part B – The Facts in Detail | 62 |
| Indemnities | 64 |
| Telephones and blackberries | 65 |
| Part C – The position of a desk head in a recruitment exercise | 66 |
| Part D – The Claims of the Fifth to Fourteenth Defendants for Constructive Dismissal | 70 |
| The law | 70 |
| Mr Hall | 87 |
| Mr Sully, Mr Harkins, Mr Bishop | 94 |
| Mr Yexley | 118 |
| Mr Bowditch | 125 |
| Mr Cohen, Mr Temple | 131 |
| Mr Wilkes | 133 |
| Mr Matthews | 135 |
| Part E -Tullett's Claims in Conspiracy & Inducing of Breach of Contract | 136 |
| Tullett's case | 136 |
| The law as to conspiracy | 143 |
| The law as to inducing breach of contract | 146 |
| Findings of fact : the roles of Mr Verrier, Mr Lynn and Mr Marshall in the alleged conspiracy | 155 |
| Mr Verrier | 155 |
| Mr Lynn | 160 |
| Mr Marshall | 170 |
| Liability for inducing breach of the brokers’ contracts with Tullett | 177 |
| Part F – BGC's Claim in respect of the Tullett Three | 184 |
| Mr Comer | 187 |
| Mr Di Palma | 191 |
| Mr Stevenson | 192 |
| No loss | 196 |
| Did BGC repudiate the forward contracts? | 199 |
| Superior right | 207 |
| Were BCG's contracts with the Tullett Three voidable? | 210 |
| Part G – Relief by way of Injunction | 213 |
| Relief against the defendant brokers | 215 |
| The law | 218 |
| Matters relating to all desks | 227 |
| The forward cable desk | 231 |
| The short term sterling OBS desk | 242 |
| The sterling cash desk, Mr Wilkes and Mr Matthews | 244 |
| Mr Yexley | 245 |
| Relief against BCG, Mr Lynn and Mr Verrier | 247 |
| Part H – Financial claims against the Defendant Brokers | 254 |
| (1) Conspiracy | 254 |
| (2) Claims in respect of re-signing and retention payments | 259 |
| (i) Restraint of trade | 264 |
| (ii) Penalties | 268 |
| (3) Claims for recovery of discretionary performance and loyalty bonuses | 271 |
| Part I—Conclusions | 275 |
Introduction
Part A – Preliminaries
The principal parties to this action are rival companies in the business of inter-dealer broking. Their businesses involve the employment in London and other international centres of large numbers of brokers who act as intermediaries between traders in what can broadly be called financial products, including cash, foreign exchange, derivatives, commodities and equities. Tullett, as I will call the claimants, has its London offices at Broadgate in the City where it employs around 650 brokers. BGC, as I will call the defendant companies, has London offices at Canary Wharf where it employs around 600 brokers. Its revenue is about two thirds of that of Tullett and its profit margin is lower. Mr Anthony Verrier, usually called Tony Verrier, was formerly employed by Tullett as Chief Operating Officer. He was the company's second most senior executive. The Chief Executive Officer was and is Mr Terence Smith, usually known as Terry Smith. On 5 January 2009 Mr Verrier commenced work with BGC as Executive Managing Director and General Manager. He reported to Mr Shaun Lynn, BGC's President and senior officer in Europe, who in turn reported to Mr Howard Lutnick, the Chief Executive Officer, in New York. As soon as Mr Verrier joined BGC he put into action a plan to recruit brokers from Tullett to BGC. He had some limited success and thirteen signed contracts to come to BGC when their contracts with Tullett permitted. Three of these later changed their minds. This may be contrasted with BGC's raid on Tullett in New York the following autumn, in which approximately 80 brokers agreed to come to BGC.
On 25 March 2009 Tullett commenced proceedings against BGC alleging conspiracy, inducing breach of contract, and misuse of confidential information, all in connection with the recruiting by Mr Verrier from Tullett's London office. Mr Lynn and Mr Verrier were also defendants, as was Mr James Hall, the head of Tullett's forward cable desk. On 1 April I heard Tullett's application for interim relief, and on 2 April I delivered a judgment, [2009] EWHC 819 (QB), as a result of which undertakings were given. Soon after, the nine brokers who had signed contracts with BGC in addition to Mr Hall and had not changed their minds were added as defendants. They also gave undertakings.
Trial of the action commenced on 14 October 2009 and concluded on 5 February 2010. At the trial Tullett has sought to continue by way of injunction the effect of the undertakings, and they have sought to establish their rights to damages. The defendants have in the main denied any wrongdoing. They have denied that Tullett are now on any basis entitled to ongoing relief by injunction. BGC also counter-claims against Tullett for inducing the three Tullett brokers who changed their minds to break the contracts they had entered with BGC. The trial is limited to liability only: issues as to damages will be determined separately.
Mr Verrier
In order to set the events in context it is helpful to provide an outline of Mr Verrier's history. He began as a sterling deposit broker with MW Marshalls in 1987. In 1999 after Mr Verrier had spent a short period at EXCO, returned to MW Marshalls and been promoted a number of times, MW Marshalls merged with Prebon Yamane to form Prebon Marshall Yamane. Mr Verrier was appointed joint Chief Executive Officer for the UK and Europe, Middle East and Africa. In 2002 he became the sole Chief Executive Officer. In November 2004 Prebon Marshall Yamane merged with Collins Stewart Tullett. Mr Verrier was appointed Chief Executive Officer for Europe, Middle East and Africa of the money broking arm of Collins Stewart Tullett—called Tullett Prebon. Collins Stewart and Tullett Prebon de-merged in December 2006. On 1 September 2006 Mr Verrier had been appointed Chief Operating Officer of Tullett Prebon plc—the first claimant. Mr Smith had become Group Chief Executive Officer of Collins Stewart Tullett in May 2000. Mr Verrier reported directly to Mr Smith following the merger in 2004. In March 2008 Mr Verrier was approached by another inter-dealer broking company commonly called Tradition. Mr Verrier was by this time unhappy at Tullett. His unhappiness resulted from Mr Smith's style of management and actions taken by Mr Smith of which he disapproved. He was frank in his evidence before me saying that he did not like Mr Smith. I make no findings as to whether his unhappiness was justified.
On 15 April 2008 Mr Verrier informed Tullett that he would be leaving Tullett when his contract expired in March 2009. Negotiations with Tradition led to him signing a contract on 14 April 2008 to take up employment with Tradition. However some of the associated financial arrangements remained undetermined. He was approached by Mr Lynn on behalf of BGC, and he decided to join BGC rather than Tradition. On 22 August he signed a contract with BGC whereby he was to commence employment with BGC when free to do so. He was to be Executive Managing Director and General Manager. A substantial signing-on payment was made to him on 1 September. On 26 August Mr Verrier informed Mr Smith by e-mail that he would be joining BGC as soon as he was free to do so.
On 31 August 2008 the Sunday Times published an article about Mr Verrier including the fact that while recently on sick leave from Tullett he had been at a resort in Malaysia with, to use the familiar phrase, a lady other than his wife. It is Mr Verrier's case that the article was a ‘plant’ by Mr Smith in retribution against Mr Verrier for joining BGC, which is a company which Mr Verrier asserts Mr Smith dislikes. Mr Smith gave evidence before me as to his limited part in the article, which involved responding to a reporter's enquiries after the newspaper had discovered about Mr Verrier's trip with his companion. There can be no doubt that Mr Smith does not like BGC as a company. In the aftermath of the article Mr Verrier's marriage failed and he had to leave his home.
On 12 September 2008 proceedings were commenced by Tullett against Mr Verrier. Mr Verrier's position was that he had been constructively dismissed. The trial of the action was due to commence...
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