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Court of Appeal upholds High Court's "meticulous" judgment in high profile team move case

  • Press Releases 23 February 2011 23 February 2011

Clyde & Co Legal Director, Charles Urquhart, looks at the Court of Appeal's decision to dismiss BGC's appeal in its long running battle with fellow interdealer broker Tullett Prebon.

Three Lord Justices sitting in the Court of Appeal have this week unanimously dismissed BGC's appeal in its long running battle with fellow interdealer broker Tullett Prebon.

At the original High Court trial, Mr Justice Jack upheld Tullett Prebon's claims in conspiracy, breach of contract and inducing breach of contract following BGC's large scale raid of Tullett Prebon's brokers. He also enforced a period of garden leave/ post termination relief and upheld the interim injunction prohibiting all BGC's recruitment of Tullett Prebon employees for a period of 1 year from 2 April 2009. Finally, he also dismissed the departing brokers' claims for constructive dismissal and BGC's counterclaim that Tullett Prebon had induced breaches of BGC's forward contracts.

BGC appealed the High Court's rejection of both the departing brokers' claims for constructive dismissal and BGC's counterclaim. Various other appeals were not permitted.

In dismissing BGC's appeal, Lord Justice Maurice Kay described Mr Justice Jack's original judgment in the High Court as "meticulous". In particular, the Court decided that Mr Justice Jack had followed the proper test to determine whether there has been a repudiatory breach of contract which involves an objective view of whether the contract breaker has clearly shown an intention to abandon and altogether refuse to perform the contract. The Court of Appeal agreed that Tullett Prebon had tried to strengthen its relationship with its brokers, quite the reverse of the abandonment or refusal to perform the contract that is necessary to support a successful claim for constructive dismissal.

The Court of Appeal also agreed that those Tullett Prebon brokers who signed "forward contracts" with BGC were entitled to rip them up and remain with Tullett Prebon because BGC's recruitment methods destroyed trust and confidence before the employment relationship had even started.

In light of the glowing endorsement of the High Court's judgment and the fact that the appeal was limited to a small number of points, today's decision simply serves to reinforce the lessons of Mr Justice Jack's original judgment, namely that:

  • many pitfalls are faced by employers who plan to recruit from their competitors;
  • in the face of an unlawful poaching raid, the Courts are prepared to grant effective injunctive relief;
  • the provision of indemnities by BGC to the departing brokers was, in effect, an acknowledgement by BGC that the brokers' conduct might be unlawful;
  • courts will always analyse attempts by employees to fabricate constructive unfair dismissal claims in these types of team move situations with a degree of scepticism;
  • express contractual clauses in brokers' contracts that required Tullett Prebon brokers to inform their employer if they received an approach were enforceable;
  • desk heads had an implied duty to inform their employer of the proposed raid by a competitor once they had become aware of it;
  • it is not necessary for an employee to be aware of a repudiatory breach of contract by his employer as at the date of resignation in order for him to prevent his previous employer from relying on the terms of the contract; and
  • it is not correct that a party to a contract could not rely on a breach of trust and confidence by the other party where the first party had already committed a breach itself. Rather the Courts should only go as far as to take into account the conduct of the parties when determining whether there had been a breach of trust.