Tullet Prebon Plc and ors v BGC Broker LP and ors
If an employer fundamentally breaches the contract of employment, the employee can claim constructive dismissal. In Tullet Prebon Plc and ors v BGC Broker LP and ors the Court of Appeal said that courts must objectively assess the intention of the employer when considering whether they have committed a repudiatory breach of contract entitling the employee to claim constructive dismissal.
Basic facts
Tullett Prebon Plc (TP) and BCG Broker LP and ors (BGC) were competitors in the field of inter-dealer brokerage, acting for banks and other financial institutions.
In January 2009, TP’s chief operating officer defected to BGC and then persuaded 13 of his former colleagues to sign “forward contracts” with BGC, under which they agreed to join him at a future date, with an assurance that they would be indemnified by BGC for any financial losses that arose as a result of leaving TP.
TP became suspicious and tried to persuade some of those who had signed the contracts not to leave. This involved a series of meetings highlighting the benefits of staying but accompanied by threats of legal action if they did not. As a result three brokers (the Tullett Three) decided to stay put.
On 25 March 2009,TP suspended one of the more senior brokers involved and commenced proceedings against him, the former chief operating officer, BGC and BGC’s chief executive officer alleging conspiracy, inducing breach of contract and misuse of confidential information.
In the meantime, the brokers who had signed forward contracts resigned claiming constructive dismissal on the basis of a breach of the implied term of trust and confidence. Amongst other things, they cited the threats by TP to sue if they breached their contractual obligations and the fact that their colleague had been suspended.
In April 2009 TP obtained an interim judgment preventing the brokers from starting work at BGC and preventing BGC from employing them before the court made any other orders.
High Court decision
The High Court judge rejected the brokers’ claim for constructive dismissal, finding that TP was trying to strengthen its relationship with the brokers when it met with them, not attack it.
Noting that TP had made threats to sue the brokers if they breached their contracts, the judge said this was justified as the firm (correctly) believed that the brokers were adopting an “early exit strategy” and that there was no bullying or intimidation.
He concluded that TP’s conduct at the meetings was not likely to destroy or seriously damage its relationship of trust and confidence with the brokers. The High Court judge also upheld claims against BGC for conspiracy and breach of contract and rejected BGC’s counterclaim against TP for inducing the Tullet Three to remain with TP and renege on their forward contracts.
Court of Appeal decision
The Court of Appeal agreed with the High Court that the constructive dismissal claims were not well founded. Referring to the case of Eminence Property Developments Ltd v Heaney, it confirmed that the legal test for establishing the intention of the “contract breaker” is “from the perspective of a reasonable person in the position of the innocent party”.
Applying this test the Court had no doubt “whatsoever” that as a matter of fact, the High Court had been entitled to find that TP did not manifest an intention "to abandon and altogether refuse" to perform its contract with the brokers. Quite the contrary, it wanted to preserve its contracts with them.
The High Court judge had therefore adopted the correct approach in considering the constructive dismissal claims which was to make an objective assessment of the facts. The Court of Appeal also rejected BGC’s appeal against the decision not to award it damages when the Tullet Three reneged on their forward contracts.