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In the widely reported case of Tullett Prebon & Ors -v- BGC & Ors  EWHC 484, the High Court concluded that BGC had unlawfully poached some 10 brokers form Tullett Prebon's Treasury Division in London, including four brokers from Tullett Prebon's Forward Cable Desk. Mr Justice Jack's judgment was upheld on appeal ( EWCA Civ 131), and Tullett's damages claim was settled on confidential terms following some 4 weeks of contested evidence in March of this year. Sir Raymond Jack has now given judgment in a follow on claim by BGC ( EWHC 2009 (QB)), accusing Tullett of procuring breaches of contract by one of BGC's employees, Peter Rees.
At the time of BGC's poaching raid on Tullett's Treasury Division (March 2009), Mr Rees was working as a forward Swiss trader for BGC in Nyon, Switzerland. He was (as the Court found) the disaffected head of a failing and disintegrating ‘Swiss' desk. At the end of March 2009 he had his salary cut by 66%, under a performance adjustment clause in his contract. He received advice from Swiss lawyers that this cut was unlawful and resigned on 6th April 2009. He was recruited by Tullett Prebon to work on its Forward Cable Desk (filling vacancies created by BGC's poaching raid), where he started in mid May 2009. BGC alleged that Mr Rees had breached his contract in leaving early (he had 29 months of his Initial Term still to run) and had breached his PTRCs by working for Tullett. BGC alleged that Tullett had procured those breaches.
The Court found that the salary cut was lawful and Mr Rees was not justified in resigning; he had been unfortunate to be wrongly advised by his Swiss Lawyers. However, his early departure had caused BGC to suffer no loss, and he had not acted in breach of his PTRCs to any material extent, applying Swiss Law. He was, however, obliged to repay a ‘forgivable loan' (effectively a loyalty or signing payment he received on joining, but repayable in the event of early termination).
Of more interest in the context of business protection and recruitment disputes is the Judge's handling of the procurement claims against Tullett. He rejected the claim that Tullett had procured Mr Rees breaches in recruiting and employing him. Tullett "only took him [Mr Rees] on once [it] had established, to the best of its legal department's ability, that [it] was free to do so". So Tullett did not have the necessary intention, following the guidance given by the House of Lords in OBG. In any event, BGC had failed to show any loss (a constituent element of the procurement cause of action). The Judge rejected BGC's claim that it was entitled to Wrotham Park or transfer fee damages for Tullett's recruitment of Mr Rees - these were "not available as a substitute for conventional damages to compensate a claimant for damages he has not suffered. Nor should it be used to award a larger sum than a conventional calculation of loss provides". Given his other findings, the Judge did not need to address the dispute between the parties as to the extent to which the alleged procurement had been causative of the breach, but expressed the (obiter) view that "if a contract would have been broken by a party to it whether or not the conduct relied on as inducement had taken place, it cannot properly be said that the breach was induced or procured by the conduct. Neither can the other party say that his losses were caused by that conduct because they would have occurred in any event".
The status of employment rights on the transfer of an undertaking is an extremely complex area of...